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A Report on the Santa Clara Conference on Software Patents by Tkilgore ~pj
Saturday, November 24 2012 @ 05:26 AM EST

Groklaw member Tkilgore attended the Santa Clara Law conference Solutions to the Software Patent Problem on November 16th for Groklaw, and he has now sent us his report. We have a second one due also later, but let's get started with his.

He is a mathematician, so that is his frame of reference, and I hoped that he'd be able to raise questions that might help conference speakers to see a side of things that they otherwise might not.

As you know, Groklaw stands for the proposition that software is algorithms, nothing else, and that algorithms are mathematics, and hence unpatentable subject matter, so I hoped he'd be able to present that thought. Sadly, although he tried to ask questions, he was never called on.

However at the end of his overview of the day, he writes about his impressions of the day, how the room seemed to be divided into two groups, 1) programmers and academics who teach computer programming, and 2) lawyers or those representing corporate interests. It gives an interesting and unique flavor to his coverage, one not to be found anywhere else.

A Report on the Santa Clara Conference on Software Patents
~ by Tkilgore

The conference was a one-day conference, which started at 8:50 am and ended at 5:20 pm with a a reception afterwards from 5:30 to 6:30. There was a lunch break from 12:15 to 1. The schedule can be found at the conference website. It was adhered to closely.

The morning program consisted of three panels. The first was called a "Keynote" and was titled "What is the Problem?" The second was "Panel #1: Legal Reform, Part 1." Then after a coffee break we had "Panel #2: Agency Reform."

The afternoon panels were called "Keynote #2: Views from the Trenches" and then "Panel #3: Legal Reform, Part 2." After this an afternoon coffee break, then "Panel #4: Self Help" and at the end "Keynote #3."

Some of you who were not in attendance were able to view the sessions live, except for the talk of Richard Stallman who refused to have his talk streamed on the ground that Silverlight was in use. Since I was actually present, I do not have the live streaming to look at, and thus my presentation of what happened is based upon my notes, which in what follows might be embellished by memory and thus not word-for-word correct.

Also, I got tired toward the end. I also tended to write less when things seemed to get repetitive, when the presentation seems to echo a well-known position, or was a talk which presented the activities of an organization, when those details can best be found in the organization's own online resources.

The conference begins:

Eric Goldman opened the conference at 8:50 with a 10-minute introductory talk. He explained that the conference was organized and held under the premise that software patents are a problem, and the idea behind the conference is to look for solutions to the problem. Though there is a broad consensus about the existence of a problem, not everyone is in agreement about its precise nature, nor in agreement about proposals for solutions to the problem. So, that is why the conference is taking place. He mentioned the EFF and IEEE as co-sponsors and several others, too. I could not catch all the names of the co-sponsors; the list presumably coincides with the list on the conference web page (Berkeley Center for Law and Technology, EFF, IEEE Santa Clara Section, IEEE CNSV, and Cooley LLLP).

Goldman then added that many of the conference resources and materials are and will be presented at the conference web page (see above) and at wired.com (these materials are also linked from the conference web page). As I am transcribing these notes, the text of several of the talks has indeed been posted, and one hopes for more.

Dr. Goldman further explained that the conference schedule was very tight and they were going to run a very tight ship to keep on schedule, which was done just as he had said. He said that there would be an online poll on Twitter after each panel, and the participants could vote about which presentation or "solution" to the software patent problem presented by the respective panelists that they liked best. I myself did not take part in this survey, as I came to the conference only with "old technology," ready to use pen and paper but not equipped to participate in electronic voting procedures.

Then, he stepped down and the first panel began.

Keynote #1: What is the Problem? ( 9:00 - 9:40 am )

The moderator of this panel was Andrew Chin of the Uinversity of North Carolina [Let’s Create a ‘Concrete Causation’ Standard for Software Inventions], and the panelists were Richard Stallman and Kent Walker from Google. First to speak was Richard Stallman, then Kent Walker. Time was allotted for questions at the end.

Stallman [Giving the Software Field Protection from Patents]:

Richard Stallman started his talk consistently with his well-known principles, by requesting that live screening be turned off, as he had been given the information that it was using Silverlight, which, he said, is non-free. When it was confirmed to him that the recording had been turned off, he proceeded.

His opinions on the topic of software patents and on the subject of "intellectual property" in general are well-known, but the repetition of those ideas at a conference on the problems of software patents is both timely and appropriate. "Why are software patents bad?" he asked, "Why are patents on ideas bad? Software patents interfere with freedom. Software *does* need patent protection. It needs protection from patents!" Patents are different from copyright. We should not use the term "intellectual property" as an inclusive term. "Intellectual property" is bad terminology. One needs to talk about specifics, not generalities. So, what is bad about patents?

Stallman then proposed a comparison to the bad effects of software patents by supposing that music had been subject to a series of "musical idea" patents from the 17th and 18th centuries onward. Patents covering riffs, chord progressions, and such. What would have happened to Beethoven? His contribution to music was the combined effect of what he did, not the individual components (many of which were borrowed from others).

Patents on software have a similar effect. Software developers are threatened by patents. Patent systems should (should have) avoided that. Patents are not property. They are government-given grants. Government could take away as it has given. But how to ask for solutions? We need to ask for software to be a "safe harbor." Stallman then qualified this by explaining that software needs to run on a "general-purpose machine" (in order to stay within this safe harbor). Diamond v. Diehr, he said, required hooking up a rubber-curing machine. The CAFC then twisted this decision around to mean that the computer was what was patented, not the rubber-curing machine.

Stallman then concluded by saying that people keep looking for half-solutions. That is a mistake. We need to protect all software developers, not just some. We need to get the support of all software developers, not just some. We also need to avoid future stretching and misuse of the boundaries of what can be patented.

Walker [Don't Let Trolls Exploit Patent Systems Flaws]:

Kenneth Walker (from Google) then spoke. He mentioned first the following points:

  • There are lots of patent challenges to Google.
  • Article I Section 8 of the constitution permitted patents as "support for the useful arts," drawing an obvious negative comparison to current reality.
  • A patent examiner has on the average 20 to 24 hours to evaluate a patent.
  • 4000 patent suits were initiated last year.
  • Troll claims cost US companies an estimated $29 billion a year in settlements.
  • Building the Panama Canal cost $12 billion in today's dollars.
  • It is products and services, not patents, which really serve the country.
Then he asked, why do trolls hit tech companies? And his answer was that there were so many patents with broad and vague claims, including claims which included or covered technology which had not really been invented yet when the patent was filed.

He characterized the result as classic "dead weight social costs."

As a solution to the problem, he said that we need to refocus the patent system to promote real innovation. The CAFC and the Patent Office, he said, have recently taken positive steps. But we need to do much more. He listed the following points:

1. Patents should be about creative production, not creative writing.

2. Weed out bad software patents already issued.

3. We need clear rules about damages. We need easier ways to collect costs for frivolous claims.

The above, he said, will not solve the larger problem, though. We need for the whole system to be refocused.

The floor was then opened for comments and questions. Dr. Chin made a comment which at this point I do not fully know how to interpret, that we "need a concrete causation problem."

Then there was a question for Richard Stallman, "Do you have any good definition of software patents?" His answer: "Any software which runs on a general purpose computer should be excluded from patentability."

A series of several more questions for Stallman then followed: He was asked whether some very special programmers might deserve patent protection (presumably because what they had done was particularly ingenious or valuable). His answer was, "No."

It was at this point, I think, that he was asked, too, whether he could conceive of such a thing as a "good" software patent, and he said "no" to that, too. He further explained that to make such distinctions would make some people more protected than others, thereby opening the door to abuse and also thereby splitting the class of people whom he was attempting to protect into factions, and that it is also nearly impossible to make such distinctions about what is really, really valuable and what is not quite so valuable as all that. He further pointed out that there is lots of really difficult mathematics and nobody ever said it is patentable even though some of that mathematics is both famous and essential for modern life.

He was asked about comparing software to other fields where things are patented on a regular basis and nobody is complaining (and so, then, what exactly are software people complaining about and why is it that they are not just bellyaching?). His response was that software patents are patents on thought. The effects of software patents are not confined to specific industries and special groups of people. *Everybody* is doing software development. He explained that this means, essentially, the whole population and practically every branch of business, industry, and technology. Large and small companies are writing their own software for their own use, either hiring programmers or writing it themselves. Thus, he said, software patents are a burden on all of society and are an infringement on human freedom, in a manner which does not apply to patents in any other field.

At this point, questions for the Keynote #1 panel were cut off, due to the rigid schedule.

My comments:

In this "Keynote" session, it was certainly agreed that software patents are a problem, but differences in approach were already manifest. Richard Stallman described patents on software as patents on thought, which amount to patents on the use of the human brain to reason and to solve problems by the application of reasoning. Thus, to Stallman a patent upon software is a direct threat to human freedom. Stallman got a lot of obvious agreement from a large portion of the audience, too.

On the other hand, Kenneth Walker focused mainly upon the deleterious effects of "bad" patents and the economic chaos caused by "trolls" and by the misuse of patents as competitive weapons between companies. These two points of view, which are in fact very different from each other, were manifested in many other talks during the conference and also in many of the questions which were asked from the floor. Also, the idea of trying to find common ground between these points of view and trying to find a program or programs of action which everyone could support was an oft-recurring theme.

Panel #1: Legal Reform, Part 1 ( 9:40 - 10:50 am )

The panelists were James Bessen (Boston U. School of Law) [ Can New Fees Fix the Patent System? Experts Weigh In], Colleen Chien (Santa Clara U. School of Law) [Tailoring the Patent System to Work for Software and Technology Patents], Brian Love (Santa Clara U. School of Law) [ How PTO Fees Could Decimate Patent Trolls], Christal Sheppard (U. Nebraska College of Law) [Congress (In-) Action: Resolving a Court Created Gordian Knot on Software Patents]. Two commenters were also on the panel, Michael Meurer (Boston U. School of Law) and Jason Mendelson (Foundry Group).

James Bessen led off by pointing out that there are economic aspects of software patents, and he compared the situation in the EU to that in the US. In the EU, he said, there has been restraint on software patents and in the US there has been exponential growth. He then listed a series of court decisions which provide, he said, some limits and restraints on the patenting of software:

1972: Benson and Flook
2012: Bilski
2012: Prometheus
(no date given) CLS Bank
1966: Graham
2007: KSR
(Disclaimer: I might have missed something he said about these decisions. He was moving fast)

In spite of the negative decisions which were intended to slow or stop software patents, he said, the economic forces which have favored them have been irresistably strong. Money was the main driving force, and it is necessary to do things to inhibit the pressure of money. Meanwhile, there have been a lot of bad consequences.

He explained that patents are almost impossible to search because the words might be quite different. For example, one would not find "slide to unlock" whle searching for "activating the function" (or was it "activation function"?) and this could literally be costly. I think I remenber he said that this example was based upon an actual patent search which really did take place, really did come up with nothing, and the failure to snag anything relevant was indeed quite costly to the company which did the search and failed to discover the patent which impinged on what it was about to do with its commercial product.

He explained that patent applications and descriptions are "full of magic words" which are meant to pretend to describe exactly and to increase the appearance of novelty, such as "slide to unlock" containing the words "continuously moving the finger." In short, "word games" are played, which involve and entangle the courts, the patent drafters, and the USPTO.

Again, he said, the pressure for all of this is money, resulting in continuing and concerted efforts by those who want the patents to get around any previous restrictions.

He said that what is needed is a "Pigovian tax" (a piece of economist jargon; see Wikipedia). He compared the situation with software patenters to that of polluters, in that there are social costs for software patents and social costs for pollution, but those who take out software patents do not need to pay those costs, just as polluters do not need to pay for having caused pollution but instead the costs are shunted off onto all of us. Thus, one of his central suggestions is to change the law so that "polluters pay."

Among the social costs, he mentioned two items: deadweight loss from market power and patent troll litigation. His proposed solution, then, was to mitigate those effects by changing the fee schedule for patents. He would escalate the fees over the years for the renewal and maintenance of patents. This, he said, would provide a strong disincentive to trollish behavior, because patent trolls are typically shoestring operations which expect to hit a big jackpot and right now they need pay practically nothing for the maintenance of their patent portfolios. In this regard, he pointed out that in some other countries, Germany in particular, the kind of escalating or steeply progressive scale of renewal fees for patents which he thinks should be adopted is already in place.

Another proposed reform would be to tie the cost of application for a patent to the field in which it was to be issued. Significantly more fees should be charged in fields where the probability of lawsuits is shown to be high. Adoption of this measure across the board, over all fields, would directly affect software patents without mentioning software patents by name. Fees, he asserted, are part of the solution.

He concluded his talk with the words, "See if you can find words to change the world. But remember. Money talks. BS walks."

My comment:

A very serious and quite credible analysis was presented here of the economic forces which have driven the expansion of software patents, overcoming any attempts to put on the brakes, and then of the deleterious effects upon business and the economy which have ensued.

When the time came for questions from the floor, I did not get called upon, either at this time or any other. So I did not ask any question. But the presentation certainly gave rise to one. I would have asked, in view of the apparent inevitability of the economic forces which were thus depicted, that just how (without stepping outside this analysis) could any attempt to mitigate the obvious bad effects by such things as fee adjustments be expected to take place? After all, the people who are making so much money out of a system which seems to bend to the Almighty Dollar would certainly see that coming, and they would move heaven and earth to stop the changes, wouldn't they? I mean, we seem to have had trouble making polluters pay for pollution and for similar reasons. But this question remained unasked and unanswered.

Chien: Colleen Chien was up next. She pointed out that the problem of software patents was not new. She mentioned in particular a Presidential Commission in 1967 which argued against software patents, and a public hearing which took place in 1994. Why, then, has the problem persisted? Answering her own question, she said that the interests of Big Pharma short-circuited the interests of the tech industry. We need differentiation.

Then she mentioned that there is a perceived problem with the TRIPS treaty and related international agreements. Article 27 of TRIPS, she said, contains a clause that "patent rights will not discriminate between fields." She then tried to debunk the idea that TRIPS causes a real problem, mentioning that surgical methods are exempted from patent enforcement (i. e. surgeons can not be sued for violating a patent if they apply some patented procedure during a surgical operation), also certain exemptions relating to drug patents, and several other examples which I could not write down.

How can such exceptions be done, she asked, and answered by saying that exceptions are OK if they have narrow, well-defined application and they do not short-circuit "legitimate interests." She then explained that tech patents are different from patents in other areas, because

  • it is impossible to search patents on tech and software
  • infringement is usually inadvertent
  • small inventions, patented, are used in big products
  • short production cycles
  • trolls

Such criteria are already applied, she said, in courtroom cases about software and technology patents, especially the one about small inventions in big products. Based upon this analysis, she proposed that an exception be carved out for software patents, similar to the ones mentioned above for medical practice. There should be a clear test for the exception. She commented that the patent system as a whole has no legitimate interest in unreasonable cases.

Finally, she mentioned two other tangible steps which ought to be taken:

1. significant increase in patent maintenance fees after 5 years

2. carve out a limited "innocent user" exemption

Love:

The next panelist was Brian Love, also from Santa Clara Law School. He has done a study which analysed what happens during the 20-year cycle of a patent, with some detailed collection of data, and this talk was based upon that study. It is not possible to give justice to the presentation of what was essentially an academic article in this brief description.

One of his main points was the need for term reduction, especially for software patents, that the standard 20-year term is just too long a term to fit software. Then, expanding on that point, he pointed out what he called "the bad news," that 17 to 20 years down the road is precisely the time when most troll patents are litigated. The observed facts and implications:

  • Product companies and Non-Practicing Entities (NPE's) tend to enforce their patents at opposite ends of the patent term spectrum.
  • The last three to five years of the terms of technology-related patents are primarily of benefit only to trolls.

In fact, the situation is such that 60% of the patent lawsuits filed by trolls would be impacted if there were a three-year shortening in the life of the patents. Other lawsuits filed in this last three years period would be affected, too, suits filed by "product companies which are acting like trolls" in order to make a last attempt to monetize their patents. He mentioned Kodak and Encyclopedia Britannica as specific examples of companies showing this "troll-like" behavior.

Impediments to an attempt to shorten the terms of technology patents could be foreseen to come from TRIPS and from congressional gridlock.

As an alternative to statutory change, patent maintenance fees could be adjusted upon an escalating scale as time passes. The PTO has the right to adjust its own fees. Several other countries are already doing similar things with fee scales, including UK, Canada, and some others.

This essentially was the end of Brian Love's presentation.

My comment:

Both Brian Love and the previous panelist, Colleen Chien, have mentioned maintenance fees for patents. Some others, later on, mention these fees, too. It is not easy to make clear what the issue is about, just from some quickie notes about the talks, so what follows is a distillation of what several people said about the issue of maintenance fees for patents and why a change would help.

When a patent is filed, there is an application fee. At fixed intervals after the patent is granted, up to the 20-year maximum life, the patent holder must pay a maintenance fee in order to keep the patent in force. If the maintenance fee is not paid, then the patent automatically expires when the maintenance fee is delinquent. Many patents in fact do expire at due dates of maintenance fees precisely because nobody bothers to pay the fee. The maintenance fees for US patents are currently quite low, also roughly the same at the various due dates, which occur at periods something like 2 years, 5 years, 12 years, and so on (I don't remember exactly but some panelist, probably Brian Love, put up a table). The maintenance fees in other countries increase dramatically as the patent gets older. The reasoning which justifies that is, if the patent is valuable to the holder because of actual use, then the holder will renew it. If it is not actually valuable, the holder will not want to spend the money for a worthless patent.

So, how is the maintenance fee schedule deemed to affect patent trolls?

Well, patent trolls typically buy up lots of patents, treating them like lottery tickets and hoping that one of those patents will win the Irish Sweepstakes. The troll relies upon having few or no fixed expenses in order to do this, and produces nothing and has no income unless someone licenses one of its patents, or the entire portfolio. Thus, the troll is taking great advantage of the extremely low patent maintenance fee in order to maintain lots of patents. A significant increase in the maintenance fees, therefore, is a significant hit against typical troll behavior. This is especially true, moreover, because the observed behavior of trolls is to buy up older patents which either nobody noticed or nobody enforced, and then try to take advantage. If the maintenance fees were to go up sharply in the later years of a patent's life, then, the current pattern of troll behavior would be severely affected.

Several other countries have deemed it good to increase steeply the maintenance fees as patents get older, and have put a sliding fee scale into effect. The US has not done so. In any event, the above comments are intended to explain what the discussion of maintenance fees was about.

Sheppard:

Next up was Crystal Sheppard, University of Nebraska School of Law.

In a nutshell, she said that the problem was Congressional action or, better, inaction, toward resolving a court-caused problem. She mentioned specifically the following court decisions:

  • Gottschalk v. Benson
  • Diamond v. Chakrabarti
  • Diamond v. Diehr
  • (some others)

Asked the audience whether they expected anything positive from Congress (show hands, please) and no hands went up. Shrugged, and said this just points up the problem. So, short of getting some legislation passed, what *can* be done? In essence, the problem is to change the law without passing a law.

Falling short of an actual change in the law, she suggested trying to obtain a "Sense of Congress Resolution" which would serve to tell the court system what Congress thought it was enacting, when it passed the existing laws. This would itself, of course, require a Congressional process to be pursued, but it might be more feasible than the actual enactment of legislation. Such a resolution ought to say that a patent on software is not listed in sections 102, 103, and 112, and requires "transformation of a non-general-purpose machine."

She said that TRIPS is not an impediment to such a resolution being passed. Finally, she said that if Congress can not act by passing such a "Sense of Congress" resolution, it should formally and officially abdicate and bow out of the process.

Meurer and Mendelson:

Michael Meurer and Jason Mendelson provided comments and analysis, and then the floor was opened for an extremely brief discussion. It was time for the morning coffee break, and I don't think that there were very many questions. I do not have a record of any. Actually, I do not think that there were really very many things to ask. The lectures were clear, focused upon measures to tweak the system so that it functions a little bit better. Probably because of that focus the panel was exciting mainly to the attorneys in the audience.

Coffee break.

Panel #2: Agency Reform ( 11:05 - 12:15 )

The panelists are listed as:

Peter Menell, UC Berkeley School of Law [ Promoting Patent Claim Clarity]
Arti Rai, Duke Law School [Let's Tame Software Patent Claims: Lessons from Bioinformatics]
John Allison, McCombs School of Business, The University of Texas at Austin
Michael Risch, Villanova Law School
Commenters: Amy Landers, McGeorge College of Law
Christina Mulligan, Yale Law School

The first speaker was Peter Menell (I think). He gave some background of vague patents. He said that the problem, in fact, goes a long way back, and he quoted several rather extensive complaints and critical descriptions about vagueness which dated all the way back to the middle of the 19th century. Some of these complaints were even written by people in charge of the patent office, and some of the complaints were attached to rejections.

He said that the patent office "has to play an essential role" in handling this issue. As evidence that no one else can do the job right, he described a simulated experiment, more or less of the form of a "moot court" in which the judges of the CAFC were asked to participate as individuals, outside of their official capacity, and asked to evaluate patents. They were given some samples of (vague) patents to evaluate. The results, he said, were all over the map and showed no pattern at all -- except that it is impossible to make rational and coherent and objective decisions when confronted with vagueness.

Summing up, he said that the time may be right for clarifying claims and constructions. By this, he meant that the PTO has to insist upon clarity.

John Allison was next up. He opened his talk with the statement, "I am not a great fan of software patents, but I think they are inevitable." He listed the two biggest problems with software patents as

1. claims are not clear
2. inadequate disclosure (not sure what this meant)

He does not believe that software or any other area should be "singled out" for special treatment regarding patents.

He mentioned that he is involved in a very big statistical study which will "probably turn into a retirement project" about the conformity of patents with section 112.

He said that the biggest problems seem to occur due to patent attorneys gaming the system and said again that he believes solutions and reforms which are neutral toward software and technology would have the best chance to succeed and would also have a strong positive effect on the problem of software patents.

Arti Rai mentioned that she had a background in biotech and pharma before entering law. She proposed as a solution a change in the practice of the patent office, not changes in the law.

She mentioned that there has been a flood of patent applications about data processing. The claims are (typically) very vaguely written and are incomprehensible. In 2003, she said, 77% of patent applications had article 112 problems, and rejections (not clear whether this was 77% of all applications, or 77% of biotech applications, or 77% of data processing applications).

For tangible improvements in the system:

1. Written descriptions need to be improved. In biotech patents, an actual formula is required. A patent application on "quadratic discriminant analysis" given with no algorithm attached needs to be improved. By this, she seems to imply that if recently adopted standards for biotech patents were applied to software, too, we would all be better off.

2. Distinct claims and definiteness need to be enforced.

Comment: Algorithm or no algorithm, a patent on "quadratic discriminant analysis" appears to this mathematician to be nothing more than a patent on mathematics. Am I wrong? I would have asked about this during the Q & A but did not have the opportunity.

Next up was Michael Risch. His views are familiar to many of us from the previous discussion here, on Groklaw. He made the following points:

We need to apply existing laws more rigorously.

We need to focus on the patents which are being litigated and reviewed.

"Stallman will not agree with this approach."

The reason we have the problem pre-dates the CAFC. It is due to a flood of new technology, combined with the ignorance of examiners (and judges?).

He gives examples about how to apply current rules:

1. Patents on "pushing bits around" : Does the patent actually do something, or is it a mere building block? (see Gottschalk and Benson)

2. Novelty. Functional claiming has to go. The idea of a "new machine" is wrong. Searching works better now, so require it to be used seriously.

3. Obviousness. He mentions the Groklaw discussion and the view that the invention was the general-purpose programmable computer and not the programs which people write to run upon it, which therefore will all be in some fundamental sense obvious. He explicitly rejects this characterization, and says that the problem with obviousness is: What was the problem? That might be the biggest part of the problem. Because of this, he is unwilling to reject categorically the patenting of software.

My comment:

It is not clear to me what Risch's boundaries are for patentability. If patentability hinges upon non-obviousness due to having asked the right question to solve, are we not back again to patentability of ideas and concepts? The logic genuinely escapes me. I wanted to ask about this in the Q & A at the end of the session, but I did not get called on.

The commenters brought up the following points:

Patents are "gotcha" game because it is practically impossible to search patents.

In regard to claim construction and closure, what is the likely impact of these proposals? Improvement of claims, obviously. But will that be a panacea in court? Probably not. Nevertheless, the solution of this problem will also have the positive effect of making patents more useful for their original purpose (as a positive encouragement of technological progress). The commenter does not believe that this improvement would have any effect on the amount of R & D which goes on. Also does not believe that the envisioned improvements of the system would decrease the general eagerness to file for patents.

Lunch

Keynote #2: Views from the Trenches ( 1:00 - 2:00 )

The speakers were:

Moderator: Kristen Osenga, University of Richmond School of Law
Caroline Dennison, United States Patent and Trademark Office
Honorable Edith Ramirez, Federal Trade Commission
Honorable Paul Grewal, Northern District of California

Caroline Dennison led off, giving the views of the patent office. For them, the first question is, what is a software patent? Are software patents such things as

  • business method patents
  • (I missed one)
  • applied things such as measurement and testing?

After this, what, exactly, is the problem? Is the problem that

  • the patent was issued?
  • the patent is problematic to enforce?
  • is vague?
  • is obvious?
  • does not represent a technological advance?
  • is excluded by statute?
  • or what?

Tangible responses of the patent office include the existence of the Patent Quality Assurance office, which will request comments from the public. Other tangible steps include

  • retraining agents
  • partnerships with various outside groups, professional societies, trade groups, and such.
  • opening a branch office in Silicon Valley.

Edith Ramirez, from the FTC asked as a first question, "Why is the FTC here at this conference?" Answering her question, she pointed out that the FTC has long involvment in IP issues, though those issues usually involve aspects of IP other than patents, and that the FTC is and has historically been heavily involved in enforcement work.

She also stated that the FTC had been aware of patent issues for quite some time and gave some history.

2003: a report which examined competition issues related to patent policy. It looked at problems arising from vague patents and bad quality patents, also looked into issues of the effect of such patents on the market, on competition, and related issues. The report also raised issues related to patent stockpiling and patent trolls.

2011: A new report considered patent notices and remedies. This report laid down a principle that the framework for damage remedies has to relate to the economic value of the claimed invention.

Injunctions are a hot-button issue. The threat of an injunction is a big club to hold over the accused patent violator. She mentions the Ebay case as a case which can inhibit injunctions.

However (contrasting the different roles of the FTC and the ITC and their independence from each other), the ITC can offer exclusions very easily. Ebay does not apply to cases filed with the ITC. Nevertheless, the FTC is concerned about this issue and urges the ITC to use the "public interest" test in weighing exclusions. This test is intended to factor in the effect on consumers and the effect on competition.

The FTC and SSO's (Standards Setting Organizations): Courts and the ITC need to deal with these issues, but SSO's need to do more to codify things when RAND patents are at stake. She mentions the Rambus case as one in which the FTC perceived that the standards process was abused.

Paul Grewal, a judge for the Northern District of California, looked at patents and patent cases from the point of view of the judge and the judicial system. For obvious reasons, he did not comment about specific cases, but he wanted very much to come to the conference in order to provide everyone present with some needed perspective about how judges are thinking and reacting while on the bench. The particular questions which he wished to address had to do with the issues of how software patents and patent cases are handled in court, and how ought they to be handled.

His points:

  • The issue of stays relating to PTO re-examinations comes up with increasing frequency, as patents are challenged. A judge's question about this is, "How long will this take?" His informal answer, speaking as a judge, is that if the PTO can stick to its promise of a 12-month turnaround time, there will be more stays issued.

  • Many of the proposals made today will affect patent cases in federal court.

  • One thing to keep in mind: A software patent case is one of 500 to 800 cases which the judge is handling simultaneously. Therefore, he finds any simplification to be quite welcome. Parties who are in court because of a patent dispute are in court because they could not come to an agreement by themselves, and so they expect that the judge will handle their disagreement. They ought to keep those other 800 cases in mind while expecting the full concentration of the judge upon their disagreement.

  • There are always problems about legal interpretation, new decisions which come down from higher courts, and the role of the district judge is to apply and implement those decisions. As a concrete example, consider the Prometheus case and its effect on the analysis of software patent cases. What is a district judge supposed to do, based upon this case? When and how, for example, should non-patentability arguments be considered? At the beginning of the case, at the middle, or at the end? As a separate issue or together with others? At the summary judgment stage? What, exactly, to do?

  • The issue of damages: Are the issues raised regarding damages a special problem of software patents? No. And yes. So, damages are very important. But when in the trial to bring them up? And what should or should not be allowed by the judge in presentations to the jury on the issue of damages?

    Questions from the audience:

    Why aren't there more court-appointed experts under Rule 706?

    Answer (from Judge Grewal): Mostly these issues need to be asked for by a litigant during the trial.

    What about experts to decide novelty or patentability?

    Grewal: Hmm. Maybe.

    A question is asked about the role of the ITC.

    Ramirez for FTC says that the FTC cannot speak for the ITC, but the ITC is in a new area. The IP issues involved regarding patents are not the IP problems which the ITC has dealt with in the past.

    A question for Judge Grewal: Why not an infringement expert and a damages expert? Grewal: Good idea, but there are time constraints at trial.

    What about fee shifting (presumably for things like frivolous or meritless suits)? Grewal: The US legal system and the UK legal system are not the same. But this is something which might start to happen anyway.

    Time for questions is up.

Panel #3: Legal Reform, Part 2 ( 2:00 - 3:10 )

The speakers:

Mark Lemley, Stanford Law School [http://www.wired.com/opinion/2012/10/mark-lemley-functional-claiming/#more-120423]
John Duffy, University of Virginia School of Law [Let's Get Rid of Kludgy Patent Fixes and Define the Non-Obvious]
Ted Sichelman, University of San Diego School of Law
Samson Vermont, University of Miami School of Law [ No Social Harm, No Legal Foul]
Commenters: Suzanne Michel, Google
Heidi Keefe, Cooley LLP

Mark Lemley:

Too many software patents, too many bad ones ...

He wants to focus on what he considers a fundamental issue, overclaiming. A big difficulty is the phenomenon of patenting the problem, not patenting the solution. Ten percent (left me wondering is that all, not lots more?) of software patents at least claim to patent the problem.

Patenting or attempting to patent the problem is not, in fact, restricted to software patents and is not something recent. This tendency dates back to the patents of S. F. B. Morse on the telegraph, and the patents of the Wright Brothers on controlling the airplane. Morse tried to patent not just his telegraph but made much broader claims, and his efforts in that direction were ultimately knocked down. The Wright Brothers tried to claim, essentially, all methods of controlling aircraft by their patents on "wing warping," and extended legal battles ensued with others, who had adopted the use of ailerons and flaps to achieve the same results.

Method claims can exist, but their efficacy is limited to what is actually claimed in the patent. Attorneys have gotten around this limitation by specifying "a computer" or "a processor" as the substrate of the patent, attempting to use the most general terms possible. The problem is, that *all* software has to run on a computer! So this is no bound at all upon the patent. We need to apply to software patents the same issues which are applied in all other fields!

Duffy:

His background was in engineering, and now he is a law professor.

Advice: Don't seek a kludge. Seek the elegant solution. Says that exempting software from patentability is a kludge.

So, he says, look at the basic question, which is why do we have patents in the first place?

Stallman said nobody wanted or asked for software patents. He claims that there are no reasons for having patents in areas where nobody gets new knowledge from them. There is supposed to be a tradeoff, here. This is fundamental.

So, said Duffy, my proposed "solution" to the problem (of what to patent) is to look for the question of whether or not the proposed or alleged patent would have actually brought new and useful knowledge or not. Software patents in general do not.

I am not sure at this point whether the next line of my notes was my own question, or whether it was part of the talk. Either way, I think it is a very pertinent question.

The big question is, of course: How to implement this? Sichelman:

Sichelman's main focus was on a proposed change in the structure and methods of enforcement. He perceives the present approach as both destructive and divorced from the original purpose of patents, which were supposed to promote innovation in society as a whole. He made the following points:

What if you were a defendant in a patent suit and you lost? The current idea is that the patent owner needs to be "made whole." In short, tort law on damages governs what happens after that.

Why is this wrong? Because patent law is supposed to promote optimal levels of innovation, not remedy private harms.

Where do make-whole remedies break down?

  • component patents (on part of a product), and high switching costs
  • very large dead weight on public
  • duplicated development costs
  • make-whole remedies not needed to incentivize innovation

Also, what about the issue of institutional competence (must have meant the issue of whether the patent is really any good, or not) and the issue of administrative costs?

So, his final question was, how to carry out his proposed reforms? Judges would have to implement them. How? With what guidelines?

Samson Vermont:

His idea is to predicate remedies for patent infringement upon the harm done to the public.

The problem: US patent law has lost touch with its ultimate purpose, which is to serve the public good. Therefore, the proposed solution is to excuse infringement when certain factors are present. Excuse infringement which optimizes "social enjoyment" of the invention.

Four items were then listed as factors impinging upon how to handle infringement, of which I managed to catch three of them:

1. The question of whether the patent holder actually practices the patent, or not.

2. (I did not succeed in capturing this one)

3. Whether the cost of search exceeds the cost of (independent) invention.

4. Questions of social utility of the infringement.

Comments from the commentators on the panel:

Suzanne Michel:

The Federal Circuit looks for magic words in the patent. It reduces things to a claim construction exercise. The patent system is not natural. It is not that you cannot walk on my lawn; the patent system is *not* a property rights system. Few people outside of this room seem to agree, [but] the goal of the patent system is to foster innovations.

Heidi Keefe:

If you are a client and want innovation in the system, then you need to call me. You need to be willing to keep on with your case. Be willing to challenge the current statement of the law.

Questions from the audience:

At this point, Richard Stallman came from the back of the room up to the front and was given the microphone. My impression is that he shared the frustration of many of those attending, who seemed to feel that the problems of software patents, which gave rise to the conference in the first place, were not being taken seriously and were surely not being addressed by those who were proposing "solutions."

He said a lot of things, which I did not write down. In part, that is because the things he said were the things one would expect him to say because he has been saying them for a long time, long before this conference, and had spoken at some length and detail as the leadoff speaker of the morning. As I said, his remarks struck a very sympathetic chord with a large portion of the audience. He got a very strong round of applause. It is impossible to know, of course, whether what he said had any effect on what happened for the rest of the afternoon, but he did raise some crucial aspects of the software patent problem up to the forefront, again.

Among the things which he said were that what were being proposed as "solutions" were halfway measures, and the clean, neat, and elegant solution would be, simply, to abolish software patents. In particular, he attacked the statement that to abolish software patents is a "kludge" and said that, in fact the situation is the other way around. Those who want to fix the problems with the system by adopting "neutral" solutions which in practice would turn out to be impractical and in reality impossible to implement and which in fact do not really address the problem are the ones who really are engaging in a kludge. Just to ban software patents altogether would be much simpler to carry out and would solve the whole problem at one stroke.

At this point, he was interrupted by a panelist and was asked what is a software patent, anyway, and where would you draw the line between hardware and software? His answer I probably do not need to repeat. Even more interesting to me was that sitting at my table was a professor of computer science who remarked very acidly that perhaps if the people running the patent system were confused about what is a software patent perhaps they shouid consult the field of computer science. Namely, he said, hardware is the material object in which the electrons go round, and software is the human activity of programming that hardware. The distinction is clear. It is fundamental, and everyone who works in the field knows it. This little episode pointed out very well the basic problem about a discussion on software patents between the legal scholars on the one side and the computer programmers on the other. In the famous words from Cool Hand Luke, "What we have here, is a failure to communicate."

Stallman also reminded the panel and the audience that the problem of software patents had arisen, unwanted and unsolicited by anyone in the computer industry and certainly unwanted and unsolicited by anyone who does programming, and not sanctioned by anything in the underlying statutes enabling patents. He characterized the entire edifice of software patents as based upon "judge-made law." And again he pointed out that the patenting of software is an infringement on human rights for the very fundamental reason that patents on software can not avoid being patents on the thoughts that people are thinking.

As I said, Stallman's comments got a long and loud round of applause which came from all over the room.

Coffee break

Panel #4: Self Help ( 3:30 - 4:40 )

Panelists:

Keith Bergelt, Open Innovation Network
Jennifer Urban, UC Berkeley School of Law [A Proposal for a Defensive Patent License]
Dan Ravicher, Public Patent Foundation
Wendy Seltzer, Yale Law School
Commenters: Brad Burnham, Union Square Ventures
Benjamin Lee, Twitter

Bergelt:

Says that norms are shifting. Says that we need access to all the prior art that is out there. Sees that there is more awareness that big interests are gaming the system, to stifle innovation by individuals working alone or together in groups. The rest of the talk consisted of a missionary talk for OIN.

Ravicher:

First: Let's listen to others.

Second: He respects judges and juries, and believes that everyone else should, too. They are trying to do a very difficult job and in the main are trying very conscientiously.

As to "frivolous cases": We have rule 11.

Instead of complaining, lets talk about jobs!

The rest of his talk was a missionary talk for the work done by the Public Patent Foundation (PubPat). He further recommended that it is a good idea for companies to support an independent foundation which exists to challenge patents. Sometimes a company is constrained by circumstances not to mount the same kinds of challenges that PubPat can mount, but to contribute to a non-profit foundation which pursues a policy is not the same thing as to pursue the policy oneself.

Seltzer:

Wendy Seltzer is involved with legal support for W3C, the World Wide Web Consortium, which is an international standards organization. In this capacity, she is concerned about patents and patent policy.

In 1994, W3C formally adopted a policy for only "Royalty Free" patents (RF) to be used in its standards.

She says that this policy is very good, but it has obvious deficiencies which are very hard to deal with. Namely, the policy can not address the problem of NPE's (non-practicing entities) coming forward and saying that everybody needs to license their patent -- after what their patent allegedly covers has already been incorporated in a standard and people are using it. Also, the policy can not deal with FUD, such as questioning whether a given standard is actually free of patents, or not, and asking repeatedly whether anybody actually knows the answer to the question.

As to the practical question of how to keep things on an RF basis, she says that the rule is, if you know of a patent which impinges on a standard, existing or proposed, then you have to give notice. If you are a member of W3C and own a patent, then you have to agree to RF licensing before the patent can be incorporated in a standard.

This policy can not work against an outsider. Eolas is an example of that.

Jennifer Urban:

Jennifer Urban is one of the authors of the Defensive Patent License. Her talk outlined the reasons why the license was written and highlights some of its features.

The problem: Innovation in the shadow of software patents. This problem especially affects open innovation communities. Defensive patenting is a kludge. There are three possible uses for it:

  • threats between companies
  • threats from bullies
  • threats from trolls

Why don't FOSS and small firms use patents defensively? Three reasons:

  • costs
  • cultural and political opposition
  • what will happen if someone else gets your patents?

The DPL sets up a distributed licensing group.

The DPL is like the GPL; the licensor opens its entire portfolio.

DPL users are free to litigate against someone not under the license.

DPL users may stop offering licenses with 6 months notice. (From what was said here, I am not sure whether this means new licenses, or whether existing licenses can be withdrawn, and it would make a difference)

What about trolls? (no answer to that problem, here or from anybody else)

What about patent quality? Patents are the best form of prior art.

Says that there might be further questions, and go ahead and ask.

The Commentators:

Ben Lee (Twitter):

Advice to startups: If you use Linux, then join OIN and support PubPat.

Brad Burnham:

He is a venture capitalist from New York. He supports companies using FOSS for web services. He summed up his experiences with companies he had supported. One of the things he has learned is that software engineers do not like software patents.

Burnham then told some very sad stories of companies he had supported, which had been hit by trolls. Says that defensive patents would not have helped. Companies had to shut their doors and people were put out of work over frivolous patents. Ravicher said to talk about jobs, and he is talking about jobs.

Comment:

I would have had a question for Wendy Seltzer, but I did not get to ask it.

The question relates to the problem of trolls who attack an already-adopted standard, which large numbers of people, businesses, and organizations are already using, on the basis of some patent which they claim that the standard itself infringes. Realizing the general problem of getting legislation passed about these patent-related issues, I wonder if it is possible to solve this one nevertheless. We do have in many other areas the concept of legal notice. Every local newspaper has a section devoted exclusively to legal notices. Legal notice is required, for example, before any foreclosure of property by a lender or a tax collector, or in case there is a divorce. The legal notice must be posted in a place prescribed by law and for a requisite length of time, and all interested parties are supposed to know to look there. Could it be possible to get this concept of legal notice extended to standards set by standards organizations? Then, everyone who is in the standards organization must put its relevant patents on the table, and anyone outside the organization would have been legally notified of an obligation either to speak up now or to forfeit any future rights to object. I don't see exactly why a bill to put this into effect could not get through Congress. Nobody would want to object to it other than trolls, and the trolls are surely outnumbered and are politically outgunned by more productive economic interests about a matter like this.

Keynote #3 ( 4:40 - 5:20 )

Moderator: Nair Flores, Facebook

Panelists:

Pam Samuelson, UC Berkeley School of Law
Julie Samuels, Electronic Frontier Foundation

Julie Samuels made the following points:

Coalition-building makes a difference.

Policy makers in Washington are listening to the tech community and tech companies because they are afraid. Remember SOPA and PIPA.

Right now the next issue is fear of TRIPS.

We will need to make compromises regarding software patents in order to get something done. Let's continue to work together.

Pam Samuelson:

The last 25 years have seen progress. Now it is recognized that there are problems with software patents:

  • low quality
  • inadequate disclosure
  • functional claiming
  • incompatibility of software and patents
  • gamesmanship about RAND and FRAND

The Supreme Court does not like computational patents.

Ideas for progress should include active engagement and consciousness-raising with:

  • the patent office
  • judges
  • ITC
  • Congress

The fact that there is a public-interest standard for patents should be paid attention to and raised on any appropriate occasion.

Self-help measures should not be neglected.

The National Academy of Sciences has a panel on patent policy. Interact with this panel.

Standards organizations (SSO's) need to refine their policies on patents.

The DOJ should pay attention to the problem.

Contact and interaction with professional societies such as ACM and IEEE are important, too.

This was the end of the talk, also the end of my note-taking.

The conference was adjourned, and there was a reception afterwards, at which a light meal was served.

Some concluding comments on what I saw at the conference:

I mentioned at the end of the first session, Keynote #1, that there were essentially two groups of people at the conference, with two different mind-sets and two different views of the problems arising from software patents.

One way to characterize those differences seems to be based upon what the people in the two groups do for a living. It seems to be a very basic difference between people who do programming or who teach programming on the one side and people who represent corporate or legal interests on the other.

A large number of people who do or teach programming for a living seem to see a patent system into which their work and their teaching seems to have been jam-fitted due to outside forces, when the system seems, to them, fundamentally not to fit. They feel that something painful has been and is continuing to be inflicted upon them from outside and they can not see any positive good coming out of it, neither for themselves, nor for society as a whole. They feel threatened by nebulous but powerful outside forces, and their personal convictions are violated by a system which is driven by the greed of others, and that the patents which result from that system are almost without exception stupid, harmful, and border on insanity.

A lot of talk was devoted to questions about how to reform the system, so that, for example, it is easier to search for patents. For these people, one might doubt whether any such reform would make things easier for them. They write code. They sit and think about how to set up software which will address or solve problems. They do not perceive that they have anything to learn from already-issued patents, even if the patent is deemed to be meritorious and sound, from a legal point of view. In short, they do not see how any patent can ever "teach" them anything, which is supposed to be at bottom one of the motivations for the patent system.

Those who run the system indeed refer to the "teaching" function of patents, which makes the system seem to this set of people to be even more insane.

And the members of this group do not look forward with pleasure, either, about the prospect of spending the rest of their careers searching for patents, or challenging individual patents on grounds of invalidity, or living under the threat of being sued for "violation" of patents which they never dreamed could exist.

One might wonder, for example, what all of the improvements in patent searches are going to do to the profession of computer science even if successful. Will the consequence be that the computer science student will have to spend three years of a four-year college education learning how to search patents, which will then necessarily replace a large part of the curriculum currently in effect? Would we really be any better off as individuals, or as a country?

Those who hold such views as described above, based upon their own experience and background, find a great resonance in the proposal of Richard Stallman, simply to get rid of something which was never asked for, never wanted, and does great damage. Moreover, his description of patents on software as patents on thinking seems to have great resonance, too, and over time it seems better and better to fit reality.

With the increases in power of desktop and handheld computers and the abilities of even cell phones to run serious programming applications, computers and the programming of them has become available to great masses of average people and are used by increasing numbers. More people are programming than ever before. Computers and programming of computers have become ubiquitous in the society, giving a new, contemporary weight to the emphasis of Stallman that software patents impinge upon human rights, a position of his which in fact has not changed for many years.

The second group of people comprises the leadership of companies, patent attorneys, the patent office, the regulatory agencies. Among this group, economic advantages are seen if a company gets a lot of good patents. There is also the motivation of serving the country by obliging other countries to license "intellectual property" from the US as our exports of material goods seems to decrease over time and manufacturing of goods has moved to a great extent overseas.

They do not see the shortsightedness of this policy. Foreign companies, too, can obtain US patents, as one of the panelists mentioned. Moreover, foreign companies can also buy US companies along with their patent portfolios. In fact, both of these things are happening.

Many from this second set of people do indeed agree that there is something wrong with the patent system as far as software is concerned, but they tend to see the issue as one of "good" patents and "bad" patents, not as an issue of what are the areas which the patent system ought or ought not to cover in the first place.

Those of them with some sense of history would argue that the patent system has seen similar crises before, has gone through periods of turbulence, but in the main, as they see it, patents are really good for society. The system needs to be protected from misuse, from its own errors and excesses, and from outside harm. If it is said to them that software patents were wrong and illegitimate in the first place, then they come up with scholastic arguments about what, precisely, is a software patent. If pressed, they will argue that, at least abstractly, there could be such a thing as a good software patent, and therefore one should not exclude a whole category from the system.

During discussions, they tend to dismiss complaints about software patents and of harm done by software patents as "anecdotal." They also seem to believe that programmers, the true beneficiaries of extending patents to cover software, will at some indefinite time in the future begin to adjust themselves and to become more tractable and accepting of this protection which they did not ask for but which the system has nevertheless beneficently and altruistically extended to them.

Even those among this set of people who do not quite hold the attitudes which I have just described are of the firm belief that what has been done can not be turned back. That software patents simply will not go away, and somehow or other everyone is going to have to adjust to the situation.

Finally, there is the existence of Free Software and Open Source software. While quite different in philosophical approach, both of these movements have greatly increased public participation in the development of software, and both movements have popularized computer programming and made it easier for ordinary people to participate. Writing software and even the development of large projects with complex and long-range goals has gotten out in public.

The first group of people, the programmers who have attacked the appropriateness of software patents, has drawn a large part of itself from people who have directly participated in these movements or in large projects sponsored and nurtured by one of these movements. The first group is thus well aware of these issues.

The first group is also well aware of the irreconcilability between typical patent licensing terms on the one hand, and Free Software on the other.

Some of the members of the second group almost instinctively think of software and especially of technically advanced software as being developed by large companies and then sold to a comparatively passive public. They may know of the existence of Free Software, but even so they tend unconsciously to discount its social effects. If their world view were actually valid, patent protection for the advances in knowledge performed by those big companies might be appropriate. But this is not what is happening and has not been what is happening for quite some time. Thus, that world view does not completely mesh with social reality.

All of this is quite obvious to the first group, but it is instinctively rejected by those in charge of many large companies and by other elites. Such people come to accept such a realization very slowly because it goes against so much which is at the very basis of their world view. Thus, quite likely the thesis of Stallman that software patents oppress society as a whole and are an infringement on freedom of thought, a fundamental human right, must no doubt seem strange to members of the second group, who shrug off and discount that argument. That almost subconscious rejection is a mistake. Stallman's arguments are incisive and logical and strike to the heart of the matter. The evident popularity of his views at this conference did not spring forth from a vacuum.

And thus there are two groups with divergent interests and divergent perceptions. Perhaps what is new and positive here is that both of these groups perceive at this point that the patent system really has somehow gone wrong in regard to software patents, and something needs to be done to correct the situation.

The organizers and sponsors of the conference certainly deserve credit and appreciation, too, for bringing together these groups of people with divergent perceptions and interests but with a common goal together, in order to discuss their views.


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