US Supreme Court to Take on Software Patents

Software patents have been a somewhat controversial topic within the IP community for some time now, especially due to their heavy association with patent trolls. These Non-Practicing Entities (NPEs) or otherwise known as Patent Assertion Entities (PAEs) exist for the sole or primary reason of enforcing patents which they own with no actual intention to ever use them themselves for the development of goods or services. As such these practices are highly questionable, at least on an ethical standpoint. The Goodlatte Innovation Act is attempting to curb these practices; however has yet to pass through the legislature and become law in the United States, following a similar approach to their Kiwi brothers in New Zealand who have since, potentially at least, ended software patents in late 2013. Software patents have been disputed in the long-going case of Alice Corporation v CLS Bank, which is being heard in the US Supreme Court, and will undoubtedly address the current state of software patents and their use in the US.

The case concerns several patents owned by Alice Corporation relating to the facilitation of securities trading, and more specifically, the reduction of risks for parties not fulfilling their part in their contractual obligations such as patent number 7725375. Independently from Alice CLS Bank developed their own software which fulfilled a similar function, potentially infringing Alice's patents. Due to this CLS sought a declaratory judgment from the courts intending for Alice's patents to be invalidated, as per their argument, the patents would not be patent eligible due to them being merely abstract ideas, not falling under the requirements of 35 USC section 101. CLS' argument asserts that what Alice have patented merely covers basic economic concepts; however Alice argue that abstract ideas should only be interpreted narrowly, including things such as facts of nature. Ultimately the Supreme Court face the dilemma of deciding how far the abstract patent doctrine extends, potentially impacting a large industry of software patents.

Soft wares can be quite nice during Winter

Abstract ideas, although expressly prohibited by the Supreme Court in their decision in Diamond v Chakrabarty, are still assessed on a case-by-case basis, still leaving ideas which seem abstract potentially within the remit of section 101. As such the Supreme Court has stated that "...Congress took this permissive approach to patent eligibility to ensure that ingenuity should receive a liberal encouragement", allowing for a wide margin of flexibility within this scope. The rationale behind the rejection of abstract ideas is because "...abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work".

In the District Court of the District Columbia Justice Collyer saw that Alice's patents were not eligible as they sought to patent, in her Honor's mind, fundamental concepts and were therefore abstract ideas. Subsequently in the Court of Appeals the decision of the District Court was reversed, deciding that "[t]he asserted claims appear to cover the practical application of a business concept in a specific way", noting their extensive implementation through computers. The limitations the patents' implementations faced was, in the Court's view, integral to their patentability, therefore not merely encompassing abstract ideas which could be implemented quite easily. CLS sought an en banc (all of the judges of a particular court reside as opposed to only a select few) rehearing of the decision. With the Court of Appeals rehearing the case en banc, the majority of the Court of Appeals' judges saw that the patents were not patentable due to their abstract nature, concurring with the initial District Court decision.

As one can very well see the case is very complex and while this article aimed to set out the basics of the case as an informative starting-point prior to the Supreme Court decision, some specifics had to be omitted. This writer would welcome any and all interested in this case to read the included source material thoroughly if you want a more nuanced understanding of the case as a whole.

The case ultimately boils down to how the Supreme Court balances a much narrower definition, preventing partly or mostly the definition of more general ideas in software, against a broad-ended, much vague definition of an abstract idea, potentially inhibiting future innovation as a result. Justice Breyer touched on this, preferring a much narrower allowance of abstractivity: "...instead of having competition on price, service and better production methods [if software patents are not allowed or restricted], we'll have competition on who has the best patent lawyer". Arguably Justice Breyer does have a point, and the backlash against software patents in the past several years would only indicate such a direction as well. But again, the issue is not that simple, and this writer for one awaits the Supreme Court's decision with interest.

Source: The Guardian

Free Speech and Copyright - When Copyrights and Personal Rights are at Odds

Although intellectual property law protects expression in its multitude of applications sometimes it comes at odds with the rights that are conveyed through the aforementioned expression, whether it was intended or not. Previous examples are the potential curtailing of criticism by using trademarks, where the line between the intended protection offered by trademarks and its potential misuse against freedom of speech came to light. Copyright in itself can potentially be used in a similar fashion, although most common law jurisdictions do expressly allow for copyrighted content to be used for criticism. A recent instance in the United States faced this very conundrum; can copyright trump your right to criticize another?

The case in question was Garcia v Google, which concerned Ms. Cindy Lee Garcia, who acted in a small role in a movie titled "Desert Warrior" (a working title at the time of casting). Even though Ms. Garcia had participated in the filming of the movie, the finished film never saw the light of day. Some time after Ms. Garcia's scene was used in the infamous YouTube video "Innocence of Muslims", in which her scene was partially dubbed having her say "is Mohammed a child molester?". As a result Ms. Garcia soon began receiving death threats from various parties, and she subsequently took precautions and asked Google to remove the aforementioned video relying on the Digital Millennium Copyright Act and its take-down provisions. Google refused her initial reasoning for the video's removal, finally having Ms. Garcia resort to a copyright claim over the video's content, asserting it infringed her copyright in her performance.

Although the case discussed Ms. Garcia's copyright in the film quite extensively, it remains but worth a mention. In Chief Justice Kozinski's judgment Ms. Garcia did have a copyright interest in the film, even though her part was only 5 seconds long in a 13 minute video. As a copyright interest was seen by the court Google were ordered to remove the video from YouTube due to it infringing the aforementioned rights. In Chief Justice Kozinski's view this was a matter of balancing equities, in other words, an assessment of the balance of fairness, and saw that Ms. Garcia's rights in the video overshadowed those afforded in the First Amendment of the American Constitution through free speech. Her security was also a consideration in this assessment; a truly sad result of her unwilling part in the video.

Compliance, or passive aggressiveness?

What should be discussed in this instance, and has rightfully so become the vocal point of this case, is whether copyright should be able to be used to curtail free speech. As Google argued in the case: "[a] court order requiring removal from YouTube of the Film or any portion thereof would impose a substantial burden on free expression, without preventing any future harm to [Ms. Garcia]". In the majority's opinion Ms. Garcia only had the likelihood of success in her claim, or in other words, potentially had a copyright interest in the work, and the majority subsequently saw that this potential interest would weigh heavier than the public interest under free speech. Commenting on this, in his dissenting judgment, Justice Smith saw that "...the law and facts do not clearly demonstrate how granting a preliminary injunction in Garcia's favor would serve the public interest". Clearly one can agree with Justice Smith in this instance, at least under these facts. Although this writer fully accepts that Ms. Garcia's safety is paramount and should be a consideration in this instance, her argument fails in the uncertainty of her copyright interest and lack of concrete harm caused. Her protection should not be handled through copyright, and as stated by Justice Smith: "It's disappointing, though perhaps not surprising, that Garcia needed to sue in order to protect herself and her rights".

The Garcia case is an unfortunate result of unforeseen circumstances and the infamy to which the video rose. The decision has since come to a vote over whether the 9th Circuit Court of Appeals should rehear the case. The video's infamy served a two-fold purpose when gauged under US law; it started a conversation over religion and attitude's towards it, however it also caused severe distress to Ms. Garcia and even fear for her life. Her argument through copyright was flimsy at best, but seemingly was her only avenue for respite. The majority's view on the matter can be argued to be incorrect, and does not fairly assess the balance between her alleged copyright interest and the public interest. As Google stated: "...[o]ur laws permit even the vilest criticisms of governments, political leaders, and religious figures as legitimate exercises in free speech", and this right should be protected, although not used as a veil to protect those who wish to blatantly infringe copyright under the guise of free speech. Even though copyright and free speech do overlap quite extensively, their relationship does come with a price, and each case will present a different situation where the court will have to find the right spot where protection is afforded, but not at the expense of free speech. Copyright serves as a shield to those expressing themselves, and it should not be used to stifle others; something which clearly was not Ms. Garcia's intention in her action.

Source: Reuters

Retrospective - The Modern Concept of Breach of Trust in Intellectual Property

As was discussed on this very blog some five months ago, trust is imperative in the sphere of invention. With billions of dollars being put into the research and development of products, services and intellectual output, maintaining the veil behind which the future monetary incentive lies is highly important. Without this companies and individuals would have a hard time gaining from their innovations, and it could potentially cause stagnation within technology and creative output as no real reason exists for the investment. The previous article touched on the early days of breach of trust in such instances where such a fiduciary relationship is broken, but such actions have since evolved and stand far from their origins in the mid-1800s.

Often thought of as the modern basis for breach of trust is the case of Coco v A N Clark (Engineers), decided in 1969 in the High Court of the United Kingdom. The case concerned Marco Paolo Coco, a man who designed an engine to be used in mopeds, subsequently entering into negotiations with Clark for the manufacture of the aforementioned engine. During these meetings Mr. Coco provided the defendant information relating to the engine under the expectation that they would manufacture it once the negotiations had ended. The negotiations broke down eventually and no contract was entered into by the parties. After this the defendant started to develop their own moped engine, the design of which resembled Mr. Clark's engine quite vividly, leading to Mr. Coco arguing the defendant had purposefully broken down the negotiations in order to develop its own engine based on his design; subsequently seeking an interim injunction to prevent the defendant from using the information he had provided them for the production of their engine.

Orville had also developed a moped with more "fantastic" results

In the end the High Court had to decide whether Clark had breached the trust between them and Mr. Coco. Justice Megarry, in his judgment, saw that three elements had to be satisfied for there to be a breach of trust: "First, the information must itself... have the necessary quality of confidence about it; secondly, that information must have been imparted in circumstances importing an obligation of confidence; [and] thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it". Whether the information does possess the quality of confidence was well defined by Lord Greene in Saltman Engineering v Campbell Engineering: "The information, to be confidential, must, I apprehend, apart from contract, have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document... which is the result of work done by the maker upon materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process". The latter two requirements are an assessment of whether a reasonable person would see the circumstances are importing a quality of confidence, while the claimant would then have to give evidence as to the unauthorized use of that information and the detriment which resulted from that use.

Having considered all of the aforementioned requirements the claimant's action failed, and no injunction was therefore granted. In Justice Megarry's decision the claimant's case was weak at best, and his Honor saw that where information was given to the other party in the expectation that the claimant would be paid, the Court saw that an injunction would not be an appropriate remedy in that instance. Justice Megarry did, however, order that Clark would have to pay a royalty of 5 cents per engine to the claimant should he intend to manufacture those engines.

The Coco case perfectly illustrates the potential loss and problems which could result from a breach of trust should the other party abuse that information for their own benefit. Although the case failed, it still remains an important hallmark in assessing whether a breach of trust has occurred even today all over the common law. 

What is Inappropriate in Trademarks?

As times have changes and society has moved on from its perceptions about race and related terminology, what is acceptable and what is not has shifted quite drastically. This type of shift more often than not also impacts the judicial sphere, and a great area where this can be seen is trademarks. Under several common law jurisdictions, such as the US, Canada and the UK, certain marks are not registrable because they are disparaging against certain people or is contrary to public morality. What entails such a mark will change as society's perceptions over what is offensive or disparaging change; however this issue has been brought back to light after a recent US Patent and Trademark Office decision over a mark.

The mark in question was 'Washington Redskin Potatoes', relating to the marketing of entertainment services and certain merchandise, with no actual connection to the sale or marketing of potatoes. In addition to the confusing connection with foodstuffs the services being sold by the applicant have nothing to do with the famous American football team either, increasing the uncertainty behind the name and its use.

Irrespective of these considerations what remains interesting is the rejection of the mark by the USPTO as they deemed "...the connotation [of the word Redskin] is disparaging", backed by the National Congress of American Indians' view on the word. This raises a point about the legitimacy of the Washington Redskins' trademark as well, due to it using the same mark which has been clearly deemed as disparaging. This, however, is still not as straightforward as one might think based on the USPTO's assessment of the Redskins Potatoes mark. In the case of Pro-Football v Harjo the very mark the football team owns came into contention, with the Court of Appeals upholding the team's mark due to the appellant not being able to challenge it as they were late to do so, and thus failed under equity. Although the initial Trademark Trial and Appeals Board decision did state that the mark "...may be disparaging of Native Americans to a substantial composite of this group of people... [and] may bring Native Americans into contempt or disrepute"; clearly aligning itself with the rationale of the USPTO's decision some 15 years later, the issue of whether the mark would be disparaging to American First Nation people never was fully addressed on appeal due to the inexcusable lateness of the complaint by the appellant.

How would such marks be treated in other common law jurisdictions then? In Canada the Canadian Trade-Marks Act stipulates that a mark cannot be awarded if it is "...likely to be mistaken for... any scandalous, obscene or immoral word or device". This could be a number of things, which could include names which could be seen as derogatory towards a subset of people, such as First Nations people. The Washington Redskins however do own the trademark in Canada as well as the US, clearly demonstrating that the mark could be seen as acceptable, although having been registered over 30 years ago. The mark has never been challenged in Canada, but should the Redskins' mark be challenged further or even potentially lost, it would undoubtedly spur Canadians to do the same.

In the UK under the current Trade Marks Act 1994 no marks can be registered which are "...contrary to public policy or to accepted principles of morality". In the case of Re Hallelujah Trade Mark this was seen to being an assessment of morality under current standards as to not cause offense to anyone or any segment of the populous. Much like in the US and Canada the mark is still registered in the UK, clearly indicating an acceptance of the mark which was registered nearly 30 years ago. The mark has not been challenged in the UK.

As can be clearly seen what is immoral or inappropriate can vary wildly over decades or even years, making a definitive line differentiating what is or isn't appropriate almost impossible to set. Morality has always been a subjective concept, making it even harder for the judiciary or the legislature to effectively enforce it without upsetting one party or the other. What can be said through the Redskins saga is that not all marks exist purely for the sake of offense, and that what truly is inappropriate in trademarks has to be left open and moldable to the standards that exist at the time of assessment. Whether the Washington Redskins' mark will be further challenged will be left to be seen; however this writer for one thinks most parties will not be able to do so under equity, at least not in the US.

Source: Bloomberg

Retrospective - Inventive Step in Patents

Improvements on older inventions is arguably the cornerstone of technological advancement, and more often than not can be equally or even more important than the original invention. This however has to be balanced between what is truly an improvement and what is merely something presented under the guise of an improvement only to be able to control currently or formerly patented subject matter. Under the Patents Act 1977 this is a matter of assessing whether the improvement in question is an 'inventive step' under the Act. The provisions defines this as being such if "...it is not obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art". Although the section is clear in its intent, the test in how this would be assessed was left to the courts to further specify on.

The case in question which tackled the inventive step, laying down the modern application of this requirement was Windsurfing International v Tabur Marine (Great Britain), decided in 1985 in the Court of Appeal. It concerned a patent which protected the design of a wind surfboard, owned by Windsurfing International. The patent essentially consisted of a surfboard to which a triangular sail was attached, providing wind propulsion for the board, and a joint allowing for the sail to move according to where the wind was coming from. The defendant was licensee of the patent, operating in the UK. The two parties subsequently fell into a dispute, after which Windsurfing International sued the defendant for patent infringement. Although the case related to the old Patents Act 1949, the principle of inventive step still applies to the current 1977 Act even though the two pieces of legislation differ.

Cowabunga, dude!

The defendant challenged the patent through their argument that there was nothing new or novel about the patent where a sail is attached to a surfboard, asserting that the patent did not involve an inventive step, therefore allowing the Court to revoke the patent. Similar designs have been published in the US and the UK in related magazines in the late 1960s, and the defendant also presented evidence where a 12-year-old boy had made a similar craft as early as 1958 in the UK, predating the patent by over a decade.

Respective of all evidence presented in the case the Court was still faced with the question of whether the patent included anything which was new, and therefore involved an inventive step, protecting it from revocation. The question was aptly answered by Justice Oliver, who subsequently postulated the test for obviousness in relation to the inventive step:

 "...[the question] has to be answered, not by looking with the benefit of hindsight at what is known now and what was known at the priority date and asking whether the former flows naturally and obviously from the latter, but by hypothesizing what would have been obvious at the priority date to a person skilled in the art to which the patent suit relates, who is assumed to have access to what was known of the art in the [UK] immediately before the priority date".

The test, in other words, is an assessment of what the new idea or concept is which is protected; who would be a skilled person in the related art and what would his knowledge be based on commonly available information in the art be at the time; what are the differences between any pre-existing art which is used in comparison; and whether the differences or improvements in the new patent would have been obvious to the aforementioned person skilled in the art. The Windsurfing test has since been further clarified in the case of Pozzoli Spa v BDMO SA, but still remains quite relevant in deciding whether a patent truly involves an inventive step or not. In the case the patent was revoked, as prior art clearly showed the patent did not involve any steps which were not obvious to a skilled person in the art, with the Court heavily relying on the evidence provided where a 12-year-old boy had preempted the design, making the creation of such a craft quite obvious to anyone even remotely skilled in the area.

Similar considerations are made under other common law jurisdictions, such as under the Canadian Patents Act or in the United States; however the North Americans often refer to this as non-obviousness rather than an inventive step. Bar the different wording the substantial considerations are very much alike. This only shows how important true inventiveness is under patent legislation.