The Categorical Imperative for Innovation and Patenting

The political theories of John Locke, Jean-Jacques Rousseau, Montesquieu and others greatly influenced our Founders in the creation of our nation, as well as our patent system. In particular, Locke’s political philosophy included the maxim that a person’s property or fruit of their labors should be protected by their government. James Madison, the father of the Constitution, and others inculcated this viewpoint of a patent system into the fabric of our nascent nation. Indeed, the only “Right” mentioned within the text of the Constitution is the right to secure protections under patent and copyright. The other Rights, i.e., Freedom of Religion, Security in One’s Home from Unreasonable Searches and Seizures, etc., are set forth in the attached Bill of Rights.

Despite the clear language of the Constitution, the Federalist Papers and other writings that the Lockean “natural rights” view governs, some academics try to decry this approach, and turn to other philosophies, such as John Stuart Mills’ Utilitarianism, to either bolster or undermine the usefulness of a patent system, usually undermine. Born thirty years after the creation of the United States (and nearly twenty years after the Constitution), Mill wrote extensively on individual liberty, freedom, logic and other issues, and is chiefly known for his principle of utilitarianism, the greatest good for the greatest number. His maxims are many, including “Originality is the one thing that unoriginal minds cannot feel the use of.”

But there was another philosopher, contemporaneous with the Founders, that bears notice, Immanuel Kant, who had a different take on moral and political philosophy, including the Categorical Imperative. Kant spent his life trying to distill the issues of morality into a logical framework. Just as the natural scientists of the Enlightenment were forming logical arguments concerning the physical world, e.g., physics, natural science and other disciplines, Kant tried to do the same with human morality: systematize it.

In his Categorical Imperative, Kant simplifies a moral argument position for an individual by asking a question: if you thought that your position or Statement would be Universal, i.e., applicable to all people, it would have the stance of a Categorical Imperative and thus you must do it. For example, a Statement that I should try to save a person that is drowning can be considered a Categorical Imperative since this would be a betterment of humanity.

However, the proposition or Statement that it should be ok for me to steal another’s car is not a betterment at all. Applying this as a universal law would lead to societal chaos and possible collapse since thievery would reign, and anarchy would result. Since the entire purpose of government is the protection of people (and their possessions), this Statement fails, and you are NOT compelled to act in that manner. This Statement does not rise to the level of a categorical Imperative.

Intellectual property has been attacked of late on various grounds, including being less than property, and thus not entitled to the protections of the Constitution, despite the evidence to the contrary. This attitude is most recently, and most troublingly, exemplified by the U.S. Supreme Court in Oil States, where the Court equated patent rights to taxicab medallion rights. Freeriding is also being touted, subverting copyright law. Information must be free is the mantra.

As we shall see, applying Kantian logic entails first acknowledging some basic principles; that the people have a right to express themselves, that that expression (the fruits of their labor) has value and is theirs (unless consent is given otherwise), and that government is obligated to protect people and their property. Thus, an inventor or creator has a right in their own creation, which cannot be taken from them without their consent.

So, employing this canon, a proposed Categorical Imperative (CI) is the following Statement: creators should be protected against the unlawful taking of their creation by others. Applying this Statement to everyone, i.e., does the Statement hold water if everyone does this, leads to a yes determination. Whether a child, a book or a prototype, creations of all sorts should be protected, and this CI stands. This result also dovetails with the purpose of government: to protect the people and their possessions by providing laws to that effect, whether for the protection of tangible or intangible things.

However, a contrary proposal can be postulated: everyone should be able to use the creations of another without charge. Can this Statement rise to the level of a CI? This proposal, upon analysis would also lead to chaos. Hollywood, for example, unable to protect their films, television shows or any content, would either be out of business or have robust encryption and other trade secret protections, which would seriously undermine content distribution and consumer enjoyment. Likewise, inventors, unable to license or sell their innovations or make any money to cover R&D, would not bother to invent or also resort to strong trade secret. Why even create? This approach thus undermines and greatly hinders the distribution of ideas in a free society, which is contrary to the paradigm of the U.S. patent and copyright systems, which promotes dissemination. By allowing freeriding, innovation and creativity would be thwarted (or at least not encouraged) and trade secret protection would become the mainstay for society with the heightened distrust.

Also, allowing the free taking of ideas, content and valuable data, i.e., the fruits of individual intellectual endeavor, would disrupt capitalism in a radical way. The resulting more secretive approach in support of the above free-riding Statement would be akin to a Communist environment where the State owned everything and the citizen owned nothing, i.e., the people “consented” to this.

It is, accordingly, manifestly clear that no reasonable and supportable Categorical Imperative can be made for the unwarranted theft of property, whether tangible or intangible, apart from legitimate exigencies.

On the positive front, there is a Categorical Imperative that creators should be encouraged to create, which is imminently reasonable and supportable. Likewise, the statement set forth in the Constitution that Congress should pass laws “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” is supportive, as a Categorical Imperative, for the many reasons elucidated two centuries ago by Madison and others, and endorsed by George Washington, Thomas Jefferson, and later by Abraham Lincoln. A Categorical Imperative, universality, however, may be a stretch outside of the United States since other cultures may not treasure the progress of science and the useful arts and freedoms that we Americans do. Nonetheless, it is certainly a supportable proposition in the United States, and even a Categorical Imperative that we must do it!

Turning to issues facing us today, despite the categorical imperative nature of an intellectual property system, some powerful naysayers object to intellectual property per se, but on more fundamental grounds, pecuniary. A large amount of the condemnation of the intellectual property laws over the last decades has been from the big tech companies that would like to use new innovations for their own profit at the expense of the individual inventor. Ignoring the small entrepreneur or inventor is even de rigueur, i.e., most tech companies now have a “sue me” approach to patent infringement, which means openly taking patented technology knowing that a patentee is not likely to have the means to bring a costly litigation. To further undermine small inventors, the big tech companies, at the behest of Congress, instigated onerous administrative proceedings at the Patent Office, where the odds were stacked against patentees, proceedings often called “death squads” due to the very high percentage of patent invalidations.

Indeed, these patent-hostile, monopolistic companies lavishly fund lobbyists to further influence Congress on their behalf to diminish patents, thereby undermining the patent system and the value of patents, and increasing their profit margins with the freeriding. With all of the denunciation of the Chinese for freeloading our IP, we should perhaps look within first to make America great again. To add insult to grave injury these same companies have also supported numerous Supreme Court challenges to further undermine the patent and copyright systems. The recent appointment of Andrei Iancu as the new Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trdemark Office is a harbinger of a possible turning point toward a more positive patent system.

As a result of all of the big tech efforts to destabilize the patent system, the engine of innovation has suffered. To further harm the patent system, the press labels all inventors de facto trolls and thus unworthy. This demonization of inventors by the press has been profound. Gone are the days of an inventor being celebrated for building a better mouse trap or developing a nifty app. Now, even the Wright Brothers and Edison have been brought low, equated to trolls and not respected American innovators.

Immanuel Kant’s dream of systematizing morality is, of course, imprecise, but the meaning is quite clear and analogous to another famous maxim: do unto others as they would do unto you. Kant’s Categorical Imperative and the Bible extort us to be better people and form a better society. If, however, you feel that innovation is trivial and content should be free, then a Categorical Imperative for freeriding may be sane for you, but it fails at the societal level, i.e., universal application would undercut society. It is also wrong to steal. In the balance, society wants new ideas, new stories, new ways of doing things, and newness itself. All of this takes effort and expense, along with ingenuity and creativity, which should be strongly encouraged and not punished.

A Kantian Categorical Imperative to encourage, support and defend the creations protected by intellectual property is manifest. We should not be swayed by the arguments of corporate monoliths desirous of their own wellbeing and not society’s. In connection with his categorical imperative, Kant also believed that we should all “always recognize that human individuals are ends, and do not use them as a means to your end.” In other words, we should value and respect each human being and their contribution to the world. By deliberately or wantonly stealing patented technology from individual inventors, big tech companies treat them as a means to the corporate end, diminishing and dehumanizing the inventor.

Our Founders well knew that human beings create, and that the stuff of that creation has value. The patent and copyright clause, embodied within the Constitution itself, recognizes this need to encourage, facilitate and support the creativity embodied in us all.

 

 

Article also published today on IpWatchdog.com website

Quantum Mechanics and the U.S Patent System: Two Uncertainties

From Ancient thinkers to Isaac Newton to today, our classical understanding of the world around us includes various laws that objects in our Universe obey, such as Newton’s Law of Gravity. These physical laws were updated a century ago by Albert Einstein to include situations not adequately described by Newtonian Mechanics, e.g., travelling near the speed of light, resulting in the modern view of Space-Time.

Around the time of Einstein’s discoveries, however, experiments in subatomic physics presented considerable challenges to these classical views. The disparity of these observations with the “real” world ultimately resulted in an agreement among physicists on the interpretation of reality itself, the Copenhagen Interpretation, which was necessary to establish a common platform for physics and mathematics. Quantum Mechanics developed as a statistical model in this alternate reality, where laws were replaced by rather uncertain estimations.

Our patent system was also been built upon classical rules and understandings, e.g., earlier patent systems, and the thoughts of Rousseau, Locke and others who influenced our Founders in the creation of our patent system. For over 200 years our patent system has been operating within the paradigm or mindset that innovation should be encouraged by providing a personal incentive to benefit the innovator (in the short term) and Society as a whole (over the long term).

This reality, however, is now under question, i.e., the George Washington Interpretation that a patent system is good for the nation. As with Quantum Mechanics in physics, a new reality has been thrust upon us that the patent system is actually questionable, uncertain or even bad. This new view is the Troll Interpretation. Instead of American inventors creating a better mouse trap, bettering Society, they are now trolls, every one of them it seems. This new interpretation is a long way from the veneration accorded inventors, including great American innovators, such as Morse, Bell, Edison and others. Indeed, the press goes into overdrive denigrating famous inventors, such as the Wright Brothers, as trolls.

The U.S. Supreme Court, which for two centuries acknowledged the importance of patent rights, has also brought the George Washington Interpretation into doubt by undermining the entirety of the patent system in the recent Oil States case, where patents of innovations are now deemed mere tools of the government, and not the innovator’s private personal property. But this is just the latest in numerous decisions over the past decade or so where the Supreme Court has curtailed and belittled patent rights. All of their many negatively-postured opinions have denigrated the value of patents and investment in innovations relying upon patent rights. Indeed, the Supreme Court has directly created considerable uncertainty in a once fairly certain world of patent valuation.

In physics, there is an interesting experiment involving light passing through two narrow slits. Under classical physics, light, as a particle, should pass through and hit a detector on the other side in two places corresponding to the placement of the slits. But this is not the case. Instead, there is a continuum of values detected corresponding to light wave interference, i.e., the light, as a wave, actually goes through both slits and interacts with itself on the other side. One cannot predict with certainty where any given light ray will hit the detector. All one can do in this uncertain environment is to employ statistical techniques to guess.

Right now, the Supreme Court jurisprudence on many important patent issues is just as uncertain, creating further havoc with the George Washington Interpretation. Indeed, it is hard to decipher meaning from the diverse opinions of the Court as to how to proceed. Each new decision further disrupts the patent paradigm in unknown and uncertain ways, but overwhelmingly negative. The Court does not seem to understand the criticality of the issue and the crises so generated.

Modern innovation relies on funding, and one must demonstrate that one can deliver on a promise, e.g., investment requires some certainty to the investor or banker. In the past, the key assets were physical in nature, e.g., a factory lease and the latest printing press for a startup printing business – known values. Now, the assets are far less tangible, e.g., an app or a therapeutic kit, but far more valuable, and very much in need of patent protection. Yet, apart from Justices Gorsuch and Roberts, the Supreme Court appears unable to accord patents the proper status in this equation, creating further uncertainty in the marketplace, preventing many businesses from forming and thwarting innovation itself.

Also, if a valuable invention covered by a patent can be invalidated with ease, e.g., in one of the new and slanted-against-the-inventor USPTO proceedings, why invest in R&D that cannot be protected? This scenario affects critical technologies, such as new techniques and therapeutics to detect diseases. For example, the Cleveland Clinic has recently curtailed critical research in view of the lack of ways to protect these techniques with patents. Indeed, abuse of Section 101 of the Patent Act has reached a precarious level. The investment calculus is simple: if too uncertain a patent can be obtained, and if obtained, too uncertain regarding enforcement, then no funding. This fundamental principle of economics is apparently lost on the Justices.

In Congress, under intense lobbying, they passed the America Invents Act (AIA) in 2011 to increase the “certainty” in the patent system. Despite the warnings beforehand that this was not so, this lobbyist- and troll-inspired law has morphed into a miasma of confusions and uncertainties. Now, Congress is having hearings to establish what they did wrong, and asking fundamental questions. Why has our patent system, once number one in numerous rankings, fallen to 12th place? Why are foreign patent systems more conducive to critical innovations in software, AI, diagnostics and therapeutics, and our Patent Office and the courts deny these innovations the right to be patented? Why is trade secret protection, in lieu of patenting, become so huge? Why are we indulging in this national self-destruction?

The new USPTO Director Andrei Iancu is trying to fix this horrible situation, where we have skewed so far from the George Washington Interpretation into extreme uncertainty that threatens the nation. He wants to change the dialogue and stress the positives of patenting, the positive portrayal of our famous inventors, and turn back many of the bad measures of the AIA. With the Supreme Court Justices rejecting the Founders’ view of patents, Congress will have to now step up and bolster our patent system. Senator Coons and others in Congress recognize America’s innovation slide, the proper role of patents, the bad press regarding patents, and the need to create certainty in business dealings. As our economy heats up further, patents will be even more critical to secure the fruits of American ingenuity in a complicated and intense world market.

George Washington, Thomas Jefferson and many others, including Abraham Lincoln, recognized the extraordinary value of the U.S. patent system, and talked and wrote about its virtues. A few bad actors should not have derailed this critical engine of our economy, but they did, and now all patentees are labelled trolls. Thus, a new portrayal of patents is needed. It will take time to educate the press, reintroduce the positive advantages of the patent system, and stop the slide. We must, however, watch out for the truly bad actors here, some of the big tech lobbyists who still want to curtail patents (to curtail competition), which keeps the patent system under threat.

The uncertainties in physics should not be mirrored in our patent system. The reality of the Founders is not alien to us: hard work, and reward creativity and innovativeness. Modern inventors of new advances should not be harmed due to the perverted view of the patent system being foisted upon us. We need to reaffirm the George Washington Interpretation. Director Iancu has his work cut out for him: Make American Invention and Inventors Great Again!

The U.S. Patent System: The Good, the Bad and the Ugly

There is a lot of reason for hope in the pro-patent community over the last several months. New USPTO Director Andrei Iancu has been saying all the right things, and the USPTO has already released helpful 101 guidance in light of Berkheimer. But there is a long way to go to get back to an equilibrium point, as we have been reminded recently by the Supreme Court’s decision in Oil States, and the U.S. Chamber’s report of the U.S. falling to 12th place in terms of patent protection worldwide. Sometimes it is darkest before the dawn, and that may be where we are now. Join us for a candid conversation about the Good, the Bad and the Ugly with prominent Intellectual Property Blogger Gene Quinn. What you need to know to navigate (and survive) the shifting winds of the U.S. patent system.
The talk is this Wednesday, May 30, 2018, starting at 4:30 PM with a networking event before and afterward.  For those in the Washington, DC area I hope that you can come to this informative meeting and social event. Here is a link to the event: https://www.lesusacanada.org/events/EventDetails.aspx?id=1110304&group=160111
If you have any questions, please feel free to contact me: vandyke@acm.org 202.378.3903.

Speech on Intellectual Property for 2018 at the Annual Meeting of the Bar Association of Montgomery, County Maryland

Tomorrow I reprise my update on IP law at the Bar Association of Montgomery County, Maryland, which is the county adjacent Washington, DC. Lots to report, The Oil States patent case has introduced even more confusion into U.S. patent law. But the appointment and confirmation of the new Director of the USPTO, Andrei Iancu, offers some rays of hope. I also address recent events in copyright, trademark and trade secret. For those in the area, I hope that you can attend.

Here is the program: http://c.ymcdn.com/sites/www.barmont.org/resource/resmgr/temporary_newsletter_files/2018_annual_meeting_web_file.pdf

I am Chair of the IP Section. If you have any questions about IP or require assistance (I have both domestic and international clientele) please contact me.

http://www.rayvandyke.com vandyke@acm.org
My website is being updated so please excuse its primitiveness;)
Ray

Oil States: a Very Slippery Slope

In a narrow but still huge decision today, Oil States Energy Services v. Greene’s Energy Group, the U.S. Supreme Court today relegated patents and challenges to them as more a public, as opposed to a private, right.  Justice Thomas wrote the opinion of the Court that under the “public-rights doctrine” great latitude is accorded  in allowing the adjudication of “public rights” by non-Article III adjudicators, e.g., political appointees.  The Court held that Article III federal judges (life appointment, more independent) are not needed in Inter Partes Review patent challenge proceedings at the USPTO, where a private challenger can seek the invalidation of a patent under the auspices of a USPTO Board, where the “judges” are subject to the Director and other political appointees that “adjudicate” the patent right.  This particular point was made manifest when a former Director allegedly sought to overturn Patent Board decisions not to her liking by appointing more judges to skew the judgment (panel stacking).

Also,  the majority, looking to history, viewed patents, particularly some patent challenges, as not being entitled, under the common law of the 18th century and beyond, to trials  by jury.   Indeed, the Court held that the Patent Clause in the Constitution, at the founding of the patent system, inherently included a contemplation for potential cancellation proceedings.  Even though Justice Gorsuch in his dissent seriously questioned this interpretation, the Court said that the “historical practice” of the courts over the last two centuries does not matter because under the “public-rights doctrine” the USPTO is perfectly ok today.  Thus, with this finding, patentees are also not entitled to jury trials under the Seventh Amendment since there is no private property taking involved.

In the decision, Justice Thomas sought to narrow the conclusion of the Court today to just the constitutionality of these IPR proceedings, and not extend this viewpoint to other contexts of patents, leaving the “private property” notion for some patent rights hanging.  In his dissent, Justice Gorsuch lucidly contested the majority’s viewpoints and the holding, considering it as dispensing “with constitutionally prescribed procedures” for expediency and a “retreat” from constitutional guarantees for citizens.  Indeed, the majority seemed to interpret the jurisprudence and the historical context quite differently than Justice Gorsuch, viewing the case as an administrative correction, as opposed to a patent case.   The injustice of this decision will have enormous ramifications.

However, as a practical matter, the Justices as a whole were perhaps loathe to invalidate IPR and the thousands of Board decisions made so far, and thus instead stretched the Administrative State to now include IPR patent rights, forfeiting the parties’ private patent rights.  As noted in the oral argument, this decision takes patent rights back to the days of supreme rulers, such as Elizabeth I, where the patent “monopoly” is entirely subject to the ruler’s whim, granting and taking, instead of a patent system for creating a protected and secured private property right.  Here, the government giveth and government can taketh away.  Patents are just franchises, like taxi medallions, under the view of the majority.  Our Founders shudder.

With only two Justices viewing patents as private instruments, Gorsuch and Roberts, this does not bode well for the future.  Congress needs to act to fix this.  However, with the insidious influence of the tech lobbyists to squelch private innovation and future technology challenges by any means, it is doubtful that Congress will step up.   Thus, in due course, when the next Court challenge accrues encroaching on patent rights, we will again be faced with a majority of the Justices deeming patents as another administrative right to be curtailed, instead of the special instruments they are for the private citizen to contribute to Society as a whole, as our Founders intended, by getting a short-term incentive to innovate.  Liberal IPR proceedings over the last few years, invalidating many valuable patents, have significantly undermined the importance and value of patents, the consequences for which are being felt by entrepreneurs, inventors and investors for future technologies.  Today’s decision perpetuates this injustice, much to the delight of our world competitors.

With the value of patents being diminished, and today’s decision is a further diminishment, innovation in America is suffering, the next cures for diseases are compromised, the next valuable app is being thwarted, and the American spirit of invention further quelled.  All because a majority of our Justices deem the patent system as something not deserving of constitutional protections, which is in direct conflict with the Court’s own history and jurisprudence.  The only good news of late is the appointment of Andrei Iancu as Director of the USPTO, who is changing the dialogue.  Hopefully, the Justices will consider patentees not as trolls, but as important keystones to our success as a nation.

Copyright and the Game of Thrones

The enormous popularity of HBO’s Game of Thrones has driven many into a frenzy.  Just as the Night King appropriated Daenerys Targaryen’s dead dragon for his own uses, many viewers think that GoT episodes should be freely available for their own uses.   The extraordinary value placed on these episodes resulted in hackers cracking into various protected systems to download them and even hold HBO for ransom.  Although the GoT mania has died down with the end of the short Seventh season, the mania nonetheless continues somewhat as we enter the doldrums until 2018 and the final season.

The incredible efforts to get the episodes are in spite of the large penalties in play.  The basic damages for copyright infringement (unauthorized copying) are between $750 to $30,000 per work.  In other words, if you hack into a system and then post a file for others, the damages could be immense, e.g., for 1,000 downloads multiple the above numbers by 1,000 to get a sense of the damage scale possible.  If a judge deems the copying willful, i.e., done on purpose and not accidental, the damages can be increased to $150,000 per work.  There is also the possibility that you will have to pay the content owner’s legal fees, and the owner may be able to seize and destroy whatever copies you have, as well as enjoin or stop you from future such copying.

In addition to the civil liability, infringers, whether small-time or mass infringers, may also be committing a felony or a misdemeanor.  A felony charge must involve an infringement of the copyright owner’s reproduction or distribution rights, two of the various copyright rights.  Further, a felony conviction carries a maximum sentence of five years in prison and a maximum fine of $250,000.  Even though there has been some leniency in the past for  individual pirating, there is still a  risk that you will be made an example.  The legal fees alone  for defending such suits are large, and, as indicated, you may be paying both sets of attorneys.

In relation to the GoT copyright craziness, here is a Consumer Reports article that cites me on the penalties.  https://www.consumerreports.org/televisions/the-risk-of-watching-pirated-game-of-thrones-episodes/  I recommend reading their other articles.

If you are accused of copyright infringement, consult an attorney to assess your situation.  If you are small fry, you may not be worth the legal effort.  However, if you go after very valuable content, such as GoT, and/or indulge in massive file sharing, you are more of a target and  the liability can be staggering.  As a computer scientist, I understand the thrill of hacking.  However, as an IP attorney helping people, whether innocent or guilty, out of the problems due to their pirating activities, all I can say is that some content owners are meaner than Cersei Lannister in protecting what is theirs.

 

 

The Constitutional Foundations of IP – A Natural Rights Perspective

Despite the value of intellectual properties to the United States, there have been numerous efforts of late to curtail those rights, rights which were enacted by our Founders to encourage inventors and creators.  The Constitutionality of some of these rights is now in question, particularly now at the Supreme Court. Randolph May, writer of the recent book “The Constitutional Foundations of Intellectual Property,” will discuss this critical issue from the natural law perspective.  Raymond Van Dyke, IP practitioner and educator, will speak about the importance of IP to society then and now.

This Greater Washington, DC Licensing Executives Society Chapter event is on the evening of July 20, 2017 in Washington, DC.  Here is the event notice: http://www.lesusacanada.org/events/EventDetails.aspx?id=981094&group=160111

With the constitutionality of inter partes proceedings at the Patent Trial and Appeal Board of the USPTO now in question, the issue is quite pertinent, and the consequences quite serious to the patent system.

If in Washington, DC tonight, I hope that you can make it.

Ray, Greater Washington, DC Chapter Chair, LES

(202)378.3903  vandyke@acm.org

 

Roberts Rules of Order

The Supreme Court has been quite active fine-tuning the patent system and deboning the law of the Federal Circuits for many years.  Today is no exception.

In Impression Products, Inc. v. Lexmark International, Inc.  (May 30, 2017), Chief Justice Roberts took to task the Federal Circuit’s take on the law of patent exhaustion, i.e., whether a patentee upon a sale retains any rights to the sold object.  In this case, Lexmark tried to prevent other companies, such as Impression, from refilling Lexmark printer ink toner cartridges.  Obviously, the printer ink business is quite lucrative and it is no surprise that this case made it to the Supreme Court.

The Federal Circuit had earlier held that Lexmark’s proscriptions on refilling were acceptable, whether the sales were within the United States or abroad (for import).  The nuanced, decades-old jurisprudence of the Federal Circuit held patent law in special regard vis-à-vis other areas of law, and permitted limited controls post-sale.

Back in 2013, the same issue arose in a copyright dispute.  The Court there held that the first sale doctrine extinguished a copyright holder’s rights.  In that case, Kirtsaeng v. John Wiley & Sons, Inc., Kirtsaeng sold Wiley textbooks printed in Thailand on eBay for U.S. students.  The large price differential between the prices in the United States and Thailand made the venture profitable, much to the chagrin of Wiley who sued him.

Just as in Kirtsaeng, the Court today said restrictions or conditions on resale or use constituted unlawful restraints on alienation.   Thus, Lexmark cannot predicate their refilling policy on patent law.  They can, of course, seek coverage under licensing, contract law or another approach.  To Chief Justice Roberts, the patentee upon selling the object has obtained the full measure of the patent right, i.e., no rights remain and the patent right is exhausted.

Justice Ginsburg, who dissented in Kirtsaeng, dissented here.  In her dissent, she made several cogent points.  First, the patent system is different from the copyright system, which has an explicit first-sale statutory provision – unlike patent.  Second, the territorial nature of the patent system and activities in global commerce suggest different handling.  Foreign activities have no bearing on the existence of U.S. patent rights.  Also, the patent laws differ between countries, unlike the more uniform copyright laws, making the first sale exhaustion argument for patent weaker.

Nonetheless, Lexmark and other patentees will now have to take care to obtain a fair price for their products at the time of sale.  Roberts Rules of Order for IP are straightforward: the patent bargain must honed further, and the rogue interpretations of the Federal Circuit must be stamped out.  It is rather odd that the Court regularly condemns the Federal Circuit, yet often has zero alternative interpretation.  The Alice and other recent cases simply held that they did not like the interpretation of the Federal Circuit, and no substitute was proffered.  Here, however, we have a clear directive: you sell a patented item and that is all you get for it.

Supreme Court Messes with Texas

The Supreme Court today decided a monumental case in patent law regarding venue, i.e., where a patent plaintiff can file a lawsuit.  TC Heartland LLC v. Kraft Foods Group Brands LLC (May 22, 2017).  For a few decades, the operative venue standard governing where patentees could sue a defendant was 28 U.S.C. 1391(c): ” a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.”  This broader “personal jurisdiction” standard was promulgated by the Federal Circuit’s interpretation of various Congressional amendments to this statute, which seemed to broaden venue over and above the more specific patent venue statute, 28 U.S.C. 1400(b).

In the case today, the Court discussed the law of venue from the Judiciary Act of 1789 through various Congressional changes to the venue statutes today.  The Court also cited Transmirra Prods. Corp. v. Fourco Glass Co., 233 F. 2d 885 (1956), where the Court expressly stated that the then 1391 statute did not supersede, augment or supplement the standalone 1400 statute, which exclusively governed patent cases.  Thus, the seminal Federal Circuit decision VE Holdings Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (Fed. Cir. 1990), which did just that, is now reversed, reflecting an ongoing trend of CAFC reversals.

The TC Heartland decision will greatly affect plaintiff patentee’s choices as to where to sue a defendant.  Indeed, under 1400(b), a company’s “residence” is their State of Incorporation,  which rather restricts the places to sue.  Plaintiff patentees will thus be less likely to file their infringement actions in the Eastern District of Texas, which over the last two decades or so has morphed into a haven for patentees, i.e., the juries in East Texas generally favor the patent system and patentees, driving the defendant corporations mad.

Time will tell how this new decision, on the backs of so many other Supreme Court narrowings of patent law, will impact the patent system.  Many corporations, desirous of insulating themselves from patent lawsuits, will continue their onslaught, via lobbyists and other means, to further derail the U.S. patent system.

Having practiced in the Great State of Texas (its legal name) many years ago, I can relate a humorous anecdote about the Eastern District courts.  In the 1970s and 1980s, the Texas federal courts, particularly in the Eastern District had specialized in personal injury (PI) cases.  With tort reform, however, these cases and the specialization of these courts became irrelevant.  So, the story goes that the courts there, as a means to perfect another area of specialization, focused on intellectual property, i.e., IP as opposed to PI;)  Perhaps the Eastern District will need to refocus again – with different letter acronyms.

World IP Day 2017 Redux

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The celebration of World Intellectual Property Day at the U.S. Patent & Trademark Office was held on April 26, 2017, where April 26th is the official anniversary date.

After the Chief Policy Officer of the USPTO, Shira Perlmutter, started the event, there where a number of distinguished speakers, including John Sandage, World Intellectual Property Organization (WIPO) Deputy Director General, Patent and Technology Sector, Joseph Ferretti, Vice President and Chief Counsel, Global Trademarks at PepsiCo, Inc. and President of the International Trademark Association (INTA),  Jeanine Hayes, Chief IP Officer of Nike, Inc., and Mario Bollini, Co-founder and Chief Technology Officer, Global Research Innovation and Technology, Inc. (GRIT).  Ms. Hayes demonstrated Nike’s commitment to improving lives with innovation, this year’s WIPD theme, with the latest in Nike technology.  Mr. Bollini then demonstrated his all-terrain Freedom Chair for the disabled.

it was a hard act to follow, but follow I did with my talk on the History of Innovation, with examples of important inventors that improved lives, such as Edison (the light bulb illuminating the night ), Morse (transmission of information faster than horses), various medical innovations, such as that of Raymond Damadian of Fonar (the creator of the magnetic resonance imager) and many other fascinating technologies.

I also talked about the origins of the intellectual property laws and the reasons we have them.  For patent and copyright, our Founders enshrined these rights into the Constitution itself – with the other “rights” set forth in the attachment, The Bill of Rights.  Also, our Founders in essence democratized the U.S. patent system, permitting anyone to file for and obtain a patent.  This was a big change from the systems on the Continent.  George Washington extolled the benefits of a patent system in the First Inaugural Address.  Also, Abraham Lincoln was an avid fan of the patent system and spoke at length about its advantages – equating the importance of the patent system to the founding of the United States.

The above speakers also spoke later at the Senate Hart building, and numerous Congressmen showed up, including Representative Goodlatte of Virginia, with whom I spoke about the importance of the patent system benefiting all Americans, whether individuals, small companies or large corporations.  We both strongly agreed that this was in America’s best interest.  Under his direction, the House of Representatives that day approved by a vote of 378-48 the Register of Copyrights Selection and Accountability Act  (H.R. 1695), which would make the appointment of the Copyright Registrar a Presidential one (instead of the current Librarian of Congress) and for a term of ten years.

I should also add that Senator Coons of Delaware, a staunch supporter of the patent system, also spoke.  His strong advocacy of the patent system is quite welcome to the patent bar and all innovators relying on the patent system.