Supreme Court Continues to Address Patent Concerns

The Supreme Court has taken on another possibly landscape-changing patent case that will determine if patent holders are able to sue everyone up and down the food chain for a patent infringement. "This case, officially between LG and Quanta, really concerns the question of how many times patent holders can get a cut of any component found violating a patent. Currently, patent holders will often sue up and down the food chain. So, if you happen to have a patent on a component within a motor that is used in automobile wipers, you could sue the motor maker, the wiper maker and the auto manufacturer -- and get all three to pay, even though the same product is used throughout the supply chain. This case will look at whether or not it makes sense to allow for that type of double, triple or quadruple dipping."

Comments

What does the patent claim?

[Valdrax]

The real problem is who do you have to sue based on what your patent claims.

Let's take the example used in the summary of a component used in a motor in a windshield wiper blade. What does the new component do that made it patentable?

- Is the innovation purely in the use in a motor? (Reducing wear and tear?)
- Or maybe is the innovation in its effect on the wiper? (A smoother wiping motion with less noise?)
- Or maybe is the innovation in how the car performs? (Allowing a more aerodynamically friendly wiper?)

What if the patented item does all three and claims all three things? Does a SCOTUS decision ruling that you can only collect once open the door for a finger-pointing exercise between defendants (something the courts like to avoid) in trying assign infringement? Does going straight to the bottom of the supply chain always make sense? (For example, what if it doesn't do anything for the motor itself but only for the higher level functions?)

These are very important balance issues that the SCOTUS will have to consider.

Re:What does the patent claim?

[Valdrax]

Ummm you sue who is actually producing the violating item.

That's the bottom of the supply chain argument I mentioned earlier. It seems the easiest argument, but what happens if the innovation is based on the use of the component in a final product and not an intermediary one?

For example, let's imagine a windshield wiper that automatically adjusts its speed to the rate of rainfall. This would require at least two components -- a sensor for the rain and a controller that acts on said information. Assume that we don't have existing parts for each of these.

The patent for this would describe:
A) The sensor for detecting rain.
B) The motor control mechanism.
C) The method of tying the two together to produce the result.

In this case there are at least three parties that could be infringing on the patent:
A) The sensor maker.
B) The motor control maker.
C) Whoever makes the system to tie them together (most likely the auto manufacturer).

If you can only collect from the first people in the chain, then does it become impossible to patent non-obvious ways of combining off-the-shelf parts such as a system to auto-adjust your wiper speed to the rain? If you could only collect from the last person in the chain, then who is the last person in the chain? The auto manufacturer? The auto dealer?

The RIM patents are very similar to this, if I recall correctly. You have the hardware interface portion of the patent, the back-end server portion of the patent, and the service portion of the patent. Who must you be limited to suing, A, B, C, or some combination of them?

While it seems sensible that infringement should only happen at one point in the supply chain for a good or service, coming up with a hard and fast rule for where this should happen is going to be hard and may take decades of future Supreme Court rulings to nail down.

Of course with a bit of maneuvering that violating producer could be a shell company out of the courts jurisdiction with physical production in china at which case the issue becomes more complex as you mentioned.

That's not so much of a problem. You just sue them in federal court, and if they don't pony up the licensing fee, you sue to bar entry of their goods into the country. That's the ultimate (and only) power that a government has over a multinational or extranational entity -- the power to bar them from doing business in their country unless they play by their rules.

Re:Patent Laundering

[Applekid]

1) Setup a puppet company
2) Infringe all you want
3) Profits!!! stay safe (safely stolen) from patent holders Wouldn't discovery expose a shell company like that? RICO covers that sort of thing, doesn't it?

Re:Test for Obviousness

[kebes]

I'm not a patent expert, but isn't this already the case? Prior art is indeed a valid defense against patent claims.

The problem is that proving prior art is difficult. Even if you are in the right, and can provide evidence to that effect, it becomes a long and expensive court case, which many cannot afford (especially the small-time inventors that patent law ostensibly promotes).

Patent-happy companies will continue to throw as many patents at the system as they can. Whatever sticks is ammunition, regardless of whether or not the patent is valid. Even patents that may be invalidated can be used as threats.

We really need to decrease the number of patents granted, so we need "early detection" of prior art. Frankly, I think patent applicants should be liable in some way if their application is shown to be invalid due to prior art or obviousness. It should be treated as a very serious offense, akin to perjury. We need to make it so that there is an incentive to scour the literature for prior art, and a penalty for making false claims.