HAPPY NEW YEAR TO ALL! I hope everyone has a safe and happy new year. Personally, I have no idea what i'll be doing yet, and frankly, I've been extremely lazy in planning for anything this holiday season. Maybe a good, lazy weekend will be just what the doctor ordered . . .

IF YOU THOUGHT FEE DIVERSION WAS ONLY A USPTO PROBLEM . . . On Dec. 20, a letter was sent to the Director General of the World Intellectual Property Organization (WIPO) by thirteen companies that are significant users of the Patent Cooperation Treaty. The companies expressed concern about a proposal made in September to increase PCT fees and noted that up to 80 percent of PCT fees are being used to subsidize programs at the World Intellectual Property Organization that "may not be in the interests of patent owners."

They are, of course, absolutely correct. What I found most troubling is that, unlike the United States USPTO and GAO, WIPO doesn't even have a mission statement with regard to the fees, and also has virtually no transparency for users to determine where these fees are going. I'd be very interested to learn what some of these WIPO side projects are. Unbelievable.

PATENT ATTORNEYS - TOUGHER THAN YOU THINK: (Chicago Tribune) Greg Raymer, the 2004 World Series of Poker champion, apparently knows how to wield more than a stack of chips when everything is riding on it.

The soft-spoken patent attorney from Stonington, Conn., fought off a pair of attackers Dec. 20 at the Bellagio hotel-casino after he had finished playing a cash game of poker, according to a Las Vegas police report.

Raymer was returning to his room about 2 a.m. when two men approached, the report said. As he opened the door to the room, they tried to push him in. But the heavyset Raymer resisted and began struggling with the men, the report said.

As he was fighting, one of the men pulled out a gun and said: "We just want the money." But Raymer didn't give up, and yelled for security, causing the men to flee. A security officer said one of the suspects was a poker player and also recognized him from a previous incident.

Police made an arrest in the case but the report didn't identify the person. Raymer, known as the "Fossilman" in poker circles, won the WSOP Texas Hold'Em title and $5 million in cash. He beat out a field of 2,576 in May to win the prestigious event.

THE NEXT ROCKET DOCKET: MARSHALL, TEXAS? (National Law Journal) When the Eastern District of Virginia, which once had the reputation as an IP "rocket docket," became overwhelmed with patent lawsuits several years ago, the judges advised lawyers to go somewhere else.

That "somewhere else" turned out to be the U.S. district court in a place called Marshall, Texas, about 100 miles east of Dallas.

But now Marshall may be approaching the Virginia district's experience. In the last several years, patent lawyers have flocked to Marshall, a small northeastern Texas town of 25,000, because of its speedy court process, patent-enthusiastic judges and juries considered ideal for hearing intellectual property cases. This year alone, the court has seen 59 patent cases, more than triple the total in 2003, which saw just 14 patent suits.

So what's the big legal attraction in a town whose claim to fame is an annual fire ant festival?

The judges, lawyers say. Specifically, District Judge T. John Ward, who joined the bench in 1999 and helped create what is known in legal circles as a rocket docket for patent cases. He did this by adopting rules that encourage the setting of quick trial dates and firm discovery deadlines. And where there have been discovery disputes, he has made himself available.

But more than all that, lawyers say, what may perhaps be Ward's strongest trait is that he actually likes patent cases.

"That to me is the big deal. You could have a rocket docket in Minnesota or New Jersey, but if the judges don't like patent cases, it doesn't make sense. These [Marshall] judges say they like them and they act like they like them," said attorney Daniel F. Perez of Winstead Sechrest & Minick in Dallas.

"They don't put up with any discovery disputes or any shenanigans," said Charles Baker, an intellectual property litigator with Porter & Hedges in Houston. "Some federal judges make it very well known that they don't like to hear these cases."

Baker noted that some defense attorneys are afraid to try cases there because of its pro-plaintiff reputation, which he disagrees with. He said that the rocket docket also turns off some defense lawyers who feel pressured to produce evidence quickly, leaving little time for preparation.

"People have portrayed [Marshall] as a fear factor: 'Oh, this is a terrible thing. These people are abusing the judicial system. It's unfair.' Well, I don't agree with that," Baker said. "The only advantage [for plaintiffs' lawyers] I see is that they can get them to trial quicker. But as a defense attorney, there are ways you can deal with that if you're a competent lawyer."

Baker said that Marshall's large elderly population also provides a good jury pool for intellectual property cases.

"There are a lot of old people who don't have a problem with sitting weeks at a time and listening to complicated issues," Baker said. "But in Houston, you have people who are fighting to get out of a trial."

WILL THEY TRASH "FIRST-TO-INVENT" IN THE U.S.? It seems that every 5 years or so, WIPO gets together to harmonize patent laws throughout the world. Not a bad idea, if you ask me, but one of the biggest sore points has been that the U.S. is the only country that uses the "first-to-invent" requirement for filing patent applications, while the rest of the world uses "first-to-file." Under a "first-to-file" system, Interference practive would vanish, and the USPTO/Courts would simply look at the filing dates to determine inventorship. Many small businesses have been resisting this change, and were primarily responsible for canning the last harmonization efforts in 1999. Well a new round of harmonization efforts are underway, and I would be shocked if WIPO doesn't revisit this topic again.

I'll keep you posted on any further details.

JAPAN, CHINA AND S. KOREA START TALKS ON PATENT HARMONIZATION: Not waiting for WIPO, South Korea, Japan and China are pushing to unify their industrial property rights systems by comprising industrial patents, designs and trade marks, the Nihon Keizai Shimbun said Sunday. The Japanese paper said the three countries will soon begin working-level talks to discuss unification of their patent systems, as well as ways to simplify their patent application procedures.

PATENT FOCUS: COLORADO - Last year, at least 48,000 newly incorporated businesses were born in Colorado. But if Small Business Administration calculations are correct, only about half will survive long enough to blow out the candles on their fourth-birthday cakes.

Yet during the state's 128-year history, thousands of businesses, products and innovations have done more than just survive - they've flourished. Each day, people across the country encounter products invented or perfected in Colorado.

From hard candy to dog toys to revolutionary footwear, creative Coloradans have made imprints throughout the world. And, based on the number of new ideas sprouting up each year, there's no end in sight.

According to the U.S. Patent Office, Colorado residents - who make up 2 percent of the nation's population - filed for 7 percent of all patents in 2003; two-thirds were granted. Another recent study done by The Corporation for Enterprise Development ranks Colorado the ninth- most-innovative state in the union.

In the second installment of Colorado Originals (the first ran in June), The Denver Post showcases some of the notable products, businesses and inventions with Colorado roots.

CHINA TAKES STEP IN CURBING IP THEFT: China promised to get tougher on copyright and patent violations, a long-awaited move that may ease U.S. concerns over rampant piracy, believed to cost foreign businesses billions of dollars every year. In a new interpretation of the law governing intellectual property rights, the country's top court lowered the bar for treating violations as crimes and laid out prison terms of up to 7 years for the worst offenders. However, Beijing's decision to release the new guidelines without giving Washington a chance to weigh in on the final package prompted a tart U.S. response.

"We received the text today. We would have liked to have looked at it before it was issued in its final state. As this is the first time that we've seen it, we need time to review it closely," said Neena Moorjani, spokeswoman for the U.S. Trade Representative's office. The interpretation, debated behind closed doors for much of the year, aims to address long-standing complaints by the United States and others that China has done little to stamp out piracy of everything from software to golf clubs.

"We should not only sentence such offenders in a determined manner, but also make it economically impossible for the criminals convicted and sentenced to commit the crime again," Cao Jianming, vice-president of the Supreme People's Court, told reporters.

Cao said the court had firmed up legal definitions of terms such as "without permission of the copyright owner" and "reproducing and distributing" to make it easier to prosecute offenders. The legal ruling also comes amid heightened awareness within China over the pitfalls of counterfeit products following a fake milk powder scandal that killed 13 babies and made nearly 200 others sick.

Moorjani said the U.S. government would soon have "a more complete reaction" to the new judicial guidelines.

AH, THAT'S MORE LIKE IT: I was worried that the EU Parliment may actually come to its senses and push the software patent directive forward. Against all expectations, the final vote on the European software patents directive was postponed until further notice. The Polish Minister of Science and Information Technology, Wlodzimierz Marcinski, made a special journey to Brussels to demand that the directive be dropped from the agenda.

According to the FFII (Foundation for a Free Information Infrastructure), Mr Marcinski felt the trip to Brussels was neccessary because of the pressure Poland's permanent representatives were under to accept the draft as it was.

What the delay means for the directive now is uncertain. Poland's minister asked for time to prepare a "constructive declaration" on the directive. Several countries support this position, having changed their stance since the vote on the text in May. Germany has already issued a statement saying that the compromise text has "room for improvement."

It is possible that the Luxembourg presidency will take a different approach and allow more discussion of the content of the draft, but the draft could just as easily show up on the agenda of the next meeting of the Council of ministers.

ACACIA WATCH UPDATE: On Thursday, the company agreed to buy Global Patent Holdings, an umbrella company whose various divisions, including TechSearch, have sued or struck patent licenses with Intel, Sony, Samsung and a myriad of smaller technology companies.

The deal would create a patent powerhouse which would own small pieces of dozens of different technologies, many of which are fundamental components of everyday Internet and personal technology businesses. The company said more acquisitions are likely.

TRADING TECHNOLOGIES DRAWS A LINE IN THE SAND: One of the most notorious holding companies in the Chicago area, Trading Technologies International Inc., recently demanded about $130 million a year from the four top exchanges in exchange for the company dropping its patent lawsuits.

The exchanges involved include the Chicago Mercantile Exchange and the Chicago Board of Trade. In a widely circulated "open letter to the futures industry" dated Tuesday, Trading Technologies argued that its software has encouraged the spread of futures trading, so the company should get 5 cents per contract dealt.

In return, the company would improve its products and agree to end all patent infringement suits against brokerages it believes have modified its software without paying for its continued use. The company in recent months settled suits against two trading firms -- Goldenberg, Hehmeyer & Co. and Kingstree Trading LLC -- that admitted patent infringement.

The goal of the letter was to get those firms to lobby the Merc, Board of Trade, Frankfurt-based Eurex and London-based Euronext.liffe, to agree to the payments as indemnity from the patent suits.

WOT? Apparently the EU software directive is not as dead as recent press reports have indicated. European Union governments have recently approved rules governing the patentability of inventions implemented by computers, known as the software patents directive, standing by an agreement they reached in May.

A meeting of ambassadors to the EU yesterday evening agreed to formally endorse a deal reached by member state governments in May of this year. The decision will come as a blow to opponents of the new legislation, among them the open source software community, who argue that the rules would allow the patenting of software. For approval, the legislation must still be referred back to the European Parliament (EP), which includes many opponents of the legislation.

If members of the European Parliament (MEPs) reject the EU governments' agreement, the two sides have to find a compromise, which may end up being closer to the open source software lobby's position.

Poland recently declared that they were opposed to patenting software. But this time, Poland merely issued a declaration saying that it had some "concerns" with the compromise. The declaration fell short of saying that Warsaw would block the proposal at a later date, according to a Dutch Presidency spokesman. Poland is understood to have come under severe political pressure not to undermine the proposal at this stage.

MICROSOFT AND AUTODESK COZY UP: As part of its plan to gain access to a broader portfolio of intellectual property, Microsoft has signed a patent swap deal with design software maker Autodesk.

Under the pact, the two companies will gain access to each other's patents in a variety of areas, including data management, collaboration, digital effects, digital rights management, project management, computer-aided design and location-based services.

Microsoft has been stepping up its activity on the patent front, ramping up its own filings and at the same time trying to ink cross-license deals with other tech companies. Microsoft has been using the combined power as a marketing vehicle against Linux, noting that it indemnifies its customers against potential patent infringement claims.

Neither company would discuss financial details of the cross-licensing arrangement, including whether any money changed hands. Kaefer has said that Microsoft currently spent about $1.4 billion last year on patent licensing, but noted the company has an opportunity to narrow those losses by more aggressively licensing its own portfolio.

ALL ACACIA, ALL THE TIME: I'm not sure how long this has been out there (and it seems that it has been a while), but streamingmedia.com has a web page completely devoted to Acacia and all of it's activities over the years. After browsing through it, it seems that they have quite a bit of information, including court filings, press releases, etc. The page is good to link if you have received one of Acacia’s letters or are afraid you may receive one.

THE DAY AFTER: After the Federal Circuit essentially upheld-in-part NTP's patent infringement suit against RIM, RIM's stock price dropped 5 per cent. Ah, the power of patents . . .

COMMENTS ON OPEN-SOURCE IP: Microsoft recently made public statements that some say are an attempt to slow the rapid adoption ofOS software. For example, Microsoft CEO Steve Ballmer recently commented that the Linux operating system violates 228 separate software patents, suggesting that Linux users are likely to get sued for patent infringement. No specific patents were identified.

This commentary states that it is no surprise that the company with the most to lose by the adoption of OS would try to slow its adoption. A 2004 Forester survey of 140 large North American companies revealed that 46% of these companies already are using OS software and another 14% plan to do so soon. With 60% of the large North American companies allegedly using OS software, the theory goes that Microsoft is keen on putting a hex on users and developers that are migrating to OS systems

"Between Microsoft's posturing and the latest guidance from the FFIEC, itis clear that companies migrating to Open Source need to tread carefully,"said JamesGatto, an intellectual property partner in the Northern Virginia office ofPillsbury Winthrop. "However, there are a number of strategies and tactics that can mitigate potential liability." Gatto noted that some unique legal issues arise with OS software but that there are unique benefits as well.

The suggestion that users of OS softwareare more likely to be sued for patent infringement than those that useproprietary software, like Microsoft's does not appear supported by actual experience. It is interesting to note that while Microsoft has had several dozen patent infringement lawsuits filed against it in the past few years, none have been reported against Linux, the most popular of all OS programs.

It is also not correct that OS software can not be patented. Many companies that are involved with OS have significant patent portfolios and have declared that they will use these patents defensively to protect against patent lawsuits. For example, in October, Novell vowed to use its patent portfolio to protect open source software products and voiced its oppositionto proposed changes to the European Union software directive that would ease restrictions on software patents. Jeremy Bevan, a Novell VP, added, "there have been various rumors about the possibility of patents in open source technology and what will happen," saying that the company wanted to reassure its customers that "there's no greater risk" with open source than with proprietary technology.

HERE'S AN INTERESTING RUB: (Reuters) Computer software should not be protected by copyright laws designed for music, literature and other creative works, according to a lawsuit filed in a U.S. court in San Francisco.

Intellectual-property consultant Greg Aharonian hopes to convince the court that software makers can protect their products adequately through patents, which provide more comprehensive protection, but are difficult to obtain and expire in a shorter period of time.

The case seeks to clarify which laws the $100 billion U.S. software industry uses to protect its products. Currently, software makers like Microsoft Corp. use both copyright and patent laws to protect their creations, as well as "clickwrap" agreements that stipulate terms of use.

An official with a software-industry trade group said not every software product is protected by patents.

"If you eliminated the ability to sue somebody for copyright infringement, you would eviscerate our ability to go against pirates," said Emory Simon, counselor for the Business Software Alliance, which estimates that U.S. businesses lost $6.5 billion last year to piracy.

Aharonian argues in his complaint that software copyright laws violate the right to due process enshrined in the U.S. Constitution because they do not provide clear boundaries for appropriate use. That means industry players and courts do not have a clear idea of the rules.

"Until you're sued and a judge makes up his mind about what is the idea and expression (at stake), no one knows," Aharonian said in an interview.

- A longshot for sure, but it raises some valid points. And I bet this is going to get the EU "free software" crowd convulsing over the prospect of having a "patent-only" system in the U.S.

GOOGLE FILES PATENT ON A PAY MODEL FOR SEARCHING CONTENT: This article summarizes the analysis from Susan Kuchinskas at InternetNews on a patent filing by Larry Page (co-founder of Google). The patent application , 20040122811, titled "Method for searching media" was originally filed in September 2003 and its core function is summarised by Susan,

to enable search of printed material, offer pay-per-view documents, scanned documents with clickable ads and even the ability for print publishers to swap out ads in digital copies of their printed pages. There are two key elements of the patent: a method for executing a permission protocol so that the publisher could authorize Google to display more text from the relevant publication; and storing scanned versions of printed documents along with data sets representing the ads that went with them.

It's not just online text that is covered. CDs, DVDs, audio books, hard copy magazines, newspapers and journals could all be included. Susan continues with the analysis:

The patent claims a method for updating advertisement information for the printed documents. For example, it would allow the publisher of a hot news story to resell the ad space to a rotating series of advertisers or let advertisers keep the ad but update prices and product information. One of the claims, covers storing information about products in the ads. This might allow the advertiser to create a special landing page associated with the ad, working like a Web banner ad.

Pretty interesting stuff indeed.

OLIVE BRANCH BETWEEN JAPAN AND KOREA? Sony Corp. and Samsung Electronics announced that they had agreed to share patents on basic technology to speed up product development and avoid adding to a growing number of cross-border patent disputes.

The cross-licensing deal allows the Japanese and South Korean electronics giants to tap each other's vast patent portfolios on basic technologies. However, it will exclude key technologies that help differentiate their products, such as those related to Sony's hit PlayStation game consoles.

The move follows a string of legal actions between Japanese and South Korean electronics makers over alleged patent infringements.

"With this agreement with Samsung, we aim to keep clear of unnecessary conflicts and compete only in those areas where we really need to compete," Sony Executive Vice President Yoshihide Nakamura told reporters.

- This is pretty big - being that Japanese companies tend to act in concert regarding corporate and IP policies (emphasis on "tend"), it may be only a matter of time before Matsushita and Toshiba settle their disputes between them and LG Electronics . . .

BACK FROM GERMANY: I just returned from Germany today, where I spoke to clients and law firms about the American experience with software patents. Unfortunately, I get the feeling that the EU Parliment is going to botch this one up, as the people there told me that Parliment is deathly afraid of crossing the small software company owners (who also happen to run Linux and other open-source products). As a result, it is going to be a while before the EU makes a decision on this, and in any case, they are likely to restrict the types of software that can be patented. I think this is bad policy for Europe and it will likely result in a larger gap between US and EU technological innovations.

A GOOD LESSON: The Seattle Times does an article on Harry Rasmussen, who founded the company Crest Industries, which manufactured telephone products during the 1970'2-80's. The story is sad mostly because Rasmussen took what he thought was a good business idea, obtained patents on his technology, and started changing the telephone industry in the 1980's.

Unfortunately, Crest's patent portfolio turned out to be much weaker than he expected (apparently due to poor drafting), and a change in the business climate had his company falling prey to cheap Asian knock-offs. Because law firms were not open to alternate fee arrangements for litigation, his company could not afford to defend it's patent portfolio against these copies being flooded onto the US market. As a result, the company went under.

Undaunted, Rasmussen is now working on encryption technologies, and is hoping to make a comeback. However, I would bet that he is going to be a little more vigilant in obtaining patent protection on his inventions, and perhaps may think twice before abstaining from enforcing his patent rights. Best of luck.

PRIMER ON PROTECTIVE ORDERS: One of the often-disputed topics that arise during patent litigation stem from protective orders and their proper scope. Michael Rader provides a concise breakdown of some of the considerations that in-house counsel need to make when considering a protective order. Some of these considerations include:

• Does the opposing party have in-house patent counsel? Many protective orders allow for access to confidential information by a single in-house attorney. If the opposing party's legal department does not include a patent attorney, this may mitigate patent-related risk in some cases.

• How extensive is the opposing party's portfolio of pending patent applications? If the opposing party does not have pending applications directly covering the relevant technology, the risk of patent claims being crafted to ensnare the company's new products is mitigated. Information about the opposing party's patent portfolio can be gleaned from publicly available sources or requested during negotiations over the protective order.

• How much of the company's confidential information would, in fact, aid the opposing party's patent prosecution efforts? For example, if the company's products are readily reverse-engineered, access to confidential technical specifications may do little for the opposing party's patent attorneys.

OFF TO GERMANY: I'm taking a trip to Germany this week and will be spotty at best in posting blog entries. I may be able to slip in a post or two over the next week, but the best bet is to check next week for new posts.

DEAR GOD . . . The software patent ambitions of Acacia Research are well-known to the streaming media industry. Acacia initially targeted Web pornographers, shutting down sites that neglected to pay its licensing fees, but since then has exacted license fees from a broad array of cable, satellite and Web content companies that now number 264 and include Walt Disney.

Acacia's latest target centers on its patent describing how wireless networks present unidentified computer users with Web pages that redirect them to log-in or subscription pages. Hotels, airports and other areas with Wi-Fi hot spots typically use such redirection schemes.

Acacia's patent, No. 6,226,677, was originally granted in May 2001 to LodgeNet Entertainment, a Sioux Falls, S.D., information technology company targeting hotels. Acacia purchased the patent in July.

Berman said Acacia launched its Wi-Fi licensing campaign in September and is in advanced licensing discussions with a number of potential licensees. No Wi-Fi licenses have been signed yet.

ADVANTAGE: SCHICK - In a mega-litigation action between the #1 and #2 razor makers, a German court ruled today that Energizer Holdings Inc.'s four-bladed Quattro razor does not infringe Gillette Co.'s European patent on three-bladed progressive exposure.

Energizer, which purchased razor maker Schick Wilkinson Sword last year, said the German court ordered Gillette to reimburse Energizer's court costs, but it does not yet know what the reimbursement amount would be.

Gillette said it disagreed with the German Patent Trial Court's decision. The company plans to appeal and continue related litigation that includes additional claims.

The U.S. litigation is still ongoing, but Judge Patti Saris of the U.S. District Court of Massachusetts in January rejected a bid to halt Quattro sales on grounds the device infringes on the patent for Gillette's three-bladed Mach3 razor.

PatnetCafe Introduces IPFront Line: PatentCafe, publisher of global patent data, enterprise patent research software and invention resources, has introduced IPFrontline™ Intellectual Property and Technology Magazine. IPFrontline is claimed as the first online publication to feature patent industry reports covering 14 key industry segments, as well as the 200 most active companies receiving patents.

The patent activity reports are designed to help venture capitalists, industry analysts, fund managers, business investment advisors and other technology investors keep current on the latest U.S patent trends. The IPFrontline focus is on news, trends, technologies, laws, policy and issues related to the discovery, commercial exploitation and protection of invention.

The real-time patent charts online track patent trends of 14 key industry segments, as well as patent performance of the Top 200 companies and patent law firms. Andy Gibbs, PatentCafe’s CEO notes that “intellectual property accounts for more than 70 percent of the market cap of the Fortune 500, and nearly 90% of NASDAQ-listed companies. Whether investing in a Fortnue 100 companies, or early stage technology start ups, the understanding of patent trends of companies and industries is vital to intelligent decision-making.”

ANOTHER GOOD REASON TO DO DUE DILLIGENCE: Once touted as revolutionary for its ability to compress and send DVD-quality video down a phone line at high speed, Adam Clark's technology is under dispute by the company he sold it to for $16 million.

Media World Communications was billed as "the next Microsoft" [editor's note: "Bwaa-ha-ha-ha-ha-ha!"] when it formed in 2002 mainly to develop and commercialise Adams Platform Technology (APT), with Mr Adams becoming a director. Since then the 29-year-old - who started his first audio-visual and events management business while still at school - has debuted on BRW Magazine's Young Rich list with a personal fortune said to be $25 million.

But after serious doubts about APT surfaced in September, Media World Communications went into administration.

Analysis by accountants PricewaterhouseCoopers found the compression technology was already available and the encoding performed by APT was actually from commercially available hardware and software disguised to make it appear as APT.

Video coding and compression expert Tim Ferguson found "many" technical flaws in the US patent filed relating to APT, and that APT would not perform as well as a modern compression method.

Mr Clark and his lawyers Baker & McKenzie did not return calls yesterday.

PATENT SYSTEM AT RISK? Herb Wamsley from the IPO writes an article in CNET claiming that the budgetary problems at the USPTO (read: fee-diversion) is placing the patent system at risk:

The problem is that our current patent approval system is underfunded and overburdened. That means nothing but trouble for American technology-based
companies, entrepreneurs and the American economy.

The lack of resources for the United States Patent and Trademark Office
is particularly troublesome for the nation's computing and advanced technology
industry. Absent the assurance and incentives provided by a strong patent, few
companies will invest in next-generation technologies. And absent investment,
there will be less innovation and job creation in the U.S. tech sector.

To be honest, there is nothing new in this viewpoint, as practitioners have been screaming bloody murder over the last 10 years over fee diversion. But I am constantly baffled why groups like the IPO and AIPLA don't make political hay out of this. I mean, does anyone really know the names of representatives and/or senators that continuously retain the fee-diversion provisions? Have they been threatened politically in any way? It should come as no surprise that politicians respond best when a block of people unequivocally say "Do X, or we will do everything in our power to see that you don't get (re-) elected". The IPO and the AIPLA have been making nice for too long. I say they name names and start leaving some horse heads in the bedrooms of certain representatives.

UK PUTS THE KAIBOSH ON BUSINESS-METHOD PATENTS: The UK Patent Office is taking a new approach to dealing with the increasing number of applications for business method patents, which cannot be patented in the UK, to short-circuit the usual lengthy exchange of correspondence. European patent offices, including the UK Patent Office, tend to reject such applications. A “technical contribution” or “technical aspect” is required before patentability can be considered.

Notwithstanding, applications are flooding in. So in an effort to deal with them in an efficient and cost effective manner, the UK Patent Office has decided to make two changes in cases where the examiner thinks that the invention is “inherently unpatentable.”

Firstly, says the Patent Office, a hearing will be set as soon as the applicant has responded to the initial examination report issued by the Office. At this hearing the Hearing Officer will make a ruling on the patentability of the invention.

Secondly, the Hearing Officer will no longer be required to issue detailed reasons for his ruling but can issue an abbreviated decision, referring back to similar cases.

The practice paper can be viewed here.

AMAZON.COM LITIGATION BEGINS NEXT WEEK: In a "battle royale" from some local heavyweights, Pinpoint Incorporated's patent infringement suit against Amazon.com is set for trial next week beginning December 6th in Chicago. The Honorable Judge Richard A. Posner of the 7th Circuit, U.S. Court of Appeals will be sitting by designation as the district judge presiding over the jury trial. Pinpoint alleges Amazon.com's personalization technology and its product recommendations infringe Pinpoint's U.S. Patents Nos. 5,758,257 and 6,088,722. Pinpoint is represented by Phil Beck and Peter Bensinger, Jr. of Bartlit Beck Herman Palenchar & Scott LLP in Chicago. Mr. Beck represented President George W. Bush in the 2000 election contest litigation in Florida and also represented the U.S. Government in its antitrust case against Microsoft. Mr. Bensinger is nationally known for his use of legal technology and American Lawyer magazine has dubbed him "the most wired lawyer in America."

(FINALLY!) - After Linus Torvald's diatribe against software patents, a UK law firm comes out in support of software patents and accuses Torvald of fear-mongering. Specifically, John Collins, a partner at UK firm Marks and Clerk said: "Torvalds and his supporters lack a fundamental understanding of intellectual property rights as they seem to be unaware that copyright can only protect software code and not software".

He claims that open source developers and the Polish government are misinforming the IT industry and "serving only to endanger genuine inventions".

He said: “Linus Torvalds (creator of Linux) has recently made a statement claiming that the Directive would broaden the area in which patents would be granted. This is simply a false assumption. The original proposal was solely designed to clarify and unify existing practice in the EU. However the current version – as a result of amendments made by the European Parliament – will result in patent holders in certain areas losing a significant element of protection meaning that some existing patents will become worthless.”

- While I agree with Mr. Collins, I think there should be more people in the EU speaking out against the anti-software crowd. When you read some of the garbage they write about software patents, you wonder what planet they are living on . . .

AND THE BEAT GOES ON: Acacia Research Corporation announced today that its Acacia Technologies group has entered into 64 new licensing agreements for its Digital Media Transmission (DMT(R)) technology since announcing its 200th license on November 8, 2004. Sixty of the new licenses are with cable TV companies. In addition to the cable TV licenses, Acacia has now entered into 175 licenses for online entertainment, movies, music, news and sports, as well as e-learning and corporate websites. Acacia has also licensed the leading companies that provide over 90% of video-on-demand TV entertainment for the hotel industry in the United States.

SOUTH KOREA'S LG ELECTRONICS STRIKES BACK: South Korea on Monday slapped a temporary ban on the import and sale of plasma display panels made by Japan's Matsushita Electric Industrial Co. Ltd., officials said. The latest measure came after South Korea's LG Electronics Inc. asked authorities earlier this month to investigate Panasonic Korea Ltd., Matsushita's sales company in South Korea, for alleged patent violations. Matsushita, meanwhile, had earlier asked a Tokyo court to halt sales in Japan of the South Korean company's plasma display panels also because of alleged patent violations. The dispute underlines the growing competition in the electronics industry between older Japanese companies and up-and-coming South Korean makers.

- This has to be one of the ugliest patent disputes in recent years. Both companies have been involving their respective governments in tweaking the other side, and some of the comments made by politicos suggest that there are racial undertones to this matter. It will be interesting to see if either side backs off. If not, this is going to be a whopper.

USPTO GETS READY TO SPEND-SPEND-SPEND! Buoyed by the promise of $200 million in new revenue, the U.S. Patent and Trademark Office says it will hire 900 new patent examiners to speed up the processing of patent applications. The funding was included in the $388 billion Omnibus Spending Bill approved by Congress this week. The new funding isn't really new revenue. But since 1992, Congress has diverted much of the money raised by fees the Patent Office charges companies applying for patents to pay for unrelated programs. The budget bill allows the Patent Office to keep its fee revenue through the end of the fiscal year ending with the 2006 budget, a compromise with Congress. Next year, the Patent Office and its technology allies will press to end the diversion of funds permanently.

The Patent Office has already begun posted job openings on its Web site (www.uspto.gov). It is looking for college graduates with at least a four-year degree, preferably in engineering. Salaries range from $24,075 to $57,375.

AMPEX SETTLES WITH SONY: Ampex Corporation, which is essentially a patent holding company, today announced that it has reached a settlement with Sony Corporation whereby Ampex will withdraw the patent litigation it initiated in July 2004 in the International Trade Commission (ITC) and in the Federal District Court for the District of Delaware relating to digital still cameras manufactured and sold by Sony.

Under the terms of the settlement, Sony will be licensed under several Ampex patents to manufacture and sell various products, including digital video tape recorders and digital still cameras. In return for a payment of $40.0 million, Sony will be permitted to use Ampex patents in any of its products for the period through April 2006. After that time, the licenses provide for running royalties based on sales of products including digital video tape recorders and digital still cameras to the extent that they utilize Ampex patents. The licenses provide that their terms are confidential.

- It looks like Ampex hit Sony where it hurt. With the dual district court/ITC lawsuit, Sony was looking at some potentially devastating losses from (a) not being able to import digital cameras if Ampex was successful in the ITC (where cases can have judgments rendered within 16 months of the the filing of the complaint); (b) facing potentially huge damages in the infringement action; and (c) at best, spending millions in legal fees defending both actions.

UPDATE: IRAQ - No, it's not what you think. However, it never occurred to me that part of reforming Iraq and Iraq's laws would include modifications to it's patent law regime. Recent orders from the provisional government has already started parblems with Iraqi farmers, claiming that plant variety protection will harm the local farmers.

COMMERCE ONE AUCTION UPDATE: Seems that companies are starting to pool resources to buy out 39 patents held by Commerce One, a bankrupt software company in Santa Clara, Calif., that's in the process of shutting down and liquidating its assets. The patents cover technical protocols that underlie popular methods for exchanging business documents over the Internet.

The upcoming auction has some big Silicon Valley companies on edge. Among them are Google, Oracle and Sun Microsystems. Attorneys for those and more than a dozen other companies held a powwow this week to discuss the patent sale and the danger of becoming targets of infringement suits by whomever acquires them.

They also discussed pooling their funds and jointly bidding in the Dec. 6 auction. A nonprofit group called CommerceNet, which organized the meeting, offered to collect contributions and manage the bidding. If the joint bid won, CommerceNet would essentially retire the patents. If it lost, CommerceNet would refund each contributor.

"It's a little bit like paying the blackmailer before they have something to blackmail you about," said Craig Smith, CommerceNet's chief financial officer and chief operating officer.

WHAT'S IN *YOUR* DOCKET? IP Law & Business recently conducted a Technology Survey , where the 50 largest patent firms, ranked by number of registered patent attorneys, were asked what docketing software and annuity software they use.

Most firms use both: docketing software to manage prosecution of pending patents and trademarks, and annuity software to manage payments of maintenance fees and taxes on existing patents. Docketing and annuity software developed along separate lines, and historically firms used separate software programs to manage each task. Recently, however, most of the major vendors have started offering linked systems, and many firms are slowly starting to adopt them.

The survey also asked firms what kinds of tools--Web sites, databases, and the like--they use when conducting prior art searches for patent and trademark applications. 38 firms responded to the survey.

DELAYS, DELAYS, NOTHING BUT DELAYS: European Union governments have delayed voting on a proposed law that would define which technological innovations can be patented, after Poland said it was considering withdrawing its support.

The proposed law was endorsed by government leaders this month as an important legislative priority for the sluggish European economy to make it more competitive with the American economy. But an agreement reached in May by the European Union's 25 members now appears to be unwinding because of Poland's possible switch.

OFFENSIVE INNOVATION - MAKING YOUR R&D MATTER: Carleen Hawn writes a great piece on how established companies may be disadvantaged in the market when it comes to producing innovative technologies. Carleen particularly takes Microsoft to task for arguably being too timid in its R&D:

The failure to consistently produce dramatic and successful innovations may be less a comment on Microsoft than it is on the nature of innovation. Innovation is capricious - a function of luck and good timing as much as brains. It's tough to score once, much less repeatedly. Harder still to feed and mine creativity in established organisations, where scale becomes the enemy. It's more difficult for a $US37 billion business to find and commercialise inventions that will sustain profitable growth at the same rate as in smaller rivals.

Microsoft may be the most striking example of the phenomenon that Harvard academic Clayton Christensen identified in his 1997 book, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Good managers, Christensen wrote, tend to direct resources toward protecting established lines of business, usually by investing in incremental improvements that help pad profit margins.

Christensen called these "sustaining innovations"; defensive tactics. It's not that Microsoft lacks creative talent or that it simply has run out of ideas - it has an abundance of both. But for most of the past 25 years, it has overwhelmingly devoted these vast resources to the innovative defence of its existing franchises. That's why it has missed opportunities to launch important new businesses. And why it will miss many more.

And the investment world has a different take on "innovation" than the technical world has. While Microsoft may keep shareholders happy by entrenching existing technologies, establishing new innovative technologies may provide more risk than reward in terms of Microsoft's bottom line:

[I]nnovation experts argue Microsoft isn't investing enough in offensive innovation to define its future. And the research it does seems wildly inefficient. Over the past five years, Microsoft spent an average of $US9 million per patent, nearly twice its peer group.

Ultimately, observes Gary Hamel, innovation guru and chairman of Strategos, "really good ideas are just few and far between".

Venture capitalists typically pore over 50 to 100 deals to find a good $20-million software investment. By that logic, Microsoft, with its $6.8-billion annual R&D budget, must consider as many as 35,000 new ideas just to find a few hundred worth investing in every year. There just might not be enough opportunities out there for Microsoft to employ its vast resources effectively.

"Microsoft has to create the third- or fourth-largest software company in the world every year to be considered innovative," says Brian Skiba, managing director of the San Francisco-based hedge fund Viant Group. Even if Microsoft had been able to replicate Google's dominance in search technology, Google's $US1.5 billion in revenue would have lifted Microsoft's own top line by just 4 per cent.

But so long as Microsoft enjoys its dual annuities from Windows and Office, it needn't worry much about the revenue generated by its research.

BAH! The long-running battle to reserve the money raised from patent fees exclusively for use by the Patent and Trademark Office is unlikely to be resolved in the 108th Congress.

Lawmakers refused to block the diversion of such fees as part of the omnibus appropriations bill for fiscal 2005 cleared over the weekend.

They did provide PTO a funding boost and specifically allocated funding to hire more patent and trademark examiners. But the technology lobbying community, which worked hard to stop fee diversions this year, is split on whether the larger budget will benefit technology companies as long as PTO still could lose money from patent fees to unrelated programs.

Under the omnibus appropriations bill, PTO would receive up to $1.6 billion, or $342 million more than in fiscal 2004. The measure also would let PTO raise its fees between 15 percent and 25 percent over the next two years to fund its operations.

"STAND AND DELIVER!": A broad coalition of intellectual property and business associations made a last-ditch attempt Wednesday to persuade appropriations negotiators to adopt language from a House bill concerning user fees for the Patent and Trademark Office (PTO).
If the lawmakers cannot agree to the language that would allow the PTO to keep all of the fees generated by its work, the coalition said in a letter to the leaders of the House Appropriations Committee, they should drop language that would increase user fees for patent applications.

MEET "MR. PATENT": Marvin Johnson can't seem to stop innovating. The plainspoken scientist from Phillips Petroleum has 212 patents to his name. Johnson, a 74-year-old research fellow with Phillips Petroleum, stopped keeping track of his patents a long time ago. That's because he has 212 of them to his name, with at least 8 more on the way.

Do the math: a 46-year career and 220 patents either issued or pending. That's more than one patent every three months for more than four decades. How does Johnson evaluate his remarkable performance? He starts with a wisecrack: "It's the same in patents as it is in having a baby. Conception is the best part of it."

EU SOFTWARE PATENT INITIATIVE LOOKS DEAD: The Polish government has said it will not support a controversial European directive, delivering a potential blow to attempts to make software patentable in Europe.

The Polish government said Tuesday that it could not support the proposed Patentability of Computer-Implemented Inventions that was agreed on by the EU Council earlier this year.
"Because of numerous ambiguity and contradictions respecting the current directive project, Poland cannot support the text which was accepted in the vote of the Council on May 18, 2004," the Polish government said in a statement.

It added that it would be prepared to back a directive that made it clear that "computer-implemented inventions" would be patentable, but that computer programs would not be.
Without the backing of the Polish government, it is likely that the directive no longer has enough support to be sent back from the Council to the EU Parliament. Crucially, the EU has just revised the number of votes that each member state can wield, and this move has given Poland enough influence to tip the balance.

(Thanks to James Goedken for the article)

GAMING INDUSTRY BECOMING LARGER TARGET: While computer game fans shell out tens if not hundreds of millions of dollars for the latest shoot-em-up release, a little-known patent holder is hoping to make a different kind of computer game killing.

American Video Graphics (AVG), a Marshall, Texas, limited partnership, has wielded its arsenal of seven patents related to the display of 3D computer graphics to sue a who's who of companies in the computer game industry.

Defendants in the three suits, filed Aug. 23 in the U.S. District Court for the Eastern Division of Texas, Tyler Division, range from game makers (Nintendo, Sega, Atari and Activision) to entertainment companies (LucasArts and Vivendi) to hardware vendors (Hewlett-Packard, IBM, Dell and Gateway) to consumer electronics companies (Sony, Fujitsu, JVC, Sharp, Matsushita and Toshiba).

Many of the complaints stem from those companies' distribution of Microsoft's 3D software with the Windows operating system. Microsoft also is named in the complaint, specifically for its Xbox computer game system.

(J. Goedken)

E-COMMERCE PATENT AUCTION: I have to think this one will be worth watching. More than three dozen patents said to cover key facets of Internet transactions will soon be auctioned off by Commerce One, a bankrupt software company. Bidding for the portfolio of patents will begin at $1 million in the auction, which is scheduled for Dec. 6 in federal bankruptcy court in San Francisco. Earlier this month, the patents were carved out from the rest of the assets of Commerce One.

The 39 patents cover basic activities like using standardized electronic documents to automate the sale of goods and services over the Internet. Some intellectual-property experts said that these patents, which have broad reach, could be used to challenge Web services like the .Net electronic business system from Microsoft or Websphere software from IBM. Those companies declined to comment, saying any discussion would be speculative at this point.

Speaking of "no comment," one of the interesting things I found about the article was that no one wanted to talk about it:

One of the partners of the law firm, Mark A. Haynes, was one of the lawyers who helped write the patents while working at Wilson & Sonsini, a leading Silicon Valley law firm, in the late 1990s. He declined to comment.

Microsoft executives also declined to comment on whether the company was interested in bidding on the patents. A Silicon Valley investor who is in contact with potential bidders, however, said that Intellectual Ventures, a venture capital firm founded by Nathan Myhrvold, a former top Microsoft executive, was considering making a bid. The company also declined to comment.

When no one wants to say anything, experience tells me that somebody, somewhere has plans for this portfolio. And you can bet that the ensuing litigation would be fast and furious.

What would be more interesting if there were law firms planning to get in on this action - could you imagine the fees generated from this if someone the likes of Niro, Robins Kaplan or McAndrews obtains ownership? It's a license to print money, I tell you.

I bet there are lots of prior art searches going on right now . . .

UPDATE: turns out, one law firm has already submitted a bid - Haynes Beffel & Wolfeld in San Francisco (reported in the NYT).

WHY ARE LARGE PATENT BOUTIQUES DISAPPEARING? In his IP litigation blog, Phillip Mann discusses the perceptions of in-house counsel when they evaluate firms for potential IP litigation. Not surprisingly, Fortune 500 companies have been tossing most of their high-ticket work to mega-firms, in which partners can command billing rates of up to $700 an hour.

OUT WITH THE OLD . . . Robert and Arlene Kogod, prolific Washington philanthropists and art collectors, yesterday gave the Smithsonian Institution $25 million toward the renovation of the historic Patent Office Building.

The gift is the fourth largest donation in Smithsonian history and the biggest since the Donald W. Reynolds Foundation gave $30 million in 2001.

The Kogod money will enable the museum to proceed with a dramatic glass enclosure over the courtyard of the building, which will reopen in 2006 as the restored home of both the Smithsonian American Art Museum and the National Portrait Gallery.

This is the Patent Office project's third major gift. Nan Tucker McEvoy and the Henry Luce Foundation each donated $10 million in 2001.

A National Historic Landmark, the Patent Office building -- across Seventh Street NW from MCI Center -- has been closed to the public since 2000 and has been gutted. Much of the contents of the American Art Museum and the National Portrait Gallery have been put on the road in traveling shows. The renovation, designed by Hartman-Cox Architects of Washington, is scheduled to be completed by July 4, 2006.

ONE FOR THE LITTLE GUYS: For Todd Austin, president of Ann Arbor-based Simplescalar L.L.C., what began as a potential patent lawsuit became a beneficial business relationship.

"In 2002, a huge Asian consumer-electronics company came out with a computer processor that looked like they had used our design information," Austin said.

The company admitted to using the software. It had come into the company through channels where the product was offered virtually free for researching. Apparently, a doctoral candidate working for the Asian company part-time had brought the software in.

While the lawyers negotiated a settlement on the illegal use, Austin said, "I took a clever step."
Several engineers of the company had contacted Austin by e-mail over the previous two years, saying they thought his software could match up with what they were doing, but they never followed up.

"I sent the names of their engineers to their legal counsel, suggesting they had a business need for my software," Austin said. "Within a couple of weeks, we were licensing to them. They've gone on to develop two other products not yet on the market with it, and I do support services and on-site training for them."

Simplescalar, with revenue of about $1.5 million a year, now is doing about $300,000 a year in business with the Asian company, Austin said. "I guess I'd say they've become a decent customer."

IT HAS BEGUN - IP HOLDING COMPANIES GO MAINSTREAM: Nathan Myhrvold and his partner, former Microsoft chief software architect Edward Jung, have created the quintessential company for the 21st century. It doesn't actually make anything: it outsources, offshores and offloads nearly every task performed by regular corporations. It has no factories, machine shops or marketing teams. Only patent attorneys populate the quiet hallways. The five-year-old firm's plan is to create or buy new ideas, accumulate patents—exclusive rights to use the inventions—and rent those ideas to companies that need them to do the gritty work of producing real products. Because today's businesses are constrained by their need to make money, Myhrvold says, "it is irresponsible for them to think wildly outside the box." He wants to fill that innovation gap—"We are thinking wilder, crazier thoughts than anyone else."

To generate patentable ideas, Intellectual Ventures hired a dozen top scientists as part-time consultants to participate in several all-day gabfests each month, which the company calls "invention sessions." Lawyers transcribe the discussions, which can range from biotech to nanotech to solid-state physics, and follow up on the most promising ideas with patent applications. One participant, Dr. Leroy Hood of the Institute for Systems Biology in Seattle, says: "We are thinking about how you can solve problems that have never been solved before." Since the company has been holding sessions for only a year, it has likely produced about a hundred ideas whose patent applications won't be processed—or start earning any money—for at least three years.

The company is buying patents from all corners of the high-tech world, including those that could pose legal threats to its powerful investors. In a recent e-mail, Intellectual Ventures stated that the company is "interested in purchasing patents and applications in the areas of software, e-commerce, communications, semiconductors, consumer electronics and computer architecture—basically, just about anything that deals with bits." By buying all these patents, Intellectual Ventures ensures they cannot be used against its investors by other small IP holding companies.

FUNNY: A new blog, appropriately titled "IP Funny" is worth a look for those willing to peek inside the sometimes twisted minds of inventors and IP practitioners. The comments surrounding the gas discharge device and the "Apparatus for Facilitating the Birth of a Child by Centrifugal Force" are positively hilarious.

DC FIRMS START FREE-AGENCY DRAFTING OF ADMINISTRATION DEPARTURES: The revolving door between the government and private practice keeps turning, and with that in mind Legal Times asked a number of recruiters and lawyers at D.C.-area law firms who they consider to be the hottest hires and the biggest "gets" among lawyers who may be leaving the administration. Moving between the government and private practice can promise a big payday for upper-level administration officials. Big names can trade their policy experience and their government contacts for up to six times their government salary.

The intellectual property area has seen a number of high-profile officials join private firms in recent months. Just last month, Stephen Kunin, deputy commissioner of patent examination policy at the U.S. Patent and Trademark Office, joined the Alexandria, Va., patent boutique Oblon, Spivak, McCelland, Maier & Neustadt. And in January, James Rogan, the former director of the PTO, rejoined his old firm, Venable. That leaves Jon Dudas, Rogan's replacement, as the most attractive candidate available, according to recruiters, but there is little chance he will move on since he has only been in the position since June 2004.

Asked for comment, Dudas would only say that he is honored that people thought of him. "I can think of a number of IP firms, especially those with strong trademark and copyright practices, that would fight for Jon Dudas," says one recruiter. Another name mentioned is Deputy Secretary of Commerce Ted Kassinger. Kassinger focused his practice on international trade and transnational dispute resolution at Vinson & Elkins prior to joining the administration. However, he too was appointed to his current position only a few months ago.

TOKYO BARS IMPORTS OF LG PANELS TEMPORARILY: The Tokyo Customs Office said Thursday that it accepted Matsushita Electric Industrial Co.'s request to suspend imports of plasma display panels produced by LG Electronics because of its alleged patent infringement.

On Nov. 1, the company filed suit in Tokyo District Court seeking an injunction against the importation and sale of LG flat screens in Japan, and asked the customs office to bar them. LG's screens could be banned from the Japanese market for up to two years. The Tokyo Customs Office said it would hear arguments from both Matsushita and LG Electronics in one to two months before it decides whether to reopen imports.LG said while the decision would not be particularly harmful to the company, it is "regrettable."

It said it would file suit seeking to nullify the plasma display panel patents that Matsushita holds late this month.This is the second dispute this year between Japanese and South Korean makers of plasma displays, a market that researcher ISuppli Corp. forecast would grow to $11 billion next year. Samsung SDI Co. and Fujitsu Ltd. settled their dispute in June by agreeing to cross-license each other's patents.

MICROSOFT INDEMNIFICATION PLEDGE - THE FINE PRINT: With Microsoft pushing its indemnification of end users, it appears that the devil is in the details - some fine print in the agreements may make users a little wary about how much protection is really offered. Some clauses defining the scope of protection are certainly troublesome:

Our obligations will not apply to the extent that the claim or adverse final judgment is based on:

(i) your running of the covered software after we notify you to discontinue running due to such a claim;

(ii) the combination of the covered software with a non-Microsoft product, data, or business process;

(iii) damages attributable to the value of the use of a non-Microsoft product, data, or business process;

(iv) your altering the covered software;

(v) your distribution of the covered software to, or its use for the benefit of, any third party;

(vi) your use of our trademark(s) without express written consent to do so; or

(vii) for any trade secret claim, your acquiring a trade secret (a) through improper means; (b) under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (c) from a person (other than us or our affiliates) who owed to the party asserting the claim a duty to maintain the secrecy or limit the use of the trade secret. You will reimburse us for any costs or damages that result from these
actions.

Worth a second look indeed.

THE ECONOMIST COMES OUT AGAINST SOFTWARE PATENTS (WELL, SORT OF): In today's Economist, there are two articles published that basically bemoan that the US Patent System is "broken". They cite the usual litany of complaints: too many filings in the USPTO, "absurd" Internet patents, and litigious patent holders. Oddly, nowhere in these articles do they mention the fact that the USPTO has hundreds of millions of dollars siphoned off by Congress each year, thus limiting the means that the USPTO can rely on to address many of the complaints.

One thing the press has failed to do is to cite exactly HOW the current patent system is "stifling innovation." Apparently, the Economist has taken the position that granting patents, regardless of the technology, is a bad thing. Hogwash. Before they go around wagging their finger at the USPTO, they need to get their arguments straight first. For example:

The number of patent applications to the PTO is growing at around 6% a year. The wait for a decision is on average 27 months—and much longer for complex applications in advanced sciences.

Now, the backlog is certainly a problem. However, the reason many companies are filing patents is because they recognize a potential commercial benefit from filing those patents. Unfortunately, the article doesn't address the numerous benefits that were afforded to companies that were smart enough to patent their research and development. The article then includes this seemingly contradictory statement:

Similar growth is occurring elsewhere, including in countries that previously showed little interest in intellectual property. Applications to China's patent office increased fivefold from 1991 to 2001. As countries such as China, South Korea and India spend more on research and development, they are filing more patents.

If companies worldwide are spending more on R&D and patenting the results, how is that a bad thing? But the Economist shows its true colors when it addresses the software initiative being considered in Europe:

Were further proof needed that this may not be an entirely positive development, look no further than the mighty software monopolist, Microsoft, whose chairman, Bill Gates, has called on employees to increase the number of patents that the company files.

Oh yeah, I forgot - if Bill Gates is doing it, it must be evil . . .

[NOTE - if you need access to the Economist articles, feel free to use the BugMeNot.com link on the RHS of the screen]

GETTING THEM WHILE THEY'RE YOUNG: Joan DeLuca teaches a class at Saint Andrew's School called Frontiers in Science and Technology, where students learn to think like inventors while learning. In the class, students are taught the five types of intellectual property: Patents, trademarks, copyrights, trade secrets and contracts. The big project of the year involves students in groups of three developing a new idea. Groups will submit an idea, research it, and make a presentation to a patent committee on Dec. 3, at which they will tell the what, why and how of their idea. The law firm of Fleit, Kain, Gibbons, Gutman & Bongini in Boca Raton, will donate their time to file a patent application for the best idea from the class.

Three recent graduates of St. Andrew’s School of Boca Raton, Fla., received a patent for an item that would eliminate the need for thirsty athletes to tip the ubiquitous orange water coolers to get the last drop.

I think this is a phenomenal idea - it raises early awareness of patents and the patent system, and gets budding entrepreneurs early exposure to what is arguably one of the most important business tools in today's technological economy.

COULD INDEMNIFICATION BE THE TRUMP CARD FOR MICROSOFT? In a recent announcement, Microsoft plans to expand the scope of its intellectual property protection policy to cover customers using current and earlier versions of its software.

The announcement, made late Tuesday evening, includes the Windows Server System (including Microsoft SQL Serve and Exchange Server), Microsoft Office System and the Windows client.

Microsoft said it will cover the four forms of intellectual property disputes commonly associated with software: patent, copyright, trade secret and trademark disputes.

Microsoft has been relying on indemnification issues to gain market advantage over Linux and other open-source companies, which currently offer little to no protection for users from infringement claims made by patent holders. Steve Ballmer from Microsoft released a 4 page memo last month (reported on this blog) explaining how indemnification issues can significantly contribute to costs for users of open-source software.

JAPAN/KOREA PATENT WAR: In the editorial pages of the Korean Herald, the editors apparently feel strong enough about the latest rift between Japanes and Korean companies that they refer to it as a "patent war." The spate of patent disputes is drawing particular concern from the Korean government and industry, which fear it may "harbinger a Japanese onslaught against Korean companies, many of which have learned technology from Japanese companies. "

HMMMM I thought software wasn't patentable in Europe

PATENT WAR BREWING ON THE JAPANESE/S. KOREAN BORDER? A week after Matsushita and LG Electronics began a tit-for-tat lawsuit exchange, with both companies claiming the other has infringed their plasma display panel patents, Toshiba has accused Hynix of infringing its DRAM and Flash patents, and has begun legal proceedings against its South Korean rival in the US and Japanese courts.

Japanese electronics makers have been recently filing lawsuits against South Korean makers, which are increasingly challenging their domination in the sector.

A lawsuit filed with the Tokyo District Court alleges Hynix willfully infringed three of Toshiba's NAND Flash patents. The Japanese company wants the court to block the sales of allegedly infringing components and to force Hynix to cough up damages for the transgression.

A second suit, filed in the US District Court for Northern Texas, alleges infringement of four NAND patents and three others relating to DRAM. Again, Toshiba is seeking an injunction against offending products.

Both cases follow the collapse of talks between the two companies over the extension of an August 1996 semiconductor intellectual property cross-licensing deal. That agreement expired on 31 December 2002, and negotiations centring on the terms of a new agreement have been going on ever since.

Hynix has yet to formally respond to its erstwhile licensing partner's action, but given that the falling-out concerns a cross-licensing deal, Hynix will almost certainly accuse Toshiba of infringing some of its intellectual property and fire off one or more counter-suits.

2004 MERGER UPDATE: In a move that seems certain to raise further doubts about the viability of stand-alone intellectual property law firms, the New York IP boutique Fish & Neave has agreed to merge with Ropes & Gray, a large Boston firm.

Fish & Neave, which has about 160 lawyers in New York, Palo Alto, Calif., and Washington, D.C., is one of the nation's largest IP boutiques. It is also one of the oldest, having represented clients including Thomas Edison and the Wright Brothers since its founding in 1878.

The merger, which is to become effective Jan. 1, will increase Ropes & Gray's New York office to more than 200 lawyers from around 80. The combined firm, which will operate as Ropes & Gray, will have more than 750 lawyers nationwide. Unusually, the firm will retain the Fish & Neave name for its firmwide IP practice group.

EU SOFTWARE PATENT UPDATE: The UK Patent Office has published an article explaining the software patents directive, entitled Patents & Software: Fact and Fiction. The article explains the details of the software patents directive, a potential change to European law which would allow the patenting of certain software in Europe.

The UKPO document states that the EU Council has agreed a text which is now due to be debated by the European Parliament. It claims that the directive is needed to stop the UK from moving towards a US-style liberal patenting regime and to clarify the law by only allowing software to be patented if it makes a 'technical contribution'.

Of course, the "free software" loonies are on the rampage, claiming that the Europeans would be reduced to using rocks and sticks to get anything done should software patents be allowed. My favorite loonie, Roofus Pollock, resorts to some Soviet-era deductive argumentation to conclude that anything that positively reflects on software patents is lies . . . all lies:

"FFII-UK deplores the continuing misinformation presented in the recent Fact and Fiction document distributed by the UKPO," said Pollock. "The document continues to peddle old fictions, presents hardly a shred of evidence and continues to promote the patentability of software which threatens innovation both in the UK and across Europe."

How do you like that? Peddling old fictions promoting software patents, when it is clear to geniuses like Pollock that they "threaten innovation" (evidence abounds, don't you know). Oh, and Pollock thinks that the UK Patent Office should just shut up when it comes to promoting software patents:

"We are also concerned that a supposedly neutral, government-funded, administrative agency is taking such a strongly partisan role in this debate, particularly given the inherent conflict of interest in the Patent Offices' role that encompasses providing impartial advice while simultaneously having a significant stake in the resulting outcomes"

Inherent conflict? Significant stake? Does he think that UKPO officials are engaging in some kind of warped "patent profiteering" or something?

And where else are the inventors supposed to file applications, the US? Oh . . . wait . . . .


UPDATE: To see how unhinged Pollock has become, check out nosoftwarepatents.com's message board for the UKPO publication. Pollock provides his characteristically deep insight on the paper - in his short reply, he manages to use the word "lie" 21 times. And the best quote of all:

What the "patent mafia" wants is that people who make independent creations can be taxed, robbed or killed by those who previously ran to the patent office and registered some general idea. It's pretty much the logic of a racket gang: We're sorry that we've just created a problem for you but now you gotta pay for a solution.

Killed? Either Pollock is fast and loose with the hyperbole, or I need to start hiring protection for clients before the EPO.

IN THE "IT MUST BE FRIDAY" CATEGORY: The Chinese capital, notorious for its smelly lavatories, will show off its ambitious plan to improve them during the fourth annual World Toilet Summit later this month, the Beijing government said Friday.

Beijing has already invested more than 200 million yuan (24 million dollars) since 2001 on upgrading and building more than 700 new public toilets to prepare for the 2008 Olympic Games, he said.

"The toilet problem at many scenic spots is a major concern both at home and overseas and is a main focus of complaints," Yu said.

During the summit, Beijing will host an exhibition on toilet design, show the video "Beijing public toilet" and arrange for participants "to see the achievement of toilet constructions in Beijing in recent years".

Issues to be discussed at the summit include toilet design and management, and the popularization of energy-efficient and environmental toilets.

The Singapore-based World Toilet Organization, which promotes itself as a global body for coordinating and promoting sanitation issues, said Beijing had been chosen to host the summit to highlight its efforts in transforming its toilets.

-- Sort of gives you a different perspective on the acronym "WTO" . . .

PROPS FROM LAW.COM: Law Technology News from Law.com has a roundup of IP blogs, and gives a tip-of-the-hat to yours truly - last, but certainly not least . . .

TARGET: DELL - Dell seems to be attracting the attention of small holding companies, eager to make their mark in the patent world.

The company has become the first to be targeted by the owner of a broad patent that covers international e-commerce.

The patent in question, 6,460,020, covers a "universal shopping center for international operation". It describes a system that allows buyers to order goods online, and have their international delivery charges calculated there and then. If they accept the total amount, they can authorize a credit card payment.

The patent was filed in December 1997 and granted in October 2002. It is owned by DE Technologies, based in Union Hall, Virginia.

DE is the company suing Dell, and it's after a percentage of the $14.9bn sales the PC giant makes selling kit overseas.

Dell is essentially being used as an example of what might happen to other companies if they fail to license DE's patent, the patented process' co-inventor and DE CEO Ed Pool told the Wall Street Journal.

Dell has yet to comment on the case, but if it attempts to fight the claim, its defence could well centre on prior art. Amazon has been doing this kind of thing long before 1997, to name but one online retailer with an international reach. However, Dell may simply decide that the cost of licensing the patent is lower than the cost of litigation, particularly since it will have lawyers to pay even if it prevails in court.

Dell is also the target of American Video Graphics, another little-known firm, but one that holds a number of graphics-related patents acquired from Tektronix. It is suing Dell, a number of other hardware companies and the leading games publishers for alleged infringement of its intellectual property.

UP NEXT: CISCO - (CNET) ConnecTel, a small Florida company is suing networking giant Cisco Systems for allegedly infringing on four of its patents.

ConnecTel claims that Cisco is using routing technology developed by its founder, Allen Kaplan, who filed for the patents in 1996. The company filed the complaint in the U.S. District Court in Marshall, Texas, on Tuesday.

Specifically, ConnecTel is accusing Cisco of stealing its intelligent data routing technology, which chooses the best data path and transmission method for packets based on multiple factors, including bandwidth, availability, security and the user's priority. ConnecTel has never manufactured products using its technology. Instead, it has licensed the technology to several unnamed companies, according to Daniel Perez, an attorney with Winstead Sechrest & Minick in Dallas, who is representing ConnecTel.

ConnecTel claims in its complaint that it offered Cisco a chance to license the technology several years ago, but that Cisco rejected the offer. Later, Cisco used the technology in its own products, according to the suit.

ConnecTel is seeking unspecified damages and an injunction to stop the alleged infringement. Perez said he expects damages to be in the hundreds of millions or even billions of dollars.

WONDERING HOW EU ANTI-PATENT PROVISIONS GOT WHERE THEY ARE? A scathing article from the International Herald Tribune gives insight on how EU policies are stifling competition.

STARTING A BUSINESS? Guy Kawasaki, entrepreneur, author, and the chief executive of Garage Technology Ventures, a venture capital investment bank for tech firms provides expert answers to questions about starting a business in Forbes.

STATING THE OBVIOUS? "Patents are being used as an offensive measure," John MacPhail, a partner at Baker & McKenzie, told attendees at a forum on software patents in Sydney on Wednesday.

"People are pooling and accumulating patents so that they can cross license with other players and make it harder for the little guys," MacPhail said. "It's a rich player's business. If you don't have any patents, you don't have any weapons in your armoury."

- Don't know about the "rich player's business" comment, but isn't that kind of the whole point of patenting?

WHO NEED PRESIDENTIAL RECOUNTS WHEN YOU HAVE EU SOFTWARE PATENT RECOUNTS? A campaigner against software patents is calling for a recount on the EU Council's vote to allow software patents, claiming that changes in EU voting rights mean the result is no longer binding.

A change in the voting weights of EU members means that the EU Council members which supported controversial changes to the EU Software Patents directive no longer have a majority vote, prompting some campaigners to call for a recount.

The EU council voted on 18 May in favour of changes to the EU Software Patents Directive that would allow the widespread patenting of software in Europe. This political agreement is not legally binding until the proposal is formally adopted, which the EU council is expected to do in a meeting at the end of November.

But, due to new voting weights for EU member states that came in on Monday -- in Article 12(1) of the Accession Act -- the countries which supported the change now fall short of a qualified majority by 16 votes, according to an analysis published by Florian Mueller, the founder of an anti-patent Web site.

Mueller is now lobbying representatives from various countries to request that the EU Council proposal is withdrawn as there needs to be further discussion or vote.

ISO JPEG 2000 LITIGATION UPDATE: In a move that allegedly threatens the ISO JPEG2000 imagery standard, Lizardtech, Inc. is appealing a US Federal Court Order, which ruled that Claim 21 of US patent #5,710,835 was invalid. The '835 patent was developed by Los Alamos National Laboratories, and licensed by Lizardtech.

In October 1999 Lizardtech sued Earth Resource Mapping (ER Mapper), claiming infringement of the '835 patent. ER Mapper is a strong supporter of the JPEG2000 image standard, which competes with Lizardtech's proprietary compressed image format. Further details on the original court action and win by ER Mapper are available at directionsmag.com.

The case has a long and expensive history. It came to an end in March 2004 when Chief Judge John Coughenour of the U.S. District Court for the Western District of Washington ruled that the '835 patent Claim 21 and its dependent claims are invalid. Judge Coughenour further ruled that ER Mapper's products do not infringe the remainder of the '835 patent.

According to ER Mapper (one of the accused parties in the litigation), if Lizardtech were to win their appeal and overturn the ruling that Claim 21 of the '835 patent is invalid, then they may require that users of JPEG2000 - or indeed any wavelet based imagery format - pay a license fee to Lizardtech to use the'835 patent.

Submarine patents covering common image formats are of serious concern in the JPEG community. In 1994, Unisys required that developers would have to pay a license fee in order to continue to use technology patented by Unisys in certain categories of software supporting the GIF format. In 2002, Forgent reported that it was seeking licensing revenue from companies using the old JPEG (not JPEG2000) image format. After obtaining $15 million from licensing their patent to a third-party licensee, Forgent sued 31 companies in 2004 for using JPEG without paying Forgent a licensing fee.

LG / MATSUSHITA WAR HEATS UP: This doozie of a patent battle has been monitored by this blog, and recent pronouncements from LG indicated that the fight is going to get worse before it gets any better. It appears that the patent fight is not restricted to the two companies, but is starting to implicate Japanese technology companies vs. South Korean companies.

South Korea's LG Electronics Inc. vowed to take action against Japan's Matsushita Electric Industrial Co. over an alleged patent infringement. The warning by South Korea's second-largest electronics maker came a day after Matsushita filed a court injunction to halt sales of LG Electronics' plasma display panels in Japan. Matsushita claimed LG Electronics violated its patents on technology to dissipate heat that is generated when the panels are activated.

In response, LG Electronics said it was ready to take counter-action, warning it would refer the issue to the World Trade Organization if the Japanese court rules in favor of Matsushita. LG Electronics also requested the Seoul government to restrict the import of Matsushita's products sold in South Korea. LG Electronics, which has LG Philips LCD Co., the world's largest flat panel maker, under its wing, said it has evidence that Matsushita has infringed on its computer-related technology.

QUOTE OF THE DAY: CNET has a report on the software patent debacle in Europe, where they have nitwits like Rufus Pollock from the Foundation for a Free Information Infrastructure (FFII) saying pompous things like "as all informed observers know, promoting innovation is a matter of striking a correct balance between protection and monopoly. Innovation and ideas must be 'adequately rewarded,' and this is precisely what software patents do not do."

Anyways, my favorite line of the article was when they described the members of the EU parliment responsible for debating the software issue:

In September 2003, the European Parliament tried to water down the council's Directive on the Patentability of Computer-Implemented Inventions by adding amendments to it that would restrict widespread software patenting.

This move was rejected by the council in May, and the parliament is expected to begin its work again in November. Because the parliament has appointed former French Prime Minister Michel Rocard--who has described himself as a "supporter of free software"--to lead its response to the council, there is speculation that it could take a hard line.

I wonder how far I could get describing myself as a "supporter of free HDTV DLP front-projector televisions" . . .

ARCHIVING THE DOT-COM-BOMBS: (MSNBC.com) For more than two years, Kirsch, a professor of entrepreneurship at the University of Maryland, has been frantically collecting business plans of the dot-com era. To let these documents lie idle and scattered is to risk losing an important piece of American business and cultural history, he argues.

"How will future historians be able to understand the texture of this time? What information will they have access to, to understand the highs and lows?" he asks. "We can't wait 100 years for documents to wend their way into historical archives. We've got to act now."

Kirsch and a rotating staff of loyal students have created a digital database -- available at www.businessplanarchive.org -- that lists more than 2,300 companies so far, mostly from 1997 to 2002. It is a painstaking process, and the records are far from comprehensive, Kirsch acknowledges, but he hopes the archives may someday prove useful in capturing the craziness of the Internet boom.

For instance, how could a scholar 50 years from now capture the brazen self-confidence of dot-com entrepreneurs? Chapters of exposition might not match two paragraphs in KaoticSpace.com's 2001 business plan that lay out the company's public relations strategy:
"We won't have to bribe or pay any media providers for promotion. It is in their users (investors) interest to know of us. By not providing their users with the most current information on us, they (media providers) would be doing their viewers a disservice, and risk losing said viewers."

Or consider the founders of FreeProductSamples.com. They identified at least 21 other companies trying to make a profit giving away beauty products and household items but were confident they could become cash-flow positive in 12 months and hit the $100 million revenue mark in five years. Executives of ThatNew.com sought to help users keep track of all the exciting Web sites popping up on the Internet by filtering them into categories like "thatnewbusiness.com" and "thatnewshow.com."

To capture more of that history, Kirsch recently launched a second project that allows individuals to share their stories from the bubble. At CreativeDestruction.org anyone who worked at Internet technology companies during the 1990s can log on and write about the experience or take a survey about what the period was like.

- Tip of the hat to James Goedken for passing along the story . . .

OH, WHAT THE HECK: It seems everybody else is posting something of a political nature these days, so I thought I'd throw out something that struck me as monstrously vapid written by the pinko Boston Globe. Of course the Globe, who likes to blame Bush for everything from hurricanes to stubbed toes, came out in its op-ed pages to (surprise!) blame Bush for the vaccine shortages. Not being one to leave well enough alone, Robert Kuttner goes on to give his magical recipe for never being short on vaccines again:

What should the administration be doing? First, it should require several drug makers to work with the CDC to develop flu vaccines. The industry is profitable thanks to extended patent protection, publicly funded basic research, and FDA seals of approval. It should gladly make vaccines at only a normal profit as a civic thank-you for all it gets from government.

Second, Congress should pass a law, as it did in the swine flu crisis of 1976 indemnifying manufacturers and physicians against lawsuits. If the FDA approves a vaccine, that should be sufficient assurance. Government could set up a public compensation fund for the rare victim of a faulty vaccination.

Third, government should be the purchaser and distributor of the vaccines. That would both guarantee manufacturers a market and would create a rational plan for priority distribution. And these vaccines should never be patented. As Dr. Jonas Salk, creator of the polio vaccine, famously said: "Who owns my vaccine? The people! Could you patent the sun?"

Oh dear. Now, for those that feel I may be a little heavy handed on the Globe, consider what was posted in the People's Weekly Word Newspaper a few days ago:

JWJ also estimated yearly savings of $140 billion by stripping drug companies of monopolies over marketing drugs . . .

In addition, JwJ urges the U.S. eliminate patent monopolies by having the federal government finance all drug research. Publicly funded research, plus similar research at nonprofit organizations such as universities and foundations, account for more than half of total U.S. drug research spending, JwJ says. Drug companies spent $33.2 billion on R&D last year, their lobby says. But Families USA points out the drug companies spent more than double that on advertising and marketing.

Just where do they find these people?

NOTE: It is interesting that, although Jonas Salk did not find it appropriate to patent the polio vaccine, he appears to be an inventor on 7 patents related to AIDS prevention and treatment.