PTO Seeks Improved Software-Related Patents

The patent lawsuit abuse debate also returned to Capitol Hill Wednesday: Reps. Jason Chaffetz, R-Utah, and Peter DeFazio, D-Ore., announced the reintroduction of the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act, which would force PAES, also referred to as “patent trolls,” to “take financial responsibility for frivolous lawsuits” (http://1.usa.gov/Xjv8J4).

The “patentability” of software is an important issue for the Obama administration, the Commerce Department and PTO, said PTO General Counsel Bernie Knight. PTO is using the Software Partnership to “potentially come up with new guidelines” for software patent examination and improve the training of patent examiners, he said. PTO asked the industry to consider “how to more effectively ensure that the boundaries of a claim are clear so that the public can understand what subject matter is protected by the patent claim and the patent examiner can identify and apply the most pertinent prior art.” PTO also asked for industry input in advance of a planned request for comment on possible changes to the process of preparing a patent application prior to examination, as well as input on other issues the industry feels need to be addressed. The public and industry will be able to submit additional written comments to the PTO through March 15 (http://1.usa.gov/VY3tdR).

The current analysis of functional claims under Section 112(f) of the Patent Act “sometimes misses the logical application of well-established legal principles,” Michel said. “We have fallen into a briar patch of formalism based on a hunt for magic words.” When a patent application’s claim recites the function of a piece of software, the specification is supposed to also include an algorithm that limits the patent’s scope. “There can be no functional software claim that fails to recite a supporting algorithm and yet avoids the limits of 112(f),” Michel said. “Despite this, the corpus of existing software patents is replete with claims that recite a high-level function and no supporting algorithm, but that have not been examined and limited by the specification under Section 112(f).” This has occurred because of a lax interpretation of “means-plus-function” claims that allow for claiming the “means for” performing a specific computer function, Michel said. “But it’s trivial and common for patent applicants to substitute words like ‘means for’ with words like ‘computer programmed to’ or some equivalent language that adds no real limits to the software function recited by the claim,” she said.

PTO examiners should abandon analyzing software patent applications based on such “magic words,” which has never been required under the Patent Act, and embrace a substance-based analysis of the claims, Michel said. Allowing “magic words"-based examinations has resulted in granting overbroad software patents that “place a drag on innovation” and “fuel litigation against large numbers of unrelated companies,” she said. “When you see Google, Playboy and JCPenney all in the same lawsuit, you know you've got a pretty broad claim."

The agency should not establish technology-specific patent examination rules that “are likely to be useless as soon as they are established, because technology inexorably moves on to the next thing,” said Marian Underweiser, IBM’s counsel-IP strategy and policy. “If we establish special rules for software now, trying to address what to some may be urgent quality concerns, we will encourage a system that caters to any special interest with any special grievance.” Such an action would result in a “fractured and balkanized” patent system that would stifle innovation and would become “incomprehensible,” she said.

PTO can also improve patent quality by instituting continuing education programs for patent examiners, said Tim Sparapani, the Application Developers Alliance’s (ADA) vice president-law, policy and government relations. “If they get this, I believe they will be able to see what the cutting edge is, I believe they will understand what’s commonly understood as a foundational patent in the software field, and they'll see where the edge is,” he said. “This field is moving quickly -- six months is a lifetime in our world."

Representatives of two IP owner groups also argued against implementing rules specifically targeting software patents. Having rules that single out software patent applications for “disparate” treatment “seems unfair and unjustified,” said Sumeet Magoon, chair of the Intellectual Property Owners (IPO) Association’s Software and Business Methods Patent Committee. IPO believes PTO should focus on providing the most relevant prior art and improving the training of its examiners, he said. The American Intellectual Property Law Association does not support “special” rules for software patent examination, said AIPLA member Kenneth Nigon, an IP law attorney with RatnerPrestia. “We believe the focus should be on establishing a process for examining all claims and not defining any bright line test” for software-related patents, he said.

Patent litigation abuse requires a legislative fix, Chaffetz and DeFazio said Wednesday as they reintroduced the SHIELD Act. “Patent trolls contribute nothing to the economy. No industry is immune to these attacks,” Chaffetz said in a statement. “Instead of creating jobs and growing the economy, businesses are wasting resources to fight off frivolous lawsuits. This bipartisan legislation will curb future abuse by requiring trolls to bear the financial responsibility for failed claims.” “Patent litigation abuse cost American companies an estimated $29 billion, DeFazio said. The bill had previously been introduced in August, but did not make it out of the House Judiciary Committee. Unlike last year’s version of the bill, the new version “applies to all types of patents,” DeFazio’s office said.

An Electronic Frontier Foundation-led coalition sent an open letter to the House Judiciary Committee asking for hearings on “patent trolls” and the SHIELD Act (http://bit.ly/XCyZC3). “It’s time to force these trolls to take responsibility for the damage they cause with their bogus claims,” said Julie Samuels, an EFF staff attorney, in a related statement. “The introduction of the SHIELD Act sends an important message to patent trolls: their business model is dangerous and their days are numbered."

The fact the SHIELD Act would shift “the costs of baseless litigation onto patent trolls who lose in court should help discourage nuisance lawsuits, thus helping give our nation’s real innovators the freedom they need to operate,” said CCIA President Ed Black in a statement supporting the bill. “This won’t instantly fix our dysfunctional patent system, but it will start to chip away at the insanity that is stifling innovation and costing our economy billions."

ADA said it supports the SHIELD Act, but argued that PTO also needs to implement additional policies to address the problem. “Unfortunately, many small companies cannot afford to pay lawyers through the course of a litigation, so they need more relief than the SHIELD Act offers,” ADA President Jon Potter said in a statement. “A quicker and cheaper program for challenging trolls’ patents in [PTO] is needed as an alternative to litigation. The Covered Business Method Program, as set out in the American Invents Act for financial services patents, is a good model."

The Consumer Electronics Association supports the SHIELD Act too. “If we want to build American businesses and create jobs, we need to change the law that encourages baseless but disruptive legal threats for American businesses,” President Gary Shapiro said. “A successful defense of a patent lawsuit costs upwards of a million dollars, so many small businesses and startups cannot fight back or get funding to continue their businesses.” Existing law “encourages unethical patent trolls,” and the SHIELD Act would “get it changed,” he said.