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Special: Patent Office Director — Software Patents Working

David Kappos (A. Kotok)

David Kappos (A. Kotok)

U.S. Patent and Trademark Office (USPTO) director David Kappos pushed back at complaints about software patents harming American innovation, saying the current patent system has generated “an explosion of innovation.” Kappos discussed software patents today in a speech to the progressive think tank Center for American Progress in Washington, D.C.

Kappos answered charges that the current patent system for software is broken and that the American computer and communications industries are suffering as a result, by saying “the various dire reports and commentary have omitted a critical component—the facts.” He focused particularly on the smartphone industry, recently the target of patent litigation between Apple and Samsung, which Forbes magazine estimates has cost some $20 billion.

The USPTO, said Kappos, reviewed court records of patents for smartphones and found in 80 percent of the cases, the courts upheld the patents as valid. Moreover, he noted, rejections of software applications are upheld at a slightly higher rate than for patent appeals overall. And patent cases appealed further to the Federal Circuit — officially, the U.S. Court of Appeals for the Federal Circuit, the appeals court specializing in patent law — are upheld 95 percent of the time.

In addition, Kappos said software should not be treated any differently from other inventions in providing patent protection, pointing out that for many of the most innovative inventions in recent years, “patented software played a role, equally as important as the hardware with which it interacts.”

He cited in particular a robotic surgical system made by Intuitive Surgical in Sunnyvale, California that can create tiny incisions to reduce tissue damage and patient recovery time. “Why would we tell the team working on a clamp that holds a scalpel their innovation is worthy of protection,” asked Kappos, “but tell the programmers whose algorithm guides that clamp with unerring precision their innovation is not?” He added that venture capital would hardly invest in a company where “half of their innovation was free to be lifted by their competitors the moment they put it in the marketplace.”

Kappos highlighted patent quality as a key factor in reducing patent disputes. He described new metrics of patent quality put in place at USPTO during 2009-2010, and new guidelines to determine which inventions are eligible for patent protection, which apply heavily to software. He said another set of guidelines, called Section 112 guidelines, issued in 2011 improved the clarity of software patents, leading to a 20 percent increase in patent rejections related to those guidelines.

Prior art from third parties

In addition, the USPTO director can order a reexamination of patents. Two such reexaminations occurred in the last 3 1/2 years, said Kappos, with both applications rejected following the review. Both were software patents, dealing with tax strategies.

Kappos underscored the importance of the America Invents Act, passed and signed last year for alleviating some of the acknowledged problems with software patents. He noted in particular the provision allowing for third-party submission of technical and business information relevant to patent approvals, called prior art, that can make it easier for patent examiners to find and evaluate earlier work on the subject of the patent.

“[F]or the first time in the history of our patent system,” said Kappos, “third parties can submit prior art to our examiners, referencing a specific application and including an explanation of how the prior art relates to the application. So now anyone can participate in the patent system and contribute to higher patent quality.” He also pointed to crowdsourcing prior art through a private online network called Ask Patents, where software experts can find and discuss prior art for patent applications. (The site seems to have more of a simple question-and-answer format.)

Kappos mentioned as well proposed legislation that addresses problems with software patents including the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act introduced by Democratic congressman Peter DeFazio of Oregon and Republican Jason Chaffetz of Utah. The SHIELD Act takes aim at patent trolls, companies that buy old patents and make their money buy suing or threatening to sue related patent holders.

Under the proposed SHIELD Act, patent trolls would need to pay the legal costs of the people they sue, if the suit is unsuccessful. In follow-up questioning, however, Kappos admitted the Obama administration had not yet taken a position on supporting the SHIELD Act.

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