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November 29, 2010

Lay That Burden Down

The black-robed toads who feel beholden to uphold the powers that be are taking it upon themselves to look at a more open season for patent killing. i4i squeezed a $290 million jury award from Microsoft for a feature in Word that few users knew existed, let alone use: customizing XML using metacodes (which, technically, is like herding cooties). The CAFC affirmed willful infringement, enhanced damages, permanent injunctive relief, and validity. Meanwhile, the patent office confirmed i4i's claims as valid over Microsoft-cited reexam prior art. The high court must scrutinize a system that is clearly broken: something is terribly wrong when some pip-squeak inventor or puny entity can extort money from mega-corporations raking in obscene cash flow, and have minion courts and bureaucrats let it slip by.

Microsoft's writ of certiorari, granted by the Supreme Court, asks that the burden of proof for invalidating a patent be lowered from the clear and convincing standard to a Mafia-esque "look who you are messing with" metric.

Not wanting to be caught flat-footed on the payola, Chief Justice Roberts has recused himself from this case, cryptically mumbling, "The law? What about my trust fund?!"

Owing to a long tradition of "guilty until proven innocent," criminals have to be convicted "beyond a reasonable doubt," making cops and district attorneys coordinate their lies and set a tight frame. By contrast, civil spats require "clear and convincing" evidence, which translates to "more likely than not": a preponderance of evidence that doesn't leave much to ponder.

The Federal Circuit has long required that a patent kill by invalidity be done convincingly clean, somewhere between preponderance and beyond a doubt: "substantially more likely than not."

A damning document is enough, but single-person testimony does not meet that standard. Microsoft has not challenged the need for corroborative evidence in the instance of testimony.

The question before SCOTUS is whether invalidity "must be proved by clear and convincing evidence." This is the same imbroglio that Microsoft hoisted in its loss to z4, which was withdrawn when the parties settled.

Companies with "4" in their names have been a patent scourge to Microsoft. Four is superstitiously associated with death in Japan, as the kanji for both "four" and "death" are pronounced "shi."

Substantively, Microsoft came up empty-handed trying to invalidate i4i's asserted 5,787,449. The best they could get is one guy testifying that '449 was pretty much like a product that i4i sold more than a year prior to filing for the patent, but maybe not with the inventive bits in. Microsoft is hoping to whip that thin gruel into a beefy stew of invalidity.

Will it make a difference? According to one academic study, probably not. As the Chinese say, "the fish stinks from the head." And vice versa.

Less crazed coverage: Professor Crouch at Patently-O.

Posted by Patent Hawk at November 29, 2010 2:40 PM | Prior Art

Comments


Oh shi sh!

Posted by: Oh shi sh! at November 29, 2010 5:59 PM

What your astute (black-robed toads), restrained (Mafia-esque), insightful (herding cooties) analysis misses is the interesting argument raised by MS: should a lower standard apply to patent validity with respect to prior art THAT WAS NOT CONSIDERED BY THE PTO?

While I may share your loathing of MS and your distrust of Mr. Roberts' merrry band of robed whackadoodlers, I would ask your more humble and objective side to consider whether this is not a reasonable question.

IMHO, the answer to said aboveforementioned question is YES, a different standard should apply.

As I have argued here and over at PaOb a number of times, the best patent reform measure Congress could possibly pass is to limit examination to only those references provided by the applicant. The examiner should not be doing any searching at all, and the PTO should not be charging a search fee.

The examination would be limited to, and the presumption of validity would attach to the patent, only with respect to the references disclosed by the applicant. There would be no presumption of validity with respect to any other reference. None. Zip. Nada. The courts in litigation would have a clean slate with respect to any PA reference the applicant did not disclose to the PTO. Applying such references by the court would require only the substantial evidence standard -- which is the standard used by the PTO initially.

This encourages applicants to do a very thorough search and it puts the penalty for a crappy search on the applicant. It also frees up the examiners' time so they can write more blog comments.

This plan is an approximation of what MS is trying to do -- apply different evidentiary standards for references that were reviewed by the PTO vs. references that were not.

So, what's the problem?

(Prediction: sans Roberts this will be a 4-4 split and the lower court's holding will prevail. Kennedy may become suicidal because he won't have the swing.)

Posted by: Babel Boy at November 30, 2010 9:17 AM

"So, what's the problem?"

The problem(s) are quite clear.

Let's start with the definition of "considered". I am quite sure that this verb is "considerably' weaker than you might imagine (yes, an examiner's poorly constructed search result list of 400,000 items would mean that each of those items was "considered".

On the flip side, if you want any type of meat on "considered", let's look at what an examiner is required to write in an allowance. "____" That's right - nothing. An examiner can fully allow an application with ZERO word about prior art. Even given any amount of art supplied by an applicant. If you don't like the first case of "considered", good luck squaring that with what an examiner is actually required to say. Lacking anything said by the examiner you are squarely back at the first paragraph.

Next, let's look at unintended consequences. As you mention that you have been at PaOb, I am sure that you have seen the postings on what would happen regarding those IDS filings if your view of "only what the examiner 'considered' " passes from the Supremes. Especially given the Broadest Reasonable Interpretation standard, combined with the Obzilla 103 PHOSITA, every single reference even remotely (to use the typical examiner's standard of Reasonable) related would be submitted on an IDS. The IDS lliterally would be hundreds, if not thousands of pages. Each and every time. Remember, an applicant submitting prior art on IDS's enjoy the multiple benefits of a) not stating that any type of search was actually done and b) not making any claims as to the relative patentability of the supplied art. ALL of that art is presented for the examiner to consider - ALL of that art is for the examiner to do his job with.

Also, "The examiner should not be doing any searching at all" - did you sleep through the entire Tafas episode? The Office by law must examine the application. It is the examiner's job - not the applicants. Do we really need to go over this again?

"encourages applicants to do a very thorough search" - You are living in a fool's paradise my friend. No such thoroughness (with its attendant cost) would be perfomred when the legally less risky and far, far easier massive data dump option is available.

Posted by: Pedantic Pete at November 30, 2010 11:59 AM

"did you sleep through the entire Tafas episode? The Office by law must examine the application."

I think he just said that the congress should change that in his opinion.

"You are living in a fool's paradise my friend. No such thoroughness (with its attendant cost) would be perfomred when the legally less risky and far, far easier massive data dump option is available."

So get rid of that option?

The solutions to your pathetic quibbles with what is facially a good idea are ridiculously easy to come up with.

If you're going to quibble, then the only thing to quibble about is that the DC lacks the expertise to properly analyse the art that would inevitably be dumped upon it by the defendant. And I don't know about whether that's all that meaningful or not. Oh and one thing that is certain to be a problem is that we tried a very similar "registration system" and just about everyone found it to be "thoroughly unacceptable", to quote them.

Posted by: 6000 at November 30, 2010 3:17 PM

6000

"Oh and one thing that is certain to be a problem is that we tried a very similar "registration system"

Well, this would not be a registration system by any means. The examiner would still examine the case, but only on the basis of art that is provided by applicant.

Basically, the system suggested is one in which the PTO is doing the applicant a favor, for a fee, of looking at the references the applicant has identified and providing an opinion as to whether those references disclose the claimed subject matter.

As to the court's ability to evaluate the art, it's what they do now. But they do it after the Markman, so the effort is considerably mitigated. In any event, it really comes down to the infringer's brief in the motion to dismiss and, if necessary, the experts' opinions. A lot more than the examiner has to go on. So there's no additional burden for the court.

Besides, I am not saying that the patent is invalid if non-IDS art is cited against it. I am saying the patent does not enjoy the presumption of validity with respect to that art -- nor should it. The court has to evaluate that art one way or the other -- the only difference I'm suggesting is how strong the presumption of validity is.

The presumption of validity now extends to every piece of art in the world even if the examiner only looked at one. That is idiocy.

Tafas is immaterial. Pedantic, being totally tone deaf, didn't understand my suggestion and clearly didn't see the part about it being effectuated by a change in the law. Not one of his better efforts.

Sure, without some sensible deterrent, applicants would just dump all 7.8 million patents in the IDS. I would suggest, for example, an excess IDS fee -- the first 50 IDS references as part of the filing fee. Then $20 per reference after that and $20 more per reference for clearly redundant or clearly immaterial references. OED also has some thumb screws for practitioners who pull dumb tricks.

50 IDS references is plenty of room to find potential art that could be cited against one in court. In any field.

Posted by: Babel Boy at November 30, 2010 4:20 PM

"50 IDS references is plenty of room to find potential art that could be cited against one in court. In any field. "

I don't know man, I've seen some pretty crowded areas in my art.

Still, I'd be all for it if not for the fact that it would be quickly found as unacceptable as registration. Some applicants wouldn't submit any art, and they'd just practically register.

Besides that, applicants, and their attendant searchers, seem all too often to be completely incompetent at searching. Seriously, given the search results that you can tell came from some searcher somewhere, it is a wonder to me that search firms ever get repeat business. They're at least as bad, and usually much worse, than any examiner searching.

That said I'm sure there are good searchers, somewhere. Patent Hawk might be different, just as nod to the host.

Posted by: 6000 at November 30, 2010 5:30 PM

"The solutions to your pathetic quibbles with what is facially a good idea are ridiculously easy to come up with."

6000 - that's why Congress hasn't been able to do it five years running, right?


Babel,

You are correct - I missed the change in law part. Must be because I see this so many times that the impracticability of it all blinds me. As to a fee per basis - come play the King's game - this is just not fair to the largest sector of jobs producers. As for labeling such a "dumb trick", well that's just more of you putting your head in the sand because you love your idea.

It would take such a major change in the law to have applicants examine their own applications (which is the equivalent of your system), that the idea simply bears no semblance to reality. It just won't happen. Here you may find some materiality in Tafas, if only as an indicator of how hated those Office plans were. What you suggest is easily on par with those plans for the level of hatred they would generate.

Good luck with that.

Posted by: Pedantic Pete at November 30, 2010 6:26 PM

"50 IDS references is plenty of room to find potential art that could be cited against one in court. In any field."

Any drawbacks then to the imposition of a 50 reference limit? (And if so, should such a limit [with the same references; or could others be substituted?] apply to conts & CIPs?

Posted by: 50 References? at November 30, 2010 7:22 PM

"Any drawbacks then to the imposition of a 50 reference limit?"

For everyone, forever and ever?

Or just against the patentee?

Yeah, that sounds like a bargain, doesn't it?

Let me guess, you and Babel are signed up for the same sales class, right?

Posted by: Pedantic Pete at November 30, 2010 9:19 PM

I'm so glad you kids love the never-ending game of "game the system." Everybody's playing it. It's the fantasy role-playing game that only hurts when reality hits the fan.

From a "this makes sense" perspective, Microsoft's ploy is so in the weeds. Look who's standing in the weeds with them, having diligently filed their amici briefs: mega-corporation USA. Money talks, and the Supreme Court listens.

Then again, Bilski turned out surprisingly OK, wheedling out of the BIG courtroom. Let's console ourselves with the thought that prudence may prevail in this next episode of Supreme jurisprudence. After all, what would the new burden of proof be: "shoot it if it moves"?! (Isn't that the Dick Cheney standard for quail hunting and lawyer blasting? Hmmm... I feel an amicus coming on...)

Posted by: Patent Hawk at November 30, 2010 10:16 PM

Does anybody out there have experience of oppositions at the EPO? My experience is as follows:

1. It is never easy to find art that is as good as what the EPO Examiners already found and examined prior to issue. Usually, one finds nothing better.

2. It is never easy to persuade a tribunal in Europe to revoke a claim issued by the EPO, on art considered by the EPO (even though the petitioner for revocation has only to get over the "balance of probability").

How about the USPTO sets up a fee system in which Applicants pay pro rata, per reference listed on their IDS. The more they pay, the more comfort they derive. As the man once said " You pays your money and you takes your choice".

Posted by: MaxDrei at December 1, 2010 1:04 AM

6000:

"Still, I'd be all for it if not for the fact that it would be quickly found as unacceptable as registration. Some applicants wouldn't submit any art, and they'd just practically register."

You are absolutely right about some applicants providing no art, but a patent that lists no art would have absolutely no presumption of validity -- zero.

No rational company would wade into the market place with such a worthless piece of paper. If I am a competitor, all I need is a single anticipating reference and I can infringe to my heart's desire knowing that if I am sued, the patent is road-kill and I don't have to overcome a presumption of validity. If I don't want to wait to be sued, I file for a re-examination.


6000:
"Besides that, applicants, and their attendant searchers, seem all too often to be completely incompetent at searching. . ."

My experience has been that the quality of professional search services I have commissioned for my clients is much higher than the quality of the PTO searches my client pays for. If I had to choose between a private search and a PTO search as the basis of my patent protection -- private, no question.

Most private searchers are, after all, ex-examiners. Some are ex-examiners because they are smart enough to make a better living on the "outside". Some are ex-examiners who got flushed by the PTO. I believe your comments relate to the later; mine to the former.

Pete:
"It would take such a major change in the law to have applicants examine their own applications (which is the equivalent of your system), that the idea simply bears no semblance to reality. It just won't happen."

You are still missing the point. The applicant wouldn't be doing any examination. The PTO would examine the application based on the art the applicant provides. The part you are missing is that there is a distinction between "examination" and "searching." We do, after all, pay the PTO separate fees for those services.

This will never happen, you say. You know, in the present environment you are absolutely correct.

But the patent professionals in this county could make anything happen they want, if they had any balls, or, more to the point, if they had an organization with any balls.

Unfortunately, the only organization with any clout in the patent world is POPA and it has been screwing applicants and patent professionals in behalf of examiners for decades.

Posted by: Babel Boy at December 1, 2010 9:16 AM

You are absolutely right about some applicants providing no art, but a patent that lists no art would have absolutely no presumption of validity -- zero.

You can't have a patent without a presumption of validity, because that would require the patentee to prove his patent valid in court - an impossible task. The "best" you can do is a patent with no heightened standard of proof for art-based invalidity, which I think is what you meant.

No rational company would wade into the market place with such a worthless piece of paper. If I am a competitor, all I need is a single anticipating reference and I can infringe to my heart's desire knowing that if I am sued, the patent is road-kill and I don't have to overcome a presumption of validity.

But it would still cost the infringer, say, $5 million to invalidate the patent in court based on that reference. Same as today. Now, would you like to license my unexamined patent for the low, low price of $4 million?

The real problem here is the high cost of litigation, which makes it a lousy way to sort things out. Sure, re-exam is an option, but what if you don't trust examiners to do the job properly (they presumably got it wrong the first time) and you'd rather have a judge?

Posted by: IANAE at December 1, 2010 9:37 AM

"We do, after all, pay the PTO separate fees for those services."

That makes me laugh - now who is being pedantic? That distinction is meaningless gloss on the overarching legal concept of examination (you may recognize that this "examination" includes all the activities of the Office from submittal to issuance of final disposal).

"This will never happen, you say. You know, in the present environment you are absolutely correct. But the patent professionals in this county could make anything happen they want, if they had any balls, or, more to the point, if they had an organization with any balls."

And you now miss for the second time the viable reference to Tafas. Simply put, the patent professionals would not want this to happen, as witness the response from the very same patent professionals in Tafas. It is simply not a matter of the ball size. You seem to be in a very small minority with this pet idea of yours. Time to let it die.

Posted by: Pedantic Pete at December 1, 2010 9:56 AM

The fact is that even SCOTUS can’t do away with the presumption of validity (much as some of those Justices might like to)-that’s written in stone in 35 USC 282. Instead, SCOTUS is being asked to consider “whether the [Federa Circuit] erred in holding that Microsoft’s invalidity defense must be proved by clear and convincing evidence.”

But contrary to how Microsoft presents the question as “straightforward” it isn’t. What complicates that question is that the invalidity defense is based on an alleged “on sale” bar for which the testimony presented to the jury (another complication) is conflicting. Here’s a key paragraph from the Federal Circuit decision on that point:

"At trial, the jury heard conflicting testimony on whether S4 met the “metacode map” limitation [of the claims.} In evaluating the evidence, the jury was free to disbelieve Microsoft’s expert, who relied on the S4 user manual, and credit i4i’s expert, who opined that it was impossible to know whether the claim limitation was met without looking at S4’s source code. Although the absence of the source code is not Microsoft’s fault, the burden was still on Microsoft to show by clear and convincing evidence that S4 embodied all of the claim limitations. The jury’s finding of validity was supported by the testimony of the inventors (Vulpe and Owens), as well as their faxes to an attorney regarding the patent application.”

So there you have it. What’s ironic is that even if the standard of validity is changed to “preponderance of the evidence” in this situation, that may not help Microsoft win its alleged “on sale” bar defense. Given that the testimony on this issue is conflicting, Microsoft may still win the “battle” with SCOTUS but lose the “war” when this case is returned to the courts below, including the Federal Circuit. Also, and an issue not mentioned by those commenting on Microsoft’s cert petition is that if Microsoft wins on the alleged “on sale” bar defense because of a different standard of validity, i4i may face a significant “inequitable conduct” problem because this alleged “on sale” bar situation is of its own making (see quote from Federal Circuit decision above), and from what I can tell was never presented to the USPTO. Accordingly, the stakes (including who pays whose attorney fees) goes even beyond i4i’s potential loss of a significant damage award.

I’m also changing my previous view about the standard for validity changing depending on whether the “evidence” (e.g., prior art, on sale bar, etc.) had or had not been considered by the USPTO. My reason for changing my view is the astute point made by others that this will create a significant incentive to dump as many references as possible on the USPTO to retain the higher standard of validity. That will simply create a new problem, namely whether such “dumping” of references can support an allegation of “inequitable conduct,” even though the changing standard of validity makes such “dumping” attractive. Put differently, changing the standard of validity from “clear and convincing” to “preponderance of the evidence” is the lesser of the two potential evils here in my view.

Given that the question before SCOTUS is far more complex than Microsoft makes it out to be, I'm not confident that SCOTUS will come out with anything other than another “muddled” ruling. The issues here are simply too subtle for SCOTUS to grasp with its “blunderbuss” approach to patent law. In fact, I predict that SCOTUS will come out with an opinion as fragmented and as perplexing as the one in Bilski. We can only hope SCOTUS won’t make a mess of it in this case, but after a string of “mudlled” decisions starting with KSR International and ending with Bilski, I’ve pretty much given up hope.

Posted by: EG at December 2, 2010 7:20 AM

It seems to me that a SCOTUS ruling for Microsoft in this case would likely have numerous significant repercussions for patent litigation -- for instance, (1) it could leave many more patent holders vulnerable to harassment by excessive litigation from large corporations; (2) it would probably serve as the basis for invalidating many patents post-issuance; and (3) it could give the FTC more leverage in ending reverse-payment settlement agreements. I think this is a case in which the Court should very seriously and carefully the policy basis of the current law and the consequences if it is overturned.

Posted by: patent litigation at December 6, 2010 3:20 PM

Hawk,

Why are you so full of disdain for everybody on this earth? malice towards one and all.

Posted by: Raju at December 10, 2010 10:45 PM

Raju,

Your conclusion is black-and-white, a negative projection that states nothing of me, but much about you.

Both the Indic and Western traditions of thought have long valued the Socratic, or dialectical, method, as seeking the truth through negation of false hypothesis.

Blog writing is not obviously a dialogue. But in a way it can be. To provoke thought in a reader, to challenge point of view, creates a facsimile of dialog between the writer and reader.

The raucous comments that populate this blog continue that spirit. I have encouraged such, with the tempering not to attack the person, but stick to the argument/observation made. 6000, a regular reader and commenter, has made numerous valuable contributions to this blog. His statements and point of view are often derided, but the man is worth reading, and often makes very good points. Same with MaxDrei. The same could be said for others who put themselves out in vigorous discussion. I thank them all.

I have learned much in my time of blogging, and have enjoyed many who have contributed. Some of my most valuable lessons have come from those who have a much different view than the one I held before my view shifted, by learning from those who held that different view. My own thoughts have been provoked.

Some of my sidebar quotes indicate my admiration for colorful discourse, which I do try to fill my blog with as much as possible: with silly puns, wit, and, yes, sarcasm, as best I can. I try to paint situations and institutions in a pithy, colorful black-and-white, as I did in this entry, to provoke thought on what is really going on, what the dynamic is behind the static events.

If my writing offends your delicate sensibilities, and causes you to disrespect me by insult, perhaps you should look inside yourself to ask why. If you come up with some answers, then perhaps you may appreciate that I am doing the job that I set out to do: inform, entertain, and provoke thought and discussion.

Enlightenment is not a state of being so much as a dynamic of constant challenge to right action. Right action is not as simple as "I'm okay, you're okay." Getting to the next level of understanding is seldom friction-free; instead, mental friction leading to a frisson of comprehension. ("Right action" is a term that Mahareshi Mahesh Yogi used to employ.)

Thanks for reading. And commenting.

Posted by: Patent Hawk at December 11, 2010 12:11 PM

Nice analysis, Hawk, but you left out the fact that part of the reason for MS's loss on appeal was b/c their trial counsel failed to preserve some issues for appeal. Since MS can afford to hire the best, not amateurs who might fail to preserve a grounds for appeal, this makes me wonder if MS deliberately instructed its trial counsel to tank those arguments (which would have given the CAFC room to reduce the ridiculously large damage award for, as you aptly put it, "herding cooties") so that it would be able to tee this up before the supremes on the big question of standard of proof.

Oh, and I'm sure Oliver Stone's portrayal of the JFK assassination was factually accurate in every way.

Posted by: 6's mom at December 12, 2010 4:10 AM

Thanks, Hawk.

Good points all for why a blog done well; as here; is actually more valuable than one would perhaps have initially thought.

Posted by: Steve M at December 12, 2010 9:59 AM