Mark Lemley

Mark Lemley chats about the Alice case of the US Supreme Court and his firm Lex Machina, Ken is telling us about Facebook as a service of process in legal proceedings, Rolf tells you about the new fast-track CTM applications! Have fun!

IP FRIDAYS

Co-Presenters:

Rolf Claessen and Kenneth Suzan

Episode 15 – November 14, 2014

RC = Rolf Claessen

KS = Kenneth Suzan

IF= Ean Floyd

ML = Mark Lemley

Hi. This is Mark Lemley from Stanford Law School and you are listening to IP Fridays.

KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to Intellectual Property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.

RC: First of all I want to thank you for tuning in to IP Fridays. Our podcast has now been downloaded over 6,500 times and the number of listeners is growing and growing. I want to already hint that we will have a Christmas present for you. Actually, we are giving away original Christmas mugs from a German Christmas market in Cologne, my hometown, and we will have more about this in our first show in December. Also, our listener, Ian Floyd, left us a really nice feedback. If you want to leave us a feedback, you can go to www.ipfridays.com/feedback or simply press on the leave voicemail button on the right of your screen when you enter our Website.

IF: Hey guys, this is Ian Floyd from the Love & Sensibility podcast and I just want to let you know that I really appreciate your show. You know, people out there that have a business are going to run into situations when you are dealing with intellectual property – you know, patents, copyrights, that type of thing, even podcasts – and I just want to let you guys know that I really appreciate what you are doing out there and to tell everybody else that you need to listen to this show and download this show and keep it as one of the shows that comes up in your podcast iTunes list every week. So guys, keep up the great work.

RC: We have a link to Ian’s podcast in the show notes for you.

I am very excited to have a special guest today who has been coined, “The Most Influential Academic Person in the IP Fieldâ€. Today’s interview is with Mark Lemley from Stanford University and he will tell us more about the most recent Alice case of the Supreme Court and he will tell us about his company, Lex Machina. Also, I will tell you about fast track proceedings for community trademarks but, before we jump into the interview, Ken has a really interesting story about Facebook as a service of process in legal proceedings in the U.S.

KS: Suppose that you are dealing with a certain legal issue regarding divorce, or child support, but cannot get in contact with the opposing party. What methods could you use to locate them? Facebook, the world’s largest social media platform, is used for connecting with old friends, new friends, and family. They say that desperate times call for desperate measures, and one New York judge recently granted permission to serve legal documents via social media platform Facebook.

A New York Judge recently granted permission to Noel Biscocho to use Facebook to serve legal documents to his wife Anna Maria Antigua since there was no other way to contact her. The plaintiff had no way to trace his ex-wife since she had moved to a different address and changed her phone number. The case was heard before Family Court in New York before Staten Island Support Magistrate Gregory Gliedman. The judge ruled “despite the absence of a physical address, Biscocho does have a means by which he can contact…namely the existence of a social media account.â€

In February of this year, a US Magistrate for the Eastern District of Virginia, Thomas Rawles Jones Jr. also permitted service by Facebook – in addition to email at two known e-mail addresses, as well as service via a LinkedIn account. The Court in that case ruled “Service of process through all four means of service, two email and two social networking accounts ostensibly belonging to the defendant, comports with due process because it is reasonably calculated under the circumstances to provide defendant notice of this suit.†The case is Whoshere, Inc. v. Gokhan Orun d/b/a WhoNear and WHONEAR.ME.

With technology evolving and becoming more intertwined in people’s everyday lives, could social media become the most convenient way to effectuate service of process? If other judges accept this method of delivery, this trend may catch on around the United States, and even around the world. For the record, it’s already been accepted in Canada, New Zealand, and before the English High Court under certain circumstances, and often coupled with other requirements such as publication in a newspaper or service via electronic mail.

RC: Thank you Ken for this really cool use of social media in legal proceedings. Now we will jump into the interview with Mark Lemley.

ROLF CLAESSEN’S INTERVIEW WITH MARK LEMLEY

RC: I am very excited to be on the phone with Mark Lemley today. Mark Lemley is often coined “The Most Influential Person in Intellectual Property†and he is currently a Professor at the Stanford Program in Law and he is also the founding partner of a law firm called Durie Tangri LLP and a couple of years ago he also founded Lex Machina Before we talk about his Lex Machina firm, I want to ask Mark Lemley a little bit about the most recent Alice decision. So, first of all Mark, thank you very much for being on the program.

ML: Well I am happy to be here.

RC: So, what in your point of view are the most important take-aways from the Alice Decision rendered by the Supreme Court a couple of months ago?

ML: Well, I think that Alice does a couple of things that are very significant. The first thing that it does is it cements as the test for patentable subject matter the frame work that the Supreme Court set out in Mayo two years previously and I think a lot of patent lawyers had more than half persuaded themselves that Mayo was an aberration and it couldn’t really be the right result and now it seems that it is not only confirmed when it comes to medical diagnostic patents, but it is the rule we apply across all areas and when you apply that rule, the Court says in Alice that if the claim is directed to an abstract idea, and all you do to that abstract idea is you implement it in a conventional way, such as by using standard computer hardware, that invention is not patentable subject matter. I think that is quite significant because a large fraction of the software and business method patent claims that are being litigated in the United States today fit that description. We have taken a basic idea, a problem we want to solve, and rather than filing a patent claim that covers a particular algorithm or a particular solution to that problem, the claims are phrased in the form of any computer programs to achieve this result; programs to reach this particular outcome. In the wake of Alice, we have now seen in the software and business method world fifteen lower court decisions. In thirteen of those lower court decisions the courts have invalidated the patents and in the other two they have said, “Well, procedurally it is too early to make this decision but come back later.†So, the record of these patents since Alice has not been very strong. That doesn’t mean that I think all software is unpatentable, but it does mean that my guess would be that the majority of the software and business method patent claims that are being asserted in court today are going to be held invalid.

RC: Yes, and the USPTO recently, or actually right after the decision, issued a statement or kind of rules for their examiners for assessing these kinds of patents in the field of business methods and software and the rules seem to be very similar to the rules in Europe. In Europe, you first look at the claim and see which features are of technical nature and then use these to assess inventive step or, in the U.S. they would say obviousness, and the rules in the U.S. are now quite similar. What is your point of view about this?

ML: Yeah, I do think there has been a substantial move in the United States towards the European approach. If anything, I think as we see Alice being applied in the courts, the U.S. might now be more restrictive when it comes to software patentable subject matter than Europe is because the leeway we give for technical effect seems to be much more limited. The courts have been saying, “Well, if all you are using are standard pieces of computer hardware, even if you have programed them in a new way, your invention as a whole is not going to be patentable.â€

RC: Right, for example, in Germany there was a case where a robot for placing welding spots in the car manufacturing industry to put cars together, the robot was known but the algorithm was changed and it was just a piece of software that made the robot make more precise welding spots. I think if I applied the rules by the USPTO, that would really not be patentable because it was just a piece of software. What is your opinion?

ML: So, I think that may be right. And one of the things that we need to figure out as the court decisions continue, are: What are the logical limits of Alice? I think if you take seriously what Alice says, we would say that was unpatentable because the robot hardware technology was well-known. With that said, I do think that at some point when the courts confront inventions that really do look more like real technology, that they are going to start putting limits on the Alice principal because, if they don’t, if you take it to its logical extreme, virtually nothing is going to be patentable because, you know, you can reduce a wide variety of claims to the basic idea and then say well I took this idea and I implemented it by using materials out there in the world.

RC: Right. Okay. So, another aspect that struck me is that a lot of the large companies in the U.S., like Google and Apple and the like, they have large portfolios of patents and many of these patents are not entirely software patents, some are entirely software implemented, and some are just business methods. Are these all worthless now, in your opinion? Probably not, or do you think that the companies will enforce them, or not? Will they be write-offs, or not? What do you think? Do you have any opinion about this?

ML: I think there is going to be a much greater premium on how the claims are drafted. I think there are a number of what are just very broad business method patents out there or patents that are written without a lot of technology underlying them that are not going to be salvageable after Alice. But I also think that there are a number of patents in which there is real advance in computer technology in software in a new algorithm and I am at least hopeful if the patent claims that are being asserted are directed to those algorithms are limited to those technical improvements that courts will find ways for them to survive. So, I have argued in a paper last year that part of the problem that the court is trying to address is this problem of functional claiming; of trying to claim the problem that you solved, rather than the particular way in which you solved the problem. So, I think we will see the growth of narrower, more specific claims that try to incorporate more clearly the new algorithms that people have developed, we may see more use of means plus function claim language, so, you know, I think all of the companies in the software world need to take a look at their portfolio and say, not only going forward, how am I drafting these claims, but do I have patents where some of the dependent claims may be more likely to survive than the independent claims. Do I have a real technological invention here that I could go back and claim in a reissued proceeding for example. I think for the companies that are thinking of asserting patents, that becomes really important. Now, I also think that in the Silicon Valley, a lot of the large patent owners are not companies who ever really planned to assert the patents but they have the patent portfolios primarily for defensive or trading purposes and they may not be as concerned about this. I suspect that the “Googles†of the world, even though they are large patent owners, look at the Alice decision as a good thing because when they show up in court, it’s primarily as a defendant in a suit filed by a patent troll and those patents are much more likely to be invalidated.

RC: Right. Well, thank you very much for your insights about Alice. I also promised our listeners that I would ask you about your company, Lex Machina. Can you tell us a little bit about the company? When it was founded? Why did you found it? What does it do? How does it make our lives easier?

ML: So, I started this project in 2006 as an academic research project. Something called “The Stanford IP Litigation Clearing House.†The basic motivation was that we were starting to see all of the debates in the United States around patent reform and people were throwing around numbers in those debates – Patent trolls are 50% of all lawsuits. No, patent trolls are only 2% of all lawsuits – and I felt that this was all “anec-dataâ€, as I call it. It’s not based on real statistical data. It was based on people’s personal experiences masquerading as data and that there has to be a kind of knowable answer to these questions. So we started collecting information on every IP lawsuit filed in the United States since the year 2000. We quickly realized that this was a project of enormous scope. That there was so much information that we had to automate as much as possible of the data collection and analysis if we were going to hope to keep up with all of the cases that were being litigated. So, we ended up spinning it out as a private company in 2010 called Lex Machina and that company provides both law firms and corporations with access to data and information about patent litigation that is helpful in anything from pitching a client for a case to knowing when you have been sued in a new jurisdiction, what experience the judge has with patent cases, when do they do their Markman hearings, does your opponent tend to settle cases or take them to trial, and things of that nature. So we find that law firms use this tool to get intelligence about the court, about their opponent, and about their opposing counsel. We also find that companies are interested in more analytic work. So they are interested in benchmarking themselves against their competitors: Am I being sued more often? Am I settling more or less of my cases? And also in some predictive analytics: Of the 50 cases that I have pending, which three are more likely to go to trial? Or which ones are the biggest risks for me? And that allows people to make some more informed judgments. Law has been for a long time a discipline that has been resistant to efficiency to big data and to the kinds of optimization that have swept through the rest of the business world. I think we are seeing a real revolution, particularly starting here in Silicon Valley, in legal technology and in ways to improve and make more productive legal services and Lex Machina is one of the leaders in that endeavor.

RC: Yeah, very interesting. So, what kinds of clients do you have mostly with Lex Machina? Is this mostly law firms? Big ones or small ones? Or are these the large corporations? Or are these like mid-sized companies? Who is mostly paying for your services?

ML: So I would say that most of the clients are law firms. A fairly large share of the big law firms in the United States are clients. But we also have small firms and mid-sized firms. The subscription price can differ depending on the size and the number of attorneys. But most of the clients are law firms. But we have a number of corporations as well and those tend to be corporations that are heavily involved in some aspect of technology and so have a lot of patent suits or a lot of patents to worry about. The companies who have started in this area were the Silicon Valley technology and software companies. They were naturally a logical market for big data and analytics but we have branched out into the pharmaceutical industries and a number of other patent owners. We hope ultimately to expand the product beyond just patent law so we have been collecting data and copyright and trademark law as well and we may move into other areas.

RC: That’s very interesting. Do you think about expanding to other territories and legislations? For example, also collecting information about case law in Europe and Germany?

ML: Yes, I think that is definitely something we are interested in doing. It comes with some challenges, both the language challenges but also different jurisdictions are at very different stages in whether or not their case records are online and available in a searchable form but our hope eventually is to reach beyond the United States into Europe and places like China and Japan where there is a great deal of interest in patent litigation and very little rigorous information about what happens.

RC: Yes, you mention China. Most patents these days are filed in China and the trend is not stopping, it’s probably accelerating, so I think that would be probably a big market for you to be in, right?

ML: Yes. I think it is a very important market and I think, not just for Chinese companies, but companies in the West are very interested in what is happening in China. With the IP system it is very much in flux and it is an area in which I think if we could have access to the data, it would be a great thing.

RC: Well, thank you very much for being so kind as to spend time with me on the phone. It has been a real pleasure talking to you and I hope we can hear from you sometime in the future with updates on software patents or any other topic that might be interesting. Thank you very much for your time.

ML: Well, thank you. It was my pleasure as well.

RC: If you want to find out more about Mark Lemley, please go to www.ipfridays.com/marklemley.

Recently, OHIM has announced that they will now process community trademarks a little faster if you want. They introduced a fast track program. The fast track program will be available starting from November 24th. Currently, CTMs are published around four to eight weeks after the fees are paid. In my personal experience, sometimes that can be much, much faster. I had cases where the trademark was published actually just a week after having paid the fees. But on average the OHIM might be correct so now they are promising to cut this time in half if you are selecting the goods and services from a database of pre-validated and pre-translated terms and applicants would have to pay the application fee immediately after submission of their application. Also, the applicant should not trigger any deficiency finding at the time of submission or during the examination by the OHIM itself. If you want to read more about this you can go to http://www.ipfridays.com/fasttrackohim.

Thank you for listening and tune in next time.

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You have been listening to an episode of IP Fridays. The views expressed by the participants of this program are their own and do not represent the views of nor are they endorsed by their respective law firms. None of the content should be considered legal advice. The IP Fridays podcast should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents of this podcast are intended for general informational purposes only and you are urged to consult your own lawyer on any specific legal questions. As always, consult a lawyer or patent or trademark attorney.

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