Watch out if you try to open one — you might risk infringing someone’s “business method” patent. (Chris Hayes, “Snap, Crackle … Patents”, In These Times, Jan. 2)(via Reason “Hit and Run“).
P.S.Victor Serby, in comments, notes what he calls a “glaring factual error” in Hayes’s account and points out that a patent application is a very different thing from a valid patent.
6 Comments
There is a glaring factual error in Chris Hayes’s article “Snap Crackle Patents.” See link in Cereal-Serving Restaurants. The Court of Appeals for the Federal Circuit, not the Third Circuit is the appeals court that decided State Street Bank and reversed the decision of the District Court for the District of Massachusetts. State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. Jul. 23, 1998). http://www.ll.georgetown.edu/federal/judicial/fed/opinions/97opinions/97-1327.html The Federal Circuit court was created by Congress in 1982 to have exclusive jurisdiction in patent appeals (among its other functions) so that US patent law would be uniform throughout the US. Prior to the formation of the Federal Circuit, each circuit had its own caselaw resulting in conflicting opinions and forum shopping.
Mr. Hayes also makes a legal error by implying that the State Street decision somehow lets a restaurant serving cereal obtain patent protection for this business method. The Federal Circuit holding in State Street eliminated the business method exception for otherwise patentable subject matter, and is correct, in my opinion.
Cereality’s patent application stands a snowball’s chance of maturing into a patent under 35 USC 103 (obviousness grounds) http://aiw1.uspto.gov/.aiw?Docid=20050160005&homeurl=http%3A%2F%2Fappft1.uspto.gov%2Fnetacgi%2Fnph-Parser%3FSect1%3DPTO2%2526Sect2%3DHITOFF%2526p%3D1%2526u%3D%25252Fnetahtml%25252FPTO%25252Fsearch-bool.html%2526r%3D2%2526f%3DG%2526l%3D50%2526co1%3DAND%2526d%3DPG01%2526s1%3Dcereality%2526OS%3Dcereality%2526RS%3Dcereality&PageNum=&Rtype=&SectionNum=&idkey=35506DD9F77A). The Patent Office, in due course will most likely reject this application. The apparent injustice, however, occurred when “Monteleone received a letter from Cereality’s attorney warning him that he may be in violation of a patent application the company had filed for its ‘methods and system’ of selling cereal.” Fledgling businesses have enough problems without the insult of a competitor misusing the patent system to gain an unfair advantage. Unfortunately, such misuse happens all the time.
Stifiling competition by forcing a competitor to hire a patent attorney to debunk claims of violating a patent application is problematical. Obtaining a patent opinion is an expensive endeavor. By mererly filing a patent application and having an attorney send a letter, a company can effectively stiffle its potential competition by fooling them into thinking that they may potentially infringe, and that it may become too expensive to stay in business. The flip side of the coin is that if the patent application truly had merit, then the competition would want a legitimate heads up so that they could decide whether to invest in technology that may infringe a patent that may issue in the future.
Unfortunately, there is no quick solution to eliminating this area of abuse.
Mr. Serby is right about the citation error. The State Street decision was from the Federal Circuit and not the Third. I apologize for the error.
Notifying competitors of the claims of pending patent applications is legitimate (although rare in my experience). It is required by law in order to obtain provisional rights (damages for infringement of a patent before it issues). Provisional rights were added to U.S. patent law in 1999. Once a patent issues, you can then sue the competitor and not just enjoin future infringement but get damages for infringement that took place between your notification and when the patent issued. If you don’t like this, blame Congress for instituting provisional rights.
And, of course, Congress created provisional rights as part of the legislative compromise in crafting a comprehensive solution to deterring submarine patents, which have their own set of problems. It’s not clear to me there’s a way around provisional-rights abuses without creating more problems or effectively de facto limiting the terms of patents.
Of course, if anyone has a comprehensive solution, Flavio would.
Someone actually received a patent on the use of a laser pointer to exercise cats. Imagine if that guy sued all pointer makers for potential infringement? At least he might make them label pointers “Not to be used to exercise cats.”
Walter: I suspect that such labeling would be counterproductive. Like in the comic song, “Beans in my ears”, the likely response to the labels would be, “I never thought of that.”