Architect of Tafas v. Dudas Victory Defends USPTO's Fee Proposal, Others Warn of Unintended Consequences for Patent System & Pharma Startups
Architect of Tafas v. Dudas Victory Defends USPTO's Fee Proposal, Others Warn of Unintended Consequences for Patent System & Pharma Startups
Also: this week in patents & the underwhelming reality of using VR.
This Week in Patents
AlivCor’s CEO Priya Abani: “I lead one of the startups accusing Apple of patent infringement. Here’s why Congress should side with us.”1
Another Setback for Sonos: Federal Circuit affirms ITC’s final determination that speaker redesigns “proposed by Google do not infringe claims of the Sonos patents.”
Ongoing Sonos saga proves again how hard it is even for an operating company with an impressive patent portfolio, a powerful story about willful infringement, and sufficient resources to hire the best attorneys to enforce its patent rights in today’s climate.
Sonos’s view: ruling confirms that Google is a "widespread infringer of Sonos's patented inventions that underlie wireless home audio."
Eli’s view: Sonos should’ve have tried to force settlement by calling Google CEO to testify when it had the chance.
$525 million jury verdict in Kove v. Amazon for infringement of patents related to data storage technology.
As Sonos can attest, one favorable jury verdict doesn’t change that this battle with a tech giant is likely far from over.
Kove previously fought off Amazon’s efforts to force disclosure of its litigation funding arrangement. Amazon’s interest in that likely stemmed from wanting to know how much resources Kove would have to keep battling.
SEP platform Sisvel announces a total of 21 licensees in its Wi-Fi 6 patent pool
SEP observer writes-in: “another successful, efficient arrangement by private market for innovators and implement that casts doubt on any need for EU plan to upend SEP licensing.”
WDTX stands alone in ending “judge shopping” as Judicial Conference’s call to follow falls flat.
Dallas-based IP litigator Steven Callahan observes: NDTX declines to implement the Judicial Conference’s new “policy” to end “judge shopping,” EDTX also unlikely to implement, and WDTX can revoke its anti-Judge Albright order assigning patent cases filed in Waco on a “district wide” basis.
USPTO’s Fee Proposal for 2025 - Part II
Last week, Voice of IP wrote about USPTO’s unprecedent proposal to set 20 new fees and increase 38 fees by 25% or more in a clear attempt to advance many of the same policy goals that were stopped by Tafas v. Dudas without running afoul of that ruling.
However, many Voice of IP readers continued to wonder whether there might be any grounds for challenging the fees. So, Voice of IP reached out to Sherry Knowles - who was the legal architect of the victory in Tafas v. Dudas in her role as GlaxoSmithKline (“GSK”)’s Chief IP Counsel - to get her thoughts about the USPTO proposed fee increases trying to accomplish what the Judge Catheris didn't allow in Tafas v. Dudas. Somewhat surprisingly, she responded by offering support for USPTO's proposed approach and contrasting it from what Tafas v. Dudas stopped.
Sherry Knowles - legal architect of the victory in Tafas v. Dudas - responds:
I spoke at a conference in January attended by a number of high level PTO personnel. I was asked to speak on the Tafas case and present a common sense approach to continuations. This is what I said.
The PTO remains under the permanent injunction issued by Judge Cacheris on April 1, 2008 from issuing regulations that overlap with the Final Rules published by the PTO August 21, 2007 regarding limitations to continuations and claims.
Instead of laws that limit continuations or claims, the PTO should revise its fee structure to embed motivations to use continuations and claim count more carefully when needed.
The three categories of users (micro, small and large) should be expanded to five categories (micro (stays same), small (stays same), large (greater than 500 but less than 5,000), very large (5,000 to 50,000) and mega (greater than 50,000) employees.
The fees for basic filing, examination and searches should be tiered up for the new five categories, in a manner that reflects ability to pay and value to the organization.
The fees for continuations and RCEs should increase progressively starting at the third filing and then go up significantly in a tiered fashion as each new continuation and RCE is filed.
It should be considered a misuse of the system to file repeated continuations for delay without any intent to prosecute.
The PTO should institute a structure for “Deferred Examination” of up to 5 years with the penalty that the application publication cannot be used as a basis for damages for pre-issuance infringement during the time of the deferral period.
As indicated, I am not against revising the PTO fee structure, in fact, I think it is overdue. The tenth continuation should not cost the same as the first continuation. Large established companies should pay more than small growing companies. And rolling continuations in a serial fashion by filing no-fee continuations, waiting until the last deadline, and then paying the fees, abandoning the application and filing another one with no intent to prosecute should not be allowed.
If the PTO adjusts its fee structure, there will still be no prohibition on continuations or claims, which would be inconsistent with current statutory law, however, behaviors may change as more thought given to prosecution decisions. Also, additional income to the PTO would be great as a means to hire the best people and retain them as well as to expand programs for innovators.
Unintended Consequences for Patent System & Pharma Startups
Lots of experienced patent practitioners pointed out potential unintended consequences of raising certain fees, including that:
increase in RCE fees will lead to a spike in ex parte appeals being filed
continuing application surcharges will incentivize filing of more lower quality original applications without the applicant having the benefit of taking into account what happened during examination of parent, earlier child applications
USPTO examiners will not have the usual benefit of examining all of the applications that would have previously been in the same family, which will in turn lead to reduced efficiency and worse examination results.
Voice of IP is still working on finding out the full story about the fee proposals beyond advancing the administration’s overarching IP policy of sticking it to “big pharma.”
At this point, Voice of IP was able to gather from a recorded, not yet released Clause 8 interview that USPTO’s main rationale for the proposed fees stems specifically from the belief that the new and increased fees are being targeted at those who are in the best position to easily afford those fees (e.g., “a big pharma” company that is making billions of dollars selling drugs covered by the patents and patent applications for which the fees are being charged).
However, the Clause 8 guest pointed out that, in the pharma space, the smaller players - who are often doing the most cutting edge research and development - would be most negatively impacted by the proposed fees. Because these pharma startups often have very limited resources, the proposed fees are likely to increase the chances that they will have to choose to be acquired by large pharmaceutical companies to cover those fees. So, the large pharmaceutical companies are likely to be the unintended beneficiaries of squeezing pharma startups with these fees.
Underwhelming Reality of Using VR
The release of Apple’s Vision Pro and Meta’s Quest 3 earlier this year temporarily reignited enthusiasm about the potential role of virtual reality. But the tech world is already back to focusing solely on AI. Why?
To help answer the question, Voice of IP was able to convince Georgetown Professor Kasra Ferdows - one of the world’s leading tech futurists - to share an anecdote that illustrates his view of the underwhelming reality of using VR and the potential of AI to finally help advance its use.
Professor Ferdows’ on the underwhelming reality of using VR:
About three years ago, we - Georgetown University - tried to design VR "cases" to put the students in "real" environments (e.g., a factory or warehouse). But we gave up!
First, creating even a short VR case required enormous amounts of work. Game designers perhaps know how to do it, but each game is a big investment and it is not practical to duplicate that process for a class session. We found it to be very difficult to film or design realistic settings (remember for VR you need to change the scene depending on where the person is looking). It was also very difficult to anticipate all possible questions (for example from someone on the factory floor) and prepare responses that would deliver the lessons for the session but didn't seem contrived. Perhaps AI can now reduce that challenge.
Second, it was very expensive to do even a few "cases" (over $100 K for just the production of one case). Furthermore, you needed an expensive VR headset for every student in class. We tried to use the phone but the experience was totally different and flat.
Third, even with a fancy headset, we felt that the students would get bored soon after the novelty wore off. A second or third session during the day which required putting the VR headsets in class seemed excessive. Perhaps there are a few topics that students can explore alone at home, but it was cumbersome to have a case discussion with headsets on.
In short, we felt the time had not come. Perhaps now things can be different. Still, I think while VR AI technology has undoubtedly improved, producing worthwhile content is still a formidable challenge.
Do you know why Sonos chose not to call Google’s CEO to the stand? Were you involved in the White House discussions regarding the proposed USPTO fee changes?
If so, please email me at eli@VoiceOfIP.com or find me on Signal at eli.92.
Amusing aside and the inspiration for the image choice above: the URL for this article (https://fortune.com/2024/04/09/startups-accusing-apple-of-copyright-infringement-congress-tech-politics/) makes the classic media mistake of mixing up different IP rights by referring to “copyright infringement” instead of “patent infringement, which the article accurately discusses.