1. This is a sleeper case (i4i v. Microsoft) that has drawn relatively little attention in the public's eye. In reality, the stakes associated with it are huge and the interest it has drawn from key players in the tech industry is commensurate with those stakes.
2. The reason it is not a particularly exciting case from a headline standpoint is that it deals with what appears to be a specialist technical issue of patent law, that is, what is the proper "standard of proof" to be applied when a patent is challenged as being invalid? Should it be a "clear and convincing" standard or a "preponderance of evidence" standard?
3. In fact, the practical effect of this case on patents will be far greater than that of, say, Bilski, which dealt with the question of what constitutes patentable subject matter. Bilski covered business method patents only. The i4i case affects basically every case pending in the courts in which the validity of a patent is being challenged.
4. Among those in the tech world, just about everybody who is anybody has weighed in with a "friend-of-the-court" (amicus) brief asking the Supreme Court to throw out the clear-and-convincing standard in favor of a preponderance standard. The parade includes Google, Apple, Facebook, Intuit, Yahoo, Intel, Dell, HP, and others. A group of 36 law professors specializing in IP have also asked that the standard be changed, as has EFF. A superbly informative summation of the amicus briefs seeking to undo the clear-and-convincing standard is found here: http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202472695453&.... A good discussion also appears here: http://www.patentlyo.com/patent/2010/09/challenging-the-clea....
6. So why is this so important and why do some companies (such as Apple) that frequently rely on patents to protect their competitive positions side with Microsoft in wanting to make it easier to find patents invalid? The simple answer: trolls. In essence, when a patent's validity is challenged and a jury is instructed to uphold it unless it finds "clear and convincing" evidence that it is not valid (owing to whatever ground, whether it be obviousness or existence of prior art or any other recognized ground for declaring a patent invalid), the challenge will almost certainly fail in the average case. The jury is basically told that the patent is presumed valid unless they can clearly find compelling evidence to invalidate. Since, in most cases, what is offered is conflicting evidence of varying types, jurors (typically not wanting to sort through a maze of technical evidence) will simply shrug their shoulders and say that the patent stands. If, on the other hand, the jurors are instructed that they are to determine the issue based on which way the preponderance of evidence tips, then they are to give no deference to the findings of the USPTO in upholding the patent but are to look at it fresh to decide whether the evidence shows that it is more likely than not that a patent is invalid. Thus, under current standards, trolls come into court heavily armed with law that says, in effect, uphold what the USPTO did unless you find a hellava reason not to. Microsoft, and the other tech companies, want this changed so that trolls have no built-in advantage when it comes to a litigated dispute over patent validity, i.e., they want a "level playing field" once the fight is on.
7. On the technical issue, patents laws are governed by statutes enacted by Congress but no existing statute requires that a clear-and-convincing standard be applied to this issue. The parties dispute the issue but Microsoft's position is that no such standard had been applied by federal courts (at least not with any consistency) before Congress created the Federal Circuit court to oversee patent disputes. Microsoft argues that the Federal Circuit has skewed patent litigation by arbitrarily making it more difficult to invalidate patents than Congress had intended. This was the same court, by the way, that had adopted the State Street test that led to a wild proliferation of business-method patents and that was struck down in Bilski. The Supreme Court is now being asked to bring a bit more sanity to the related area of standards for determining patent invalidity.
It is hard to say which way this one will go. The patent bar is in an uproar that issued patents might not be deemed presumptively valid when challenged but might be much more vulnerable to challenge going forward, and so too are the trolls. Pretty much everybody else favors reform, including most of the tech industry heavyweights. My own sense is that this one is going to tip toward Microsoft and that we will get some measure of reform here. This would be a significant and very practical step toward undercutting a good measure of the power currently held by the trolls.
Do you have any thoughts on SCOTUSblog's take on it, that it revolves around a question of whether the standard of review should depend on whether the USPTO considered a particular piece of evidence? --> http://www.scotusblog.com/2011/04/court-takes-up-standard-of...
Their take is that Microsoft is only asking for the standard to be lowered with regard to prior art that was not considered by the USPTO. Microsoft argues that the case for deference is greatly weakened if the USPTO never evaluated the specific prior art in question; but that deference should still be given w.r.t. anything that the USPTO considered.
IBM's amicus brief opposes that approach, because they argue it'll create a mess if the standard of review depends on details of a specific patent's administrative record, and because it will encourage patent filers to just dump huge reams of potential prior-art into the USPTO record, to make sure that anything that could possibly be found will count as having been already considered by the USPTO.
I think that a half-way approach would only create chaos and would satisfy no one. Its main appeal is that it would give the Court a middle ground by which it could say, consistent with general principles of administrative law, that the USPTO should be accorded great deference but not insofar as it did not in fact consider the evidence subsequently used to challenge its decision. That works logically but, as noted by IBM, would likely only complicate the issue beyond bounds as a practical matter.
Microsoft likely fashioned its petition along these lines owing to a dictum in KSR v. Teleflex that said as much and also to try to appeal to the incremental jurisprudential approach of the current Supreme Court (decide only what is absolutely necessary for a given case and leave it to future cases to do more). The irony of this is that Chief Justice Roberts, who seems to specialize in incremental jurisprudence, has recused himself from the case and will not participate in the decision.
I believe the half-way argument is weak and will not hold sway. If the Court goes for reform, there is no reason it should not go all the way on this issue. This is particularly true given that nothing in the statutory language limits the Court's power to set an appropriate standard. Unlike Bilski, where it faced a challenge to business method patents in a context where Congress had expressly said you could have them, there is nothing here that stands in the way of the Court's making a coherent ruling based entirely on what is appropriate for the case. I am hopeful, therefore, that this case will help bring some sanity to this troubled area of the law.
One of the amicus briefs urged that courts should give deference to the examiner's decision only as to prior art that had been discussed in writing by the patent examiner, thus providing a written record of reasoned decision-making that could be reviewed by a court. That brief relied on the Supreme Court's holding in the Zurko case [1] that the standard of review in the Administrative Procedure Act applies in appeals from decisions by the USPTO just as much as in other administrative appeals.
Footnote: The Zurko patent [2] was one of the early software patents, for a method for executing trusted commands in an untrusted environment. The lead inventor was Mary Ellen Zurko, aka "mez," who then worked for Digital Equipment and is now with IBM. (Disclosure: I drafted that patent.)
grellas, these analyses that you post here are a treasure. I always learn from them. Thank you for sharing your expertise in a way that we can understand.
[off topic] but this is why we should go back to be seeing karma points. The only reason why his exceptional comment stood out was the length.
It is hard to read every comment on every post. But some people post valid interesting links and quick comments and I am sure I am missing them because I can't zero in on them w/o seeing the upvotes
this is why we should go back to be seeing karma points
A lot of the super-upvoted comments aren't any better. Many get upvoted because they repeat some conventional view. I find these get in the way more than obviously bad ones do. They're more work to filter out.
I noticed I'm relying more on user names as a proxy for how good the comment probably is. It's lossy (a good comment can come from an unexpected place) but not that lossy (humans are relatively consistent), and it's fast. I wonder if the software could support this way of using the site. The obvious ways of doing so would unfortunately fragment the community.
Anyone who reads HN regularly soon learns to recognize grellas's username as a mark of a good-quality post on legal issues. (I write this as a a lawyer who is not currently in active legal practice. I learn things from his posts, and he helps me reexperience some of the intellectual excitement I had when I was first studying law.)
"Verbose" is not the same as "long." It means using many words when a few will do. Grellas's posts are long, but they are not verbose. Their length comes from the fact that they thoroughly cover subtle concepts. They have remarkable clarity, which is the opposite of being verbose.
In practice, this opens an avenue for jurors' ethical sense to come into play, especially regarding non-practicing entities; and likability/worthiness of the patent-holder and their business practices. Of course, legally, this is a strong argument against the change. Can't have community ethical standards messing up patent law!
Also: if more patents are held invalid, companies might apply for fewer, freeing up patent examiners to spend more time on each one (assuming their funding wasn't cut because of fewer applications...)
My law firm (which is arguing Microsoft v. i4i before the Supreme Court) is hosting an event on the morning of May 4 in Palo Alto to discuss i4i along with two other major patent cases before the Supreme Court this year. Both of the attorneys who are arguing the case will be there.
If you are interested in attending, get in touch with me.
Once again, reporter engages in static analysis to ignore a good solution. Article confidently states that they get so many inventions that a thorough review would cost too many billions for fees to support. But why isn't charging whatever a proper review actually costs a good option? Raise fees a bit, raise standards a lot, and this half a million each year volume problem goes away too.
I can't stand the idea that the patent office is so bad that we should only consider courtroom based solutions. Courtrooms are terrible too - way too much expense, too much uncertainty, and too large $s getting risked on what a jury decides or when a judge last had a snack break. They should have their place, but it shouldn't be the first line of defense or general solution for the problem.
surely raising the fee is just going to screw over anyone without corporate backing, and do nothing to the corporations who already can afford to file most of the spurious patents?
I think the problem lies in the "until you run into patent trolls" part. They wouldn't exist without their bad patents, after all, which come from the PTO.
I think there is a clear correlation between domain squatters and the cost to squat domains. You will see the same thing with patent trolls, they need something that is "reasonably obvious" but not in use at time of patent application. And the higher the cost the fewer such patents will exist covering smaller areas.
Currently, patents have worth well in excess of the application cost. Much of this is because patents are generally presumed valid - it's bloody hard to get a court to overturn one, for example. The article points out that this presumption is ill founded - patent examiners don't have time to do a thorough review - and suggests that the solution is to make it much easier to challenge them in court.
You want to talk about a situation where only those with money can make money? Make it easy to overturn a patent by hiring more lawyers. Cost of keeping a patent will skyrocket, value of obtaining a patent will plummet.
If you're going to have software patents, it seems much better for everyone to have strong patents by weeding out lousy patents before they are granted than by inviting constant multi million dollar legal battles.
Seems like a stopgap to actually fixing the patent problem though. This might help medium/large companies that are the victims of patent trolls, but small business/individuals would still have to deal with the realities of litigation and possible loss.
If one of the conceptual problems with a jury over-ruling a patent's validity is their lack of expertise, what if the jury in patent cases were composed of practitioners or experts in the field at question?
It mentioned in the article that it costs the patent office more money than what they charge for processing patent claims. Why is that? Why don't they just charge the full amount?
Today, you can file a patent for under $1,000(not including attorneys fees) depending on how many claims and drawings you have. If they charged the $10B they said it costs to review the number of applications they get now(around 500,000) your $1,000 becomes $20,000. At that price most independent inventors couldn't(or wouldn't) file. Remember that the entire purpose of the uspto is to encourage innovation and if it costs you a year's salary to get a patent on something that might not ever make you a dime then you're not going to be encouraged to innovate.
> Remember that the entire purpose of the uspto is to encourage innovation
While patents could in principle be reformed, in practise any reform is unlikely to work because people would game the system. The best way to encourage innovation would probably be to abolish patents altogether.
Why not just have an escalating fee system? Make it cheap for the first few submissions and increase to above the actual cost as the number of submissions for a single entity increases. (And put provisions in to avoid ownership by proxy submissions, or at least to make those approaches comparably expensive.)
1. This is a sleeper case (i4i v. Microsoft) that has drawn relatively little attention in the public's eye. In reality, the stakes associated with it are huge and the interest it has drawn from key players in the tech industry is commensurate with those stakes.
2. The reason it is not a particularly exciting case from a headline standpoint is that it deals with what appears to be a specialist technical issue of patent law, that is, what is the proper "standard of proof" to be applied when a patent is challenged as being invalid? Should it be a "clear and convincing" standard or a "preponderance of evidence" standard?
3. In fact, the practical effect of this case on patents will be far greater than that of, say, Bilski, which dealt with the question of what constitutes patentable subject matter. Bilski covered business method patents only. The i4i case affects basically every case pending in the courts in which the validity of a patent is being challenged.
4. Among those in the tech world, just about everybody who is anybody has weighed in with a "friend-of-the-court" (amicus) brief asking the Supreme Court to throw out the clear-and-convincing standard in favor of a preponderance standard. The parade includes Google, Apple, Facebook, Intuit, Yahoo, Intel, Dell, HP, and others. A group of 36 law professors specializing in IP have also asked that the standard be changed, as has EFF. A superbly informative summation of the amicus briefs seeking to undo the clear-and-convincing standard is found here: http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202472695453&.... A good discussion also appears here: http://www.patentlyo.com/patent/2010/09/challenging-the-clea....
5. By the way, the other side of the argument is well-articulated here: http://ipwatchdog.com/2011/03/13/supreme-court-patent-watch-....
6. So why is this so important and why do some companies (such as Apple) that frequently rely on patents to protect their competitive positions side with Microsoft in wanting to make it easier to find patents invalid? The simple answer: trolls. In essence, when a patent's validity is challenged and a jury is instructed to uphold it unless it finds "clear and convincing" evidence that it is not valid (owing to whatever ground, whether it be obviousness or existence of prior art or any other recognized ground for declaring a patent invalid), the challenge will almost certainly fail in the average case. The jury is basically told that the patent is presumed valid unless they can clearly find compelling evidence to invalidate. Since, in most cases, what is offered is conflicting evidence of varying types, jurors (typically not wanting to sort through a maze of technical evidence) will simply shrug their shoulders and say that the patent stands. If, on the other hand, the jurors are instructed that they are to determine the issue based on which way the preponderance of evidence tips, then they are to give no deference to the findings of the USPTO in upholding the patent but are to look at it fresh to decide whether the evidence shows that it is more likely than not that a patent is invalid. Thus, under current standards, trolls come into court heavily armed with law that says, in effect, uphold what the USPTO did unless you find a hellava reason not to. Microsoft, and the other tech companies, want this changed so that trolls have no built-in advantage when it comes to a litigated dispute over patent validity, i.e., they want a "level playing field" once the fight is on.
7. On the technical issue, patents laws are governed by statutes enacted by Congress but no existing statute requires that a clear-and-convincing standard be applied to this issue. The parties dispute the issue but Microsoft's position is that no such standard had been applied by federal courts (at least not with any consistency) before Congress created the Federal Circuit court to oversee patent disputes. Microsoft argues that the Federal Circuit has skewed patent litigation by arbitrarily making it more difficult to invalidate patents than Congress had intended. This was the same court, by the way, that had adopted the State Street test that led to a wild proliferation of business-method patents and that was struck down in Bilski. The Supreme Court is now being asked to bring a bit more sanity to the related area of standards for determining patent invalidity.
It is hard to say which way this one will go. The patent bar is in an uproar that issued patents might not be deemed presumptively valid when challenged but might be much more vulnerable to challenge going forward, and so too are the trolls. Pretty much everybody else favors reform, including most of the tech industry heavyweights. My own sense is that this one is going to tip toward Microsoft and that we will get some measure of reform here. This would be a significant and very practical step toward undercutting a good measure of the power currently held by the trolls.