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Keeping Score

How many lawyers does it take to write this month’s column? Just one very smart one. Here’s a summary of legislation, litigation, and intellectual agitation from around the globe.
This year’s court docket continues to be eventful, with many cases relevant to software patents and future of open source. First and foremost are some patent legislation and cases, so let’s do a little catch-up there.

Patent Reform and Improvement

The European Commission has reintroduced its proposal on criminal penalties for intellectual property infringement, and unfortunately, there is little good news. The new proposal, approved on April 26, 2006, and identified as 2006-168, is not (yet) available to the public, although I have reviewed a copy of it. (If you’re interested in reading the proposal in its entirety, keep your eye on http://ec.europa.eu/prelex/detail_dossier_real.cfm?CL= en& DosId=193131# 37791.) I had been hopeful that the Commission would reconsider its position, especially its intent to assert criminal penalties for intentional patent infringement, but a change of heart seem unlikely. I will be surprised if this proposal doesn’t cause a lot of folks in the information technology industry, folks who don’t normally see eye-to-eye, to pull together to, at a minimum, remove intentional patent infringement from the directive.
Closer to home, intellectual property attorneys had hoped to see Senator Hatch’s alternative to House Resolution 2795 by now, but his proposal appears to still be in drafting. (You can find H.R. 2795 at http://thomas.loc.gov/cgi-bin/query/D?c109: 4:./temp/~c109r6sSIh::.)
Meanwhile, a new bill, House Resolution 5096 (http://thomas.loc.gov/cgi-bin/query/z?c109: H.R.5096), has been introduced by Representatives Berman and Boucher as another alternative to H.R.2795. Focused a bit more on patent quality, it still retains many of the proposals in the original H.R.2795. Still, it’s doubtful that either bill will see much action this year.
However, a new group from the information technology industry has formed to push for patent reform. Called the Coalition for Patent Fairness, the group is sponsored by Cisco, Intel, and HP, among others, and its efforts appear to be directed at five key areas:
1.Assuring full consideration of all factors before granting injunctive relief in patent infringement actions.
2.Restricting forum shopping by patent plaintiffs.
3.Apportionment in damage award determination, that is, limiting the award to the proportionate contribution of the patented invention to the overall product.
4.Limiting damage recovery to U.S. goods, not replicated goods in foreign jurisdictions.
5.Establishing clear standards for the awarding of multiple damages for willful infringement.
While many of us believe software patents to be a bad idea, these proposals would at least keep a bad situation from getting worse.
At the same time, the United States Patent and Trademark Office (USPTO) continues to pursue its own course to attempt to improve patent practice. The USPTO has advanced proposed rules with respect to both claims practice and continuation practice (http://www.uspto.gov/web/offices/pac/dapp/opla/presentation/focuspp.html). The USPTO is also seeking comments and suggestions for the implementation of its 21st Century Strategic Plan (http://www.uspto.gov/web/offices/com/strat21/comments2007.htm).
Finally, the USPTO continues to be interested in two additional processes that could greatly improve patent quality: the use of open source software as prior art, and the community patent review process proposed by Beth Noveck of New York Law School. Noveck’s idea (available online at http://dotank.nyls.edu/communitypatent/) is to allow the public the opportunity to comment on patents prior to issuance. The USPTO has announced it will run a pilot program incorporating Noveck’s ideas starting in January 2007.

U.S. Supreme Court Cases

Two of the three Supreme Court cases mentioned in prior columns, eBay (argued before the Court on March 29) and Labcorp (argued before the Court on March 12), remain unresolved. Rulings should be issued by the end of June.
Another case of interest is Microsoft v. AT&T Corp., which raises the issue of whether the shipping of a gold master abroad for purposes of foreign replication is sufficient to fall within the reach of U.S. patent law under Sec. 271 (f) of the Patent Act (see point 4 above). The Court is no longer accepting amicus briefs in this case, and it has sought the opinion of the U.S. Solicitor General before proceeding with a determination on the writ of certiorari.
On May 15, the Supreme Court announced its decision in the eBay, Inc., et al. v MercExhange, L.L.C. case. The Court held that district courts are not required to issue injunctions when infringement has been found. Rather, district courts may issue injunctions upon considering a four-part test. As the magazine goes to press, the full opinion of the Court was not yet available, but from what has been announced in the press, this decision appears to be good news.

Competition Litigation

The second of the two major events involving Microsoft and its on-going competition battle with the European Commission took place the week of April 24, with the appeal hearing before the Court of First Instance in Luxembourg. The hearing, before a panel of 13 judges, pitted Microsoft and its supporters against the European Commission and its supporters, including the Software and Information Industry Association and European Committee for Interoperable Systems. The five-day hearing was a battle royal with both sides making their best arguments.
A star-witness for the Commission was Samba’s Andrew Tridgell. Tridge’s testimony, which was both well prepared and, at times, light-hearted, was of critical importance in supporting the Commission’s contention that Microsoft has intentional extended standards and refused to supply interoperability information in extending its monopoly on the desktop. While no clear winner emerged from the hearing, the general consensus is that the Court will be hard-pressed to not support the Commission, given that Microsoft bore the burden of proof and Microsoft failed to land any knock-out punches during the hearing.
It will likely be autumn before the Court issues a ruling. Until then, the Commission continues to consider the imposition of daily fines for failure to comply with the Commission’s orders and is considering further Statements of Objection (basically, findings of further non-compliance) over the next several months.

Standards

In early May 2006, the International Organization for Standardization (ISO) announced the approval of the OpenDocument Format as a standard. This is a huge step forward for an open format for documents.
So much has happened in the last few months, but there’s still a lot to do. I’ll be sure to give you another update in September.

Mark H. Webbink is Deputy General Counsel for Red Hat.

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