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Intellectual Property
Supreme Court Says Error Made In KSR Patent Ruling
by Andrew Noyes
The Supreme Court on Monday unanimously ruled that the U.S. Appeals Court for the Federal Circuit erred in its view of when an invention is "obvious" and thus cannot be patented. The long-awaited decision in KSR International v. Teleflex came five months after the case was argued.
The appeals court rejected a claim by automobile gas-pedal manufacturer KSR that its product, similar to that of competitor Teleflex, was too simple to warrant an original patent. Under the standard test, a patent can be found obvious if there was a "teaching," "suggestion" or "motivation" to combine pieces of "prior art" into the claimed invention.
But an opinion written by Justice Anthony Kennedy said the Federal Circuit was incorrect in holding that "courts and patent examiners should look only to the problem the patentee was trying to solve." Under the correct analysis, he said "any need or problem known in the field and addressed by the patent can provide a reason for combining the elements in the manner claimed."
In his 24-page opinion, Kennedy said the appeals court was wrong "in assuming that a person of ordinary skill in the art attempting to solve a problem will be led only to those prior art elements designed to solve the same problem." Prior art is industry lingo for existing inventions used to challenge a patent.
The appeals court also was incorrect in concluding that "a patent claim cannot be proved obvious merely by showing that the combination of elements was obvious to try," Kennedy wrote, adding, "Rigid preventative rules that deny recourse to common sense are neither necessary under, nor consistent with, this court's case law."
The high court also handed Microsoft a major victory against AT&T on Monday by ruling 7-1 that U.S. patent law does not inhibit international creation of copies of digital code to be installed in computers made and sold abroad.
In this instance, Microsoft software code was created domestically and then shipped overseas, where copies were "burned" and distributed. AT&T alleged that the code violates a company patent and wanted to collect damages for Microsoft's foreign sales.
In the majority opinion, Justice Ruth Bader Ginsburg wrote that it is up to Capitol Hill to tinker with patent law to account for "the realities of software distribution." Congress is "doubtlessly aware of the ease with which electronic media such as software can be copied and has not left the matter untouched," she said.
Justice John Paul Stevens was the lone dissenter and Chief Justice John Roberts recused himself from the case. Stevens wrote that "software is analogous to an abstract set of instructions" and cannot be viewed the same as a blueprint, which tells a user how to do something. "Software actually causes infringing conduct to occur," he explained.
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Intellectual Property
Experts Say Court Decisions Balance Patent Law
by Andrew Noyes
The Supreme Court's decisions in a pair of patent cases on Monday were seen as good news for the high-tech sector, experts said. One case, KSR International v. Teleflex, dealt with the so-called "obviousness" standard used in the patenting process; the second was a transnational infringement feud between Microsoft and AT&T (see separate story).
Business Software Alliance counselor Emery Simon told reporters on a conference call that the court's opinions continued the trend of rebalancing how elements of patent laws are interpreted to square with their statutory intent. A favorable ruling for online auction site eBay decided nearly a year ago was the last big win in this arena, he said.
BSA filed friend-of-the-court briefs in support of KSR and Microsoft. These are "dramatic and important developments" and the gist of the opinions was close to what the trade group argued in its briefs, Simon said.
Thanks to the KSR case, "there will be better opportunity for examiners to weed out patents not worthy or applications not worthy of getting patented," he said. With respect to Microsoft v. AT&T, he said the law was "creating enormous disincentives for companies to do their research in the U.S."
In both cases, the high court criticized decisions reached by the U.S. Appeals Court for the Federal Circuit, which hears patent cases from lower courts around the country. The opinions send the message that "the balance has been tipped in favor of presuming patents always to be valid," Simon said.
Similar to the eBay case, patent stakeholders will have to wait and see "how much noise there is in the courts as they adjust to this," he said. "It's going to lead to less litigation and less uncertainty."
Morrison & Foerster partner Rachel Krevans said it could take "four or five years to resolve exactly how the lower courts and the patent office will apply the new standard."
The Coalition for Patent Fairness -- which lobbies for Apple, Comcast, Microsoft and Time Warner, in the ongoing congressional patent reform push -- said the rulings illustrated the court's rejection of "arguments of those who oppose any strengthening of the current system."
Foley Hoag attorney Philip Swain said the combined impacts of the two opinions "reflect a Supreme Court that is seeking to restrict the power of patents," adding, "They will make patents less of a strategic weapon in a company's arsenal."
The KSR opinion is the more significant one because it affects all patents and will make them harder to get and easier to prove invalid in court, he said. Swain said that would "help ease the problems that businesses now have due to an excess of bad patents, which hinders competition."
But Foley & Lardner attorney George Best said the Microsoft decision "left unaddressed some of the more provocative issues raised in the briefing and at oral argument." Specifically, the court did not address the question of whether or not software in the abstract could be patented.
Teleflex attorneys Kenneth Bass and Thomas Goldstein slammed the KSR ruling. Bass said the decision "makes the legal standard extremely uncertain" and Goldstein said it "may affect the viability of millions of patents valued at many tens of billions of dollars."
For more reaction to KSR International v. Teleflex and Microsoft v. AT&T, visit our blog, Tech Daily Dose.
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Trade
USTR Releases Annual IP Review Of Trading Partners
by Winter Casey
The Office of the U.S. Trade Representative on Monday recognized improvements by some foreign trading partners to better protect intellectual property rights. In the agency's annual Special 301 report on the adequacy and effectiveness of other countries' success in protecting IP, the USTR noted improvements in the Bahamas, Belize, Brazil, Bulgaria, Croatia, the European Union and Latvia. All of these countries -- aside from Belize and Brazil -- were removed from the watch list this year.
However, the USTR found that "rampant counterfeiting and piracy problems have continued to plague China and Russia." These two countries -- along with Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey, Ukraine, and Venezuela -- all received poor IP marks and were put on a priority watch list. U.S. trading partners placed on that list can risk losing trade privileges if they fail to make enforcement progress.
Recording Industry Association of America Executive Vice-President Neil Turkewitz said if Russia fails to meet its obligations to a bilateral U.S.-Russia IP agreement signed in 2006, "the United States should respond accordingly and unilaterally impose sanctions on Russian exports to the United States."
While the RIAA had proposed that Canada be elevated to the priority watch list, the USTR decided to leave the country on the regular watch list. "Canada's weak border measures continue to be a serious concern for IP owners," the USTR said in its report," said Turkewitz. "We hope that the Canadian government will move swiftly to expand economic opportunities in the cultural sector by introducing and enforcing appropriate norms and that we will not find ourselves in the position next year of once again calling for Canada's elevation to the priority watch list."
Michael Geist, an e-commerce legal expert at the University of Ottawa in Canada, emphasized that Canada "already meets its international obligations on copyright on each of the issues identified by the USTR."
Despite China's overall poor IP enforcement record, the United States said it was pleased by the efforts of many Chinese officials to protect IP. China's IP progress is hurt by "the lack of criminal liability for certain acts of copyright infringement" and a lack of clear standards for the initiation of police investigations, among other reasons, according to the USTR.
The International Intellectual Property Alliance, a coalition representing U.S. copyright-based industries, echoed the concerns of the USTR report. "China and Russia again remain the two countries that are of the greatest concern to the copyright industries, as they were in 2006 and prior years," Eric Smith of the IIPA said in a statement. IIPA said it supports the USTR's decision to elevate Thailand to its priority list this year but added its members also believe that Canada, Mexico and Saudi Arabia should have been moved to the priority list.
The USTR said addressing weak IP protections and enforcement through various mechanisms such as the negotiation of free trade agreements will continue to be a priority for the Bush administration this year.
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Television
Barring Hurdles, Florida Set To Approve Video Franchising
by Michael Martinez
The debate over statewide video franchising has come full circle in the Sunshine State.
The Florida Senate on Friday passed a bill to allow video service providers to negotiate statewide deals instead of entering the state's market one locality one at a time. The state House, which has authorized its own version of the proposal, now has until the legislative session expires on Friday to clear the measure and send it to Gov. Charlie Crist for final approval.
Video-franchising legislation died in the Florida Senate last year. Debate on the bill lasted until the final hours of last year's legislative session, but lawmakers were not able to break a stalemate over how much authority to grant local governments in the franchising process.
This year's measure sailed through the Senate by a 30-3 vote. Barring any major squabbles this week in the House, the bill will clear the full Legislature.
About a dozen states, including California, Indiana, and Texas, have established statewide video franchising rules during the past several years. Similar bills also are pending in Illinois, Ohio, Tennessee and Wisconsin.
Large telecommunications companies, such as AT&T and Verizon Communications, have lobbied hard on behalf of the bills, which would streamline their entry into states' video markets.
Steve Wilkerson, president of the Florida Cable Telecommunications Association, described the Florida Senate's proposal as "consumer friendly." He said he is unsure if the remaining opponents of statewide franchising rules -- which include the Association of Community Organizations for Reform Now, the Florida League of Cities and the Florida Public Research Interest Group -- would be able to derail the bill this week.
"It's a big, controversial and complex bill," Wilkerson said. "You can't rule out the possibility that something could happen. But it does appear to have a lot of momentum."
Calls to Crist's office were not returned before deadline on Monday. Wilkerson said members of Crist's staff were very active during the negotiating process on consumer fairness issues.
Walter Dartland, president of the Consumer Federation of the Southeast, said opponents of the statewide franchising bill faced an uphill battle this session against intense lobbying of from the state's telecommunications industry. He said Senate revisions to close discrimination loopholes and prevent "cherry picking" in wealthy neighborhoods were positive steps.
"Maybe a statewide franchising scheme is inevitable," he said. "But it needs to be done in a way that delivers consumers the competition that they want."
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E-Government
Senate Gears Up To Debate FDA Drug Safety System
by Aliya Sternstein
Drug safety legislation up for debate in the Senate Monday afternoon would require pharmaceutical companies and the Food and Drug Administration to pool public and private reports of adverse drug reactions into one FDA computer system.
The proposal is part of a bill that would reauthorize and amend a program that collects fees from drug manufacturers for drug reviews and safety evaluations.
Negotiations to divvy up system responsibilities are ongoing, according to Craig Orfield, spokesman for Sen. Mike Enzi, R-Wyo., ranking member on the Senate Health, Education, Labor and Pensions Committee. The committee approved the program's reauthorization earlier this month.
"It is a work in progress. The development of the system, that burden, would be placed on the FDA," Orfield said. The FDA would be collaborating with private entities, as well as academic institutions, to aggregate mainly pre-existing data. It is anticipated the system would be operational within two years of the bill's enactment, he said. Up to $30 million in appropriations would go toward funding the project.
While many agree that additional drug safety surveillance is needed, the design of the system has watchdog groups concerned.
Arthur Levin, director of the nonprofit Center for Medical Consumers, said: "You can't prove causality by data mining. All you're doing is identifying [red flags]. Then you've got to go figure out the connection."
And he is skeptical that $30 million is enough to cover the cost of staffing, computational programming and extraction of useful data. "This may be a good first step. . .but it certainly doesn't go far enough. Much more has to be done," Levin added, saying that the "much more" has to do with where the analytic piece would be housed and where it would be paid for.
John Pippin, a senior medical and research adviser at the Physicians Committee for Responsible Medicine and a cardiologist, said, "The FDA has not yet shown the ability to establish effective computer-based methods. He cited the recent uncovering of a November 2006 report that detailed the FDA's mismanagement of an upgrade to its computerized adverse-event reporting system, which FDA staff use for post-marketing drug safety inspection. The system "was bungled, leading to cost overruns and major delays in implementation," he said.
Earlier this month, Alan Goldhammer, deputy vice president for regulatory affairs at the Pharmaceutical Research and Manufacturers of America, said the industry wants drug review to be electronic from creation in the lab to sale on pharmacy shelves. As of Monday morning, PhRMA was not taking a position on specific provisions in the new legislation.
PhRMA President and CEO Billy Tauzin said in a statement on Friday, "Significant increases called for in PDUFA funding proposed by the FDA would provide the resources necessary to improve and modernize the agency's already strong drug safety monitoring system."
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Net Governance
ICANN Gains Court Rulings On Web Site Performance
by Andrew Noyes
The group that manages the Internet-addressing system made several strides last week to enhance Web stability and performance. Chief among them was a preliminary injunction from a federal judge that allows the agency to quickly terminate a troublesome registrar's accreditation.
U.S. District Judge Manuel Real ruled the Internet Corporation for Assigned Names and Numbers can strip RegisterFly of its contract after getting numerous complaints about the New Jersey-based firm. The situation prompted an outcry at ICANN's March meeting in Portugal for an audit of the accreditation process.
The California court also ordered RegisterFly to give ICANN accurate data for all of the domain names it administers and post a disclaimer on its Web site. The company failed to meet similar conditions of a temporary restraining order that was issued on April 16.
ICANN said it would begin its search on Monday for an accredited registrar to act as a transfer provider, so domain name owners can get full access to their Web properties switch to a legitimate registrar of their choice. RegisterFly has repeatedly failed to respond to Technology Daily inquiries for comment.
"Registrants are our first concern," ICANN President Paul Twomey said in a press release. He said his organization is following "a very determined approach" to restore access to those affected by RegisterFly's collapse. This is the first time since ICANN's 1998 creation that it has had to intervene in this way, he said.
In other ICANN news, the organization issued its fourth annual report that addresses ongoing problems pertaining to webmaster contact data that is made publicly available though Whois databases.
The report recounts progress made by ICANN in recent years and describes a series of inspections planned for 2007. They include manual reviews of thousands of Whois data fields and tests to determine whether registrars are investigating and correcting faulty information provided by Web site administrators.
ICANN also released a new toolkit for Web site designers and software application developers so that new top-level domains, or TLDs, created since 2001 are recognized by software and online applications.
"It wasn't so long ago that .com and .net -- the last bit of a domain name - were largely the only options for Internet users," said Kim Davies, the technical liaison for ICANN's Internet Assigned Numbers Authority. There are now more than 240 country-code TLDs as well as .biz, .info, .travel and others.
Some users who employ the new domains have had their e-mails blocked or cannot use e-commerce sites, Davies said in a press release. The ICANN toolkit saves developers from the time-consuming task of re-programming their systems each time a new TLD is added.
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On The Download
Some Politicos All A-Twitter About New Message Blog
by Shira Toeplitz
If House Minority Leader John Boehner, R-Ohio, is twittering, then maybe it's is finally catching on -- or not. This week, the House GOP leader joined a small but technologically elite group of politicians who use the new technology to communicate with, well, someone out there.
The New York Times called Twitter a cross between MySpace, "microblogging" and "messaging." That description is about right -- but it takes some experimenting and even frequent messaging on your own to really "get" Twittering. In short, users can set up an account and post short messages for their "friends" and "followers" that can go straight to the Web, IM or mobile phone.
Boehner spokesperson Don Seymour said he started the Twitter account after reading about it online in an effort to "reach a new audience." But just who exactly is Boehner's target audience? He only had a handful of followers (one of whom authored this story) last week, but now has about 35 followers, or users who monitor his twittering. It's also been reported that only 100,000 people use the program, many of whom are likely to be techies and not politicos.
So what do Boehner and other politicians like presidential candidate John Edwards see in Twitter? It's minimal effort and it's free, so there's nothing to lose but a campaign's staff's time and energy. Users are limited to 140 characters, so politicos are (for once) forced to be brief. Active Twitter user and GOP consultant David All called it a "quicker way of sending a message without going through the full process of writing a big long e-mail" in "an age when people don't have much attention."
Nonetheless, it's a trend that's intrigued more politicians than Boehner: Edwards has been Twittering regularly for an audience of 2000-plus since early March and most recently, Sen. Barack Obama, D-Ill., sent out his first Twitter Sunday. The "JoeBiden" account has been fairly active, though his Democratic colleague under the user name "BillRichardson" has only sent out one Twitter. Also, "RudyGiuliani" account will only let "friends," or approved users, see his Twitters.
Since Boehner started Twittering last week, many of the Twitter accounts with White House 2008 names have been reserved, although it seems not always by the campaign. Someone has started Twittering with negative comments at Twitter accounts bearing the user names of Mitt Romney, Sam Brownback and Newt Gingrich. Under Twitter's terms of service, however, the Web program can take those accounts away from the current user and give them to the candidate's campaign, according to Twitter CEO Jack Dorsey.
Editor's Note: On The Download is The Hotline's dispatch on politics, multimedia and the Internet.
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Today's Feature:
Issue of the Week
When a coalition of Internet companies fighting for network neutrality relaunches in May under a new name, Microsoft is not expected to be among them.
Every Monday, read the Issue of the Week by the Technology Daily staff.
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E-briefs
E-Government: The Internet search firm Google on Monday announced partnerships in Arizona, California, Utah and Virginia to make information on public Web sites more accessible. Under the deals, more government documents in those states will be searchable through Google queries. "Connecting citizens with their government by offering the public better access to public sector information and services is consistent with our broader vision -- to organize the world's information and make it universally accessible and useful," said Google CEO Eric Schmidt in a release. "These partnerships are among many that Google is pursuing with government agencies to better serve the public." Virginia Gov. Tim Kaine said the initiative will help to make his state's government more transparent. "Our goal is to provide easy, quick and intuitive citizen access to every government resource," he said. "Google is helping us to achieve it."
E-Government: The Patent and Trademark Office's online filing system for patent applications has exceeded agency goals for its first year, officials said Monday. For the first time in PTO history, more new patent applications are being filed electronically each week than through the traditional paper process. More than 500,000 submissions have been filed using the Web program to date, according to a press release. PTO Director Jon Dudas said the e-filing program represents "a great step forward in making IP protection easier and more efficient." The electronic system allows users to file applications and related documents virtually anytime and anywhere and filing fees are paid online as well. Over 80 corporations, law firms and independent inventors participated in the pilot program before it launched last March.
Security: Lawmakers and lobbyists are gearing up for the second round of fighting over legislation that would allow states to enforce laws stricter than federal rules regulating security at chemical facilities. The Homeland Security Department issued new federal chemical security rules earlier this month. Language that would allow states to go beyond the rules is currently in the emergency supplemental spending bill President Bush has on his desk. Bush has vowed to veto the bill as early as Tuesday because it includes a time table for withdrawing U.S. troops from Iraq. Lawmakers will have to rework the bill, and again face a decision over whether to include the chemical security language, which the White House also opposes. The American Chemistry Council plans to send House and Senate appropriators a letter Monday urging them to remove the language. Supporters, such as Sen. Frank Lautenberg, D-N.J., are rallying to keep it in the re-worked supplemental. Lautenberg fears the new federal rules could pre-empt his state from passing stricter chemical security laws in the future.
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