Category: Law
William W. Cochran and Christopher R. Benson & Michael C. Elmer have put together a superb paper on the history of patent damages. If you want a copy, please contact Bill Cochran.
The paper discusses how the statutory language of awarding damages has changed over time and the evolution of injunction relief. Below I will quote the historical statutes from the paper. But before I do that I want to point out three problems with the presently available relief for patent infringement.
1. Injunctions Are Optional Upon a Finding of Infringement
2. No Enhanced Damages for Purposeful Negligence.
3. Reasonable Royalties are Never Adequate Compensation.
1. Injunctions Are Optional Upon a Finding of Infringement
The patent right is the right to exclude. It is the height of absurdity to win a patent lawsuit and not obtain an injunction. If I win a lawsuit then I should be able to enforce my right, which is the right to exclude. You cannot exclude someone from trespassing on your property in the past. Thus the right to exclude means the right to exclude in the future or an injunction.
Unfortunately, this bit of illogic is brought to you by the statute 35 USC 283, which states that injunction may be granted in accordance with the principles of equity. This means in theory that you can win a patent lawsuit and still not be able to enforce your right to exclude.
The law should be changed so that an injunction should issue as part of any suit in which a patent is found to be infringed.
2. No Enhanced Damages for Purposeful Negligence.
The treble damages provision for patent infringement is only for ‘willful’ infringement. This means that companies can practice purposeful negligence and the worst case outcome for this is to pay the patent holder the damages they caused. See point 3 below. In addition, the In re Seagate Techs., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc) overturned the longstanding principle that an infringer must exercise a duty of due care. As a result, the enhanced damages provision has become meaningless. An infringer has no duty of care to not infringe and can then defeat any charge of willfulness by purposeful negligence. The threat of enhanced damages is now almost meaningless and provides no deterrent effect to keep people from infringing patents.
The law should be changed so that enhanced damages should be available in the case of negligent infringement. This is the only way to protect our inventors for technology thieves.
3. Reasonable Royalties are Never Adequate Compensation.
In any lawsuit there is a non-zero chance that you will win even if you are guilty. If the damages are found to be a reasonable royalty, then the logical choice is always to negligently infringe a patent. In the worst case the infringer will only pay what they would have had to pay the patent holder if they had negotiated a license and there is a chance they may win the lawsuit incorrectly and pay nothing. Now, you may object that if they are forced to pay lost profits as damages this is a real deterrent. This is true, but the reality is that it is very hard to prove lost profit and the patent holder must show that ‘but for’ the infringing activity they would have made the sale. In the case of a large company infringer and a small company patent holder, the patent holder is likely to end up with even less damages under the lost profits calculation. As a result, many large companies pursue a policy of efficient infringement. This policy is morally reprehensible, but it does make economic sense.
The law should be changed so that the minimum damages is reasonable royalty plus some percentage amount such as 20% to provide an adequate protection for America’s inventors.
Below are some of the interesting highlights from the excellent paper PATENT DAMAGES by Bill Cochran.
Act of 1790
The first patent act, the Patent Act of 1790 provided that an infringer must:
…forfeit and pay to the patentee such damages as should be assessed by a jury, and moreover, to forfeit to the person aggrieved the infringing machine.
Act of 1793
Three years later, this was changed in the new Act of 1793, §5. It was a significant departure from the Act of 1790, and a significant departure from the common law of torts. This new Act (§)5 provided:
That if any person shall make, devise, and use or sell a thing so invented, the exclusive right of which has been secured to any person by patent, without the consent of the patentee . . . the person so offended shall forfeit and pay to the patentee a sum that shall be at least equal to three times the price for which the patentee had usually sold or licensed to other persons the use of said invention.
Act of 1800
The Act of 1800 removed the requirement that the patentee had to be selling a product and recognized the value of maintaining exclusivity and not just liability. Thus, the new Act of 1800 returned to the concept of damages, requiring the infringer to:
…forfeit and pay to the patentee a sum equal to three times the actual damages sustained by such patentee.
The Act of 1819 §(c) read:
. . . that the Circuit Courts of the United States shall have original cognizance, as well in equity as at law, of all actions, suits, controversies, and cases arising under any law of the United States, granting or confirming to authors or inventors the exclusive right to their respective writings, inventions, and discoveries; and upon any bill in equity, filed by any party aggrieved in any such cases, shall have authority to grant injunctions, according to the course and principles of courts of equity, to prevent the violation of the rights of any authors or inventors secured to them by any law of the United States, on such terms and conditions as the said courts may deem fit and reasonable
This appears to be the first instance that an “injunction” could be obtained against an infringer.
The Act of 1836, §14, read as follows:
Whenever in an action for damages for making, using, selling the thing patented . . . a verdict shall be rendered for the plaintiff, it shall be in the power of the court to render judgment for any sum above the amount found by the verdict as the actual damages sustained by the plaintiff, not exceeding three times the amount thereof.
Act of 1870
. . . and the court shall have power, upon a bill in equity filed by any party aggrieved, to grant injunctions according to the course and principles of courts of equity, to prevent the violation of any rights secured by patent, on such terms as the court may deem reasonable; and upon a decree being rendered in any such case for an infringement, the claimant [complainant] shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has suffered thereby, and the court shall assess the same or cause the same to be assessed under its direction, and the court shall have the same powers to increase the same in its discretion that are given by this Act to increase the damages found by verdicts in actions upon the case…
The Patent Act of 1922 stated:
. . . and upon a decree being rendered in any such action for infringement the complainant shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has sustained thereby, and the court shall assess the same or cause the same to be assessed under its direction.
If on the proofs it shall appear that the claimant has suffered damage from the infringement or that the defendant has realized profits therefrom to which the complainant is justly entitled, but that such damages or profits are not susceptible of calculation and determination with reasonable certainty, the court may, on evidence tending to establish the same, in its discretion, receive opinion or expert testimony, which is hereby declared to be competent and admissible, subject to the general rules of evidence applicable to this character of testimony; and upon such evidence and all other evidence in the record the court may adjudge and decree the payment by the defendant to the complainant of a reasonable sum as profits or general damages for the infringement…
The Act of 1946 reads as follows, now being numbered as 35 USC §70:
[after authorizing injunctions, the first paragraph continues] …and upon a judgment being rendered in any case for an infringement the complainant shall be entitled to recover general damages which shall be due compensation for making, using or selling the invention, not less than a reasonable royalty therefor, together with such costs, and interest, as may be fixed by the court. The court may in its discretion award reasonable attorney’s fees to the prevailing party upon the entry of judgment on any patent case.
The court is hereby authorized to receive expert or opinion evidence upon which to determine in conjunction with any other evidence in the record, due compensation for making, using, or selling the invention, and such expert or opinion evidence is hereby declared to be competent and admissible subject to the general rules of evidence applicable thereto.
The court shall assess said damages, or cause the same to be assessed, under its direction and shall have the same power to increase the assessed damages, in its discretion, as is given to increase the damages found by verdicts in actions in the nature of actions of trespass upon the case; but recovery shall not be had for any infringement committed more than six years prior to the filing of the complaint in the action.
This is the first statement about reasonable royalties.
Act of 1952
Section 284 states:
Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.
When the damages are not found by a jury the court shall assess them. In either event the court may increase the damages up to 3 times the amount found or assessed.
The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances.
However, the decision in In re Seagate overturned a longstanding principle that an infringer must exercise a duty of due care.
Present statute
§283. Injunction
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
As stated by the Federal Circuit in Smith International, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir.), cert. denied, 464 U.S. 996 (1983):
Without this injunctive power of the courts, the right to exclude granted by the patent would be diminished, and the express purpose of the Constitution and Congress, to promote the progress of the useful arts, would be serious undermined. The patent owner would lack much of the “leverage,” afforded by the right to exclude, to enjoy the full value of his invention in the market place. Without the right to obtain an injunction, the right to exclude granted to the patentee would have only a fraction of the value it was intended to have, and would no longer be as great an incentive to engage in the toils of scientific and technological research.
In eBay v. MercExchange, L.L.C., 547 U.S. 388 (2006) , the Supreme Court made it clear that obtaining injunctions in patents is no different from obtaining an injunction is any other civil matter relying upon equitable relief. The plaintiff must prove four factors:
- The Plaintiff will suffer irreparable harm without an injunction.
- The remedies at law, which are money damages, are inadequate to compensate for the injury.
- Considering the balance of hardships between the plaintiff and the defendant, an injunction is warranted.
- The public interest would not be disserved by issuing an injunction.
PatentlyO reported the following hypothetical.
In Mayo v. Prometheus, the Supreme Court is again addressing patentable subject matter. During oral arguments, Justice Breyer came-up with a hypothetical invention to help him draw the line on patentable subject matter.
JUSTICE BREYER: Suppose I discover that if … someone takes aspirin … for a headache and, you know, I see an amazing thing: if you look at a person’s little finger, and you notice the color [indicates that] you need a little more, unless it’s a different color, you need a little less. Now, I’ve discovered a law of nature and I may have spent millions on that. And I can’t patent that law of nature, but I say: I didn’t; I said apply it. I said: Look at his little finger.
MR. SHAPIRO: Sure.
JUSTICE BREYER: Okay? Is that a good patent or isn’t it?
MR. SHAPIRO: No … Well, because you — you’ve added to a law of nature [to] just a simple observation of the man’s little finger.
First of all taking aspirin is not a law of nature. The law of nature would be how the body reacts to aspirin, but the process of taking aspirin is not a law of nature. If you use this information to observe whether someone is taking too much or too little aspirin, then you have applied that “law of nature” to a human problem. Namely, how to know how much aspiring one should take for a headache.
The Supremes struggled to find a hypothetical to understand 35 USC 101 according to the reports. Here is a simple 35 USC 101 test that even they should be able to apply correctly.
Anything that man creates to solve an objective problem is an invention. If a device/service is not found in nature separate from man then it is an invention. For example, the ability to create fire or harness it is an invention of man. No other animal has the ability to create or harness fire. Man did not have some sort of inherent knowledge of how to create or harness fire, so creating fire is an invention.[1]
Applying this information to the above hypothetical, aspirin is created by man. It does not exist separate from man, so this hypothetical is clearly within 35 USC 101. Taking aspirin is not a part of nature. Observing the effects of taking aspirin is not a part of nature.
Mayo’s argument in this case boils down to patents should not exist, or at least should not be apply to Mayo.
[1] However, it is no longer novel and therefore you could not patent for creating fire.
The Supreme Court will hear arguments in this case on December 8, 2011. This case is about whether Prometheus’ patents (6,355,623 & 6,680,302) claim patent eligible material under 35 USC 101. Section101 is a bit obscure, but logically anything that is not found in nature (separate from man) and that solves an objective problem is an invention. Ultimately, section 101 is a threshold question of whether the subject of the patent is an invention. The novelty requirement, section 102, is not asking whether the subject of the patent is an invention, but whether the applicant is the inventor. The nonobviousness requirement, section 103, is really the outgrowth of judicial activism (see Non-Obviousness: A Case Study in Judicial Activism). The only logical basis for the nonobviousness requirement is that you have to be more than just the inventor to deserve a patent. This is a violation of the Constitution, Article 1, Section 8, Clause 8, but I digress. Section 112 of the statute is about whether the applicant fulfilled their part of the social contract. The only question before the Court is whether the patents are directed to an invention.
The patents claim methods for determining the optimal dosage of thiopurine drugs used to treat gastrointestinal and non-gastrointestinal autoimmune diseases. Thus, the questions in this case are whether determining optimal dosages of thiopurine drugs to treat autoimmune diseases exists in nature separate from man and whether this solves an objective problem? Clearly, determining optimal dosages does not exist in nature for any drug and the patent solves the objective problem of determining the optimal dosages of thiopurine drugs for autoimmune diseases. CASE DISMISSED. This case is straight forward and should never have been granted certiorari by the Supreme Court. I have previously written about this case at Mayo v. Prometheus – Supreme Court Grants Cert (Again).
I consider it bad news that the Supreme Court granted certiorari in this case, because they have gotten so many patent cases wrong in the last five years. Their understanding of patent issues would make a first year patent associate blush. However, the last patent case they decided, Stanford University v. Roche Molecular Systems, showed some signs for hope.
Mayo has attempted to obscure the issues, by blurring the differences between section 101 & sections 102 & 103. For instance “Mayo argues that the claims’ physical steps should be disregarded because they are old in the art.” (p. 1 Prometheus Brief) Whether these steps are new or old is totally irrelevant to the 101 question. This question is only relevant to the question of novelty and non-obviousness. But even with respect to the question of novelty and non-obviousness this statement is non-sense. It is a violation of both logic and legal precedent. Every invention ever created is a combination of known elements (steps) because of conservation of matter and energy – you cannot create something from nothing. From a legal precedent point of view, this is an attempt to reinstitute the point of novelty test, which was always nonsense because it violates conservation of matter and energy.
Mayo also attempts to argue that Prometheus has patented a law of nature. This is absurd – the optimal dosage for an individual human being of thiopurine drugs, is a law of nature? Admittedly, I am not an expert in pharmacology but there is no way that determining an individual dosage for a specific person is a law of nature. Mayo knows this is non-sense, so they attempt to make the argument respectable by again disregarding parts of the claims. A law of nature would be something like the absorption rate of a drug into a cell is based on certain factors. An application of that law of nature, for instance to tailor a drug so it has a faster or slow absorption rate is an invention.
Mayo then puts forth the fraudulent argument that every patent should be evaluated by the courts as to whether it “promotes science and the useful arts.” First, of all the preamble to Article 1, Section 8, Clause 8 is not limiting and never was meant to be limiting. It is standard knowledge to every patent attorney that preambles are not meant to be limiting. The Constitutional clause uses the word “RIGHT” and by right the Founding Fathers meant “natural rights”, which are not subject to some utilitarian purpose. The right to Life, Liberty, and the Pursuit of happiness are not subject to some utilitarian goal, they are unalienable – inherent in being a human being. The fraudulent nature of this argument can be seen in the fact that its proponents never suggest that every trashy novel, movie, or painting should not receive copyright protection because it does not advance science and the useful arts.
Mayo then puts forth another argument made by every parasite – namely that patents are a monopoly. This is just nonsense. Patents are a property right not a monopoly. The statute defines patents as a personal property right and patents meet all the tests of a property right. Namely, 1) Does the right arise because the person created something? Creation is the basis of all property rights. The law is just recognizing the reality that the person is the creator and without that person the creation would not exist. This is consistent with Locke’s Natural Rights and Ayn Rand’s Objectivism. 2) If someone else was the creator would they have received the right in the creation? This ensures that the right does not arise from political favoritism. 3) Is the right freely alienable? Freely alienable means that right can be sold, transferred, divided, leased, etc. This is a key feature of property rights. Patents fit all three criteria and are property rights.
Mayo then puts forth the PATENTABLY absurd argument that the patent system could be replaced by government funding of inventions. The absurdity of this argument can be summed up in one word – SOLYNDRA. First of all, the Supreme Court does not have the authority to make the decision to scrap the patent system and replace it with government funding. This argument by Mayo borders on delusional. Even Congress does not have the right under the Constitution to eliminate patents that would require a Constitutional Amendment.
Mayo has neither the facts or the law on its side so its approach is to purposely confuse the issues and to outright lie. Mayo should be ashamed to have its name associated with the parasitic attempt to rob the invention of others.
This excellent article shows that when Canada changed from a first-to-invent system to a first-to-file system, it was bad for individual inventors, technology start-ups, and Canadian venture capital. The article then quotes a UK study showing how the European system is not encouraging innovation. The article notes that the America Invents Act will effectively eliminate the one year grace period for inventors, which is particularly important for startups. The new post 
grant review will allow large companies to tie up entrepreneurial companies in expensive litigation for years. The post grant procedure has been used effectively in Europe to stifle startup competitors by large companies. Unfortunately, one of the supposed benefits of the Act was to stop fee diversion. The Patent Office is completely funded by user fees and Congress has taken (stolen) these fees to support other Congressional pet projects. The result of fee diversion is that it now takes four or more years on average for a patent to issue. This pendency time results in the patent often issuing long after the commercial opportunity has passed the company by. If it took 3 to 4 years to obtain title to your car or house after you bought it, you would think you were living in a third world country. However, this is what happens in the patent world everyday and the America Invents Act does not solve this problem. The author concludes that Congress should be careful that the America Invents Act not become the equivalent of Sarbanes Oxley.
This article was written by Gary Lauder is Managing Director of Lauder Partners, a Silicon Valley-based venture capitalist and co-inventor of a dozen patents. More info on this issue can be found on his Web site.
This case is directed to a method of delivering copyrighted material over the web. It provides some interesting quotes related to software and web based inventions.
“[I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.” Research Corp., 627 F.3d at 869.
The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long acknowledged that “improvements thereof” through inter-changeable software or hardware enhancements deserve patent protection. Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor.
The eligibility exclusion for purely mental steps is particularly narrow. See Prometheus Labs., 628 F.3d at 1358 (noting that claims must be considered as a whole and that “the presence of mental steps [in a claim] does not detract from the patentability of [other] steps”).
Perhaps this is the beginning of a resurgence of rationality with respect to 35 USC 101 and software.
Dear Friends,
It is easy to take for granted what we have in America. Even with a terrible economy and crazy politicians, we are still better off than other countries. Consider how many people try to get to America. No other country has its equivalent of the “American Dream.” What is it that makes America different?
When every nation on earth was run by aristocracies, a few great men stood up and said we will create a nation where the every person has rights and the individual is empowered with responsibility for his government and his society. Furthermore, we will grant him the rights to that which he creates and will take away the barriers that other countries have for those who innovate. At the time in England, only the privileged could afford to invent.
The patent system that our Founders created was revolutionary at the time, and continues to be significantly different and more favoring of the creative individual than the systems of other countries. Other patent systems favor large companies and vested interests, and that is one reason that America has out-innovated the rest of the world so significantly.
So, why would large companies that seem to benefit from a good patent system want to radically change it for the worse? Bill Gates said it best in an interview years ago with Ken Auletta: “The thing I worry about is some guy in his garage inventing something I haven’t thought of.” Once a company becomes large and has vested interests, it innovates less and tries to protect the income streams it is already receiving. The vested interest cannot help but try to impede innovation that will become competition.
The America Invents Act was written by the top attorneys of two of the key, large, multinational companies that are behind this bill. They weren’t thinking about you and me when they wrote it. In fact, fee diversion wasn’t even mentioned in the first version that was brought to the Senate (!) – it was added in an amendment. How could anyone who cares about our patent system not even address fee diversion? The answer is that they have different motives.
Up until now, our patent system has protected and supported the individual inventor, as our Founding Fathers intended. The America In vents Act changes that. If you are not aware of the issues, see the attached document. The bottom line is that a big part of what our Founders provided for us, and that is part and parcel to the success of this great nation, is about to be ripped away. The America Invents Act could face a final vote next week. If you care about this country, about freedom, and about the value of the individual, please call your senators and tell them you are against this bill. For talking points, use last night’s email or go to www.SanePatentReform.org. Please call tomorrow, Friday. For your senators contact information, go to CongressMerge.com/onlinedb. Every man, woman, and child who has ever hoped to pursue the ”American Dream” is depending on you. Please help in this critically important matter.
Best Regards,
Randy Landreneau, President
Complete Product Development
www.CompleteProductDevelopment.com
727-744-3748
Dear Inventors,
The Senate is about to take up the America Invents Act. It is possible that this act will be the first thing addressed when they return to work Tuesday next week, September 6th. A motion for cloture has been filed, which means a very limited debate if the motion gets a three fifths vote. In this event, we could see the final vote on the bill take place next week. Here’s the short version of what is wrong with the bill.
- The America Invents Act Will Increase The Time It Takes To Get A Patent: The biggest problem of the patent office, some say the only problem, is the time it takes to get a patent – 3 years plus on average and increasing. Held-up patents mean held-up jobs, business ventures, and dreams. At a time when the patent office needs every penny it receives in fees to improve its ability to handle its workload, fees are being stolen by Congress ($100 million this year alone!). The only thing in the bill that would have helped reduce the backlog was the original Senate version’s guarantee that all of the fees paid by inventors to the patent office would be only available to the patent office. The current House version put the Appropriations Committee back in charge, the same group that has been responsible for taking inventors fees. In the face of current deficits, fee diversion will undoubtedly continue. The only thing that would have helped reduce the patent backlog is gone now.
The change from First-to-Invent to First-to-File will create a rush to file that will increase the patent backlog, further increasing the time it takes to get a patent. This belief is borne out by what happened in Canada after a similar change.
- The America Invents Act will Reduce Job Creation: Census data has shown that net new job creation in the US over the last 30 years comes from startups. Large companies tend to export jobs. If you compare the US to Europe, you know that the US has had more entrepreneurial activity than Europe. The US has produced more groundbreaking technologies. The First-to-Invent Patent System of America supports entrepreneurship and the First-to-File systems of Europe do not.
In a First-to-File system, the risk of another person filing for the patent before the initial inventor causes inventors to have to greatly reduce any communication with outside parties regarding their inventions. Individual inventors, who are the greatest source of real innovation, usually need to work with others in research, development, funding, and marketing prior to filing for a patent. Large companies, on the other hand, can often do everything needed within their walls. In America, historically, an individual inventor could work toward making an invention successful without having to be nearly as secretive as a European inventor. In First-to-File countries, inventors have a great incentive to not disclose an invention to anyone prior to a patent application being filed, leading to under-researched, under-developed inventions, and weaker patent applications. Putting such burdens on individual inventors greatly reduces innovation. This is a big reason why America has had a multitude of new technologies and new companies while Europe has been dominated by old companies and vested interests.
A friend who was an engineer at a large, well-known electronics company in America told me that if any employee came up with an invention that was too good, it got shelved. The reason was that it would upset current product lines that are profitable. Vested interests do not want someone coming up with an invention that will compete with them. This is why large companies have been trying to change our patent system for many years. The irony is that many of the large companies supporting this bill can be traced back to one innovative individual who was supported by the American First-to-Invent Patent System in his pursuit of the American Dream. If innovation and job growth are the goal, changing from First-to-Invent to First-to-File makes no sense at all.
- There is much more. Corporate attorneys will have an additional expensive procedure to use to challenge issued patents and will use it to wear down and defeat potential competition. Past requirements that attorneys and inventors act “without deceptive intent” are repealed in the bill (!). Companies will be able to keep trade secrets for as long as they want, hiding the information from the rest of the world, but still retain the right to keep making or using the product if someone else patents the invention, and will even be able to get a patent on the Trade Secret at any point in the future. Harmonization is not only not accomplished with the bill, but there are situations where the bill creates disadvantages for American inventors relative to inventors from other countries (prior art cutoff date for obviousness). Section 18 sets up a special procedure for challenging the validity of business method patents, under a weaker standard than any other kind of patent (a gift to big banks so they don’t have to worry about the valid patent of Claudio Ballard – if you don’t know the story, look it up and prepare to be outraged). If you want more, go to www.SanePatentReform.org. If all of the above weren’t enough, Thomas Jefferson, himself, opposed a similar change to First-to-File over 200 years ago, and many legal experts have stated that the proposed change is unconstitutional.
As usual, the odds are against us. But that has been the case with virtually every decent effort any man or woman ever embarked upon. Many saints were viciously killed by their numerous detractors. Since we’re inventors, how about Galileo? For publicizing his discoveries, he was tried for heresy by the Inquisition, threatened with torture, sentenced to house arrest for life, and not even absolved of his “crimes” until 1992! You may not know that in our American Revolution, only about 1/3rd of the colonists were even for it. The odds were phenomenally bad. We won only through the efforts of heroic individuals, and we can win again here.
The America Invents Act is an example of the worst of politics and influence. The result of its passage will be less innovation, fewer jobs, and a worse future for America. But amazingly, many of the politicians who are about to vote on it know very little about it. Their large company supporters are saying to vote for it, and the few of us fighting it are being drowned out. The only way we can stop it is to call our Senators and educate them. I am convinced that most of our Senators are sane enough to understand the issues if someone tells them. Please call your senators and communicate the truth to them. You can make a difference. Do it because it is right. Help defeat this bill. Call this week (to find your Senators, go to http://congressmerge.com/onlinedb/). Don’t wait, it could be too late. Thank you.
Best Regards,
Randy Landreneau, President
Complete Product Development
www.CompleteProductDevelopment.com
The future of America lies in its ability to be creative — to “out think” the rest of the world. Come up with a great idea and you can become rich. You can build a business that will create many jobs. And there is a system in place to protect inventors, the patent system. Think of those who have done it: Thomas Edison, Henry Ford, Steve Jobs, Bill Gates, the Wright Brothers, and many, many more. That system, the system which made it all possible for the US to lead the world, a system in place since 1789, the system is about to be changed to discourage creativity, and to hobble the independent inventor. Large corporations have mounted a large lobbying campaign, spending huge sums of money, to get the so-called “America Invents Act” through Congress. They must be stopped. [More . . ]
Zach Carter observed in the Huffington Post:
Today, the patent bill looks like a scorecard tallying points for powerful corporations: a win for pharmaceutical companies whose monopolies are driving up Medicare costs; a win for Wall Street’s battle against check-processing patents . . . .
Left out of the tally is the public, even as the economic landscape for American families grows darker. Historian Richard Hofstadter famously observed that Congress during the Gilded Age busied itself with dividing the nation’s spoils among the rich and powerful. But as the current patent struggle suggests, the spoilsmen are back and Washington is once again an arbiter of who lands the lucre.
Here is just part of what the so-called “American Invents Act” will do if it becomes law and what you can do to stop it.
What the Proposed Bill Does:
Imagine this: you have a dispute with a large corporation and decide to sue. Then you find out that the winner of the law suit will be decided by, of all things, a race. Whoever wins the race to the courthouse steps wins the law suit. Sound ridiculous and farfetched. Think again.
Under the present system, the one who invents first gets the patent. What this means is that an inventor can’t be stopped because a huge corporation can beat the inventor to the door of the Patent Office. Under the so-called “reform” it will be whoever wins the race to the steps of the Patent Office will get the patent!
The repercussions are much broader than the obviously dishonest idea of giving a patent to someone who wins a race to the door of the Patent Office. To develop inventions takes time, effort, and money. By awarding patents to first inventors, the current system encourages development. Going to a first to file system, as called for in the proposed law, will discourage developments. More than that, it would increase the likelihood that patent applications would be defective because they would be filed too early in the development stage. But this is precisely the barrier to independent inventors that large corporations, who oppose startup competition, crave. Given such a situation, it would be no surprise that investors will be disinclined to support startups.
The current Patent Act encourages inventors by providing a grace period for filing a patent application. During this period small companies can go to the marketplace, seek financing, find manufacturing and marketing partners, or decide whether or not to file a patent application.
Under the proposed act, the grace period would be eliminated. Go out and promote your invention and you lose the right to file. This means that small businesses will have to file first and then find out if they should commercialize an invention afterwards. The proposed act would cause small businesses to incur additional and unnecessary expense, and thereby discourage innovation, development and job creation.
Under the present system, if a new method of doing business (say, a great way of delivering music on the Internet) is created, it can be patented.
The new act, if it passes, eliminates business method patents. There is not a single other industry that has a special patent provision to protect it, not one.
The present law gives competitors the right to have the Patent Office review an issued patent. The proposed law would give competitors more weapons to have patents reviewed and re-reviewed, in order to delay inventions and innovations and upwardly spiral an inventor’s costs. So to the cost of patenting an invention add the cost of defending it again and again and again. This ups the price and the risk for small companies and puts them into expensive (very expensive) litigation, litigation they might not want, may not be able to afford and may not be ready for. The mere existence of these procedures will be another way of closing out the small inventor and small businesses.
Under current law, a company must file a patent within one year of putting the invention into commercial use, whether or not the public is aware. The new act would changes the rules. A company will be able to use an invention in secret for years and then file a patent application years later. This undermines one of the major objectives of patent law – to bring the benefits of innovation to the public as quickly as possible. After all, the Constitution provides Congress the power to enact laws that “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.”
Today, it’s one patent for one invention. The new act permits the filing of multiple applications for the same invention. Issue multiple patents for the same invention and thereby create a legal thicket which will be used to block startups and competition.
This one’s a beaut. Today an inventor must disclose the best method of making the invention. Under the proposed act, a large company can keep the best method secret so long as they can show some other way of practicing the invention. The whole idea of the patent system is to require the inventor to provide for the public benefit the best way of making the invention so that when the patent ends, everyone can make the invention. Now, large businesses can hold the best methods and processes secret, thus the defeating the purpose of our patent system.
What Can Be Done About It:
Congress is in recess but they will take up the bill when it returns in early September. As complicated as the America Invents Act is, opposition is straight forward. If you agree that the proposed bill is wrong, you can:
Telephone your Representative and Senators right away and tell them to vote against the America Invents Act. You can find the name and phone number of your representative at this link. You can find your Senators’ contact information at this link.
Philip Furgang, a noted New York patent law practitioner. Philip is the author of the forthcoming book, “Patent Prosecution” (Oxford University Press.)
Philosopher George Santayana’s sage words: “Those who cannot remember the past are condemned to repeat it,” ring as true today as they must have when he wrote them in 1905. The words aptly apply to the ineptly titled “America Invents Act,” S. 23 and H.R. 1249, currently meandering through Congress.
Perhaps President Barack Obama is preparing for the day when he can sign the bill into law. That day is likely to bring woe to patent practitioners and users of the patent system alike, and particular woe to small inventors and startup businesses that collectively drive our nation’s economy.
As perchance an omen of tumultuous times ahead, Obama was seen holding a copy of Aldous Huxley’s Brave New World at the Bunch of Grapes book shop during his recent summer idyll on Martha’s Vineyard. Written in 1932, Huxley’s tome depicts a distorted social order, ushered in by the darkness of the Holocaust, in which science, technology and the media are collectively used to control human behavior.
U.S. patent law is rooted in incentivizing inventors to innovate in, among others, the fields of science and technology. The current patent reform initiative is steeped in media jargon promising job creation for America at a time when jobs are desperately needed. Unfortunately, there’s no data to support this promise. Indeed, all empirical evidence points to the likelihood that this patent reform will result in job destruction.
It goes without saying that Congress has the power, working in concert with the president, to reform or deform the patent system as we know it. In short, its members can change the patent laws of our nation in a manner that would reframe the social order pertaining to patents for better or for worse.
Giles S. Rich and Paul Rose, co-authors of the 1952 Patent Act governing our nation today, opined on the differences. They concluded that patent reform should be adopted if, and only if, the proposed changes increase the incentive force associated with our patent system.
A key incentive provided by our patent system is the incentive for inventors to disclose their invention in a patent application in exchange for the possibility that they may achieve a patent grant in return. The subsequent publication of the patent application serves to inform the public about the invention, and thus enables others, including competitors, to build upon it. The net result of this incentivization is to promote “the Progress of the Useful Arts” as mandated by Article 1, Section 8, clause 8 of the Constitution.
Certain provisions of the patent reform bill will have the ill effect of disincentivizing small inventors and startup companies from using the patent system in the first instance. One provision would award the patent to the first person to file a patent application on the invention, rather than the one who is actually the first to invent. Another provision would eliminate the “grace period” that has traditionally provided a safe haven to allow an inventor to get his or her invention “off the ground” without forgoing the opportunity to patent it. The net result is to change the social order for patenting in a manner that selectively demotivates small inventors and startups.
There is no reason to believe that such changes will benefit society as a whole. To the contrary, the proposed changes will work to society’s detriment by disincentivizing inventors who fear that they can’t possibly win a race to the patent office and can’t properly vet their invention with others before filing. In short, these changes will discourage these inventors from disclosing their invention in a patent application.
Discouraging disclosure of inventions undermines a key incentive of our patent system, namely the incentive to disclose, and thereby undermines the patent system as a whole by inhibiting third- party access to information about those inventions, thus slowing down the rate of innovation.
Another proposal in the patent reform bill would adopt the European-style opposition protocol–ambiguously described in the bill as “post-grant review.” Such a protocol is analogous to the inter partes re-examination form of post-grant review that is already available under the existing U.S. patent law. The fact that a European-style opposition procedure was adopted by Japan, China and South Korea two decades ago, and was subsequently abolished in each of those countries within a decade, should be enough to give Congress and Obama pause.
The call for the United States to adopt a European-style opposition procedure is not new. It was bandied about back in the late 1980s during the Reagan era, as a bargaining chip in trilateral talks among Europe, Japan and the United States in an effort to “harmonize” their patent systems. The United States chose not to harmonize and did not adopt such a system then. Unfortunately for Japan, it did. Our nation needs to recall that history now.
At this critical juncture in the patent reform debate, the salient questions are: Why would a country that is a world leader in inventiveness change its patent system to comport with that of a European protocol that has been tried and shown to fail elsewhere? Why adopt “first to file,” and eliminate the “grace period” for filing, in the absence of evidence that doing so will improve the inventiveness of our nation’s inventors, which it clearly won’t?
So far, Obama’s term in office has been unremarkable, to say the least. The reasons, for what can be described as an abject failure of leadership, are set forth in Drew Weston’s Aug. 7, 2011 opinion piece in The New York Times entitled “What Happened to Obama?”
Mindful of Huxley’s warning about our “new world,” we can only hope that Obama, if not Congress, will reflect upon the likelihood that a patent reform initiative that has been tried, and found to fail in other countries, should not be adopted because it is likely to fail here. Likewise, a patent reform initiative that demotivates inventors with limited means should not be adopted because it is the antithesis of the incentive system that our patent system was established to provide. Both initiatives would deform our patent system, rather than reform it.
If neither Congress nor Obama respond to the risk posed by the patent reform bill, Huxley’s apocalyptic vision of control over human behavior via manipulation of ownership of science, technology and the media may become a reality sooner than we think. Under those circumstances, history will have all the more reason to discredit Obama’s term in office.
Dale L. Carlson is a partner at Wiggin and Dana in New Haven, Conn., an adjunct professor of patent law at Quinnipiac University School of Law in Hamden, Conn., and immediate past president of the New York Intellectual Property Law Association, the largest regional IP law association in the country.
This case is another example of the courts ignoring the statutory language and not understanding basic technical and patent concepts. Cybersource invented a process for determining if credit card fraud was likely in an online transaction based on the relationship between the IP (Internet Protocol) information’s past association with the credit card. They sued Retail Decisions for infringement of their patent 6,029,154 and Retail Decisions counter that the claims were unenforceable because they were not directed to statutory subject matter.
The court first examined claim 3, which had undergone a reissue examination. Claim 3 is a method of first discovering the IP information normally used with the credit card and then determining if this indicative of a fraudulent transaction.
3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:
a) obtaining information about other transactions that have utilized an Internet address that is identified with the [ ] credit card transaction;
b) constructing a map of credit card numbers based upon the other transactions and;
c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.
The Court found this claim invalid under 35 USC 101, which states
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
Claim 3 is clearly directed to a process, but somehow the courts have decided to legislate from the bench and add additional requirements. Here, the court argued that claim 3 did not meet either of the prongs of the machine or transformation test. Which the court explained, “we held that a claimed process would only be “patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus; or (2) it transforms a particular article into a different state or thing.” Step (a) requires obtaining information about other transactions on the internet associated with the credit card. This is going to require a computer to access the internet and acquire this information and store it somewhere, probably on the computer. In order for the computer to access the internet it needs a modem, which is an electronic circuit that generates voltage signals that are sent over the internet to another computer. These are physical processes (transform voltages and currents) by machines. A computer is a machine as is a modem. This claim clearly meets both the machine and transformation prong of the test.
The court’s response that it would be possible for someone to just look at a previously compiled database of this information is inconsistent with the patent and reality. The court ignores that a patent is presumed valid, which means that it MUST try to find an interpretation of the claim that is valid. Instead the court does the exact opposite. A clear reading of the specification finds that a merchant will send credit card information to the internet verification system over the internet or at least over some communication system. That means the method is tied to a machine, namely a computer and communication system comprising multiple computers. It also means the computer is transformed. The voltages stored in its memory change. It makes no practical sense for this process to be undertaken by hand. The merchant cannot have a customer wait for hours for a person to review a previously created written record (because if it is a database on a computer – it’s a MACHINE) to create the map of credit card numbers. Then wait on the person to hand evaluate this information. This process only makes sense when carried out by machines. Retail Decisions is not arguing that they be allowed to carry the process out by hand to avoid the claims. This line of reasoning is completely disingenuous. This Courts’ reasoning makes a mockery of 35 USC § 282 and 35 USC § 101 and the machine or transformation test.
Claim 2 was a Beauregard claim—named after In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)—is a claim to a computer readable medium (e.g., a disk, hard drive, or other data storage device) containing program instructions for a computer to perform a particular process. This case made it clear that you did not have to claim the computer to meet 35 USC § 101 requirements. The Court just ignored this case and found claim 2 non-statutory for the same reasons as claim 3. Whatever happened to stare decisis? This is a clear case of Judicial Activism.
It is clear from the way the opinion was written that the judges felt the Cybersource patent was just too broad. However, their reason for rejecting the claim was not on Novelty (102) or nonobviousness (103) it was lack of statutory subject matter. The opinion seems to show a lack of understanding between the sections 101 and 102/103 of the code.
Non-Patent Attorneys on CAFC
This is another case that demonstrate that a requirement for being a judge on the CAFC should be that you were a practicing patent attorney, who actually prosecuted patent application. In this case, none of the three judges are patent attorneys and Bryson and Dyk do not have a technical background. The Court clearly did not understand how the invention worked. They seem to believe that computer are not machines and perform mental processes. They do not understand that computers are electrical circuits, the internet is made of computers, and all these computers are transforming voltages and currents, not unlike a transformer. The judges showed confusion between different sections of the code and they ignored the previous ruling of their own Court. Patent law is too important to be left to attorneys without the appropriate training.
The CAFC opinion in this case was issued on July 29, 2011. This case has alternatively been known as ACLU v. Myriad or the Myriad gene patent case. In a 2-1 decision, the Court of Appeals for the Federal Circuit (CAFC), stated that patents to isolated genes are patentable subject matter (35 USC 101), they found the comparing and analyzing method claims were not directed to patentable subject matter, and found Myriad’s method claims to screening potential cancer therapeutics via changes in cell are patentable subject matter.
Isolated Genes Claims
The opinion explains, “It is undisputed that Myriad’s claimed isolated DNAs exist in a distinctive chemical form—as distinctive chemical molecules—from DNAs in the human body, i.e., native DNA. Native DNA exists in the body as one of forty-six large, contiguous DNA molecules.” p. 41 Since isolated DNA is distinct and man made, it is patentable subject matter.
Moore in his concurring opinion points out:
In contrast, mere purification of a naturally occurring element is typically insufficient to make it patentable subject matter. For example, our predecessor court held that claims to purified vanadium and purified uranium were not patentable subject matter since these were naturally occurring elements with inherent physical properties unchanged upon purification. See In re Marden, 47 F.2d 958, 959 (CCPA 1931)
He distinguishes these cases as, “Isolation of a DNA sequence is more than separating out impurities: the isolated DNA is a distinct molecule with different physical characteristics than the naturally occurring polymer containing the corresponding sequence in nature.” P. 11 Moore He further states, “I decline to extend the laws of nature exception to reach entirely manmade sequences of isolated DNA, even if those sequences are inspired by a natural template.” P. 14 Moore. He further explains the difference between this case and purified vanadium or uranium as, “Given the chemical differences highlighted by Judge Lourie’s opinion and discussed supra, the mere fact that the larger chromosomal polymer includes the same sequence of nucleotides as the smaller isolated DNA is not enough to make it per se a law of nature and remove it from the scope of patentable subject matter. The actual molecules claimed in this case are therefore not squarely analogous to unpatentable minerals, created by nature without the assistance of man.” P. 15 Moore.
Moore further takes on the red herring[1] debate about whether these sort of patents result in promoting science and the useful arts. He points to David E. Adelman & Kathryn L. DeAngelis, Patent Metrics: The Mismeasure of Innovation in the Biotech Patent Debate, 85 Tex. L. Rev. 1677, 1681 (2007), as clearly showing biotech patents have resulted in increase innovation.
Method Claims to Comparing and Analyzing
The courts stated, “We conclude that Myriad’s claims to “comparing” or “analyzing” two gene sequences fall outside the scope of § 101 because they claim only abstract mental processes.” p. 50 This is clearly mistaken. The step of comparing requires a physical and transformative process. For instance, the process of sequencing a gene is a physical and transformative process it is not a mental process. There is no other way to compare and analyze two gene sequences without the physical process of sequencing. As explained by Myriad:
The steps of “extracting and sequencing DNA molecules from a human sample (is necessary)—before the sequences can be compared or analyzed. According to Myriad, the district court failed to recognize the transformative nature of the claims by (1) misconstruing the claim term “sequence” as just information, rather than a physical molecule; and (2) erroneously concluding, in the alternative, that Myriad’s proposed transformations were mere data-gathering steps, rather than central to the purpose of the claims. p. 49.
Method Claims to screening potential cancer therapeutics
The court in analyzing these claims states:
Starting with the machine-or-transformation test, we conclude that the claim includes transformative steps, an “important clue” that it is drawn to a patent-eligible process. Bilski, 130 S. Ct. at 3227. Specifically, the claim recites a method that comprises the steps of (1) “growing” host cells transformed with an altered BRCA1 gene in the presence or absence of a potential cancer therapeutic, (2) “determining” the growth rate of the host cells with or without the potential therapeutic, and (3) “comparing” the growth rate of the host cells. The claim thus includes more than the abstract mental step of looking at two numbers and “comparing” two host cells’ growth rates. The claim includes the steps of “growing” transformed cells in the presence or absence of a potential cancer therapeutic, an inherently transformative step involving the manipulation of the cells and their growth medium. The claim also includes the step of “determining” the cells’ growth rates, a step that also necessarily involves physical manipulation of the cells. p. 53
The sad thing about the court’s analysis above is that it clearly applies to the method claims for comparing and analyzing. You cannot compare and analyze without manipulating the cells. Even if a non-mechanical method were found for sequencing a gene (e.g., an optical, x-ray of other analysis) this is clearly a physical process and transformative. The court is being logically inconsistent between the method claims to comparing and analyzing and the method claims to screening potential cancer therapeutics.
While I do not agree with all the points made by Judge Lourie and Moore, these are thoughtful opinions by smart people who understand patent law and the underlying technology. Note that both of these judges are patent attorneys and have advanced technical degrees. Unfortunately, but not surprisingly, the same thing cannot be said about the dissenting opinion by Judge Byson. Byson is neither a patent attorney and does not have a technical background.
Dissent
Judge Byson’s dissent boils the question down to, “whether an individual can obtain patent rights to a human gene. From a common-sense point of view, most . . . observers would answer, Of course not. Patents are for inventions. A human gene is not an invention.” This shows Judge Byson’s complete lack of understanding of the underlying technology. Myriad did not patent a human gene, it patent an isolated human gene. Isolated gene’s have value (utility) that non-isolated genes do not or the plaintiffs would not have filed this lawsuit. Myriad did not patent a random segment of human genetic material, it patented a human gene that had diagnostic value. Discovering that diagnostic value was the product of human intelligence. An invention is a something created by man that has objective utility. The isolated gene is created by man and it has objective[2] utility. The dissent’s arguments show why the CAFC should be limited to patent attorneys.
[1] This is a red herring argument, because these same people do apply this standard to copyrights. Do Disney movies really promote science and the useful arts?
[2] By “objective utility” I mean to distinguish this from a creation that only has aesthetic utility.
On June 20th, the Supreme Court granted cert. for the second time in Mayo Collaborative Services v. Prometheus Labs., Inc, Supreme Court No. 10-1150. This case is about patents 6,355,623 and 6,680,302 to Prometheus, which claim methods for determining the optimal dosage of thiopurine drugs used to treat gastrointestinal and non-gastrointestinal autoimmune diseases. Prometheus sued the Mayo Clinic for infringement and Mayo’s defense was that the patents are invalid as not being patent eligible material under 35 USC 101.
The House had their first ever debate last night (6/22/11) on the Constitutionality of a piece of legislation under the new rules requiring the House specifically address the Constitutionality of legislation. The major supporter for the Constitutionality of America Invents Act was Lamar Smith, Republican from Texas and the major Congresswoman challenging the Constitutionality was Marcy Kaptur, Democrat from Ohio.
The following letter from a number of Law Professors deals with the Constitutionality of a First-to-File system as contemplated by the America Invents Act (H.R. 1249 and S. 23)
The following letter from a number of Law Professors deals with the Constitutionality of a First-to-File system as contemplated by the America Invents Act (H.R. 1249 and S. 23)
June 17, 2011
By Email
Speaker John Boehner
Office of the Speaker
H-232 U.S. Capitol
Washington, DC 20515
Democratic Leader Nancy Pelosi
Office of the Democratic Leader
H-204 U.S. Capitol
Washington, DC 20515
Re: Unconstitutionality of “First-Inventor-to-File” Provision in H.R. 1249
Dear Speaker Boehner and Leader Pelosi:
We are writing concerning the issue of the unconstitutionality of § 2 in H.R. 1249, the provision titled “first-inventor-to-file.” It is the belief of the signatories to this letter, all of whom are law professors who specialize in intellectual property law, that this provision is unconstitutional under the Copyright and Patent Clause in Art. I, § 8, Cl. 8.
Section 2 of H.R. 1249 violates both the plain terms of the Copyright and Patent Clause and the historical interpretation of this clause by Congresses and the federal courts. Although there are many legitimate concerns about H.R. 1249’s impact on innovation, this unconstitutional provision by itself is sufficient to justify withdrawing this bill from consideration. At a minimum, this is a justifiable reason supporting the 54 House Members who have joined the June 1, 2011 letter to the Rules Committee in expressing their concerns about the constitutionality of H.R. 1249.
H.R. 1249 Unquestionably Takes Patents Away From Inventors
Although the word “inventor” appears in the title in § 2, which confusingly uses the phrase “first-inventor-to-file,” it nonetheless creates the same first-to-file rights that existed in the patent reform bills that had been introduced in prior Congresses and which were universally recognized as creating a first-to-file patent system. It also creates the exact same first-to-file rights that exist in other countries that have adopted first-to-file patent systems in both name and substance, such as Canada. Section 2 has to create a first-to-file patent system if only because one of the primary justifications for this provision in H.R. 1249 is that the United States should harmonize with other countries’ first-to-file patent systems. In sum, despite the confusion created by its title, H.R. 1249 unquestionably creates a first-to-file patent system.
The Constitution Only Empowers Congress to Give Patents to “Inventors”
The basis of the 220-year-old first-to-invent patent system in the United States is the Copyright and Patent Clause, which states that Congress has the power:
“To promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S. Const., Art. I, § 8, Cl. 8 (emphasis added).
The operative terms for patent law is that Congress is empowered only to “secure[e]” to “Inventors” their “exclusive Right to their . . . Discoveries.”
In the Founding Era, the term “Inventors” was defined in the newly independent United States of America as referring only to first inventors. In Samuel Johnson’s 1785 dictionary, often relied on by the Supreme Court as an authoritative source of meaning in the
Founding Era, an “inventor” is defined as “one who produces something new; a devisor of something not known before.” Moreover, Johnson defined a “discoverer” as “one that finds anything unknown before.” Samuel Johnson, A Dictionary of the English Language (6th ed. 1785). Johnson was not alone in thinking that “Inventors” referred only to first inventors. St. George Tucker, for instance, defended the Copyright and Patent Clause against criticisms that it empowered Congress to create commercial monopolies by observing that “nothing could be more fallacious,” because this constitutional provision limited Congress to securing only an “exclusive right” in “authors and inventors.” St. George Tucker, Blackstone’s Commentaries: With Notes of Reference to the Constitution and Laws of the Federal Government of the United States and of the Commonwealth of Virginia, vol. 1, appendix (1803): p. 266.
Moreover, the First Congress, whose acts are often recognized as probative of the original meaning of constitutional terms, explicitly rejected the English practice of granting patents to importers of technology, recognizing that importers were not first and true inventors. During the drafting of the bill that became the Patent Act of 1790, the House committee decided not to follow the English practice of extending patent rights to the “first importer” of overseas inventions. Representative Thomas Fitzsimmons wrote: “The 6th Section, allowing Importers, was left out, the Constitutional power being Questionable.” See Karen E. Simon, The Patent Reform Act’s Proposed First-to-File Standard: Needed Reform or Constitutional Blunder?, 6 J. MARSHALL REV. INTELL. PROP. l. 129, 141 & n. 95 (2006-2007) (quoting congressional record).
Thus the Patent Act of 1790 authorized the grant of a patent only to a person who has “invented or discovered any useful art . . . not before known or used.” See Patent Act of 1790, § 1, 1 Stat. at 109-110. The Patent Act of 1790 further provided for termination of a patent “if it shall appear that the patentee was not the first and true inventor.” See Patent Act of 1790, § 6, 1 Stat. at 111. This uniquely American first-to-invent requirement was readopted in all patent statutes enacted by successive Congresses in 1793, 1836, 1870 and 1952.
As the famed patent law historian, Edward Walterscheid, whose work has been relied on by the Supreme Court in many patent cases, has written: “Implicit in the use of the terms ‘inventors’ and ‘discoveries’ in the intellectual property clause is the premise that before an exclusive right can be granted, the discovery to be patented must be novel. . . . Simply put, novelty is a constitutional requirement.” Edward C. Walterscheid, The Nature of the Intellectual Property Clause: A Study in Historical Perspective (Buffalo: William S. Hein & Co., 2002) at p. 310-11 (emphasis added). Walterscheid further writes that James Madison and early Congresses embraced a uniquely “narrow” conception of novelty compared to England (which permitted patents for importation), as they believed that for an invention “to be patentable in the United States a discovery had to be original to the inventor.” Id. at p. 312-13.
Supreme Court Confirms Patents Must Be Granted to Inventors
In numerous court decisions since the early American Republic, Supreme Court Justices have repeatedly recognized that the patent statutes imposed this constitutional requirement. In 1813, Chief Justice John Marshall, riding circuit, wrote that the “constitution and law, taken together, [give] to the inventor, from the moment of invention, an inchoate property therein, which is completed by suing out a patent.” Evans v. Jordan, 8 F. Cas. 872, 873 (C.C.D. Va. 1813) (No. 4,564) (emphasis added).
In the Supreme Court’s decision in Stanford v. Roche just last week, Chief Justice Roberts quotes from many of the Supreme Court’s decisions over the past 220 years to establish that “Our precedents confirm the general rule that rights in an invention belong to the inventor.” This included, for instance, the decision in United States v. Dubilier Condenser Corp., in which the Supreme Court held that U.S. patents have long secured “the result of an inventive act, the birth of an idea and its reduction to practice; the product of original thought.” 289 U.S. 178, 188 (1933) (emphasis added). Justice Joseph Story, recognized by patent scholars today as one of the founders of American patent law, wrote that “No person is entitled to a patent under the act of congress unless he has invented some new and useful art, machine, manufacture, or composition of matter, not known or used before.” Bedford v. Hunt, 3 F. Cas. 37, 37 (C.C.D. Mass. 1817) (No. 1,217) (emphasis added).
Congress May Not Define “Inventors” However It Wishes
Some supporters of the constitutionality of § 2 have stated that the meaning of the word “Inventors” in Art. I, § 8, Cl. 8 should be left to the policy discretion of Congress to interpret and apply in its patent statutes. But this cannot be a valid principle for applying constitutional provisions to Congress, because it would mean that every word in every provision of the Constitution should be left to the policy discretion of Congress as to how it should be applied to American citizens. Under this approach, Congress could freely redefine the meaning of “speech” in the First Amendment, or Congress could freely redefine the meaning of “due process” in the Fifth and Fourteenth Amendments. Certainly Congress has some discretion within the scope of its enumerated powers to enact legislation; this is why the Framers adopted the Necessary and Proper Clause. But the very idea of a Constitution that specifically enumerates limited powers in the federal government through expressly worded provisions requires that the limiting terms in these provisions not be read out of the Constitution by interpretative fiat. If “Inventors” is to have any meaning whatsoever in defining and limiting the scope of Congress’s power to enact patent statutes under the Copyright and Patent Clause, it can only mean what it has been consistently interpreted to mean for 220 years: patents may be secured only to the first inventors.
Supporters of the constitutionality of § 2 have further claimed that the instances in which patents are denied to first inventors given their post-invention activities, such as public use or abandonment, suppression and concealment of an invention, prove that the Constitution does not require that patents go to first inventors. Again, this is a nonsensical principle of constitutional interpretation. The Constitution establishes the presumption that first inventors are secured a patent, but it does not mandate that first inventors must receive patents regardless of their own actions. Thus, Congresses and courts have identified instances in which post-inventive actions by a first inventor can result in a default on the right to receive a patent. There are myriad examples—such as strategic behavior by an inventor in commercially exploiting an invention as a trade secret long before filing for a patent or an inventor’s publicly disclosing an invention and thus creating reasonable reliance interests in third parties that the invention is in the public domain—but they all entail post-invention actions that result in a substantive or procedural default by the first inventor in receiving a patent. This is no different from the constitutional practice of denying to felons the right to vote or the right to own firearms or restricting every American citizen’s due process rights through statutes of limitation, and so on.
Accommodating Foreign Laws Is No Excuse to Violate Constitution
Lastly, the supporters of the constitutionality of § 2 have alleged that Congress’s longstanding practice of accommodating foreign countries’ first-to-file rules when foreign inventors apply for patents in the U.S. somehow disproves the constitutional argument against this first-to-file provision. But such laws prove no such thing. The Constitution applies only within the jurisdictional boundaries of the United States of America, and thus it is merely an act of comity for Congress to permit foreign inventors who have created inventions in foreign countries to apply for U.S. patents; under the Constitution, Congress may permit or refuse such a patent application by discretionary fiat. This is why the United States has entered into treaties to secure international protection of patent rights. It is also why, since the early American Republic, foreign inventors working in foreign countries have always required Congress to enact special statutes to permit them to apply for U.S. patents. But the constitutional requirement for U.S. inventors is neither discretionary nor unclear: It requires that the laws “securing” patents to “Inventors” who are living and working in the United States may do so only for those “Inventors” who have created “Discoveries”—those who are first to invent, not first to file for the patent itself.
In closing, it is our belief that there is a serious question concerning the constitutionality of the first-to-file provision in H.R. 1249. But regardless of whether one agrees that a first-to-file system is unconstitutional, it is entirely appropriate that this debate occur in the deliberations concerning whether H.R. 1249 should be enacted by Congress. The constitutionality of a statute under consideration by Congress, in addition to whatever policy issues may be raised by it, is always something that should be openly and forthrightly considered by Congress, which has as much a duty to uphold the Constitution as do the Executive and Judicial branches.
Sincerely,
Daniel B. Ravicher
Lecturer in Law, Benjamin N. Cardozo School of Law
Executive Director, Public Patent Foundation
Adam Mossoff
Professor of Law
George Mason University School of Law
Lateef Mtima
Professor of Law and Director,
Institute for Intellectual Property and Social Justice
Howard University School of Law
Kali Murray
Assistant Professor of Law
Marquette University Law School
Sean Patrick Suiter Adjunct Professor of Law, Creighton University School of Law Visiting Professor of Law, Peking University School of Law
Dale L. Carson
Adjunct Professor of Law
Quinnipiac University School of Law
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