
A Patently Obvious Problem - petethomas
http://www.nytimes.com/2011/04/16/opinion/16Lichtman.html
======
grellas
A few observations:

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&...](http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202472695453&Patent_Litigation_Extra_Heavy_Hitters_Back_Microsoft_Supreme_Court_Bid_in_ii_Case).
A good discussion also appears here:
[http://www.patentlyo.com/patent/2010/09/challenging-the-
clea...](http://www.patentlyo.com/patent/2010/09/challenging-the-clear-and-
convincing-standard-of-proof-for-invalidating-patents-in-court.html).

5\. By the way, the other side of the argument is well-articulated here:
[http://ipwatchdog.com/2011/03/13/supreme-court-patent-
watch-...](http://ipwatchdog.com/2011/03/13/supreme-court-patent-
watch-i4i-files-brief-in-microsoft-case/id=15745/).

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.

~~~
_delirium
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...](http://www.scotusblog.com/2011/04/court-takes-up-standard-of-patent-
validity/)

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.

~~~
grellas
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.

~~~
dctoedt
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.)

[1] _Dickinson v. Zurko,_
<http://www.law.cornell.edu/supct/html/98-377.ZO.html>; see also _In re
Zurko,_ [http://law.justia.com/cases/federal/appellate-
courts/F3/111/...](http://law.justia.com/cases/federal/appellate-
courts/F3/111/887/630610/)

[2] <http://www.freepatentsonline.com/6507909.html>

------
jakewalker
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.

------
pkteison
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.

~~~
Palomides
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?

~~~
Fargren
Not if the money from the fee actually goes to paying competent personnel to
analyze whether the patent is spurious.

~~~
elithrar
In which case, validating and ensuring the flow of patents coming in doesn't
stop becomes a business interest to them.

------
latch
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.

~~~
wazoox
That's nonetheless a step in the right direction.

------
arghnoname
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?

------
vishaldpatel
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?

~~~
daimyoyo
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.

~~~
cabalamat
> 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.

~~~
dennisgorelik
Abolishing patent system would be an overkill, but shrinking it, say, ten-
fold, would help.

