Claim 1 is directed to

A method for providing episodic media, the method comprising:

providing a user with access to a channel dedicated to episodic media, wherein the episodic media provided over the channel is pre-defined into one or more episodes by a remote publisher of the episodic media;

receiving a subscription request to the channel dedicated to the episodic media from the user;

automatically downloading updated episodic media associated with the channel dedicated to the episodic media to a computing device associated with the user in accordance with the subscription request upon availability of the updated episodic media, the automatic download occurring without further user interaction; and

providing the user with:

an indication of a maximum available channel depth,

the channel depth indicating a size of episodic media yet to be downloaded from the channel and size of episodic media already downloaded from the channel, the channel depth being specified in playtime or storage resources, and

the ability to modify the channel depth by deleting selected episodic media content, thereby overriding the previously configured channel depth.

The “podcasting patent” is a continuation of an application filed November 19, 2003. Applicants filed the continuation less than a year ago, in October 2008, and after one false start, successfully petitioned for accelerated examination.

One of the most striking things about the prosecution of this application is that it appears that Applicant did not submit (and the Examiner did not consider) a single piece of “non-patent literature.” In other words, when determining whether these claims were patentable, neither the Applicant, nor the USPTO appears to have considered any publications except patents and patent applications.

As a result, the Examiner never looked at any publications from Dave Winer, who was a major contributor to the development of RSS in the years prior to November 2003. For example, in October 2002 (more than a year before the podcasting patent’s earliest priority date), Dave wrote about “a new tool called RSS Explorer. …. It allows you to browse another Radio user’s subscriptions, and click checkboxes to subscribe.” And by at least mid-2003, the RSS 2.0 specification supported media “enclosures.” Indeed, the Radio Userland application, which shipped in January 2002, was “both a podcast distributor and a podcast client.”

Would an examiner have considered a big chunk of Claim 1 to be obvious considering a combination of these references? Maybe, maybe not. But it seems clear that a giant swath of relevant prior art was never considered during examination, and now that the patent has issued, it’ll cost someone a lot of money to undo that.

In this case, it looks like the applicants effectively used the pre-exam search and support documents to frame the examination around just a few patent applications that the applicants thought (correctly, as it turns out) they could distinguish. As a result, some random dudes you never heard of were granted a probably-undeserved monopoly over a big chunk of an incredibly common mode of media distribution.

Seems likely that the only people who are going to end up benefitting from this patent are the lawyers who will get paid to wrangle over it for the next few years.

The Globe and Mail reports on “the most costly piece of punctuation in Canada,” in which one ambiguously drafted clause costs Rogers Communications over $2M in a contract dispute. (Actually, the culprit is not exactly the punctuation per se, but rather a poorly drafted sentence.)

Page 7 of the contract at issue states that the agreement “shall continue in force for a period of five years from the date it is made, and thereafter for successive five year terms, unless and until terminated by one year prior notice in writing by either party.”

According to this sentence, when does the termination option apply?

Apparently Rogers intended that the termination option apply only in the “successive five year terms.” However, there’s a very good argument to be made that the “unless and until” clause applies any time the agreement is in force. The writer chose to draft the sentence almost as if he or she were presenting a list of independent clauses setting out conditions under which the agreement shall continue in force: it shall continue for five years; it shall continue thereafter for successive five year terms; and it shall continue unless and until terminated.

Although the sentence, as drafted,  is somewhat ambiguous, I think the Canadian Radio-television and Telecommunications Commission (CRTC)  probably parsed the sentence correctly.

Rogers could have eliminated the ambiguity by not trying to pack so much information into a single sentence. One possible re-draft might read as follows:

The agreement “shall continue in force for a period of five years from the date it is made. Thereafter, the agreement shall continue in force for successive five year terms, unless and until terminated by one year prior notice in writing by either party.”

This re-draft is somewhat more verbose, as the subject (“the agreement”) is repeated in successive sentences. However, this more verbose formulation eliminates the ambiguity that was present in the original. When the first five year period and the subsequent five year periods are addressed in separate sentences, it becomes clear that the termination clause applies only “[t]hereafter… for successive five year terms….”

Thanks to TidBITS for bringing the story to my attention.

If you recall, the Federal Circuit (a court that issues most key patent law rulings) released an important decision, In re Bilski, last October. Initially, many commentators erroneously opined that the decision invalidated software patents. It didn’t. While Bilski curtailed “pure” business method patents (e.g., a method for preparing a tax return), it had very little impact on the ability of an innovator to obtain a patent on software through a careful patent attorney. Indeed, I’ve even seen some office actions in which the examiner himself offered changes to claim language to make the software patent-oriented claim conform to Bilski.

Yesterday, the Supreme Court “granted cert.” This means the Supreme Court wants to review the decision, and it likely also means the Supreme Court was dissatisfied with Bilski.

Indeed, the Wall Street Journal Law Blog quoted Laurence Rogers, an E.E. patent lawyer at Ropes and Gray as saying, “The Supreme Court doesn’t get involved in patent cases unless it sees something it doesn’t like.”

In addition, Joe Mullin at The Prior Art quotes Mark Lemley—intellectual property law glitterati and Stanford law professor—as saying, “They either looked at the Bilski legal test and said it’s an unworkable test, or they looked at their own precedent and decided they didn’t like that.” Prof. Lemley goes on to say, “If you look at other Supreme Court patent cases in recent years, they show no compunction about overturning settled wisdom in the Federal Circuit and courts of appeals.”

Thus, I’m predicting that the Supreme’s Court’s willingness to hear Bilski may be just that—an indicator they’ll overturn it.

In Every Penny Counts, the district court uses Bilski as Judge Newman predicted in her Bilski dissent: “each trial court… will have a blank slate on which to uphold or invalidate claims based on whether there are sufficient ‘meaningful limits’” imposed on the claim by the use of a particular machine.

In Every Penny Counts, the district court analogizes the claimed system to that of Gottschalk v. Benson, 409 U.S. 63, 64-66 (1972), in which a method of programming a digital computer to convert signals from binary-coded decimal to pure binary form was found to be unpatentable. In Gottschalk, the Supreme Court reasoned that because converting binary-coded decimal to pure binary form had no use outside a computer, allowing the patent to stand would “wholly preempt the mathematical formula and, in practical effect, would be a patent of the algorithm itself.”

In Every Penny Counts, the district court quotes Gottschalk, stating, in a conclusory manner, that the system at issue “‘has no substantial practical application except in connection with’ computers, cash registers, and networks….”

However, this reasoning misses the mark because unlike Gottschalk’s binary conversion algorithm, many of the claimed elements could certainly have practical application outside a computer. For example, a computer is not practically required to “determin[e] an excess payment on the basis of the determinant established by the payor,” nor is a computer practically required to “apportion[] at least a part of the excess payment amount said accounts on the basis of the excess determined.”

On this point, at least, Gottschalk seems distinguishable. In Gottschalk, the Supreme Court implicitly recognized that entities other than digital computers by and large have little need to engage in a binary decimal conversion process. For example, few of us humans routinely deal with raw binary representations of numbers or other data. However, human beings do routinely perform such accounting tasks as those performed by the claimed computing means in Every Penny Counts. Thus, unlike the claims at issue in Gottschalk, the claims at issue here would arguably not be in practical effect a patent of the algorithm itself.

Admittedly, in a credit card system as large as Bank of America’s, it may not be cost-effective to have a human perform the claimed elements. Accordingly, the claims at issue may indeed cover most commercially feasible implementations of a process, but that still seems to be a far cry from Gottschalk, in which the claims would have completely preempted a mathematical formula.

In the end, maybe the district court reached the right outcome, and maybe it did not. However, the claims at issue seem distinguishable from those of Gottschalk, and if the district court had not employed this faulty analogy, it is not clear that it could have reached the same outcome.

To address these “abusive” practices, as of April 2010, the EPO will require that a divisional application be filed either:

• within two years of the first communication from the Examining Division regarding the earliest application in a family; or
• within two years of any objection from the Examining Division regarding a lack of unity of invention for any application within the family.

In Europe, a divisional application is the only allowed form of “continuing” application,  so the new rules will force patent applicants to identify discrete patentable inventions disclosed within their specification somewhat earlier than the current rules allow. The new rules may also make it difficult for patent applicants to spread out prosecution costs in Europe.

I. LEGAL BASIS

Until relatively recently, trade secret protection had been based on common law principles; namely, trade secrets had been protected under contract, quasi-contract, and property theories. Protection of trade secrets under contract theories includes instances in which there existed an express contract concerning non-disclosure or use of a trade secret, or there existed a confidential relationship giving rise to a duty no to disclose or use the trade secret – such as an employer-employee relationship. The quasi-contract basis of trade secret protection includes avoidance of unjust enrichment from trade secret misappropriation. And the property theory, the “property” ceases to exist upon disclosure of the trade secret.

Perhaps the most widely used common law definition of a trade secret was found in the Restatement of Torts, § 757 comment b (1939):

[A trade secret is] [a]ny formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.

The Restatement also lists six factors to be considered in determining the existence of a trade secret:

1. the extent to which the information is known outside the business;
2. the extent to which it is known by employees and other involved in his business;
3. the extent of measure taken by him to guard the secrecy of the information;
4. the value of the information to him and to his competitors;
5. the amount of efforts or money expended by him in developing the information; and
6. the ease or difficulty with which the information could be properly acquired or duplicated by others.

These factors are “[t]he most-cited listing of the objective criteria for determining the existence of a trade secret.” M. Jager, Trade Secrets Law § 5.05 (1995). Note that this definition is still widely used in spite of he decision of the authors of the Restatement (Second) of Torts (1979) to omit any discussion of trade secrets.

In recent years, trade secret law has become largely statutory. The Uniform Trade Secret Act (UTSA) has now been adopted (sometimes with modifications) in 42 states. M. Jager, supra, at § 3.05 (1996). Washington adopted the UTSA as of January 1, 1982. RCW 19.108 et seq.

The UTSA defines a trade secret as information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

II. ELEMENTS OF A TRADE SECRET

Under both the old Restatement of Torts and the current statutory definition, to establish the existence of a trade secret one much show that the information or item alleged to be a trade secret is: (1) of an appropriate subject matter to be protected as a trade secret; (2) not a matter of common knowledge in the trade and not readily ascertainable by proper means; (3) of value; and (4) the object of reasonable precautions taken under the circumstances to maintain secrecy.

1. Protectable Subject Matter

Under the common law and the Washington statutory definition, almost any knowledge or information used in conjunction with one’s business may be held as a trade secret. Specific examples include:

1. Formulas for chemicals, drugs, cosmetics, foods, et cetera.

2. Industrial Processes. E.I. duPont de Nemours & Company, Inc. v. Christopher, 431 F.2d 1012 (5^th Cir. 1970).

3. Know-how, i.e., technical information relating to the practical application of patented or unpatented inventions.

4. Blueprints, such as for a building or machinery.

5. Computer software, to the extent it cannot be reverse engineered.

6. Sources of supply, pricing information, identity of vendors or suppliers, and customer lists.

In addition and contrary to common belief, trade secrets are not limited to technical items, know-how and related matters, but include a wide variety of business information (i.e., employee benefit information and financial statements and projections). Under the Washington statute, a trade secret can include information that has commercial value from a negative standpoint (e.g., knowledge that a particular process cannot be used to produce a certain product).

2. Not Generally Known or Readily Ascertainable

Trade secret protection is available only for information not generally known (i.e., secret information), and is not available for information which is common knowledge. And in addition to not being generally known, a trade secret must not be readily ascertainable by proper means. The comments to the UTSA indicates that information is “readily ascertainable” if it’s available in trade journals, reference books or other published materials.

Note that secrecy is not lost if the possessor of the information disclosed it to another in confidence or under an express or implied obligation not to disclose it. Accordingly, information can be disclosed, for example, to prospective purchasers of the trade secret, or to employees involved in a manufacturing process which utilizes the trade secret, without destroying the trade secret. These types of disclosures comport with commercial reality.

3. Independent Economic Value

To be protectable, the trade secret information must provide a competitive advantage over others who are unaware of the secret information. Earlier decisions required that for a trade secret to have value, the information must be regularly used in the proponent’s business. This requirement, which could post a problem during research and development, has been rejected by the UTSA.

4. Reasonable Efforts to Maintain Secrecy

The requirement that the possessor of a trade secret must make reasonable efforts to maintain secrecy is based on the rationale that if the possessor does not treat the information as a trade secret, then the law also should not. The degree of secrecy required is that which is reasonable under the circumstances and may include:

1. advising employees of the existence of trade secrets;

2. limiting access to the trade secret on a “need-to-know-basis”;

3. controlling plant access;

4. central control of blueprints and drawings;

5. use of security guards; and

6. locked storage of laboratory notebooks.

III. TRADE SECRET MISAPPROPRIATION

Under the common law, liability for trade secret misappropriation required acquisition by another by improper conduct or unfair means together with the use or disclosure by such person to the trade secret owner’s detriment. Under the UTSA, the definition of misappropriation is much broader; it can include simple acquisition of a trade secret by a person who knows or has reason to know that the trade secret was acquired by improper means – no subsequent or impending use of the trade secret is required.

The UTSA specifies that “improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Again, one of the broadly stated policies behind trade secret law is the maintenance of standards of commercial ethics. Thus, improper means could include otherwise lawful conduct which is improper under the circumstances; e.g., an airplane overflight used as aerial reconnaissance to determine the competitor’s plant layout during construction of the plant. E.I. duPont de Nemours & Co., Inc. v. Christopher, 431 F.2d 1012 (CA5, 1970).

IV. RELIEF AVAILABLE

1. Injunctive Relief

Once it has been established that a trade secret has been misappropriated, injunctions to enjoin further use of a trade secret generally have been issued by the courts. This remedy is expressly provided under the UTSA. Under the common law, there were several different views concerning the duration of prohibitory injunction. Under one doctrine, the defendant could be permanently enjoined from using the misappropriated trade secret, even if it later became public knowledge. Allen-Qualia Co. v. Shellmar Products Co., 87 F.2d 104 (7^th Cir. 1936). This view was based on the theory that the defendant by her own inequitable conduct had permanently deprived herself of the right to employ the trade secret. Under a second doctrine, the injunction is terminated once the information becomes available to the public. Conmar Products Corp. v. Universal Slide Fastener Co., 172 F.2d 150 (2d. Cir. 1949). And under a third doctrine, the duration of the injunction is limited to the period of time it would have taken the defendant either by reverse engineering or by independent development to develop its product or process without the use of the trade secret. K-2 Ski Company v. Head Ski Co., Inc., 506 F.2d 471 (9^th Cir. 1974).

UTSA adopts the K-2 rule; injunctive relief terminates once a trade secret ceases to exist – however, the injunction may be continued for an additional length of time to eliminate any commercial advantage derived from the misappropriation. As such, the maximum duration of an injunction is the period of time it would have taken the defendant to lawfully discover the trade secret either through independent development or reverse engineering.

2. Damages and Attorney’s Fees

The UTSA provides that in addition to or in lieu of injunctive relief, damages of the actual loss caused by the misappropriation may be awarded. In addition to damages, the complainant may recover the unjust enrichment resulting from the misappropriation, provided that such amount is not taken into account in computing the actual loss. If willful or malicious misappropriation is found, the court can award exemplary damages in an amount not to exceed twice actual damages, together with recovery for unjust enrichment. In such circumstance, the court may also award attorney’s fees. The comments to the UTSA indicate that the patent laws are followed in determining whether attorney’s fees should be provided.

3. Statue of Limitations

The UTSA specifies that an action for misappropriation must be brought within three years after the misappropriation is discovered or reasonably should have been discovered.

In Crown Packaging, the plaintiff (the patent holder), in brief, did not mark its products with a patent number as required by 35 U.S.C. § 287(a) for most patented products. You’ve seen these markings on, for example, a Starbucks coffee sleeve (Pat. Nos. 5,205,473 and 6,863,644, to be precise).

Nevertheless, the court, consistent with precedent, allowed the patent holder to enforce its method claims. Method claims are used extensively in patents on software products, so this is good news for many of our clients.

For more about the decision, I’d refer you to Patently-O’s post on the case here.

Oftentimes, the litigants will ask for a “special verdict.” This requires the jury to answer specific questions to determine exactly what their findings of fact were. That is to say, the jury doesn’t just say “you win” or “you lose,” they tell you why. I uploaded it for your review.

What I found particularly interesting is what the jury determined about the level of “ordinary skill in the art.” This was a factual determination they had to make to help determine whether the chain was legally obvious under 35 U.S.C. 103. The jury rejected either the plaintiff’s or defendant’s position on this point, and instead it looks like they took both! They said:

A minimum of three years of technical engineering experience in the design and use of of outdoor power equipment; or a technical education in mechanical engineering and one year of experience in the design of outdoor power equipment and use.

What you’ll likely find more interesting, however, is the bottom line. Notice the plaintiffs are recovering for both royalties and price erosion. Here it is:

All in all, it looks like the litigants had a thoughtful jury. Here’s the full form:
Blount Verdict Form

Yesterday, I was looking at an old InterTrust patent application. It was a continuation of an application filed back in Silicon Valley’s dot-com boom times. InterTrust had then, like a lot of our clients do today, very ambitious goals. In this case, those goals didn’t materialize, and InterTrust morphed in to (what I call) a pure innovation company. And it still became very successful because of the value of its intellectual property.

The reason InterTrust could pull this off was that they invested wisely in their intellectual property portfolio, and they took care to protect it. In other words, the geeks did great work, and so did their lawyers.

That memory fact got me thinking. Most of our clients are high-tech companies. And high-tech companies do at least two things simultaneously: (1) they are building markets, customers, and businesses; and (2) they are building an intellectual property portfolio. Even though many of them consider them one and the same, they are really two independently valuable things.

Unfortunately, as the current economic times will attest (not unlike the dot com implosion that continues to inform my thinking), markets come and go—that’s just a part of the creative destruction that is capitalism. Your innovation, however, might just outlast all of this.

You may not, or may not, agree with InterTrust’s new business model, but as a high-tech innovator, surely you must agree that your work has strong value independent of it’s current economic incarnation. In other words, think of the business the IP’s current shell.

Recognizing that distinction, the independent value, and helping you make the most of it is the role of your intellectual property counsel.