The IP Watchdog Gene Quinn is explaining the current state of software patents and Brian Dorn of Barnes & Thornburg is summarizing a very interesting discussion with United States Representative Erik Paulsen he moderated on the topic of life science and patents.
Rolf Claessen and Kenneth Suzan
Episode 21 – February 6, 2015
RC = Rolf Claessen
KS = Kenneth Suzan
BD = Brian Dorn
GQ = Gene Quinn
Hi. This is Gene Quinn. I am a patent attorney and the founder of ipwatchdog.com and you are listening to IP Fridays.
KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to Intellectual Property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.
RC: Welcome to the 21st episode of IP Fridays. Today we have an interview with Gene Quinn who is a patent attorney in the U.S. and he is also hosting a famous blog called IP Watchdog. He is a specialist in software patents so we are talking about that topic. Also, Ken had the chance to interview Brian Dorn of Barnes & Thornburg. He moderated a discussion with U.S. Government Representative Erik Paulsen about life science and patents. But before we jump into the interviews, I want to say thank you to the Stanford Lawyer Website who mentioned us and our podcast on their Website. Thank you, thank you, thank you. So without further ado, here is the interview with Ken and Brian Dorn.
KEN SUZAN’S INTERVIEW WITH BRIAN DORN:
KS: Rolf, I am joined by Brian Dorn who is Of Counsel at Barnes & Thornburg in the Minneapolis office. Brian, you recently moderated an hour long discussion with United States Representative Erik Paulsen, who is also co-chair of the Congressional Medtech Caucus on the topic of the Federal Government and the Life Science Industries. Can you summarize your discussion for our listeners?
BD: Yes. Thank you. We had kind of a wide-ranging discussion regarding various topics looking to the recently started Congressional Session, the 114th Congress. We discussed tax law looking at the medical device tax repeal. That was rather front and center because Representative Paulsen is the chief author on that and it is one of the higher priorities for the Republican Party in that it has already been introduced, it has 254 co-sponsors, so it will pass the House, it has support in the Senate, all across the political divide, Senator Hatch’s bill ranging from Ted Cruz in Texas to Elizabeth Lauren in Massachusetts so that’s something that should be happening quickly. We talked about the effects of corporate inversions, if anything would be done with Congress. We discussed intellectual property. We discussed regulatory law in terms of the 510(k) Program in terms of medical devices, meningitis B vaccine regulation and trying to get that approved or the status of that, Representative Paulsen is a big proponent of trying to speed that up because that vaccine is approved in Canada and Europe and we still have college students here in the United States dying from meningitis B one of the reasons the vaccine is not available. Lastly we also discussed the Federal Government’s response to the Ebola situation, I wouldn’t call it a health crisis in the United States, it was in Africa, that the Federal Government’s response to Ebola this past summer.
KS: Since this is an intellectual property podcast, can you speak more specifically to the IP subjects you discussed like patent reform? What exactly was discussed?
BD: Sure. In regards to the intellectual property, at least according to Representative Paulsen, first and foremost is going to be further patent reform legislation to protect U.S. innovation — “and I think if there is one thing that the United States does very well, or has a track record of doing very well, it’s innovation and if we are going to sustain that innovation in the future, I mean it is a combination of getting it right on tax reform, immigration reform, patent reform, knowing that patents are a part of our DNA or innovation is a part of our DNA. It is referenced in the United States Constitution, literally and so that is part of who we are.” — In terms of the reform in any legislation, the patent troll issues are probably going to take precedence. That is going to be the main issue in any reform in any legislation and that is really looking at the patent trolls who people used to call non-practicing entities and universities really didn’t like that term so a lot of people now call it patent assertion with entities just looking to sue and abuse the system regarding patent litigation. In the last Congress, legislation actually passed the House by a bi-partisan vote but the Senate didn’t take any action so Representative Paulsen did say that he is looking for that legislation to go forward again but it is probably going to be modified. There has been new developments such as Supreme Court decisions regarding how you can get fees and what defines exceptionality, plus since the Senate has changed parties, there is going to be a new partner (so to speak) or a new chair of the senate judiciary committee so there is going to be some re-working of the legislation that way so whatever legislation for a bill that was passed will not be the same, there is probably going to be some re-working, and that will probably take some time to shape it. Also in the last Congress there were a lot of people trying and multiple bills regarding the legislation besides even the one that passed but as Representative Paulsen said, since one of them was Representative Goodlatte, who is the chair of the House Judiciary Committee, that is the one that is most likely to be the basis since he is the chair.
KS: So excited times indeed at Congress with respect to IP.
BD: Somewhat yes and someone actually asked the question in terms of patent reform about the balance between life sciences and tech companies because there is kind of that different interest in patent law. With life science companies it takes so long to get to market and get FDA approval and really want really strong patent protection whereas tech companies are a lot more to the market first. You’ve been seeing a lot more of the troll issues and all this affecting the tech community rather than the life science community so they have different interests, they have different needs out of the reform so that is one of the things he says that he is really looking for stakeholder groups to weigh in and to really provide pros and cons for each.
KS: Brian, did you discuss any other IP subjects besides patents during the program?
BD: There was one other patent issue that we discussed in terms of more of a biotech specific, in terms of the Myriad decision and patent eligibility of DNA and I had talked about the position that before the Supreme Court decision invalidated it, Congress had kind of taken implicit approval of it in that they had never outlawed it, in fact they actually had a few years before that decision came down from the Supreme Court, they had actually passed legislation that said no human organism is not patent eligible. So technically under patent law if you have a recombinant non-naturally occurring organism it would be patent eligible and technically I guess a human would fall under that and they took the position that no matter what happened, a human organism is not patent eligible and one of the Judges even in the Federal Circuit decision kind of adopted that saying that the Patent Office has been doing it for thirty years and there is this implicit approval by Congress. So my question was, would anything coming forth would Congress so to speak correct what the Supreme Court has done?
KS: And what was the discussion?
BD: He didn’t necessarily take my position of the implicit approval by saying yes or no. He is not aware of anything coming forth from this issue. He said likely a handful of members will take this up at some point. They will look for feedback on the issue. Most likely, if anything comes, it will be a slow deliberative process. In non-patent issues, there was a trade secret legislation that was starting to come around last Congress and they are looking forward probably in this Congress to new trade secret legislation because currently it is a state issue. 47 states currently have adopted at least some form of the Uniform Trade Secret Act so it is not necessarily uniform, it is mostly the same between the states but there are some differences. The reason, and I questioned why now, why are we doing the federal law if we have this in place, and one was going back to the importance of IP and this country’s economy wanting to protect the IP it is better to unify the law instead of having this patchwork of minor differences. Also, the number of hacking incidents and data thefts and that sort of thing is increasing.
KS: Yes, we have been seeing lots of stories of these in the news in the last six to twelve months.
BD: Absolutely, and some of the Congressional thought is that by having a uniform federal trade secret law that will be helpful in prosecuting any of these hacks or even protecting companies. I mean, some of it is criminal in terms of trying to get money and fraud and all that but even for the theft of IP this would come in and fill that role.
KS: 2015 just started, is there any IP legislation that is likely to be enacted this year that you might have touched upon during the program?
BD: Well, in terms of what we talked about with the patent reform, he thought that was likely. It’s not going to be an immediate bill. We talked about the medical device repeal which has broad support. It’s a priority. He has already introduced the legislation. I don’t think they’ve taken a vote. Senator Hatch has introduced the Senate version. That is going to happen. That is going to get to the President’s desk very soon. But in terms of the patent reform, like you said, there is momentum to do it, it’s just not going to happen right away because they have to do some of these modifications and various things. With the trade secret bill, that hasn’t been introduced yet but he doesn’t think that is going to be immediate action. It’s likely to happen but again it is not immediate. It’s going to be a little further down the line. But that has bipartisan support and a number of members of Congress are looking and want to pass something along those lines.
KS: Brian, thanks for sharing your information with us today and our listeners.
RC: Thank you Ken and Brian for this really helpful summary. If there is one really hot topic in the field of patents nowadays, it is software patents and there could be none better than Gene Quinn, host of the IP Watchdog and software patent specialist to talk about this and explain software patents.
ROLF CLAESSEN’S INTERVIEW WITH GENE QUINN:
RC: I am very excited to be joined by Gene Quinn today. Gene Quinn is also known as the IP Watchdog – probably one of the most famous blogs in the IP world. He is an expert in software patents and his practice is also focusing on software patents. I have a couple of questions for him. Thank you for being on the show today.
GQ: Oh, thanks for having me Rolf.
RC: So, since you are really an expert on software patents and many of our listeners might be working mostly on trademarks and copyrights, maybe you can tell us a little bit about what makes these software patents special compared to the regular patents.
GQ: Well that is really a good question and I wish I had a really good answer. That, in and of itself, is one of the biggest problems that we have here in the United States. We really don’t necessarily know why these particular patents are different. I can guess. I mean if you look at some of the particularly older software patents that were issued in the U.S., not the oldest ones, but ones that came out after the State Street decision, say like very late 1990’s and early 2000’s, what you saw was an awful lot of patents that were written like very simple method patents without a discussion of very much of the technology that would be used or necessary in order to pull off the process. So that is what I think became offensive. Now, what makes these different, long term or even like today, I really don’t know because if you look at the software patents that are filed today, by and large they are very thick documents. They have a lot of technical disclosure and so I don’t know what the problem is. The claims, I think they look at the claims and they say to themselves, the judges say, “Well, if you read these claims, you wouldn’t necessarily be able to write the code or create the computer implemented process.” While that is true, if you read the entire application, then you would be able to understand what is going on and the claims have never been, in any patent, ever a blueprint. The claims define the scope of what is the exclusive right as it is described in the specifications. So I think what makes them different more so than anything is the comfort level of familiarity. A lot of these judges, for example on the Supreme Court 18 months ago, Justice Kagan gave an interview to … and she said that they don’t even use e-mail. Well I’m not sure how you can have judges in their 70’s and 80’s, some of them maybe in their 60’s, but certainly senior judges making these technology-based decisions when they don’t even use the most basic form of technology available today.
RC: Yes, so true and I think if you would give the specifications into the hands of programmers, they would immediately know what to do, I would say.
GQ: Well that really I think has got to be the test where it ultimately winds up going. If you look at when David Kappos was director of the Patent Office and Bilski came out and all of this was happening in about the 2010-2011 timeframe, that is what he was really instructed the examiners to do back then was don’t have this be a 101 patent eligibility issue unless it is clearly, in no uncertain terms, not patent eligible push through that to get to 112 to see if there is an invention disclosed because if there is an invention disclosed, then it really ought to be patent eligible. So how do you know if an invention is disclosed? I think you have to say, could somebody who has skill in the art use what you have given us and create what you have described.
RC: So the U.S. Supreme Court has recently issued a few decisions dealing with the patentable subject matter and the latest in this role is the so-called Alice decision. It seems that the U.S. Supreme Court is taking a very strict view with this decision. How do you interpret this decision?
GQ: Yeah, it is really a very bad decision. I think it is completely inconsistent with many of their other decisions and that is the problem that the Supreme Court has in the United States. They almost never overrule a prior U.S. Supreme Court decision but the decisions that they come out with are frequently … decisions and so therefore reconciling these things becomes very, very difficult. One of the biggest problems with the Alice decision is, if you step back and you look at just Alice and Bilski, we have a scenario under Bilski where they specifically said that business methods are patent eligible and they said that it is possible that a business method could be patent eligible even if it is not tethered to a machine. Then they go into Alice and they don’t ever even use the word “software” and it they kill these claims that were quite clearly tied to a machine in a particular embodiment under the abstract idea doctrine and there’s just really no logical way to keep these consistent. So the irony is this whole thing started, the whole problem started in the U.S. over the last few years, out of concern over business methods and today those are patent eligible but software maybe is not patent eligible. So there are a lot of ironies. And then if you go back to the 1980’s when the Supreme Court issued their decision in Diamond v. Diehr, they quite clearly said software was patent eligible. The whole case was about software. So there is a little bit of a schizophrenic back and forth at the Supreme Court and I think it is because (1) they just don’t do enough patent cases to become ever familiar with the substantive area, and (2) they are technological novices, extreme novices.
RC: Yes, as you mentioned, they don’t even use e-mail.
GQ: Which is boggling. Let me ask you a question, do you remember a time when e-mail didn’t exist?
RC: Well yes, when I started studying chemistry in 1993. I think I was one of the first users of e-mail.
GQ: I remember going to college and you had to go to the computer lab because you didn’t have this access in your apartment or dorm room. But, I mean, the world has so substantially changed that you really have to think long and hard about the last time you sat down and wrote somebody a letter. Maybe a Christmas card or a sympathy card or something like that but every other form of written communication is now e-mail – business, personal – and these folks don’t even use that and they are the ones deciding. It boggles the mind.
RC: Right. That’s really a little bit far out.
GQ: Yeah, you would almost have to go out of your way to find people who are less technology sophisticated and more poorly equipped to decide these issues than the United States Supreme Court.
RC: Right. So, there is a whole new industry that evolved in the last couple of years – the so-called non-practicing entities or some people call them patent trolls. Do you think the Alice decision will have an impact on the business model of these entities and particularly the larger ones like Intellectual Ventures or Acacia or Rockstar and there is also like some of them are more university related. For example, there is the Wisconsin Alumni Research Foundation or you know universities that just have a technology transfer office — they also want to have their licensing. So how would they be different?
GQ: Well, I do think that there is going to be a dramatic impact but I don’t think it is what most people think is going to be the impact. The decision is not going to harm any of the large entities like Intellectual Ventures, Acacia, Rockstar, those types of groups and to some extent it may wind up helping them dramatically because right now these assets that relate to computer implemented methods, whether they have system claims, whether they be just the method claims or computer readable medium claims, those patents are not worth very much at all right now and people are trying to sell them and they are not getting much money. They are not getting a lot of interest. What I think you are going to see, is the birth of super trolls where you are going to have some well-funded companies that are going to start buying up these patents for pennies on the dollar and I don’t know anybody in the U.S. who thinks that the law as it exists today is going to be the law that we deal with five years from now or ten years from now, it may not even be the law we are dealing with over the next year or two because if you look at U.S. law as it applies to software and software patents, it has changed dramatically. It has never stayed in one place. I mean the first software patent was issued back in 1968 and the first time the Supreme Court had an opportunity to kill software patents was in 1972 and then nine years later they said in Diamond v. Diehr that software is patentable. So, you see, every handful of years this thing has shifted from the very beginning. So if you have a long view of the patent system and you think that it is going to shift, which I think everybody does, you should be a buyer of these assets right now because the whole goal anytime you are buying an asset, whether it be a stock or whether it be a patent, you want to buy low and sell high. These things are as low as they are going to go so I think you are going to start to see a lot of accumulation. Now, on the university side, I think that this is going to really harm universities. It’s not just Alice, but you mentioned WARF (the Wisconsin folks), and they do a lot of biotech and a lot of genetics there and we have had Myriad decision and the Mayo decision on patent eligibility and that will affect them a lot, and Alice will affect them somewhat, but all of these decisions from the Supreme Court are going to negatively affect the universities far more which is horrible because that’s where you get the most basic scientific research going on because that is their mission. People point and they say well they are not very good at technology transfer or they are not very successful, but it’s like that’s right, that’s the point. They are doing research that otherwise could not ever be done because it’s not economically feasible. So you want them to be engaging in this highly speculative research. But these decisions are going to make it harder for them to get patents and universities are already very conservative, not in a political way, but in a financial way to begin with because they have so much innovation going on and so few resources to begin with to move forward. I think you are going to see those kinds of enterprises where they have a lot of innovation and not a lot of resources are going to be very negatively impacted. They are going to be paralyzed.
RC: Right, and I think also entities like Intellectual Ventures they also bought lots of patents that have nothing to do with software. For example, I know a chemistry professor who actually sold a lot of his patent to Intellectual Ventures so they also have plenty of patents not at all affected by Alice probably.
GQ: That’s exactly right. And Acadia I know for sure is the same kind of deal and they are starting to get into, from what I have been told, and they have always been in this space but they are putting a lot more emphasis on medical devices than they have maybe in the past because the medical device is a machine and if machines wind up not being patent eligible, then we might as well just all go home. So these companies are starting to move into different spaces. The problem that we see here in the software area, if it is in fact a problem we can talk about, I don’t think it is nearly the problem that the critics have made it out to be, but to the extent that it is a problem all you are going to do is push these companies into different spaces. If I could just say for a minute, I don’t think that this stuff is a problem. I mean, people frequently point to smart phones and say, Oh my God, patents are awful, we have this patent thicket, the smart phone is being held up. Now just stop and think about that for a second, exactly what innovation has been stopped in the smart phone area? I mean, every six months to a year you get the next generation that is better, stronger, faster, thinner, the battery lasts longer, the glass is harder to break, the apps work better, they do more artificial intelligence, voice recognition, you can control your whole home through your cell phone now. I mean, what innovation has been stopped by patents?
GQ: I mean, nobody can give me an answer. I don’t think there is any. And I think the story really isn’t that Apple won a billion dollars from Samsung or where that winds up who knows on appeal for the litigation. But the story isn’t that they won a billion, the story is that they ONLY won a billion. I mean, who in their right mind with as much money as Samsung is making, Samsung should have written the check and said thank you because they are making tens of billions of dollars a year and all the infringements over how many years is only worth a billion dollars? I mean, I think the same problem we are having in the patent system is one we have in the broader economy when all our leaders all over the world have run up such debt that the amount of debt that we owe is so astronomically high and difficult to get our heads around. I mean, a trillion dollars, twenty trillion dollars, it’s hard to imagine that amount of money and I think when you have in these litigations a billion dollars, that’s a threshold that makes people stand back and say oh my God something needs to be done but just look at how much these companies are worth and how much money they are making.
RC: Right. You just suggested also that the situation might change in the future, you know, buying low and selling high, so do you think the Supreme Court will back peddle in the future or in the short term will it just be tough to get software related patents granted or enforced in the U.S.?
GQ: Well, and this is a difficult question to answer. What I see is there are a lot of people and companies that are having little to no success getting software patents issued. There are also a lot of companies that are having absolutely no problem getting software patents issued and I don’t know whether it is a political problem, I don’t know what exactly the issue is but I just read an article published yesterday that the big banks, Bank of America and JPMorgan Chase, they are getting financial service software patents without any problems.
RC: Yeah, I saw that on IP Watchdog.
GQ: Yeah, and they are the ones that wanted these patents to go away. So it’s hard to understand what is going on at the Patent Office. There are some people getting them and some people not getting them. I do think you are going to see the law change though and what I can tell clients and people with great certainty today is if you don’t file your application today, you are never going to get a patent on it and by the time you ultimately get a final decision if you don’t accelerate the application, it’s likely to be four, five or six years at least. Will the Supreme Court back pedal? I don’t know that they will do it in any relevant quick time but the history in this space shows that they are schizophrenic in that they do come up with diametrically opposite decisions so I think that either the Supreme Court is going to back pedal a little at some point, or Congress is going to get involved and where I think you are starting to see it is up until about six months to a year ago the tech industry was sort of monolithic on this issue but then Apple, Microsoft and some others split away from Google and formed the Partnership for American Innovation and they are talking about how important patents are and how they are needed for innovation so I think maybe the next time these cases go up to the Supreme Court, if you see the Google side submitting amicus and then you get IBM, Apple, Microsoft and all the others on the other side, that maybe then the Supreme Court will stand up and take notice because it does seem, I agree with the New York Times, they wrote a piece not six months ago that explained that the Supreme Court seems to be giving disproportionate attention to amicus briefs and while they are in an echo chamber, they do seem to really try and keep an eye on the industry in a way that maybe is unhealthy if you are just thinking about the law but I do see that over time this could change. Just last week the Federal Circuit came up with a decision, I think it was the right decision, but they found that a software patent claim was patent eligible. So as long as the Federal Circuit keeps making those decisions, you are going to have panel dependency at the Federal Circuit and the Supreme Court is going to be more and more likely to have to step in and they frankly can’t screw up the area any worse than they already have.
RC: Alright. So, the present situation and the present view of the Supreme Court somehow resembles the case law in Europe regarding software patents. So do you think the Supreme Court just wanted to work towards harmonization of patent law?
GQ: You know, I don’t think so. I think Justice Ginsburg is probably the one on the Court who is most interested in that and most comfortable looking to Europe and other jurisdictions but the four conservatives and then the middle of the Court with Justice Kennedy, I don’t think that they have shown a whole lot of interest in, not just this area, but in any area to really try to look at what other countries are doing and then feel the need to harmonize the law. So I think that is more of a happenstance than the Court setting out to accomplish that.
So, I mean that would be one way to explain what is going on and it would be logical and I can understand why you would ask that question because when you see these decisions and you try to line them all up and you look at them, they really are irreconcilable in many ways so how and why did they come up here, that would be as good a reason as any I suppose but I am afraid the reason they have come where they are at is just because of the lack of understanding of the issues involved.
RC: Will you be at Meet the Bloggers during the INTA meeting in San Diego in May?
GQ: I have it on my calendar but May and June are usually terribly difficult for me but I try to take any chance I can to get to southern California so I am hoping that I will be able to keep that open and be there.
RC: Good. I will be there for certain.
GQ: Okay, good.
RC: How can our listeners get in touch with you if they wanted to?
GQ: The best way is to go to www.ipwatchdog.com. That’s the best way to get in touch with me there in our contact form or you can always find me on LinkedIn. LinkedIn is a good way to shoot me an e-mail. I always monitor those pretty good.
RC: Alright. Thanks for being on the show Gene.
GQ: Sure. No problem Rolf. Thanks for having me.
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