Top Patent Judge Steps Down Over Ethics Scandal, Highlighting How CAFC Has Become Too Close To Patent Lawyers

from the total-failure dept

For many years we've written about the serious problems with CAFC, the court of appeals for the federal circuit, which is better known as the appeals court where all patent cases go. CAFC was created in the early 1980s under the belief that a more "specialized" court could better handle the more complicated technical issues related to patents. But what really happened is that it basically built a club of patent-friendly judges, who spent nearly all of their time with patent lawyers, and thus took an increasingly patent-friendly view of the world. That one of the key original judges on CAFC was also a long-time well known patent lawyer who almost single-handedly wrote the 1952 Patent Act, seemed to set the tone that has remained throughout the court's existence.

Just a few years ago, Tim Lee highlighted how the two most recent Chief Judges at CAFC, Randall Rader and Paul Michel, were too close to patent lawyers, and had formed a friendly sort of club:

Rader and Michel's perspectives are likely skewed by the fact they spent their time on the bench surrounded by patent lawyers (who by definition work with firms that have the resources to hire patent attorneys). For the typical software-producing firm, patent lawyers are simply too expensive. Most firms never get patents, and they typically settle patent claims rather than taking them to court. As a result, Judges Michel and Rader rarely hear from smaller firms for whom the patent system is nothing but a burden.

That point has apparently been driven home loud and clear over the past few days. The WSJ revealed that the CAFC is in the midst of an ethics crisis after it had to reissue two rulings after Rader recused himself, which he did after the rulings had been issued, and only once it came out that he not only sent a laudatory email to a patent lawyer practicing before the court, but even urged that lawyer to share the letter, a move that would likely help that lawyer sign up more clients.

As all of this has come out, Rader has now stepped down as the Chief Justice and issued an apology.

Even though he's now stepping down (though remaining on the court -- just not as Chief Judge), this should, once again call attention to the fact that CAFC is an experiment that failed and should be done away with entirely. Rather than creating a specialized court that understood technical issues, it created a captured court that massively changed patent law to favor patent holders and patent abusers. The fact that the Supreme Court has regularly struck down CAFC rulings as nonsensical is one sign. The fact that its Chief Judge thinks its okay to send buddy-buddy "good job" emails to lawyers practicing before the court is just the nail in the coffin of how far gone the court is.

Filed Under: cafc, patent lawyers, patents, randall rader

Intellectual Ventures Big Case Shut Down By Judge Over Completely Bogus Patents

from the but-of-course dept

Late last fall, we highlighted some very questionable practices by Intellectual Ventures in suing a bunch of big banks for patent infringement. Our focus was on a particular patent, 6,182,894, which was initially assigned to American Express, and which claimed to cover the concept of CID or CVV codes (those little extra three numbers on the back of your credit card you're supposed to type in as an added security measure). American Express, perhaps realizing how ridiculous it would be to sue over such a patent "donated" it to a non-profit, the Consumer and Merchant Awareness Foundation ("CMAF"), who explicitly promised that it would only be used to encourage better credit card security, and that it would never use the patent "against issuers, acquirers, merchants or consumers related to activity in the retail financial services and payment areas." Of course, it took all of about two years before CMAF effectively sold the patent to Intellectual Ventures, and then disappeared as an entity. IV, apparently, felt that it was not bound by the original promises, and started suing basically everyone. Soon after our story appeared exposing this questionable activity, Intellectual Ventures suddenly decided to drop that particular patent from its lawsuit. Shocking.

However, it continued with a few other patents... but that all ended last week when a judge rejected the remaining patents as completely bogus:

... the Court concludes as a matter of law, based on a clear and convincing evidence, that neither the '137 nor the '382 patent contains patentable subject matter under Section 101.... Nothing in the Court's Claim Construction establishes patentability, since however the claim terms may be construed each patent consists of nothing more [than] the entry of data into a computer database, the breakdown and organization of that entered data according to some criteria, disclosed in the '137 patent, but not the '382 patent, and the transmission of information derived from that entered data to a computer user, all through the use of conventional computer components, such as a database and processors, operating in a conventional manner. There is no inventive technology or other inventive concept that authorizes the protections of a patent, such as an improvement in the workings of the computer or the transmissibility of data or some other transformation of data into something qualitatively beyond the informational content of the data entered, even though the data might be organized and manipulated to disclose useful correlations. Rather, these patents are "drawn to a mental process -- i.e., an abstract idea."...

The two patents in question, 8,083,137 and 7,603,382, describe some rather basic and obvious ideas that a couple of patent lawyers twisted around to make it appear like they were patentable. The '382 patent claims to patent offering up a custom webpage to a user based on their personal preferences. The '137 patent is about "administering financial accounts." In both cases, Joe Mullin in the link above notes that they appear to have really originated with patent lawyers. The '137 patent did come from an engineer, but it wasn't because of anything she invented. She was doing some retirement planning, and her patent lawyer husband thought that her ideas for tracking budgets could be patented. The '382 patent just came straight from a patent lawyer.

And, of course, what the judge was noting above, is that neither should have been granted as patents in the first place, because both just involved basic data processing that any software could do. Neither did anything even remotely inventive. And, of course, the fact that both originated with patent lawyers highlights just how bogus IV's constant refrain is about how it's protecting individual inventors. It's never been about individual inventors at all.

It's been about the lawsuits and the money.

Which is why it should be no surprise to read about IV's response to this complete loss:

[Our] patent portfolio is deep and we have another action pending against Capital One in Maryland. We remain committed to defending our intellectual property rights, as well as those of our customers and investors.

In other words, okay, if we didn't get you with the first batch of bogus patents, we have tens of thousands of other bogus patents, and sooner or later, some judge will either let us win, or these banks will fork over lots of cash to make us go away.

Filed Under: patent lawyers, patents
Companies: capitol one, intellectual ventures

New Patent Reform Law Already A Good Thing... For Patent Attorneys

from the but-of-course dept

While it seems pretty clear that the patent reform bill that became law a few weeks ago won't actually do much to improve our broken patent system, one area of business it's helping tremendously is in increasing demand for patent lawyers. Due to the new law, suddenly law firms are scrambling for more and more patent lawyers:

Patent lawyers are in such demand that their specialty may account for more than 15 percent of law firm job openings while representing just 3 percent of lawyers in the United States.

Such lawyers typically have degrees in fields like engineering as well as law. Some law firms are now almost doubling recruitment fees to meet the growing demand for specialists in intellectual property, or I.P., particularly in technology, said T. J. Duane, a principal at a legal recruitment firm, Lateral Link.

The NY Times article above goes on to point out that the new law has especially made things much more complicated, thereby increasing demand for patent lawyers. It also mentions how law firms are really seeking people who could have been contributing to actual innovation, but have left engineering for the law instead:

The ideal candidate would hold a doctoral degree in electrical engineering, have graduated from a top 10 law school and have worked for four years at a strong law firm, Mr. Duane said.

This is not a good thing. A functioning patent system is one where the rules are clear and fewer lawyers are needed. The fact that the clearest immediate impact of the change in the law is the opposite should give the politicians who supported this law a pretty big reason to rethink it.

Filed Under: lawyers, patent lawyers, patent reform, patents

You Shouldn't Have To Hire A Patent Lawyer Before You Can Innovate

from the predictability dept

One of the persistent themes I noticed at Wednesday's patent conference at the Brookings Institution is that most of the lawyers seemed to assume that if the legal system ultimately reaches the right conclusion—invalidating a bad patent, say—that this means that the patent system is working well. Some panelists suggested that the Bilski decision, which struck down one particularly egregious "business method" patent, shows that there's not really a problem, because the courts are recognizing the problems with bad patents and correcting them. They seemed not to fully appreciate how slow and expensive the legal system is. One only has to think back to the great BlackBerry showdown to see that having the legal system eventually invalidate a bad patent may not be good enough. Even if the law is on the side of an accused patent infringer, the time, expense, and uncertainty of litigation can kill the firm before its rights can be vindicated in court.

I think the right way to think about patent reform is not whether the courts eventually reach the right result, but whether the system is predictable enough that you can tell in advance what the law requires, without hiring a patent lawyer. After all, this is how well-designed property rights systems work. I didn't need to hire a property lawyer to tell me who owns the apartment I'm living in—the rules of real property are predictable enough that I could figure it out on my own. The vast majority of property transactions are the same way—lawyers only get involved in exceptional cases that involve large sums of money or tricky legal issues. By the same token, if we're going to have patents on software (or in any other industry), they should be few enough and clear enough that a smart entrepreneur can figure out in advance, without the help of a lawyer, which patents he needs to license. If our current patent system isn't living up to that standard, the solution isn't to come up with ever-more-complex legal doctrines trying to separate the "good" vague patents from the bad ones. Rather, the solution is to restrict patenting to those fields where it's possible to make things clear and predictable. If that's not possible in some industry (and I suspect it's not in software), then that's a sign that patents aren't an effective way to promote innovation in that industry.

Filed Under: innovation, patent lawyers, patents, property rights