Legal Bytes: Patent Wars - Friend or Foe?
     By John Brewer - April 2006

            
      In the United States, a patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. U.S. patent grants are effective only within the United States, U.S. territories, and U.S. possessions. Under certain circumstances, patent term extensions or adjustments may be available.
        The right conferred by the patent grant is, in the language of the statute and of the grant itself, “the right to exclude others from making, using, offering for sale, or selling” the invention in the United States or “importing” the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. Once a patent is issued, the patentee must enforce the patent without the aid of the US Patent and Trademark Office.
       There are three types of patents:
       1) Utility patents may be granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof;
       2) Design patents may be granted to anyone who invents a new, original, and ornamental design for an article of manufacture; and
       3) Plant patents may be granted to anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.
        The owner of a patent who thinks his/her patent has been infringed can sue the alleged infringer under the provisions of the US Code. There have been some recent high-profile cases alleging patent infringement.
       The patent infringement case involving the Blackberry device received a great deal of publicity recently. NTP is a company based in Arlington, Virginia, and was co-founded by Thomas Campana Jr., an engineer. In 1990, Campana created a system to send e-mails between computers and wireless devices. Campana died in 2004 and was survived by his wife, who owns a large stake in NTP. NTP alleged that Research in Motion, Ltd. (RIM), was infringing on the NTP patent with RIM’s Blackberry device. NTP sued. The federal judge assigned to the case urged the parties to settle their differences outside of the courthouse. The parties agreed to settle. It is reported that RIM paid NTP $612.5 million to fully settle any and all claims.
       On March 27, 2006, the New York Times reported the US Supreme Court will hear a patent infringement case involving eBay. MercExchange sued eBay in 2001.
      “The patent in question surrounds the "Buy It Now" feature that eBay uses to allow processing of transactions for the Web site's fixed-price purchasing option. The Supreme Court will decide whether a federal appeals court was correct in reversing a district court's decision to deny an injunction against eBay's use of the feature. In doing so, it will reconsider a precedent from 1908, which suggested that injunctions were always an appropriate remedy for patent infringement.
       Supporting briefs from third parties, including some unlikely ones, have piled up for each side. A pharmaceutical industry trade group filed a brief in support of MercExchange, as did General Electric, Proctor & Gamble, the University of California, a group of venture capitalists and the United States government. All argued in favor of injunctions against those who infringe patents.
       A brief filed jointly by Oracle, Microsoft and Intel in support of eBay argued that the injunction rule "has transformed patents into a powerful tool for litigation abuse" and "stifles innovation." eBay has hired Juleanna Glover Weiss of the Ashcroft Group, a lobbying firm in Washington founded by John Ashcroft, the former United States attorney general, to help with communications efforts related to the case and patent issues in general.
        The issue that is before the Supreme Court is whether the federal circuit court's ruling correctly interpreted federal patent law, which authorizes judges to grant injunctions but does not require them to do. An issue that is germane to this battle is that the holder of the patent may not be actually using the patent in commerce but is “sitting” on the patent. The Supreme Court agreed to hear the case after the United States Court of Appeals for the Federal Circuit, a specialized court in Washington that hears all appeals in patent cases, overturned the lower court's decision and ruled that MercExchange was entitled to an injunction. The appeals court said that injunctions were the "general rule" in patent infringement cases, and should be withheld only in such "rare instances" as "the need to use an invention to protect public health." In his decision to withhold the injunction, the district court judge noted that MercExchange "exists solely to license its patents or sue to enforce its patents, and not to develop or commercialize them."
       Patent litigation is expensive. One report estimates that the expenses of a patent infringement case average $5 million, per side. Due to the volume of litigation, lobbying groups are urging Congress to revise the patent laws. Some observers tend to use the term “reform.” The term “revise” is more appropriate. “Hundreds of patent infringement cases are pending against computer software and hardware manufacturers,” Emery Simon, a lawyer for the Business Software Alliance trade group, said in testimony last year before the House Judiciary Committee. He argued that the problem has become endemic in the technology industry.
       One thing is certain; industry lobbyists will probably persuade Congress to modify current patent laws. Business tends to get its way with the current Congress. Will the end result be beneficial to the consumer? The answer to that question is reserved.
 

John Brewer practices law in Oklahoma City, is a member of the Governor’s and Legislative Task Force for E-Commerce, and enjoys issues relating to eBusiness and cyberspace. Comments and questions are welcome and can be emailed to johnb@jnbrewer.com.

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