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Review: Burning the Ships: Intellectual Property and the Transformation of Microsoft.

Posted in General Commentary by Jake Ward on June 16, 2009

 burntheships

Burning the Ships, by Marshall Phelps and David Kline, provides a unique, behind-the-scenes insight into the decisions behind Microsoft’s internal evolution in intellectual property policy.  The reasons provided for the demise of the non-assertion of patents or “NAP” clause, for example, is particularly interesting. 

Phelps joined Microsoft after many years at IBM, where he orchestrated their highly successful licensing program.  At Microsoft, he overcame significant internal resistance and succeeded in causing Microsoft to collaborate with other companies.  

Of particular interest to those interested in building a corporate IP program are the objectives set forth in Phelp’s “5-year plan”, namely:

1. Build an outward-facing IP and licensing culture within the company;
2. Play a leading role in the global IP debates;
3. Develop closer coordination between the IP group and the technical development teams in the business units to help guide innovation strategy;
4. Better protect technologies by becoming a top-10 patentee;
5. Maximize the utilization of IP assets to support the companies business goals, standards efforts, and relations with open source and other firms; and
6. Use licensing revenue and cost optimization to fund IP&L’s expanded efforts.

As a negative, the authors’ perspective is certainly (understandably?) biased toward Microsoft.  There is also a lot of name-dropping throughout the book, and a certain amount of unnecessary repetition.  Overall, however, we enjoyed the book and would recommend it to our readers.  

Microsoft Corp. v. AT&T Corp.

Posted in Opinion Commentary by Jake Ward on May 1, 2007

Title 35 U.S.C. § 271(f)(1) does not govern the manufacture and sale of components of U.S. patented inventions in foreign countries.

(Supreme Court 2007, 05-1056)

Title 35 U.S.C. § 271(f)(1) provides that it is an act of direct patent infringement to “suppl[y]. . . from the United States . . . components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States.”

In this case, AT&T Corp. alleged that when Microsoft Corporation’s Windows software was installed on a personal computer outside tbe U.S., the programmed computer infringed AT&T’s patent for a “Digital Speech Coder” system.  AT&T sought damages not only for each Windows-based computer made or sold in the United States, but also, under Section 271(f)(1), for each computer made and sold abroad.  Extending Section 271(f)—and consequently, the extraterritorial application of U.S. patent law—the Federal Circuit held that Microsoft infringed under Section 271(f)(1) when it exported master versions of its Windows software code to foreign computer manufacturers, who then copied the software code and installed the duplicate versions on foreign-manufactured computers that were sold only to foreign consumers.  The Supreme Court reversed.

In reversing the holding of the CAFC, the Supreme Court stated: 

Because Microsoft does not export from the United States the copies of Windows installed on the foreign-made computers in question, Microsoft does not “suppl[y] . . . from the United States” “components” of those computers, and therefore is not liable under §271(f)as currently written. . . .

Foreign conduct is generally the domain of foreign law, and in the patent area, that law may embody different policy judgments about the relative rights of inventors, competitors, and the public. Applied here, the presumption tugs strongly against construing §271(f) to encompass as a “component” not only a physical copy of software, but also software’s intangible code, and to render “supplie[d] . . . from the United States” not only exported copies of software, but also duplicates made abroad.  Foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries.  If AT&T desires to prevent copying abroad, its remedy lies in obtaining and enforcing foreign patents. . . .

REVERSED.

Microsoft v. AT&T: Notable Quotes from the Oral Arguments.

Posted in Litigation Commentary by Jake Ward on February 22, 2007

Per usual, we will preface our thoughts with the following disclaimer:  “It is generally a futile effort to predict how the Supreme Court will rule on any given issue.”  That being said, we think it was clear the Justices were concerned about the effects on the reach of U.S. patent law if AT&T were to prevail.  The technology at issue also appeared to perplex the Justices at times, as much of the arguments appeared to focus on the Justices’ attempt to wrap their minds around the technical aspects of the AT&T patent.  Interestingly, although the questions presented have been narrowly framed to determine the appropriate meaning of the terms “component” and “supplied from the United States” within Section 271(f)(1), the issue of whether software itself is patentable appeared to be at the forefront of the Justices’ thoughts. 

Below are some quotes that we found of particular interest:

Transcript at page 9.

JUSTICE KENNEDY: But I still would like to know your position. The golden disk is or is not a component?
MR. OLSON (ON BEHALF OF PETITIONER): It is not a component — 

Transcript at page 12.

JUSTICE KENNEDY: That seems odd. I mean, Microsoft doesn’t say please buy our disk because it’s the prettiest disk in the business.
MR. OLSON: Justice Kennedy -
JUSTICE KENNEDY: It says buy our program because the program means something. 

Transcript at page 21.

MR. JOSEFFER (ON BEHALF OF THE UNITED STATES AS AMICUS CURIAE SUPPORTING THE PETITIONER): The United States view — I’m not sure exactly how much we disagree on this — but the United States view is that, for example, a blank disk is not a component of this invention because you don’t need a blank disk to practice this invention. The — the actual component is the physical substantiation, the physical copy of the software that’s inserted into a computer and if you get a disk -
JUSTICE SOUTER: In other words, the disk plus the — plus the coded instructions. 

Transcript at page 22.

JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?

Transcript at page 34.

JUSTICE SOUTER: Why doesn’t that get you right back to the point that Justice Breyer was making? [MR. WAXMAN is] saying, I think, in essence if you send a blueprint — this is like a blueprint. It tells, it tells a machine which may be in Europe how to put the object code on other disks or on hard drives. The machine in Europe is following instructions just the way an artisan would follow a blueprint. 

Transcript at page 39.

JUSTICE SOUTER: It is an object that has coded onto it, transferred to it in a readable way, those commands. But it’s an object, isn’t it?
MR. WAXMAN (ON BEHALF OF RESPONDENT): Well, it’s not necessarily an object. I don’t know whether you would call a stream of photons that is constantly repeated under the Atlantic Ocean an object.

Transcript at page 40.

JUSTICE SCALIA: I hope we can continue calling it the golden disk. It has a certain Scheherazade quality that really adds a lot of interest to this case. (Laughter.)

Transcript at page 43.

JUSTICE BREYER: But I then would be quite frightened of deciding for [AT&T]and discovering that all over the world there are vast numbers of inventions that really can be thought of in the same way that you’re thinking of this one, and suddenly all kinds of transmissions of information themselves and alone become components. So I’m asking you, is there any outside the computer field analogous instance where the transmission of information has itself been viewed as the transmission of a component?

Transcript at page 53.

JUSTICE BREYER: You’re right, Justice Ginsburg, that the court of appeals for the Federal Circuit thought it was bringing this statute up to date and it even said so. We are making an extension of the statute to keep up to date with the technology. That is not for courts to do.

Microsoft v. AT&T: Argument Transcripts

Posted in Litigation Commentary by Jake Ward on February 21, 2007

The link to the transcript for the February 21st oral arguments before the SCOTUS in Microsoft Corp. v. AT&T Corp. can be found here

Any thoughts?  Discussion to follow!

Microsoft Corp. v. AT&T Corp.: USSC Hearings Scheduled for Wednesday, February 21st.

Posted in Litigation Commentary by Jake Ward on February 20, 2007

As reported at MSN/Money, the Supreme Court on Wednesday will hear oral arguments in a case that could test the global reach of U.S. patent law.  The dispute centers on 35 U.S.C. § 271(f)(1), aimed at preventing companies from circumventing U.S. patent law by shipping “components” overseas for assembly.  The case tests whether software is such a “component” and whether creating copies of software overseas from a master disk shipped from the U.S. is covered by § 271(f)(1).

Specifically, the background and questions presented before the USSC have been articulated as follows:

Title 35 U.S.C. § 271(f)(1) provides that it is an act of direct patent infringement to “suppl[y]. . . from the United States . . . components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States.”

In this case, AT&T Corp. alleges that when Microsoft Corporation’s Windows software is installed on a personal computer, the programmed computer infringes AT&T’s patent for a “Digital Speech Coder” system. AT&T sought damages not only for each Windows-based computer made or sold in the United States, but also, under Section 271(f)(1), for each computer made and sold abroad. Extending Section 271(f)—and consequently, the extraterritorial application of U.S. patent law—the Federal Circuit held that Microsoft infringed under Section 271(f)(1) when it exported master versions of its Windows software code to foreign computer manufacturers, who then copied the software code and installed the duplicate versions on foreign-manufactured computers that were sold only to foreign consumers.

The questions presented are:

(1) Whether digital software code—an intangible sequence of “1’s” and “0’s”—may be considered a “component[] of a patented invention” within the meaning of Section 271(f)(1); and, if so,

(2) Whether copies of such a “component[]” made in a foreign country are “supplie[d] . . . from the United States.”

Charles W. Parker v. Microsoft

Posted in Opinion Commentary by Jake Ward on January 11, 2007

Alas, the Inventor of the Elemental Atom is Trampled by Microsoft. 

(Fed. Cir. 2007, 07-1017), non-precedential

Parker appealed a final judgment of the United States District Court for the District of Columbia dismissing his patent infringement action against Microsoft Corporation as frivolous. Parker v. Microsoft Corp., No. 06-CV-00540 (D.D.C. Mar. 23, 2006).

On appeal, the CAFC reviewed the district court’s frivolousness determination. In finding no abuse of discretion, the CAFC stated:

Parker’s allegations that he has patented the “elemental atom” and that Microsoft has infringed his rights by using and improperly claiming inventorship of such an invention are “fanciful,” “fantastic,” and “delusional” contentions supporting the district court’s determination. 

Live Blogging from 2011 Sughrue Symposium on IP Law in Akron, Ohio.

Posted in General Commentary by Jake Ward on March 21, 2011

We are attending the 2011 Sughrue Symposium on Intellectual Property Law and Policy today.  The Symposium is co-sponsored by The University of Akron School of Law and Sughrue Mion, PLLC, and has been offered on an annual basis for the past 13 years.

We have attended the Symposium in the past, and have always found it to be very instructive.  This year’s Symposium is certainly living up to our expectations.  An excellent review of U.S. Patent Law developments in 2010, including recent  Supreme Court and CAFC decisions, was provided in the first presentation by Donald Chisum.  Robert Clarida (partner at the law firm of Cowan, Liebowitz & Latman, P.C.) has also just completed an informative, and highly entertaining, review of Copyright Law in 2009-2010.

If you happen to see us at the Symposium, feel free to say “hi” and let us know your thoughts on this year’s presentations, or IP law developments in general!

JW Update 2:15PM:

The Symposium is proving to be excellent, per usual.  A very good panel prior to the lunch break including Paul Michel, Chief Circuit Judge (Retired), and Marybeth Peters, Register of Copyrights (Retired).  Being recently retired, both Judge Michel and Ms. Peters had the freedom to exercise their 1st Amendment rights and speak their minds on the state of IP law. 

With reference to patent law, in particular, Judge Michel predicts that patent legislation, at least in a limited form, will be enacted in this term.  He believes that first-to-file and at least some form of new post-grant review will be part of the final legislation to be signed into law, but that fee diversion at the USPTO may not be.  Judge Michel’s strongest statements, however, were reserved for the SCOTUS.  Paraphrased, he opined that the vast majority, if not all, of the Supreme Court justices are anti-patent for one reason or another. Judge Michel also believes that the SCOTUS will likely weaken the presumption of validity in case of Microsoft Corporation v. i4i Limited Partnership, presently before the court.

The featured speaker at lunch was Robert Bahr, Associate Commissioner for Patent Examination Policy, U.S. Patent and Trademark Office (USPTO).  Mr. Bahr gave a good overview of various on-goings at the USPTO, including the guidance that has been provided to Examiners relating to the Bilski opinion, and the proposed Three Track Program.

NY Times Article – Turning Patents Into “Invention Capital”.

Posted in General Commentary by Jake Ward on February 21, 2010

An interesting article today at the New York Times, detailing an interview with Nathan Myhrvold at Intellectual Ventures

Intellectual Ventures is a self-proclaimed “invention company” located in Bellevue, Washington.  Nathan Myhrvold, an ex-Microsoft executive, founded the company in 2000 with the goal to nurture fundamental innovation and invention.  To date, Intellectual Ventures has acquired at least 30,000 patents.  Intellectual Ventures’ activities are not limited to buying patents, however.  The company apparently has 650 employees including scientists and engineers, and an in-house invention effort and lab that last year applied for 450 patents.  

Most interesting is Mr. Myhrvold’s expressed interest in building a market for “invention capital,” where patents will be valued as a separate asset class, like real estate or securities.  He recently articulated his vision in an article published in the Harvard Business Review here.

We highly recommend reading both of these articles.  Non-practicing entities (NPEs) such as Intellectual Ventures are often maligned in industry as “patent trolls”, since they generally do not create any products themselves and instead generate revenue primarily by licensing patented technologies.  However, could more of their business model really be what our economy needs to finance start-ups with new ideas, and revitalize otherwise dying industries?  Any thoughts from our readers? 

See also an earlier 2007 post by AT! on the Intellectual Ventures company here.

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