Keynote Lecture: "Stalemate or Statesmen? What Is
Needed to Move Forward Constructively with the Balancing of America's IP
System"
Speaker: David Kappos, Partner, Cravath, Swaine & Moore
We’ve demonstrated ability to achieve stalemate. Not likely
to change unless we step back from political fray and bring diverse but not
incompatible interests together. IP-intensive
industries provide millions of jobs. But
that doesn’t mean that all is perfect in the underlying system. They said the
AIA couldn’t be done, but it was—now how do we fix patent litigation?
There’s no solution to stop all aggressive litigation
tactics that won’t marginalize the patent system to the point of irrelevance.
One person’s abuse is another’s defense of a right. Americans have always been
litigious.
Judges can do a good job within the system: we had hot
debates over things like the standard for obviousness and royalties in patent
cases. We ultimately found ourselves at
an impasse, but the Court stepped in and in major decisions completely solved
various problems. KSR (obviousness); Seagate
(willful infringement); eBay
(injunctions); etc. Same scenario now: Court is addressing remaining challenges
in litigation. Participants in the
debate naturally want more. Some say
court decisions aren’t as permanent as legislation, but permanence improves
over time as judicial precedent takes shape.
But legislation is needed to address problems the courts can’t.
Topic 1: fee-shifting.
Helpful decisions have emerged since Octane
Fitness. Cal. ct. ordered a company
to pay fees after it filed an unreasonable infringement suit. Judge considered whether P’s attys should be
sanctioned for filing an unreasonable suit. The better part of valor is to let
the system work. Don’t act preemptively.
Topic 2: demand letters. Pending troll bill substantially
addresses this issue. One person’s
aggressive demand letter is another’s defense of her property. Troll bill does
what reasonably can be done.
Topic 3: discovery.
Legislative provision should be aspirational (respect separation of powers)—heighten
pleading requirements where sensible but using Judicial Conference as
implementation vehicle for staging, etc.
Wouldn’t be panacea but would have virtue of leaving decisionmaking
authority to those best suited to react to particular circumstances in front of
them. It’s true courts have had time to deal with these issues but haven’t, but
it’s also true that courts are more focused on these issues than in the past.
Congressional encouragement would give reason to fix it themselves.
Topic 4: covered customer stays. Retailers, coffee shop
owners etc. want to be left out of suits targeting their off the shelf tech
products. Seems logical at first that
such users should be dismissed. Problem: many technologies are highly
customizable and it’s difficult for a fixed statute to figure out if an
infringement is inherent in an acquired IT solution, or whether the situation
is caused by aftermarket user modifications, in which case the user shouldn’t
be permitted to walk away. A bright line can be drawn, but customer added
modifications are too complex/varied for any bright line rule. Fortunately, courts have stepped in. June: Nintendo and 11 retailers won a writ of
mandamus from Fed. Cir. instructing dct to sever and stay claims of patent
infringement against retailers while case against Nintendo proceeds. Drew a distinction b/t manufacturer of
potentially infringing game and retailers.
Demonstrates the courts generally know how to deal with customer stay
petitions and law already provides for proper handling—mere retailers have
succeeded in 18 of 24 motions to stay filed in the last 15 years. A calibrated solution is in order for the
limited issues with covered customer stays.
Topic 5: CLS Bank
and Myriad: While fixing law, why not
deal with cases where courts have stuggled with policy and tech and provide
guidance in what’s plainly legislative territory? Congress has declined for
over 200 years to enact limits on PSM except in most extreme cases. SCt has heard 9 cases in last 50 years over
PSM, creating a hash of decisions that can’t be reconciled. Bilski,
Prometheus, and the other 2 finally
appear to be circling around the best available standard, abstractness. This
isn’t objective, admittedly, and hard to charge patent examiners with it. Currently: A coarse test that eliminates only
the clearest of infractions; overreliance on §101 is dangerous to our country’s
economic health. Codifying abstractness narrowly could, in one step, steer away
from overreliance on §101 and reassure innovators that breaking new ground in
biotech, 3D visualization, etc. is every bit as inventive as others.
Topic 6: Nautilus:
Decisive action where it is needed to reenergize requirement clear disclosure
of claims and specifications as part of the bargained-for exchange that is the
patent system. Codification of claim
definiteness would do as much to curb abuse as any of the proposals debated
this year.
Topic 7: PTO funding.
Fees should be retained. This would do more for job creation/economic
growth than any other patent reform proposal currently on the table. If granted
access to user fees, USPTO is in position to hire, train and retain a quality
workforce granting quality patents that are defensible and not used as tools of
abuse. Make the USPTO’s own resources
available to the agency, increasing speed and
care.
Q: how can Chicago IP community get more involved in patent
reform?
A: academics focused on data-driven research. Study from last year, in part from
Chicago-Kent, going through the so-called dramatic increase in litigation,
revealed to the world that this wasn’t just trolls but was more complicated,
was a breakthrough. Raising your voice
to support that.
Rebecca Eisenberg: codification of abstractness as imperfect but best we can
do. But it seems like it was the only
thing the SCt could agree on because they didn’t want to adopt any new nonstatutory limits. But if you’re going to Congress, Congress
could do more than shovel computer programs into abstractness which previously
was about E = MC2 and the like. Why codify something so flawed?
A: The most difficult issue that faces our patent system
right now. Big regret: shouldn’t have
left §101 at the beginning of the patent statute, as if it was Contracts
101. It should be the backstop and not
the first stop. 102, 103, and 112
examination is sufficient—if you pass those, 101 should be no problem. 101 is
the hardest place to try to craft clear standards. You should almost never reach it, and PTO almost
never does. Abstractness is the best
courts have come up with; if we try to move to something more precise and
clear, we’ll find as we did in © that we can’t anticipate the future. Our great
strength is flexibility—avoid the temptation to tie things down too quickly in
patent law. Flexibility means ambiguity;
we have to come to grips with that. A very generic term like abstractness or
something similar is about the best we can do; need to settle the issue and
keep moving.
My one comment: it's interesting that I've heard nothing about design patent here. The cases haven't (yet) reached the Supreme Court, but when we talk reform, design patent should probably be on the agenda too.
My one comment: it's interesting that I've heard nothing about design patent here. The cases haven't (yet) reached the Supreme Court, but when we talk reform, design patent should probably be on the agenda too.
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