Luna Innovations cheats trade secrets, fined more than its worth

In a lawsuit similar to Tesla Motors vs. Fisker, Virginia-based Luna Innovations has to pay $36 million to Bay Area company Hansen Medical. The jury found that Luna had broken its agreement to help Hansen develop a robotic catheter and illegally used trade secrets to obtain a contract with Hansen's competitor instead. Hansen was represented by Morrison & Foerster. The jury awarded this large amount, despite audits attesting to the fact that Luna only had a market capitalization of $20 million, and would probably cease to exist after complying with the court's decision. National Law Journal, 27 April, 2009, page 13

More on the USPTO v. Tafas & GSK Appeal

USPTO v. Tafas & GSK Appeal - Dec. 5, 2008 14 November 2008 By Gene Quinn The United States Patent & Trademark Office appeal of the Tafas and GlaxoSmithKline case regarding the claims and continuations rules that were famously enjoined by Judge Cacheris of the Eastern District of Virginia is set for oral arguments on Friday, December 5, 2008, at 10am. I will be in attendance at the hearing and blogging immediately thereafter with my thoughts on the hearing, providing my perspective and insights, that is assuming there is an oral argument that day at all. I know it is scheduled for then, but let me be perfectly open and honest about my intentions. I want to see the Patent Office and/or the Department of Justice step in and do the right thing and withdraw the rules and moot the appeal. That is the only responsible thing to do and the fact that those making the decision to move forward with this case have not seen fit to save themselves this embarrassment demonstrates that they are out of touch and simply don't care what damage will be done to not only the Patent Office but all Administrative Agencies. It is irresponsible and reckless to do anything other than withdraw the rules, and we all need to do whatever we can to bring pressure to bear in the coming weeks to get our government to do what is obviously the right. The fact that this case has gone this far is an unfortunate testament to the fact that the Patent Office and the Department of Justice are hell-bent on forcing the Federal Circuit to issue a decision that is going to be nearly ruinous for all of the agencies of the Federal government. How is it possible that a lame duck administration at the tail end of its time in office can continue to push and appeal a case where the outcome is so certain? This is going to be a disaster for all agencies, and a decision that should be made by the next leaders of the Patent Office and the Department of Justice. The claims and continuations rules should be withdrawn and this appeal mooted. That is the only responsible thing to do, so please Mr. Dudas, on the way out do the right thing here and don't risk the decision of the Eastern District of Virginia being ratified by a Court of Appeals and thus becoming precedent that will allow for the challenge of virtually any administrative rulemaking decision. On Tuesday, August 19, 2008, the United States Court of Appeals for the Federal Circuit issued a decision in Cooper v. Dudas, which makes it clear what the outcome of the PTO appeal of the GSK & Tafas case will be. As I pointed out in my post titled Trouble Ahead for the PTO, the Cooper v. Dudas case, although a win for the PTO, laid the foundation for the Federal Circuit to ratify the decision of Judge Cacheris lock, stock and barrel. In this decision the Federal Circuit explained that the PTO does not have the authority to make substantive rules, explained that substantive rules are those that effect a change in existing law or policy that will affect individual rights and obligations. The Federal Circuit went on to explain that in the Cooper v. Dudas case the PTO was fine because they were merely setting a working definition of an ambiguous term used in a statute. That is hardly the case in the Tafas & GSK appeal. The statute is clear, inventors have the right to file as many claims as they want and file as many continuations as they want. There is nothing in the language of the statute that supports any limitation, and what the Patent Office tried to do clearly and unambiguously was affecting substantive rights. Changing rules in the middle of an application process cannot be characterized any other way. You had the right to do something yesterday, no right to do it today. That is a change, and it impacted a lot of pending applications. It should not come as a surprise to anyone that the Federal Circuit might signal in decisions leading up to an important case which way they are leaning. They do this all the time. In fact, if the Patent Office and the Department of Justice actually force the Federal Circuit to issue a decision you can expect that the decision will cite the Cooper v. Dudas opinion liberally. They have inched the law closer to where it needs to be to support what it is that they are about to do without it being viewed as a shift in the law. It is rare that the Federal Circuit so abruptly changes course like they did in Bilski without moving that direction slowly. So I predict that if the Federal Circuit issues a decision it will be to affirm Judge Cacheris. Now why would the Patent Office and/or the Department of Justice want a Court of Appeals to affirm a decision that is such an indictment of Patent Office rulemaking? I have no idea. It is reckless and is something that should be stopped. Someone in the government, whether in the DOJ, Department of Commerce or Congress, needs to step in and be the voice of reason. We all know there are a lot of needless and irrational challenges to actions taken by Administrative Agencies, and while this is not one of those meritless situations, an indictment of rulemaking that will flow from a Federal Circuit decision will do nothing more than embolden challenges and flood the court system with cases that will for years require district courts and the regional Courts of Appeals to set the appropriate balance. The only way that will happen is by further indictment of the Patent Office as judge after judge explains just how bad the Patent Office rulemaking was and that in whatever case is before them the clear disregard for the law shown by the Patent Office is not what is at issue. When the Federal Circuit ultimately issues its decision after the new PTO administration is in place the claims and continuations rules will be once and for all thrown out and there will be no doubt left that the Patent Office did not have the authority to directly contradict the patent laws enacted by Congress. The truth is that the Patent Office tried to do something they didn't have the right to do and they were challenged, thankfully, by Dr. Tafas and GlaxoSmithKline and the many amici who filed briefs explaining exactly how and why the rules were bad and not supported by the law. Why do our lame duck political leaders want to turn a clearly bad decision to act contrary to the overwhelming weight of public comment and contrary to the Patent Act itself into a miserable precedent that will undoubtedly embolden legions of challenges to legitimately rulemaking? Because if you continue down that path this is exactly what will happen, and someone needs to point that out to our leaders and get them to accept reality. About the Author: Gene Quinn is a US patent attorney and the founder of IPWatchdog.com, and is the Editor and chief contributor to the PLI Patent Practice Center and is on the PLI Patent Bar Review faculty.

Notable paragraphs of the US Patent Law

These paragraphs are most often cited by the USPTO examiners, and patent agents struggling with pushing inventions through the institution's paper jam: US Patent Act Title 35 of the United States Code §100, Definitions: Process means process, art and method, and includes a new use of a known process, machine, manufacture, composition of matter, or material. §101, Patentable inventions: Any new and useful process, machine, manufacture, composition of matter, or any new and useful improvement thereof, may obtain a patent therefore… §102, Novelty: 1. Not previously known, used, patented, printed, publicly used, sold. 2. Invention was not patented, used, printed one year prior to date of application. §103, Non-Obviousness: 1. Not patentable if at time of prior art invention, the subject matter as a whole would have been obvious to a person of ordinary skill in the art. §111, Application: 1. Specification: 2. Drawing: §112, Specification: Written description: manner and process of making and using invention – full, clear, concise and exact so as to ENABLE a person skilled in the art to make and use the same. Claims: One or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention – independent, dependent or multiple dependent form. Claims may be MEANS or STEPS for performing a specified functions, and may not be enabling (but supported by spec). §271, Infringement: Making, using, offering, selling any patented invention infringes the patent. NOT if it is changed by subsequent processes.

Twin lawyers charged with court fraud

From New York Times, 27 September page A7: "An Italian lawyer has been charged with fraud and false representation because she is suspected of having her identical twin sister fill in for her during court hearings. The lawyer, was also a part-time judge near Milan, helping other judges with heavy caseloads. But when she had to fill both roles, she twice sent her sister, who is not a lawyer, in her place, collecting legal fees even when she was elsewhere. The sisters will be tried next month.

COPYRIGHT TERM EXTENSION VIOLATE "PROGRESS" IN THE CONSTITUTION, OR DOESN'T IT?

Law professor Maria Pollack, whom I have criticized in the past for not understanding, science, engineering or patent law, HAS written an interesting article on how aspects of copyright law violate the "progress" clause of the Constitution. Her paper is titled "What is Congress supposed to promote? Defining 'progress' in Article I, Section 8, Clause 8, of the United States Constitution", and appeared recently in the Nebraska Law Review. Her conclusion:

This Article uses linguistic evidence to disprove a long standing assumption about the Progress Clause, which gives Congress "the power ... To Promote the Progress of Science and useful Arts by securing for limited times to Authors and Inventors the exclusive right to their respective writings and discoveries". The word "progress" is not a reference to the Enlightenment Idea of Progress and, thus, an anachronistic bias incapable of cabining Congress. The word "progress" means "spread". Congress does not have the power to create any intellectual property regime it thinks will increase the Gross National Product, campaign donations from holders of large copyright portfolios, or world harmonization. Any right to exclude others from use of writings and discoveries must promote the spread of knowledge and technology. This clarification of the constitutional language warrants court overthrow of both the circumvention limitations in the Digital Millenium Copyright Act and the twenty year subsidy provided copyright holders by the Copyright Term Extension Act.

PROCTER AND GAMBLE SUES IRS TO RECLAIM ITS PATENT DONATION DEDUCTION

Speaking of which, Reuters reports that Procter & Gamble is suing the IRS, asking to have $435 million in patent donations reinstated. The news is from http://www.reuters.com/article/americasIpoNews/idUSN1952932320080919 In 2005, the IRS audited P&G's tax returns for 2001 through 2005, with the IRS in 2008 sending P&G a letter asking for extra taxes and interest, which P&G paid upfront without agreeing with the IRS assertions. Now P&G is suing to protest the extra taxes, which it wants back. From the article: "P&G said the IRS asked for more money after looking into tax credits the company claimed for technology donated to colleges and universities, as well as artwork donated to the Cincinnati Art Museum and the National Underground Railroad Freedom Center. The IRS also denied certain credits related to spending on patent work and research, among other items."

Is Mickey Mouse evil?

In many IP circles, Disney is viewed as evil for their successes in getting copyright term extensions. One [false] rumor is that Disney wants to tie copyright term to the proton decay rate (which is ten to the zillion years). One true statement reflecting another form of idiocy is a statement last week from a Sunni cleric in Saudia Arabia announced that children should not be allowed to watch Mickey Mouse, labeling the cartoon character a "soldier of Satan" who should be killed.

How Disney might have lost the Mickey Mouse copyrights

The 22 August LA Times has an interesting article on Disney's copyrights for Steamboat Willie and its substantially similar Mickey Mouse characters. The primary question is of simple copyright law: is the copyright registration for Steamboat Willie defective and thus is the character in the public domain? The more intriguing dilemma - if Steamboat Willie is in the public domain (argument below), can people sell substantially similar Mickey Mouse products and defend themselves by arguing that they are substantially similar to the uncopyrighted Steamboat Willie? Disney has trademarked "Mickey Mouse", so you would have to use a different name for a new product line based on using the public domain Steamboat Willie. The controversy starts with a copyright lawsuit involving one of the few Mickey Mouse movies not copyrighted, a 1933 short called "The Mad Doctor", for which someone was trying to sell animations cells. Disney lawyers rightfully pointed out that Mickey Mouse itself was still under copyright, so the cell seller couldn't sell. The loser, one Gregory Brown, consoled himself with an odd argument that the Disney lawyers had made - that Mickey Mouse had been created by Walt Disney Company in 1928. Problem. The company didn't exist in 1928. Whose name then is on the copyright forms? Digging around, Brown found a clue on the title card to the beginning of the "Steamboat Willie" cartoon that was released on a 1993 LaserDisc, which said: "Disney Cartoons Present A Mickey Mouse Sound Cartoon, Steamboat Willie - A Walt Disney Comic by Ub Iwerks, Recorded by Powers Cinephone System, Copyright MCMXXIX" MCMXXIX is the Disney's lawyer's 1929 reference - but to Steamboat Willie. Brown unsuccessfully tried arguing in his court case that any of these three parties (Disney, Iwerks, Powers) might claim ownership, an uncertainty that nullifies all ownership claims under the arcane rules of the Copyright Act of 1909. And since Steamboat Willie is so substantially similar to Mickey Mouse, if Willie is in the public domain, it makes it practically impossible for Disney to defend any copyright claims to substantially similar Mickey Mouse knockoffs. Fun stuff, huh. The judge ignored the argument for coming too late in Brown's case. However, in 1999, Arizona State University law student Lauren Vanpelt reviewed Brown's findings, and wrote/posted a paper "Mickey Mouse - A Truly Public Character," , in the public domain, pretty much agreeing with Brown - Willie. She concludes, quite powerfully and definitively (she is not a law professor yet): "Disney published its common law protected expression without the proper copyright notice attached to the films and on the club materials. The statute of limitations to rectify that omission has long since elapsed, as has the statute of limitations for Disney to file any infringement claims based on that omission. As a result of its omissions and inaction, Disney forfeited its copyright claims to Mickey Mouse. Mickey has fallen into the public domain where all are free to copy and enjoy him." Shortly thereafter, a Georgetown University law student, Douglas Hedenkamp, reviewed Vanpelt's paper, and did additional research at the Library of Congress, and agreed - there is too much ambiguity into who owns the copyrights to Steamboat Willie. And under the 1909 laws (courts rely on the laws at the time of something happening), the ownership must be unambiguous, which isn't the case here, a requirements courts have repeatedly upheld. A rough looking version of Hedenkamp's article is at:http://homepages.law.asu.edu/~dkarjala/OpposingCopyrightExtension/publicdoma in/HedenkampFreeMickeyMouseVaSp&E(2003).htm Hedenkamp concludes, again powerfully and definitively (he wasn't a law professor at the time :-), with: Ultimately, if all the material incorporated into the films published without notice is in the public domain, this means that the character Mickey Mouse is himself public domain material. Mickey would still be protected by the copyrights in his other films and products, but those copyrights would only extend to the new matter that is original to them. [FN161] The aspects of Mickey's image and character that were derived from the original public domain films cannot be protected by virtue of their inclusion in new works; this is true under both the 1909 Act and the Current Act. [FN162] This means that the public is free to exercise all of the rights that the Copyright Act would otherwise reserve to the holder of a valid copyright. [FN163] This includes the rights to copy, display and distribute the films, and to make, display and distribute derivative works based on those films and the Mickey Mouse character. [FN164] In response to a letter from Hedenkamp, Disney General Counsel Louis Meisinger wrote back saying the equivalent of "all of you are wrong", and threatened legal action if Hedenkamp went public. Fortunately Hedenkamp has balls and a knowledge of constitutional law (something IP lawyers are mostly forbidden to consider :-), and published an article in the 2003 edition of the Virginia Sports and Entertainment Law Journal. The end of the LA Times articles goes: Meisinger, the former general counsel, is now a Los Angeles County judge. Asked about the Hedenkamp article in an interview in his chambers, Meisinger gave an instant nod of recognition but ignored an invitation to take up the argument again. "Everything has to fall into the public domain sometime.", he said, then headed back to court. Which is a pathetic implicit concession that indeed Brown/Vanpelt/Hedenkamp are correct - Steamboat Willie is in the public domain. Since LA Times was able to write this article in 2008, five years after Hedenkamp's paper, with the question unresolved, is further support that Steamboat Willie is in the public domain. Disney rightfully zealously defends its intellectual properties, which apparently it can't do here as proved by the possibility of an article five years later in 2008. If Disney could have fixed the defect, it would have done so after Vanpelt's and Hedenkamp's papers - Disney has the money and legal brainpower to easily fix such problems. And the LA Times could have reported "Despite the controversy, in 200X, lawyers for Disney successfully reinstated the copyrights to its Steamboat Willie character." Question. How to have some fun with this (assuming one has lots of money to play litigation games)? Would it take setting up a Web site that freely distributes Steamboat Willie videos to upset Disney enough to have them file the copyright lawsuit that resolves this question? Or what would happen if someone wrote a letter to the Library of Congress, asking them who are the assigned names to Steamboat Willie? Is there a legal problem in accepting licensing money for a something that has now been shown to be unlicensable? Where is the professor Jon Duffy of the copyright academic world to file a lawsuit to force the issue? This case once again shows how much of a bag of hot air is the mind of Larry Lessig, since he could strike a great blow for all of his pretend copyright causes by doing something with Steamboat Willie that would force Disney to sue Larry.

PROFESSOR PETITIONS PTO TO ABOLISH SILLY COMPUTER SCIENCE RULE

To sit for the patent bar, for someone whose academic background is in computer science, you need a bachelors degree in computer science from a school accredited either by the CSAB's CSAC or the ABET's CAC - two boards that accredit computer science programs. The problem is that most of the leading computer science departments, often part of engineering schools, are accredited differently. In 2006, Prof. Thomas Field of the Franklin Pierce Law School petitioned the PTO to modify this requirement, arguing that it unfairly restricted many worthy candidates from applying for the patent bar. In May 2006, PTO lawyer Toupin responded with a rejection of the petition, ignoring all of the legitimate merits of the argument, and instead pretty much arguing that Field didn't dot his "i"s and cross his "t"s. Now Toupin could have remembered that he is a public servant, instead of an anal weenie, and wrote back and said "While your petition is defective, we agree the Rule is unduly restrictive, and have changed it accordingly".

ANOTHER PROFESSOR GENERATES STUPID ARTICLE ON PATENT REFORM

The 11 August 2008 edition of Forbes, page 30, has an opinion piece by real estate law professor Michael Heller of Columbia Law School on patent reform. What's next, an article on patent reform by divorce settlement law professor? If nothing else, his opinion piece supports the argument that Mark Chandler of Cisco and his ilk in the CPF are whiners. Heller argues that too many crappy biotech/pharm patents are stifling research and driving up litigation costs. His solution? Change the formula for patent litigation damages (gee, I wonder where Heller gets some of his academic support)? Not once in the article is any mention of reforming the incompetent and corrupt PTO management, which gets rid of most of the problems Heller and Chandler whine about. That's the law professors' solution to every legal problem - anything (like more legislation) but what might actually solve the problem. Columbia Law School is near New York University, which means nothing, except it gives me an opportunity to insult once again the IBM scam otherwise knows as the NYU Patent Public Peer Review joke.

Morons proclaim September 24th the World Anti-Software Patent Day

Newswires report that on September 24th, lying engineering/law morons around the world will be organizing an anti-software patent day. Liars because they are really against all patents, morons because their arguments are equally applicable to hardware patents. But they can't argue against hardware patents because that would reveal their true goal - the elimination of patents for unconstitutionally, plague-like (according to the ABA) copyright system.

FEDERAL COURT RULES THAT EBAY IS A CRIMINAL ORGANIZATION

From: Steptoe_Newsletter@steptoe.com Sent: Thursday, August 21, 2008 12:47 PM Subject: E-Commerce Law Week, Issue 520 E-Commerce Law Week Issue 520, Week Ending April 16, 2008 Court Says eBay is a Criminal Enterprise. Seriously. A federal court in California recently held that eBay's allegedly false statements about the safety of its "Live Auction" service can support a claim against the company under section 1962(c) of the Racketeer Influenced and Corrupt Organization Act (RICO), a statute originally designed to go after organized crime. The ruling is at: http://www.steptoe.com/attachment.html/3504/520a.pdf For your information, 18 USC 1962(c), the section of RICO of interest here states: (c) It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. Although the case involves a civil suit, the court's ruling in Mazur v. eBay Inc. amounts to a remarkable statement that eBay's description of its auction service constitutes criminal behavior. While the Federal Trade Commission has brought actions for "unfair" or "deceptive" acts in commerce against companies whose actual privacy practices did not live up to their stated policies, allowing RICO actions to be brought on the basis of similar misstatements is a giant leap - and could have enormous negative ramifications for websites. (c) Copyright 2008 Steptoe & Johnson LLP.

How patents fall under the IRS sphere of influence

26 U.S. Code 1235 is the part of the U.S. tax code that deals with the sale or exchange of patents, and the key word here is "patents": 26 USC 1235 - Sale or exchange of patents (a) General - A transfer (other than by gift, inheritance or devise) of property consisting of all substantial rights to a patent, or an undivided interest therein which includes a part of all such rights, by any holder ... ... shall be considered the sale or exchange of a capital asset held for more than 1 year, ... ... regardless of whether or not payments in the consideration of such transfer are - (1) payable periodically over a period generally coterminous with the transferee's use of the patent, or (2) contingent on the productivity, use, or disposition of the property transferred. It stipulates patents, but does not include patent applications, especially those that still have the patent pending status. There have been published accounts, and I am sure private transactions, of people selling the rights to their patent applications. Why? Despite nonsense to the contrary, patent applications can be highly useful capital assets, and not that much less a sure thing than an issued patent (i.e., while many patent applications do not become patents, many issued patents are susceptible to becoming non-patents through invalidation). Inventors, or acquirers, in the business world, can effectively use a portfolio of patent applications. They are as much a capital asset as a portfolio of patents. Indeed, the PTO Web guide to "provisional patent applications" (which are even weaker than "patent applications"), states one clear business use of a provisional patent application as a financial asset: "Enables immediate commercial promotion of the invention with greater security against having the invention stolen;" While provisional applications are a bit wishy-washy, a patent application is a serious investment, especially in terms of claims drafting costs. It is not a hobbyist-business attempt at asset creation, especially since an inventor can spend many tens of thousands of dollars to get through a few Office Actions and still not have a patent. Yet the inventor still may be able to find someone to buy the application as an asset. An inventor should be entitled to the same capital gains treatment for his or her patent application. The phrase "patent applications" isn't the same as the phrase "patents", and thus the IRS could or could not argue that 26 USC 1235 does not apply to the sale or exchange of patent applications. Frankly, I doubt they would care either way. But the law is the law, and the law currently says that the capital gains treatment only applies to "patents". Yet another example of Congress not fully thinking when drafting an IP law. I would say that Congress "obviously" did not think this through, but Congress has yet to tell me what they mean by "obvious" in the patent world (I don't care how many pretend academics you hire, 35 USC 103 is unconstitutionally vague). Does the IRS accept "patent applications" as "patents" in interpreting Section 1235, as a case where Congress intended to use a specific term, patent, in a slightly more general way to also include patent applications? A 2002 IRS Technical Advice Memorandum on Section 1235, where the IRS itself is a bit confused about this issue (see TAM-117258-02 (August 2002), www.irs.gov/pub/irs-wd/0249002.pdf), where it writes: Section 1.1235-2(a) states that the term "patent" means a patent granted under the provisions of Title 35 of the United States Code, or any foreign patent granting rights generally similar to those under a United States patent. .... So far the memo, and this paragraph, is still talking about "patents", with a very reasonable modifer that "foreign patents" are "patents" under 1235. But then the IRS writes: .... It is not necessary that the patent or patent application for the invention be in existence if the requirements of 1235 are otherwise met. Where did "patent application" come from? It is the only time the phrase is used in any definitional sense in the memo, and seems to imply that "patents" in 1235 includes "patent applications". Indeed, IRS Regulation 1.197-2(c)(7) [197 deals with amortizing goodwill and the like], at one point in time, if not still today, describes as assets excluded from Section 197 including both patents and patent applications, again implying some sort of asset equivalence for patents and patent applications. Other instances. The IRS Web page for deducting general R&D expenses (www.irs.gov/businesses/small/industries/article/0,,id=97640,00.html) states: R&D expenditures include the expenditures of obtaining a patent, such as attorney's fees expended in the making and perfecting a patent application. Again, kind of implies equal treatment of patents and applications in the IRS' eyes. Another IRS Web page also seems to suggest that patent applications fall under 1235. The Web page, "Ordinary or Capital Gain or Loss" covers capital gains in general (see www.irs.gov/publications/p544/ch02.html). As one example of when a capital asset transaction is not treated as a capital gain, the page states: Depreciable property transaction. Gain on the sale or exchange of property, including a leasehold or a patent application, that is depreciable property in the hands of the person who receives it ... is ordinary income if the transaction is either directly or indirectly between any of the following pair of entities: .... [basically, selling to an entity you mostly control]. The implication here is that if you sell the patent application to an entity that is pretty much distinct from you (like a licensing company, or a product developer, etc.), any proceeds or royalties you receive are treated as capital gains under Section 1235. Thus it seems, in light of a fair number of IRS writings, that "patent applications" are included under "patents" in Section 1235. If so, are these scattered IRS commentaries enough assurance for an inventor selling a patent application? This is why Congress needs to add language to Section 1235 along the lines of "By 'patent' in this Section, is also meant patent applications.

US Court dethrones a Fed judge, cancels a Microsoft win

(Another Circuit Court Kicks Judge Real Off Case, Zusha Elinson, The Recorder (San Francisco) August 4, 2008) In a rare move, the U.S. Court of Appeals for the Federal Circuit booted a trial judge off a patent infringement case Friday. But it was not so unusual for the judge: U.S. District Judge Manuel Real (age 84). Just two weeks ago, a 9th U.S. Circuit Court of Appeals panel took a big class action against American Honda Motor Co. Inc. away from Real. The controversial Los Angeles judge has now been removed from at least eight cases by the 9th Circuit. Coming down hard on Real's judicial skills, the Federal Circuit panel threw out Microsoft's 2006 win over Research Corporation Technologies in a patent infringement case. In its published opinion, the panel reversed Real's decision to declare RCT's patents unenforceable, tossed his orders that found the patents invalid and non-infringing -- and ordered that another judge take the case. "After a thorough review of all the evidence, testimony, and facts of this case, this court concludes the strongly expressed convictions of the trial court in this case may not be easily and objectively reconsidered," wrote Judge Randall Radar for the three-judge panel in Research Corporation Technologies Inc. v. Microsoft Corp., 06-1275. Terrence McMahon, the McDermott, Will & Emery partner who represented RCT before Real, said he was glad to get a new judge on the case. "It was clear that he had a point a view and we disagreed with it - we tried the case and he cut us off at every pass," McMahon said. "I've never had something like this in my whole career, and I hope I never do again." RCT first filed suit against Microsoft in 2001 for infringing on six patents related to digital half-toning. At first with another judge, RCT won a summary judgment motion that some of Microsoft's products were infringing. But after the case was given to Real, things went Microsoft's way. Real reversed the prior judge's order and then canceled the scheduled jury trial in favor of a trial on inequitable conduct to determine whether RCT had withheld information from the patent office. After an hour-long inequitable conduct trial with no witnesses, Real ruled from the bench against RCT because the inventors didn't disclose information about new "K factor" tests to the patent office after they'd already filed for a patent. The Federal Circuit panel wrote that Real erred: The new tests weren't material because they were done after the patent was filed and had nothing to do with the patent anyway. The panel also faulted Real's analysis of the inventors' intent to deceive the patent office. "In sum, the trial court erred in ignoring the materiality prong and in misapplying the intent prong of the inequitable conduct test," Radar wrote. Finally, the panel also tossed Real's exceptional case finding, which awarded attorneys fees to Microsoft's lawyers. "A new day has dawned. Everything that Judge Real did has been erased," McMahon said. A lawyer for Microsoft from Portland, Ore., firm Klarquist Sparkman did not return a phone call seeking comment. But in a statement, Microsoft said, "We look forward to going to trial for the first time and telling our story in court." Real, 84, also did not return a phone call seeking comment. In the Honda class action, Bonlender v. American Honda Motor Co. Inc., 07-55258, a 9th Circuit panel threw out Real's order certifying a nationwide class against the car company, saying the judge abused his discretion by certifying the class on his own "without making any findings regarding Rule 23's requirements for class certification." In March, he was also removed in an unpublished order from another case, U.S. v. Hall, 06-50356, in which he was accused of "excessive and biased interventions" that denied two defendants a fair trial. Two years ago, Congress dropped an effort to impeach Real over allegations that he interfered in a bankruptcy case to help a woman whose parole he supervised. A judicial discipline complaint stemming from the bankruptcy case was twice tossed out, although a public reprimand was ultimately issued. This January, the judicial discipline review body for the federal courts, the Conduct Committee of the Judicial Conference of the United States, disclosed that Real had been accused of a pattern in 72 cases over the years of not providing reasons for decisions as required.

Free Flow of Information Act encourages trade trade secret leaks

The Senate is considering what the House has passed the Free Flow of Information Act, which gives strength to federal law in the form of the right for reporters in most cases to protect the identity of their sources, even from prosecutors or judges. The business community is not happy with the Senate version of this bill, because unlike the House, the Senate version does not have a provision which requires reporters to disclose the identity of sources who leak trade secrets. Some state laws, such as in California, already protect reporters from having to disclose sources of trade secrets. The Senate bill would extend this protection across the country. And thus the concern of the business community. A nice article on this side effect appears in the 30 June 2008 Forbes, page 32, in an article by communications consultant Carter Wood titled "Too Much Freedom of the Press".

RFID company sues college researchers for exposing defects

This another ugly trend in big business: www.computerworld.com/action/article.do?command=printArticleBasic&articleId= 9109139 Chip maker sues to quash research on RFID smart card security flaws Researcher says chip hack could crack open 2 billion cards, By Sharon Gaudin July 10, 2008 (Computerworld) A semiconductor company is suing a Dutch university to keep its researchers from publishing information about security flaws in the RFID chips used in up to 2 billion smart cards. The cards are used to open doors in corporate and government buildings and to board public transportation systems. NXP Semiconductors filed suit in Court Arnhem in The Netherlands against Radboud University Nijmegen. The company is pushing the courts to keep university researchers from publishing a paper about reported security flaws in the MiFare Classic, an RFID chip manufactured by NXP Semiconductors. The paper is slated to be presented at the Esorics security conference in Malaga, Spain, this October, according to Karsten Nohl, a graduate student who was part of a research group that originally broke the encryption last year. Nohl told Computerworld on Thursday that he gave his research to the Dutch university so it could build on what he had done, and he has been closely following its progress. "I think it's crucial that it's published in an academic conference where researchers can work on solutions," said Nohl. "I don't think there's any good outcome for NXP. Say they were to win. They'd be keeping information away from the academics who might come up with solutions." NXP declined to be interviewed for this story but said in an e-mailed statement, "We cannot give further comments at this time, as it is in the hands of the court and the court has given a confidentiality order." Representatives from the university did not respond before deadline. Call out the military Nohl said the problem lies in what he calls weak encryption in the MiFare Classic smart card. In March, he said that once he had broken the encryption, he would need only a laptop, a scanner and a few minutes to get the cryptographic key to an RFID door lock and create a duplicate card to open it at will. Since the MiFare Classic smart cards use a radio chip, Nohl said he easily can scan them for information. If someone came out of a building carrying a smart card door key, he could walk past them with a laptop and scanner in a backpack or bag and skim data from their card. He also could walk past the door and scan for data captured to the reader. Once he's captured information from a smart card and/or the card reader on the door, he would have enough information to find the cryptographic key and duplicate a smart card with the necessary encryption information to open the door. He said the whole process would take him less than two minutes. And that, according to Ken van Wyk, principal consultant at KRvW Associates, is a big security problem. "It turns out it's a pretty huge deal," said van Wyk in a previous interview. "There are a lot of these things floating around out there. Using it for building locks is the biggy, especially when it's used in sensitive government facilities -- and I know for a fact it's being used in sensitive government facilities." Van Wyk noted in March that one European country had deployed soldiers to guard some government facilities that used the MiFare Classic chip in their smart door key cards. "Deploying guards to facilities like that is not done lightly," he said. "They recognize that they have a huge exposure. Deploying guards is expensive. They're not doing it because it's fun. They're safeguarding their systems." Van Wyk declined to identify the European country under discussion. Vintage technology Manuel Albers, a spokesman for NXP Semiconductors, said previously that the company had confirmed some of Nohl's findings. However, he said there are no plans to take the popular chip off the market. "The MiFare chip was first introduced in 1994. At the time, the security level was very high," he said in an interview. "The 48-bit key length for encryption was state of the art." In an earlier interview Albers noted that NXP recently released MiFare Plus, which is backward-compatible with the MiFare Classic while offering better security. He said the company did not release the updated chip because of Nohl's findings, but it did use some of his information when designing it. In a statement on its Web site, the university notes that Mifare smart cards are widely used to control access to buildings and facilities. "All this means that the flaw has a broad impact," according to the release. "Because some cards can be cloned, it is in principle possible to access buildings and facilities with a stolen identity. This has been demonstrated on an actual system. In many situations where these cards are used, there will be additional security measures; it is advisable to strengthen these where possible." The university added that this past March, its researchers informed its government, the Dutch Signals Security Bureau of the General Intelligence and Security Service, and NXP Semiconductor about their findings. In an interview on Thursday, van Wyk said publishing security research is a common pursuit, but it's a bit harder to deal with for a hardware company. "You have an RFID chip deployed by the millions," said van Wyk. "Switching that around is extremely costly and won't happen very quickly. It could be it will take them months or a year to do that." Van Wyk added that it's a "scary" situation for the companies and organizations using these smart cards. "If they're using that for access control to buildings, they'd have to make major changes to their whole access system," he said.

A (silly) comic book law from California

California Business and Professions Code Section 16603 (illegal to require purchase of horror comic book as condition to other purchases): 16603. Every person who, as a condition to a sale or consignment of any magazine, book, or other publication requires that the purchaser or consignee purchase or receive for sale any horror comic book, is guilty of a misdemeanor, punishable by imprisonment in the county jail not exceeding six months, or by fine not exceeding one thousand dollars ($1,000), or by both. This section is not intended to prohibit an agreement requiring a person to purchase or accept on consignment a minimum number of copies of a single edition or issue of a magazine or of a particular book or other particular publication. As used in this section "horror comic book" means any book or booklet in which an account of the commission or attempted commission of the crime of arson, assault with caustic chemicals, assault with a deadly weapon, burglary, kid.napping, mayhem, mur.der, r.ape, robbery, theft, or voluntary man.slaughter is set forth by means of a series of five or more drawings or photographs in sequence, which are accompanied by either narrative writing or words represented as spoken by a pictured character, whether such narrative words appear in balloons, captions or on or immediately adjacent to the photograph or drawing. (good definition of comics - must have been written by a decent patent attorney) Why isn't "filing a frivolous patent infringement lawsuit" in this list of possible crime horrors?

Some more primitive patents, and intel from Linuxgram

Look, I love scrutinizing pedantically software patents. There are many of them, so many stupid ones, and the pickings are aplenty. But to be fair to the software examining corps at the PTO, patent quality is a problem across the board. And it will remain a problem across the board until the PTO, Congress, ABA/AIPLA, and more importantly, corporate America, DECIDE TO TAKE PATENT QUALITY SERIOUSLY. And yes, ANY PATENT NOT USING THE JEPSON FORMAT SHOULD BE A PRIORI INVALID. At least 99% of everything is an improvement. So in this spirit, here are some more idiotic patents. "Decontaminate something, compare it to a control something" United States Patent 6,428,746 Filed: February 4, 2000 What is claimed is: 1. A method for determining an efficacy of a decontamination procedure, the method comprising the steps of: providing at least one test object and at least one control object; contaminating multiple sites on each of the at least one test object and the at least one control object with a known amount of an inoculum comprising organisms; performing the decontamination procedure on the at least one test object but not on the at least one control object; recovering the microorganisms from each of those respective contaminated sites on the at least one decontaminated test object and the at least one contaminated control object; comparing a number of microorganisms recovered from each respective site of the at least one decontaminated test object with a number of microorganisms recovered from each respective site of the at least one contaminated control object; and deeming the decontamination procedure effective when the number of microorganisms recovered from each site of the test object is at least approximately a 3 log reduction of the number of microorganisms recovered from each respective site of the control object. 2. The method of claim 1, wherein said at least one test object and said at least one control object are substantially identical prior to performing said method. 3. The method of claim 2, wherein said at least one test object and said at least one control object are surgical instruments. inoculum comprising organisms - at least say organisms comprising inoculum, but it can be construed rather literally, and self-limiting, while being vague - double disservice to one's self. The inoculum has no precedent here, and the way it reads, it is heretofore unclaimed inoculum that comprises organisms - which is not what they intended (in their ignorance). deeming - this is an arbitrarily ambiguous action - it never describes an action of a system or a group of users. The users rather carry our registering, associating, subscribing, but not deeming. Deeming belongs in Shakespeare. Patent a camera all over again Here is another gem. Note that some of the claims claim any camera made in the last one hundred years, or at least every disposable camera. U.S. Patent No. 6522835 9. A lens-fitted photographic film package comprising: a body; a lens element within said body; a film element housing; a detachable film cartridge within said film element housing; a film element within said detachable film cartridge; and a rear door attached to said body and enclosing said detachable film cartridge. This claim was allowed on the first action with no amendments and no prior art cited. Access-method-independent exchange using a communication primitive Finally, the latest patent to scare everyone on the Internet. Uh-Oh. Hold on to Your Wallet. Charlie's Back with More Proof that He Owns the Patent on Web Services By Maureen O'Gara of LinuxGram Charlie Northrup, the guy in New Jersey whose prior art on what looks to be Web services dates back to 1994 and appears to trump anybody else's IP, has gotten another patent. God knows it wasn't easy. The US Office of Patents and Trademarks pored over his application simply forever, comparing it to other like-minded patents. It found nothing that would disallow it, certainly nothing held by any member of W3C, and just granted the patent the other day. Patent number 6,546,413, which bears the title "Access Method Independent Exchange Using a Communication Primitive", expands on Charlie's key 5,850,518 patent, otherwise known simply as 518, filed when the World Wide Web was just a baby and nobody else was thinking much about Web services. It's the third extension Charlie has gotten. The other ones were patents number 6,397,254 and 6,421,705. To knock Charlie's patents out of the box, somebody would have to have filed for a Web services-resembling patent in late 1993. The new patent contains 40 claims that basically cover any service provider providing a service. It also throws users a few curves. Like 518, it is good as of December 12, 1994. The 518 patent is huge, rife with implications and could theoretically compromise any number of technologies depending on how it's, hum, interpreted. It's all about the automated discovery and connection of Web services though the word "Web" was never used in the filing since the Web didn't exist back then outside of research circles but 518 describes how to connect to a service using TCP/IP so it doesn't matter, it anticipates Web services. Naturally, it's no fun holding such cards without playing them. So Charlie is setting up an LLC, a limited liability partnership, that the patents will be transferred to. The lawyers should have the LLC up and running, so to speak, in the next few days. Charlie won't have all that much to do with it. It's not his sort of thing. He's going to keep to the technology side. The LLC may involve big-time business types and, of course, lawyers - maybe three firms worth of them eventually. It'll be up to the LLC to decide what to do with the IP, Charlie says, trying to keep the thing at arm's length. What that appears to mean is that the unnamed LLC will seek to license the stuff, which in turn may come down to suing people it thinks are infringing. Charlie doesn't like to talk in terms of suing people, but says it may be advantageous to Web services players such as IBM, Microsoft, BEA, Sun and the service providers to have a license. The service providers could be practically anybody but it looks like it may behoove financial institutions and folks trafficking in multimedia - broadcast, audio and video - to check things out. Charlie suggests that a license might also be helpful in mitigating the liabilities of companies being sued by other companies for some sort of Web services infringement. The LLC lawyers are starting to work on what are called "claim charts" that track alleged infringement. Licensing terms are still being thrashed out. Meanwhile, Charlie, who's got a little tiny company called Global Technologies Ltd, is productizing the IP under the code name DASCOA, short for Discovery and Connectivity Oriented Architecture, which is basically what it does using XML. Charlie says, "DASCOA is like a super-PTSN (Public Telephone Switched Network), but for software. It simplifies the writing of Web services considerably, and does not require SOAP, WSDL or other encumbered specifications" like the stuff the IBM-Microsoft-created WS-I Organization has dreamed up. Charlie is thinking of tying up with another company more skilled at marketing to get DASCOA to market. Reportedly the spec is written, the software's in the can, and the documentation is written, but needs some cleaning up before productization. Linuxgram is published weekly by G2 Computer Intelligence Inc. www.g2news.com 323 Glen Cove Ave.; Sea Cliff, NY 11579 (c) Copyright 2003 G2 Computer Intelligence, Inc. Here it is: United States Patent 6,546,413 1. A method to selectively use an Application Process of a first computer, to access information, and to access and interact with Minor Services accessible to said Application Process, wherein the Application Process uses one or more operating system communication primitives for communication connectivity and synchronization, and wherein said Application Process is a service provider application process executing on a computer system, and wherein a user application process is executing on a user computer system, said service provider application process being accessible to said user application process using a communication primitive the method comprising a) selecting said Minor Services by chosen criteria; b) connecting the Application Process with said selected Minor Services when the Application Process requires interaction with said selected Minor Services; wherein: c) said service provider application process communicates a registration request to said user application process, d) said user application process communicates said communicated request to the user of said user application process, e) said user responsive to said requests, communicates registration information to said user application process, f) said user application process communicates said registration information to said service provider application process, and g) said service provider application process registers said registration information as an entry in a service directory accessible to said service application process. Access-method-independent exchange United States Patent 5,850,518 1. A method to selectively use an Application Process to both access information, and to access and interact with Minor Services that have not been referenced in the representation of the application program for the recorded Application Process comprising the steps: a) registering Minor Services and communication primitives; b) selecting said registered Minor Services and said registered communication primitives by chosen criteria; c) determining which selected Minor Services and communication primitives are presently loaded; d) loading said selected Minor Services and said selected communication primitives that are not already loaded; and e) connecting said Application Process with said loaded minor services using said loaded communication primitives, when the Application Process requires interaction with said selected Minor Services. minor services, communication primitives, without prior definition of such - is primitive

Patents can be patented:

Patent prosecution is a multi-billion dollar a year industry in the United States, with much of the income (at least based on the fees I have paid over the years) due to patent claims drafting and patent claim modification during patent examination. Patent prosecutors are manufacturers of patent claims (and indeed can be sued for selling a defective product). Patent prosecutors use technology tools to manufacture and optimize their product (patent prosecution would shut down in the United States without computers). And like other industries with manufacturers, there are always improvements to be made, i.e., there should be new and better ways to draft patent claims. Let's ignore requirements 102, 103 and 112 of the 35 USC on patenting, and find out whether new patent claims drafting methods can be patented. A priori, I offer that at least three important precedents support the affirmative:

a) Baker v. Selden - if I can patent methods of structured prespective drawing with paper and pencil, I should be able to patent methods of structured claim drafting with paper and pencil; b) State Street - patent claim drafting is a VERY VERY concrete, tangible and useful business method for manufacturing VERY VERY concrete, tangible and useful patent claims and specification, if such methods earn law firms billions of dollars a year; and c) Lundgren - patent claim drafting methods are, well, METHODS of 35 USC 101 that rely on various degrees of technology to implement, technology now optimal to claim.

With many areas of technology having tens of thousands of new patent applications each year, licensing a new claim drafting method for, say, $1000/patent could be quite lucrative. And given increasing PTO fees for patent claims, there could be good such demand.

Favoritism patent awarded to Microsoft

A few weeks ago, the U. S. Patent Office awarded Microsoft what Greg Aharonian calls is a Bilski-like claim - a sign of favoritism: Bayesian scoring U.S. Patent 7,376,474 1. A method comprising: a) receiving a draw outcome of a game between at least a first team opposing a second team, the first team including at least one player and the second team including at least one other player; b) receiving a first score including a first mean and a first variance representing a distribution associated with the at least one player of the first team; c) receiving a second score including a second mean and a second variance representing a distribution associated with the at least one other player of the second team; d) updating the first mean and the first variance based on the draw outcome of the game; e) updating the first mean and the first variance of the first score due to changed abilities of the at least one player of the first team based on a dynamic score function of a period of time since the first team last played the game; and f) providing an indication of the updated first mean and the updated first variance to the at least one player of the first team. No technology in this claim, just like with Bilski. And some rather broad elements, like "distribution", just like with Bilski. Yet Bilski's claim gets rejected under article 101, but not Microsoft's. Corporate favoritism at the Patent Office? Seriously, big companies get lots of Bilski-like claims every month - where's the PTO outrage? While the patent talks about the use of electronics (just like the Bilski patent), by "receiving" one could mean reading the information in a newspaper and magazine, and by "updating" one could mean paper-and-pencil calculations for mean and variance (which are not that hard to do). I could implement this entire patent with a paper notebook and my mind. In fact, I know some sports-nuts mathematicians who could do all of this in their head, including remembering in their minds the updated scores from game to game. Usually that automatically disqualifies this patent under article 101. That is, this patent can be done equally manually, ( as well as mentally) or by computer. Does both possibilities make this unpatentable (that is, if you were not a big company like Microsoft) under 101? Is it not enough a process to be a 101-process? 35 USC 101, much like 17 USC 102, is a semantic disaster of vagueness and public notice incompleteness, thanks to the cavalier attitude Congress has with regards to the fundamentals of IP law. And based on the Bilski oral arguments, and other recent similar cases, the courts do not have any better fundamental understanding. They should punt 101 (and 103) back to Congress, and Congress should confer with a wide variety of people (as opposed to selling this to the highest bidder).