US Corporate IP Counsel Hear Latest Updates On Patent System 24/03/2014 by William New, Intellectual Property Watch Leave a Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)NEW YORK – “This is a very, very exciting time be in patent law,” Drew Hirshfeld, deputy commissioner for patent examination policy at the US Patent and Trademark Office, told a group of intellectual property lawyers last week. In his keynote address to the 19-20 March Corporate IP Counsel meeting in Manhattan, Hirshfeld and a range of private sector speakers laid out a picture of a highly dynamic field, with legal and business opportunities and challenges changing every day. Hirshfeld listed activities at the USPTO that practitioners should know about, referring extensively to the office’s website. He mentioned the Patent Prosecution Highway (PPH), which he said has “really taken off” over the past 4-5 years, but that there is still “much more room” for it to be used by people. An advantage to the PPH, he said, is that it allows a filer to get their corresponding claims expedited if they have an office action in one of the participating PPH countries. He noted that it has a higher allowance rate since it is determined by what another country says is allowable. He also gave statistics relating to the administrative trial proceedings at the Patent Trial and Appeal Board (PTAB), available here. For instance, he said, as of 13 March, there were a total of 1,082 petitions filed at the PTAB, including 945 inter-partes review (IPR), 132 covered business method (CBM) review, and 5 derivation proceedings. There have been final decisions on about 20, and a settlement rate of 10 percent, about 90 already, he said. And it is still early in the process, as many of the trial proceedings are still pending at the PTAB and therefore, the number of final decisions and settlements will increase as those proceedings move toward disposition. Under the 2011 America Invents Act, he mentioned that some 1,400 preissuance submissions have been filed. The AIA made it possible for third parties to make submissions relating to patent applications prior to their issuance. More information is here. He said the preissuance numbers were “good but nowhere near where we thought.” USPTO will hold a roundtable on crowdsourcing on patents on 10 April, he added. The roundtable is “part of efforts to expand ways for the public to help patent examiners find relevant prior art, as called for in the recently announced USPTO-led Executive Actions to strengthen the U.S. patent system,” according to USPTO press release issued today. “The USPTO is committed to refining the current third party submission process and exploring other ways that the public can better provide potential prior art to the agency,” Michelle Lee, deputy under secretary of Commerce for intellectual property and deputy director of the USPTO, said in the release. “By soliciting feedback about innovative ways to leverage crowdsourcing techniques, we can help build a better patent system together.” “On February 20, 2014, the Administration announced three new initiatives aimed at encouraging innovation and strengthening the ‘quality and accessibility of the patent system’,” the release said. “Crowdsourcing access to prior art will strengthen patent quality by harnessing the tremendous potential of private sector subject matter expertise, making it easier for the public to provide relevant prior art for consideration in patent applications. It will also help the USPTO update its guidance and training for patent examiners to help them more effectively use crowd-sourced prior art.” Another area Hirshfeld mentioned was prioritised examination of patent applications, which he said people are “starting to use.” Since September 2011, there have been 16,000 prioritised petitions, he said, and they are averaging 600,000 per month in this fiscal year (since 1 October). Under this system, “you are basically paying for speed” in processing your patent application. The office aims to get it done in under a year, well ahead of the typical average time for an application. A recent Federal Register notice on prioritisation was published that proposes to relax requirements, which he said is expected to further increase numbers. He referred to progress on seven White House executive actions that have been taken involving the USPTO. Among other topics, he mentioned that a glossary pilot program is about to be launched, hopefully by summer. More about the program is available here. In another area, Hirshfeld mentioned an increase in provisional applications for patents, which are not yet a formal application but allow the filer to establish an early filing date. He said the office is seeing an increase in these applications, and expect a “big spike” in utility applications that come from provisional applications. More information about provisional applications is here. SEPs, IP Valuation, Patent Wars As an indication of the dynamic nature of patents, a series of speakers described recent legal cases worth billions of dollars, ever-refining efforts to determine (and exploit) the value of IP, the ongoing competitive battles among companies and countries over patents. Marc Sandy Block, IP counsel at IBM, lectured on some key recent legal cases involving standard-essential patents (SEPs), which are patents that are essential to technologies that practice a given standard, such as a key element of a smartphone. Companies who participate in setting a standard and own SEPs are generally under obligation to licence them to other companies under fair, reasonable and non-discriminatory (FRAND) terms, and this has come up in a number of recent lawsuits. Block talked about cases that have led to limits on the ability of companies to get injunctions on other companies’ products they deem to be infringing, and cases in which a company asserted that another company was infringing its patents only to have the other company come back and accuse them of infringing their patents – and win. He also described the outcomes of several cases that have shifted the focus from market-based damages to set royalties, such as in the case of Microsoft v. Motorola Mobility. That case also involved a decision by a US court declaring that its case must be completed before a second case on the subject overseas could be considered. He further described a trend in cases making it hard to get International Trade Commission exclusion orders, such as a case in which it was found necessary to show that a good effort had been made to have a RAND negotiation before charging that the SEP owner had failed to share its SEPs at a reasonable rate. Judges have been looking into the details of SEPs and royalties, and several issues have been determined, such as that it does not matter who the other party is since it must be non-discriminatory, and that the SEPs in a technology like a mobile phone can be considered separately, and that royalty “stacking” must be taken into account. Another key issue has been distinguishing that some SEPs are more important than others. In summing up, Block offered some shorthand “tips to assess.” On drafting, he suggested to: consider limitations on “means plus function” royalty calculations; consider the “entire market value” rule and the “smallest saleable/priceable unit”; “Sell” value of invention over alternatives in patent background; ask if it is worth investing in technology or patenting, given potential standards issues; and ask whether a standard’s drafts are prior art, or whether technical contribution to a standard group might impact novelty. On enforcement, he said to ask: how important are royalties and other factors to the strategy for the standardized technology, what encumbrances and risks attach to the SEPs, especially if they are transferred alone or as part of divestiture or other transaction; how licence terms with one firm might affect terms with others due to RAND non-discrimination requirements; and is competition law a concern. For implementers, he suggested to: review standards organisation policy regarding SEP holder commitments in order to determine your access; recognise any obligation to licence your SEPs reciprocally; ask who owns the SEPs and what is the licensing history; and ask whether technology should be standardised or open to competitive alternatives. Patent Valuation A hot topic in the patent world continues to be the ongoing refinement of how to value patents. A panel ran through some of the issues. A wide variety of metrics of valuation were listed, taking both a qualitative or quantitative approach. Examples listed were: how often the patent is cited; who cited; length of claims; strength/validity of claims; priority date; geographic coverage; pendency of application; competing technologies; development stage; right to produce/sell/use; scope of areas of application; size of market; and growth in market. The moderator, Charles R. Macedo from Amster, Rothstein & Ebenstein LLP, noted that these metrics should not be over-valued, as it is the scope of the claims against the covered products, and the royalty base and royalty rate that will ultimately govern the value of the patent in question. Practical considerations in valuation were discussed. For instance, presenters noted, value arises from the exclusionary aspects of patents. Historically, typical value comes from monetisation by the complete exclusion of competitors or licensing royalties. Value also can be extracted from sale or holding as defensive leverage. For instance, a strong patent portfolio may deter a competitor from aggressively enforcing their patents against another you, Macedo explained. Then, after assessing the value of the technology, an assessment must be done of methods utilising the patent in the particular business. For example, it should be determined if it is prudent to sue a litigious competitor who is likely to bring a retaliatory suit. Or whether it would be more valuable to hold on to the patent for defensive cross-licensing. Discussion was held around an assertion that “good” patents have a tougher time now than they did 10-15 years ago, and that “bad” patents may be getting more of a chance than they used to. One attorney noted the “constitutional right” in the United States for good patents to receive protection. A key topic of discussion raised by Macedo, was a recent development in Vermont that seemingly has helped snowball efforts in Congress to stem activities of patent assertion entities or “patent trolls.” The development occurred several months ago when a so-called patent “troll” sent a series of letters to coffee shop owners in Vermont telling them they were engaged in patent infringement and needed to pay. This led the coffee shop owners to complain to state officials, who approached the Vermont attorney general, which ultimately has led to a variety of patent reform bills in the US Congress aimed at issues such as particularity, customer suits, reducing costs of patent litigation, and the Federal Trade Commission looking at baseless assertion letters. One of the sponsors of the 2011 US patent reform bill was Vermont Senator Patrick Leahy, chair of the Senate Judiciary Committee. On patent valuation more broadly, speakers said that, in general, there are many more “tools” for valuation now than in the past. One speaker also said the economic downturn was an opportunity, as it “put far more visibility” on intellectual property. Protection of Content Online On a separate panel on social media, a representative of Major League Baseball’s MLB Advanced Media (MLB.com), noted that her group has a way of dealing with online protection of broadcasts. In addition to strict rules on use, they have three approaches. The technology approach includes that broadcasts are centrally controlled so they can be cut off if necessary. Then there is a licensing approach, and a “manpower” approach, involving people checking for illegal broadcasts throughout the baseball season. Most platforms nowadays have taken steps to make sure content owners are comfortable allowing use of their content on those platforms, she said. Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related William New may be reached at email@example.com."US Corporate IP Counsel Hear Latest Updates On Patent System" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.