We wanted to direct our readers to an interesting blog post from the Wall Street Journal’s “Market Watch.” In sum, if you work in the ecommerce industry, and feel as though the problem of patent trolls is getting out of hand – you’re not alone. Fascinatingly, relying on data compiled by Patent Freedom, Market Watch reports that the retail industry has been the most targeted sector for patent trolls this year – a trend expected to continue through 2014. That puts retailers ahead of high-tech industries such as electronics.
Why? With patent trolls more of a threat to a particular way of operating (for example, a particular website feature such as live chat) than to the next great product offering, retailers are more inclined to pay nuisance value settlements than to shoot their way out of a patent suit. And savvy plaintiffs know it.
Read what Market Watch has to say:
Whether you pay close attention to the world of patent litigation or get your IP news from this blog along, you’ve no doubt heard of Alice, the Supreme Court’s unanimous opinion this term that the two–step analysis it set out in Mayo v. Prometheus applies just as readily to abstract ideas as laws of nature. First, a court must inquire whether the claims at issue are drawn to a patent–ineligible concept, such as a law of nature or abstract idea. If yes, then, second, the court must ask whether the claim’s elements individually and as an ordered combination transform the nature of the claim so as not to simply cover the abstract idea itself. That is, the court must look at the “inventive concept” embodied in the claims.
What the Supreme Court pronounces from on high (“thou shalt not suffer an abstract idea to live”), the lower courts must figure out how to implement (“what is an abstract idea?”). That’s why we are interested to note two recent opinions—one by the Federal Circuit, the other by the patent–heavy District of Delaware—relating to Alice’s implementation. In Digitech Image v. Electronics for Imaging, the Federal Circuit found a patent directed at the tagging of digital images invalid under Section 101, after struggling somewhat mightily to craft a clear definition of the abstract idea at issue.
Onward to Delaware, where (hat tip to Delaware IP Law) Judge Andrews recently invalidated a Comcast patent for the same Section 101 ineligibility—though had a much easier time of it defining the pertinent abstract idea.
We represent a number of retailers and, while often we dedicate blog space to issues of patent law which might impact ecommerce operations, there are, of course, other areas of IP law of which to take note.
One such area that has received increasing attention over the last year or so is Apple’s efforts to secure trademark protection for its store layouts. Apple considers its retail space design and layout not only distinctive, but a distinctive advantage – and has challenged rivals it believes have tried to mimic that layout. Having recently received a trademark in the US for its store design – covering such items the look of the store’s furniture, fixture, lighting and shelves – Apple has recently taken the fight overseas. Earlier this month, the EU’s Court of Justice overturned a decision by German patent authorities rejecting an application to grant IP protection to Apple’s store design, finding that a design pattern like Apple’s “may constitute a trademark provided that it is capable of distinguishing the goods or services of one undertaking” from others.
While Apple’s store layout may be more distinctive than most, there are certainly other retail and service (i.e. hotel and restaurant) brands that have invested in making their interior layouts unique, and, no doubt, have begun to stand up and take notice of Apple’s latest trademark battles.
Last months, electric car company Tesla caused a stir by announcing that it was adopting an “open source” philosophy for its patents: “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”
Tesla claims that its efforts in this regard are designed to ultimately bolster the electric car market as a whole against the gasoline-guzzling Goliaths, a move in which it will ultimately benefit. Others see more complex motives, but everyone is talking about it.
Including NPR, which recently aired a segment as to what would happen if we got rid of patents altogether.
Six major companies—Google, Newegg, Canon, Dropbox, SAP, and Asana—have launched a program designed to retain the defensive value of patent portfolios while thwarting the future threat of patent trolls. Under the name License on Transfer Network, and as described in Ars Technica, these companies have joined forces—and asked others to join—in a relatively simple pact. Members agree to pool their patents, and to license those patents to all other members of the network—but the license only kicks in when a patent is transferred out to a non–network entity. In other words, the owners can use their patents to go after competitors they believe to be infringing or to defend themselves in lawsuits filed against them by others. What they agree not to do is to sell (or out–source) their patents to a non–network entity who can redirect those patents back at network members— think, a patent troll, whether free–standing or acting in league with the patent’s original owner.
For companies opposed to patent troll behavior, but not willing to abandon the patent system or their own portfolios altogether, throwing in their lot with the LOT network may be worth the annual membership fee of between $1,500 and $20,000 (scaled to a company’s revenue).
What’s a more American holiday than the Fourth of July? Fireworks, apple pie…and patent laws.
Happy 178th anniversary to the Patent Act of 1836. Giving this country such useful reforms as the actual examination of patent applications before patents were issued.
While the rest of the nation has switched its focus from Alice’s Adventures in Patent Land to Alice’s Contraceptive Coverage at Hobby Lobby, we would be remiss if we didn’t offer an amusing diversion in the form of directing our readers to the first installment of “Law Comics,” appropriately titled “Alice in Patent Land,” authored by Julia Powles and reprinted at Patently-O. Enjoy.