Goodlatte Innovation Act - Patent Trolls Addressed?

Patent trolls (often referred to as Patent Assertion Entities), the creatures that live underneath the bridge of innovation and profit, attempting to benefit from those who wish to use their patents, all the while never actually using the patents they own. Even if their appearance rarely matches those of the fairy tale variety, patent trolls are a big problem in the modern sphere of innovation and creation. Currently patent trolls take up a whopping 62% of all patent infringement claims; having gone up from a still high figure of 29% only two years ago. This can be acknowledged is a problem, and calls have been made to address this issue. Finally the first step has been taken in doing so.

In the United States a Bill was recently introduced called the Goodlatte Innovation Act, which seeks to remedy the changes introduced in the America Invents Act in 2011. According to the Bill's creator, Bob Goodlatte, the Act "...is designed to eliminate the abuses of our patent system, discourage frivolous patent litigation and keep U.S. patent laws up to date. These important actions will help fuel the engine of American innovation and creativity, creating new jobs and growing our economy".

The CEO of Patent Trolls Inc.

The measures the new Act takes is the introduction of the requirement to present information very early on in litigation, essentially justifying the infringement action. The action would then be assessed and should it not be deemed "substantially justified", the alleged infringing party would not have to pay the award sought by the plaintiff. The Act also introduces more stringent disclosure requirements, making the plaintiff submit more detailed information as to the patent being infringed, which specific claim of that patent is infringed, and how it is being infringed by the defendant. This clearly opens up the process and makes it more transparent for both sides, potentially impacting on vague threats over infringement resulting in quick settlements out of fear; exactly what patent trolls are seeking in their mode of operation.

The Act also introduces joinder provisions which link any parties with a "financial interest" in the patent case, clearly targeting shell companies which are used for infringement claims in lieu of the controlling company. This would make the parent companies liable for any fees which would result in frivolous claims, preventing them from side-stepping them while still benefiting from any awards that could be won by the shell company in their claim. In addition it introduces an exception for any infringements that might occur in consumer use or through manufacturers' use of the patent. The court would have the ability to stay those proceedings until the matter between the main companies is settled.

The Innovation Act is clearly something which the patent sphere has been yearning for in the US for the last couple of years, and with the aforementioned figures proving a clear direction in the abuse of patents through infringement claims, those actions need to be curbed. Although the Bill is a bipartisan creation, due to the divide in the current US government the Bill's passing is still in the air; however one could argue its passage is in the interest of both sides and the industry as a whole. Whether the Bill passes or any changes are made will be monitored by this vigilant writer, and I argue this Bill is an incredibly welcome change to the grand scheme of things.

Source: Ars Technica

New Zealand Bans Software Patents - Or Did They?

As we have turned towards an ever-more computerized world, software has arguably become almost as valuable as the hardware it runs on. Without effective protection through patents for innovative software products, the field would be a free-for-all of copying, using others' methods and creating an environment where innovation would not persist. Some have argued, and rightfully so to an extent, that the field has lead to a culture of abuse and 'patent trolls' where software patents are merely a conduit for quick cash-in schemes for companies who have no intention of ever using the patented software. Due to this clear misuse there have been calls for reform or the full fledged abolishing of software patents in the common law, and finally those calls have been answered by the far-away land of New Zealand.

Software engineers' collective disappointment

In mid-2008 the New Zealand Parliament had the Patents Bill introduced, which sought to "...update the New Zealand patent regime to ensure that it continues to provide an appropriate balance between providing adequate incentives for innovation and technology transfer". The Bill introduces a cavalcade of changes to the old Patents Act 1953, being one of the biggest modifications of the New Zealand patent legislation in 60 years. The Bill introduces an exception to patentability for computer programs in very express terms. Although the exclusion provision states that computer programs are not patentable, this is not the case entirely. 

Under a Supplementary Order Paper to the Patents Bill computer programs are not patentable "...as such if the actual contribution made by the alleged invention lies solely in it being a computer program" (emphasis added). The first two words highlighted in the quote above prove integral to the interpretation of this new provision; software patents are not allowed as such, but should they be a way to implement a patentable process, they can be patentable. The SOP provides an example of a chip in a washing machine, through which a computer program in the chip improves the washing machine's operation. In such instances the software in the chip could be patentable. What is important is the interconnection between the software and the improved process.

In interpreting this the new provision employs a similar approach to that of the European Union and the United Kingdom. This approach was set out in the case of Aerotel Ltd v Telco Holdings Ltd (and others) and Macrossan's Application, intepreting section 1(2) of the UK Patents Act 1977 dealing with the subject matter of what is not an invention. The New Zealand provision's wording, albeit slightly different, still encompasses the heart of the Aerotel considerations, while adding specifics pertaining to their own legislation, and arguably using the Aerotel test would prove beneficial for the New Zealand judiciary.

Kiwis are very apt with technology

In assessing a patent and whether it is excluded from patentability under the Aerotel approach, the courts would have to properly construe the claim; identify its actual contribution; ask whether it falls solely within the excluded subject matter; and check whether the actual or alleged contribution is technical in nature. The first factor is purely a standard assessment of the patent claim, deciding what the monopoly would be before considering its possible exclusion. The second factor is deciding whether the inventor has really added anything to the stock of human knowledge, emphasizing the substance of the invention (what it actually contributes) above the form of the claim itself (what is argued it contributes). The third factor is assessing whether the contribution is solely an unpatentable subject matter. Should the invention be a patentable subject matter, the final consideration is if it is of a technical nature. 

The New Zealand approach is assessing the substance of the claim (rather than its form and the contribution alleged by the applicant) and the actual contribution it makes; what problem or other issue is to be solved or addressed; how the relevant product or process solves or addresses the problem or other issue; the advantages or benefits of solving or addressing the problem or other issue in that manner; and any other matters the Commissioner or the court thinks relevant. Clearly this echoes the approach given above, and would be served well should the New Zealand judiciary consider the Aerotel test.

So as one can see New Zealand has effectively banned software patents, but only to the extent that they exist independently. Calling this a blanket ban is merely hyperbolic, but the potential abuses that have been experienced with pure software patents have been remedied, and it remains to be seen whether the rest of the world will follow suit. Calls have been made for the US to do the same, but with vast amounts of money being tied into software innovation in the US, it can be argued that a ban over software patents in the US is still well behind the horizon.

Source: ZDNet

IP Laws Amendment Bill 2013

A new Bill was recently introduced to the Australian Parliament, dubbed the "IP Laws Amendments Bill 2013". The aim of the Bill would be to amend current legislation pertaining to patents and plant breeder's rights, and to introduce some changes to the all-new Intellectual Property Amendments (Raising The Bar) Act 2012 (discussed on this blog some time ago).

The first amendment relates to the Crown's use of patents, further clearing up the existing provisions on the use of patents for services funded by the Federal, State or Territorial Governments of Australia. The aim of this is to reduce uncertainty as to when the power can be used. It also adds more levels of accountability over the use of patents for those purposes, forcing the Government agencies to negotiate with the patent owner prior to invoking the Crown's use on that patent - earlier legislation required absolutely no notice to the patent owner prior to use or negotiation over its use. If the negotiations are unsuccessful, Ministerial authorization can be sought to use this power. The amendments would lastly include proper guidelines as to remuneration over the use of patents by the Crown.

Australian Bills lack the pizzazz of their American cousins

The second amendment would implement the TRIPS protocol into Australian law, which would enable the issuance of compulsory licenses by the Courts for the manufacturing and exportation of patented medication to third-world countries. This would enable the importation of much cheaper drugs to countries suffering from diseases such as HIV, malaria or tuberculosis which would otherwise have very limited resources to attain these drugs.

The third amendment gives owners of Plant Breeder's Rights a course of redress against possible infringers of those rights in the Federal Circuit Court. The aim for this is to allow for a much quicker, more cost-effective and less formal way to handle these disputes when compared to taking it to the Federal Court.

The fourth amendment deals with the creation of a single trans-Tasman (Australia & New Zealand) patent attorney regime, with common qualification requirements, an IP Attorneys Board and a Disciplinary Tribunal. The amendment also creates a single patent application and examination process, lessening the amount of administration in these processes which currently exist.

The other more minor amendments deal with document retention requirements in patents, trade marks and registered designs, removing them completely from all related acts. This brings all document retention requirements under the Archives Act 1983, removing redundant copies. As said above, there are also some amendments dealing with the Raising The Bar Act 2012, fixing some oversights in its drafting.

Overall the Bill does propose some welcome changes, especially relating to the implementation of the TRIPS protocol which Australia accepted in 2007 and the faster and easier way of dealing with possible infringements of PBRs. The Bill has only passed its first reading, so its content is still subject to change over the course of its road to assent, but the given form of the Bill does inspire faith in its efficacy.

The Explanatory Memorandum for the Bill can be found here.