Even as it deals with hot-button issues like campaign financing and affirmative action, the U.S. Supreme Court has patents on its mind these days.
The court, which has already heard four patent-related cases this term, will hear two more next week. An underlying question is how to deal with companies that own patents purely to collect royalties without making a product. Congress also is weighing ways to curb what companies like Google Inc. (GOOG) and Cisco Systems Inc. (CSCO) call rampant lawsuit abuse by some patent owners.
“That’s why they take so many cases - they think a great danger is afoot,” said Paul Janicke, a University of Houston law professor. “The Supreme Court is worried and has been for years that patent power is too strong - too many patents are issuing, too many people are being abused by them.”
The stakes are high for the companies and the broader economy. Industries with revenue tied the most to patent protection - including drugmakers, technology companies and certain manufacturers - generated $763 billion, or 5.3 percent, of the 2010 U.S. gross domestic product, according to a Commerce Department report in 2012. The challenge is restraining excessive lawsuits without harming companies that rely on patents for their products or licensing revenue.
In the past eight years, the Supreme Court has limited patent owners’ ability to block non-competitors from using their inventions, made it easier to invalidate patents, and made it harder to get patents on business methods, medical diagnostics and isolated DNA.
Software Patents
In March the justices heard arguments on whether to tighten the rules to get a patent on software. They are considering two cases, argued in February, on when the loser in a patent case should pay the winner’s legal fees.
The court ruled in January that the patent owner always has the burden to prove infringement, even if the other side filed suit first to challenge the patent.
“I’m not one to say the Supreme Court is always anti-patent,” said Timothy Holbrook, who teaches patent law at Emory University in Atlanta. “They view patents with greater suspicion. There is some hostility.”
Next week’s cases involve how to determine exactly what a patent covers and whether a company can be liable for infringing a patented method even when it doesn’t perform every step of the method.
In the first case, being heard April 28, Nautilus Inc., (NLS) maker of Bowflex exercise equipment, claims a patent on a heart-rate monitor owned by Biosig Instruments Inc. is invalid because it’s too vague. An appeals court disagreed and said the patent’s wording was adequate as long as someone who understands the technology could figure it out.
Google, Amazon
Google, Amazon.com Inc. (AMZN) and other companies say that standard - set by the U.S. Court of Appeals for the Federal Circuit, which handles all patent cases - is too lax and allows some owners to claim their patent covers far more than was invented.
“Inventions are not wish lists,” the companies said in a filing supporting Nautilus. “Nor are they recitations of desired results that, if achieved, would be useful, even commercially available. Inventions are particular ways of achieving results.”
Yahoo Inc., while agreeing the standard needs to be tightened, said patent owners should have some leeway for reasonable interpretations of what the patent claims.
A stringent standard “would threaten to invalidate an enormous swath of patents and deprive inventors of any meaningful ability to claim the full scope of their inventions,” Yahoo said in its filing.
(Published by Bloomberg – April 25, 2014)