One of the key, and most controversial changes, is a shift in the patent priority rules from the “first-to-invent” system that has been in effect in the US since the beginning of patent law to the “first-to-file” system that is used in every other patent system in the world. A first-to-invent system means that the first person to invent something gets the patent. This seems fair. A first-to-file system grants a patent to the first person, or company, to pay the fees and file the patent. This, to me, seems un-American in that it rewards paperwork over innovation.

To those who believe there is no such thing as American exceptionalism—those who believe that there is no more innovation in the US than anywhere else—this change “harmonizes” our patent system with the rest of the world, making patent law fairly consistent from country to country.

If you’ve read my blog you know that I believe that there is more innovation in the United States than anywhere else on earth. Do we really need proof of this? But let’s take another look at this issue. Proponents claim that this change will have an insignificant effect, if any. Yet has anyone rigorously studied how this change will affect individual inventors and entrepreneurs in America? Until recently, the answer was no. But professors of law at the University of Pennsylvania, David S. Abrams and R . Polk Wagner, recently performed a detailed study.

You might wonder how they could perform such a study when the act does not require the “first-to-file” system to go into effect until March 2013? These professors already had a model. Canada switched from first-to-invent to first-to-file in 1985, giving them a significant amount of historical data. The results are interesting, and unfortunately not hopeful.

The chart below illustrates one of many interesting statistics in their study. The number of patents per year before the system changed was fairly constant at around 1,700 per month. A significant drop of over 40% occurred around the time that the system changed, to less than 1,000 per month and remained low.

Perhaps even more disconcerting is that Abrams and Wagner find that the fraction of patents going to individual inventors also decreased at the time of this change in Canadian patent law. So the number of patents decreased and the percentage of patents issued to individual inventors also decreased.

Abrams and Wagner summarize their findings in very blunt terms:

In the end, how much do individual inventors matter? That,
we think, is the critical question suggested by our study. To
date, most observers seem to have assumed that a shift to the
first-to-file rule, though a substantial change in US patent
law practice, would have little impact on who seeks and receives
patents. This is wrong. A change to the first-to-file rule in
the US should be expected to result in the reduction of individual
inventors’ share of patents. Thus, the cost savings yielded
by the change away from first-to-invent will not, we suggest,
be free.

Like any law, this patent reform act can be undone. However, it seems that many members of both parties support this change, probably because they do not fully understand the implications and because of pressure from large corporations that stand to gain from it. Perhaps a grass roots movement can rise up to pressure Congress to un-reform US patent law. Grass roots movements seem to be all the rage these days. So I still hold out some hope.

• The Software IP Detective’s Handbook
• About Software Copyrights
• About Software Trade Secrets
• About Software Patents
• The Software Clean Room Process

I’ve been thinking about that, and I’ve come to three conclusions.  First, many programmers just aren’t very good at what they do. Many  of them have simply learned to copy others’ code (see  Is Googling Replacing Programming?) or maintain someone else’s code. Second, many programmers underestimate their abilities. Programmers tend to be introverted and not ones to brag about their skills. Of course there are exceptions, but programming is generally a solitary endeavor.

Third, many programmers believe that to be patentable, something must be very complicated. But that’s not true. Section 102 of the U.S. Patent Act states that an invention must be novel, and Section 103 states that it must be nonobvious. There is no requirement that it be complex.

Many inventions are very useful and yet also very simple. Searching Google, I found almost 4,000 patents involving paper clips. I found 27,000 patents with the word “needle“ in the title and over 9,000 patents for kinds of spoons. There are nearly 600 patents involving rubber bands. Some recent patents include a water sprinkler for dogs (USPTO # 7,997,229) and a waterproof cover for a camera (USPTO # 7,991,274). My point is that some inventions are simple and some are complex, but they all are novel and no one else thought of them. If you tend to dismiss software patents, remember that what makes an invention patentable is not whether you could have done that, but whether you actually did.

Grocery trolls produce no fruits, vegetables, or produce of any kind. They do not own farm land, they do not raise livestock. They do not harvest grains. Instead, they buy up the food items produced by small, independent farmers, and sometime large farm corporations, and force hungry consumers to buy them at higher prices. These greedy grocery trolls, going by benign names like Safeway, Lucky’s, Rainbow Grocery Cooperative, and Trader Joe’s have no farming skills whatsoever. And the consequences of not buying food from them? Starvation!

Patent licensors perform the same kind of service by buying up inventions from inventors and offering them for sale. The strength of their size, their sales force, their marketing budget, and their distribution channels ensures that they will be able to buy from small entities and sell to large and small entities and make a profit by charging for their services. Groceries buy from small farmers who could not otherwise reach large markets. Patent licensors buy from small inventors who cannot afford to license their inventions to other companies.

The analogy isn’t perfect, but it’s pretty darned good. Free commerce in a free society means that you or I can sell anything we like to anyone we please; there are no restrictions on having created the good in the first place. If that were the case, most transactions would be illegal. You wouldn’t be able to sell your house or buy a used car. You wouldn’t be able to trade baseball cards or collect antiques. The list is very long. That’s why restrictions on the sale of patents must never be allowed in any free market economy. Restricting the sale of any goods would be a curtailing of civil rights-an extremely dangerous precedent-and anyone who believes in civil liberties should be absolutely against such restrictions.

Overall the book covers the following topics:

• Key concepts of software intellectual property
• Comparing and correlating source code for signs of theft or infringement
• Uncovering signs of copying in object code when source code is inaccessible
• Tracking malware and third-party code in applications
• Using software clean rooms to avoid IP infringement
• Understanding IP issues associated with patents, open source, and DMCA

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Peter Huber makes some contradictory and misleading arguments where he claims that non-practicing entities are ruining innovation in America. On the one hand, he acknowledges that only a small percentage of patents, roughly 2% by his own estimate, end up court. Yet he also believes that “[o]ur patent laws have drifted way off course.” He states that “[t]he patent office now grants more than 4,000 patents a week” but neglects to mention that the total number of patent applications and the number of patent rejections have both similarly risen. And one major goal of USPTO director David Kappos, appointed in 2009 by President Obama, is to reduce the backlog of 1.2 million patents around the time he took office. Many more patents are being submitted and examined than ever before-—a sign of the vigorous spirit of innovation in America.

Dr. Huber’s logic is equally baffling when he claims that companies rarely sue each other but that companies spend lots of money collecting patents. Why would a company spend so much on worthless patents? Patents are used to protect their investments in technology, and the vast majority of patent lawsuits are between large corporations like the recent ones between Oracle and Google, Apple and Samsung, Dish Network and Tivo, and many, many others.

Dr. Huber claims that the Supreme Court’s decision in Bilski v. Kappos somehow agrees with his view that patentability must be restricted. In fact, this decision did just the opposite. While business method patents were rejected by the court, as expected, the patentability of software was expanded.

Dr. Huber claims that plaintiffs in the Eastern District of Texas almost blindly reward plaintiffs in patent cases, but a recent study by the Stanford
Intellectual Property Clearinghouse showed that plaintiffs in that jurisdiction win only 40.3% of the time.

Finally Dr. Huber gets to his point. Patent examiners and juries just aren’t smart enough to figure out which patents are good and which are “sketchy.” So instead, he wants the patent system changed to restrict inventors from owning the fruits of their intellectual labor. As an individual inventor I object to his condescension and to his attempt to limit this constitutionally protected driver of American innovation.

1. A computer-implemented method comprising:
   • creating, by a computer system, a first array of lines of functional program code from a first program source code file, the first program source code file including the lines of functional program code of a first program and lines of nonfunctional comments of the first program;
   • creating, by the computer system, a second array of lines of nonfunctional comments from a second program source code file, the second program source code file including lines of functional program code of a second program and the lines of nonfunctional comments of the second program;
   • comparing, by the computer system, the lines of functional program code from the first array with the lines of nonfunctional comments from the second array to find similar lines;
   • calculating, by the computer system, a similarity number based on the similar lines; and presenting to a user an indication of copying of the first program source code file wherein said indication of copying is defined by the similarity number.

Here is the only dependent claim of the prior art patent US 7,568,109:

1. A system for comparing at least a first corpus to a second corpus, comprising:
   • an analyzer identifying concepts in the corpuses, said analyzer determining a frequency rating of each of said concepts in each corpus;
   • for each corpus, replacing each instance of each of said concepts with its respective determined frequency rating to create a frequency file;
   • and a comparator comparing the frequency file for the first corpus to the frequency file for the second corpus, wherein said comparing the frequency file for the first corpus to the frequency file for the second corpus further comprises comparing portions of one corpus against the other corpus.

The second prior art submission was simply a reference to the UNIX diff command. While the diff command is relevant, it is a simple line-by line comparison of text files without any understanding or parsing of programming source code. It doesn’t separate functional lines of code (statements) from nonfunctional lines (comments).

Judging by their remarks, the posters to the Peer-to-Patent site didn’t understand patents, and didn’t read the patent claims. They should be allowed to post references, but the ultimate decision must be in the hands of those trained in examining patents. However, the patent examiner told me that her supervisor didn’t want to issue a patent that had been publicly noted to be invalid, and so after months of arguments I had to arbitrarily narrow the claims to get allowance, resulting in patent US 7,823,127. So now, anyone from anywhere with any ulterior motive (particularly those who believe no software should be patentable) can bring about the quick rejection of an otherwise useful and valid patent.

When using the RPG, an expert selects the type of case, type of report, types of technologies involved, types of tools used, and expert background profiles from a GUI. Then a Microsoft Word draft report is generated that includes all of the selected generic information intermixed with blank sections where case-specific information should be filled in manually.

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Still confused? So are many others. Except for Bilski who now knows for sure that he doesn’t have a patent. Looking at it as an inventor, I see that the court has broadened the scope of patentable materials, which is good, but has made the test for patentability muddier which means I will spend even more time and more money arguing with patent examiners. Looking at it as an expert witness for patent litigation, this ruling is sure to cause a lot more disagreements, which means a lot more litigation, which means a lot more business for me.

An excellent discussion of the Bilski ruling can be found at Patently-O, written by Dennis Crouch, Associate Professor at the University of Missouri School of Law. His regular columns on patents are the best ones available anywhere.

• Secrets comprise two-thirds of the value of firms’ information portfolios.
• Compliance, not security, drives security budgets. 
• Firms focus on preventing accidents, but theft is where the money is.
• The more valuable a firm’s information, the more incidents it will have.
• CISOs do not know how effective their security controls actually are.

Download the report to report to get the details.