March 08, 2004
Conflict of Interests - Semiconductor IP Patent Rights vs Standards
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because it involves both patent rights and a standards making organization. A public version of the court's initial
decision was released on February 24th. On March 5 the FTC announced an intention to appeal the decision.
adopted in, the relevant standards.
The judge ruled that Complaint Counsel failed to prove the facts they alleged in the complaint and that the legal theories advanced by Compliant Counsel failed to demonstrate that a violation of the FTC Act had occurred.
The legal issues are quite complicated. Trials and appeals are still ongoing. There is no way of knowing what the final outcome will be and when it will be known.
Before examining the implications of the ruling, let us review some material on patents and standard making organizations.
A patent is a property right granted by the U.S. Government to an inventor “to exclude others from making, using, offering for sale, or selling the invention throughout the U.S. or importing the invention into the U.S.” for a limited time in exchange for public disclosure of the invention when the patent is granted. Patent rights date back to the U.S. Constitution Article 1, Section 8, Clause 8 to wit: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;” The first patent was granted in 1790.
According to the USPTO, United States Patent and Trademark Office, the number of patent applications (355,418) and approvals (189,597) have more than tripled in the last twenty years.
date on which the application for patent was filed.
as the “Home Shoplifting
Network”. She reported that CDs of AutoDesk software, valued at $9K, could be purchased in open air markets for $2.
The Semiconductor Chip Protection Act of 1984 (the "SCPA") provides a special form of protection for "mask works fixed in a semiconductor chip product". The SCPA protects three-dimensional images or patterns fixed in the semiconductor product so long as the "topography" of the chip is not singularly dictated by the electronic function of the chip, nor one of only a small number of possible design choices. Protection does not extend to an idea or concept, process, or system behind the semiconductor product.
It is important to understand that the SCPA does not provide as broad protection as the patent laws do. Certain activities by competitors are permitted, such as reverse engineering for the purposes of teaching, analyzing, or evaluating the concepts embodied in the mask work including the circuitry, logic flow, and organization of components. The results of legitimate reverse engineering may be incorporated into another original mask work and commercially exploited.
Many have raised concerns regarding current patent law and USPTO practices and policies. For example, patent examiners have insufficient breath and depth of knowledge and insufficient time and resources to exhaustively investigate all prior art. They rely on the information provided by the applicant plus a search of the patent database. A patent once approved is assumed valid. It takes a considerable amount of time and money to contest a patent. Many simply pay license fees as a shorter, less costly and less risky alternative. From February through November 2002 the FTC and Department of Justice (DOJ) held hearings to examine the Balance of Competition and Patent Law and Policy. They
observed that poor patent quality and legal standards and procedures that inadvertently may have anticompetitive effects can cause unwarranted market power and can unjustifiably increase costs. Such effects can hamper competition that otherwise would stimulate innovation.
In its Executive Summary the FTC/DOJ cited testimony that
overlapping patent rights results from the nature
of the technology; computer hardware and software contain an incredibly large number of incremental innovations. Moreover, as more and more patents issue on incremental inventions, firms seek more and more patents to have enough bargaining chips to obtain access to others' overlapping patents. One panelist asserted that the time and money his software company spends on creating and filing these so-called defensive patents, which “have no . . . innovative value in and of themselves,” could have been better spent on developing new technologies”
Recommendations from FTC/DOJ to Congress and the USPTO included:
- Create a new administrative procedure to allow post-grant review and opposition to patents
- Specify that challenges to the validity of a patent are to be determined based upon “preponderance of the evidence” rather than on “clear and convincing evidence” of invalidity.
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-- Peggy Aycinena, EDACafe.com Contributing Editor.
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