Monday, October 31, 2005

SUPREME COURT GRANTS REVIEW OF MEDICAL PATENT THAT "CORRELATES" A TEST RESULT - AND DENIES MICROSOFT'S PETITION IN THE MEANTIME: The Supreme Court announced today that it will grant review of LabCorp v. Metabolite case, which was previously described as "dangerous" for the medical community. Labcorp's petition to the Supreme Court described the stakes thusly:

The Federal Circuit has construed a patent to grant a monopoly over a scientific fact, holding that doctors directly infringe the patent by thinking about a basic medical fact critical for treatment decisions, and that a third party induces infringement merely by reminding doctors of this fact. This decision, if allowed to stand, poses a severe threat to patient care. The opposition fails to dispel the intolerable uncertainty the Federal Circuit has imposed on all those who seek to provide doctors with the medical facts necessary for effective treatment of their patients, and all those who seek to comply with what should be uniform legal standards under the Patent Act. The Court should grant certiorari to resolve this uncertainty.

The issue in the case revolves partly around statutory subject matter (when it rains it pours), and particularly regarding the patenting of a natural phenomenon. Claim 13 of Metabolite's 4,940,658 patent recites the following:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded
animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

The sticking point in this claim is the word "correlating." According to LabCorp, there is no description of how the correlation occurs in the specification. And without this precise description, there is no enablement of the cited claim (see, e.g., Lizardtech, which was decided after this case). Furthermore, LabCorp argues that letting claim 13 stand from a patentable subject matter standpoint would open the door for parties to claim patent monopolies "over basic scientific facts rather than any novel inventions.

Arguments will be scheduled for next year. It is anticipated that the Court will address many of the patentability issues that have cropped-up over the last few years.

ABOUT MICROSOFT: Microsoft has not gotten much help from the courts (or from the USPTO for that matter) in dealing with their problems with Eolas. Not straying from the script, the Supreme Court denied Microsoft's petition for a writ of certiorari, and returned the entire case over to the district court to resolve a number of pending issues.

One point that was brought up by Dennis over at Patently-O was how the USPTO's claim interpretation will affect Microsoft's behavior towards its AcitveX plug-ins. Specifically, the Examiner found that, with respect to the active maps disclosed in the prior art, it is the browser application, and not "an executable application separate from the browser application," that makes the areas "interactive" by waiting for a user input, such as a mouse click. And because the prior art executable applications terminate after generating a static image, there is no on-going manipulation and control by the user of the object displayed within the browser-controlled window. As such, the prior art did not teach "interactive processing," as required by the claims (see page 5 of the Notice of Intent to Issue Reexam Certificate). Eolas' patent did not rely on a user event detected by the browser (such as a mouse click), but rather responded to the browser parsing an "embed text format" that is detected in the hypermedia document when first being loaded into the browser.

I don't see the Examiner's interpretation as being too limiting to Eolas, since many of these features have been already incorporated into ActiveX. However, there were some interesting comments made by the Examiner with respect to the Viola Browser application that was cited as prior art in the Reexam. I'd be interested to receive any feedback from the more hardcore programmers on these points:

If the Viola tags are considered as arguably corresponding to the instant claimed '906 "embed text format" (in the sense that the Viola tags specify "the location of at least a portion of an object external to the first distributed hypermedia document" as claimed in '906 claims 1 and 6), then the Viola script program specified between the tags is not equivalent to the instant '906 claimed external "object" when the claimed '906 external "object" is interpreted in a manner consistent with the specification of the '906 patent.

The Viola, "clock.v" script is a high-level source code PROGRAM. In contrast, the scope of the claimed '906 external "object" broadly encompasses myriad types of data objects, including self-extracting data objects [see '906 patent, col. 3, lines 33-51].

The scope of the claimed '906 external "object" is broad when construed in a manner consistent with the specification . . . However, the scope of the claimed '906 external "object" clearly does not read upon a high-level source code PROGRAM, such as a Viola script, nor does it read upon an object in byte-code form.

When the scope of the claimed '906 external "object" is construed in a manner consistent with the specification, it is clear that any executable component of the claimed '906 external data "object" is limited to performing self-extraction of the compressed data object . . . Although a self-extracting data object typically includes executable code to expand the compressed data object to its original size, this type of self-extraction extracts DATA that has no relationship to a high-level source code PROGRAM in the form of a Viola script, or a byte-code file, or the like.

Also, with respect to the "executable application" limitation:

While expert witnesses and dictionaries (considered as extrinsic evidence) may differ regarding the proper construction of the instant claimed "executable application," the Central Processing Unit (i.e., CPU or microprocessor) found in every computer system has only a single, precisely defined interpretation as to what constitutes an "executable application." When the CPU initiates a "fetch and execute" cycle, the program counter is loaded with the address of the next executable instruction. To be "executable" the contents of the memory location pointed to by the program counter must contain an instruction in binary form that is a member of the native instruction set of the microprocessor (i.e., a binary machine language instruction). The binary representation of the precise portion of the machine language instruction that determines what kind of action the computer should take (e.g., add, jump, load, store) is referred to as an operation code (i.e., OP code). From the perspective of the CPU, if a recognizable machine language instruction (i.e., a native CPU instruction) is not found within the memory location pointed to by. the program counter, the computer will crash.

The Viola system uses "C-like" Viola scripts that must be INTERPRETED by the browser and then TRANSLATED or CONVERTED into binary native executable machine code that can be understood by the CPU. Alternately, the Viola script is precompiled to intermediate byte-code form and the byte-code is interpreted (i.e., translated) into binary native executable machine code at runtime. This extra step of translation results in an unavoidable performance penalty, as interpreted applications run much slower than compiled native binary executable applications.

Accordingly, the "C-like" Viola scripts (or corresponding byte-code. representations) are not "executable applications" from the perspective of the CPU, which is the only perspective that really matters at runtime. A conventional CPU is only capable of processing binary machine language instructions from its own native instruction set.

Without an intermediate translation step performed by an interpreter component of the Viola browser, a Viola script (or corresponding byte-code representation) cannot be processed as an executable application by the CPU.

Significantly, the instant '906 specification is silent regarding the use of applications that rely upon scripts that must be interpreted before they can be executed. The instant '906 specification is silent with respect to interpreting code prior to execution. The instant '906 specification is silent with respect to the use of byte-code intermediate forms.

AND LAST, BUT NOT LEAST, a shout goes out to Stephen Nipper's Invent Blog that received an anonymous fax last year regarding US Patent 5,495,581, which apparently has some application to Eolas' '906 patent (to see the analysis, click the link to Stephen's Blog). In a Miscellaneous Incoming Letter, received in the PTO on October 16 in connection with the Reexam, the letter states that "[a] patent interference may exist between the matter of the above identified case and US Patent 5,495,581 and continuations stemming from it. Please have a look at this information by Googling: eolas interference nipper."

Bloggers - we HAVE arrived.

Friday, October 28, 2005

FRIDAY FUNNY: It started off as something of an inside joke among colleagues, but now it has come to this. Enjoy.

Bud Light Presents: Real Men of Genius

[Real men of genius]

Today we salute you, Mr. Anti-Software Patent Guy.

[Mr. Anti-Software Patent Guy!]

Some people only complain about patent quality, but you know enough to step it up to the next level: advocating the total abolition of all software patents. Patents? You don't need no stinkin' patents.

[Copyright is all you need!]

There's a specification - maybe even some drawings - and a bunch of claims somewhere in the back, but only you know that the only way to determine the scope of a patent is by reading the title.

[They're trying to patent the Internet!]

It could be Microsoft. Or Google. Or Or some holding company you've never heard of. But whoever it is, their patents cover algorithms you thought of 10 years ago. And besides, the ideas are pretty stupid anyways.

[Don't forget the one-click-patent!]

While others rest, you can't . . . because somewhere a patent is being filed on code you are writing this very moment - and that patent's going to make someone a lot of money.

[It's all a scam anyways!]

So crack open an ice-cold Bud Light, Mr. Anti-Software Patent Guy, because if you filed a patent application for being smarter than the rest of us, you'd get a first-action allowance.

[Mr. Anti-Software Paaaaatent Guy!]

UPDATE: After receiving an e-mail from one of the foreign associates our firm works with, it dawned on me that some of our overseas friends may not be entirely familiar with the commercial the post spoofs. For a quick run-down of "Real Men of Genius," click here

Thursday, October 27, 2005

HOW THE RIM/NTP PATENT DISPUTE MAY AFFECT FUTURE LITIGATION WITH PUBLICLY-TRADED COMPANIES: Now that the brouhaha over the RIM/NTP has temporarily died down, CNet has provided a handy chronology of the case, listing key events in the dispute.

After reading through it, I noticed that the original verdict (November 21, 2002) found that RIM was liable for (only!) $23.1 million when it was found they infringed 16 claims from 5 of NTP's patents. Having the benefit of hindsight, it would seem that RIM would have been better off by simply settling the case during that time.

Since RIM decided to fight, this was the reward for their efforts:

May 23, 2003 - Court increases RIM damages and hikes the royalty rate to 8.55 percent, which has to be set aside from RIM's U.S. sales until the case is concluded.

Aug. 5, 2003 - Court issues injunction banning U.S. BlackBerry sales, but stays the ruling pending an appeal.

March 16, 2005 - RIM says it agrees to pay $450 million to settle the dispute with NTP, sending its stock soaring more than 17 percent.

June 9, 2005 - RIM shares fall 5 percent after the two companies fail to finalize a settlement.

October 7, 2005 - RIM stock plunged 10 per cent before trading was halted
on news that the Federal Circuit rejected the BlackBerry maker's request for a
new hearing.

October 21, 2005 - trading of RIM stock is halted for the second time in three weeks when the Federal Circuit denied RIM's request to delay sending the case back to a lower court while RIM sought certiorari to the U.S. Supreme Court. The Supreme Court subsequently denied taking that case, further hitting RIM's stock.
What a rough ride. Of course, there are still the reexaminations being conducted in the USPTO, which currently bode in RIM's favor, but it is still unkown how NTP's responses will overcome the rejections being made in the proceedings. And if the judge rules to force an injunction on RIM, watch out.

This all has to be welcome news for holding companies, which now seem to have investor skittishness over patent infringement cases working in their favor. Just in the last week, Intel and Amazon had to explain to stockholders that earnings were less-than-desirable due to settlements ($300 mil and $40 mil respectively) made late in pending litigation. Each stock got hit over the news.

After seeing the nightmare that RIM is currently experiencing (never mind the potential injunction), holding companies have some pretty compelling arguments for publicly-traded defendants to reach settlement earlier (such as Forgent, which recently had RIM settling with them over their JPEG patent).

While patent infringement cases have dogged companies for years, the public is getting more in tune with the effect of patents, and the potential harm (or benefit, depending on which side you take) that they can cause. And the "hotter" each story becomes in the press, the greater the likelihood will be that investor confidence in a stock will wane.

USPTO RELEASES NEW EXAMINATION GUIDELINES FOR SOFTWARE PATENTS: In light of Ex Parte Lundgren, the USPTO has released a 59-page Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility. The Guidelines are intended to officially state the USPTO's understanding and application of current caselaw. Interestingly, the Guidelines state that "[a]ny failure by USPTO personnel to follow the Guidelines is neither appealable or petitionable."

The Guidelines don't really contain anything earth-shattering, but they acknowledge the Lundgren decision (see p. 45), and state that "USPTO personnel should no longer rely on the 'technological arts' test to determine whether a claimed invention is directed to statutory subject matter. There is no other recognized exceptions to eligible subject matter other than laws of nature, natural phenomena, and abstract ideas."

The Guidelines state that, prior to evaluating the claimed invention under 35 U.S.C. § 101, USPTO personnel are expected to conduct a thorough search of the prior art tofurtherl contribute to USPTO personnel's understanding of the invention. Both claimed and unclaimed aspects of the invention described in the specification should be searched if there is a reasonable expectation that the unclaimed aspects may be later claimed.

The first step for Examiners is to determine whether claims falls within one of the four enumerated categories of patentable subject matter recited in 35 U.S.C. § 101 (process, machine, manufacture or composition of matter). Once this determination is made, the claims are further analyzed to see if they are directed to nothing more than (1) abstract ideas (such as mathematical algorithms), (2) natural phenomena, and (3) laws of nature. If so, the claims are not eligible and therefore are excluded from patent protection. However, if the claims recite a practical application of any of the 3 exceptions, then patentability may still be established.

To satisfy section 101 requirements, the claim must be for a practical application of the § 101 judicial exception, which can be identified in two ways:

  • The claimed invention "transforms" an article or physical object to a
    different state or thing.
  • The claimed invention otherwise produces a useful, concrete and
    tangible result.
The examiner should review the claim and determine if it provides "a transformation or reduction of an article to a different state or thing." If the examiner finds such a transformation or reduction, the examiner shall end the inquiry and find that the claim meets the statutory requirement of 35 U.S.C. § 101. If the examiner does not find such a transformation or reduction, the examiner must then ask whether the claims recite a practical application of an abstract idea, law of nature, or natural phenomena that produces a useful, concrete and tangible result.

In determining whether the claim is for a "practical application," the focus is on the final result achieved by the claimed invention. The steps taken to achieve a particular result are not as relevant. If the claim is directed to a practical application of the § 101 judicial exception producing a result tied to the physical world (that does not preempt the judicial exception), then the claim meets the statutory requirement of 35 U.S.C. § 101.

For an invention to be "useful" it must satisfy the utility requirement of section 101. The USPTO's official interpretation of the utility requirement provides that the utility of an invention has to be (i) specific, (ii) substantial and (iii) credible. If the specification discloses a practical application of a § 101 judicial exception, but the claim is broader than the disclosure such that it does not require a practical application, then the claim must be rejected.

The "tangible" requirement does not necessarily mean that a claim must either be tied to a particular machine or apparatus or must operate to change articles or materials to a different state or thing. However, the tangible requirement does require that the claim must recite more than a § 101 judicial exception, in that the process claim must set forth a practical application of that § 101 judicial exception to produce a real-world result.

To determine whether a "concrete" result is present, the process must have a result that can be substantially repeatable or the process must substantially produce the same result again. The opposite of "concrete" is unrepeatable or unpredictable. Resolving this question is dependent on the level of skill in the art.

The USPTO bears the initial burden of presenting a prima facie case of unpatentability. The examiner should review the totality of the evidence (e.g., the specification, claims, relevant prior art) before reaching a conclusion with regard to whether the claimed invention sets forth patent eligible subject matter. The examiner must weigh the determinations made above to reach a conclusion as to whether it is "more likely than not" that the claimed invention as a whole either falls outside of one of the enumerated statutory classes or within one of the exceptions to statutory subject matter.

See Guidelines here

Dennis Crouch's Patently-O also provides a great summary of the Guidelines.

Tuesday, October 25, 2005

SCIENTIGO STAKES CLAIM TO XML IN PATENT PORTFOLIO: According to ZDNet, Charlotte, N.C.-based Scientigo (pronounced "see-EHN-ti-go") owns two patents (No. 5,842,213 and No. 6,393,426) that cover the transfer of "data in neutral forms." The company further claims that these patents cover the data-formatting standard XML.

Of course, Scientigo is looking to "monetize" these patents.

However, rather than seek outright royalties, Scientigo is in the process of forging a tentative agreement with an intellectual-property licensing firm to handle contracts with third parties. A final agreement could be announced early next week. It's not clear what Scientigo has in mind, but they seem to be trying to placate the web community over the notion that they are poised to corner the XML market.

For those that may not be too familiar with XML ("Extensible Markup language"), XML is the universal format for structured documents and data on the Web, and was officially released by the W3C in 1996. XML is a subset of the older SGML, that enables generic SGML to be served, received, and processed on the Web just like HTML. Basically, XML is a system for defining, validating, and sharing document formats. XML uses tags to distinguish document structures, and attributes to encode extra document information. For further information on XML, click here or here.

So what do the claims cover?

Well, in the '213 patent, claim 11 recites the following:

11. A method of transferring data in electronic form from a computer comprising the steps of:

a) organizing and storing the data in neutral form that is to be transferred;

b) organizing and storing the names, definitions and properties of the structural tags used to express the data in neutral form; and

c) transferring the data expressed in neutral form along with the names, definitions and properties of the structural tags that make up that neutral form data.

And the '426 patent goes slightly further in defining the claimed features:

1. A method of modeling a set of information for storage in neutral form in a computer based environment, comprising the steps of:

a) modeling the set of information into instance data sets, each composed of an instance cluster comprised of data instance nodes, each data instance node in an instance cluster containing an assigned distinguishing structural tag comprising:
(1) a data reference
(2) a data type
(3) a data organization; and

b) each structural tag having defined components for each data value in
each instance cluster.

That pretty much covers XML. Accordingly, the software community began scrambling for more information, and in the process ran the patents past Sun's Tim Bray, who is credited with co-inventing XML. Here is what Tim had to say on David Belind's blog:

The notion that an application filed in January 1997 can cover a technology whose first public draft was in November 1996, and which was based on a then-ten-year-old ISO standard, seems ridiculous on the face of it. So one assumes that they're not trying to put a tollbooth on XML itself, it must be some particular B2B application of it or some such. There are no specifics of what they're claiming on their Web site.

All valid observations. One potential target specifically named by Scientigo is, with companies like Microsoft and Oracle taking a back seat for the time being. But I would find it unusual for a company like Scientigo to go directly after the big players at this time - typically the standard protocol for companies like Scientigo is to go after smaller fish to establish a royalty rate for the patent, and then pull the trigger on companies like Amazon.

One thing I noticed that runs in Scientigo's favor, is that they managed to at least cite some non-patent literature (including the ISO 10303 standard) which may make it slightly more prickly to find "non-cumulative" art. However, there appears to be a veritable army of companies that are looking to pounce on this patent at the first whiff of litigation. Without having done any searching myself, I can only guess that there are at least a few W3C publications out there that could cause problems for this patent.

Monday, October 24, 2005

THE ECONOMIST RELEASES IP SURVEY - The Economist is giving special attention to intellectual property this week, noting that IP has become the most important resource for most companies, replacing land, energy and raw materials. According to the survey, as much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s (copies of the survey can be purchased here).

For IT and telecom companies, the role of intellectual property has changed radically over the years. What used to be relegated to lawyers and engineers in R&D labs has been heartily embraced by the boardroom. "Intellectual-asset management" is now recognized as a strategic business issue. In America alone, technology licensing revenue accounts for an estimated $45 billion annually; worldwide, the figure is around $100 billion and growing fast.

Technology firms are seeking more patents, expanding their scope, licensing more, litigating more and overhauling their business models around intellectual property. Yet paradoxically, as some companies batten down the hatches, other firms have found ways of making money by opening up their treasure-chest of innovation and sharing it with others. The rise of open-source software is just one example. And a new breed of companies has appeared on the periphery of today's tech firms, acting as intellectual-property intermediaries and creating a market for ideas.

The survey provides many statistics that indicate that this trend is heading for an upswing, including a finding that 60% of technology and telecoms firms report an increase in licensing compared with the previous decade, and 70% report fewer obstacles to reaching such agreements.

There are also a number of excellent articles that accompany the survey, including:

A market for ideas - discussing the aforementioned upswing in IP development anlicensingng;

Patent sense - how the patent system works in the US and abroad;

The arms race - analyzing the proliferation of patents within institutional companies, noting that, in general, companies file almost two patents for every $1m they spend on R&D;

Voracious venture - using patents as business models for companies;

An open secret - the impact of patents on open source;

Thinking for themselves - Asia's embrace of IP and patents, and future plans to take on the west in patenting technology;

The liquidity of innovation - using patents as currency in today's business climate; and

An interview with Kenneth Cukier, author of the survey and technology correspondent for The Economist.

Friday, October 21, 2005

BEWARE LUNDGREN (I.E. THE PERILS OF IGNORING "TECHNOLOGICAL ARTS" FOR YOUR PATENTING STRATEGIES) - By now, many of you in the blogosphere have heard about Ex Parte Lundgren, where the US Board of Patent Appeals and Interferences (BPAI) eliminated the "technological arts" test in determining patentable subject matter. Patently-O, I/P Updates, and The Patent Prospector all have in-depth analysis of the decision and the findings made by the Board. Greg Aharonian, who originally broke the story, has more details in his newsletter.

To quickly summarize, there was a notion being passed-off by the USPTO examining corps, that a patent had to be "in the technological arts" in order to be eligible for patenting. This concept was extracted from language allegedly contained in a number of old CCPA and BPAI decisions (In re Musgrave, 431F.2d 882, 167 USPQ 280 (CCPA 1970); In re Toma, 575 F.2d 872, 197 USPQ 852 (CCPA 1978); and Ex parte Bowman, 61 USPQ2d 1669 (Bd. Pat. App. & Int. 2001)(nonprecedential)). Unfortunately, reliance on these cases was misguided, since the decisions didn't validate the actual position, and there also was no supporting authority in any of the USPTO regulations.

Accordingly, the BPAI decided to put an end to the informal practice of issuing non-statutory subject matter rejections based on the "technological arts" test:

Our determination is that there is currently no judicially recognized separate "technological arts" test to determine patent eligible subject matter under § 101. We decline to create one. Therefore, it is apparent that the examiner's rejection can not be sustained.
As a practical effect, the decision should quell any "hold-over" examiners in the USPTO that still feel the need to reject business-method patents under 35 U.S.C. 101. Most practitioners still get the occasional 101 rejection from newly-minted examiners or from those that never got word of the State Street decision by the Federal Circuit.

Thus, the decision would seem to be an exclamation point on the concept that "anything under the sun made by man" would be patentable. And if your patenting strategies were limited to the United States, you would be absolutely correct.

However, if you intend to broaden your patent protection beyond the borders of the United States, you might as well pretend that the decision (as well as State Street) never happened.

While the U.S. undoubtedly has the most liberal policies regarding patentable subject matter, the rest of the world has a much more stringent requirement on patentable subject matter. In fact, Europe has a specific "technical effect" requirement on claims that include business methods. Individual countries within the EU (such as the UK) have even more demanding requirements for the showing of a "technical effect." Thus, there is a clear disconnect in this regard between the patent policies of the US and the rest of the world. Chances are, if Lundgren's patent were to be submitted to the EU Patent Office today, it would be rejected as being non-statutory (the EU has a clear ban on business methods "as such").

I've always advised clients who are patenting business methods to adopt the EU approach, if they ever intend to file patents abroad. At a minimum, the specification should contain an embodiment that discloses the computers, servers, routers, etc., along with algorithmic diagrams, clearly disclosing a software process for performing the invention. If you're going to stand a chance at getting a business method patent allowed in the EU today, your only hope is by claiming the software process underlying the business method. Of course, the EU Patent Office lets a few business-method patents slip through the cracks every now and then, but you're better off playing by their rules from the start, instead of paying thousands of dollars in EU maintenance fees, only to find out that your disclosure won't support the technical requirements being demanded by the EU examiner.

Also, the EU is getting more and more bizarre by the day with its handling of software patents. A wonderful example of this is the "little man" requirement decided recently on an Oracle software patent. This test asks whether an artefact or process is new and non-obvious merely because there is a computer program; or would it still be new and non-obvious even if the same decisions and commands could somehow be taken and issued by a little man at a control panel, operating under the same rules. If the little man can do it then the computer program is merely a tool, and the invention is not about computer programming at all.

It's enough to make your head explode. But it goes to show that the decision in Lundgren is a dangerous precedent to adopt if you have global patent aspirations. Unfortunately, we can't make the rules in the EU - we just navigate our way through the given rules to get the broadest protection possible, regardless of how strange the journey is along the way.

Thursday, October 20, 2005

SHOULD NEW CLAIM CONSTRUCTION ARGUMENTS BE ALLOWED ON APPEAL? The United States Court of Appeals for the Federal Circuit was established under Article III of the Constitution on October 1, 1982. The court was formed by the merger of the United States Court of Customs and Patent Appeals and the appellate division of the United States Court of Claims. One of the primary reasons Congress created the Federal Circuit was to bring uniformity to patent law.

Ever since Markman, the Federal Circuit established that interpretation of a patent is a question of law and, as such, is decided by the court alone, and not the jury. Furthermore, when the Federal Circuit reviews a claim construction from a lower court, the review is conducted under the plenary de novo standard (i.e., without deference to the lower court).

Under conventional procedural rules, issues not raised in the lower court will be waived on appeal. However, the interesting question has been raised that, if the Federal Circuit is really trying to establish a "correct" interpretation of a patent, why can't new arguments pertaining to claim construction be introduced on appeal?

When considering the meaning of a patent, the Federal Circuit is empowered to (a) adopt the claim construction proffered by the Appellant, (b) adopt the claim construction proffered by the Appellee, or (c) adopt its own interpretation of the patent based in the record, even if the specific interpretation wasn't argued by either party in the lower proceeding. A classic example of the last phenomenon can be found in Exxon Chem. Patents, Inc. v. Lubrizol Corp, 64 F.3d 1553 (Fed. Cir. 1995), where the court adopted a claim construction advanced by neither of the parties at trial (although the decision stated it was only a "slight modification" of one of the argued interpretations). As Judge Nies' stated in her dissent:

[b]y advocating a different interpretation of the claim sua sponte, the majority required Exxon to litigate not only its opponent's position but also the unknowable position of the appellate court.
Thus, the defendant essentially won on a claim interpretation that could never have been raised on appeal because the interpretation was not argued in the proceeding below.

The Federal Circuit has been less-than-clear in providing guidance for practitioners regarding claim construction. At times, the opinions of the court regarding appeal seem contradictory. To complicate matters further, litigants have the tendency to file conditional cross-appeals to preserve various issues, sometimes to vocal disapproval by the court.

Chicago-Kent College of Law will be hosting the 2nd annual Federal Circuit Clerk Roundtable, where numerous former clerks from a variety of backgrounds will meet on Monday, October 31 to address these very issues. It sounds like a very interesting event, and I hope to be able to attend (maybe I'll see you there).

Wednesday, October 19, 2005

IS VoIP GETTING SET FOR A PATENT SHOWDOWN? As the appeal of voice-over IP (VoIP) grows among businesses and consumers, telecom vendors are scrambling for position. Earlier this month, a subsidiary of Sprint/Nextel zapped Vonage, VoiceGlo and with a patent infringement suit (by amazing coincidence, Vonage is in the midst of preparing for an initial public offering). Sprint/Nextel is also seeking an injunction as part of the suit. Yesterday, Teles announced the granting of a patent, and then proceeded to immediately include it in the ongoing litigation the company has against AVM, Quintum and Cisco.

Later next month, VoIP companies are expected to address the issue of 911 service. Customers in some states have reported problems getting through to an emergency operator, sometimes to disastrous results (Texas and Connecticut have sued VoIP companies for inadequately informing customers that they may not have the same access to the 911 network they did under traditional phone service). Also, because the calls aren’t part of a regular phone network, it sometimes is not immediately clear to a 911 operator where a call is coming from on a VoIP line. VoIP providers, use broadband — cable, wireless or DSL — operated by other companies to carry customer calls.

The FCC has mandated that VOIP providers ensure that when their customers dial 911 they are connected with an operator who can immediately tell the location of the call. The deadline for this service is set for Nov. 28, 2005 (although it is probable that this deadline will get pushed back again).

Which brings up the question of patents - if companies are scrambling to implement E911 services on their VoIP phones, chances are that someone's going to stumble right into a patent on 911 services.

Currently, most telephone service providers rely on Public Safety Answering Points (PSAP) that are equipped to receive 911 calls. The PSAP operators take emergency calls, identify the caller's location, request the program to match the PSAP with the caller's area and then initiate a three-way call with the appropriate emergency response operator.

One problem with PSAP's is that they serve only 67 percent of all U.S. households. Also, PSAP's rely on databases containing names, phone numbers and addresses, and if the information is incorrectly stored in the database, emergency crews will be unable to locate the caller. Furthermore, if emergency calls are made away from home, the operator needs to be informed where you are.

Accordingly, many VoIP companies have been filing patents to address these issues, and some have already had their patents issue. Right now there doesn't seem to be a dominant patent yet that may become a gateway for E911 Services. And because of the vagueness of the FCC mandate, it's not entirely clear how the VoIP companies are supposed to provide these services. But it is clear that when government mandates particular technology for certain products, it can create potentially huge patent headaches for complying companies.


From the Yahoo News Wire:

In the news release, "Technology Managers Forum Selects MCI for 2005 Best Practices Award for Technology Innovation," issued earlier today by MCI, Inc. over PR Newswire, we are advised by the company that the third paragraph, first sentence, should read "patent-pending" rather than "patent- ending" as originally issued inadvertently.

Tuesday, October 18, 2005

MICROSOFT STARTS A SURGE (OF SORTS) IN PATENT FILINGS IN INDIA: As reported in, Microsoft has apparently reacted to India's modification of its software patent laws in 2003 by increasing patent filings by 5 times over the previous year.

Now, before anyone gets excited, the tally for Indian patents filed by Microsoft is 304 patents, which is a tiny fraction of its US filings. Nevertheless, this appears to be a significant spike in patenting activity for Microsoft. Although Microsoft has been in India for over 10 years, some of those years were devoid of patent filings altogether:

1998 - 1 patent application filed
1999-2001 - 0 patent applications filed
2002 - 13 patent application filed
2003 - 67 patent application filed

According to the Indian Patent Facilitating Center (PFC) of the Technology Information Forecasting Assessment Council (TIFAC), the technological areas which Microsoft filed included data management (42), network (39), Web-related e-mail (30), graphics, image (20), encryption, security, authentication (17), wireless (10), speech recognition, database and architecture (9 each).

Friday, October 14, 2005

GETTING INTO THE WAYBACK MACHINE: One great tool that I've used for a while is While some of my compatriots are familiar with this site, I was surprised that many others have never heard of it. For those of you seeking "other" prior art, this is a must-have for your invalidating arsenal.

What is it, you say? Well, the short version is that a group called the Internet Archive has started a huge effort over 10 years ago to archive digital content that has amassed on the Internet. Eventually, the goal is to create an "Internet library" that scholars, researchers and historians can access to view archived digital content and web pages (if you're interested in the long explanation, click the link above).

The database is particularly useful for quickly checking potential public use of patented technologies, through announcements and "news" reported on company website. Also, if you're dealing with standardized technologies (e.g., IPv4/IPv6), you can browse through publications released by standardization and trade groups during a specific time periods (e.g., January-May 1998) to see what was known in the art at the time. On occasion, you can get documents published by speakers that pertain to specific applications - if you get lucky (like I did last week), you can find a "killer reference" that can make you very, very happy.

Thursday, October 13, 2005

MICROSOFT ATTEMPTS TO INVALIDATE EXCEL PATENT: Back in June of this year, Microsoft was hit with a $8.96 million judgment for infringing on a 1994 patent (US 5,293,615) held by a Guatemalan inventor, Carlos Amado. Amado's patent covered technology that linked Microsoft's widely used Excel program with its Accel database. This was one of those cases where Microsoft - while losing the judgement - could still claim some sense of victory, as Amado originally was asking for $500 million in damages.

Not taking the judgment lying down, Microsoft filed an appeal with the Federal Circuit (docket 05-1531) in August, and had their reexamination request granted last month at the USPTO for the '615 patent. In the request, Microsoft is seeking only to invalidate claim 21, which is the broadest of the independent claims:

21. An apparatus for carrying out spreadsheet calculations using data imported from a database via a point and shoot user interface to select a database record for loading into a specified range of the spreadsheet, comprising:

a computer having a display and a memory having one or more storage locations;

a spreadsheet program, having a spreadsheet data format, in execution on said computer for displaying a plurality of cells which define a spreadsheet, each of said cells having a unique identification code indicative of the location of said cell on said display and each said cell being associated with one or more of said storage locations in said memory, and wherein any one or more of said cells can be selected by a user as part of a selected range using a cursor, and wherein said spreadsheet program includes program code to control said computer to receive data from said user and to store said data in the storage locations associated with user designated cells wherein said data can be text, numbers, or formulas including mathematical or logical operators relating contents of the storage locations associated with one or more of said cells to the contents of the storage locations of one or more other ones of said cells mathematically or logically, and wherein said computer is controlled by said spreadsheet program to display on said display the contents of said storage locations associated with each said cell, except where the contents of the storage locations associated with a particular one of said cells are a formula, in which case the computer is caused to display the results of the mathematical or logical operations defined by said formula at the corresponding location for said cell on said display, and wherein said spreadsheet program includes a recalculation routine for controlling said computer so as to perform a recalculation upon receipt of a recalculation command where all formulas associated with all cells of said spreadsheet are recalculated using whatever the current values are for each said cell stored in the associated storage locations in said memory at the time the recalculation command is received and any new results stemming from recalculation of said formulas where new contents since a previous recalculation exist in the storage locations associated with said cells mathematically or logically related by said formulas are displayed on said display at the location of the corresponding cells;

a database file stored in said memory and containing one or more records, each said record is comprised of one or more fields, each said field contains data;

first means in execution on said computer for controlling said computer so as to display on said display one or more of said records of said database file within a window while said spreadsheet program is in execution;

second means in execution on said computer and coupled to said recalculation routine and to said database file and to said first means, for controlling said computer to display a cursor in said window in which said records from said database file are displayed, said cursor being movable within said window under control of said user and controlling said computer to recognize a select command entered by said user such that any said data record pointed to by said cursor at the time said select command is given by said user is selected, and for controlling said computer so as to automatically load said selected database record into said selected range of said spreadsheet when said recalculation command is given, said loading including automatically reformatting data of said selected database record to said spreadsheet data format prior to the recalculation of said spreadsheet, such that when said recalculation is performed by said spreadsheet program, the contents of the storage locations associated with the cells in said selected range will be set equal to the contents of the selected database record before the recalculation starts thereby forcing the storage locations associated with the cells of said selected range to be loaded with the contents of said fields of said selected database record before the recalculation starts.

I'm not kidding - that is the broadest claim in the patent. Anyways, Microsoft is relying primarily on documents and disclosures pertaining to SuperCalc, which was a spreadsheet program available in the 1980's that permitted the linking of a spreadsheet and a SuperCalc window displaying data from a database file. Also, Microsoft is citing the Q+E program, which also was available in the 1980's, that allowed linkage of an Excel spreadsheet to a Q+E window displaying data from a database file. Neither of these documents were considered by the Examiner during the original prosecution of the '615 patent.

At this point, it is likely that the USPTO will issue a non-final rejection in the coming months. Once the rejection is mailed, the stage will be set for another reexamination showdown for Microsoft . . .

Wednesday, October 12, 2005

JAPANESE MINISTRY RECOMMENDS RESTRICTING SOFTWARE PATENTS: The Ministry of Economy, Trade and Industry (METI) in Japan, which oversees the Japanese Patent Office, recently established a “Study Group on Legal Protection for Software and Promotion of Innovation” in order to analyze innovation in the field of software.

The study is intended to review how software intellectual property rights should be handled by the various governmental agencies and bureaus, and to work with industries to implement any changes. Given the rise of open-source software and the increasing recognition of the importance of interoperability among software packages, the Ministry is attempting to establish the "appropriate balance" between the protection and utilization of intellectual property rights.

The interim report (which hasn't been posted yet on the METI site) suggests that due to the interconnection of computer software operating systems and applications software, allowing patentees to continue to hold monopolistic developers' rights over existing software platforms could deter the development of new programs.

Tuesday, October 11, 2005

ARE AUTO-MAKERS STRONG-ARMING SUPPLIERS TO SURRENDER PATENTS? During an industry conference meeting last week in Baden-Baden Germany, there was considerable grumbling by electronics suppliers over alleged hardball negotiating tactics used by OEM's to secure orders from suppliers. When Wolfgang Runge, who is the program committee chairman of the VDI Congress on Electronic Systems for Vehicles, blasted automakers over their treatment of suppliers, his comments "struck a nerve" with the other suppliers at the conference who roundly applauded his remarks.

Allegedly, a growing practice has emerged in the industry, where OEM's are requiring suppliers to surrender all of their IP rights in order to win orders from car makers. Most of the suppliers are small- or medium-sized companies, who have invested considerable sums in protecting the intellectual property surrounding their products. More shockingly, the arrangements entitle OEMs not only to use the fruits of their suppliers’ R&D efforts for their own benefit, but also to provide them to third parties. One anonymous development manager described his experience this way:

“We found that a competitor was using IP we’d developed . . . When we brought this situation to the attention of the relevant OEM, and asked them to at least pay a licensing fee, they told us that we were welcome to lodge this request but that in such a case they could not guarantee that we would receive orders from them in the future.”

Yow. I can understand why OEM's want suppliers to play nice with their respective patent portfolios - nobody wants to explain to their customers that orders aren't being filled because two suppliers are having a brawl over a patent. And while one may argue that the value of the sales contract adequately compensates the supplier forfeiting their IP rights, this seems like an onerous policy. And the OEM's don't seem to be losing any sleep over this practice either. When the German auto industry group VDA (Verband der Automobilindustrie) was asked to respond to these allegations, the spokesman said "we see no reason to comment."

FUJITSU ANNOUNCES LAUNCH OF PATENT STRATEGY SUPPORT SERVICE: I picked up this announcement from Nihon Keizai Shimbun (posted on claiming that Fujitsu is releasing software capable of recognizing the field and nature of a patent by analyzing its digitized text, while also listing key patents that are often cited in research and development projects.

The service to list patents in certain fields starts at 1 million yen (about $900) per search, the report said, adding Fujitsu will also offer a more comprehensive service that includes information on competitors' research and development activities and evaluations of their patents. The overall idea, as far as I can tell from the skimpy press releases, is to create a centralized toolkit to allow companies to quickly map patents in a particular technological field.

Patent mapping and analysis software is the next important development in patent services, as it has been very time consuming for practitioners to obtain a comprehensive overview of patenting activity in a technological area. However, most of the previous products have been (a) expensive, or (b) not explained very well to the general public. Internal company databases have been heralded as being efficient and reasonably comprehensive, but there has been scant discussion in the patent community over which ones are exceptional enough for wide adoption (see, e.g., this article on Cisco's internal database that is coordinated with all outside counsel that do Cisco's patent work).

Also, many of the more enterprising practitioners and service providers have already taken matters into their own hands by creating RSS feeds to USPTO databases, allowing people to get real-time patenting activity as it is published by the USPTO. One example is (discussed here on Steven Nipper's Invent Blog). Others, such as Matt Buchanan, have generously pointed out scripts that can be used to get RSS feeds from the USPTO. The USPTO itself has even made overtures to providing such RSS services in the future.

I think that many of the institutional patent holders have plenty of existing resources that could help the public obtain patent information more quickly and effectively - I just wish this information would be more freely disseminated without having to dig through multiple layers of links and articles.

Friday, October 07, 2005

SEEKING GUIDANCE ON WRITTEN DESCRIPTION REQUIREMENT? COME TO CHICAGO ON THE WEEK OF NOV. 7: Recently, the case of Lizardtech vs. Earth Resource Mapping has caused quite a stir in the patent community, where a claim from Lizardtech's '835 patent was invalidated by the Federal Circuit under 35 USC 112, first paragraph for failing the written description requirement.

Lizardtech basically disclosed one embodiment in the specification, but then tried to claim a much broader (i.e., generic) scope in one of the claims (claim 21). While a claim will not be invalidated on section 112 grounds simply because the embodiments of the specification do not contain examples explicitly covering the full scope of the claim language, the court ruled that LizardTech overreached in trying to claim all possible variations of a claim feature that was defined only in terms of a specific embodiment. Concerns were immediately raised, questioning whether the disclosure of a single embodiment opened up applications to attacks under section 112.

By fortuitous coincidence, The John Marshall School of Law in Chicago will be hosting a free seminar on November 7, where two judges from the Federal Circuit, along with Judges James E. Holderman and Matthew F. Kennelly from the Northern District of Illinois will be discussing "The Enablement/Written Description Debate of Patent Law." If you have any questions about the future of the enablement requirement, this would be a good time to ask.

However, my take on the Federal Circuit's decision was that it was not that earth-shattering as some have suggested. Without getting into too much detail on the technology involved (ERM has a discussion on the technology here, see also the decision linked above), this is the gist of the decision in terms of the 112 arguments:

Lizardtech's disclosure discussed a method of viewing images at multiple resolutions by creating an array of "seamless discrete wavelet transformation (DWT) coefficients." Under the embodiment disclosed, the DWT coefficients were made "seamless" by "maintaining updated sums" of DWT coefficients. No other ways of creating seamless DWT coefficients were disclosed.

The problem with claim 21 was that this feature was absent from the claim. The prosecution history showed that the allowability of the claim was based on arguments pertaining to the seamless feature, but the only way the disclosure taught seamless DWT's was by maintaining the updated sums (you can see the circular logic here):

The trouble with allowing claim 21 to cover all ways of performing DWT-based compression processes that lead to a seamless DWT is that there is no support for such a broad claim in the specification. The specification provides only a single way of creating a seamless DWT, which is by maintaining updated sums of DWT coefficients. There is no evidence that the specification contemplates a more generic way of creating a seamless array of DWT coefficients.

After reading the patent, a person of skill in the art would not understand how to make a seamless DWT generically and would not understand LizardTech to have invented a method for making a seamless DWT, except by "maintaining updating sums of DWT coefficients."

If the seamless feature of claim 21 had been interpreted as maintaining updated sums, then the claim would not have been differentiated from claim 1, which explicitly recited this feature. Stuck between a rock and a hard place, the Federal Circuit was forced to invalidate the claim.

I do agree that the lesson to be taken away from this is that alternate embodiments or alternate features should be disclosed whenever possible. However, it is often the case that the technology "is what it is" - you can only claim what you know at the time the application is being drafted. Not being an expert on finite impulse response filters, I don't know if Lizardtech could have done anything differently in its application. Were alternate embodiments even available during that time? Only the inventors would know the answer to that question.

Wednesday, October 05, 2005

NOT SO FAST - MICROSOFT FAT PATENT ISN'T DEAD: Around the time of April 2004, The Public Patent Foundation filed a reexamination request with the U.S. Patent and Trademark Office, asking it to revoke one of Microsoft's patents (5,579, 517) related to the FAT (File Allocation Table) file system, the older of two main systems used by Windows to store files.

The FAT file system also happens to be widely used by Linux-based Samba servers, which use the FAT file system to serve files to Windows-based PCs as well as by flash memory drives and digital cameras.

Some have worried that Microsoft may claim Linux infringes this or other Microsoft patents and that Microsoft would someday seek royalties. Under the terms of the General Public License, Linux software may not be distributed if it contains patented technology that requires royalty payments (regardless of the amount). Last year Microsoft used the '517 patent as the basis of its first ever licensing program, offering manufacturers the right to use the ubiquitous file system in return for a low royalty rate.

The open-source community was pretty happy when the USPTO rejected the claims due to prior art (which is pretty typical), and was initially upbeat when the Office issued a final rejection in the reexamination. During the course of the reexamination, Dan Ravicher, the Foundation's executive director, urged licensees who'd signed up for Microsoft's FAT licensing program to tear up their contracts, stating "I hope those companies that chose to take a license from Microsoft for the patent negotiated refund clauses so that they can get their money back."

Bad move.

After checking out the office action on the USPTO portal, it actually turns out that all of the prior art rejections have been overcome - the only remaining rejection is a 35 U.S.C. §102(f) rejection, based on inventorship issues raised during the course of filing multiple "swear-behind" declarations. The crux of the rejection is based upon an inventor's statement declaring that he was the "author" of a document being submitted as evidence of prior conception. Without having more evidence, the examiner was forced to assume that being an "author" was tantamount to being the sole "inventor" of the claimed subject matter. Accordingly, the 102(f) rejection was issued, claiming that the other listed individuals weren't actual "inventors."

This should be pretty easy for Microsoft to get around the rejection. All they need to show is that the document authored by the declaring inventor was a collaborative effort, or, in a worst case scenario, strike inventor names from the patent.

A steak dinner says that the USPTO will be issuing the reexamination certificate in less than 6 months time . . .

Tuesday, October 04, 2005

UPDATE ON EQUIAS: After posting on Real Estate Alliance Ltd.'s (REAL) continuing litigation against Diane Sarkisian and the '989 patent, I was a bit befuddled over the sudden appearance of Scott Tatro from Equias Technology Development, discussing the specifics of the REAL patent. Well, after a little digging, I found this article from Red Herring that provides some more information on the cast of characters involved on REAL's side. Apparently, Equias Technology Development is a consortium of smaller companies and individuals based in Malta, New York, that has bought the rights to license REAL’s technology.

I also had questions regarding the time lag between the granting of the patent (back in 1991), and the current enforcement effort, and why it took so long for these suits to materialize. According to Scott, the explanation goes something like this:

“In 1993, the Internet became more robust and people began using graphical interfaces. That became a venue where REAL could monitor usage of its patent . . . In 1995 REAL started notifying real estate companies, hospitality companies—any companies using a mapping interface.”

Most people who were informed of the patent ignored the company. Then REAL went for broke. In 1994 it filed a suit against Microsoft’s Home Advisor, a real estate outlet. They also sued MoreData, an information aggregator working with Microsoft.

“REAL ran into a wall of money that they didn’t have the resources to fight,” said Mr. Tatro. “But they continued negotiating with companies through the ’90s. Then the law started changing, making users responsible for patent infringement.”

In 2002 REAL gained a major investor, Andrew Rooke, who is currently the president of the company. So REAL gained an independently wealthy benefactor and a team of patent attorneys.

“Since then we’ve had NAR tell us that they think the patent is legit, but the patent holder is too small, so it did not have the legal staying power,” said Mr. Tatro. “We formed a consortium and negotiated with them for bulk licenses, but they’ve been ignoring us, hoping we would go away.”

Equias Technology Development, a licensee of that technology, said it has
approached the National Association of Realtors (NAR) to reach a negotiated
settlement on a bundled license but has been rebuffed.

Apparently, the company has no current plans to sue Google or Microsoft for their use of mapping technology because Google "allows others to overlay their database over its mapping technology."

“If Google or Microsoft began urging real estate agents to geo-locate their databases on their maps, then they could be in violation,” said Mr. Tatro.

I'm not buying this completely. Apparently, when Tornetta tried to sue Microsoft and Moore USA and was unsuccessful, the judge threw the case out because it was filed in the wrong name. Tornetta never refiled. That doesn't sound like a money problem to me. It's rather odd that they would pop up six years later making waves over the same matter that was brought up years ago.

Also, regarding Google, I wonder if the folks at REAL saw this announcement by RealBird: "RealBird Integrates Google Maps into its MLS Mapping Service "

I personally think that REAL has a valid case here, but there are some serious bugs they need to work out. First, the apparent stopping-and-starting of litigation may come back to bite them. Second, the line of mapping patents were developed well before the Internet matured into a viable platform, and I anticipate that the defendants will have a go at restricting the interpretation of each of the claim elements over that fact. That doesn't necessarily mean that REAL can't argue equivalents, but ever since Festo, there are more and more hurdles that patentees need to jump before they can get a court to buy into an argument of equivalence.


Prosecution Histories and a copy of the complaint filed can be downloaded and viewed here

Article from Realty Times

MORE ON SUN'S PATENT GRANT: After having some questions regarding the motivation for Sun's recent patent grant, a reader pointed me to David Berland's excellent blog on ZDNet, which sheds light on the strategy being invoked by Sun.

Developers have been abuzz about Microsoft's recent decision to support Adobe's Portable Document file format (PDF) in the next version of its desktop productivity suite, currently called Office 12. The announcement by Microsoft appears to be tied to the current debate in government organizations on which software platforms the government organizations will be using.

More specifically, the Commonwealth of Massachusetts is compiling a list of approved products for the 173 state agencies that employ some 80,000 people. During the decision-making process, Massachusetts instituted a policy that requires public documents to be stored and/or exchanged in one of two file formats – the OASIS-backed OpenDocument Format ODF) and Adobe's PDF. Since MS-Office support neither, it was effectively bumped from Massachusetts' list of approved products. Not only did the decision affect all state agencies and employees, but the many thousands of contractors that do business with the Commonwealth as well.

The reason for this decision is that the state government wanted did not want to have royalties being paid out every time someone wanted to view a public document. And based on their own definition of "open," state officials were concerned that Microsoft's file formats were too closed to make that goal possible. In an attempt to give pause to ODF-interested organizations, Microsoft publicly questioned whether ODF was susceptible to future patent threats.

Seeing that Microsoft's move started getting traction in the software community, Sun countered by making a guarantee to developers and users that they won't be sued for patent infringement when using or developing an implementation of ODF. This is pretty significant in terms of Sun's positioning to gain access to government systems (although I maintain that it won't do much to alleviate threats from other patent holders). According to David, "[g]iven the public nature of andaccessibilityy to Massachusetts' deliberations on the matter, the Commonwealth had created the equivalent of an on-line software wizard that will make it easy for other organizations to follow suit. Just cut, paste, and do some search and replaces. There isn't much else left to do except wait for Sun, IBM and others to race to fill the ODF solution void. "

Monday, October 03, 2005

REAL ESTATE ALLIANCE CONTINUES PRESS FOR '989 PATENT ENFORCEMENT: As many of you may be aware, back in July, Real Estate Alliance, Inc. filed a lawsuit against real-estate agent Diane Sarkisian of Ambler, Pennsylvania for infringing U.S. Patent No. 5,032,989, titled "Real Estate Search and Location System and Method." The patent covers a mapping system "for locating available real estate properties for sale, lease or rental using a database of available properties at a central location and remote stations which use a graphic interface."

Predictably, most people associated with real-estate searching went absolutely bananas. The patent is quite broad, and possesses an enviable priority date of 1986/1991 (the patent was a CIP having priority to a 1986 application). To date, no one is quite sure how aggressive REAL will be in enforcing their patent, and there are constant fears that REAL could become the next Trading Technologies of the real-estate business.

In this recently published "interview" with Scott Tatro, president of Equias, LLC, it would appear that REAL is getting ready to kick their enforcement of the '989 patent into high gear. As a quick background on the relationships involved here, Equias is currently a licensee of the patent that also happens to be "offering" the technology to the real estate community through its portal, Equias apparently obtained a license back in 1995 on the '989 patent and considers itself to be one of the market leaders in this technology.

Now the reason I used the quotations on "interview" was that the publication wasn't so much an interview, as it was an advertisement for the '989 patent. In fact, the whole piece reads like an infomercial you'd see on late-night TV:

"It's hard to believe - you're telling me I can make thousands of dollars working from home?"

"Absolutely! By following these 5 easy steps outlined in my program, you can make as much as 5 thousand dollars a week while never leaving the comfort of your pajamas!"

Here is what Scott (ST) had to say about the patent in the interview:

MP: How long can the ‘989 patent be enforced?

ST: The patent expires in 2008. There still exists an additional six years that REAL will still be able to take enforcement action against past infringers who did not acquire a license.

MP: Please tell us about Equias. What is this company all about?

ST: We formed Equias, LLC about a year ago. We are independent of REAL, the owner of the ‘989 patent, and we have obtained a license under the patent. Our agreement allows us to take the exact same license that REAL is offering agents at a fee of $10,000, and provide it to agents who use our licensed system at a much lower cost, paid for over time. We’re working to create a fully licensed national portal, called We’ll announce some significant national participants by the end of the year.

MP: If the patent is so clearly enforceable, why are people resisting?

ST: I don’t know. Maybe people still hope that this will just go away. For agents, many appear to think that their brokers or MLS will somehow protect them, but this is a mistake—it’s the agents that will be sued, and who will have to pay damages. The law permits REAL to seek “reasonable royalties” from those who make, use, sell or import the invention without a license, but so many agents have just assumed that they could use the mapping method of the patent, that they are shocked to learn that someone actually invented and patented it.

MP: Why do you think much of the real estate industry was unaware that they were infringing on this patent?

ST: I don’t know. Several years ago, NAR, HomeStore and the big MLS groups were offered the opportunity to license the patent, but they didn’t. Maybe they didn’t want to alarm the industry. Maybe they were looking for prior art for the past few years.

MP: What would it entail for a real estate professional to be in compliance with the patent? What would the licensing costs amount to?

ST: The patent has a couple of layers to it. Even if an agent stops every infringement right now, there is the issue of past infringement. If every MLS, portal, or IDX acquired a patent license today going forward, that would not necessarily relieve “users” from the liability of having infringed in the past. The license being offered by REAL covers all past liability and is good for the life of the patent. Its license offer is $10,000. That $10,000 number may be incredibly painful, but it is a small fraction of what REAL has calculated a court would award
as that “reasonable royalty amount.”

MP: One Realtor has already been sued by REAL for allegedly infringing the ‘989 patent. Do you anticipate further litigation of this kind?

ST: Yes. REAL has told us that more suits are “in the pipeline” against agents all over the country, but that they prefer to grant licenses to agents. We believe,
however, that the agent and her MLS, TReND, may be going after a precedent-setting case. Sources from TReND supposedly said, “all it takes is for one agent to write them [REAL] a check, and they could go after every agent in the country.” TReND has more than 20,000 agent members. Although a settlement may be less costly for this one agent, it appears to us that there are other forces in play.

MP: How would you respond to industry critics who say these suits ‘will never hold up?’

ST: As a licensed agent, I was once one of those people saying the same thing, so I can’t blame them. However, once someone has access to the relevant facts, it quickly becomes obvious that this patent and REAL are for “real.” Many of those facts can readily be downloaded at

I’m not an attorney, but we’ve been told that one of the best ways to avoid paying damages or license fees is to find invalidating prior art to present in court. That means prove that somebody else created and documented the invention before the patent holder. That appears to me to be about the only way to kill the ‘989 patent at this point. Certain parties will undoubtedly do what countless others have already done, by spending tens-of-thousands of dollars with lawyers from all across the country. They’ll be looking at a million different dotted “i’s” and crossed “t’s” to see if they can pick the patent apart and somehow avoid doing the right thing.

Evidently, REAL must has some kind of deal with Scott and his company regarding this patent, since there is no reason for him to plug the '989 patent in this manner (he's merely a licensee). Granted, REAL is currently litigating this patent in court, so it would be unwise of them to start blabbing in the press about what their patent does or does not cover. But it does raise some questions as to why he was selected as a spokesperson for this patent.

Second, it should be clear from this interview that REAL intends to start the enforcement effort with the agents themselves. At first blush, they would appear to be the most vulnerable to settlement, and thus provide a quick stream of revenue into the comany's coffers. And the $10k offer seems specifically designed to flip a fair amount of agents at the outset. However, there is the issue of agents acting alone versus agents acting at the behest of their employer (i.e., the real-estate firm). I will bet that there are some indemnification issues that could quickly bring these firms into the mix. Specifically, the first element of the '989 patent requires the step of "creating a database of the available real estate properties." As a previous poster of this blog pointed out, is this really something that agents compile on their own? Or is this step being performed by the realtors/MLS?

And the issue of realtors "ignoring" calls for licences for a period of years raises issues of laches and/or estoppel. The inventor had this patent assigned for over 10 years (until it was assigned to REAL in November of last year). Why did it take so long to start enforcement of this patent (especially towards the end of its life)?

All interesting stuff. I'm eager to see how this will play out in the months to come . . .

Saturday, October 01, 2005

SUN PROVIDES EMPTY PATENT ASSURANCES FOR OPENDOCUMENT: Yestarday Sun officially released what it calls the Sun OpenDocument Patent Statement — a statement that basically amounts to a covenant of patent non-assertion that applies to anyone seeking to create or use an implementation of ODF.

The OpenDocument format (ODF), short for the OASIS Open Document Format for Office Applications, is an open document file format for saving and exchanging editable office documents such as text documents (including memos, reports, and books), spreadsheets, charts, and presentations. This standard was developed by the OASIS industry consortium, based upon the XML-based file format originally created by

The standard was publicly developed by a variety of organizations, is publicly accessible, and can be implemented by anyone without restriction. The OpenDocument format is intended to provide an open alternative to proprietary document formats including the popular DOC, XLS, and PPT formats used by Microsoft Office, as well as Microsoft Office Open XML format (this latter format has various licensing requirements that prevent some competitors from using it).

The statement by Sun had some significant attruibutes that were summarized by David Berland at ZDNet:

  • Like previous patent grants by Sun and IBM, it's an irrevocable promise by Sun that guarantees developers and users that they won't be sued for patent infringement when using or developing an implementation of ODF. In a way, this does most open source licenses one better because those licenses don't explicitly contain patent grants.

  • Unlike previous patent grants by Sun and IBM, it doesn't list any specific patents. In other words, it basically says that whatever of Sun's patents an implementation of ODF may "read on" (in other contexts, that would be "infringe on") , Sun will not assert those patents against a user or developer of that implementation. Whereas other patent grants list specific grants, this non-assertion statement doesn't force developers or users to examine a list of granted patents in order to figure out if they can openly implement some specification (in this case ODF).

  • Like previous patent grants and like open source, privity is not a requirement. In other words, users and developers don't have to document their execution of a license with Sun. Lack of privity (as a requirement) clears the way for sub-licensing — one of open source's most endearing traits.
I wonder if open-source developers are really that spooked over patent infringement that Sun, IBM, CA, HP and all these other companies have to come out every month "pledging" patents in the press. This will do little to protect developers from infringement, especially when the pledging companies are practically the last people on earth that would actually sue them on their patents. In fact, I would be concerned that developers begin clustering around particular technologies due to these pledges - if I were a holding company, this would be like smelling blood in the water . . .

JAPANESE IP COURT STEPS INTO ACTION: The Intellectual Property High Court (IPHC) of Japan overturned a lower court ruling Friday, ruling that Justsystem Corp. can continue to produce and sell its Ichitaro word-processing software and Hanako graphics software because they do not infringe on a Matsushita Electric Industrial Co. patent. The high court said Justsystem's "help mode button" in the Ichitaro and Hanako software does not have the same function as the icon in Matsushita's patent specifications.

The district court in February of this year found that Justsystem infringed on a Matsushita Electric Industrial Co. patent involving a function called "help mode button" in a case filed by Matsushita against the Tokushima-based software company. Matsushita maintained that the Justsystem software indirectly infringed on Matsushita's patent. Justsystem appealed the February district court ruling. This was the first decision handed down by the Grand Panel.

As reported previously on this blog, the IPHC panel comprises of five judges with specific knowledge in intellectual property issues, and is referred to as "The Grand Panel of the Intellectual Property High Court" (Why "grand?" I can understand "supreme" or "high" courts, but "grand?" Sounds like something from a Liberace skit . . .)

Presiding judge Katsumi Shinohara also said that Matsushita's patent, filed in 1989 and registered in 1998, is "invalid because it lacks inventive elements." He also said the icon "could have been developed with the technology before the application."

The next case will be heard by the court on October 7, 2005 - Nippon Synthetic Chemical Industry Co will be taking the JPO Commissioner to task over one of their revoked patents. Tune in for the fun.

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