IDEA Volume 60 Blog
Welcome to the IDEA Volume 60 Blog!
In this blog, we want to showcase our Associate Editors’ notes. We encourage all of you to attend the annual Student Note Symposium in April 2020. At this event, you can hear a short presentation from each Associate Editor and talk with them about their research and the nuances of each area. You can also learn about IDEA and the UNH Law Review. Thank you and enjoy!
Table of Contents
- Breathing Life into an Asphyxiated Patent System: A Technical Court with Specialized Panels
- Rethinking Patent Damages: Apportionment
- Leaving the Boulder Behind: Imposter Syndrome in the Legal Field
- The Current State of Software Patents and Patentability
- Secondary Patents for Brand Pharmaceutical Companies – An Incentive for Innovation if Done “Right?”
- Loot Boxes- Moving into the Regulatory Spotlight
- Content Embedding and Copyright: A Choice of Perspective
- A Fair, Reasonable, and Non-Discriminatory Review of Recent FRAND Royalty Determinations
- A Step Toward Electoral Reform
- Exploring New Hampshire’s Recently Enacted “Right to Privacy” State Constitutional Amendment.
Breathing Life into an Asphyxiated Patent System: A Technical Court with Specialized Panels
By Nancy Braman, J.D. ‘21
Receiving a patent from the United States Patent & Trademark Office (USPTO) is a tricky process, one that often requires many years of manipulating patent claims until they fit the mold identified by patent examiners. The cost to see a patent application through to completion can range from a few thousand dollars to tens of thousands of dollars, depending on the invention’s complexity. Inventors agonize over this long process and celebrate if they’re lucky enough to cross the finish line and receive a patent. However, this is not the end of the line for the patent owner. A proceeding called inter partes review (IPR) allows outsiders to challenge the patent’s claims as unpatentable, even after a patent examiner has determined otherwise. From April 2019 to present, institution of IPR proceedings by the Patent Trial and Appeal Board (PTAB) of the USPTO sits at 64%, meaning that 64% of the requests for review of patents for unpatentability are granted. From 2012-2016, only 4% of patents petitioned for review survived with all claims upheld as patentable by the PTAB. Unsurprisingly, with many inventors receiving a low patentability finding after going through years of revision with the USPTO’s patent examiners, scores of appeals are made to the Court of Appeals for the Federal Circuit (CAFC).
The CAFC was created in 1982 as a merger of the US Court of Customs and Patent Appeals and the appellate division of the US Court of Claims. It has nationwide jurisdiction in multiple areas of law, such as international trade, government contracts, patents, trademarks, certain money claims against the United States government, federal personnel, veterans' benefits, and public safety officers' benefits claims. However, intellectual property cases comprise 67% of the CAFC’s case load. From January through August 2018, the CAFC affirmed the PTAB on all issues in 75.06% of cases and reversed or vacated the PTAB on all issues in only 12.10% of cases. Yet in a 2013 study, only 7 judges or 20% had technical backgrounds out of the 34 judges on the CAFC bench. The study also found that the propensity to reverse PTAB decisions by CAFC’s three-judge panels may be dominated by the technical or non-technical majority on the panel. Patent invalidation rates by non-technical judges were only 3% higher than technical judges, however these statistics fail to consider if the technical backgrounds of the technical panel judges are homogeneous with the patent’s technology.
The creation of the CAFC did not go far enough to ensure that patent owners receive due care when their cases are brought before the court. Not only are non-technical judges deciding highly technical cases, the number of technical judges is too small to adequately cover the realm of technology patents brought before the court. While areas such as trademarks, copyrights, and trade secrets may be fairly evaluated by non-technical judges, oftentimes patent law cases are so complex that even those with a general technical background have trouble understanding them. Therefore, it is imperative that the US patent system breaks away from the CAFC and has a court dedicated to patent law, specifically. This court should operate not only with panels of technical judges, but with panels that are specialized in the area of technology that is being evaluated, whether it be software, chemical, mechanical, or electrical in nature. Only then will inventors receive a fair hearing regarding the patentability of the inventions they spent thousands of dollars and years attempting to patent.
Rethinking Patent Damages: Apportionment
By Haley Breedlove, J.D. ‘21
In June 2018, the United States Patent and Trademark Office (the USPTO) issued its 10 millionth patent. Even more staggering is that over 4 million of those 10 million patents were granted in the 20 years prior to meeting this milestone. This growth highlights the value U.S. companies place on patent protection. The question we must ask is – “Where exactly does this value come from? “
Patents, unlike many other forms of property, grant a negative right to the property. Meaning, rather than grant the right to use a piece of property, such as with a land deed or the title to a car, patents grant the right to exclude others from using a particular property. The true value of a patent, therefore, is rooted in the ability to monopolize a particular technology for as long as the 20-year term of a patent. Where that monopoly is jeopardized by others infringing the patent, the value comes from the ability to collect damages.
I’ll admit - damages is not exciting for everyone. Yet it is quite literally the single most important consideration when deciding whether to litigate a patent. Daubert challenges against damages calculations have become extremely common in patent cases. In recent years, some reports show as many as half of Daubert challenges result in the exclusion of some or all of a experts’ method of calculating damages. As the complexity of the technologies in litigated patents continues to increase, combined with the lack of clear and consistent guidance from various courts that hear patent damages, it’s time to re-think our approach to patent damages.
Most commonly, those who litigate a patent seek reasonable royalties. A reasonable royalty is usually a calculation of the royalty base (reflected by revenue of the infringing product) multiplied by a royalty rate (the percentage of the value of the patented technology).
Here lies apportionment. Apportionment is at the forefront of the damages analysis in nearly every patent litigation case. It can be the difference between a $24 Million and $2.4 Million verdict. Apportionment, according to the Federal Circuit in Virnetx, is the requirement that the patentee must give evidence to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features. Virnetx, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1327 (Fed. Cir. 2014). Where there is an infringing device consisting of both patented and unpatented features in the claims, then many courts require that the royalty base be apportioned by limiting it to the Smallest Scalable Patent Practicing Unit (SSPPU). The argument is that apportionment prevents the patent owner from unfairly collecting a royalty on the unpatented features. For example, where a patent covers an operating system running on a smartphone, the royalty base must be apportioned to exclude the unpatented features, such as the touchscreen, cameras, processor. VirnetX, 767 F.3d at 1328-29. The issue is that it’s often unclear how to apportion the patented and unpatented features. Where an operating system uses a processor that is not included in the patent, but certainly be required, how should damages be counted? It’s unclear and imprecise. Courts are concerned that showing a jury large revenues for devices like a smart phone can cause biases, withholding a clear explanation of the revenue of the entire device may be just as detrimental.
Two recent Federal Circuit cases, decided just two days apart, have highlighted the inconsistency with apportionment. Essentially, in Exmark where the claim at issue covered the entire lawn mower and the novel feature was a baffle, the Court held that apportionment was required in the royalty rate to account for the un-novel features of a claim. Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp., LLC, 879 F.3d 1332 (Fed. Cir. 2018). Alternatively, in Finjan where a claim covers a multi-component product, which was a software feature, part of a larger anti-virus software, apportionment was still required in the royalty base to apportion the unpatented features. Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299 (Fed. Cir. 2018). It seems the key distinction is to apportion the royalty base based on the patented features, rather than the novel aspects of the invention.
When it comes to the apportionment of patent infringement damages, there is still a lot to be decided. Courts are continually growing and changing but certainly not as swiftly as the technology coming before them.
By Douglas Bruno, J.D. ’20
Law students and lawyers often experience a common feeling: that they don’t belong. This feeling brings with it a common cycle: the need to achieve greatness, fear of failure, denial of aptitude, ignoring compliments, and explaining away success. Some point to the field’s high-octane, competitive environment; others explain that the feeling is simply anxiety and depression; and others don’t even notice the feeling at all. Is this just part of the profession? If so, what can we do about it?
This “feeling” is actually a clinically defined event called the Imposter Phenomenon. Most people know it colloquially as “Imposter Syndrome.” The Imposter Phenomenon isn’t localized to the legal profession; it occurs among doctors, nurses, engineers, and many other high-achieving professions.
The common scenario goes like this: first, the person has an insatiable need for achievement. This need goes beyond the average ambition, though. They need to be the best. Their eyes are set on the gold medal; bronze simply will not do. Second, the person dreads failure. Simple mistakes can become mountainous shortcomings. And, if simple mistakes cause such a breakdown, imagine the damage of larger ones. Third, the person denies their ability. The person might hold vast intelligence, skill, or experience, yet they refuse to accept it. Fourth, the person refutes praise. Praise builds confidence; confidence breeds motivation; confidence and motivation foster achievement. However, if one denies praise and allows their confidence to remain in the cellar, they are only hurting themselves. Finally, the person explains away success. This stage is closely tied to denying compliments. They will likely offer one of the following excuses: (1) “I got lucky”; (2) “It wasn’t a true challenge.”; and (3) “Sure, I succeeded here. But I can’t obtain sustained success.”
Some law students shed this feeling before the end of law school. But, for others, they carry it through their legal career. They carry it beyond the doorway of work and into their homes, their hearts, and their relationships.
This note is one imposter’s attempt at encouraging the dialogue. Lawyers are too often expected to be strong, flawless giants. But the more we discuss our anxieties, fears, and shortcomings, the sooner we will realize our humanity. Otherwise, we’ll live in a Sisyphean nightmare, rolling our boulders up the hill of life for eternity.
The Current State of Software Patents and Patentability
By Mason Carr, J.D. ‘21
Software is one of, if not the most, innovative areas in technology. For that reason, software patents have become increasingly more popular. In recent years, we have seen the landscape of software patents drastically change.
At first, software was freely patentable and was only restricted by § 101, which grants a patent to “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.”
Eventually, the courts began to hand down rulings that restricted the patentability of software. In 2010, the court decided Bilski v. Kappos, where the court identified three specific exceptions to § 101's broad patent-eligibility principles. These exceptions were for laws of nature, physical phenomena, and abstract ideas. Next, in Alice Corp. Pty. Ltd. v. CLS Bank Intern., the Supreme Court articulated a two-step inquiry for determining whether a particular software is patentable. First, a computer-related patent application must not be directed to an “abstract idea.” But, if it is, then the patent application must claim some elements that “transform” the claimed invention into a patent-eligible invention.
Post-Alice, the consistency of software patents is hazy at best. The courts have been unable to properly articulate what exactly transforms software into a patentable invention. That being said, lawyers will tell you that overcoming a 101 rejection can be rather formulaic and does not stand in the way of software patents as often as it may appear. Best practices for ensuring the patentability of a particular software are claiming the invention such that it improves computer functionality in some way (i.e. it enables certain computations that were previously unavailable, speeds up processes, or requires fewer resources), or such that it solves a computing challenge in an unconventional way. In general, software may be patent eligible if it is written with a precise focus on the technical merits of your particular software solution.
Secondary Patents for Brand Pharmaceutical Companies – An Incentive for Innovation if Done “Right?”
By Meredith Floor, J.D. ‘21
The pharmaceutical industry is comprised of brand companies, which seek to create new products, and generic companies, which create cheaper versions of already existing brand products. Brand pharmaceutical companies spend billions of dollars researching, developing, testing, and bringing new drug products to the market. This highly expensive and research-intensive process may take up to ten to twelve years per product and requires a significant financial investment in early-stage development.
While brand companies are investing in this process, generic companies are profiting from brand company research as they produce and sell the same drugs for less. Therefore, in order to justify making large research investments, brand companies need a system that allows for a temporary monopoly on new drug products, unhindered by generic company competition on the market. That system is the United States patent law system.
The current patent law system incentivizes innovation by rewarding an inventor with the right to exclude others from using her invention for the length of the patent. In exchange for this exclusionary right, the inventor is required to disclose the invention to society. This quid pro quo is the fundamental core of the patent law system.
In the pharmaceutical context, brand companies disclose the new drug products to society, and consequently to generic companies. In return, the brand company receives a temporary exclusionary right to the invention. While afforded the protection of a patent on a new drug product, drug companies often seek ways of extending the exclusionary right.
One way of extending intellectual property protection is to seek secondary patents, which cover slight variations of the initial invention. This strategy allows for product variations to be protected through the patent system for an amount of time that extends past the patent term of the initial product. Understandable, there is concern that such secondary patents allow for pharmaceutical companies to extend monopolies on products. However, this note will argue that secondary patents for brand pharmaceutical companies should be granted because they serve to incentivize innovation and product improvements without unfairly creating a monopoly on previously patented drug products.
Loot Boxes- Moving into the Regulatory Spotlight
By Christopher Glueck, J.D. ‘21
Micro-transactions have been an increasingly popular way to generate revenue in video games. Classically, video game purchases involved a one-time transaction that would buy access to the full game. With older game systems, you could only play what was on the disk. Today, games are often tied to the internet, and new content is rolled out on a regular basis. One of the major ways to support the continuous rollout of new content in a game is through micro-transactions. The use of micro-transactions has become prevalent in the industry to the point that some games are able to succeed as a free-to-play title with integrated micro-transaction systems.
Loot boxes are best understood as a specific class of micro-transactions. As the name suggests, the experience of opening a loot box is supposed to be like that of opening a mystery box. Often times the player is shown the digital items that are in the box, and the player is given the opportunity to pay to draw one or more items from the box. Fundamentally, loot boxes rely on surprise mechanics to give players access to virtual goodies.
Since loot boxes can involve the payment of real money for the chance to win virtual items, which must carry some real value to that gamer, there is an increasing concern that loot boxes could be a form of gambling. The biggest concern comes from parents that worry about their children being exposed to gambling mechanics at an early age. Internationally, Belgium has found that some AAA loot boxes were a form of gambling. Currently loot boxes are not regulated in the U.S., but it is an issue that is starting to draw some attention. The FTC held a workshop last August to hear from interested parties about loot boxes. It remains to be seen if loot boxes will be regulated. My note will explore whether or not loot boxes could be treated as gambling under the existing law. There will also be some discussion of what the industry can do in reaction to potential regulations.
Content Embedding and Copyright: A Choice of Perspective
By Kurt Hoppmann, J.D. ‘21
The law frequently runs into issues when adapting itself to cases involving the internet. For instance, because the internet is a worldwide network, it does not readily confine itself to the jurisdictional boxes that the legal system seeks to impose. Furthermore, the perceptions of the everyday users of the internet frequently do not reflect the underlying operation of the internet.
Seeking to provide a framework through which address this conundrum, Professor Orin Kerr, in his article “The Problem of Perspective in Internet Law” (91 Geo. L.J. 357), proposed that when applying the law to the internet, you can choose from two perspectives in modeling the facts. The interior perspective is the perspective of an internet user who views the actions that they take on the internet as analogous to the actions that they take in the real world. For instance, they see shopping at Amazon.com as akin to shopping at a brick-and-mortar store owned by Amazon. The exterior view adopts the perspective of a user who views the internet as simply a series of electronic transactions between servers.
The impact of choosing between these perspectives becomes apparent when one looks at the phenomenon of embedding copyrighted content on a webpage. If, for example, the New York Times chooses to embed a tweet with an image into a news story, a user adopting the interior perspective might see this tweet as being an integrated part of the New York Times’ webpage. However, from an external perspective, the New York Times’ server only links the user to the image — the user’s computer actually retrieves the image directly from Twitter’s servers.
In choosing between these perspectives, Kerr suggests two questions that may be helpful: (1) whether there is a doctrinal preference to either the interior or exterior perspective and (2) from what perspective does the party being regulated view the internet?
This note will evaluate the problem of content embedding through the interior and exterior view of the internet and discuss which perspective best fits the doctrine of copyright. Finally, the legal fallout of adopting either perspective will be explored along with possible limitations on liability.
A Fair, Reasonable, and Non-Discriminatory Review of Recent FRAND Royalty Determinations
By Austin Lorch, J.D. ‘21
Standardization within particular technologies has been taking place for many years. Screw-cutting lathes, sewing machines, and airplanes serve as early examples of technologies governed by standards. As invention complexity heightens, and as the world becomes more and more interconnected, our dependency on standardization increases. Many of the most prominent technologies of the 21st century (including the device you are reading this on) would not live up to their full potential if they did not have standards on which they could rely.
Standards promote compatibility between products produced by differing manufacturers. Consumers generally benefit from standardization because it increases product value for consumers, reduces production costs, and increases competition. However, standardization can hurt consumers by locking-in inferior technologies within the marketplace.
Private Standard Setting Organizations (SSOs) are the primary source of interoperability standards. Market participants work collaboratively within voluntary SSOs to develop and promote the standards. Certain patents are deemed “essential” to a given standard. These patents are known as “Standard Essential Patents” (SEPs). In return for their patent being selected as part of a standard, SEP owners make a commitment to the SSO to license their patent(s) on Fair, Reasonable, and Non-Discriminatory (FRAND) terms.
After Standard Essential Patents are chosen, other players in the industry look to pay royalties to SEP owners in return for the right to use the inventions within their own products. The SEP owners are tempted to exclude competitors from the marketplace by charging unreasonably high royalty rates. When the inevitable occurs and parties do not agree upon licensing terms, licensees argue that they were not provided Fair, Reasonable, and Non-Discriminatory rates. This leads to the elusive question: How should FRAND royalties be determined?
The terms “fair,” “reasonable,” and “non-discriminatory” are inherently subjective and highly fact dependent. To further the confusion, the concept of FRAND was created through neither statute nor regulation. FRAND commitments are contractual, and therefore, flexible. With all of these factors against them, it is understandable that courts in jurisdictions across the globe have struggled when tasked with making FRAND royalty determinations. The uncertainty and instability amongst courts can put unknowing SEP owners and licensees in a position of speculation. The currently available remedy for FRAND speculation seems to reside only in a practical understanding of how recent courts have acted so that future decisions can be made based on the most recent information presently obtainable.
This law review note seeks to enable SEP owners and licensees to remedy FRAND speculation by providing “A Fair, Reasonable, and Non-Discriminatory Review of Recent FRAND Royalty Determinations.”
A Step Toward Electoral Reform
By Ryan Rieker, J.D. ‘21
In 2002, President George W. Bush signed the Help America Vote Act (HAVA) into law. HAVA was at least partially enacted in response to the 2000 U.S. presidential election, culminating in the infamous Florida Recount, in which thousands of ballots were disqualified because they had either registered no votes or had registered multiple votes when tallied after the polls. The goals of the Act seemed straightforward: distribute federal funds to States to replace punch card and lever-based voting machines with electronic voting machines, establish the Election Assistance Commission to aid in the management of federal elections, and establish minimum election administration standards for the State and local governments responsible for the administration of federal elections. However, these changes in the voting process introduced an increased level of complexity, and the dangers mitigated by the passage of the Act gave way to a host of new problems for the election process in the ensuing years.
In 2018, the Select Committee on Intelligence for the U.S. Senate published a two-volume report confirming Russian interference in the 2016 U.S presidential election. This interference targeted many facets of the political sphere in the U.S., including social media, voter databases, and at least one major vendor of election systems and voting machines. While many of the specific details of the attack are redacted, vulnerabilities and flaws with the way electronic voting machines are designed, secured, and managed have been well documented by various experts over the years, and many agree that reform is needed to correct these issues, lest they occur again.
One such hurdle for reform in the election process is the current way in which these vendors may rely on trade secret law to muddy investigation and inquiry into their internal systems, limiting or delaying potential change. This hurdle exists at both the federal and state level. For example, in early 2019 the North Carolina State Board of Elections was met with resistance from several vendors who were reluctant to share even their list of owners, citing trade secret protection. This article will examine the current trade secret regime upon which these companies rely and propose a new structure of reform with the goal of implementing a system of review to balance the interests of the vendors and the public good.
Exploring New Hampshire’s Recently Enacted “Right to Privacy” State Constitutional Amendment
By Nicholas Tella, J.D. ‘21
Technological advancement has made it easier and cheaper than ever for governments to obtain personal and private information about its citizens, which can be used to create a comprehensive portrait of the entire person's life that includes extensive information on past, present, and even future behavior. This information can be obtained through both the private and the public domain, such as through sources available online, collected from non-investigatory state programs, public surveillance, or aircraft both manned and unmanned. This rapid advance in technological advancement has left the ordinary citizen vulnerable to expansive and intrusive government surveillance.
Constitutional protections for rapidly advancing surveillance are lacking. There are some protections under the criminal search and seizure doctrine that protect personal and private information; however, it falls short. The current search and seizure doctrine, which requires first that the individual subject to the governmental intrusion to subjectively believe that the behavior is a violation of their expectation of privacy, and second, society must recognize the expectation of privacy as reasonable, fails to protect private or personal information for two reasons.
Firstly, the reasonable expectation of privacy framework is viewed by many scholars as ineffective in protecting from modern surveillance. Under the traditional structure, determining whether an expectation of privacy is reasonable is left to the intuition of the respective Court. However, aspects of a person that now–because of modern technology–convey very private and intimate details are presumed not to be protected, such as information derived from facial recognition technology.
Second, under this framework, the “reasonable expectation of privacy” test does not attach to information that is purportedly shared with third parties. Therefore, making it so that investigations of records that contain personal or private information regarding an individual can be explored without being considered a search and triggering constitutional protections. In effect, because of the nature of the modern world we live in where vast information concerning a person is stored by third parties, such as in the cloud, the government can search almost whatever it wants whenever it wants.
In response, State Legislatures in conjunction law professors in New Hampshire worked to draft and pass in the General Court a “Right to Privacy” constitutional amendment that protects privacy–not in some ethereal way dependent entirely on judicial intuitions–but in a positive law way in guaranteeing that “[a]n individual's right to live free from governmental intrusion in private or personal information is natural, essential, and inherent." The citizens of the State of New Hampshire then approved this “Right to Privacy” amendment in an overwhelming majority. The Privacy Amendment, codified in the New Hampshire Constitution Part 1 Article 2-b is broad in protecting citizens from surveillance and data gathering technology that exists now, and which will come to exist in the future; by creating a separate constitutional right distinct from the search and seizure doctrine. Nevertheless, the primary attention of this note is defining what is personal or private information concerning Article 2-b; and what Article 2-b’s impact is on investigative activity that intrudes on personal or private information, particularly focusing on its effects on the “third-party doctrine.”