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Thursday, January 3, 2013

Cyberlaw Predictions: The Software Patent Scene

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This post is the third in a series of predictions from legal and business experts about the directions cyberlaw policy might take in 2013, solicited by editors of BNA's Electronic Commerce & Law Report during the closing weeks of 2012. We asked that the remarks be brief -- something along the lines of a Twitter "tweet" or an elevator pitch. Over 100 attorneys, law professors, online business executives, policy advocates and other cyberlaw experts responded, producing 307 separate assessments, predictions, or just plain complaints regarding any of the many legal subject areas that affect online businesses.

Clearly I didn't ask enough patent attorneys for impressions of what's going on in their corner of the cyberlaw world. There is a lot going on there. Complaints about how the patent system is impeding innovation, complaints about the complainers about the patent system, a new unified patent system in the European Union and a new court to keep things unified (that's a lot of uniformity!), a new way of evaluating patents on business methods ushered in by the America Invents Act, and another big case in Federal Circuit involving a the patentability of computer software.

gears innovate

The experts' views:

U.S. patent law is stifling innovation and driving up costs and must change. I'm tired of fighting over the patent indemnification clause in every agreement and it's getting to the point where you cannot even think about a new business idea without receiving a demand letter from a patent troll. Marc H. Trachtenberg, @winstonadvlaw, Partner, Winston & Strawn LLP, Chicago.

The big story for 2012 is not a singular event, but rather the constant erosion of patent rights and unending (and unfounded) claims that the patent system is broken. Uninformed critics teaming up with ivory tower academics can only cause mischief that leads to further problems for universities, research and development companies and true innovators. Eugene R. Quinn Jr., @ipwatchdog, Founder, IPWatchdog, Inc., Leesburg, Va.

The Federal Circuit will yet again deal with patentability this year, this time addressing software more directly than in the past. Look out for the en banc decision in the CLS Bank v. Alice case, which will be argued in February. Stuart P. Meyer, Partner, Fenwick & West LLP, Mountain View, Calif.

Apple sv. Samsung validated patents on touch, look, feel, sequencing and human stroking, forcing Microsoft Surface® et al. to introduce a new palette of manual strokes. Pretty soon we will be patenting the strokes used in the Semaphore code. William B. Bierce, @wbierce, Partner, Bierce & Kenerson, P.C., New York, N.Y.

For many years, European countries have been trying to agree on creating a single, unified European Patent as well as a Unified Patent Court (UPC). In December, the European Parliament approved the "unitary patent" structure, with a new court to be headquartered in Paris, with London and Munich outposts. The new Unified European Patent could mark a significant change in the worldwide IP landscape. Stuart P. Meyer, Partner, Fenwick & West LLP, Mountain View, Calif.

The America Invents Act includes a new procedure for reviewing patents on "covered business methods," but there was little clarity in which patents would qualify for such review. Some of the filings made under this provision in 2012 will address this issue and we'll soon learn what the PTO thinks is the scope of this new procedure. Stuart P. Meyer, Partner, Fenwick & West LLP, Mountain View, Calif.

The America Invents Act of 2011 will transform patent strategies for a higher number of incremental applications, more extensive pre-issuance litigation and fewer business process patents. It won't stop non-practicing entities ("trolls"), who will have to choose their infringement targets in stages for snowball-like self-financing. William B. Bierce, @wbierce, Partner, Bierce & Kenerson, P.C., New York, N.Y.

Patent trolls have an ever increasing impact on internet technologies. We appear to be seeing a sea change as government agencies--for example the FTC/DOJ hearings in December--look for ways to holistically address the impact trolls have on business. R. David Donoghue, @rdd, Partner, Holland & Knight LLP, Chicago.

Social media patent wars--there is too much money and too many players to keep this powder keg from exploding, smaller players need to be wary of involvement in any disputes as the social network can shut them down without a trial. Companies should avoid the patents they know about and obtain contractual protection to shield against the patents they don't know about. Kevin R. Erdman, @kevinerdman, Partner, Reichel IP LLP, Indianapolis.

3D Systems files patent infringement suit against Formlabs and Kickstarter. Just as with Betamax case in copyright area, 3D printing needs to get to a critical mass in the consumer market to protect innovators like Makerbot. Gary Friedlander, Vice President and Division General Counsel, TransUnion, Chicago.

Computer technologists are increasingly speaking out against software patents. They've convinced Richard Posner, but not the Federal Circuit. James Grimmelmann, Professor of Law, New York Law School, New York, N.Y.

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