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March 10, 2009

Jaw

The usual suspects headed to the Hill today to jaw in the Senate about patent reform, including representatives from corporations, lobbyists, and academic stuntman Mark Lemley. The patter was as expected. California Senator Dianne Feinstein put the writing on the wall about getting to a passable bill, especially over the highly contentious damages issue: "High tech seems to feel that they're going to get whatever they want out of this bill. I'm not going to vote for a bill unless there is reconciliation between the various interests."

"Patent troll" has morphed into a more politically correct "Non-Practicing Entity" (NPE). NPE essentially means individual inventor or small company, because those who refer to NPE with some degree of hellfire and damnation don't bother to mention that corporations don't practice many of their patented inventions, but nonetheless sue when the mood strikes. To some degree, almost every patent holder is an NPE.

In other words, NPE is a bullshit distinction for corporate propagandists and their toadys, who wish to loft patents further into the stratosphere, to keep the patent game as "the sport of kings," to price patent enforcement beyond the reach of individual inventors. In today's hearings, that group was represented by IBM and Micron Technology.

Cut-rate CompTIA, the Computing Technology Industry Association, claiming to represent small computer services businesses, decried as "obvious that the astronomical cost of litigation is disastrous for many small U.S. businesses." Their shtick was "improving the federal adjudication of patent disputes." By that they meant making patent litigation cheaper. So they support the proposed legislation, because none of their crowd are inventive.

Whining to win the day, FotoTime brought in the violins and cried in their beer over being successfully sued by competitor FotoMedia.

The anti-patent crowd always disingenuously couches its stance in pabulum. As IBM put it, having "the U.S. patent system to keep pace with and respond to changes in the nature of innovation." If anything, innovation has been significant in software in recent decades, an area the courts have left quite unsettled, and which so-called "High Tech" would like rather unprotected by patents. So, "keeping pace" to IBM means gutting patent protection, except for those with very deep pockets.

Representing a more equitable side of patent sanity in today's hearing was Johnson & Johnson, on behalf of the Coalition for 21st Century Patent Reform, and Tessera. Tessera's written statement was particularly cogent. J&J wasn't much longer page-wise, but it sure seemed a tome. Writing by lawyer committee will do that every time.

The Intellectual Property Owners (IPO) Association, which does not represent the interests of intellectual property owners, but has in its membership both sides of the fence in this debate, completely ignored the damages apportionment issue, and whittled at the edges of issues for which legislation is unneeded, such as willfulness, where the bar is already set to a high standard ("objectively reckless"). Useless, if politically correct.

Mark Lemley of Stanford Law School:

There is nothing inherently wrong with either the growth in patent lawsuits or in patent enforcement by non-practicing entities. But a number of patent rules have given those plaintiffs unfair advantages in litigation, allowing them to enforce dubious patents in favorable jurisdictions, and to use the rules of patent remedies to obtain more money than their inventions were actually worth. Many of those problems resulted from troublesome judicial interpretations of the Patent Act, rather than from the Act itself.

Lemley referred to Bilski as "potentially worrisome." The man has a knack for understatement.

However one may agree or disagree with Lemley, he has done his homework, and his stated positions are logical, if springing from flawed assumptions. Beneath the armor is a straw man.

Lemley's flawed assumption with damages is that the current damages regime is insufficient in consideration of what constitutes reasonable royalty. Lemley harps on an "entire market value rule" which does not exist. That makes Lemley's arguments, likely Lemley himself, academic, i.e., as the dictionary defines the word, "without practical or useful significance."

The 15 time-tested Georgia-Pacific factors provide a basis for reasoned argument by both plaintiff and defendant, particular to the circumstances, on a case-by-case basis. Here's how Georgia-Pacific factor 11 trashes Lemley's trash talk about an "entire market value rule":

11. The extent to which the infringer has made use of the invention; and any evidence probative of the value of that use.

Here's a webcast copy of today's Senate hearing. [This review based upon written statements. I can't bear to listen to them drone on.]

If you're having trouble falling asleep, Peter Zura's has all the links on today's hearing. Alas, Peter uses MediaFire for download, which is a spam page spittle provider as part of its download service. We all have to pay the rent, but MediaFire does so with no class whatsoever.

Posted by Patent Hawk at March 10, 2009 10:30 PM | The Patent System

Comments

I have a suggestion for making this "damage" provision palatable: codify the 15 Georgia-Pacific factors and be done with it. Georgia-Pacific recognizes that each damage case is different and unique, and may require application of different sets of these factors. Also, you won't have as much difficulty hitting equilibrium in the case law as these factors already have quite bit of case law to provide guidance on these factors, and how to use them. By contrast, the proposed damages provision, being completely new, will require much longer to reach that equilibrium. I see no point in "reinventing" the standard where there's a good one already in place in the case law; codifying that standard will simply confirm that.

Posted by: EG at March 11, 2009 5:23 AM

EG,
You are missing the whole point of patent 'reform.' The point of patent reform is NOT to improve the patent system. The point of patent reform is to save M$/Google/Ci$co a few bucks (the US economy be damned! Enforcement of IP rights in China be damned!) and to make a few bucks (i.e. $10,000 per plate dinner) for Leahy and the other bought senators. It doesnt even save THAT much money for the IP Goliaths - Intel spends more $$$ on anti-trust litigation than on defending patent suits.

Posted by: anonymousAgent at March 11, 2009 5:40 AM

anonymousAgent has hit the nail on the head, unfortunately.

Posted by: NIPRA anonymous at March 11, 2009 6:23 AM

AnonymousAgent,

Easy, easy, I agree with you and am on your side. I find it completely oxymoronic to refer to this legislation "patent law reform." I would be happy if this new version of so-called "patent law reform" sank with no survivors.

I'm just trying to suggest that if Congress, in it's usual infinite unwisdom, wants to do something about damages, why don't you start with the leading case (Georgia-Pacific) which has been accepted by all courts (including the Federal Circuit) as setting forth the best test (or at least set of factors) for determining damages. The current damage provision proposed isn't even close. And if Congress wants to ignore the Georgia-Pacific factors, and put in this new nonsensical (and frankly nebulous) provision on damages, then by all means let this oxymoronic "patent law reform" legislation sink with no survivors.

Peace brother.

Posted by: EG at March 11, 2009 7:41 AM

It's funny to me how some people argue that large damages awards are a failure of the Georgia-Pacific factors themselves, as opposed to a failure of defense counsel to argue those factors.

Posted by: anonymous at March 11, 2009 9:57 AM

Wish you could say the same for secondary considerations.

Posted by: anonymouse at March 11, 2009 1:50 PM

Posted by: Lawrence B. Ebert at March 11, 2009 6:08 PM