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A patent like other property rights is a right to exclude others and not a right or an obligation to make the patented invention. Yet today there is a growing campaign by certain industry sectors and the government against patent holders that do not make any products but enforce their patent rights for licensing revenues, often pejoratively called patent “trolls.” In a recent White House report on the subject, President Barack Obama is quoted as saying that these patent holders “don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.” The government alleges that “trolls” are responsible for a patent litigation crisis. Armed with this narrative, the White House had recently announced executive actions for “taking on patent trolls.”

This narrative of harmful patent assertion by non-practicing entities is not new. A century ago, the Wright aircraft company was accused by US government officials of causing such harm because it had attempted to enforce the Wright airplane patent, which it did not practice, by sending licensing demand letters to alleged infringers. Government officials stated that the assertion of the Wright airplane patent was “injurious to the development of aircraft and the aircraft industry in the United States.” They argued that “any adequate return to the Wright stockholders upon their investment [in the Wright patent] must be through the manufacture and sale of airplanes … and not through patent channels,” and that “any return from patents must necessarily fade into insignificance.”

This myth that the assertion of the Wright patent harmed the development of aviation continues to be propagated and erroneous lessons drawn for patent policy today: In 2014, Goldstone’s book Birdmen was published as the latest in the constant reworking through time of the Wright brothers’ story. The widespread reviews of this book emphasized that the Wright brothers were patent “trolls” – Orville Wright was a “vindictive SOB whose greed and begrudgery [sic] were surpassed only by those of his brother Wilbur” and the brothers were “cursed with an addiction to malice to anyone who challenged their primacy or stood in their path to riches.” The purported tool of their “malice” was, of course, their patent. The ostensible general lesson for today is explicitly and erroneously drawn by Goldstone; “Patent law remains [today] the damper on innovation that it was when airplane development was nearly grounded in its infancy.”

We show using primary evidence that the origins of this century-old myth are factually unsupported letters of government manufacture used to persuade the President and Congress to authorize the appropriation of patented inputs at depressed royalty rates. Today these letters are treated as “primary historical sources” to support the myth that the Wright brothers’ patent retarded US aviation development and that it was therefore necessary for the government to intervene in the market for patents and force patent holders into a patent pool. The story that US government officials manufactured in 1917 is believed by many to be fact and for some people, again there is a simple, general ‘policy lesson’ – sometimes government must intervene in markets because private owners of property rights cannot otherwise strike a bargain and reach the optimum social and economic outcome.

But this entrenched and oft-repeated myth is not true, in any part. The Wright brothers licensed their patent early and with vigour into all developed markets. When they won their suit against the principal infringer of their patent, Glenn Curtiss, they never enjoined Curtiss’ manufacturing activities, leaving him free to develop the leading US aviation business. All the commercial and patenting evidence we collect shows that no patent hold-up or development suppression occurred before the government forced patentees into its preferred patent pool.

The result in 1917 was the government-designed patent pool agreement, which depressed royalties to the Wright patent holder to the extraordinarily low rate of 1% – at a time when Congress recognized in the 1917 ‘Trading with the Enemy Act’ that 5% was a fair royalty to pay for a single patent owned by enemies of the US!

The acceptance of the myth has blinded policymakers to the possibility that the design of the 1917 aircraft patent pool was an abuse of the government’s monopsony power that effectively attenuated the development-incentive provided by aviation patents. Patenting rate declined and aircraft sales exhibited little market growth for a decade after the formation of the aircraft patent pool. We hypothesize that as a result of the government intervention, a period followed when aviation innovation may have been depressed and future research should investigate this hypothesis further.

The government’s past use of the “troll” narrative encourages one to wonder whether today’s “troll” narrative, advanced once again to alleviate another purported patent litigation “crisis,” will have the unintended consequence of suppressing innovation.

Headline image credit: Wilbur making a turn with the Wright Glider, 1902. Public domain via Wikimedia Commons.

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By Jie Jack Li

At the end of last year, Eli Lilly’s mega-blockbuster antidepressant Cymbalta went off patent. Cymbalta’s generic version, known as duloxetine, rushed in to the market and drove down the price, making it more affordable.

Great news for everyone, right? Well, not quite.

Indeed, generic competition is a great boon to the payer and the patient. On the other hand, the makers of the brand medicine can lose about 70% of the revenue. Without sustained investment in drug discovery and development, there will be fewer and fewer lifesaving drugs, not really a scenario the patient wants. Cymbalta had sales of $6.3 billion last year. Combined with Zyprexa, which lost patent protection in 2011, Lilly lost $10 billion in annual sales from these two drugs alone. The company responded by freezing salaries and slashing 30% of its sales force.

Prescription Prices. Photo by Chris Potter, StockMonkeys.com. CC BY 2.0 via Flickr.

Lilly is not alone in this quandary. In 2011, Pfizer lost its $13 billion drug Lipitor, the best-selling drug ever, which made “merely” $2.3 billion in 2013. Of course Pfizer became the number one drug company by swallowing Warner-Lambert, Pharmacia, and Wyeth, shutting down many research sites that were synonyms to the American pharmaceutical industry, and shedding tens of thousands of jobs. Meanwhile, Merck lost its US marketing exclusivity of its asthma drug Singulair (montekulast) in 2012 and saw a 97% decline in US sales in 4Q12 compared with 4Q11. Merck announced in October last year that it would cut 8,500 jobs on top of the 7,500 layoffs planned earlier. Bristol-Myers Squibb’s Plavix (clopidogrel)’s peak sales were $7 billion, ranking the second best-selling drug ever. After Plavix lost its patent protection in May 2012, the sales were $258 million last year. Meanwhile BMS has shrunk from 43,000 to 28,000 employees in the last decade.

Generics competition is not the only woe that big Pharma are facing. Outsourcing Pharma jobs to China and India, M&A, and economic downturn rendered thousands of highly paid and highly educated scientists to scramble for alternative employments, many outside the drug industry. With numerous site closures, outsourcing cost reductions, and downsizing, some 150,000 in Pharma lost their jobs from 2009 through 2012, according to consulting firm Challenger, Gray & Christmas. Such a brain drain makes us the lost generation of American drug discovery scientists, including this author. In contrast, Japanese drug companies refused to improve the bottom line through mass layoffs of R&D staff, a decision will likely benefit productivity in the long run.

What can we do to ensure the health of the drug industry and sustain the output of lifesaving medicines? Realizing that there is no single prescription for this issue, one could certainly begin talking about patent reform.

Current patent system is antiquated as far as innovative drugs are concerned. Decades ago, 17 years of patent life was somewhat adequate for the drug companies to recoup their investment in R&D because the life cycle from discovery to marketing at the time was relatively short and the cost was lower. Today’s drug discovery and development is a completely new ballgame. First of all, the low-hanging fruits have been harvested, and it is becoming increasingly challenging to create novel drugs, especially the ones that are “first-in-class” medicines. Second of all, the clinical trials are longer and use more patients, increasing the cost and eating into patent life. The latest statistics say that it takes $1.3 billion to take a drug from idea to market after taking the failed drugs’ costs into account. This is the major reason why prescription drugs are so expensive because pharmaceutical companies need to recoup their investment so that they will have money to invest in discovering future new life-saving medicines. Therefore, today’s patent life of 20 years (the patent life was extended from 17 years to 20 since 1995) is insufficient for medicines, especially the ones that are “first-in-class.”

Therefore, patent life for innovative medicines should be extended because the risk is the highest, as is the failure rate. Since the life cycle from idea to regulatory approval is getting longer and longer, it would make more sense if the patent clock started ticking after the drug is approved while exclusivity is still provided after the filing

The current compensation system for the discovery of lifesaving drugs is in a dire need of reform as well. Top executives are receiving millions in compensation even as the company is laying off thousands of employees to reduce cost. Recently, Glaxo Smith Kline announced that the company will pay significant bonuses to scientists who discover drugs. This is a good start.

The phenomenon of blockbuster drugs was a harbinger of the golden age of the pharmaceutical industry. Patients were happy because taking medicines was vastly cheaper than staying in the hospital. Shareholders were happy because huge profit was made and stocks for big Pharma used to be considered a sure bet.

Perhaps most importantly, the drug industry expanded and employed more and more scientists to its workforce. That employment in turn encouraged academia to train more students in science. America’s Science, Technology, Engineering, and Mathematics education was and still is the envy of the rest of the world. Maintaining that important reputation depends on a thriving pharmaceutical industry to provide jobs for our leading scientists and researchers. In turn they will reward us by discovering the next life-saving drugs.

Dr. Jie Jack Li is an associate professor at the University of San Francisco. He is the author of over 20 books on history of drug discovery, medicinal chemistry, and organic chemistry. His latest book being Blockbuster Drugs, The Rise and Decline of the Pharmaceutical Industry.

Chemistry Giveaway! In time for the 2014 American Chemical Society fall meeting and in honor of the publication of The Oxford Handbook of Food Fermentations, edited by Charles W. Bamforth and Robert E. Ward, Oxford University Press is running a paired giveaway with this new handbook and Charles Bamforth’s other must-read book, the third edition of Beer. The sweepstakes ends on Thursday, 14 August 2014 at 5:30 p.m. EST.

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By Meghann Wilhoite

American composer and self-proclaimed “bad boy of music” George Antheil was born today 114 years ago in Trenton, New Jersey. His most well-known piece is Ballet mècanique, which was premiered in Paris in 1926; like Stravinsky’s Rite of Spring, from which Antheil seems to have derived quite a bit of inspiration, the premiere resulted in audience outrage and a riot in the streets. The piece is scored for pianos and a number of percussion instruments, including airplane propellers.

Click here to view the embedded video.

Though he died at the age of 58, polymath Antheil managed to accomplish quite a bit in his relatively short life both in and outside the field of music. Here are some highlights:

• His name appears alongside the actress Hedy Lamarr’s on a patent, granted in 1942, for an early type of frequency hopping device, their invention for disrupting the intended course of radio-controlled German torpedoes.
• In 1937 he published a text on endocrinology called Every Man His Own Detective: A Study of Glandular Criminology. The book includes chapters on “How to read your newspaper” and “The glandular rogue’s gallery”.
• His music was championed by the likes of James Joyce, Ezra Pound, Sylvia Beach, W.B. Yeats, Erik Satie, and Pablo Picasso.
• Under the pseudonym Stacey Bishop, he wrote Death in the Dark, a detective novel edited by T.S. Eliot, the hero of which is based on Pound.
• After spending the majority of the 1920s and 30s in Europe, he settled in Hollywood and wrote dozens of film, television and radio scores, for directors such as Cecil B. DeMille and Fritz Lang (and with such titillating titles as “Zombies of Mora Tau” and “Panther Girl of the Kongo”).
• Last, but not least, here is Vincent Price narrating Antheil’s “To a Nightingale” with the composer himself on piano: George Antheil – Two Odes of John Keats – To A Nightingale: Vincent Price, narrator; George Antheil, piano

Meghann Wilhoite is an Associate Editor at Grove Music/Oxford Music Online, music blogger, and organist. Follow her on Twitter at @megwilhoite. Read her previous blog posts on Sibelius, the pipe organ, John Zorn, West Side Story, and other subjects.

Oxford Music Online is the gateway offering users the ability to access and cross-search multiple music reference resources in one location. With Grove Music Online as its cornerstone, Oxford Music Online also contains The Oxford Companion to Music, The Oxford Dictionary of Music, and The Encyclopedia of Popular Music.

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By Dennis Baron

Psst, wanna buy a hot slogan?

“Occupy Wall Street,” the protest that put “occupy” on track to become one of the 2011 words of the year, could be derailed by a Long Island couple seeking to trademark the movement’s name.

The rapidly-spreading Occupy Wall Street protests target the huge gap between rich and poor in America and elsewhere, so on Oct. 18, Robert and Diane Maresca tried to erase their own personal income gap by filing trademark application 85449710 with the U.S. Patent and Trademark Office so they could start selling Occupy Wall St.™ T-shirts, bumper stickers, and totebags, as well as various other tchotchkes bearing the protest name (the Marescas’ application is for “Occupy Wall St.,” using the abbreviated form of street–they haven’t expressed an interest in owning “Occupy Wall Street” as well).

The Trademark Commission will have to decide whether anyone can own the rights to the phrase “Occupy Wall Street,” which seems to have captured the public’s imagination and entered the public domain in record time–in fact, faster than you can say “Tea Party.” If so, the Commission must then consider whether the Marescas have any right to the phrase. They didn’t join the OWS protests and they may have never even been to Wall St. (according to their application, the Marescas live in West Islip, about 50 miles from the main protest site). Plus, so far as anyone can tell, they’ve never manufactured T-shirts, bags, or stickers with “Occupy Wall St.” or any other logo or design.

The Marescas are not the only ones trying to capitalize on the anticapitalist protests. There’s an episode of an MTV reality show, complete with commercial sponsors. There’s a book. There’s an Android app. And a company called Condomania is selling Occupy condoms (free samples available to the protestors). There are over 3,000 items of Occupy merchandise for sale on the ’net. A local pizza shop sells Occupy Meat, Occupy Veggie, and Occupy Vegan pizzas to the protestors at a discounted price of $15 a pie. There’s even an Occupy Wall Street iPhone™ app that looks like a combo of Tetris and Angry Birds ($4.99 at the iTunes™ App Store™).

The Occupy movement itself is trying to buy TV time to air a commercial that it made—though unlike the competition, the original OWS remains not-for-profit. But it’s not even clear that Occupy Wall Street could trademark its own name, or that, despite its new-found popularity, the word occupy could qualify as Word of the Year, since it’s not really a new

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By Dennis Baron

Apple’s latest iPhone app will clean up your text messages and force you to brush up your French, or Spanish, or Japanese, all at the same time.

This week the U.S. Patent and Trademark Office approved patent 7,814,163, an Apple invention that can censor obscene or offensive words in text messages whie doubling as a foreign-language tutor with the power to require, for example, “that a certain number of Spanish words per day be included in e-mails for a child learning Spanish.”

Parents are sure to love this multitasker, which puts an end to teen-age sexting while also checking homework. In the spirit of the Supreme Court’s 1978 ban on George Carlin’s “Seven Dirty Words You Can’t Say on TV,” Apple’s app will shrink their children’s stock of English expletives—or at least render them unprintable—while setting the kids on the path toward bilingualism, or at least a passing grade in French. This new invention from Apple is two things in one: Mary Poppins and the Rosetta Stone, or, for those parents of a certain age, it’s a floor wax and a dessert topping.

Of course, when Apple closes one door, it opens another. Apple may cut off access to bad words in English, but it then redirects that lexical energy in the profitable direction of foreign-language learning. Teens may find their texting vocabulary circumscribed, but if children’s grades go down, Apple’s iPhone censor lets parents activate a tool that “can require a user . . . to send messages in a foreign language, to include certain vocabulary words, or to use proper spelling, grammar and/or punctuation based on the user’s defined skill level. This could aide [sic] the user in more quickly improving his or her fluency of a language.”

As if Steve Jobs wasn’t already intruding enough into people’s wallets and their private lives, the iPhone device will not only watch your language, it will require you to correct your mistakes and rat you out if you screw up. The app doesn’t just make you do your homework, it even tells you when to do it. According to the Apple patent,

The control application may require a user during specified time periods to send messages in a designated foreign language, to include certain designated vocabulary words, or to use proper designated spelling, designated grammar and designated punctuation and like designated language forms based on the user’s defined skill level and/or designated language skill rating. If the text-based communication fails to include the required language or format, the control application may alert the user and/or the administrator/parent of the absence of such text.

The control application may require the user to rewrite the text-based communication in the required language, to include the required vocabulary words and/or to correct spelling and punctuation errors. The control application may require the user to locate the error. If the user cannot correct the error, the control application may provide hints as to the location of the error by first indicating the paragraph, then, the line and, finally, the exact location.

As figure 10 from Apple’s patent application shows (see below), writers of objectionable texts

Charles R. Macedo is a partner at Amster, Rothstein & Ebenstein LLP, and the author of The Corporate Insider’s Guide to US Patent Practice, which provides a basic understanding of patent practice in the United States as it relates to both obtaining and enforcing patents. Macedo’s practice specializes in all facets of intellectual property law including patents, trademarks and copyrights.  In the article below he looks at the Tiffany v. eBay case.  Read his other OUPblog posts here. [FN: The author wishes to thank Michael J. Kasdan for his thoughtful comments on this blog entry]

One of my favorite parodies is Weird Al Yankovich’s song, “I Got It On eBay.” It reminds me of the largest garage sale outlet ever conceived, where one person’s garbage becomes another person’s gold. Anyone can hawk their old things (usually at a discount), but perhaps at a better price than one could expect by offering it on their front lawn on a sunny weekend afternoon in May.

Unfortunately, not every item sold on eBay is authentic. The large numbers of counterfeit items is a source of consternation to purveyors of authentic luxury items, apparel and consumer goods.

Over the past few years, a series of litigations have been commenced by luxury good manufacturers (such as LVMH and Tiffany and others) against eBay, seeking to hold eBay liable for damages associated with actual counterfeit sales made through its website. These cases raise the important questions of whose burden it is to police eBay for counterfeit items, and whether eBay should pay damages associated with actual counterfeit sales made through its website.

The results of these cases have been dramatically different. Some courts, most notably in France, have found that eBay should bear significant responsibility when counterfeit items are actually sold on its websites. Other courts, most notably the Federal Court in New York, have found that the precautions eBay has taken are sufficient and place a heavier burden on the brand owners to police their own marks.

In my own parody of Charles Dicken’s A Tale of Two Cities, I previously authored an article comparing the French and New York treatment of this issue entitled “eBay: A Tale of Two Defenses”, IP Law360, August 22, 2008 (available at www.arelaw.com).

On April 1, 2010, the U.S. Court of Appeals for the Second Circuit (located in New York City) weighed in on this issue, affirming for the most part the decision that eBay’s activities (at

Charles R. Macedo is a partner at Amster, Rothstein & Ebenstein LLP, and the author of The Corporate Insider’s Guide to US Patent Practice, which provides a basic understanding of patent practice in the United States as it relates to both obtaining and enforcing patents. Macedo’s practice specializes in all facets of intellectual property law including patents, trademarks and copyrights.  In the article below he looks at “patent worthiness.”  Read his other OUPblog posts here.

Speed Dating is not the only issue that our nine Justices of the Supreme Court raised on November 9, 2009 to determine what types of processes should be entitled to “patent worthiness.” Justice Scalia wanted to know why, if the patent laws were intended to cover broad processes, weren’t there any patents filed in the 1800s relating to training horses.

At the time, as Justice Scalia rightly observed, the American economy was completely dependent on horses. In fact, during the late 19th Century commerce came to a standstill when approximately 99% of all horses in America contracted equine influenza. According to Greg Sabin’s February 13, 2009 article, “Nightmare on Wall Street: 4 Other Times Our Economy Tanked“, at the height of the pandemic “as many as 20,000 businesses failed, a third of all railroads went bankrupt, and unemployment spiked to almost 15 percent.”

Not surprisingly, as Justice Scalia suggested, there were many U.S. Patents issued in the late 1800s that taught different methods of training or breaking horses:

* U.S. Patent No. 247,296, to G.W. Blake, entitled “Harness” (patented September 20, 1881);
* U.S. Patent No. 381,745, to H. C. Woodnutt, entitled “Device for Assisting in Training Horses” (patented April 24, 1888);
* U.S. Patent No. 453,727, to H. Sample, entitled “Apparatus for Treating or Taming Horses” (patented June 9, 1891);
* U.S. Patent No. 478,513, to C.C. Kelly, entitled “Apparatus for Training Animals” (patented July 5, 1892); and
* U.S. Patent No. 545,228, to J.W. Green, entitled “Horse-Breaking Apparatus” (patented August 27, 1895).

While admittedly none of these patents claimed a method of training or breaking a horse, they all obtained patent protection for such methods by claiming the apparatus to do it.

There are various explanations of why these patents claimed apparatus instead of methods:

* In the 1800s, most patents were drafted in the form of apparatus or system claims, and not method claims, although the law allowed for method claims in the form of “arts.”
* It was much easier to detect infringement of an apparatus that was sold than to detect a method of performing acts. Thus, not surprisingly, one would be less likely to invest in method claims.
* Perhaps more importantly, the law was in flux as to what type of method claims were available. For example it was not until 1909, in Expanded Metal Co. v. Bradford, 214 U.S. 366 (1909), that the Supreme Court made clear that patent eligible method claims did not merely need to have chemical transformations, but could also include mechanical transformations.

Indeed, when the 1952 Patent Act was adopted, the law was drafted to define patent-eligible methods broadly. See 35 U.S.C. § 100(b). Thus, perhaps Justice Scalia would find it interesting to note that since the Act was enacted, many patents have issued which claim methods of training animals (including horses):

* U.S. Patent No. 3,099,248, to J.K. Giles et al., entitled “Methods of Training Horses” (patented July 30, 1963) (claiming “a method of breaking and training horses preparatory to racing”);
* U.S. Patent No. 5,566,645, to T.H. Cole, entitled “Animal Training Method and Apparatus” (patented October 22, 1996) (claiming “[a] method for training animals”);
* U.S. Patent No. 6,311,645, to J.S. Brown, entitled “Animal Training Method and Apparatus” (patented November 6, 2001) (claiming “[a] method of training an animal”);
* U.S. Patent No. 6,352,053, to D. Records et al., entitled “Apparatus and Method for Animal Testing and Training” (patented March 5, 2002) (claiming “[a] method permitting an observer to determine the bucking propensity of an animal such as a bull or horse”);
* U.S. Patent No. 6,568,940, to M. Mack, entitled “Equestrian Training Method” (patented May 27, 2003) (claiming “[a] method for equestrian training”);
* U.S. Patent No. 6,602,209, to D.H. Lambert et al., entitled “Method and Device for Analyzing Athletic Potential in Horses” (patented August 5, 2003) (claiming “[a] method for predicting potential performance in a selected racing or training animal”);
* U.S. Patent No. 7,107,939, to L.J. Lady, entitled “Animal Training Apparatus and Method” (patented September 19, 1996) (claiming “[a] method for training a four-legged animal”); and
* U.S. Patent No. 7,331,310, to K. Sersland et al., entitled “Domestic Animal Training Method” (patented Feb 19, 2008) (claiming “[a]n animal training method”).

Turning back the patent law to the uncertainty of the 1800s, when our economy was based on agrarian and early industrial technology, is not what our nation needs in this time of economic crisis.

The point is that any subject should be available for patent protection, whether it is Speed Dating, Horse Training, or Hedging Risk, so long it does not claim the subject in an abstract manner.

Charles R. Macedo is a partner at Amster, Rothstein & Ebenstein LLP, and the author of The Corporate Insider’s Guide to US Patent Practice, which provides a basic understanding of patent practice in the United States as it relates to both obtaining and enforcing patents. Macedo’s practice specializes in all facets of intellectual property law including patents, trademarks and copyrights.  In the article below he looks at speed dating in a whole new light.

On Monday, November 9, 2009, the nine Justices of the US Supreme Court heard oral argument in the case of Bilski v. Kappos. This case, involving what many think to be the dull and arcane subject of patent law, can have a profound effect on the US economy, including potentially allocating research funds and investments and limiting what information our society will learn through the use of patents.

In the US, a patent can be granted to the first and true inventor(s) of a novel (new) and non-obvious invention. A patents provides a limited right to exclude others for a limited period of time, in exchange for telling the world how to practice the claimed invention. In other words, if the inventor teaches the rest of society what he or she knows, our government gives him or her an exclusive window of time during which to commercialize that invention. The assumption of the patent law is that granting a patent will foster innovation in two significant ways: (1) by encouraging investment in exchange for the limited monopoly rights, and (2) by providing disclosure of what might otherwise be maintained in secret and/or forgotten.

The issue the Supreme Court is deciding in Bilski is what types of inventions are “patent worthy” (as Elaine in Seinfeld might have phrased it), and what types of inventions do not even get considered for a patent. This debate is so important that apparently it is rumored that more amicus curiae briefs (including a submission prepared by me) were submitted to the Supreme Court than any other patent case in US history.

In an effort to divine where to draw the line on patent eligibility, the Justices posed a variety of hypothetical inventions to test patent worthiness using a proposed rule from the Appellate Court, to see whether that Court got the right answer. As an apparent example of an invention that should not be patent worthy, Justice Sotomayor, the newest member of the Court, is crediting with asking “why not speed dating?” [Court observers note that the transcript may be in error as to whether she said “speed dating” as reported in the media or “speaking”, but “speed dating” is a more interesting hypothetical].

In response to Justice Sotomayor, I say, “why not?” A brief review of Wikipedia on the subject, as it is at least in Wikipedia’s eyes deserving of its own web page, shows that “Speed dating is a formalized matchmaking process or dating system whose purpose is to encourage people to meet a large number of new people.” Certainly, this is a worthy goal for society to encourage.

“Speed dating” (two words with a space, in contrast to the single word which is a registered trademark of Speeddating Foundation., see US Trademark Registration No. 2,463,420) is a recent innovation. According to Wikipedia, “the first speed-dating event took place at Pete’s Café in Beverly Hills in late 1998” and “several commercial services began offering secular round-robin dating events” thereafter.

Many different techniques of speed dating have developed, with different themes and rules, all with the lofty goal of introducing two hopefully compatible people, who might not have otherwise met, in a time efficient manner. Each has its own process – a series of steps performed – many of which have proven profitable for their organizers and the individuals who pay to participate in these events.

It is not just Wikipedia that has found the topic worthy of investigation: the University of Pennsylvania and others have studied the events, and published their research findings. Further, pop culture has featured the concept in television shows like Sex in the City and in movies like Hitch.

Finally, perhaps Justice Sotomayor will be surprised to learn that the US Government has recognized that, at least when a speed date was tied to a computer in a manner conceived by Mordechai Teicher, the invention was entitled to patent protection in US Patent No. 7,305,398, entitled “Apparatus and Method for Managing Social Games”.

Mark Simon Davies is a counsel at O’Melveny & Myers LLP, where he works on appellate matters in one of the top Supreme Court and Appellate practices in the country. Davies is the author of Patent Appeals: The Elements of Effective Advocacy in the Federal Circuit.

Yesterday, the Supreme Court issued another significant opinion in patent law. In a unanimous opinion authored by Justice Thomas, the Court held that a patent owner who licenses the sale of components has “exhausted” patent rights even where the components must be combined with additional components to practice the patent. In so deciding, the Court reasoned that the exhaustion doctrine applies to sales of products that include only the “inventive aspect” of the patent. This unanticipated focus of the Court’s decision reflects the Court’s apparent continuing interest in refocusing patent law on protecting the “inventive” contribution.

The question before the Court was whether the patent rights of LG Electronics, Inc. were “exhausted” by its license agreement with Intel Corporation. Under the exhaustion (or first sale) doctrine, “the initial authorized sale of a patented item terminates all patent rights to that item.” Here, LGE owns patents covering various methods of managing main computer memory. LGE licensed Intel to manufacture and sell microprocessors and chipsets that practice the LGE patents. Intel sold the parts to Quanta Computer, a group of computer manufacturers, who made computers using the LGE/Intel microprocessors and chipsets in combination with non-LGE/Intel computer parts. LGE filed a complaint against Quanta, asserting that the combination of the LGE/Intel products with other computer parts infringed its patents. Quanta defended on the ground that LGE’s license to Intel “exhausted” and thus terminated its patent rights.

In siding with Quanta to find that LGE had exhausted its patent rights, the Supreme Court’s opinion proceeds in three steps. The Court begins by rejecting LGE’s argument that the exhaustion doctrine does not apply to “method” claims (i.e., claims that are not linked to a tangible article). The Court was wary that “[e]liminating exhaustion for method patents would seriously undermine the exhaustion doctrine” because patentees “could simply draft their patent claims to describe a method rather than an apparatus.” Next, the Court considered the “extent to which a product must embody a patent in order to trigger exhaustion.” On that question, the Court found that United States v. Univis Lens Co., 316 U.S. 241 (1942), “governs this case.” Just as the product in Univis “embodie[d] essential features of [the] patented invention,” so too Intel’s products embody “[e]verything inventive about each patent” and thus triggered patent exhaustion. “The Intel Products embody the essential features of the LGE Patents because they carry out all the inventive processes when combined, according to their design, with standard components.” Last, the Court determined that LGE’s contract with Intel “authorized” the sale of the products that practiced LGE’s patents (“Intel’s authority to sell its products embodying the LGE Patents was not conditioned on the notice”), and the Court expressed “no opinion on whether contract damages might be available even though exhaustion operates to eliminate patent damages.”

In various procedural respects, today’s decision resembles the Supreme Court’s patent law decisions of the past few terms. As it did most prominently in KSR Intn’l v. Teleflex Inc., 127 S. Ct. 1727 (2007), the Court has once again unanimously reversed a lower court decision based on a long-settled Federal Circuit rule favoring patent owners. As the briefing before the Court had emphasized, the Federal Circuit’s decision in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992), held that the patent-exhaustion doctrine does not apply to an “expressly conditional sale.” As in KSR, the Supreme Court declined to endorse the Federal Circuit’s “conditional sale” test. Instead, the Supreme Court again emphasized the abiding relevance of its older patent law decisions. Thus, here the Court found that Univis “governs this case” much like the KSR Court found that Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966), provides the current “framework” for whether a claimed invention is “obvious.” Unlike KSR, however, the Court did not directly fault the Federal Circuit for a “rigid rule” (or even specifically refer to Mallinckrodt).

As is often the case with Supreme Court opinions, the immediate practical consequences of today’s decision may well be limited. The Court’s ruling that the sale here was not in fact conditional arguably leaves parties free to argue that the Federal Circuit’s “conditional sale” bar on exhaustion remains the law. Moreover, the Court expressly declined to consider whether LGE could use contract law to achieve its apparent objective of requiring its patent devices only to be used in computers manufactured with LGE parts.

Nevertheless, today’s Quanta decision provides a strong indication that the Supreme Court intends to continue restricting the enforceable scope of patents. The Solicitor General recommended that the Court hear Quanta. But the Supreme Court went beyond the Solicitor General’s request. Rejecting the advice of the Solicitor General not to reach the question, the Court relied on Univis to hold that the exhaustion doctrine applies to a product that embodies “[e]verything inventive” about the patent even if further “common and noninventive” steps are necessary to practice the patented invention. In this respect, Quanta is in close step with KSR. KSR closed by emphasizing that “the results of ordinary innovation are not the subject of exclusive rights under the patent laws.” So too in Quanta, the Court explained that a patent owner could not avoid the impact of the patent exhaustion doctrine merely because the patent includes “common” steps. In both cases, the Court has refocused patent law on protecting the “inventive aspect” of a patented invention.

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