Guaranteed Patent Validity vs No Permanent Injunctions

Fascinating and bold proposal by Professor Paul Janicke of the University of Houston Law Center to fix the U.S. patent system:

(1) Continue to allow prosecution of as many claims as desired, but after allowance require the applicant to choose no more than three for issuance. During the first three years from grant, attacks on these claims can be made in the PTO or the courts, to the same extent as now. After three years from the issue date, validity of the claims becomes incontestable.

(2)  In exchange for (1), the remedy of permanent injunction disappears, except in ANDA cases. It will be replaced by a revised financial remedy: equitable sharing in the infringer’s revenues from the infringing activity, as set by the judge.

He anticipates the objections but argues radical change is needed. And it is certainly appealing to think about a fundamental rebalancing. The patent system is broken.

Cryptocurrency Hype Cycle Part 3

The hype cycle of cryptocurrency may be hitting another inflection point. I tend to believe it’s going to stay down for some time.

The Economist reports:

Economists define a currency as something that can be at once a medium of exchange, a store of value and a unit of account. Lack of adoption and loads of volatility mean that cryptocurrencies satisfy none of those criteria. That does not mean they are going to go away (though scrutiny from regulators concerned about the fraud and sharp practice that is rife in the industry may dampen excitement in future). But as things stand there is little reason to think that cryptocurrencies will remain more than an overcomplicated, untrustworthy casino.

If Cyber Attacks Go Personal

We tend to think cyber attacks will be directed to institutional weaknesses: power grids, communications, etc. But the following scenario imagines that we are equally vulnerable at a personal level. Bruce Schneier links to this:

The U.S. secretary of defense had wondered this past week when the other shoe would drop. Finally, it had, though the U.S. military would be unable to respond effectively for a while.

The scope and detail of the attack, not to mention its sheer audacity, had earned the grudging respect of the secretary. Years of worry about a possible Chinese “Assassin’s Mace” — a silver bullet super-weapon capable of disabling key parts of the American military — turned out to be focused on the wrong thing.

The cyber attacks varied. Sailors stationed at the 7th Fleet’ s homeport in Japan awoke one day to find their financial accounts, and those of their dependents, empty. Checking, savings, retirement funds: simply gone. The Marines based on Okinawa were under virtual siege by the populace, whose simmering resentment at their presence had boiled over after a YouTube video posted under the account of a Marine stationed there had gone viral. The video featured a dozen Marines drunkenly gang-raping two teenaged Okinawan girls. The video was vivid, the girls’ cries heart-wrenching the cheers of Marines sickening And all of it fake. The National Security Agency’s initial analysis of the video had uncovered digital fingerprints showing that it was a computer-assisted lie, and could prove that the Marine’s account under which it had been posted was hacked. But the damage had been done.

There was the commanding officer of Edwards Air Force Base whose Internet browser history had been posted on the squadron’s Facebook page. His command turned on him as a pervert; his weak protestations that he had not visited most of the posted links could not counter his admission that he had, in fact, trafficked some of them. Lies mixed with the truth. Soldiers at Fort Sill were at each other’s throats thanks to a series of text messages that allegedly unearthed an adultery ring on base.

The variations elsewhere were endless. Marines suddenly owed hundreds of thousands of dollars on credit lines they had never opened; sailors received death threats on their Twitter feeds; spouses and female service members had private pictures of themselves plastered across the Internet; older service members received notifications about cancerous conditions discovered in their latest physical.

Leadership was not exempt. Under the hashtag # PACOMMUSTGO a dozen women allegedly described harassment by the commander of Pacific command. Editorial writers demanded that, under the administration’s “zero tolerance” policy, he step aside while Congress held hearings.

There was not an American service member or dependent whose life had not been digitally turned upside down. In response, the secretary had declared “an operational pause,” directing units to stand down until things were sorted out.

Then, China had made its move, flooding the South China Sea with its conventional forces, enforcing a sea and air identification zone there, and blockading Taiwan. But the secretary could only respond weakly with a few air patrols and diversions of ships already at sea. Word was coming in through back channels that the Taiwanese government, suddenly stripped of its most ardent defender, was already considering capitulation.

Institutions are made of individuals, and attacking individuals can cripple institutions. But it is also enormously more difficult to attack many individual accounts. I find this scenario compelling, implausible, and a useful exercise in thinking laterally.

“John McCain Would Have Passed the Anne Frank Test”

RIP John McCain, a man of honor and character.

Jeffrey Goldberg, writing for The Atlantic:

I told him then that he would most definitely pass the Anne Frank Test. He was unfamiliar with the concept (mildly surprising, given that his best friend was Joe Lieberman). The Anne Frank test, something I learned from a Holocaust survivor almost 40 years ago, is actually a single question: Which non-Jewish friends would risk their lives to hide us should the Nazis ever return?

McCain laughed at the compliment. Then he became serious. “I like to think that in the toughest moments I’d do the right thing, but you never know until you’re tested.” I found this to be an absurd thing for him to say. Few men had been tested like John McCain; few men have passed these tests in the manner of John McCain. Of all the many stories of McCain’s heroism in Vietnamese captivity, the one I’ve always found most affecting is this one: When presented with the opportunity to be freed—he was the son of an important admiral, and his release would constitute a propaganda victory for the North Vietnamese—McCain demurred; it was not his turn (prisoners were generally released based on their time in captivity), and he would not skip to the head of the line. When he rejected the Vietnamese offer, he knew that intense torture would be his reward. And he did it anyway. His sense of honor would allow him to do nothing else.

I pressed him on this point. “I’ve failed enough in my life to know that it’s always an option,” he said. “I like to think I would do what it takes, but fear will make you do terrible things.”

John McCain Would Have Passed the Anne Frank Test

Showing possession of a coffee filter system: Rivera v. ITC

Written description decisions are unusually fact intensive. The court must answer (1) what exactly was invented? and (2) what exactly was claimed? Then the court must dissect the differences between the invention and the claims.

A patent has an adequate written description if it “reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.”

In Rivera v. ITC, the patent concerned a coffee brewer that could accept both “cup” and “pod” containers. A “cup” is a small, self-contained plastic cartridge. A “pod” is a small disc-shaped filter containing coffee grounds. Cups and pods hold coffee grounds differently, so it’s a bit of a trick to develop a brewer that can use both.

But Rivera took their claim on a cup-or-pod brewer and asserted that a loose-grounds-inside-a-cup apparatus infringed. This was too far for the ITC and ultimately the Federal Circuit panel:

[T]he question is whether a pod adaptor assembly intended to allow compatibility between distinct brewing systems, also supports an undisclosed configuration that eliminates a fundamental component of one of those systems (i.e., the “pod”) through integration. It does not.

I’ve long supported meaningful enforcement of the written description requirement: Inventors should get patents on what they actually invented. The written description requirement helps enforce that basic (and fair) requirement.

 

Edging towards a bright-line rule for CBM eligibility: Secure Axcess v. PNC Bank

Back in November 2016, the Federal Circuit narrowed the scope of patents eligible for Covered Business Method review. They held that a patent is not eligible for CBM review just because it could involve a financial transaction. Instead, the patent must have a claim that actually contains a financial activity element.

The Federal Circuit’s 2-1 decision in Secure Axcess v. PNC Bank reaffirms that narrowing, and adds that the litigation history of the patent (here targeting financial institutions) is also not relevant:

[A] patent owner’s choice of litigation targets could be influenced by a number of considerations, such as the volume of a particular target’s perceived infringement; the financial condition of the target; which targets are most likely to be willing to settle rather than bear the cost of litigating; available and friendly venues; and so on.

But Judge Lourie dissented, arguing that the patent specification and litigation history clearly described a patent on a “financial product or service,” regardless of whether the claims specifically include a financial transaction.

Will we have a bright-line rule, or an “all the circumstances” test? So far the bright-line rule has the upper hand.

An opportunity to re-read MedImmune: ArcelorMittal v. AK Steel

A complicated decision by the Federal Circuit gives us all an opportunity to review the MedImmune standard. Prior to MedImmune a licensed party could not bring an invalidity suit because it need not fear infringement (i.e., no case or controversy). MedImmune loosened that standard and essentially set forth a “look at all the circumstances” test.

So what if a party kinda asserts patent claims, but it’s really not clear, and then later gives a covenant not to sue. Somewhat predictably the “all the circumstances” test leads to a 2-1 split in ArcelorMittal v. AK Steel. The panel ends up disagreeing on whether the circumstances of a “covenant not to sue” moot the underlying controversy.

Aaaaaand… that’s really all you need to know unless you want the complicated details of this case.

When the PTO will listen to you, but the Federal Circuit won’t: Phigenix v. Immunogen

In Phigenix, Inc. v. Immunogen, Inc., a Federal Circuit panel concluded that a company can have standing to initiate an IPR against a patent, but not have standing to appeal the results of that IPR to the Federal Circuit. This standing gotcha arises because the Article III “case or controversy” requirement requires that a party:

must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.

In this case Phigenix was a third-party biotechnology company in the same space as the patent owner, and initiated an IPR that the PTO ultimately closed after concluding that the claims were not obvious. Phigenix then of course sought to appeal that decision to the Federal Circuit under the relevant statute that says, “A party to an inter partes review . . . who is dissatisfied with the final written decision of the [PTAB] . . . may appeal the [PTAB]’s decision only to the . . . Federal Circuit.”

Not so fast. The Federal Circuit held that Phigenix could appeal the result, but that didn’t mean it had standing to actually get a decision:

Phigenix does not contend that it faces risk of infringing the ’856 patent, that it is an actual or prospective licensee of the patent, or that it otherwise plans to take any action that would implicate the patent.

Phigenix tried some other arguments surrounding standing, but the Federal Circuit methodically shut these down as well based on relatively solid Supreme Court jurisprudence. It’s hard to say this case is wrong given the case law, but it is no doubt frustrating to see patent decisions dodging the merits of patent validity. These decisions have major public consequences even if they are (very) technically advisory with respect to the advocating party.

Curating Content May Defeat DMCA Protections: Mavrix Photographs v. LiveJournal

The DMCA safe harbor (17 U.S.C. § 512) immunizes websites and other internet service providers from copyright infringement caused by their users if the providers follow certain procedures. Generally this means providers have to remove copyrighted works as soon as they become aware of them.

But what if you have a bunch of volunteer moderators / curators determining which user submissions to post? Are you responsible for copyright infringement if the volunteers approve a copyrighted user submission? It seems likely, if those volunteers qualify as “agents” of your company.

In Mavrix Photographs v. LiveJournal, Inc. (April 2017), a Ninth Circuit panel concluded that volunteer moderators on a website could indeed be “agents” of the website, although the agency determination is a question of fact that cannot be resolved on summary judgment.

Importantly, the panel ruled that curating the posts (i.e. only posting about 1/3 of the submissions) probably didn’t qualify LiveJournal for the safe harbor of posting “at the direction of the user”. Previous decisions have allowed websites to take advantage of the safe harbor so long as they were only making “accessibility enhancing” changes to posts such as reformatting or screening for offensive material. But curation may be too much control:

The question for the fact finder is whether the moderators’ acts were merely accessibility-enhancing activities or whether instead their extensive, manual, and substantive activities went beyond the automatic and limited manual activities we have approved as accessibility-enhancing.

This reading appears to be well within the statutory language, but it threatens to put additional burdens on websites that curate (and begs the question of what exactly is curation / moderation). If you curate, how can you also ensure the content is not copyrighted by someone else? It’s not obvious.

Update: A group of internet companies including Google and Facebook have urged en banc review. They argue that this decision incentivizes companies to do no pre-screening of user submitted material, and that this is bad policy and contrary to the intent of the DMCA.

This all boils down to whether some forms of pre-screening are extensive enough to consider it reasonable that the company should police copyright infringement too. And to be fair the panel’s decision didn’t say one way or the other: it just said there are enough fact issues that you can’t decide on summary judgment.