State Street
Back in 1998, the Supreme Court ruled in State Street that a computer programmed with novel software is patentable even if the output is merely numbers. The State Street ruling led to a deluge of business method patent applications. Not having any previous business method patents against which to vet the new applications, the United States Patent and Trademark Office (USPTO) granted business method applications which covered many things already in the prior art. The USPTO then retracted, delaying the processing of business method patents for years before eventually rejecting them. Bilski’s was one of the patents rejected. He appealed the USPTO’s decision to the Court of Appeals for the Federal Circuit (CAFC).

Machine or Transformation Test
The Federal Circuit affirmed the USPTO’s decision, creating the “machine or transformation” (MoT) test. In a nutshell, the MoT test states that to be eligible for patent protection under 35 U.S.C. § 101, a “process” must be tied to a particular machine or apparatus, or transform a particular article into a different state or thing. Bilski appealed the decision to the United States Supreme Court. The Supreme Court granted certiorari in what may be a watershed moment in patent law.

Bilski’s Argument
Bilski argues that the CAFC’s MoT test violates the congressional intent embodied in the broad language of 35 U.S.C. §101 and unduly restricts protection of emerging technologies in the information age. Additionally, in response to State Street, Congress enacted 35 U.S.C. §273. §273 insulates entities from patent infringement liability if they were practicing a third party’s patented business method at least one year before the effective filing date of the patent. Bilski argues that since Congress specifically recognized business method patent protection in 35 U.S.C. §273, Congress must have intended 35 U.S.C. §101 to include business methods as patentable subject matter. Finally, Bilski argues that the MoT test would disrupt public policy and settled expectations. Trillions of dollars of property expectations hinge on the ruling.

Bilski’s Oral Argument
J. Michael Jakes represented Bilski and Malcolm L. Stewart represented David Kappos, Director of the USPTO. Minutes into Mr. Jake’s argument, Justice Scalia questioned Mr. Jakes why invention cannot be defined to be machines and inventions. Justice Scalia used the creations of Lorenzo Jones and Dale Carnegie as examples of what the USPTO defines as patentable and non-patentable subject matter. Apparently, Lorenzo Jones was a character in a radio show which aired 1937-1955. Jones, an auto mechanic, was constantly inventing wild mechanical devices. Later in the argument, Mr. Jakes noted “But today the raw materials are just as likely to be information or electronic signals, and to simply root us in the industrial era because that’s what we knew I think would be wrong and contrary to the forward-looking aspect of patent law.”

The Justices presented Mr. Jakes with many hypotheticals. From Justice Ginsberg’s method of picking a jury to Justice Sotomayor’s speed dating to Justice Breyer’s “fabulous” method of teaching antitrust law, Mr. Jakes responded that while many of the hypotheticals met the test of patentable subject matter under 35 U.S.C. §101, they would likely be invalid as obvious under 35 U.S.C. §101. The vetting of those inventions argued Mr. Jakes, should take place at the the threshold of obviousness, not patentability. While Justice Sotomayor definitely stated no ruling in Bilski would change the State Street case, many of the Justices felt uneasy with the concept of converting a method from patent intelligible to patent eligible simply by throwing it on a computer.

Government’s Oral Argument
Chief Justice Roberts questioned Mr. Stewart on the written brief. The Chief Justice asked why a single footnote in government’s brief did not undermine the previous 53 pages of argument. The footnote stated that while the Bilski process was unpatentable, it may be patentable if executed on a computer. The Chief Justice analogized this to a process being unpatenable until you typed it out on a typewriter. One particularly troubling statement came from Chief Justice Roberts in which he said “if you punched in in [sic] your search station, you know, give me all the bakers in Washington, that would make it patentable?” I assume the Chief Justice was referring to a search “engine.” While my own limitations make me the last pundit on verbal missteps, I do not think I would ever make this particular mistake. If the Chief Justice was indeed referring to a search engine, the use of “station” instead would seem to indicate an unfamiliarity with current technology. Admittedly, I am a geek, but I suspect neither my mother, nor my daughter would make this mistake either.

Analysis
While it is good to know Bilski will not be overruling State Street, some of the other comments made by the Justices during oral argument are a little concerning. The fate of future technology development rests in the hands of decision makers whose frame of reference is radio characters from the 50’s, typewriters and search “stations.” I realize the Supreme Court Justices are some of the keenest minds on the planet. I just hope that they are keen enough to elicit input from advisers not only knowledgeable about Xbox, Google, eBay and the iPhone, but how these technologies and technologies like them will, or will not, shape our future, depending upon the ultimate decision in Bilski.

A ruling is not expected until 2010.

Brett Trout

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Now I realize the foregoing description already has you on the phone to the Des Moines Playhouse ordering tickets, but there is more. Aaron Sorkin, the playwright who penned A Few Good Men, The West Wing and Sports Night also wrote The Farnsworth Invention. The depth and complexity of the subject matter obviously makes the play a little more inaccessible than most, but Sorkin throws in just enough humor and adult language to keep the non-geeks in the audience interested in the story. While some of the cast at the dress rehearsal seemed to be still sorting out their roles, Michael Davenport did a flawless job as David Sarnoff, narrating the action from Farnsworth’s childhood, up until his eventual death.

While the play is not entirely historically accurate, Sorkin manipulates only those facts necessary to add gravitas and more firmly place the audience in Farnsworth’s shoes. This play examines the invention and patent battles of the most influential device of modern times. It is a must see for geeks, nerds, scientists, inventors, patent lawyers and anyone with a curiosity about how one of the world’s most influential inventions almost never came to be.

Brett Trout

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A Simple Plan
Tom’s system is simple. Find a need and invent a product to fill that need. That is the easy part. The hard part, where most inventors fail is taking that product to market. “Build a better mousetrap and people will beat a path to your door.” Hardly. Taking a product to market takes testing, manufacturing, marketing, distribution and customer service. Without all of these items working together, getting to your product to market is more luck than skill. After building a successful company around his invention, it is not long before a suitor walks in to buy the company.

Intellectual Protection
Tom protects all of his intellectual property from the start. Obtaining federal patent and trademark protection keeps lazy competitors from piggy-backing on his success. Like any ground-breaking invention, Tom Carpenter’s inventions still find themselves the target of imitators. When that happens, Tom takes the steps necessary to halt the theft of his intellectual property by infringers. Whereas most patent infringement lawsuits involves attorney fees averaging over $1.5M per side, Tom has successfully defended the patent on his silt fence machine for about a tenth that amount. In that case, the court not only found the infringer liable for copying Tom’s machine, but found the infringer to be so brazen in its infringement, that the court required the infringer to pay Tom triple the damage award and all of Tom’s attorney fees.

“Green” Initiative
Tom has spent over a decade researching the problem of soil erosion and finding “green” economical solutions. Tom received his first United States Patent in 1999 on an environmentally friendly technology for installing a textile fabric to reduce soil erosion. Companies and municipalities across the country use his Tommy® silt fence machine to preserve precious topsoil that would otherwise be lost to erosion.

ScourStop
After the invention of the Tommy® Silt Fence Machine, Tom developed a unique transition mat system for preventing erosion and promoting the growth of vegetation in areas susceptible to water erosion. In 2005 and 2009 the United States Patent and Trademark Office (USPTO) awarded Mr. Carpenter two more patents on this new system for controlling erosion. The “ScourStop” system is so unique that five additional patent applications on the technology are currently pending before the USPTO. Rights to this technology were recently purchased as part of a seven figure agreement.

Inventor of the Year
Two weeks ago, at the Iowa Intellectual Property Association annual meeting, I was honored to present Tom Carpenter with the Iowa 2009 Inventor of the Year Award. It is rare that the award be granted to an independent inventor, but never was it more deserving. I am proud to have worked with Tom for the past ten years and am more excited than ever to see what he comes up with next.

Brett Trout

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What is the Real Time Web?
Like the World Wide Web itself, the Real Time Web is not something you can hold in your hand. It is not a Web site or a piece of software. It is a system, much like the World Wide Web, of search engines and instant messaging. The Real Time Web combines all of these systems together to provide nearly instantaneous access to information. What if there is an earthquake in Indonesia, a bombing in Iran or a tsunami heading toward California? Even if there was someone with a cellphone witnessing and transcribing an event as it unfolded, it is unlikely you would be able to access this information for hours. Now, services such as Twitter act as a repository for real-time messages, providing you instant access to the most current information around the world. Using powerful search engines you can sort and compile exactly the real time information you need.

Why Real Time Web
How you use the Real Time Web is up to you. It may be as simple as supplementing your internet browser, as shown in the screen shot, to provide Real Time Web information along with your standard search results. It may be to completely immerse your company in the most current information about your industry. The Real Time Web allows you to locate clients, answer questions about your business and build a loyal following. You can research competition, consumer trends, product feedback and upcoming demand. The Real Time Web drops you right in the middle of conversations customers are having about your company right now. Joining the conversation benefits both your company and your customers. The only question is: How long are you going to ignore the conversation? How long is your competition?

Brett Trout

@BrettTrout on Twitter

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Turning the Problem to Your Advantage
Inertia is a powerful force. If you have been with your law firm or a lawyer for a long time, it can be difficult to make a switch. In today’s economic market however, cutting legal fees can be one of the most painless ways to bolster your company’s bottom line. It simply can not hurt to shop around. Quality is obviously more important than hourly rate, but in a buyer’s market you may be able to upgrade and cut costs at the same time. Ask other professionals you know for referrals and talk with some new attorneys. Most will be happy to meet with you to explain how their blend of expertise and hourly rates can meet your needs. Worst case scenario, you may end up with information you can use to convince your current attorney to cut the hourly rates they currently charge you.

Brett Trout

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Hard Cases Make Bad Law
Take for instance the anticyberbullying legislation currently being proposed before Congress. Ostensibly, this bill is to protect young people against anonymous attacks. The actual bill however, makes no mention of age or anonymity. If enacted, the law would make it illegal to for anyone to coerce anyone “using electronic means to support severe, repeated, and hostile behavior[.]” This includes the use of phones and the Internet, as well as other types of electronic communication we have not even thought of yet. Violation of this law will net you a fine and/or two years in federal prison. If this ever gets enacted, I know a lot of lawyers that may need to go looking for a different line of work.

Criminalizing the Possession of Fire
Cyberbulling is terrible. So are online predators, Nigerian scams, spam emails and identity thefts. To many lawmakers, defining the difference between these crimes and acceptable online activities is beyond their lawmaking prowess. Granted, drafting legislation which carves out these activities as crimes, without punishing people exercising their Constitutionally protected civil liberties can be difficult, but that is the job you pay your lawmaker to do. If Congress cannot come up with a law that avoids persecuting the innocent, it must go back to the drawing board. Unfortunately, rather doing enough research to draft online laws more carefully, Congress drafts overly broad legislation, making many legal activities crimes and leaving it to the courts to separate the good guys from the bad guys. This is not how our criminal justice system is supposed to work. Making ten innocent people criminals just to catch one actual bad actor is not acceptable.

When They Come For You
One of the principal tenants of our criminal justice system is that serious crimes require an intent element. As we move into the world of online enforcement, this intent requirement has steadily disappeared. According to Silverglate, as a result of vague laws, the average American unknowingly commits three felonies every day. The harsh penalties associated with these vague, confusing and over-broad laws has created a perverse climate for criminal prosecutions. Rather than having to find a crime and track down a perpetrator, federal prosecutors can now simply pick out an individual and then track down a crime. Even if you successfully prove your innocence, a federal trial can take six years or more and cost you hundreds of thousands of dollars. While this may seem far fetched, in his book, Silverglate details the prosecution of honest, innocent business people, for things which were helping others. But don’t take my word for it, investigate things for yourself. Let your Congressional representatives know how you feel about being made a criminal. Just be sure to wrap up your research before you hear that knock at your door.

Brett Trout

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The Facts
In 2005, Jorge Canal was eighteen years old and attended high school with a fourteen-year-old female he had known for approximately one year. They both associated with the same group of friends, many of whom were older than fourteen. During a phone call between Canal and the girl, the girl requested, three or four times, that Canal send her a photograph of his penis. While there is some dispute as to the specific turgidity requested, Canal emailed the girl one picture of his face and one picture of his erect penis. The picture of Canal’s penis included a text message “I love you.” The girl testified that she viewed the picture and thought she had deleted it. She stated that she requested the photograph as a joke, as other friends were doing the same thing. The girl testified that she did not request the photograph in an effort to excite any feelings. When here mother checked the girl’s email account, she found the photograph and forwarded it to her husband who contacted the police.

The Law
Iowa Code section 728.2 reads as follows:

Dissemination and exhibition of obscene material to minors.

Any person, other than the parent or guardian of the minor, who knowingly disseminates or exhibits obscene material to a minor, including the exhibition of obscene material so that it can be observed by a minor on or off the premises where it is displayed, is guilty of a public offense and shall upon conviction be guilty of a serious misdemeanor.

In Canal’s trial, the jury was provided with the elements necessary to convict Canal of violating Iowa Code section 728.2:

1. On or about the 15th day of May, 2005, the defendant knowingly disseminated or exhibited obscene material to [the girl].
2. [The girl] was then under the age of eighteen.
3. The defendant was not the parent or guardian of [the girl].

The jury was given the following definition of “obscene” material:

any material depicting or describing the genitals, sex acts, masturbation, excretory functions or sadomasochistic abuse which the average person, taking the material as a whole and applying contemporary community standards with respect to what is suitable material for minors, would find appeals to the prurient interest and is patently offensive; and the material, taken as a whole, lacks serious literary, scientific, political, or artistic value. (emphasis added)

The jury was instructed “prurient interest” is defined as “a shameful or morbid interest in nudity, sex, or excretion” and in determining the community standards, they were entitled to draw on their own knowledge of the views of the average person in the community or the vicinity from which they come to make their determination, within the parameters of the foregoing definitions.

The Conviction
The jury found Canal guilty of knowingly disseminating obscene material to a minor. The trial court granted Canal a deferred judgment, placed him on probation, fined him $250, required him to register as a sex offender.

The Appeal
Canal appealed, arguing that the jury instructions went beyond Iowa Code section 728.2. By adding the language “with respect to what is suitable material for minors,” the jury instruction, Canal argued, implied a different obscenity test for adults and minors. Canal also argued his counsel was ineffective for failing to include a jury instruction that mere nudity is not obscene.

The Ruling
This is where it gets a little complex. Given the way Canal structured his appeal, the Iowa Supreme Court was not charged with revisiting the case or finding facts. The Iowa Supreme Court’s charge was merely to determine, given the jury instructions as the law of the case, was there enough evidence provided to the jury to convict Canal. The question was not whether the Iowa Supreme Court, or some other jury, in some other court would convict Canal. The question on appeal was simply whether the evidence could support a hypothetical jury’s conviction, based upon the evidence presented at trial. The Iowa Supreme Court was required to review the evidence in the light most favorable to the prosecution. In its ruling, the Iowa Supreme Court held that the evidence presented in the record was sufficient for the jury to determine, under its own community standards, that the material Canal sent to the girl was indeed obscene.

On Canal’s ineffective assistance of counsel appeal, the Iowa Supreme Court held that “[w]hen viewing the instructions in their entirety, the [trial] court effectively instructed the jury that mere nudity does not constitute obscenity.”

The Conclusion
While this case hinged more on procedural than substantive grounds, it is clear Iowa is aggressively pursuing sexting cases under Iowa Code section 728.2. Like sexting statutes across the country, Iowa’s statute is being broadly interpreted by the courts. Any child with a phone, or who has friends with phones, should know sexting is not a game. Sexting has serious legal and potentially life threatening consequences.

Forwarding, and possibly even receiving, obscene pictures may result in your minor child being criminally convicted and placed on the sex offender registry. Moreover, as sexual predators are often involved in the electronic transmission of obscene materials, a criminal conviction is one of the milder fates which can befall a child involved with sexting. Take today to talk to your child about the dangers of sexting.

Brett Trout

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The History
Patry explains the original purpose of copyright law was not to grant authors a monopoly. Monopoly was merely an evil byproduct, necessary to promote the greater public good. The quid pro quo is that in exchange for the grant of a limited monopoly in their work, artists and authors will produce more works for the public to enjoy. Any more incentive beyond the bare minimum needed to increase output Patry explains, is an immoral burden on society. The theory worked quite well for hundreds of years, until copyright distributors and lawmakers conspired to bitterly twist the intent of copyright to their own ends.

The Economics
Stripping the law and rhetoric of copyright to its core, Patry reveals the ugly truth behind our present copyright system. Copyright distributors have converted copyright law from an incentive to artists, to a weapon of mass destruction. Behind a continuous blitzkrieg of propaganda, labeling the public as villains and artists as heroes, the industry has successfully kept copyrighted material out of the hands of the public domain for longer and longer periods of time. Bringing lawsuit after lawsuit against the public’s use of ever-emerging technologies, copyright distributors have turned copyright law on its head. What began as a benefit to the public has become a weapon, which not only undermines the incentive to create new works, but which sues new technologies out of existence.

The War
Moral Panics and The Copyright Wars details how, to prevent the public from revolting, copyright distributors overtook the copyright debate, casting themselves as artistic defenders and the public as immoral thieves and pirates. Buttressed by their successes, copyright distributors continue to take ground, pressing for increasingly Draconian laws, denying the public use of decades old works and cutting edge technology, while offering nothing in return.

The Threat of Emerging Technologies
Although the public may see lawsuits against single mothers and grandmothers as the extent of the evil posed by the industry, the greatest threat lies in the attacks on emerging technologies. Passing morally corrupt copyright law after copyright law has made it easier for copyright distributors to sue new technologies. Rather than innovate, or adopt ways to capitalize on new technologies, the industry litigates, driving emerging technologies, like P2P file sharing, toward submission. Patry makes painfully clear, that the present direction of copyright law is neither morally nor economically sustainable. The only question is: How much longer before the public takes back what it rightfully owns.

I cannot recommend this book highly enough. Patry translates complex concepts into understandable language. Regardless of what side of the debate you are on, this book will change the way you think about the morality of copyright.

Brett Trout

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What is Your Trademark Worth?
Smart companies know the value of their trademarks. For companies like Coca-Cola and IBM, the value of their trademarks are measured in the tens of billions of dollars. For your company, it is measured in the value of your company above its tangible assets. The value of your trademark lies in your customer and vendor relationships, your credit history, your employees, the cost of putting it all together and ironing out the wrinkles. It is easy to see how the value of your company’s trademark can easily exceed the collective value of all of your company’s tangible assets combined.

Leaving Your Front Door Unlocked
You would never leave your company’s front door unlocked overnight. You would never trust a stranger to deliver your bank deposits. But that is what companies do when they fail to take the simple steps necessary to protect their most valuable assets. Many companies elect to stick their heads in the sand and wait until a problem arises. The problem is, by the time trademark problems arise, they have often snowballed to an unmanageable size.

The Ugly Side of Flying Blind
By the time your company receives a trademark cease and desist letter or has its trademark stolen, it may be too late. The problem could be so severe, you may have to forget about saving your trademark and focus all of your resources on just saving your company from bankruptcy. If you picked your company’s name without a trademark search, you may be infringing someone else’s trademark, without even knowing it. All the money your company has earned under that trademark may have to be turned over to the owner of the trademark.  If you continue to infringe a registered trademark after you become aware of a potential problem, you may have to pay the trademark owner triple damages plus all of the trademark owner’s attorney fees.

It Is Just As Easy to Do Things Right
Checking out the name of your company and/or the names of any new products is a relatively quick and painless process. Once you have vetted the name, you may wish to file for federal trademark registration. Unlike state registration, federal trademark registration affords national protection, triple damages, and attorney fees, as well as several other legal advantages. Probably the biggest advantage federal trademark registration provides is the increased likelihood that an infringer will back down, rather than force you into a lawsuit. Trademark attorneys typically provide a free initial consultation to explain their trademark vetting and protection services, along with the associated fees. Trademarks are your company’s most valuable asset. The sooner you protect them, the less likely you are to experience a catastrophic problem down the road.

Brett Trout

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The Evil Ought Not Last
Everyone agrees patents are a burden on society. Patents are evil. We bear this evil only because the benefit to the public good of motivating inventors to develop technology which eventually moves into the public domain outweighs the associated evil of the limited monopoly. At least that is the theory. Although he was discussing copyrights at the time, the words of Lord Macaulay are just as true today: “For the sake of the good we must submit to the evil; but the evil ought not last a day longer than is necessary for the purpose of securing the good.” By the same token, the evil monopoly ought not extend a meter further than is necessary for the purpose of securing the good. Patents do not exist to assuage the evil, or make life easier on mega corporations. They exist to benefit the public. Extending patents rights beyond the bare minimum necessary to encourage innovation is an immoral tax on consumers. Extending the geographic scope of patents steals from the many to benefit the few; the exact opposite of what the patent grant was created to accomplish.

Lessons From Copyright
Nowhere is the harm of irresponsibly extending intellectual property protections more obvious than in the area of copyright. Kowtowing to special interest groups, Congress has repeatedly increased copyright terms. In 1998, with the passage of the Sonny Bono Copyright Term Extension Act, (more pejoratively known as the Mickey Mouse Protection Act for its particular benefit to Disney) the term of copyright is now the life of the author plus 70 years. Do these extensions increase the motivation to produce copyrighted material? Hardly likely. Given the drastically diminishing returns on copyrighted work, anything more than 20 years of protection does very little to motivate additional creation. On the other hand, the additional 70 or so odd years of monopoly does much to penalize the general public. So what we end up with is a minor benefit for the tiny percentage of huge companies able to derive increasing income after the first 20 years of protection, and a huge tax on the rest of us. Just the opposite of what copyright law was designed to do.

Patents
Just as ridiculous extensions of copyright protection punish the public, so do ridiculous extensions of the geographic reach of patents. The problem is that when these anti-society laws extend beyond the bare minimum temporal and regional limitations, they keep the majority of the useful intellectual property out of the hands of the public, without increasing the entrepreneurial motivation to produce more intellectual property. Take for instance a small inventor, interested in only producing a product in a small regional market. If the inventor can just as easily protect the invention around the world, no one but those in the small region receive any benefit from the invention. More importantly, the motivation to improve on the invention anywhere else in the world diminishes dramatically.

Why This is Horribly, Horribly Bad For You
Granting inventors a monopoly for a short period of time, in a narrow geographic region is a small price to pay for motivation it provides to produce better and better technology. If the invention is truly groundbreaking, with world-wide appeal, the inventor is currently free to pursue individual patents around the world. The difference is that currently the inventor must feel he or she has the resources to bring the benefits of the innovation to each country in which the patent is sought. A world patent will eliminate this cost/benefit analysis. Innovation will plummet, and prices for old technology will remain high. You, the public, will pay increasingly premium prices for decreasingly valuable technology. The biggest problem is that this change will be irreversible. Once implemented, it will be near impossible to return to the present system of quid pro quo. Mega-corporations are banking on the public’s naïveté in their attempt to bully this change into law. By the time you realize the damage world patents are causing, it will be too late to take action.

But now you know.

Brett Trout

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