Boon or Bane for Technological Innovation?: Software Patents

Pure software patents have become the focus of a heated innovation policy debate. On the one hand, new technological innovation is now a commonplace feature of our lives.  On the other hand, the high-tech industry seems awash in patent litigation, especially in the “smart phone war” between Apple, Samsung, Google, Microsoft, and other high-tech firms.

As a result, commentators now complain about the “problem of software patents.”

The IP Practice Group at the Federalist Society for Law and Public Policy Studies is now hosting a teleforum thatb will consider whether software patents advance development of new technological innovation or hinder innovation. The panelists represent all viewpoints on this topic and bring academic, legal and industry experiences to the issue.



Call begins at 2:00 p.m. Eastern Time on Tuesday, November 6, 2012.

Registration details:

Teleforum calls are open to all dues paying members of the Federalist Society. To become a member, sign up here. As a member, you should receive email announcements of upcoming Teleforum calls which contain the conference call phone number. If you are not receiving those email announcements, please contact them at 202-822-8138.

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Conference on the Life Cycle of Orphan Drug Development & Commercialization

Conducting Effective Orphan Drug Research and Clinical Trials to Expedite Orphan Drug Approval

When:    January 16-18, 2013
Where:   Boston, MA

Key Topics

Improve current rare disease research methods used in early stages of orphan drug development with Genzyme
Evaluate where the rare disease research units fit in the portfolio for large and niche pharma companies with Pfizer
Utilize translational medicine to be effective in orphan drug development with Vertex
Collaborate with patient advocacy groups to increase patient recruitment in clinical trials with BioMarin
Review the FDA Safety and Innovation Act and its impact on orphan drug reserach and development with National Organization for Rare Disorders

Key Features

2 Pre-Conference Workshops on January 16, 2013

  1. Pre-Conference Workshop A: Integrating Gene Therapy and Stem-Cell Therapy Treatments in Rare Disease Clinical Trials with ReGenX Biosciences, LLC
  2. Pre-Conference Workshop B: Exploring New Solutions to Reduce the Orphan Drug Funding Gap with Asklepion

Event Focus

The orphan drug and rare disease industry is one of the hottest topics in modern day medicine. With blockbuster drugs coming off patent, there is a great need for pharmaceutical companies to diversify their portfolios by exploring niche markets. The increasing presence of high-profile manufacturers in the orphan drug industry provides these companies with this opportunity.

The Life Cycle of Orphan Drug Development & Commercialization Conference will focus on the current landscape of rare disease and orphan drug development, different forms of structural based drug designs, and specifically designed clinical trials.  Through these clinical trials, and by having connected to the right patients to participate, will increase productivity and expedite orphan drug approval and commercialization of the final product.

By attending this conference, delegates will gain a comprehensive view of the orphan drug and rare disease industry and will have a clearer understanding of the natural histories of rare diseases and how to most effectively treat them. Through maximizing translational research methods to evaluate bio-markers and surrogate markers in the patient’s body, this will assist in the design of orphan drug clinical trials resulting in quickly obtaining results and being able to send the orphan drug in for FDA approval.

Attending This Conference Will Enable You To:

  1. Assess the current rare disease department within the pharmaceutical industry
  2. Analyze current orphan drug developments and treatment methods in clinical trials
  3. Select the optimal patient target market to engage in rare disease clinical trials
  4. Review orphan drug regulations and accelerate orphan drug approval
  5. Address the importance of reimbursement and commercialization in the orphan drug industry

Industry leaders attending this conference will benefit from a dynamic presentation format consisting of workshops, panel discussions, and industry-specific case studies that provide accurate, real-world knowledge. Attendees will experience highly interactive conference sessions, 10-15 minutes of Q&A time after each presentation, 4+ hours of networking, and exclusive online access to materials post-event.

Register here.

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A special treat this week is a great podcast by Professor Richard A. Epstein, in which he offers his usual brilliant and insightful commentary on the patent system. As is to be expected, Richard packs about 3 hours of intellectual content into a 1-hour event.

To listen, please right click on the audio file you wish to hear and then select “Save Link As…” or “Save Target As…” After you save the audio file to your computer, you can then listen to it in your audio player of choice.

  Patent Rights: A Spark or Hindrance for the Economy? – MP3
Running Time: 00:54:30

Critics, including Judge Richard Posner, have argued that the patent system has led to excessive patenting, too much litigation, and unwarranted costs for consumers. Patent defenders have responded that with every spike in innovation comes a corresponding increase in the number of patent suits, and efforts to weaken patent rights will inevitably lead to less innovation.

Despite the passage of the America Invents Act,  the debate over intellectual property continues after a string of high profile patent infringement suits in the smartphone industry.

Would reduced patent rights diminish U.S. competitiveness and depress innovation? In a diversified economy, should so-called “non-practicing entities” (NPEs) have fewer patent rights than those that manufacture their inventions?


  • Prof. Richard A. Epstein, Laurence A. Tisch Professor of Law, New York University School of Law
  • Prof. Adam Mossoff, Professor of Law, George Mason University School of Law
  • Moderator: Mr. Dean Reuter, Vice President & Director of Practice Groups, The Federalist Society

*via Adam Mossoff and the IP Practice Group at the Federalist Society for Law and Public Policy Studies.


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The U.S. Commerce Department’s United States Patent and Trademark Office (USPTO) and the European Patent Office (EPO)  announced publication of a classification system meant to speed the patent granting process for applicants to both Offices.

The Cooperative Patent Classification (CPC) system and finalized CPC definitions are now available in advance of the January 1, 2013, official launch. The CPC is a joint USPTO-EPO project aimed at developing a common classification system for technical documents in particular patent publications, which will be used by both offices in the patent granting process.

The CPC system, which includes approximately 250,000 classification symbols based on the International Patent Classification (IPC) system, will enable users to conduct efficient prior art searches and incorporate the best classification practices of both the U.S. and European systems. It will also enhance efficiency through work-sharing initiatives designed to reduce unnecessary duplication of work.

Why CPC?

The EPO and USPTO both have highly developed patent classification systems. CPC is an ambitious harmonization effort to bring the best practices from each Office together. In fact, most U.S. patent documents are already classified in ECLA. The conversion from ECLA to CPC at the EPO will ensure IPC compliance and eliminate the need for the EPO to classify U.S. patent documents. At the USPTO, the conversion will provide an up-to date classification system that is internationally compatible.

What is CPC?

The Cooperative Patent Classification (CPC) effort is a joint partnership between the USPTO and the EPO where the Offices have agreed to harmonize their existing classification systems (ECLA and USPC, respectively) and migrate towards a common classification scheme. This is a strategic decision by both offices and is seen as an important step towards advancing harmonization efforts currently being undertaken through the IP5’s Common Hybrid Classification (CHC) project.

The migration to CPC will be developed based in large part on the existing European Classification System (ECLA) and will be modified to ensure compliance with the International Patent Classification system (IPC) standards administered by the World Intellectual Property Organization (WIPO).

Since October 2010, the USPTO and EPO have worked jointly to develop the CPC. The results of their work are now being made available through a CPC launch package that includes the complete CPC system, any finalized CPC definitions and a CPC-to-IPC concordance.

The CPC definitions will be available for every CPC subclass and contain a description of the technical subject matter covered in the subclass. Eventually, each CPC subclass will have a corresponding CPC definition that will be continuously maintained. The CPC-to-IPC concordance will help users find the relevant IPC area on which the CPC is based.

For more detailed information about the new classification system, including downloadable sections, CPC definitions and concordances, please visit the official CPC website.

See also:  Moving towards a global patent system

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Nobody ever goes home and says, honey, let me tell you about what I learned about patents today.”
~Charles Duhigg, New York Times reporter

Terry Gross of NPR’s Fresh Air program did a segment about patents today with an interview with Charles Duhigg, a New York Times reporter who recently wrote about the patent wars in the article “The Patent Used as a Sword,” co-written with Steve Lohr. Duhigg is a reporter for the Times who is contributing to their current series on the iEconomy.

The episode focuses on the story behind Apple patents and how patents have become weapons in the wars between smartphone companies and the wars between start-ups and established high-tech companies.

Here’s an excerpt from National Public Radio:


And we were trying to understand how to make sense of this, the fact that there are some people who can graduate from college, they go and they start the right company, and they get bought for a billion dollars within a couple of years, and thousands and thousands of other people who don’t have any jobs, who can’t find work even though they’re willing to work, they’re well-trained, they literally can’t find the jobs to absorb them.

[W]e really wanted to ask this question: What has happened to the economy? And what we found is it’s been a slow process, but the transition from an industrial to a digital economy is as transformative, as significant, not only for the economy but for people’s lives, how people do work and how people should think about their own work, as the transition was from an agrarian economy to an industrial economy 100 years ago.


And what you’re finding is some of our laws and ways of doing business are really out of date, even though those laws haven’t changed, which leads us to patents. And I want to mention an astounding figure or two here. This is according to a Stanford University analysis that you quote. In the smartphone industry in the past couple of years, as much as $20 billion was spent on patent litigation and patent purchases.

That’s the equivalent of eight Mars Rover missions. Last year for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products.


So the idea [behind patents] was to encourage innovation, but what’s happened, particularly in the last 15 years and in software in particular, in technology, is that rather than patents becoming something that encourages innovation, patents have become essentially a barrier, a toll gate on the road of innovation because patents have become so broad, so amorphous that if someone can get a patent on kind of a completely commonplace technology, what they can do is they can say to everyone else: Listen, if you want to invent this widget that you’ve invented on your own, that hundreds of people have invented at this point, I own the intellectual property on that widget. So I can stop you from using or selling that widget, or I can force you to pay me for it.

[T]he rise of smartphones was mirrored by the rise in the understanding by technology companies that they can patent almost anything, and their aggressive moves into pushing the patent office into granting them patents on almost any idea they could come up with.

In a discussion of Siri, the voice-recognition system that the Apple iPhone introduced last year:


They just invented the concept, and that’s almost always true now. Companies come up with a concept, and they file the patent for the concept before they actually figure out and make the concept into a product, because it’s a race to the patent office. It’s a race to try and get your patent in there first.

The difference with the cotton gin is, Eli Whitney didn’t say I’m patenting every way to ever remove a seed from cotton. Instead what he said is, I’m patenting this machine, and you really can’t do that many variations on this machine.

Today you can say I’m patenting essentially a concept. I’m patenting essentially an abstract idea, and as long as I say it can happen on a computer, I own every application of that idea going forward for the next 20 years.

So if someone comes up with some application that you’ve never dreamed of, if someone comes up with – dreams up, for instance, Siri, a voice-recognition digital assistant, even if you never thought of that when you were writing the patent application, you now can claim ownership over it.


So is this happening now, where somebody invents a way of doing something, like an application for devices, and they find out that they can’t do it because the concept has already been patented? The application didn’t exist, the way of doing it didn’t exist, but just the concept had been patented, and therefore this person can’t move forward with their application?


Absolutely, that literally happens every single day. If you are now a startup in the digital space, as soon as your product becomes even moderately successful, you will get sued by someone who holds a patent on a concept that they say that you’re violating.

I’m not sure what to say about this since this is a generalization and it’s just not true. You cannot patent an idea.  You can patent an invention, which is the concrete expression of the idea.  Under U.S. patent law, all patents — whether for a smartphone or for a business method — are judged according to the same criteria as other types of patents. Patent applicants must show that the invention is new and nonobvious and applicants must describe the invention such that a person in the industry would know how to make and use the invention.

Much of the current controversy around patents has been because certain applicants have tried to patent ridiculously vague and suspect ideas for the sole purpose of initiating lawsuits.


Now, there’s a counterpoint, which comes from a lot of people like, for instance, Judge Richard Posner, who’s a very well-respected federal appellate judge, or a paper that was recently published by the – a working paper from the St. Louis Federal Reserve, that says we don’t believe that patents are necessary.

We think that Apple, if they create, invent the iPhone, and they sell it, they’re going to make so much money on that even if other people can try and copy and imitate them, Apple will be well-compensated for all of its research and development.

Now, Apple makes about a billion dollars a week on iPhone sales, maybe even more now that the iPhone 5 is out, we don’t know the latest numbers. And what Richard Posner would say is, look, if you’re making a billion dollars a week, you have earned back the cost of inventing the iPhone many times over.

I realize this sounds good in a vacuum but there is nothing in patent law that says you can only make back a certain return on the “inventing” of your product.  Without taking into account all of the “inventing” that never becomes a product, how could this ever be determined?  Besides, the cost o inventing is not necessarily proportional to the invention.  One person could spend 10 years and 10 million dollars working on an idea and never develop a working invention.  Another person could spend 10 days and $10,000 and come up with something revolutionary.  Money and invention are often related but they’re never tied together in any kind of formula.

I love NPR and (sometimes) the NY Times but I wish they’d talk to experts instead of reporters.

You can read the rest of the interview at NPR’s website,

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“Effective and Practical Strategies for Prosecuting and Litigating Biotech Patents in an Increasingly Uncertain Legal Environment” American Conference Institute’s 14th Advanced Forum on Biotech Patents

The ongoing implementation of the America Invents Act and a massive upheaval of subject matter patentability signal that this continues to be a period of intense uncertainty for the biotechnology and pharmaceutical fields. Nevertheless, demand for biotech products continues to grow and innovation proceeds at a breakneck pace. To ensure that your company stays on the cutting edge, your patent strategies must evolve to meet new demands placed on your IP protection, and our forum on Biotech Patents will help you develop techniques to rise to the challenge. Topics to be discussed include:

  • Analyzing the PTO’s efforts to apply the America Invents Act, including how the September 16th implementation date has impacted procedure and their plans for the looming March 16th institution of the first-to-file regime.
  • Investigating how the Supreme Court’s Prometheus decision will affect personalized medicine and considering outcomes of the Myriad case and what that could mean for biotechnology.
  • Devising a biologic patenting strategy in the wake of the FDA’s newly issued biosimilar pathway regulations.
  • Enhance Your Learning Experience at the Pre- and Post-Conference Workshops


Wednesday, November 28 to Thursday, November 29, 2012


Hyatt Regency, Boston, MA


ACI’s 14th Advanced Forum on Biotech Patents brings together another top-notch faculty of expert biotech patent practitioners who will share their experience and knowledge to help you avoid pitfalls and maximize the value of your intellectual property. Do not miss the opportunity to hear experienced in-house counsel and private practice attorneys share thoughts and advice on strategic patent filing and effective defense of IP rights.


To accompany your overall experience, PTO examiners and industry leaders will guide you through changes at the PTO at our in-depth pre-conference Interactive Working Group Session: Integrating Changes at the PTO into Biotech Patent Practices.

In addition, our post-conference Master Class on Successful and Practical Strategies for Patenting Antibodies utilizes an expert faculty to assist you in protecting and promoting products that are central to the biotech industry.


Register now by calling 888.224.2480; by faxing your registration form to 877.927.1563; or register online at is a Media Sponsor of this event.  Readers of Patent Baristas are entitled to $200 off the current conference price tier.   The discount code you will need for this is: PB 200.

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On September 16, 2011, President Barack Obama signed into law the Leahy-Smith America Invents Act.   This Act is often referred to as the most comprehensive overhaul to our patent system since 1836.

Seven provisions of the AIA and USPTO implementing final rules for these provisions go into effect today on September 16, 2012:

1.  Inventor’s oath or declaration.  

The AIA provides new flexibilities for filing a declaration.  For example, in addition to maintaining current practices, an assignment document can act as a declaration, and in applications with an application data sheet, each inventor can execute a separate declaration, and the filing of a declaration can be postponed until the application is in condition for allowance.

2.  Pre-issuance submissions.  

The rules allow third parties to file pertinent publications—and a short statement of relevance—in patent applications prior to issue. The third-party submission rules allow any third party to submit any patents, published patent applications, or other printed publications of potential relevance to examination. 37 C.F.R. § 1.290(a). This includes litigation papers and court documents not subject to a court-imposed protective or secrecy order but does not include trade secrets information, unpublished internal documents, or other unpublished documents.

3.  Supplemental examination.  

Patent owners will be able to request supplemental examination of an issued patent, which could help protect the patent against certain inequitable conduct allegations. If a request for supplemental examination is accepted, the USPTO will institute an ex parte reexamination. The threshold for acceptance is whether a substantial new question of patentability has been raised.

4.  Citation of patent owner claim scope statements.  

This provision expands the type of information that a patent owner or third party may submit into a patent file. It will allow submission of patent owner statements about claim scope that were made in a federal court or a USPTO proceeding.  The provision also defines how the Office may use such information during ex parte reexamination, inter partes reexamination, and post grant review.

5.  Post grant review.  

Post grant review provides for another method for third parties to challenge a patent’s validity. Most aspects of the post grant review is the same as the inter partes review. For example, the petition requirements and patentee response are almost the same.  However, post grant review only will apply to those patents granted through the first-inventor-to-file system. Also, patents subject to post grant review may be challenged under 35 U.S.C. § 101 (utility or patentable subject matter requirement) and 35 U.S.C. § 112 (definiteness requirement) in attrition to § 102 (novelty requirement) or § 103 (non-obviousness requirement). Finally, the post grant review petitioner has a higher burden to initiate this procedure, the petitioner must show it is more likely than not that at least one of the challenged claims is not patentable.

6.  Inter partes review.  

Under the AIA, inter partes review under 35 U.S.C.  § 311(c) will take the place of inter partes reexamination. A person who is not the patent owner and has not previously filed a lawsuit challenging the validity of a patent claim may file an inter partes review. An inter partes review petitioner, however, only may request to invalidate one or more patent claims on the basis of lack of novelty under 35 U.S.C. § 102 (novelty requirement) or as obvious under 35 U.S.C. § 103 (non-obviousness requirement) and only based on prior art consisting of patents or printed publications. An inter partes review cannot be filed until after the later of nine months after the grant of a patent or the date of termination of any post grant review of the patent. The patentee may file a preliminary response, providing reasons why no inter partes review should be conducted. An inter partes review petition must show there was a reasonable likelihood that the petitioner would prevail as to at least one of the claims.

7.  Covered business method review.  

The AIA also creates a transitional program for some business method patents so that alleged infringers can challenge a covered business method patent’s validity through post-grant review. The AIA defines covered business method patents as those claiming a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological innovations.  The final rules, however, don’t say what exactly constitutes a “technological innovation.”

Want to learn more?:

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With the passage of the Leahy-Smith America Invents Act (AIA) last year, which converted the patent system from a ‘first to invent’ to a ‘first inventor to file’ system. The AIA, signed into law in September 2011, indeed brought significant changes in certain areas. But it did not address the calculation of damages in patent infringement matters, as had been suggested in prior drafts of the bill.

The absence of reform guidance in this regard leaves patent damages issues squarely for the courts. Additionally, the elimination of the 25 percent rule of thumb and rulings in other court decisions demonstrated that the courts, not Congress, would continue to shape the future of patent law and play the primary role in how patent damages are determined.

Without the 25 percent rule of thumb, a complex mathematical proof for determining royalty apportionment, known as the Nash Bargaining Solution, has recently appeared in some patentees’ damages calculations, receiving mixed reviews from the courts. In Oracle v. Google, the Court excluded expert testimony:

“[T]he Nash Bargaining Solution would invite a miscarriage of justice by clothing a fifty-percent assumption in an impenetrable facade of mathematics.”

“Instead, the normal Georgia-Pacific factors, which have been approved by the Court of Appeals for the Federal Circuit and which are more understandable to the average fact-finder, will guide our reasonable royalty analysis.”

Recognizing these developments and business leaders’ continuing deep interest in intellectual property matters, PwC maintains a database of patent damages awards extending from 1980 through 2011. They collect information about patent holder success rates, time-to-trial statistics, and practicing versus nonpracticing entity (NPE) statistics from 1995 through 2011.

New to this year’s study is an analysis of Abbreviated New Drug Application (ANDA) cases, which are increasingly prevalent in the dockets. The volume of such cases has increased substantially over the last five years, and the success rates experienced by the patent holders, or the brand drug manufacturers, have to date been higher than traditional patent actions.

The analysis yields a number of observations that can help executives, legislators, and litigators assess their patent enforcement or defense strategies, as well as the impact of NPEs.

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