Earlier this fall, I had the opportunity to do a webinar conversation with Bob Stoll, former Commissioner for Patents at the USPTO and current partner at Drinker Biddle in Washington, D.C. Our wide-ranging discussion lasted for just over one hour. You can access the entire recording, free, at Patent Eligibility in a Time of Patent Turmoil.
What follows is a bit of our conversation to whet your appetite.
STOLL: As someone very interested in the patent arena and getting the standards correct, I’ve been really worrying about things. I think we are in a very confusing state at the moment. I think that the courts are actually undermining patent eligibility in many different areas. And the irony seems to be, Gene, that the Supreme Court and now this Court of Appeals for the Federal Circuit seem to be not considering the fact that the United States is leading in many of these emerging technologies and specifically thinking about software and diagnostic methods and personalized medicine and gene sequences….
In a move reminiscent of the action taken earlier this year by NY Attorney General Eric T. Schneiderman, the Federal Trade Commission last week announced that MPHJ Technology Investments, LLC, agreed to settle Federal Trade Commission charges that they used deceptive sales claims and phony legal threats in letters that accused thousands of small businesses around the United States of patent infringement. As is typical for FTC settlements, the proposed consent order was published in the Federal Register and public comments have been solicited. The proposed consent order will be subject to public comment for 30 days, continuing through December 8, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form. Although the FTC will accept these comments, in my experience, when an enforcement settlement has gotten to this stage, we can expect the proposed settlement to become final.
The settlement with MPHJ is the first time the FTC has taken action using its consumer protection authority against a patent assertion entity (PAE). Perhaps most significantly, in the announcement of the settlement, the FTC acknowledged that patents promote innovation, which is a simple enough truth. Still given recent FTC inquiry into the industry, this statement from the Obama Administration could signal that the FTC will take actions only against outliers and not the bulk of the industry, which operates legitimately to enforce valid patents.
A 4G/LTE patent portfolio, which includes patents having priority filing dates all the way back to April 2001, is currently for sale through ICAP Patent Brokerage. This news is of particular interest because it is not every day that you see standard essential patents hit the market, and in this case the patents cover a variety of carrier grade wireless technologies that are widely used within the industry.
The patent portfolio belongs to Raze Technologies, a research and development company founded in late 1999 with the purpose of developing a last mile access system that would allow service providers to offer both broadband data and high-quality, fully featured voice services to residential and small business customers. In August 2002, Raze suspended its development operations and focused its remaining resources on the prosecution of its patent portfolio. Over time, as most if not all of the other innovative start-ups in the space have gone the way of the dinosaur, Raze has managed to accumulate a foundationally important patent portfolio relating to standard-related innovations surrounding mobile network infrastructure technologies that relate to 4G/LTE, which is the next generation wireless standard.
The term “patent troll” conjures up all kinds of images and ideas, but what is a patent troll? Unfortunately, there is really no universally accepted definition of what a patent troll is, although if you are getting sued for patent infringement by a non-practicing entity, you probably think you are being sued by a patent troll.
My view has long been that companies that complain about patent trolls don’t really want them to go away. Patent trolls are extremely valuable to these big tech companies because they are an identifiable and unsympathetic villain, even if they cannot really be defined in any satisfying way. The image of a patent troll can be paraded about Capitol Hill whenever patent reform is being pushed, or even in front of the Supreme Court, which increasingly seems to be interested in taking them into consideration when reaching decisions, despite them not being involved in the case.
I personally hate the term patent troll, which may come as a shock to many because I use it all the time. I use it to attempt to crystalize the issue, because the term “patent troll” has over time become synonymous with “non-practicing entity,” and not all non-practicing entities are bad. In fact, many are good actors that diligently work against long odds to research and develop new technologies, treatments, drugs and therapies we all want.
The Federal Court of Australia issued a ruling recently that is directly opposite to the ruling rendered by the United States Supreme Court relative to gene patents. In Yvonne D’Arcy v. Myriad Genetics, Inc., the Federal Court of Australia ruled that Myriad’s claims to isolated DNA are patentable under the laws of Australia. That is the ruling the U.S. Supreme Court should have reached in Association of Molecular Pathology v. Myriad Genetics. As the patent eligibility laws of the U.S. become increasingly inhospitable to high-tech innovative businesses, we can expect more job losses and worse news for the U.S. economy on the horizon.
Particularly interesting is that the Federal Court of Australia went out of their way to question the reasoning of the United States Supreme Court, and say that it is exceptionally difficult to reconcile Diamond v. Chakrabarty with AMP v. Myriad Genetics. I have previously written that AMP v. Myriad Genetics overrules the fundamental holding in Chakrabarty, with many disagreeing. I feel certain that my reading is correct, and the Federal Court of Australia agreed.