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.