AIPLA Electronic and Computer Law Committee Meeting

AIPLA Electronic and Computer Law Committee Meeting Jay Thomas Georgetown University Law Center October 23, 2008

Syllabus • Licensing Issues Post-Quanta • The Short-Term Future of Section 101 Jurisprudence

Why did the Supreme Court grant cert in Quanta? • Other than slam dunk reversal of Federal Circuit, does not fit pattern of recent Supreme Court cases • Standards versus Rules • Restoral of Supreme Court hegemony • Most important holding is very narrow • Court might have said that patent proprietors cannot contract around exhaustion at all • Compare Brulotte v. Thys, 379 U.S. 29 (1964) • Why not a DIG?

Implications of Quanta • Increased licensing fees for manufacturers • To substitute for inability to capture rents from downstream users • Better policy as manufacturer likely possesses greater ability to assess value of the patented invention

Implications of Quanta • Targeted Licensing • May the patent proprietor choose to extract rents from downstream users? • One strategy: ignore the manufacturer • Another: grant a royalty-free license to the manufacturer

Questions Quanta Does Not Answer • Does the order the licenses were granted matter? • In Quanta • (1) LG licenses Intel • (2) LG then attempts to enforce its rights against Quanta • Suppose the order is reversed—would the result in Quanta change?

Questions Quanta Does Not Answer • The licensing of seeds for use in a single growing season • The Federal Circuit has repeatedly upheld Monsanto’s bag tag provisions and found farmers in breach of contract • Implications for patented genetic technology and research tools

In combination with MedImmune • LEE usually possesses option to bring DJ for invalidity • Trick is to discourage LEE litigation without violating competition law • Increased royalty rate if LEE loses challenge • LEE must pay LOR’s expenses during challenge • LOR must give LEE advance notice of challenge • Challenges for future drafters

The Short-Term Future of Section 101 Jurisprudence • Bilski looms • Pattern of Supreme Court precedent • Reject rules established by Federal Circuit in favor of broader standards or Supreme Court jurisprudence • LabCorp signals some dissatisfaction • Federal Circuit responds • Egyptian Goddess • Future may well be the past

Judge Giles S. Rich, Principles of Patentability (1960) • “Section 101, entitled “Inventions patentable,” enumerates the categories of inventions subject to patenting. Of course, not every kind of invention can be patented. Invaluable though it may be to individuals, the public, and national defense . . .

Judge Giles S. Rich, Principles of Patentability (1960) • “the invention of a more effective organization of the materials in, and the techniques of teaching a course in physics, chemistry, or Russian is not a patentable invention because it is outside of the enumerated categories . . . . Also outside the group is one of the greatest inventions of our times, the diaper service.”

Issues Going Forward • How to deal with nominal hardware • Ambiguity of Diamond v. Diehr • Invention as a whole vs. • Wariness of insignificant post-solution activity • Return of Parker v. Flook? • Forum Shifting • Legislation: Industry-specific patent-free niches or broad carveouts? • Tax strategies • Check 21

AIPLA Electronic and Computer Law Committee Meeting