The Supreme Court has weakened protection to established patent holders by changing the test upon which the patent is granted. The effects remain uncertain for members of the adult online industry that had trouble with companies like Acacia Research Group, a firm that controls 64 patent portfolios.
Patent reform groups FightThePatent.com and Joint Defense Group claim that many patent rights are overly broad and not specific enough to their particular technological innovation.
In one of two recent patent cases, the Supreme Court held in KSR International v. Teleflex that it is changing the criteria upon which the very nature of a patent is established. As a result, interested parties have a greater ability to challenge existing patents.
Specifically, the U.S. Patent and Trademark Office and lower courts must be more open to denying a patent application predicated on the grounds that an invention is "obvious." The term of art "obvious" was defined as some "teaching, suggestion or motivation" that could have anticipated the patent. In KSR International, Justice Anthony Kennedy wrote that the U.S. Court of Appeals for the Federal Circuit applied the definition too rigidly.
FightThePatent's operator Brandon Shalton commented on the Supreme Court's decision. "On the issue of 'obviousness,' this is the major cry for patent reform, since patent examiners are overwhelmed with patents, and their research is limited to prior patents and whatever the patentee presents," Shalton said. "Patent law then throws the responsibility for defending the validity of the patent into civil court, which is where companies like Acacia take advantage of that. By being able to target a bad patent at the patent office level, it saves so much money on wasted litigation."
In the other case, Microsoft v. AT&T, Justice Ruth Bader Ginsberg wrote "The presumption that United States' law governs domestically but does not rule the world applies with particular force in patent law," the Supreme Court found in a 7-1 decision. Justice John Roberts recused himself from the case.
"The first part about Microsoft v. AT&T lessens the damages overseas of patent infringement," Shalton commented. "U.S. law, U.S. patents, U.S. damages—but companies that are international—could blatantly infringe overseas, and profits could still flow back to the U.S.-based company. I have mixed feelings on this. It requires the patentee to have to file all over the world, which can be a very expensive process. The fact that more companies are globally dispersed due to manufacturing overseas [allows] them to work around the situation, and now the Supreme Court has clarified it."
Noted adult industry attorney Gregory A. Piccionelli of the law firm Piccionelli & Sarno had a different take on the rulings. Piccionelli focuses on the effect the cases will have upon patent applicants in both small companies and large corporations. "The Supreme Court's ruling was not unexpected," Piccionelli said. "Unfortunately, it is another nail in the coffin of the small inventor that big business has been anxious to bury."
Piccionelli provides some history on the granting of patents and explains why the new decisions may not be as good for the long term, as some adult industry professionals believe. "Ever since the landmark 1998 Federal Circuit decision State Street Bank & Trust Company v. Signature Financial Group Inc. ruling that business methods could be freely patented, there has been unrelenting pressure by big business to make patents more difficult for small inventors to obtain. Simply put, many large corporate goliaths believe that the State Street decision could unleash an army of small-business 'Davids.'" Companies like Acacia Research Group have taken advantage of the State Street ruling, making a profitable business of gobbling up smaller companies that own individual patent rights, he added.
Piccionelli continued with his theory on the effect of the KSR International decision. "I am concerned that the pendulum has now swung too far in the other direction. The Supreme Court's decision could make the requirement that an invention must be 'non-obvious' so difficult to overcome that patents in the future may only be granted to large corporations and universities that can fund multimillion-dollar research and development facilities. Unfortunately, small inventors, who were always an endangered species, may now be on the brink of extinction."
The attorney's observation provides an interesting twist on the long-term effects to the adult industry caused by the Supreme Court's decisions in a case like KSR International. In the short term, groups like FightThePatent and the Joint Defense Group probably will be successful in challenging patents already held by companies like Acacia Research Group.
However, if Piccionelli's analyses are correct, in the long term, small technological companies will have much more difficulty obtaining patents.
Often, the U.S. Patent Office usually is slow to catch up to new technology. New patents probably are too expansive or overly broad, Piccionelli said. As the patent office becomes educated and hires new employees familiar with the emerging field, patents will be honed in and granted on a smaller scale. This simply is part of a technological maturation process. Problems with overly broad patents naturally work themselves out without changing the established judicial test of what should or should not be granted a patent, he added.
Acacia recently acquired patents related to electronic message advertising to be used with email and instant messaging. The patented technology "generally relates to the software, methods, and systems used to insert, transmit, and display background images and graphics," according to Acacia.
More than a dozen adult companies have been in protracted litigation with Acacia, which claims that its Digital Media Transmission technology has been infringed upon. DMT patents are involved in nearly all forms of digital media transmission, including downloadable and streamed media.
The Joint Defense Group, a coalition of adult companies that includes ClubJenna, Cybernet Ventures Inc., Lightspeed, VS Media, and Homegrown Video, banded together to combat the infringement claims of the Acacia Technologies Group.
The Supreme Court decision in KSR International could not have come at a more auspicious time for the Joint Defense Group, Piccionelli said, adding that, depending on where the litigation process is, KSR International's logic will help shore up the defense's rebuttals.
