PublishedJune 9, 2011

Supreme Court Gold Plates Low-Quality Patents

Today the Supreme Court upheld the Federal Circuit’s protective view of low-quality patents in Microsoft v. i4i.  Despite the limited review at the Patent and Trademark Office, the Court affirmed that once granted, a patent can only be invalidated by “clear and convincing evidence,” a strong presumption of validity that is especially helpful for marginal patents.

The Computer & Communications Industry Association warned that the decision reinforces the flood of patents that has plagued innovators in the IT sector.

The following can be attributed to CCIA President & CEO Ed Black:

“We are facing a firehose of low-quality patents that makes it impossible to know who owns what. It’s getting worse.  Any successful product, like smartphones, has become a target for patent attacks, whether by losers in the market or opportunists.”

“Judging by the 30% jump in U.S. patent grants last year, it appears that we are in a race with China to see who can grant the most patents.  That’s easy if you don’t have to worry about quality.  The winners are patent attorneys, who must be dancing in the streets today.  The losers are innovators who find the value of good patents diluted – and a blizzard of low-quality patents blocking even routine attempts to innovate.”

CCIA Senior Fellow Brian Kahin noted that patent holders are now pursuing small developers of smartphone applications.  “Why?  Small developers make easy targets because they cannot afford to go to court.  They can’t even afford to have an attorney investigate.  A mere opinion on validity and infringement is  $20K right off the bat without even responding to the lawsuit,” Kahin said.

“What makes the strong presumption of validity so absurd,” said Kahin, “is that the examination process is stacked in favor of the applicant.”  He explained that the Federal Trade Commission noted as much in their 2003 report and recommended against the high presumption of validity.  “Patent examination is subsidized,” Kahin said.  “The examiner has little time and has incentives to grant the patent.  And the PTO itself gets its income from issuance and renewal, so it, too, wants to allow the patent.”

One seldom-noted side effect of the decision is that makes it hard for the PTO to initiate reforms that key the presumption of patent validity to the scrutiny the application receives. “When your patent is gold-plated to begin with, there is nowhere to go but down,” Kahin said.

The decision today comes almost a year after the Supreme Court compounded uncertainty for business method patents when it denied a patent for a risk management method in Bilski v. Kappos, while still allowing some business methods to be patented.

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