Philip Brooks' Patent Infringement Updates

Business Method Patents on Supreme Court Docket

From BPCouncil:

Some 30 years after it last looked into the subject, the Supreme Court decided to weigh in on the burning issue of software and business method patentability by granting the certiorari petition and hearing the appeal filed by inventors Bernard Bilski and Rand Warsaw. The two requested the Court to reverse the Federal Circuit’s decision in re Bilski (now known as Bilski vs. Doll), which changed the test for determining patentable subject matter in the US. While some experts are surprised at this development – saying that the Circuit’s ruling closely followed Supreme Court precedent – others saw it coming. According to Eileen McDermott, in her article for managingip.com, this latter group contends that the issues are too critical, the dollars involved too large, and the implications on the US economy (where many inventions are tied to the computer) just cannot be ignored.

Inventors Bilski and Warsaw had sought to patent a method of hedging risks in the sale of commodities, that is, a way to buy or sell energy at a fixed price based on the expected weather for a season. The application was denied by the US Patent and Trademark Office (USPTO), the case went to the US Court of Appeals for the Federal Circuit. In a 9-3 ruling that basically narrowed the scope of business processes eligible for patent protection, the Court of Appeals upheld the rejection, ruling that business method patents applied only to those tied to a particular machine or apparatus, or processes that transformed an item from one state to another. By ruling as such, the appeals court actually overturned its own 1998 decision that patents should protect business methods that had a “useful, concrete and tangible result.”

Now, the current Bilski petition to the Supreme Court asks the Court to consider whether the Federal Circuit erred in its ruling under US law and whether its machine or transformation test contradicts Congressional intent that patents protect methods of conducting business in 35 U.S.C. Section 273.

Read the full article here.

Toronto Firm Wins in Suit Against Microsoft

The following is excerpted from a May 20, 2009 article by Simon Avery appearing at the Globe and Mail:

A small technology company in Toronto has won a Texas jury verdict ordering Microsoft Corp. to pay it $200-million (U.S.) for willful patent infringement.

Privately-held i4i Inc. said that several years ago it approached the world's largest software company with a breakthrough product in data processing, only to be spurned and to see its technology show up later in versions of Microsoft Word.

“It's a big win in terms of vindication. The money's nice, but the vindication is more important,” said Bill Cox, a member of i4i's board of directors and former president of the company.

I4i sued Microsoft in March 2007, claiming the Redmond, Wash., company had infringed on a patent awarded in 1998 for manipulating complex data in electronic documents.

Douglas Cawley, a lawyer for i4i, said Wednesday that e-mails presented during the six-day trial showed that Microsoft was aware of the firm's technology and sought to make it obsolete by including it in its own word processing software.

I4i will now seek an injunction preventing Microsoft from selling those products, Microsoft Word 2003 and 2007. It will also ask the judge for enhanced damages, Mr. Cawley said.

Because the jury found Microsoft had willfully infringed the technology, the judge is allowed to increase a jury award by up to three times the value.

Read the full article here.

What's Happening to United States Patents?

The following is excerpted from an article by Alan G. Towner in Pietragallo Gordon Alfano Bosick & Raspanti, LLP's Spring 2009 newsletter:

The strength of U.S. patents has been called into question recently. In the 1980s and 1990s, the value of patents was considered to be very high, due in large part to the establishment in 1982 of the Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over patent appeals from all of the U.S. district courts.

Before the Federal Circuit was established, there was some degree of forum shopping in patent cases – some circuits were considered to be “pro patent,” while one was even known as the graveyard of patents. As it turned out, the Federal Circuit fell into the “pro patent” camp and gained a reputation as upholding the validity of patents.

However, the tide has now begun to turn. In the past few years, certain types of patents and patent owners have come under increased scrutiny. The pejorative name “Patent Troll” was coined to describe patent owners who are not in business themselves, but rather seek only to obtain patents and license their patents to others for money.

High tech companies such as those in the software and electronics industries were particularly hard hit by Patent Trolls. Although the label “Patent Troll” has been largely replaced today with the less inflammatory name “Non-Practicing Entity,” there remains a strong sentiment in many industries that patent rights should be scaled back.

Read here Mr. Towner's discussion of the following cases:

1. eBay v.MercExchange;
2. In re Bilski; and
3. KSR International v. Teleflex.

Software Patents After Bilski

Managing IP, in association with Lexis Nexis, will host a free web seminar on April 2 at 11 am EST, examining the questions posed by the October 2008 US Federal Circuit decision in In re Bilski.

The webcast participants will include Duane R. Valz of Yahoo!, Eric E. Bensen of Hofstra University School of Law and David Heckadon of Gordon & Rees.  The panelists will dissect what the new test means for the software industry, via in-depth analysis of some of the first USPTO Board of Patent Appeals and Interferences decisions to apply Bilski.  They will also provide their assessments of the state of software patentability six months after the decision and consider alternative methods of protecting software.

Register here.

And Now for Something Completely Different - Detecting Software Copyright Infringement

I was contacted recently by Bob Zeidman, President of SAFE Corporation. They offer a product called CodeSuite®, which detects software copyright infringement.  While this might seem a little off topic for a patent infringement blog, please hear me out.

According to Mr. Zeidman, "SAFE Corporation is a pioneer in providing software and services for discovering intellectual property theft, measuring software IP, and comparing software source code and object code. CodeSuite® has been used by law firms for IP litigation cases around the world. CodeSuite has also been used by tax attorneys to track changes through generations of programs for accurate IP valuations."

I have worked on a few patent infringement cases that involved software (as a Consulting Expert and as an Investigator).  In those that reached the discovery phase and its related access to source code, we needed to identify technical experts with experience with the specific programming languages involved.  They then needed to perform very detailed and time consuming analysis of the code and how it compared to the claims of the patents.  I have not worked with CodeSuite before, but perhaps it is worth a look on the next software case I am involved with.

"You can use CodeSuite for free on any code where the total of all files being examined is less than 1 megabyte. For larger jobs S.A.F.E. can run CodeSuite on your code at our secure facility. We can also run your jobs on our CodeGrid distributed computing platform. We will provide you with the detailed, raw CodeSuite output, and an in-depth expert report."

If you have used CodeSuite before, share your comments here with other readers.  Learn more about the product here.

Peer-to-patent Increases Prior Art Submissions

Eklavya Gupte reporting on June 23, 2008, from London for Managing Intellectual Property writes, "[t]he USPTO's peer-to-patent project has led to a big increase in prior art submissions but has failed to bring in fresh patent applications in its first year, according to a report.  The pilot project began on June 15 last year and was designed to help US patent examiners to assess applications for software patents by encouraging the public to submit relevant prior art."

Read the complete article here.

Barracuda Networks Enlists Open Source Community In Trend Micro Patent Fight

The following is excerpted from Thomas Claburn's February 6, 2008 article at InformationWeek:

Barracuda Networks, a maker of e-mail and Web security hardware, has sent out a distress call to the open source community to save it from patent litigation at the hands of Trend Micro, a competing security company. On Tuesday it asked for help from anyone who can provide information that can invalidate Trend Micro's patent on gateway antivirus scanning.

Barracuda Networks has framed the dispute as an attack not only on itself but on the open source community and the free Clam AntiVirus software by "commercial patent holders attempting to unjustly hinder the free and open source community," as Dean Drako, president and CEO of Barracuda Networks, put it in a statement issued on Tuesday.

The patent in question, U.S. Patent No. 5,623,600, was filed in 1995. Fortinet, another security hardware vendor, was accused of violating the patent in 2004 and settled with Trend Micro in early 2006. Sweeny from Trend Micro confirmed that both Symantec (NSDQ: SYMC) and McAfee have licensed the patent as well.

"They're accusing us of importing open source software," said Drako. "How can you accuse someone of importing open source software? It's written everywhere." Nonetheless, Trend Micro appears to be doing just that it. If it prevails, Drako predicts trouble for companies that rely on open source software. "If Trend Micro is successful in claiming that we import Clam AV, and therefore that the ITC is the appropriate court, I could go claim that Linux is imported by IBM (NYSE: IBM) ... I could start suing them in the ITC. It could reinvent how patent litigation is done for open source software. It's a pretty bold move."

Read the full article here.

Accenture Files Patent Suit Against Guidewire

Anthony O'Donnell reporting yesterday, December 19, 2007, for Insurance & Technology writes:

Yesterday afternoon Accenture filed a lawsuit alleging that San Mateo-based Guidewire Software, a rival in the insurance claims software market, has infringed the U.S. patent protecting the Accenture Claim Components solution and has misappropriated trade secrets related to the design, coding and implementation of the Accenture software. In a preliminary response issued late last night, Guidewire denied the allegations and has followed up with further statements refuting the charges made by Accenture.

An Accenture statement referred to the company's belief that "Guidewire willfully and deliberately developed, manufactured, used and sold ... computer software and services used for insurance claims management that are covered by Accenture U.S. Patent 7,013, 284." Accenture also claims that Guidewire "willfully and maliciously obtained Accenture trade secrets without authorization" as part of an ongoing effort to compete against Accenture in the claims software market.

Accenture's allegations are based on what partner John Del Santo characterizes as good reason to believe that Guidewire had access to Accenture's confidential information. "We carefully compared our U.S. patent to the information available about the Guidewire system and concluded that they not only infringed the patent but that they must have gotten access to our trade secrets at a client somewhere," Del Santo says. "We believe that their product development trajectory was just too fast to result in the kind of product that they have, which looks fairly similar to ours. From our view that's too much of a coincidence, so there has to be a trade secret violation here, in our opinion."

Will this survive a Rule 11 challenge?

Intellectual property suits have been common in the software industry as a whole but not in the insurance software market, according to Light. "This lawsuit is a sign that there is a new front in the intellectual property wars: software that makes insurance companies better at executing their core functions," he comments.

From an industry perspective the Accenture/Guidewire suit is significant for several reasons, according to John MacPete, a patent litigator at Locke Lord Bissel & Liddell LLP (Atlanta). "First, I think it's a notice to the industry that they need to look at their software to determine whether they should have infringement concerns about the 284 patent or, frankly, any other patents that may be out there that are similar in nature to the 284," he comments. "Second, I think it's a notice to companies that either have licensed software or are in the process of licensing software in the insurance space to carefully examine or negotiate for broad non-infringement representations and indemnity language in their contract for third party infringement claims from their software providers."

Read the full article here.

Your Design Is Infringing On My Patent

Paul Marshall's article titled, "Your Design Is Infringing On My Patent: The Case Against User Interface and Interaction Model Patents and Intellectual Property" appears at UXmatters.  UX means "user experience."  Mr. Marshall writes:

The current US patent system—in combination with the litigious nature of many high-tech companies—make it likely that, somewhere down the road, something you design might incur the wrath of a patent troll.

The sad fact is that companies often file for and the US government actually grants patents for user interface and interaction design “innovations” that are either strikingly obvious or have appeared before in other systems—that is, when prior art exists, as someone in the field of intellectual property would say. This means, as user experience practitioners, we are at risk of litigation every time we design an application. Each time we fire up Visio or Photoshop, create a new design, then put it out into the world, there’s a good chance we’re infringing on someone’s patent.

In their groundbreaking 1993 shareware e-book “Task-Centered User Interface Design,” Lewis and Rieman provided some guidelines for designers to consider when deciding how to meet users’ needs by providing user interface and interaction elements. They grouped their recommendations into four categories labeled “things you certainly can copy (unless the rights have been sold),” “things you probably can copy,” “things you probably can’t copy,” and “things you certainly cannot copy (unless you get permission).” What’s interesting are the things they cited as probably safe to copy:

• Sequences or arrangements of menu items, commands, screens, and so on—You can copy their order if, in the original application, the designer clearly ordered them to improve their usability. For example, if the order were alphabetical or most-commonly-used-item first, or if there were only one way or a very few other ways items could be arranged.
• Obvious icons, ideas, commands, menu items, or words—You can copy words or graphic images when they are such obvious choices for the functions they represent that usability would be reduced if you used other words or images. For example, using the word print for printing or an icon depicting a mouse device that lets users select mouse options.

While these guidelines have been extremely useful to practitioners over the past dozen or so years, I fear that those items I’ve cited above likely now belong in the “things you probably can’t copy” category. The USPTO has issued too many overly broad and obvious patents on user interface designs for me to feel confident following Lewis and Rieman’s guidance anymore.

Read the full article here.

Open Source Developers Must Chart Clear Defense in the Patent Wars

Dean Drako, co-founder, president and CEO of Barracuda Networks, wrote on November 2, 2007 at LinuxWorld:

The United States patent and legal system has turned into a battlefield where companies and technology developers can be attacked. Open source and free software developers have historically ignored this secondary battlefield, focusing instead on the primary battlefield of development and proliferation of their project. This omission leaves open source projects and individual developers vulnerable to patent infringement lawsuits. By creating its own defensive patent portfolio as commercial companies do, the open source community can arm itself for this battle.

...the development of prior art in the open source community is a tremendously powerful tool, and it is crucial that source code repositories with comments and details be maintained. However, although such prior art can be successfully used to invalidate patents, it still takes money to mount the legal defense. In the commercial software environment the only really good defense against patents is to develop your own patent portfolio, as it is the threat of mutual self destruction that keeps most patent lawsuits at bay.

There are primarily two sources of patent attacks: 1) Competitors suing to obtain royalties or stop competition, and 2) Patent trolls suing to obtain money. The patent troll can come in the form of a company that has decided to augment its business with patent licensing or in the more traditional form of an entity whose primary business is patent suits and licensing for profit. The open source and free software communities' biggest threats are the lawsuits from competitors aiming to stop the proliferation of open source software. Patent trolls are typically less interested in open source developers and projects, because only minimal amounts of money are available given the low revenue of most open source projects.

Competitors to open source projects, however, may be very interested in stopping or hindering the development and adoption of free or open source software. In addition to suing companies utilizing open source software, it is not inconceivable that an individual developer might inadvertently infringe a patent, widely distribute the code on the Internet, and ultimately be held personally liable for tremendous damages by the patent owner. Such a tactic might be viewed as a strong deterrent to continued free or open source development.

Though filing patents may seem counter to the mindset of free and open software, the open source community can model what many commercial companies have learned is a necessary task and develop its own defensive patent portfolio. If individual open source developers begin to patent their inventions, and if these patents are assigned to a nonprofit institution with an appropriate charter, the broader open source community could draw from this patent pool to create an arsenal for legal battles. This defensive patent portfolio would be an effective deterrent, creating a cold war truce.

Read the full article here.