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.

A Primer on Intellectual Property: The Basic Tools for You to Know

Tomorrow (February 1, 2018), I am presenting a Continuing Legal Education (CLE) program on the Basics of Intellectual property (IP) for the general attorney.  With the value of IP assets a large factor of our economy, general practice attorneys frequently face issues in this specialized field of law of patents, trademarks, copyrights, trade secrets and some other areas.  This CLE is designed to allow non-IP attorneys to know some of the basics, understand the vernacular and know something of the problem areas.

I am pleased that the Bar Association of Montgomery County (BAMC) Maryland has offered me this opportunity.  I am also a Chair of the IP Section of BAMC.

For those in the area, I hope that you can make it – whether you need CLE or not.  Here is the link: http://www.barmont.org/events/EventDetails.aspx?id=1062031&group=

Please feel free to contact me if you need additional information.

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.

Patent Damages Symposium in Washington, DC

On February 23, 2017 in Washington, DC, the Licensing Executives Society (www.les.org) is having a Patent Damages Symposium with prominent damages professionals and IP attorneys, including Krista Holt, CEO of GreatBridge Consulting, Inc, Ryan Morris, a partner at Sidley & Austin, Jennifer Vanderhart, PhD Economist and a Principal at Analytics Research Group, Robert L. Vigil, PhD,  Principal  at Analysis Group, Inc., and Raymond Van Dyke, Principal at Van Dyke Law.   We will talk about recent cases affecting patent damages, techniques for patent prosecutors to maximize damages and current trends in damages.

The link is http://www.lesusacanada.org/events/EventDetails.aspx?id=921187&group=160111

This meeting constitutes my additional efforts as the Greater Washington, DC Chapter Chair to promote the organization and otherwise help the IP profession and practitioners with practical programs.  For those in DC, Virginia and Maryland, please feel free to contact me if you have a speaker in mind or a topic that needs addressing. With the eclectic wants of the Greater DC membership, we have seen it all, and welcome more!  For those outside of the DC Metro area, thanks for reading about us!

If you have any suggestions or want to speak when you visit the area in future, please email me.  Conversely, I am open to invitations to speak elsewhere. Ray Van Dyke, 202.379.3903, vandyke@acm.org,  Greater Washington, DC Chapter Chair for LES, and Patent/IP practitioner.  http://www.rayvandyke.com

Ray Van Dyke Teaches About IP in Montgomery County, Maryland

As noted, as Co-Chair of the Intellectual Property Section for the Bar Association of Montgomery County (BAMC), I am pleased to report that the IP Section is having a continuing series of presentations on the fundamentals of intellectual property law  at the Bar headquarters in Rockville, Maryland.  See: http://montbar.site-ym.com/?62

With the increasing value of intellectual property in today’s economy, as well as the ongoing controversies, non-IP professionals, whether attorneys, scientists, business people, and interested citizens, all want to better understand the workings of these legal principles and tools. The meetings have covered an overview of all IP rights, and two meetings about patents.

The next meeting, February 20, 2016, will address the current issues and controversies involving the remaining IP rights, i.e., copyrights, trademarks and trade secrets, along with a bit of antitrust.  For those who missed the talk about patents and would like to hear more, I am having a refresher on patents at 8:30 AM, with the talk about the other IP rights starting at 9 AM.

The BAMC is offering 3 hours of CLE for this event for those needing it.

As the speaker, I can say that the material will cover not only the law, but will include anecdotes about famous cases, putting the material into the context of the times.  My materials have been collected and coalesced over the last 16 years as part of an in-depth course I teach at SMU to engineers, business people, teachers, students and other interested parties.

If anyone has any questions about the course and these meetings, please do not hesitate to contact me.

For attendees, I require an RSVP so that I can gauge the audience and handle logistics. So, if learning a little about IP law is of interest, this series of presentations will do the trick. I look forward to meeting you there!

Ray Van Dyke, Co-Chair, Intellectual Property Section, BAMC

202.378.3903  vandyke@acm.org