Wednesday, March 30, 2005

"Magnificent Obsession" in Science

The March 18, 2005 issue of Science has an article about the saga of antibody anti-CD-154, potentially of use in MS treatment. Although Science mentions a court action, they did not give the cite, which is NOELLE v. LEDERMAN, 355 F.3d 1343, 69 U.S.P.Q.2D 1508 (CAFC 2004). Although the gist of the article is captured by the title [Magnificent obsession. converting an idea for a new MS drug into the real thing], there are some other issues present, but not discussed by Science. Both Noelle and Lederman were operating on federal funding, and their respective universities (Dartmouth; Columbia) took title to the inventions through the Bayh-Dole Act. Did Senators Bayh and Dole (and others) contemplate that the Bayh-Dole Act would be used for one federal grant recipient to fight another federal grant recipient? How does this serve the public, who paid for the research? Columbia University was aligned with Biogen; Dartmouth with Idec. By the time of the CAFC decision in 2004, Biogen and Idec were merged (June 2003), so that the CAFC decision had little impact on the marketplace; one company could use both inventions.

A further irony is the case BIOGEN IDEC MA INC. v. THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, 332 F. Supp. 2d 286 (D Mass 2004), wherein the Biogen/Columbia "partners" of the CD-154 saga are at opposite ends in the "Axel Patents" saga, with Columbia University the defendant in a DJ action. Therein the court found that plaintiffs have, on the present record, made a strong showing that they are likely to prevail in proving that the US 6,455,275 patent of Columbia[the '275 patent] is invalid pursuant to the doctrine of non-statutory double patenting and, if valid, is unenforceable because of the equitable doctrine of prosecution laches. The research giving rise to this patent was federally-funded [In the 1970s, the National Institutes of Health ("NIH") provided funding for, among other things, research conducted by Drs. Richard Axel, Michael Wigler, and Saul Silverstein at Columbia relating to co-transformation of cells.]

Donald Kennedy wrote an editorial on the Bayh-Dole [B-D] Act in the March 4, 2005 issue of Science:

We want technology transfer, but we resent those who take federally supported work, add some value, and receive a return on their investment. ... B-D has neither a sunset nor a reauthorization requirement, but after a quarter-century it may be time to measure the innovation it has created and to balance that against the costs to universities, their faculties, and public trust in science.

Tuesday, March 29, 2005

Hewlett-Packard sues LaserCycle over patent to printer ink

Direct infringement of a claim of a patent can be for making, using, selling or offering to sell. The observation below that LaserCycle doesn't make the ink is irrelevant if LaserCycle is using the (infringing) ink.

from The Business Journal of Kansas City :

The world's largest manufacturer of office printers has sued Lenexa-based LaserCycle Inc., the world's largest-volume remanufacturer of printer ink cartridges, for an alleged infringement of an ink patent.

Brad Roderick, LaserCycle vice president of marketing, said Tuesday, March 29 the company has begun negotiating with Hewlett-Packard Co. to resolve the suit, which was filed Friday in U.S. District Court for Western Wisconsin.

The suit alleges that three cartridge models marketed by LaserCycle contain infringing ink, he said.

"It appears to be specific to the formulation of the ink chemistry, which we don't manufacture," Roderick said.

Based on early discussions with H-P, Roderick said, it appeared unlikely the case would go to trial. The company doesn't agree that its products infringe on H-P's patents but it's seeking additional information from the company, he said.

"It is our hope that we would be able to, in the coming weeks, release a joint statement with Hewlett Packard," he said.

Favorable result for eBay in re-exam of MercExchange patents

A first Office Action in the re-exam of US 5,845,265 found the claims invalid. MercExchange will have a chance to respond to the Office Action. Recall that in the first Office Action in the Eolas re-exam, the claims were found invalid, but that Eolas was able to overcome the rejection. [The PTO examiner then made a different rejection.] This is very early in the game.

By Paul Festa of CNET news:

The U.S. Patent and Trademark Office on Thursday sent out an initial office action that, if upheld, would invalidate the patent behind a $25 million judgment against eBay.

"We certainly believe that the recent office action in particular is a very positive development," Jay Monahan, eBay's vice president of intellectual property, said in an interview. "These claim rejections will certainly be a very significant factor that will have to be considered in any future court proceedings."

Patent owner MercExchange, based in Great Falls, Va., released a statement that called eBay's response to the office action "rank speculation."

"Such first office actions are typical in a re-examination proceeding," said Thomas Woolston, the patent's inventor and founder of MercExchange. "We will deal with this office action, like all previous office actions during the prosecution of our patents, in the ordinary course."

Technology companies are increasingly turning to the patent office to dispose of patents that judges and juries have held against them in infringement cases. Microsoft is defending itself against a patent owned by the University of California and its Eolas spinoff both in the courts and through the obscure and bureaucratic re-examination process. Research In Motion, likewise, is defending itself against patent infringement claims in both venues.

The subject of the recent Patent Office action, patent 5,845,265, is one of three owned by MercExchange that have dogged San Jose, Calif.-based eBay in a years-long legal dispute. The patent describes a system for purchasing auction items at a fixed price, and the courts have held that eBay's "Buy It Now" option infringes on it.

On Tuesday,March 29, MercExchange reiterated its plan to seek an injunction against eBay for infringing the patent, which remains in force while the patent office pursues its re-exam.

Earlier this month, a U.S. appeals court held crucial claims of MercExchange's patent 6,085,176 invalid but allowed MercExchange to ask a lower court for an injunction against eBay, based on the remaining patents. Patent 6,085,176 describes a method for searching electronic marketplaces.

eBay requested the Patent Office's ongoing re-examination of the three patents in March 2004. In January, the Patent Office issued an initial office action on patent 6,202,051, preliminarily invalidating its claims as well. That patent describes a system for online consignment auctions.

The Patent Office has yet to issue any office actions on patent 6,085,176, whose claims the appeals court invalidated midmonth.

The re-examinations are what are known as "ex parte" proceedings. That means that eBay, beyond requesting the re-exams, has no formal role in them, leaving MercExchange to make its case to the examiner.

New Scientist putting upbeat spin on work of Schon?

The March 19-25, 2005 issue of New Scientist has an article entitled Crazy about Crystals which puts Jan-Hendrik Schon, formerly of Bell Labs, in an upbeat light.

Some of the text (p. 38 ff):

While some were keen to airbrush Schon out of history, a few determined researchers refused to give up: Schon's work had fired their imagination. "The work in my lab was inspired by Schon," says Mike Gershenson, who runs the lab where Podzorov works at Rutgers University in Piscataway, New Jersey. "Without him, I would not have dived into this field." In a discipline where careers can be tainted just by association, that is a brave statement. But Gershenson is simply acknowledging the facts, he says. There was a very good reason why Schon was pursuing organic transistors, however dishonest his methods: they offer a radical and potentially lucrative way to build cheap, light and flexible electronics. Ant that reason still stands.

Podzorov tried to insulate rubrene crystal with parylene. Early in 2002, Podzorov couldn't publish immediately. Reviewers wanted more evidence. It took Podzorov another eight months. Meanwhile Schon's highest profile papers were being investigated and retracted. Christian Kloc wanted to make transistors.

page 41: In the end, a small but robust core of Schon's research did survive the misconduct scandal and inspire others to take the ideas forward. But many people are troubled by it. They worry that researchers will be encouraged to fake results if they think that science could eventually vindicate them. Others play down Schon's role. "This is just science getting on with its life after a perturbation." No one condones what Schon did, yet there is something defiant about the researchers who decided not to quit. "If you went into the field because of the hype, you will leave. But if you thought about it, you will have worked seriously and got somewhere. (Morpugo).

page 5: He was sacked from Bell Labs in 2002 after an investigation found evidence of misconduct in 17 of his papers. He tarnished the reputation of science and damaged many careers. But that doesn't mean we have to hide the positive effect he had. Plenty of respected scientific achievements have dubious roots... Sanitising history is the last thing we should do if we want to prevent future misdemeanours.

Note that several of the issues discussed were actually foreseen by the Beasley report, although you would never know it by reading the New Scientist article.

In November 2002, I published in Intellectual Property Today an article entitled "Walking on Sunshine?" which discussed some of the issues with Schon's work. Some excerpts follow:

On September 26, 2002, the New York Times ran a page 1 story titled "Panel Says Bell Labs Scientist Faked Discoveries in Physics," with a first sentence "A series of extraordinary advances in physics claimed by scientists at Bell Labs relied on fraudulent data, a committee investigating the matter reported yesterday," referring to the committee headed by Professor Malcolm Beasley of Stanford University, which had issued a 127 page report on the matter. n2 A headline in the Newark Star-Ledger was even less kind: "Scientist's 'breakthrough' secret: He cheated." n3 Of the impact, the Times article noted: "the scandal tarnishes surrounding participants, including the co-authors who noticed nothing amiss, the scientific journals that critics say moved too quickly to publish the sensational findings, and Bell Labs' parent company, Lucent Technologies, which has been buffeted by a collapse of the market for its telecommunications equipment and tens of thousands of layoffs."

The report implicated only one scientist, Jan Hendrik Schon, and found 16 instances of scientific misconduct pertaining to a certain set of published papers. One of these papers, concerning superconducting oxidized buckerminsterfullerene, n4 illustrates some of the problems. A year ago, managers at Bell Labs were touting the work. Kitta MacPherson quoted Federico Capasso as saying "This shows that buckyballs may live up to their initial promise of being a material that will be very important to technology." n5 After the Beasley report, The Economist noted: "Through a carefully staged set of "improvements" to the technique, he got this up to 117degrees -- well into the liquid nitrogen zone. Buckyballs are a discovery looking for an application, and it seemed as though Dr Schon alone had found one." n6

Separately, there is an issue with the role played by scientific journals. The Asian Wall Street Journal reported: "Physicists are fuming that Science and Nature were warned not to publish Dr. Schon's problematic papers in 2001. But the two are locked in such fierce competition for prestige and publicity that they may be cutting corners to get "hot" papers. "These were revolutionary findings," physicist Robert Austin of Princeton University says. "Science and Nature should have been very cautious. When journals fail, and they did here, the system breaks down." Editors at both say they published only after thorough review and in good faith." n7 In turn, Nature had queried whether researchers in the physical sciences were ready to tackle the issue of misconduct in an article entitled "Time to wise up?", published July 11, 2002. n8 This article had some flaws.

First, the Nature article conspicuously omitted discussion of the efforts of Paul Solomon of IBM to publish a criticism of the Schon work n9 On November 5, 2001, Solomon had written a letter to Nature about the Schon work; his discussion included text: "In short, the problem we raise is profound and involves the very basics of our understanding of electrostatic devices . . . " Nature did not publish Solomon's letter. Solomon noted to me on October 2, 2002 of Nature's failure to publish his letter: "The fact that such letters are not published leads to a false impression that results such as Schon's, being published in the "most prestigious scientific journal" has received the imprimatur of his scientific peers. It can mislead the broad readership of Nature who by and large do not have the tools to evaluate it for themselves. Such an article would not have been accepted for publication in the 'less prestigious' specialist literature."

Second, the Nature article did not accurately report on the Task Force on Ethics of the American Chemical Society, of which this author is a member. The purpose of the Task Force has been to recommend whether or not a permanent ethics committee is established and to define the scope of the committee. Although in the end, the resultant committee may have primarily an educational role, the Task Force contemplated issues of "journal error" n10 and of "co-author responsibility." n11

On October 7, 2002, there were reports that Bell Labs was withdrawing six (6) patent applications in the field of nanoelectronics, including molecular scale transistors and superconductivity. n12 Of application 20020121669 ("Organic superconductive field-effect switching device," filed January 16, 2002), one notes claim 3 to a "methylene trihalide," claim 4 to a "methylene trichloride," and claim 5 to a "methylene tribromide," all non-existent compounds. Even if the data were not suspect, there might have been other problems here.

n12 Linda A. Johnson, "Bell Labs Withdraws Patent Requests," AP, October 7, 2002; Jeff May, "Lucent pulls patent bids to 'correct the record,' Newark Star-Ledger, p. 14 (Oct. 8, 2002). Curiously, although the Beasley report investigated journal articles, the initial outcome was the termination of Schon and the withdrawal of the patent applications. As this IPT article goes to press, the Schon journal articles have not been withdrawn. In the case of a paper about engineered corn in Mexico, Nature unilaterally retracted the paper when Nature felt the evidence available did not justify the paper. (See L. B. Ebert, "Johnson & Johnston: Disclosed, Never Claimed, Public Domain," IPT (May 2002) citing to Mare Kaufman, Washington Post (April 4, 2002). See New York Times, page F4 (Oct. 15, 2002).

also from IPT, "Say Good night, Gracie" (June 2003):

Although there were some allegations that scientific journal editors were not aware of the bad science of Jan Hendrik Schon of Lucent/Bell Labs prior to the unraveling in May 2002, the letter to nature of Paul Solomon of IBM of November 4, 2001, reproduced below, is a counterpoint:


In a letter to Nature by Schon, Meng and Bao (Nature, 413, 713; 2001) the authors present potentially ground breaking results for a new molecular field effect transistor (FET). However, the authors claim without comment or attempt at explanation, long-channel FET characteristics for a very short-channel device structure, in apparent violation of a basic concept of electrostatics, the superposition of electric fields.

The observed currents are several times larger than the best published semiconductor transistors (Figs. 2 and 3), transconductances (Table 1) are orders of magnitude larger than the best semiconductor transistors and rate of drain current increase with gate voltage in the sub-threshold region is several times greater than can be accounted for by thermionic emission theory (inset to Fig. 2). The characteristics of their FETs (Fig. 2) look disarmingly normal, following Shockley's simple gradual channel behavior characteristic of a long-channel FET having a large ratio of channel length to oxide thickness, yet their proposed geometry (fig. 1b) is far from conventional and in fact has a very small channel length to oxide thickness ratio.

The device geometry shown (with 2 benzene rings) would have a source/drain separation of approximately 1.5nm, while the SiO2 thickness is given as 30nm. Even accounting for possible ( 2:1) differences in dielectric constant between the organic film and the SiO2 layer, this is precisely the inverse of the requirement for a long channel FET. For any electrostatic device, from vacuum tube to field effect transistor, a basic requirement for voltage gain is that the gate be able to shield the field-sensitive element (FET channel, molecular transition) from the drain field, so that a change in drain voltage influences the electric field at this sensitive point much less than a change in gate voltage. One cannot satisfy this requirement in the proposed geometry. Indeed, the opposite is true: The source and drain electrodes are so much closer than the gate, that it is hardly conceivable, assuming a pure field effect (whatever the sensitivity to the field), that characteristics such as Fig. 2 could be generated, since the drain-to-source field is so much higher than the gate-to-channel field. Either the output conductance would be very large, or if there is a local, and hitherto unexplained, screening of the drain field, there would also be a strong attenuation of the gate potential preventing the attainment of the standard FET pinch-off (saturation) condition, well evidenced in Fig. 2, where saturation occurs (in a P-FET) when the drain voltage is more negative than the gate voltage less the threshold voltage.

In short, the problem we raise is profound and involves the very basics of our understanding of electrostatic devices. It is a pity the authors did not come up with a plausible explanation for this themselves, or at least comment on the lack of such explanation.

Paul M. Solomon, David J. Frank, Joerg Appenzeller [END LETTER OF NOV. 2001] The letter of Solomon was not published by Nature. Publication would have put scientists on notice of issues with Schon's work, and might have attenuated the misdirection of scientific resources, both public and private, during this time period.

Pubpat on Metabolite v. LabCorp

Although no case name is mentioned in Pubpat's press release, the case is Metabolite v. Laboratory Corp of America dba LabCorp, 370 F3d 1354 (CAFC 2004). The Supreme Court is interested in whether the patent in question (to Metabolite, on a method to diagnose a vitamin B-12 deficiency) might be invalid as unpatentable subject matter under Diamond v. Diehr.

As an aside, the infringement at issue in the case is indirect infringement, as was at issue in part of MercExchange v. eBay.

Pubpat's press release of March 29, 2005:

The issue stems from a case that involves a patent granted by the U.S. Patent Office on diagnosing B12 or folic acid deficiency, which can cause serious human illnesses such as cancer and vascular disease, simply by knowing if a patient has an elevated homocysteine level. It is a matter of natural biology that whether someone has a B12 or folic acid insufficiency is related to whether they have a high level of homocysteine, because homocysteine is an amino acid metabolized by B12 and folic acid. Lower courts ruled that doctors who use or discuss the relationship between B12 or folic acid and homocysteine committed illegal patent infringement and the Supreme Court is now deciding whether to hear an appeal of the case.

"This result is not only perverse public policy – placing the rights of patent holders above the rights of doctors to perform medical diagnosis and discuss a natural biological relationship – but it also violates patent law, which mandates that only processes, machines, manufactures, and compositions of matter are eligible for patent protection," states PUBPAT's position statement titled, Supreme Court Should Protect Medical Facts and the Right of Doctors to Use and Discuss Them From Patents. "The public, including specifically those wishing to use and learn from laws of biology, is significantly harmed by a failure to maintain the limits on patent eligibility because patents can – and often do – prevent important medical treatment and scientific research."

In addition to publishing its position statement, PUBPAT also expressed its views in a letter to the Acting U.S. Solicitor General who was invited by the Supreme Court last month to address the issue before it decides whether to hear an appeal of the case. Since the Supreme Court raised this issue after the time for briefing had expired, PUBPAT was barred from expressing its views directly to the court. As such, PUBPAT provided its perspective to the Acting Solicitor General who will be submitting a brief on the issue to the court in the near future.

"If the patent is not ruled invalid, it will continue to pose a threat to doctors wishing to diagnose whether their patients have a B12 or folic acid deficiency by measuring their homocysteine level [and it will also prevent scientists from discussing the biological relationship between B12 or folic acid and homocysteine for any purpose, including research," said Dan Ravicher, PUBPAT's Executive Director, in his letter urging the Solicitor General to adopt the view that the Supreme Court should hear an appeal of the case and rule the patent invalid. "Above and beyond harming public health, this result is entirely contrary to the basis for the patent system, which is the belief that society benefits when knowledge is disseminated and discussed."

[LabCorp has a facility in Raritan Boro, New Jersey.]

Friday, March 25, 2005

Microsoft speaks out against PubPat

Another industry standards / patent issue is brewing [recall Rambus v. Infineon; Unocal]

from eWeek:

"This isn't the first time we've seen these groups [the Public Patent Foundation and the Software Freedom Law Center] make accusations about Microsoft patents," said David Kaefer, Microsoft's director of intellectual property licensing, in an interview with

"It's been the case before that people have offered misleading claims, primarily because those people oppose software patents but use issues like this one to sow uncertainty about the patent process itself."

The brouhaha broke March 22, 2005, after a lawyer for Kenyon & Kenyon brought to's attention patent USP 6,101,499, filed in 1998 and issued to Microsoft in 2000. [LBE note: hardly a news flash.]

The patent covers technology that bears "more than a passing similarity" to IPv6, one of the backbones of the Internet, according to the lawyer, Frank Bernstein.

Bernstein represents a company—whose name he declined to disclose—that offers open-source products, he said. Bernstein said he also brought the patent to the attention of legal organizations before contacting

PubPat—the Public Patent Foundation—was quick to point out that it was the company or companies who hired Kenyon & Kenyon that brought the matter to light, as opposed to organizations with a hidden agenda.

"We didn't complain about this," said PubPat Executive Director Dan Ravicher. "Private companies complained about this first. We weren't the ones to raise the yellow flag. [Microsoft is trying to put my organization and [the Software Freedom Law Center] in the middle."

At the crux of the matter are allegations that Microsoft failed to disclose prior work done by the IETF (Internet Engineering Task Force) on the technology in question when it applied for the patent in April 1998.

PubPat's investigations have uncovered several references to the technology that count as prior art to the patent, Ravicher said, including several RFCs (requests for consensus) from the IETF's IPv6 working group.

Several Microsoft engineers who were involved in the IETF working group also show up as inventors listed on the patent, Ravicher said—a circumstance that may rule out the possibility that Microsoft's left hand didn't know what its right hand was doing.

"Some of the names of inventors on the patents were involved in the committee," said Ravicher, in New York. "It's not like some group of different people were inventors of the patent. There was overlap."

Microsoft's Kaefer denied any hanky-panky on the part of engineers.

"Microsoft is not trying to patent the Internet," said Kaefer, in Redmond, Wash. "We believe we have followed all the normal procedures to file for this patent. We work very closely with the IETF and other standards bodies on a daily basis and take our standards responsibilities very seriously."

Patent litigation in RFID between Intermec and Symbol

from informationweek:

Intermec Technologies Corp. on March 23, 2005 hit Symbol Technologies Inc. with a lawsuit that alleges infringement on six Intermec patents. The lawsuit is the latest in a string of legal battles between the two companies, which compete in the market for radio-frequency identification and wireless technologies.

"Symbol's unauthorized use of Intermec's patents is a clear violation of patent law and involves a substantial part of Symbol's automated data-capture product line," Intermec president Tom Miller said in a prepared statement. The lawsuit was filed in the U.S. District Court for the District of Delaware.


At last count Intermec had sued Symbol for infringing on six major Intermec patents covering key Intermec wireless access, terminal and software technologies. Intermec’s lawsuit is in fact a response to Symbol’s lawsuit against Intermec filed last month accusing the latter of infringing on basic Symbol patents in the wireless networking area, which are more commonly known as Wi Fi.

In their press release of March 24, Intermec explained their position saying that “Symbol’s decision earlier this month to terminate a supply contract (Intermec used to buy laser scanning systems from Symbol) with us and to sue us for patent infringement frees us to defend ourselves against Symbol's claims and to prosecute our own patent infringement claims against Symbol.”

Intermec was determined to stave off every attempt Symbol made to collect royalties for public domain technology and also to stop them from unlawful use of “our patented inventions.” the press release said.

Automated data capture technologies or ADCs are seen as the next step in the evolutionary chain of ‘tagging’ for identification and tracking of products in huge supply chains. From among these ADCs, radio frequency identification (RFID) devices are rapidly growing in popularity and being promoted by the Defense Department as well as leading store chain Wal-Mart and major consumer manufacturers as a far more efficient way to tag and track commercial products compared to bar codes.

Symbol is a leader in bar code systems and has invested heavily in RFID last year by acquiring RFID tag and reader maker Matrix for $230mn who were sued by Intermec a few weeks before.

RFIDs are one of the disputed patents in the Intermec Vs Symbol clash. Intermec appears to be on a sound footing as its claims against Symbol are based partly on a group of patents that it had bought from IBM some time back.

Market-watchers are keenly monitoring the litigation and speculating about who would win to eventually get a huge piece of the royalties pie.

Thursday, March 24, 2005

CAFC discusses Paris Convention in In re Rath

The TTAB relied on In re Establissements Darty et Fils, 759 F2d 15 (CAFC 1985) to deny trademark registration in a (nondescriptive) surname. Appellant invoked the Paris Convention, so there is a debate (of sorts) on international law vs. US law. The CAFC affirmed the Board, although this legal question was treated de novo (citing to International Flavors and Fragrances, 183 F3d 1361 (CAFC 1999).

There was discussion of whether the Paris Convention was self-implementing. The CAFC relied on Kawai v. Metlestics, 480 F2d 880 (CCPA 1973).

The CAFC cites to Murray v. The Schooner Charming Betsy, 6 U.S. 64 (1804) and mentions the Charming Betsy presumption.

[One of my old favorites is the Schooner Peggy, 5 US 102 (1801).]

Wednesday, March 23, 2005

The Economist on big pharma

from The Economist, March 19, 2005:

Indeed, critics argue that society is largely on the losing end of
its dealings with the industry. Drug firms benefit tremendously from public largesse, be it basic research from universities and government-funded laboratories, or tax breaks on R&D, yet fail to reward this by putting a brake on pricing. For their part, drug firms argue that in order to keep innovation
moving, they must maintain high prices, and therefore high profits. Yet many Americans doubt these arguments. A poll conducted last month by the Kaiser Family Foundation found that only 14% of the 1,200 Americans surveyed believe that current drug prices are justified because of the high cost of R&D, and that
46% favoured greater government regulation of drug prices
, although this might lead to lower profits and therefore less research.

Big drug firms are having a hard time defending the argument that
higher profits mean more innovation
. New drug launches have slowed to a trickle in recent years. Companies plough 15-20% of their revenues back into R&D; global spending on pharmaceutical R&D has doubled over the past decade, to $56 billion
this year according to CMR International, a research group. Yet the
number of new drugs approved by the FDA-a rough measure of productivity-fell to a low of 18 in 2002.

Economics, more than ethics, may force the pace of change. There are roughly 102,000 pharmaceutical "detailers", or salesmen, all trying to meet the top-prescribers among America's 870,000 physicians. They get only a few minutes with the doctor, not much time to sell the fruits of modern science. There is a
growing realisation-if not yet dramatic action-that the industry's marketing model needs to slim down and take a new shape to boost returns. Some firms are turning their drug development away from mass-market blockbusters to
specialist products, which need smaller salesforces to target fewer doctors, who tend to make more time for such products.


The industry is also struggling with another central element of its business model: its reliance on patent protection for high-profile blockbuster drugs. Lehman Brothers reckons that, at best, drugs worth $8.8 billion will face generic competition; at worst, $15.5 billion-worth of branded drugs will meet their copycat makers in America. As the past few years have shown, the expiry of
a patent on a blockbuster drug-such as Prozac-can be a painful
experience for a drug firm, wiping billions off its market capitalisation. Alas, many of the tactics firms use to tighten their grip on their intellectual property are also coming under fire.

This year's patent litigation has special significance for the whole industry, not just the individual companies involved. Generic
drugmakers are challenging the big companies in court over three blockbuster drugs-Zyprexa for schizophrenia, Lipitor for high cholesterol and Plavix for heart attacks and
strokes. These lawsuits question the original "composition of matter" patents on these products, not just the industry's efforts to spin out protection for a few more years of profit. If any one of these were to go against the big companies, it would affect the whole industry.

Lexar defeats Toshiba in CA Sup Ct on trade secrets charge

Lexar defeated Toshiba on a trade secrets charge; patent infringement is next.

from Reuters:

Lexar Media Inc., a maker of memory cards used in computers and digital cameras, on March 23, 2005 said a jury found Toshiba Corp. liable for breach of fiduciary duty and theft of trade secrets and awarded Lexar more than $380 million in damages.

The jury in the California State Superior Court in San Jose, also found that Toshiba's actions support an award of punitive damages, which are yet to be decided, Lexar said.

AFP sues Google over Google News for copyright infringement in D DC

The French news agency AFP is suing Google in the District Court for the District of Columbia for copyright infringement by virtue of Google's pulling together photos and story excerpts from thousands of news Web sites.

The issues raised by AFP may have profound implications for blogs and bloggers, who are becoming more frequent destinations for seekers of news. The case may turn on whether Google can persuade the courts that Google News constitutes permissible "fair use" of copyrighted material under 14 USC 107. Although some legal scholars say Google could argue that it adds value by significantly improving the news-consuming experience without greatly harming AFP's ability to sell its service, there would still be an issue of derivative work infringement.

text from Anick Jesdanun of AP-->

AFP lawyer Joshua Kaufman said the lawsuit would nevertheless proceed because damage already has been done.

The Google News service, which debuted in 2002, scans some 4,500 news outlets and highlights the top stories under common categories such as world and sports.

Many stories carry a small image, or thumbnail, along with the headline and the first sentence or two. Visitors can click on the headline to read the full story at the source Web site.

Yahoo Inc. has a similar service, though it uses human editors and pays some news sources, including AFP and The Associated Press, for rights. (Google wouldn't comment on any similar financial arrangements.)

In a statement, Google spokesman Steve Langdon said Web sites can request removal though most "want to be included in Google News because they believe it is a benefit to them and their readers."

In fact, AFP's own Web site includes a "robots.txt" file that spurns search engines, essentially telling them to avoid indexing its news pages.

But the case is complicated by the fact that the stories come not directly from AFP but from its subscribers, some of which might want the rest of their sites indexed to generate ad-boosting referrals.

The fair use argument will likely draw upon a 2002 appeals court ruling that thumbnail images serve a different, transformative function as compared to full-size originals — and thus constitute fair use.

But Charles D. Ossola, who handled that appeal on behalf of the copyright holder, said that ruling may not apply to the use of text, given that summaries can be rewritten whereas images cannot for search purposes.

A 1985 Supreme Court ruling on a non-Internet copyright dispute found that small excerpts can constitute infringement if they represent the heart of the work. AFP argues that the headline and the first sentence of a story constitute such an essence.

"They capture the reader's attention and describe what the rest of the article is about," the lawsuit said.

AP spokesman Jack Stokes came out in AFP's support, issuing a statement that AP believes "intellectual property laws protect news. That protection is important to ensure that organizations such as the AP can afford to collect news."

That said, facts cannot be copyrighted, and Google may have a claim on such citations if they are mostly based on facts not expression, said Fred von Lohmann, an attorney with the Electronic Frontier Foundation, a civil liberties group in San Francisco.

Von Lohmann said a ruling against Google also could harm the free exchange of ideas on blogs, which often cite and link to news stories.

The AFP case is not the only lawsuit challenging a search engine's practices. A Web site that sells nude photos of women has sued Google, accusing it of distributing links and passwords. Several companies also have sued Google and others over the use of trademarks as keywords for triggering a rival's ads.

"They are becoming multimedia centers rather than simply indexing information for consumers," said Ossola, who represents Geico Corp. in one such trademark case against Google. "The argument of convenience and benefits to consumers only goes so far when it runs into what are the legitimate rights" of intellectual property owners.


Sendo, Ericsson in patent fight over GSM phones

from Reuters

Sendo said Ericsson was not sharing patents equitably in the way envisioned by the European Commission after it helped fund development of the GSM mobile phone system.

"We're not looking for a free ride here, and we respect the intellectual property rights of these companies, but we want everybody to be on a level playing field," said Hugh Brogan, chief executive of the privately held company, speaking by phone from its headquarters in Birmingham, England.

Brogan said the price of GSM phones had dropped to the point that, in some cases, royalty costs alone amounted to more than 10 percent of the retail price of a handset and that the original royalties were no longer fair and reasonable.

This problem does not affect the major manufacturers, which need not pay each other because they cross-license patents, but it does affect new companies trying to enter or compete in the handset market, Sendo said.

"We don't think they're even-handed about it," Brogan said.

Big manufacturers such as Nokia, Motorola and Ericsson were pioneers in making handsets for the GSM mobile phone system in the early 1990s.

An industry consortium helped develop the system, now used in more than 100 countries, with funding from industry and from the European Commission. The technology is vital for any firm trying to sell phones in most parts of the world.

Ericsson said it wanted monetary damages from Sendo as well as an injunction against the continued sale and marketing of its mobile phones.

Sendo sells mobile phones to operators that need tailored designs and software and has signed deals with Britain's Vodafone and Spain's Telefonica.

With 5 million phones sold last year, Sendo is a tiny player in a market that totalled 684 million units in 2004, of which the top six firms accounted for almost 80 percent. It had sales of $420 million and 300 staff.

BusinessWeek on nanobuzz at spring APS meeting

Before getting too excited by the story below, recall that the American Physical Society (APS) spring meeting on oxide superconductors, held in the 1980's and characterized as the "Woodstock of Physics" did not actually produce much (if anything) in the way of new products. Recall also that buckyballs go back to 1984 and carbon nanotubes to 1990 (if not actually earlier), and whatever happened to them? (as the Wall Street Journal asked more than five years ago, and we still wonder). And, most importantly, don't forget Jan-Hendrik Schon Bell Labs/Lucent, who brought us our first fullerene transistor.

The "Willie Sutton-esque" quote below is sadly humorous, reflecting the lemming-like quality of many research directions, as manifested for example in the unquestioning following of Jan-Hendrik Schon.

from BusinessWeek online:

By Burt Helm

Physicists Feel the Nano-Buzz
The next step for nanotech was the hot topic at the 2005 meeting of the American Physical Society, not your average confab

Anaheim may have the Rose Parade. But on Mar. 20, downtown Los Angeles had the Parade of the Physicists. On a sunny Sunday afternoon, thousands of physicists headed down Figueroa Street to the Los Angeles Convention Center and the annual meeting of the American Physical Society. With over 6,000 scientists attending, it's the biggest and most venerable physics conference in the world. Advertisement

And it has a rich history. It's the place where high temperature superconductivity was originally announced, and where transistors and memory-storage technology were discussed when they were in their early stages.

Walking the 10 blocks between the Los Angeles Convention Center and the Westin Bonaventure, the APS's hotel headquarters, it isn't hard to pick out the terribly academic physicists from regular Angelinos. This isn't a typical industry convention, either. You'll see attendees wearing anything from rumpled tweed sport jackets and tucked-in oxford shirts and slacks -- popular with the older set -- to ratty sneakers, jeans, and t-shirts -- more popular with the younger set.

SAY WHAT? The conference's raison d'etre is getting the top minds of the physics world in one place, where they can share ideas and present their research to one another. The official schedule for the five-day conference is two 800-page phonebooks, covering hundreds of niche topics, and a total of 6,300 talks. For the most part, scientists stick to their hyperfocused specialties. "Even we don't understand half the other talks" says Rob Schoelkopf, a quantum-computing specialist from Yale University.

But this year, one subject in particular assumed the spotlight: nanoelectronics, the science of taking electronics down to a microscopic level.

While the first simple nanotechnology products are entering the mainstream in the form of nanoparticles and composites in sunscreens, fabrics, and consumer goods, the talks drawing the biggest crowds here are focused on the next step: using nanomaterials for computing applications. Sessions with names like "carbon nanotube transistors" and "computational nanostructures" have attendees packing the room and spilling out into the hall.

READY CASH. Nanotechnology is hogging attention not only because it has proved such fertile ground for discovery but also "to a certain extent, because the money's there" says Michael Lubell, a spokesman for the APS. According to a report released by the society in February, 2005, while the Energy Dept. has started four new centers for nanotech-specific research and the feds now devote $5 billion annually to nanotechnology research, physics funding has decreased by 14% in the proposed federal budget for fiscal 2006.

The nano-buzz is evident even on the relatively small trade-show floor (it takes up only about a quarter of the center's entire exhibition hall). Traditionally, the booths at APS are occupied by science journals looking for papers and by vendors of lab equipment. Imagine one- or two-man teams standing behind bulky electronic meters and elaborate stainless steel gaskets, chambers, and other machinery used for growing, testing, and characterizing molecules, crystals, and chips. Excluding a blowup photo of a leather-clad blonde clutching a cryogenic vacuum chamber from startup company Oxford ICE, the exhibit floor is appropriately somber for a very serious science.

But among these conservative companies, nano-fabrication equipment startups are springing up, with names like Firstnano and Nano-Master. "Any corporation with money for R&D" wants to dabble in nanotechnology, says Cary Chee, chief executive of Firstnano, which makes equipment that fabricates nanowires and nanotubes, some of the elementary building blocks in nanotech. In addition to traditional technology companies, auto makers, and consumer-goods companies are buying lab equipment.

NANO-BUBBLE? Jon Lai, one of the founders of Atomate, another maker of nanotube fabrication equipment, says he was even approached by a bubble-gum company interested in nanotech -- he wouldn't say which it was. Using the simple building block materials, "they wanted to design something so that you could go to the store, put down 50 cents, and buy some nanotechnology from them" says Lai.

As scientists here at APS study some of the most sophisticated applications of nanotechnology yet, it'll be interesting to see which developments get bubble-gum money just a few years down the road.


India passes patent bill on March 23

from BusinessWeek Online:

International aid groups slammed India's passage on Wednesday, March 23, 2005, of a new patent law that ends the decades-old practice of allowing domestic drug companies to make low-cost copies of expensive Western medicines, saying millions of poor people across the world will be affected.

The changes in patent rights stem from India's membership in the World Trade Organization, which enhances the country's participation in global trade but requires it to enforce stricter patent rules for its US$5 billion (euro3.8 billion) pharmaceutical industry.

Tuesday, March 22, 2005

IBM, Compuware settle

from Reuters:

Terms of the agreement call for International Business Machines to license $140 million of Compuware software over the next four years, and offer to buy $260 million of Compuware services over the same period.

The lawsuit began three years ago when Compuware sued IBM alleging that IBM had copied some of its software programs and was selling them for below market cost.

The settlement halts a trial that had been running for several weeks. Early on Tuesday, March 22, 2005, the parties met with the judge, who accepted the settlement, which includes a patent cross-licensing deal between the two companies, IBM said.

Dusa Pharmaceuticals sues New England Compounding over acne med

In MercExchange v. eBay, the Court of Appeals for the Federal Circuit dealt with, among other issues, inducement of infringement. [see earlier post on IPBiz.] Under the patent law (35 USC 271(b)), "whoever actively induces infringement of a patent shall be liable as an infringer." The CAFC has construed that text to require proof of intent. There must be evidence that the inducer (in the above case, eBay; in the litigation below, New England Compounding Pharmacy) intended that induced party (in the above case, ReturnBuy; in the litigation below, the physicians) to perform an act incorporating all the limitations of the asserted claim(s). Further, the patentee must demonstrate that the inducer had knowledge of the infringing acts. In the MercExchange case, the CAFC found that there was no evidence that eBay induced ReturnBuy to use barcode scanners and printers to keep track of its inventory, and thus the CAFC found no inducement to infringe. This inquiry was very fine-tuned in the MercExchange decision. Although eBay required ReturnBuy to provide a digital image for the goods that ReturnBuy wanted to sell, the CAFC found no evidence that eBay induced ReturnBuy to use a digital camera, as required by the claim.

from "Drug makers mix it up" by Andrew J. Manuse, MetroWest Daily News:

-->A Framingham firm that makes medications from scratch is defending its sale of a drug for treating acne and other skin lesions.

Lawyers representing New England Compounding Pharmacy Inc. of Framingham and Dusa Pharmaceuticals Inc. of Wilmington will meet at U.S. District Court in Boston to argue whether the pharmacy's sale of the drug violates patents held by Dusa for the compound's use with a light therapy that makes it work.

The compound, known by its abbreviation "ALA," is applied to lesions on a patient's skin but doesn't actually do anything unless it is activated with a certain wavelength of "blue light," said William McNichol Jr., the lead counsel representing Dusa.

Dusa filed its patent-infringement lawsuit on Dec. 27 after the pharmacy, which does business as New England Compounding Center, allegedly faxed advertisements to doctors promoting its ability to produce ALA. In court documents, Dusa included a copy of one fax it claims the defendant sent to doctors in November. It read: "Are you treating acne patients with Blue Light Therapy? We may be able to help!"

"Dusa's position is that by sending out those unsolicited faxes, New England Compounding is inducing those physicians to unknowingly infringe Dusa's patents," said McNichol, an attorney at Reed Smith LLP in Philadelphia. "The law treats that the same way as if New England Compounding was infringing Dusa's patents themselves."

Dusa spent "millions of dollars" investing in licenses for the method, developed by Queen's University at Kingston, Ontario, and in building a business around the clinical effectiveness of that method, said McNichol.

By selling ALA to doctors, New England Compounding is taking advantage of Dusa's work and investment, he said.

But the lawyer representing the pharmacy yesterday argued that Dusa's patent does not cover the sale of ALA itself, and that Dusa's lawsuit and related actions are anticompetitive.

"Dusa's complaint completely ignores and misunderstands the compounding industry as a whole," said Dan Rabinovitz of the law firm Menard, Murphy & Walsh LLP in Boston. "Dusa may be unhappy with the fact that the physician has placed the order with New England Compounding rather than Dusa, but Dusa's patents do not -- and in fact cannot -- prevent a physician from selecting New England Compounding as the company to fill the prescription."

The pharmacy filed a response to Dusa's allegations last week. It also filed a counterclaim against the company, alleging that Dusa made "false and misleading remarks disparaging" the quality of the pharmacy's products and business practices.

"Employees of Dusa have been interfering with New England Compounding relationships with physicians in an unlawful way," said Rabinovitz.

Rabinovitz referenced a December statement Dusa released to the press, which read, in part, "We intend to protect against damage to our product's reputation that might arise from the use of what could be an unsafe copy of our products."

The focus of the counterclaim is to stop Dusa from interfering with the New England Compounding Pharmacy's attempts to do business, Rabinovitz said.

McNichol said Dusa was just defending its intellectual property, which, he said, it has the right to do. In January, the company also filed a patent-infringement lawsuit against The Cosmetic Pharmacy, of Tucson, Ariz., in which it references the ongoing suit with the New England Compounding Center.

Rabinovitz said Dusa's case was the first against the Framingham pharmaceutical company. The firm, located on Waverley Street, mixes medications that are either no longer manufactured, in short supply or not commercially available in the combination or form a patient needs.

Dusa is seeking a court injunction to stop the pharmacy from selling the compound and unspecified damages. In its counterclaim, New England Compounding is seeking a ruling that Dusa's patents are unenforceable as well as damages.

In the US you can't find a professor who is not trying to create a company

from the Financial Times (March 21, 2005):

A mountain to climb: Brussels is trying to improve the results from

The brightest European students want to study at US universities,
renowned for incubating entrepreneurs as much as for their science.
[LBE note: courtesy of the Bayh-Dole Act.] A survey this year found that half of German companies investing in R&D overseas were reducing capabilities at home. British universities report drops of up to 50 percent in students from Asia enrolling in postgraduate courses.

To meet that challenge, EU leaders - as part of the so-called Lisbon
agenda on boosting competitiveness that they will seek to revivify at their economic summit starting in Brussels tomorrow [March 22, 2005] - have set the goal of increasing R&D spending to at least 3 per cent of gross domestic product by 2010. The private
sector contribution would rise from a little more than half to reach
two-thirds but, as a sign of intent, the European Commission also wants to double the EU's own annual research spending to Euros 10bn in its 2007-13 budget period. (...) French scientists remark wryly that France (at 2.19 per cent) has had a 3 per cent goal since the 1960s under Charles de Gaulle. [LBE note: the plan of the future and always will be.]

Susan Hockfield, new president of the Massachusetts Institute of
Technology, complained in the Financial Times recently that the US was falling behind in mathematics and science and needed to boost spending on basic research. [LBE note: Susan should contact Larry Summers of Harvard about his remarks about women in science.]

Novartis, the Swiss pharmaceutical giant, decided three
years ago, for instance, to move its research headquarters to Cambridge, Massachusetts, saying the region offered the biggest untapped pool of top scientists and hospitals. Hakan Eriksson, head of R&D at Ericsson, which is boosting research in China, says: "R&D is likely to follow where production goes." For many companies, that means Asia. [LBE note: Dupont in China, GE in Bangalore, Cummins in Pune.]

Miklos Boda (who heads Hungary's new National Office for Research and Technology) says a framework is needed to channel finance. "Hungary has the fresh water - the scientists. What we miss is the glass to hold the water."
His team wants to encourage smaller companies, arguing that they offer the best long-term growth potential, and to increase incentives for academics to develop their ideas commercially.
"In the US you can't find a professor who is not trying to
create a company
," jokes Mr Boda.

As an aside, in another area of academics, a section of my article in Intellectual Property Today for April 2005 is entitled:


Monday, March 21, 2005

Sarah Cleveland on use of "international law" to interpret US law

The Supreme Court case of DONALD P. ROPER v. CHRISTOPHER SIMMONS, 125 S. Ct. 1183; 2005 U.S. LEXIS 2200 (March 1, 2005), in invoking law external to the United States to justify the 5-4 decision, continued the debate about whether "international law" should be used to interpret US law.

In the particular area of patent law, legal conclusions of foreign tribunals are not deemed relevant to the U.S. proceedings, even on the U.S. counterpart case. HOWEVER, in the debate on patent quality, the current argument of the National Academy of Sciences (NAS) relies on differences in grant rates between foreign countries and the U.S., even though different patent applications AND different rules are involved. The idea that foreign grant rates can be used to interpret the U.S. grant rate, and to declare it "too high" should be rejected.

from Sarah H. Cleveland, Is There Room for the World in Our Courts?, Washington Post, March 20, 2005:

(...)In Roper v. Simmons, however, the 5-4 majority resoundingly supported the relevance of international law. And Justice Sandra Day O'Connor, in dissent, nevertheless agreed that "the existence of an international consensus . . . can serve to confirm the reasonableness of a consonant and genuine American consensus."

Roper is the most recent battleground on which Justices Antonin
Scalia and Stephen Breyer have acted as spokesmen for the opposing camps. Scalia has asserted that "modern foreign legal materials can never be relevant to an interpretation of . . . the meaning of the U.S. Constitution." He is supported by Justice Clarence Thomas, who has protested the court's apparent willingness to "impose foreign moods, fads, or fashions on Americans." Both men emphasize
the singularity (and superiority) of the American system.

Applying W. Edwards Deming to "patent quality"

Back in the early 1990's, there was some discussion of applying the quality concepts of W. Edwards Deming to law firms. Some of the papers suggested that Deming had not discussed legal issues. He had: Deming, On the Contributions of Standards of Sampling to Legal Evidence and Accounting, 19 CURRENT BUS. STUD. 14, 15 (1954).

As legal business improved, discussions of applying Deming to law disappeared.

Perhaps we could apply Deming style analysis to the issue of patent quality at the USPTO, first to see if there is a problem, and second how to resolve any identified problem.

In "Out of the Crisis," Deming asked, can American history, under handicap of the annual [job performance] rating produce another Irving Langmuir, a Nobel Prize winner? Deming said: It is worthy of note that the 80 American Nobel prize winners all had tenure, security. They were answerable only to themselves.

Deming then stated: A common fallacy is the supposition that it is possible to rate people; to put them in rank order of performance for next year, based on performance last year.

Rambus, Infineon agree to settle patent litigation

from Bloomberg:

Rambus Inc., a designer of high- speed memory chips, said Infineon Technologies AG agreed to pay as much as $150 million to end a five-year legal battle over patents Rambus says cover the entire memory industry.

Rambus shares surged as much as 45 percent. Infineon will pay $50 million over nine quarters starting Nov. 15, Rambus Chief Executive Harold Hughes said today. Infineon will pay as much as $100 million more if Rambus signs licenses with other chipmakers.

The settlement may put pressure on memory-chip makers Hynix Semiconductor Inc. and Micron Technology Inc. to reach similar agreements in their cases. Los Altos, California-based Rambus, which gets most of its sales from royalties and doesn't make the chips it designs, contends its inventions are used in aspects of all memory chips in the $26 billion industry.

``Infineon has been the cornerstone of all of the litigation,'' said Daniel Amir, a WR Hambrecht & Co. analyst in San Francisco who rates Rambus shares ``hold'' and doesn't own them. ``This could be the tip of the iceberg leading to being possibly the end of litigation, maybe as early as next year.''

Today's settlement covers all existing and future patents and patent applications owned by Rambus that Munich-based Infineon, Europe's second-largest chipmaker, may use.

Sunday, March 20, 2005

Florida company Enpat takes interests in patents

from Florida Today:

One of the latest trends in casino gambling has its roots in Brevard County.

The trend is casino betting chips embedded with tiny radio-frequency identification devices. The chips allow casinos to monitor gamblers' betting habits, as well as deter card-counting and fraud.

Melbourne-based Enpat Inc., headed by lawyer Eric Neitzke, recently sold two patents for the radio-frequency identification device, or RFID, technology to Shuffle Master Inc. for $12.5 million.

Shuffle Master Inc., based in Las Vegas, is a gaming-supply company that provides items such as poker tables and automatic card shufflers to casinos.

"The purchase of these patents demonstrates our commitment to bring reliable and integrated RFID technology to market for the benefit of our casino customers," said Paul Meyer, president and chief operating officer of Shuffle Master.

Neitzke is a lawyer who was corporate vice president for litigation at Harris Corp. from 1983 to 1995.

He founded Enpat in 1995 to provide assistance to patent owners who believe their patents are infringed.

He also buys an interest in the patents if, like in the case of the RFID gambling chips, he sees commercial merit.

The two inventors of the RFID gambling-chip technology, John French and Bill Piehl, contacted Neitzke after coming across his Web site,, in 1998.

To him, the merits of the technology seemed obvious. And the patents' claims were easy to understand, meaning, if he ever had to make his case before a jury, he could do it without a lot of cumbersome legalese.

Neitzke wouldn't disclose his agreement with French and Piehl.

Neitzke noted he carefully scrutinizes all requests for his services.

"I get a couple serious inquiries a month, but I take on very few of them," Neitzke said. "It takes a lot of work, and it's a big investment of resources."


The patent in question is US 5,651,548, issued July 29, 1997, entitled "Gaming chips with electronic circuits scanned by antennas in gaming chip placement areas for tracking the movement of gaming chips within a casino apparatus and method."

As of March 20, 2005, the '548 patent has been cited by 34 US patents, most recently 6,755,655 entitled "Electronic educational toy appliance and a portable memory device therefor."

The first claim of the '548 recites:

1. An apparatus comprising:

a plurality of gaming chips, each having an electronic circuit capable of transmitting information;

a gaming table having a game playing surface, said surface having indicia thereon adapting said surface for a game which uses at least one of said plurality of gaming chips;

said surface having at least one gaming chip placement area therein; and

an antenna for obtaining information from a gaming chips located on said gaming chip placement area.

Friday, March 18, 2005

Bausch & Lomb, Alcon settle on ocular vitamins

from Reuters:

On March 18, Bausch & Lomb disclosed a settlement with Alcon concerning litigation over ocular vitamins and said the agreement sets up a cross-licensing relationship that allows Alcon to continue selling the previously disputed AREDS-based dietary supplement for the eyes, while granting Bausch & Lomb global rights under one or more of Alcon's patents.

Top ten universities in terms of patents received

List of 10 universities receiving most patents in 2004

#1. University of California received 424 patents
#2. California Institute of Technology with 135
#3. Massachusetts Institute of Technology with 132

the University of Texas with 101, Johns Hopkins University with 94; Stanford with 75, University of Michigan with 67, University of Wisconsin with 64, University of Illinois with 58 and Columbia University with 52.

Thursday, March 17, 2005

News reports on CAFC decision in eBay/MercExchange

A U.S. Appeals Court ruling in a long-running patent dispute between online marketplace eBay and MercExchange has saved eBay some money, but left the door open for more litigation.

from the Washington Post:

The court in Washington threw out part of the patent-infringement verdict won in May 2003 by MercExchange , and let the company seek more damages on a third patent claim. MercExchange claimed eBay's unit infringed patents related to "fixed price" sales. One patent lawyer predicted the ruling will lead to an order blocking some eBay functions.

The court gave MercExchange a new chance to argue in a lower court that eBay infringed a third patent. The Federal Circuit, which specializes in U.S. patent law, also said MercExchange can seek a court order blocking eBay from using software that infringes the patents.

MercExchange lawyer Scott Robertson said the portion of the verdict upheld by the court relates to fixed price sales. The patent claim revived by the appeals court concerns online auctions, which might affect all of eBay's business, Robertson said.

MercExchange founder Thomas Woolston, when asked if he was willing to license his technology, said it would be "up to eBay." Woolston owns a stake in UBid Inc., which says it's the second-biggest online auction house. Chicago-based UBid is owned by privately held Petters Group LLC.

**The CAFC decision***

The CAFC found that substantial evidence supported the jury verdict of validity and infringement (by eBay) of US 5,845,265 (--> eBay loses). However, eBay not guilty of inducing ReturnBuy to infringe '265 (-->eBay wins on that point). Of arguments on the '265, MercExchange argued UNSUCCESSFULLY that eBay waived its right to argue anticipation because eBay's initial argument was solely on obviousness. The CAFC cited to Connell v. Sears, 722 F.2d 1542, 1548 (CAFC 1983) for the proposition "anticipation is the epitome of obviousness." [However, something can be anticipated, but not obvious.] The CAFC also cited Hopkins v. CellPro, 152 F.3d 1342, 1357 n. 21 (CAFC 1998). Of 271(b) on inducing, the CAFC noted that proof of intent is required, citing to Insituform v. CAT, 385 F.3d 1360 (CAFC 2004). Here, the CAFC noted the alleged inducer must have knowledge of the infringing acts.

The claims of US 6,085,176 invalid for anticipation. (--> eBay wins on that point).

Of 6,202,051, because the district court improperly granted summary judgment, there is a remand (--> procedurally, eBay loses on that point). An SJ on invalidity through lack of written description was improperly granted because of the existence a dispute of material fact.

Significantly, the CAFC reversed the district court's denial of a permanent injunction requested by MercExchange against eBay. An issue was the different standards for preliminary and permanent injunction, and the CAFC cited Lermer v. Lermer, 94 F.3d 1575, 1577 (CAFC 1996).

The case has much discussion of Markman hearings and Markman rulings.

Wednesday, March 16, 2005

Uncertain future for patent ordinance in India

Remember the ordinance India promulgared to comply with the WTO? Things are not yet completed.

from financialexpress:

As per rules, once Parliament goes into session, an Ordinance lapses within six weeks. The current session of Parliament started on February 25, 2005. It will go into a recess from March 24 to April 18. Therefore, the six-week deadline would expire in mid-April itself. The Patents Bill would thus be required to be tabled by commerce and industry minister Kamal Nath by March 24 itself. If the government misses the bus, then the whole process would have to begin afresh. A fresh Ordinance cannot be promulgated when Parliament is in session.

Legal experts said while a failure to abide by WTO rules could lead to sanctions by other countries, it would not happen immediately. First a country needs to file a dispute, following which the Appellate Body (AB) comes out with its decision. Based on the AB’s decision, the DSB Idispute settlement body)would give its judgement.

Only if India fails to implement the DSB’s decision within 15 months, other countries can impose sanctions against it. However, experts added that if India fails to stick to its WTO obligations, it could lose face in the on-going negotiations which would give the developed countries an advantage over it.

Did the CBS request for resignation in Memogate backfire?

On Sunday, February 27, 2005, the Trenton Times published an article by Cathryn A. Mitchell entitled "Request for resignation backfires." [pages D1, D4].

The eighth paragraph of the story got around to the gist of the article:

Although relieved of their responsibilities, the three executives who were asked to resign have apparently refused to do so. And this is our story behind the story, for today's purposes at least.

By February 27, 2005, the date of the Times story, two of the executives (Betsy West and Mary Murphy) had already worked out settlements with CBS and had in fact resigned. The third (Josh Howard) was negotiating.

The Times article continued:

So what is the difference between being asked to resign and being outright fired?

Well, historically, being asked to resign suggests that a person is being given a way out--an opportunity to save face and be fired.

Generally, when a person is asked to resign, we assume they will do it--for their own good. What now appears to be happening with this story suggests this is no longer an assumption we should make.

Regardless of who is to blame, the modern scenario--regardless of factual background--often becomes one of fingerpointing, with no individual willing to shoulder all of the blam and take the bullet for the group.

Instead, if one person is going down, today, he or she often takes others along for the ride...

Moral of the story: Address outstanding issues head on, internally, fully and completely if possible, before a strategic decision is made aobut how to proceed. Fully investigate all perspectives and get as many facts as you can.

This may save time -- and potentially considerable embarassment--in the long run.

In light of what has played out, the "request for resignations" allowed CBS to negotiate with the three executives and reach settlements (with two so far). Needless to say, the employer has to worry about the employee who was directly fired (Mary Mapes in this case).

Some of Mapes' activities have been reported; from NewsMax:

Mapes' literary agent explained that she "plans to argue for the veracity of the four memos supposedly typed by President Bush’s former National Guard squadron commander, Lt. Col. Jerry Killian, in the early 1970s," where Killian complained that Bush's Guard records had been "sugarcoated."

"Now that the other people have copped a plea ... she’s the only one who can tell this story," said Wesley Neff, president of the agency that is representing Mapes.

But with no such settlement to cushion her fall from grace, Mapes is undoubtedly looking for vindication. She is said to have put together 40 pages of analysis and documentation to back up her claims.

And if Mapes' comments after being thrown under the bus by her former employers are any indication, her book may point the finger at higher-ups at the network.

"If there was a journalistic crime committed here, it was not by me," the one-time CBS goldern girl complained after getting the ax. "I vetted all aspects of the story with my editors."

The moral of MemoGate may be to worry about the person who was fired.


Further on the Times, the Feb. 27 issue had an article on the Princeton Institute for the Science and Technology of Materials. Although the article was nominally about nanotubes, the picture of James Sturm depicted a tetrahedral network (e.g., silicon).

There was discussion of separation by means of size selective tubes. Curiously, there was no discussion of separations using zeolites.

Edward Cox was quoted: "We've already shown that we can accurately separate virus-sized plastic beads that differ in mass by only 1 percent." The smallest channels so far are about 50 nanometers, much larger than a single-walled carbon nanotube.

An ultimate objective is to sequence DNA.

Burst, Microsoft to settle [?]

from Techworld:

Microsoft is to pay video player software vendor Burst US$60 million to settle Burst's anti-trust and patent-infringement claims. The settlement will also give Microsoft a non-exclusive right to Burst's media player software.

Burst will use the settlement money to pay off long-term debts, enforce patent claims against other companies and to pay shareholders, according to the press release.

Todd Miller on inherent anticipation in AIPLA Q. J.

Todd R. Miller of Jones, Day has an article on inherent anticipation in 32 AIPLA Q. J. 425 (2004).

The conclusion:

-->Not surprisingly, courts often decide who is going to win and then fit the law to the facts of the case. [LBE note: agreed. See Apotex case.] This approach is not the best course to take in any situation. As the fact pattern posed herein illustrates, issues arise where "trace amounts" or impurities of a patented compound are coproduced as a by-product of a process. Should a court hold the accused infringer liable for infringement for the involuntary creation of the patented compound in quantities so minute as to be of no therapeutic, manufacturing, or other commercial significance, and in an amount that would be undetectable by an means known atthe time the patent was applied for and issued? Should a court instead commit "claim construction heresy" to avoid liability? Should a court manipulate the anticipation test to give the accused infringer a better chance of escaping literal infringement? Or should a court rely on the possibility of a de minimis exception to infringement, the reverse doctrine of equivalents, or a limitation of remedies as a means to an end? The function of patent claims is to put the public on notice of the patentee's intellectual property rights. The canons of claim construction are in place to help guide the public as to the proper meaning of the claim language. If the canons of claim construction are not applied or are applied incorrectly, the public's ability to determine the scope of protection blurs. Consequently, manipulating the canons of claim construction, for whatever reason, is not recommended.

Similarly, the laws regarding anticipation and infringement should also be followed. While it is true that there maybe an inconsistency in the law regarding accidental inherent anticipation and accidental literal infringement, manipulating the test for anticipation to remove invariability as a requirement is not a recommended course. This is particularly true in light of the fact that recognition already seems to have been eliminated as a requirement for inherent anticipation, and this would eliminate the last difference between express and inherent anticipation. Accordingly, a court should not attempt to "even the playing field" even more by permitting the accused infringer to utilize a prior art disclosure to anticipate the patent and render it invalid where the court finds that the prior art does not invariably produce the patented compound. It may be the case that some courts are manipulating the canons of claim construction to avoid finding the accused infringer liable for de minimis infringement because there is no recognized or established de minimis infringement exception. Or perhaps an underlying reason why the courts are restricting the claim scope is the fear that afinding of infringement could lead to an injunction. In this light, the legislature should either act to establish a statutory framework of de minimis infringement, and thus excuse liability, or limit the remedy for such infringement to damages.<--

Mr. Miller discussed the case Schering v. Geneva, 339 F.3d 1373 (CAFC 2003), which resolved the issue of recognition.

--> One such subissue involves "recognition," the question of whether artisans skilled in the art must recognize the "missing" explicit claim limitationwithin the prior art reference. n47 Another subissue that will be considered involves the invariability, orcertainty, requirement. Invariability refers to the principle that the missing descriptive material is "necessarily present,"not merely probably or possibly present, in the prior art, and a number of cases and secondary sources suggest that thisis perhaps the most important principle in the law on inherency. <--

I had correctly predicted the outcome of the issue of "recognition" in an article in 1999.

from Endnote 11 of Lawrence B. Ebert, There's Always Something There to Remind You, Intellectual Property Today, May 2003:

Note In re Seaborg, 328 F.2d 996 (CCPA 1964). Applicant argued that a small amount of an unknown, unconcentrated isotope would have been undetectable, and the CCPA concurred. However, what result if a new analytical method were subsequently developed which made that small amount detectable? Contemplate text from L. B. Ebert, “Inherent difficulties,” Int. Prop. Today, Nov. 1999: To illustrate one issue in the interpretation of Continental Can, consider the discovery of buckyballs. In 1984, workers at Exxon disclosed the existence of C60, with the formula as determined by mass spectrometric measurement n6 and a way to make said C60. (J. Chem. Phys., 1984, 81, 3322). They did not disclose the correct structure of C60; Professors Smalley and Kroto proposed the structure of C60 to be that of a truncated icosahedron in 1985. This was not known to be correct until after the work of Huffman and Kratschmer in 1990. Now, assuming that the synthesis of Exxon always led to C60 with the icosahedral structure, would a patent claim to C60 in 1990 (with the truncated icosahedral structure) be inherently anticipated by the Exxon work in 1984, even though no one knew the structure in 1984, and in fact could not have proved the structure until 1990? Assuming that one of ordinary skill would recognize the inherent property, albeit at a later date, one might think there would be inherent anticipation. (Of course, a 1990 claim to merely C60 would be explicitly anticipated by the written description and enablement of the 1984 reference.)

The main body of the 2003 IPT article, in discussing the Apotex case, noted:

At the same time, however,it should be made clear that there is symmetry between the standards applied for infringement and invalidity. If these same minor amounts were found to exist in a product that existed before the patent, then the patent claim should be found invalid.11 As the Supreme Court said in Peters v.Active Manufacturing Co., 129 U.S. 530,537 (1889): “[t]hat which infringes, if later,would anticipate if earlier.” In terms of Chairman Greenspan’s policy concerns, we will allow the competitor to design around,but if the competitor comes so close that he makes some of the claimed product, whenearlier processes made none of the claimed product, then the competitor is deemed an infringer.

Further to the Nov. 1999 article, at the time of my writing in 1999, a couple of partners disputed both my prediction about "recognition" (which came true in the Schering case) and even argued that Continental Can was not good law (in 1999). Of course, Continental Can is, and has been, good law.

RIM settles with NTP over BlackBerry technology

from AP on March 16, 2005:

Research In Motion Ltd., the Canadian maker of BlackBerry wireless e-mail devices, said on Wednesday, March 16, that it will pay $450 million to resolve litigation with NTP Inc., a Virginia company which said the devices infringed on in its patents.

Under terms of the agreement, NTP will grant the company and its customers the right to continue its BlackBerry-related wireless business without further interference from NTP or its patents.

On Wednesday, Research In Motion said the settlement fee relates primarily to past damages, and includes the $137 million judgment currently held in escrow. The company said it expects to expense most of the remaining $313 million in the fourth quarter ended Feb. 26.

NTP and Research In Motion plan to finalize the terms of this agreement in upcoming weeks.

The company said further comment and details will not be disclosed until the company's fourth-quarter conference call on April 5.

Tuesday, March 15, 2005

Google's method for highlighting search results

Google's US 6,839,702, issued January 4, 2005 :

The first claim:

1. A method performed by a client device for highlighting search terms in web documents distributed over a network, comprising:

generating a search query including a search term;

receiving a list of one or more links to web documents distributed over the network in response to the search query;

receiving selection of one of the links;

retrieving a web document corresponding to the selected link from the network;

intercepting the web document; and

highlighting one or more occurrences of the search term in the intercepted web document.

B. Description of Related Art

Conventional techniques for searching a hypertext medium, such as the World Wide Web ("web"), are replete with deficiencies. To perform a search on the web, a user typically uses a web browser, such as the Netscape Navigator and Microsoft Internet Explorer browsers. The user enters one or more search terms into the browser. In response, the browser generates a query request to a search engine. The search engine typically returns a list of result links to the browser, which, in turn, displays the list to the user.

To view a document associated with one of the links, the user typically selects the link by, for example, clicking on it using a mouse. Sometimes, the user desires to determine where the search terms are located in the document to determine the document's relevance. Conventional information retrieval systems require that the user perform a word search on the document to locate each occurrence of the search terms.

As a result, there exists a need for mechanisms for highlighting search terms in a retrieved document to aid a user in determining the document's relevance.

Analysis of CAFC decisions: invalidity down, noninfringement up

from an article by Glynn S. Lunney, Jr., Patent Law, the Federal Circuit, and the Supreme Court: A Quiet Revolution, 11 S. Ct. Econ. Rev. 1 (2004).

page 15:

As Figure 2 reveals, patent invalidity is significantly
less likely to be the reason why a claim of patent infringement fails under the Federal Circuit.
Before the Federal Circuit, invalidity accounted for fully three-quarters of the cases in which claims of patent infringement failed. In contrast, after the Federal Circuit's creation, invalidity accounted for just more than one-third of the failure results.

As Figure 3 reflects, an inability to establish infringement is
significantly more likely to be the reason why a claim of patent infringement fails under the Federal Circuit. In the pre-Federal Circuit era, a failure to establish infringement accounted for roughly one-quarter of the cases in which claims of patent infringement failed. However, under the Federal Circuit, an inability to establish infringement accounted for more than
two-thirds of the failure results.

This observation (also related to an earlier post of an observation by Judge Rader) has relevance to the patent quality debate involving Quillen/Webster on the one hand and Clarke on the other hand. If patent quality were going down significantly, one might expect the fraction of invalidity decisions to increase. The analysis by Quillen and Webster is discussed in 4 CHI.-KENT J. INTELL. PROP. 186 (2005).

Also, of "expectations" for patent grant, note the following text from the patent pending blog.
An inventor's statistical chance of success.

Sometimes an inventor asks about their chance of success. If they are using an invention promotion company, I would say their chance of success would be better if they bought lottery tickets. However, we have noticed some statistics that are useful in this evaluation.
Our usual practice is to do a patent search, then file a patent application.

Over a period of time, we have observed some general statistics, which of course do not take into account if the product is a good idea, if the invention is at the right time, if it can be built for a price to make its sale price attractive, if the inventor is competent to get it to market, design it, hire the right people
at the right time, etc. Just looking at numbers, here are the numbers:

100. Of every 100 inventions we do patent searches on, about 60 percent of them turn out to have patentable subject matter.

50. Of those 60 searches, about 50 of them go ahead with a patent

45. Of those 50 applications, about 45 of them result in issued patents.

25. Of those 45 issued patents, about 25 inventors do nothing with the invention, or are not successful. They may run out of energy, inspiration, time, dedication, or they may make dumb mistakes about marketing, packaging, designing, unable to find a licensee, or run out of money.

20. Out of the 45 issued patents, about 20 inventors do some kind of test marketing.

5. Of the 20 that do test marketing, about 5 will fail. The item may not sell for the price they have to get in order to make a profit, or people may not be interested in the product.
15. Of the 20 that do test marketing, about 15 are at least marginally successful.
10. Of the 15 that experience marginal success, about 10 will quit for lack of interest, resources, dedication, inspiration, changes in circumstance. Some of these could have been saved if the inventors could learn from purchasers what they really want in this kind of product, and if the inventor can change his product. Most inventors don't realize how long it takes to make a product a
success, and don't have the stamina to follow it through.

3 and 2. Of the 5 that are left of the 20 who did test marketing, about 3 will grow into successful single product businesses, and 2 will license their product to a larger company.
[end text from patent pending blog]

These numbers are of relevance to the Quillen/Webster discussion. Of the 50 applications for which a search finding patentable subject matter is performed, about 45 lead to issued patents, a success factor of 90%, less than the 97% of QWI, but greater than the 85% of QWII. However, that is the success rate with a prior search. If no search were performed (none is required), then the success rate would be 45%.

The fact that the raw PTO number for issuance is about 2 patents issued from every three applied does suggest that (some) applicants (and/or attorneys) do their homework, and do not expend the money for filing applications based on disclosures not studied for patentability.

TiVo, Comcast cut deal

TiVo will make a customized version for Comcast cable subscribers, the two companies announced March 15, 2005. The deal calls for TiVo to adapt its software to work on Comcast's existing DVR platform, and it allows TiVo to extend to Comcast subscribers the advertising it sells in the form of interactive video clips that automatically appear in the TiVo menu.


Littleton, Colorado-based EchoStar Communications goes to trial in Texas the week of October 10, 2005 to defend itself against claims of patent infringement by TiVo over digital video recording.

TiVo alleges that EchoStar -- which operates the satellite T-V Dish Network -- unfairly used its technology to build a digital video recorder, which allows viewers to pause live T-V and skip commercials.

If TiVo has its way, EchoStar would have to pay unspecified damages and might have to modify its satellite receivers. If TiVo wins, it could use the decision as a precedent to sue other companies that have introduced technologies similar to its so-called time-warp, which allows viewers to record one program while recording another.

TiVo was founded in 1997 and introduced the first digital video recorder. EchoStar followed up in 1999 with its own version.

Dupont planning to increase patent filing

from Reuters, March 15, 2005:

Thomas Connelly, Dupont's chief science & technology officer : "I expect to see us increasing our patent filing by near double digit rates over the next few years."

DuPont recently built a research and development facility near Shanghai in China that employs about 100 scientists and engineers with room for far more, and is opening a smaller facility with a "handful of staff" in South Korea.

"We will continue this trend. The next on our list will be India and Russia and you will see that happening very shortly," Connelly told a Merrill Lynch chemicals conference.

"We need to go to where the growth is."

Sales from new products were expected to increase to 33 percent of total sales in 2005, aided by growth in emerging markets.

Connelly said about 60 percent of these new product sales cannibalized or replaced other DuPont sales last year, which totaled $27.3 billion, but this divide was expected to decline to about 50 percent.

Settlement between Ligand and Burnham/SRI

In December 1999, the FDA approved Targretin (active ingredient: bexarotene) capsules for the treatment of cutaneous manifestations of cutaneous t-cell lymphoma in patients who are refractory to at least one prior systemic therapy. The European Commission granted marketing authorization for Targretin capsules in March 2001, and the product is currently marketed in many major European countries, including Germany, the United Kingdom, France, and Italy. Targretin is in continuing clinical trials in front-line, second-line, and third-line settings both in combination and as a monotherapy for non-small cell lung cancer.

A patent interference issue arose involving a patent application owned by Ligand and two patents owned by Burnham and SRI: U.S. Patent Numbers 5,466,861 and 5,837,725. These two patents previously were licensed exclusively to Ligand and now will be assigned to Ligand as part of the settlement.

SRI and Burnham will concede before the United States Patent and Trademark Office that Ligand has priority to all the disputed claims, i.e., the claims to bexarotene. SRI and Burnham also agreed not to challenge the validity and/or enforceability of any Ligand patents or applications that cover bexarotene, including certain retinoid X receptor related patents or applications that generically cover bexarotene and to cooperate in any Ligand enforcement actions involving any Ligand patents covering bexarotene.

Under the agreement, Burnham will have a research-only sublicense to conduct basic research under the assigned patents and Ligand will have an option on the resulting products and technology.

Philip Albert on software patent debate

from technewsworld (Philip Albert):

The camp that opposes software patents includes staunch open-source advocates. The other camp includes proprietary software companies, and as one anti-software patents commentator said, "The only winners in the patent war are the firms that use them against other companies and the lawyers they employ."

Open-source advocates who want to use the law to abolish software patents miss an important point. "The Law" is not just a lifeless creature of statute. At the most abstract level, "The Law" is a social contract that is composed of policy choices, economic theories and social values determined by the community at large through the democratic process.

[Query: what policy choices, economic theories, or social values have played a role in recent decisions on the doctrine of equivalents? Isn't the argument settled expectations? Also, what policy choices or economic theories played a role in Lilly v. Medtronics? Wasn't the decision based on the meaning of "a law" in what was seen to be a poorly drafted statute?]

Should the telegraph have been put on hold because of its negative impact on the Pony Express? According to the economist Charles Wheelan in his insightful book Naked Economics: "There is a crucial distinction ... between using the political process to build a safety net for those harmed by creative destruction and using the political process to stop that creative destruction in the first place. Think about the telegraph and the Pony Express. It would have been one thing to help displaced Pony Express workers by retraining them as telegraph operators; it would have been another to help them by banning the telegraph."

From a pragmatic angle, both camps might find it more constructive to focus the debate not on whether software patents should be abolished, but rather on how to prevent overly broad software patents from being issued and how to fit software patents into an open-source model.

[Albert might have mentioned what Morse tried to claim.]

Research in Motion (RIM), NTP hold settlement talk

The Toronto Star reported on March 15 that a settlement conference between RIM and NTP took place March 11, 2005 in front of United States Magistrate Judge Dennis Dohnal at the U.S. District Court Eastern District of Virginia.

RIM shares jumped more than 8 percent on March 14 after reports the BlackBerry wireless e-mail device maker held a settlement conference with NTP Inc. about their ongoing patent infringement battle.

Kona Shio, an analyst with research firm Conscius Capital Partners, said:

"We view this as a clear positive and could mark the first step toward a long awaited resolution of RIM's NTP case which we believe is curtailing share price performance. To date it is difficult to handicap the odds of a settlement."

Friday, March 11, 2005

Good Technology takes license from NTP

from RCRNews (March 11, 2005):

Research In Motion [RIM] Ltd. rival Good Technology Inc. announced it entered into a licensing agreement with NTP Inc., the patent-holding company that is suing RIM for its allegedly infringing products.

Microsoft's Brad Smith on patent issues

from pcpro, on a speech by Brad Smith in Washington DC on March 10, 2005:

Microsoft says that in 2004 it filed around 3,000 patent applications to the U.S. Patent and Trademark Office (PTO). At the same time, the company's high profile makes it an obvious target for get-rich-quick patent holder. Smith notes that the company spends close to $100 million annually to fight an average of between 35 - 40 simultaneous patent lawsuits.

At the top of his mind will be the recent Eolas case where Microsoft was sued by a company [and by UCal/Berkeley] claiming to have the patent on browser add-ins. Although the tide now seems to be turning in Microsoft's favour [the recent CAFC decision], a jury had originally awarded Eolas damages of over $500 million and threatened to cause chaos across the World Wide Web. The PTO is now looking to re-examine the Eolas patent. [the PTO initiated a director-ordered re-examination over one year ago.]

Smith feels that in the US in particular 'it is too easy for a holder of a weak patent to look to a lawsuit as the ultimate lottery ticket'. He feels that the PTO is overwhelmed and cannot do a thorough job of examining patent applications and cope with the demand.

Smith notes, 'the issue of quality of U.S. patents is linked to the issue of quantity. The PTO has witnessed a tripling of patent applications since the 1980s, with more than 350,000 applications now filed each year. This dramatic increase has strained the resources of the PTO and imposed unreasonable demands on the PTO examiners.'

Smith says 'under the current system, one needs an army of lawyers to patent an invention throughout the world. For smaller companies and individual innovators who cannot afford to comply with the complexities of dozens of disparate national systems, this can present an insurmountable problem. We urgently need to reward innovation, not stymie it.' As a start Microsoft is proposing a 'zero-filing-fee system' whereby small inventors who qualify pay less or nothing to file a patent.

Smith also thinks that the world should at least make it easier to recognise each other's inventions. He suggests that as a start the three biggest patent offices, the US PTO, the European Patent Office and the Japanese Patent Office should recognise each other's reviews. Reasonable enough, although the recent European battle will does not bode well in getting an agreement on what actually constitutes a patent.

from techworld:

Microsoft also called for a patent system that is more accessible to small investors [sic: inventors(?)], and recommended that the US Congress end patent filing fees for small companies, non-profit groups, universities and individual inventors. "The system has to work for everybody," said David Kaefer, director of Microsoft’s IP Licensing Program. "It's only a system that works for the largest companies."

Microsoft and other tech companies have pushed Congress to end the diversion of patent fees from the patent office to the US government general budget, saying that the office needs more funding to evaluate the growing number of patent applications. The USPTO receives more than 350,000 patent applications per year, triple the number it received 20 years ago.

But ending patent fees for small businesses wouldn't have a major impact on the USPTO's budget because so few small businesses or individual inventors can afford the fees, Kaefer said. Patent application fees can run into the thousands of dollars. "Some people are more able to help finance the system," Kaefer said.

Many technology companies and trade groups have called for patent reform, after some Internet activists accused the USPTO of granting patents on technologies that were already widely used. One of the most publicised cases was in September 1999, when was granted a patent for its one-click shopping service. [Yet, the one-click patent held up in a district court proceeding and remains valid.] CEO Jeff Bezos later called for patent reform.

Microsoft, which holds about 4,500 patents worldwide and has another 10,000 pending, has been on the losing end of patent lawsuits. In July, a US court in California ruled that an ergonomic keyboard patent claim against Microsoft by TypeRight Keyboard could move forward. Earlier this month, an appeals court overturned a $520.6 million patent infringement judgment against Microsoft brought by Eolas. Eolas had sued Microsoft over a Web browsing patent and won its case in lower court in August 2003.

"While patents are a really important way to reward innovation, today we see a crisis of confidence in the US," Kaefer said. "At lot of people are asking, is the system as good as it could be?"

Kaefer, echoing a speech by Microsoft general counsel Brad Smith in Washington DC on Thursday, also called for Congress to look for ways to limit patent lawsuits. "It is too easy for a litigant to manipulate the US system and look to a patent lawsuit as the ultimate lottery ticket, hoping to confuse jurors with technical jargon that will yield the payment of a lifetime," Smith said.

Smith and Kaefer also recommended the US and other countries look at ways to "harmonize" patent laws. Conflicting patent laws cause problems for patent holders and technology companies, Kaefer said.