TCS Daily


Only the Strong Survive

By Michael Rosen - August 1, 2006 12:00 AM

[Note: this is the fourth article in a series on potential reforms to the patent system. The first three installments can be found here, here, and here.]

In the previous episode of this series, I examined a few common-sense strategies for ensuring that our patent system best promotes "the progress of science and useful arts," as the Constitution enjoins us.

There are many other ideas floating around -- some overstated, some interesting, and some radical.

To begin with the overstated, some patent reformers have chosen to focus on the issue of "venue," or the geographical location of the particular district court in which patent trials are held.

All patent cases take place in federal courts. While the federal system requires that its courts be able to assert jurisdiction over a case before holding trials, jurisdictional standards are easily met when the defendants are large national (or multinational companies) that sell their products in the region where they're sued.

Thus, it's not uncommon for patent litigation to take place in certain otherwise sleepy districts considered by some to be plaintiff-friendly, including the Eastern District of Texas, the District of Delaware, and the Western District of Wisconsin.

Critics say that the current system encourages "forum-shopping," or the tendency of "trolls" to choose such districts to launch their suits because they believe juries there to be sympathetic to their battles against the "goats."

During the oral argument in the eBay case in the Supreme Court, eBay's lawyer described the so-called "Marshall problem" whereby, according to him, no patent has ever been declared invalid by a jury in any trial heard in the courthouse in Marshall, Texas, which sits in that state's Eastern District.

Thus, some goat supporters have sought to restrict the venues in which patent suits can be filed.

Yet these criticisms are somewhat exaggerated. Forum-shopping is an unfortunate, but minor, reality throughout the U.S. legal system. Whether it's big tobacco, the oil companies, or Dell being sued, plaintiffs will always seek some sort of home-field advantage.

As Justice Scalia rejoined during the eBay hearing, the sympathies of jurors in the Eastern District of Texas is "a problem with Marshall, Texas, not with the patent law."

Furthermore, there's a built-in antidote to trial court forum-shopping. It's called the Court of Appeals for the Federal Circuit, a court that specializes in hearing patent appeals and that isn't afraid to toss out unjustified jury verdicts.

A helpful companion in such situations might be some kind of presumption that any injunction issued by a trial court should be suspended while the case is taken up on appeal, unless there's good cause to leave the injunction in place. That way, while the Federal Circuit is sorting everything out, the defendant could continue to make its products.

But while venue reform is a bit overwrought, an intriguing proposal comes from Representative Darrell Issa (R-CA) and Adam Schiff (D-CA). Under this legislation, Congress would create a pilot program in five federal trial courts in which individual judges would request to hear patent litigation and would be designated as patent judges.

While cases are assigned randomly, jurists who seek to avoid hearing such litigation can opt out and hand their patent cases to one of the designated patent judges.

The objective is to enhance the quality of judicial expertise in patent cases. According to the congressmen's press release, appeals to the Federal Circuit are too frequently presented and reversals are too often made, a result of "the general perception within the patent community that most district court judges are not sufficiently prepared to hear patent cases." In their words, the "legislation attempts to decrease the cost of litigation by increasing the success of district court judges."

Rep. Issa knows a little something about patents as the named inventor on 37 of them. He sits on Rep. Lamar Smith's IP Subcommittee and he has also been a co-sponsor of the chairman's own bill.

An Issa staffer explained to me that his boss believes there's no area of law quite as complex as the patent field. On top of that, many judges simply lack the time and experience to adequately understand the legal and scientific intricacies of patent law. The goal of the legislation he has introduced is to increase training and resources to enable judges to handle patent cases with an enhanced level of skill and understanding.

The bill would also authorize $5 million per year to compensate law clerks with technical expertise who would be assigned to the courts participating in the pilot program. As a former law clerk who was involved in patent cases, I can attest that these extra resources would be most welcome.

At the same time, though, there have been no comprehensive studies linking reversal rates in patent cases to particular judges. In other words, there's no convincing evidence that the quality or experience of a judge hearing patent cases determines whether his or her rulings are overturned.

Nevertheless, the Issa-Schiff bill wouldn't appear to hurt, and instead might well benefit, the handling of patent cases. While it may cut against the spirit of the random assignment of cases, it would still enable any judge who so wishes to hear patent cases while, hopefully, fostering greater expertise among designated judges.

An even more daring suggestion, put forward by one of my colleagues, would relax the standard for invalidating patents.

Recall that a defendant in a patent suit bears the burden of proving that the patent was wrongly issued by "clear and convincing evidence." Thus, even if the examiner who allowed the patent to be granted did not review a particular piece of "prior art," the defendant must still overcome the clear-and-convincing hurdle in order to show that the pre-existing product or article anticipated the patent.

Yet under this fairly radical plan, only references that the patent examiner reviewed would be subject to the clear-and-convincing standard. If, however, the defendant finds prior art that was not before the examiner during review of the patent application, the company would only have to prove it invalidated the patent by a preponderance of the evidence.

Thus, if only prior art reviewed by the examiner earns the clear-and-convincing status, the patentee will have every incentive to put numerous references in front of the examiner before the patent issues.

This idea dovetails with the reforms suggested in my previous article: if the Patent and Trademark Office is properly funded and is able to train highly skilled examiners, they will each be able to spend more time reviewing applications and searching for possible prior art.

And if third parties are permitted to submit potential prior art to the PTO either before or immediately after the patent issues, the examiners will be exposed to a greater number of references. As discussed earlier, the more prior art the examiner is able to review, the stronger the patents that issue - and the more certain litigation outcomes become.

Thus, there are plenty of interesting ideas scurrying across the IP landscape. Stay tuned to see if any actually get implemented.

Michael M. Rosen, TCS Daily's IP columnist, is an attorney in San Diego.

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Testing the Weak
Internet Test-Taking Patent Draws Official Suspicion
EFF, May 18, 2006

At the request of the Electronic Frontier Foundation (EFF), the U.S. Patent and Trademark Office (PTO) will reexamine a controversial patent for online test-taking from Test.com. The REEXAMINATION ORDER IS THE SECOND GRANTED IN JUST TWO MONTHS after petitions from EFF's Patent Busting Project.

EFF filed the reexamination request because the extremely broad patent claims to cover almost all methods of online testing. Test.com has used this patent to demand payments from universities with distance education programs that give tests online. But EFF, in conjunction with Theodore C. McCullough of the Lemaire Patent Law Firm, showed that Test.com was not the first to come up with this testing method -- IntraLearn Software Corporation had been marketing an online test-taking system long before Test.com filed its patent request.

"Bogus patents like these are hurting innovation and education in America," said EFF Staff Attorney Jason Schultz, who heads up the project. "This is a perfect example of how the patent system is broken and what needs to be fixed."

Test.com now has the opportunity to file comments defending the patent, and then the PTO will determine whether to invalidate the patent. The PTO HAS NARROWED OR REVOKED ROUGHLY 70% OF PATENTS IT HAS DECIDED TO REEXAMINE...

http://www.eff.org/news/archives/2006_05.php

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