patents, copyright and other hazards for software developers ja-sig summer conference 25 june 2007 |...
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Patents, Copyright and Other Hazards for Software Developers
JA-SIG Summer Conference 25 June 2007 | Denver, Colorado USA
Jim Farmer instructional media + magic, inc.
i n s t r u c t i o n a l m e d i a + m a g i c, i n c.
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icWarning 1
• This is a literature survey, not legal advice.
• The references apply to United States patents, only sometime to Canada, Australia, and Singapore.
• “It depends … ”
As every patent attorney would say “Legal advice should only be given by an attorney practicing in the specific legal field and familiar with a complete disclosure of all relevant information.”
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icAn update
• Firestar v Red Hat (Hibernate) – stalled in court
• Blackboard v. Desire2Learn – failed on claims construction, appointment “… as a technical advisor to the court.”
• KSR International Co. v. Teleflex, Inc., et al. – more strict definition of “obvious”
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Major eLearning patent holders
Assignee Issued Applications
Accenture LLP 23Educational Testing Service 10Pearson Education 9UNext.com LLC 8Pearson eCollege.com Inc. 6 8SCT Higher Education (CampusPipeline) 5 2Lee, John R. 4Thomson Learning, Inc. 3Athenium, L.L.C 2Epic Learning, Inc 2Blackboard Inc. 1 6
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iceLearning U.S. patent holders
Assignee Issued ApplicationsMajor holders 73 24Minor holders 8 10Individuals 2 16
Total 83 50
Troll Target?
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icExamples of awarded patents
File Structure for Storing Content Objects in a Data Repository
Pearson Education
On-line Educational System for Processing Exam Questions and Answers
eCollege
System, method and apparatus for connecting users in an online computer system based on their relationship with social networks
Friendster
U.S. Research universities support patents and copyright
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icWarning 2
The following analysis is based on reports from the Association of University Technology Managers for fiscal (academic) years 2003 and 2004. Some errors of interpretation of the survey data may occur because of apparent differences between the values in the narrative and the tables. The association did not respond to email requests for additional information.
Perhaps not statistically significant at levels typical of research (95% to 99%), whether the value are different by 10%, 20%, or even 50%, the business recommendations remain appropriate.
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icPatents by higher education
U.S. Patent Applications and Patents Issued
0
2,000
4,000
6,000
8,000
10,000
12,000
1990 1992 1994 1996 1998 2000 2002 2004
Academic Year
0%
20%
40%
60%
80%
100%
120%
IssuedApplications
Estimated Success Rate
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icHigher education “inventions”
• Team Learning Assistant — Students participate in study teams, team projects and team analysis. In each situation, team members assess how well the team works together, troubleshoot obstacles, and leverage each other’s strengths …”
Boston University - License available from McGraw-Hill
AUTM U.S. Licensing Survey: FY 2004, Association of University Technology Managers, 16 December 2006
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icHigher education “inventions”
• A Virtual Microscope to Teach Science — “… software that incorporates an animated 3D microscope with the basic functions of a real microscope. The program views micrographic images … allowing students to experience the wonders of state-of-the-art microscopy at home and in the classroom.”
University of North Carolina – License available from Science Learning Resources Inc.
AUTM U.S. Licensing Survey: FY 2004, Association of University Technology Managers, 16 December 2006
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Research in higher education AY 2004
Source of FundsUS$
billions
Research Expenditures $40.7
Federal funds $27.7 67.2%
Industrial funds $3.0 7.3%
Institutional funds $10.5 25.5%
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icResearch results AY 2004
Invention disclosures 16,871
Estimated patent disclosures
13,834
U.S. Patent applications 10,517
U.S. Patents issued (from prior period applications)
3,680
Estimated investment per patent application
US$ 3,917,467
Estimated institutional investment per patent application
US$ 998,384
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Research results AY 2004 (patents)
U.S. Patent applications 10,517
Current estimated yield, issued per application
50.3%
Estimated resulting U.S. Patents to be issued
5,290
Patents issued (from prior period applications)
3,680
Estimated investment per patent to be issued
US$ 7,778,205
Estimated institutional investment per patent application
US$ 1,984,858
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License income, higher education
License Income and Income per Patent
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
1994 1996 1998 2000 2002 2004
Academic Year
$0
$300
$600
$900
$1,200
$1,500
$1,800Income per patent assuming no income from other licenses
Annual license revenuein US$ millions
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icReturn on Investment AY 2004
Estimated investment per patent issued
US$ 7,778,205
Estimated institutional investment per patent application
US$ 1,984,858
Maximum income per patent
US$ 40,096
Return on investment per new patent issued
0.5%
Return on institutional investment per new patent issued
2.02%
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icA personal perspective
• Research is imperative to quality teaching and learning and betterment of the world community.
• University research should focus on these purposes and, with few exceptions, avoid “profit seeking” research.
And
• To prevent external patents, university researchers should document their research and disseminate where it will be found by patent examiners.
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ic“Patent trolls” (1 of 2)
• “It is becoming more and more common … to receive letters from patent holders that allege patent infringement and demand a license fee or that ‘invite discussions about a license fee.’”
• “Such letters often come from … ‘patent trolls.’ The term ‘patent troll’ generally refers to companies whose sole business is the enforcement of a patent or patents in order to college license fees.”
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ic“Patent trolls” (2 of 2)
• “Indeed, patent trolls often have no or few assets besides patents, and normally carry out no business activity besides litigation. Thus, patent trolls typically do not fear counterclaims for patent infringement or unfair trade practices.”
Danielle Williams and Steven Gardner, “Practical Tips for Corporate Counsel for Effective Responses to Patent Trolls,”
Business Lawyer, June 2006.
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Higher Education Patent Trolls?
• University of Texas System
• Predictive texting now primarily used in cellphones.
• University of Washington via Washington Research Foundation
• “Bluetooth technology” on the basis of Edwin A. Suominen’s undergraduate research.
(Not valid in the U.K. where a substantial part of the “chips” are produced).
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icResources devoted to licensing
In higher education, for the 192 reporting universities:
• In 2004, legal fees of US$221,000,000; US$91,000,000 was reimbursed by those who lost for a net expense of $130,000.000.
• In 2004, the 192 reporting institutions had 833 full-time equivalent staff; 191 institutions reported 817 FTE “other staff.”
• Based on typical salaries in higher education, the 1,650 staff would cost $218,000,000.
• Estimated total of US$348,000,000 spent on licensing by the 192 universities.
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Expenditures in higher education
Degree granting colleges and universities, 1995-1996Digest of Education Statistics 2005, U.S. Department of
Education
Function US$ billionsInstruction and departmental research57.8 41.8%Organized research 17.5 12.7%Extension and public service 7.0 5.1%Libraries 4.3 3.1%Academic support 9.0 6.5%Administrative and general 27.9 20.2%Plant Operation and maintenance 12.3 8.9%Other 2.4 1.7%
Total 138.2 100.0%
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icThe Community Process
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icThe process
• Patent applicant agrees to the process
• Patent published immediately (instead of after 18 months)
• Community—yet undefined—provides prior art
• (In phase 2) Expert review panel provides guidance
• Patent examiner may use prior art during search and can follow expert panel guidance.
“Community Patent Review,” Beth S. Noveck, New York Law School, 12
May 2006
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icColleges and universities
• Should contribute prior art and guidance on patents important to the college or university.
• Are capable of contributing prior art and guidance on patents within their discipline area; this expertise and effort would be useful to the broader community.
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icMerges on patents
For the most part, IP scholars normally suggest changes in government policy. Rights must be rolled back, or at least counterbalanced, by some action: the courts, the Constitution, Congress, international treaties—whatever force can be brought to bear. I don’t take issue with these proposals here. Instead, I argue that while we policy types debate, private actors are taking action.
“A New Dynamism in the Public Domain,” Robert P. Merges, University of California, Berkeley,1 June 2004
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icMerges observes
“Property-Preempting Investments,” or “PPIs.”
• PPIs work because of a basic feature of our system: once in the public domain, information cannot be privatized. If it is in a firm’s interest to preempt an asset from being privatized, the firm will invest in creation of that asset and then inject it into the public domain. Thus, firms employing PPIs contribute to the public domain while pursuing their own private interests.
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icMerges suggests
• When in their strategic interest, colleges and universities donate patents to the public domain
• Because of cost, it may be more responsible to contribute published prior art that could be used when reviewing a patent
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Copyright and Creative Commons
Attribution (by)
“This license lets others distribute, remix, tweak, and build upon your work, even commercially, as long as they credit you for the original creation. This is the most accommodating of licenses offered, in terms of what others can do with your works licensed under Attribution. “
• Creative Commons Attribution 3.0
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icThe Wheeler Challenge
To both
• provide broad dissemination and use and
• demonstrate the values of higher education,
Indiana University CIO Brad Wheeler urges authors to use Creative Commons licenses.
That is, place our work into a controlled pubic-domain. Controlled in the sense of requiring, by law, the user credit the source of the material.
Developer security
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icWarning 2
• Patent enforcement is rare.
• Challenging the validity of a parent is even more rare.
Obtaining an injunction is even more rare than that.
• And suing an individual open source contributor for royalties was unreported
until last year.
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icHistory suggests
• Neither the college or university, or you personally will be directly affected by patent or copyright infringement in the next few years.
• But, the music publishers outsourced copyright enforcement to the RIAA and the software industry outsourced license enforcement to the SIIA.
Is outsourcing patent enforcement next?
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icLesson 1
• Don’t give away software
Even if you and your friends like to build model train sets,
and you have this “cool code”
Unless you want to spend the next three to five years in court with an attorney that makes more money than you do.
Let someone else give it away who is poor or very rich.
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icJacobsen v. Katzer
• Jacobsen was employed by the University of California operated Lawrence Berkeley National Laboratory.
• Jacobsen developed and distributed open source software for controlling toy trains.
• Katzer sent Jacobsen an invoice for $203,000 and sought records (FOIA request) from the Berkeley Lab on his telephone calls, email, and discussions with other employees concerning his open source development activities.
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icLesson 2
• Document your work in the same form as inventors document their work. This means timestamps and validity. (Check out PKI) Organizations should document and archive received source code and documents.
• Always transfer ownership to someone else (then you can’t be sued), but keep an unlimited license to use and redistribute your own work.
• Carefully document what you do as an employee and what you do personally to prevent uncertainty about responsibility.
Colleges and universities
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icFor mission critical software
Risk mitigation suggests
• As a user, a college or university can:• License software from a firm that provides a
patent indemnity clause (and has the resources or insurance to support litigation and awards)
or
• Use open source software for which there is an “Opinion of Non-Infringement,” has a guarantee not to sue, or evidence of license agreement.
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icA new burden for open source
To reduce “user” risk
• Provide a non-infringement opinion or a “design around” for patents held by enforcing patent holders.
• Maintain and publish complete documentation of the design, processes, and contributions.
• Reveal the sources of all code.
• If necessary, seek and execute license agreements with patent holders.
Supplementary material
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icThe “patent monster” arrives
“We've warned you for a decade. Now the monster has finally arrived: attacks against Open Source developers by patent holders, big and small. One is a lawsuit against Red Hat for the use of the principle of Object Relational Mapping used in Hibernate, a popular component of enterprise Java applications everywhere. The other attack is on an individual Open Source developer for his model railroad software.”
Bruce Perens,30 June 2006 writing for Technocrat.net
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icPatent as a monopoly
“ The exclusive right granted to a patentee in most countries is the right to prevent or exclude others from making, using, selling, offering to sell or importing the claimed invention. The rights given to the patentee do not include the right to make, use, or sell the invention themselves. The patentee may have to comply with other laws and regulations to make use of the claimed invention.”
Wikipedia, 4 December 2006
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icSoftware patents are bad!
“In seeking royalties [from patents], [universities] are merely doing what the law allows and Congress clearly meant to encourage. Since there are plausible reasons to support the governments’ policy, any argument to the contrary should be taken up with Congress, not the universities.”
Derek Bok, “Universities in the Marketplace: The Commercialization of Higher Education,” 2004 pp. 141-142.
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icExamples of pending patents
Content and Portal Systems and Associated Methods
Blackboard
e-Learning Authoring Tool SAP
e-Learning Course Structure SAP
Individualized retention plans for students
eCollege
Method and system for presenting online courses.
Manisha Jain
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icLinux threatened by patents?
“In conclusion, he found that no court-validated software patent is infringed by the Linux kernel. However, Ravicher also found 283 issued but not yet court-validated software patents that, if upheld as valid by the courts, could potentially be used to support patent claims against Linux.”
“27 of the 283 patents are held by Microsoft” Open Source Risk Management, 2 August 2004
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ic“The Blackboard patent”
• Software and business method patents are U.S. policy and law, and colleges and universities, as well as businesses must and do operate in that environment.
• Blackboard was the first to enforce any of the many existing eLearning patents, in an action that drew attention of the community.
• This has and will change the business practices of colleges and universities.
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icJacobson claims
• Katzer patents invalid based on “prior art”
• Violation of Federal antitrust, California Unfair Competition, and libel laws.
• Fraud on the U.S. Patent and Trademark Office and inequitable conduct
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ic“Buyer beware”
“While most patent owners do not sue corporate consumers for fear of alienating potential customers, certain owners, such as ‘patent trolls’, do not hesitate to target manufacturers, resellers, and end users alike.”
Mark S. Freeman,“Protecting Your Company from Patent Suits by Contracting for Indemnification,”, Choate Hall & Stewart
LLP, 5 October 2006.
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icThe IBM “protection” strategy
• Form a foundation that licenses the contributed software and subsequently licenses and distributes to others
• Apache Software Foundation
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icContributors defined
Anyone who provides “certain details of a device, method, process or composition of matter (substance) (known as an invention)” or “a particular expression of an idea or information.”
www.wikipedia.org, 3 November 2006
especially in the form of software code, drawings, documentation, publications, presentations, or devices.
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icContributor License Agreement (1)
“Agreement, You hereby grant to the Foundation and to recipients of software distributed by the Foundation a perpetual, worldwide, non-exclusive, no-charge, royalty-free, irrevocable (except as stated in this section) patent license to make, have made, use, offer to sell, sell, import, and otherwise transfer the Work … ”
Individual Contributor License v2.0Apache Software Foundation
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icContributor License Agreement (2)
“You represent that Your contribution submissions include complete details of any third-party license or other restriction (including, but not limited to, related patents and trademarks) of which you are personally aware and which are associated with any part of Your Contributions.”
Individual Contributor License v2.0Apache Software Foundation, 10 September 2004
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icApache Software Foundation
2001-2002 2005-2006
Income $9,692 $149,121
Expenses $13,214 $33,312
Assets $115,105 $243,842
From IRS Form 990 for the respective calendar years.
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icContributors should
• Ensure your contribution is “given” to a legal entity, but retain a non-exclusive license to use and distribute.
• Execute a written contribution agreement.
• Maintain a current list of your contributions and copies of the contributions themselves.
• Publish or otherwise evidence date and validity of documents.
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icContributors should
• Evaluate carefully if the organization and/or project is protecting your interests before participating or contributing.
• Verify [a written policy] they will notify you of any possible patent or copyright infringement when it is learned.
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icPatent indemnification (1 or 2)
(a) The Contractor shall indemnify the University and its officers, agents, and employees against liability, including costs, for infringement of any United States patent arising out of the manufacture or delivery of supplies, the performance of services, or the construction, alteration, modification, or repair of real property (hereinafter referred to as “construction work”) under this contract, or out of the use or disposal by or for the account of the University of such supplies or construction work.
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icPatent indemnification (2 or 2)
(b) This indemnity shall not apply unless the Contractor shall have been informed as soon as practicable by the University of the suit or action alleging such infringement and shall have been given such opportunity as is afforded by applicable laws, rules, or regulations to participate in its defense.
Based on 48CFR 52.227-3 Patent Indemnity.
The word government has been replaced by University There are additional terms that may be included.
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icNon-infringement opinion
“A non-infringement opinion addressing a U.S. patent should be authored by a qualified U.S. patent attorney. Using outside counsel may bolster the objectivity of the legal opinion … The non-infringement opinion should include an accurate technical description of the accused product. Incorporating pictures or diagrams may be particularly helpful, such as for a reviewing judge or jury. Any technical expert providing such technical description of the accused product should be well qualified to do so.”
Suneel Arora at “Minnesota CLE: IP in Complex Corporate Transactions,” May 18, 2005
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icA new burden for open source
To reduce “user” risk
• Provide a non-infringement opinion or a “design around” for patents held by enforcing patent holders.
• Maintain and publish complete documentation of the design, processes, and contributions.
• Reveal the sources of all code.
• If necessary, seek and execute license agreements with patent holders.
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icIs open source endangered?
• Yes, patents distract developers and users from their primary mission.
• Yes, it induces costs for intellectual property policy development and enforcement, for record keeping, and, rarely, for defense.
At a time higher education can least afford the diversion of resources and attention.
But, it is public policy; we must live with it!
More on patents than you wanted to know
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icProgrammers and prior art
• “What is needed is not the detailed code, but some level of description of what is in that code.”
• “…programmers are usually too interested in moving on to the next task to take the time to document the last one. It isn’t difficult to understand why software results are so often not published in formal journals. Most of the work in this emerging field has been done outside academia.”
Bernie Galler, University of Michigan at the “Public Hearing on Patent Protection for Software-Related Inventions,” February 10 & 11,
1994
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ic“Business method” patent
“The term ‘business method patent’ remains undefined by statute, but is commonly used to describe patents relating to methods of conducting e-commerce transactions. Such patents often disclose and claim aspects of software and Internet-based communications intrinsic to the business methods. Perhaps the best-known example of a business method patent is Amazon's "one-click" shopping patent.”
David Jacobs, “Counseling Clients About Business Method Patents,” Gesmer Updegrove LLP,
5 December 2000.
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icPatent Prosecution (1 of 2)
• “ … known in the business as "patent prosecution," … a patent attorney will prepare an extensive written description covering every aspect of a certain embodiment of a client's new invention. Then, after filing, it will be discovered that most of the aspects of the new invention have been done before, such that a patent on a device or method covering just those aspects would be improper. A skilled patent attorney will generally be able to identify one or more distinctions between prior devices and methods and her client's invention, even if the devices share many features.”
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icPatent Prosecution (2 of 2)
“So long as identified distinctions are not obvious in light of the ‘prior art,’ an inventor is entitled to patent claims directed to those distinctions. Consequently, the patent will issue with a relatively extensive written description but a relatively narrow set of claims. … In fact, a patent's claims generally cover only a small subset or particular combination of the material described in the written description.”
Sanford E. Warren Jr. and E. E. "Jack" Richard II,“Claims?? We Don't Need No Stinkin' Claims!!! (Or Do We?),”
International Risk Management Institute, November 2001.
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icOn Willful Infringement (1)
“Willful infringement should be a major concern for almost any business because it allows a judge, in his or her discretion, to award a patentee up to three times the actual damages suffered. In addition, the infringer may be saddled with paying the attorney fees that were incurred during the patent infringement lawsuit.”
Sanford E. Warren Jr. and E. E. "Jack" Richard II,“Avoiding Willful Infringement in Intellectual Property Litigation,”
International Risk Management Institute, March 2005.
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icOn Willful Infringement (2)
“In the end, if your organization is ever on trial for patent infringement, the patentee will [pursue] treble damages and attorney fees. … And to ensure that those traditional factors tilt in your favor, a well-reasoned opinion, presented by an expert, may still be the best option.”
Sanford E. Warren Jr. and E. E. "Jack" Richard II,“Avoiding Willful Infringement in Intellectual Property Litigation,”
International Risk Management Institute, March 2005.
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icOn prior art
“The point is that if enough money is invested, a party can almost always locate some prior art that was not available to the patent office and therefore not considered by the examiner.”
Commissioner Dickinson, at “Public Hearing on Issues Related to the Identification of Prior Art During the Examination of a
Patent Application,” 14 July 1999
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icLimits on the patent examiner
A search of this duration, for example of eight hours or less, is about what we understand a patent examiner can carry out and still meet appropriate patent office production goals.
Commissioner Dickinson, at “Public Hearing on Issues Related to the Identification of Prior Art During the Examination of a
Patent Application,” 14 July 1999
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icPrior art of software
• “The history of inventions in the software area is not recorded well. There are few formal journals … and some textbooks. … Not only are the results and inventions not published in formal journals most of the time, they usually [are] described if at all, primarily in informal conference reports or newsletters.”
Bernie Galler, University of Michigan at the Public Hearing on Patent Protection for Software-Related Inventions, February
10 & 11, 1994.
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icOn The Software Patent Institute
“The Software Patent Institute has been formed to build a database to assist the PTO with finding prior art, and while the SPI’s intentions are admirable, it is inconceivable that developers, small and large, will be willing to give up their trade secrets or even to devote the substantial time needed to evaluate, draft, and submit evidence of existing art to the SPI database.”
Jerry Baker, Oracle Corporation at the Public Hearing on Patent Protection for Software-Related Inventions, January 26 -27, 1994
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icIBM’s view
“We protect the detailed expression in every one of our software products by copyright. And approximately 3 to 5 percent of these programs contain new and unobvious functions that are protected by patent. Patent coverage on these inventive functions protects our investment, gives us important business leverage as well as access into foreign markets.”
Victor Siber, IBM Corporation, at the Public Hearing on Patent Protection for Software-Related Inventions, January 26 -27, 1994
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icMicrosoft’s view
• “… we do not believe that patent protection should be withheld from an invention that otherwise meets the statutory requirements for patentability, simply on the basis that the invention is or may be embodied in software.”
• Simply: Microsoft supports software patents
William Neukom, Microsoft Corporation at the Public Hearing on Patent Protection for Software-Related Inventions, January 26 -27, 1994
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icOracle’s patent policy
• “Oracle Corporation opposes the patentability of software.”
• “Unfortunately, as a defensive strategy, Oracle has been forced to protect itself by selectively applying for patents which will present the best opportunities for cross-licensing between Oracle and other companies who may allege patent infringement.”
“Oracle Corporation Patent Policy,” January 27, 1994
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icReexamination and litigation
71% Percentage of claims that were either amended or canceled in reexamination action.
12% Percentage of claims thatwere canceled in reexamination.
38% Percentage of claims ruledinvalid in litigation over priorart patents and publications.
David M. O'Dell and David L. McCombs,“The Use of Inter Partes and Ex Parte Reexamination in Patent Litigation,”,
Haynes and Boone LLP, 8 February 2006.
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icPatent litigation statistics
Adjudicated 14%
Summary judgment 7.0%
Jury trial 2.5%
Bench trial 0.7%
Want of prosecution 1.6%
No jurisdiction 1.4%
Default 1.1%
Settled 86%
Patstats, University of Houston Law Center, 1 November 2006
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icPlaintiff “Win Rate” 1978-2000
Jury Judge All
Trademark .63 .68 .67
Copyright .70 .74 .73
Patent .65 .50 .56
All Civil Trials .48 .48 .48
William M. Landes,“An Empirical Analysis of Intellectual Property Litigation: Some Preliminary
Results,” Houston Law Review, University of Houston, 8 October 2004.
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icRavicher advises
• Support structural patent reform
• [Added: At least some] Patent disputes may be resolved in spirit of open source licensing
• Contribute to databases of previously inaccessible prior art
• Be prepared to “design around” patents
• Obtain patent infringement defense insurance
Dan Ravicher, “Mitigating Linux Patent Risk,” 2 August 2004
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icPatent validity
• “… roughly 55 percent of all patents were held valid, 45 percent held invalid, and this is going to final judgment only. Of the 45 percent that were held invalid, prior art entered into play only 26 percent of the time, and so if you have 45 percent held invalid and only 26 percent of those involved documented prior art. … You're down into the 12 or 13 percent of the patents [litigated] were held invalid because of prior art.”
Former Commissioner Mossinghof quoting Mark Lemley, at “Public Hearing on Issues Related to the Identification of Prior Art During
the Examination of a Patent Application,” 14 July 1999