An Unacceptable Threat to Startups and Innovators from Our Patent System
| Author | Scott F. Partridge |
| Position | Scott F. Partridge is chair of the ABA Section of Intellectual Property Law. He is a partner at Baker Botts LLP in Houston, Texas. He can be reached at scott.partridge@bakerbotts.com. |
| Pages | 3-62 |
Published in Landslide® magazine, Volume 10, Number 6, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Perspective
Unpredictability, uncertainty,
and ambiguity are some of the
expected risks for any startup,
innovator, and new business. But an
unexpected source of additional risk
exists today due to the uncertainty and
ambiguity in the law of patent eligibil-
ity. That additional risk is not a fair,
appropriate, or acceptable addition to
the normal business risks that innova-
tors and their investors expect to face
in introducing new technologies to the
marketplace. The existing law on pat-
ent eligibility is neither predictable
nor certain, and in fact the ambiguity
that results is harmful to the long-term
health of the patent system.
Over the last several years, the
problem has persisted and arguably
grown unabated. The judicial system
has seemed unwilling or perhaps
incapable of xing the precedent that
has created ambiguity and uncertainty,
and the legislative system has so far
opted to duck rather than to confront
this serious weakness in the U.S. patent
system. Legislators, fearful of taking
any political heat, appear to say, “come
to us with a solution that is acceptable
to everyone who uses the system, and
we’ll x it.” And this precursor in
turn invites those beneting from the
current system to easily block any
progress toward a solution.
Understanding the path to today’s test
for patent eligibility must begin, as many
U.S. legal precepts do, with its roots in
English law. In addressing a basic sci-
entic principle in Househill Co. v.
Neilson (1843), the House of Lords
(the ultimate authority in English law
at the time) stated that “if the principle
is stated to be applicable to any special
purpose, so as to produce any result pre-
viously unknown, in the way and for the
objects described, the patent is good.”
Other expressions in Househill make the
same point that if the invention claimed
is directed to a special purpose or result,
then the subject matter is of a type rec-
ognized by patent law.
In the early days of Supreme Court
precedent, the Court arguably took an
approach in O’Reilly v. Morse (1853)
similar to Househill. The Morse case
essentially claimed the use of elec-
tromagnetic energy to cause printing
(preferably at a distance). Here the
Supreme Court found Morse’s claimed
invention “too broad” and thus void.
The Supreme Court characterized the
patent statute as follows:
Whoever discovers that a certain
useful result will be produced, in
any art, machine, manufacture, or
composition of matter, by the use of
certain means, is entitled to a pat-
ent for it; provided he species the
means he uses in a manner so full
and exact, that any one skilled in
the science to which it appertains,
can, by using the means he species,
without any addition to, or subtrac-
tion from them, produce precisely
the result he describes. And if this
cannot be done by the means he
describes, the patent is void. And if
it can be done, then the patent con-
fers on him the exclusive right to use
the means he species to produce
the result or effect he describes, and
nothing more.
The Court characterized Morse’s
claim as being so broad that he “[did]
not conne his claim to the machinery
or parts of machinery, which he speci-
es; but claims for himself a monopoly
in [electromagnetism’s] use, however
developed, for the purpose of print-
ing at a distance.” Also, the Court noted
that such a claim would grant to Morse
ownership of future “new discoveries
in the properties and powers of electro-
magnetism which scientic men might
bring to light.” Thus, the Court found
against Morse because the breadth of his
claim would entitle him to “an exclu-
sive right to use a manner and process
which he has not described and indeed
had not invented, and therefore could not
describe when he obtained his patent.
The Court is of opinion that the claim is
too broad, and not warranted by law.”
In effect, this was the beginning of
the Court’s concern about patent claims
written so broadly that those claims
would enable the patent holder to pre-
empt any and all uses by others of a
basic principle of science. Indeed, in
the following 150+ years the philo-
sophical underpinning of the Supreme
Court’s jurisprudence on patent eligi-
bility has consistently been expressed
as the avoidance of preemption of a
basic principle of science (subsequently
characterized as laws of nature, natural
phenomena, and abstract ideas).
Today, Househill’s simple statement
of a basic patent eligibility test has now
been largely lost in the evolution of the
current convoluted, complicated, and
arguably intellectually weak tests for
patent eligibility.
No patent lawyer would ques-
tion whether patent protection should
be allowed to cover raw, fundamen-
tal concepts of science, such as gravity
or relativity, or even abstract thought or
ideas (as contrasted with ideas expressed
in concrete or physical terms). No seri-
ous person could contend that the laws
of the universe exclusively belong to him
or her for even a limited duration absent
the identication and claim for a practical
use thereof. So, it is truly remarkable that
ScottF. Partridge is chair of the ABA Section of Intellectual Property Law. He is a partner
at Baker Botts LLP in Houston, Texas. He can be reached at scott.partridge@bakerbotts.com.
By ScottF. Partridge
An Unacceptable Threat to Startups and Innovators from
Our Patent System
Continued on page 60
™
Volume 10 • Number 6 • July/August 2018
7 The IP Practitioner’s Guide
to Working with Startups
Practitioners should approach a startup’s legal issues with exibility
and offer holistic counseling that considers the startup’s market, nancial
position, and business goals.
By Natalie Alfaro Gonzales and Steve Maule
12 When New Entrepreneurs Navigate Intellectual
Property: IP Matters That Really Matter in
University-Based Venture Incubators
University venture incubators present interesting IP challenges resulting from
the student-university relationship, highlighting the importance of establishing
who is the inventor, the terms of any agreements, and what licenses are granted.
By Alvin Benjamin Carter III
16 Starting Up Right: Common Pitfalls Startups
Can Avoid in Copyright Law
To protect their business assets and avoid the risk of litigation, startups are well
advised to own or lawfully acquire the IP rights to the business model or content
they use, instead of borrowing from another’s intellectual property.
By Giselle Girones
20 Personal Trainers for Tech
Startups: IP Considerations at
Different Growth Stages
Attorneys who counsel high-tech startups
without considering their respective
stages of growth risk giving the wrong
advice at the wrong time.
By Kelly G. Hyndman
Columns
1 Perspective
An Unacceptable
Threat to Startups and
Innovators from Our
Patent System
By Scott F. Partridge
5 Proles in IP Law
Rob Law
By Rupert Knights
55 Decisions in Brief
By John C. Gatz
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Published in Landslide® magazine, Volume 10, Number 6, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
34 Trademarks Are Not Intellectual
Property in Bankruptcy Cases, So
Circuits Are Split on What Happens
upon Rejection of Trademark
Licenses
In the Seventh Circuit, a debtor’s rejection of a trademark
license does not limit the licensee’s right to assert some rights
to the trademark. But in the First and Fourth Circuits, the
licensee’s rights in the trademark are categorically transformed
upon rejection, leaving it with merely an unsecured prepetition
claim for damages.
By John R. Knapp, Jr.
39 Tax Basics of Intellectual Property
U.S. federal tax considerations over the life cycle of
intellectual property are numerous and depend upon several
factors, including whether the intellectual property was self-
created or acquired, and whether the taxpayer’s objective is to
use the intellectual property in a business or transfer it through
a license or sale.
By Elizabeth V. Zanet and Stanley C. Ruchelman
44 An Inside Look at a Rising Brand’s
Global Fight against Infringers
Despite the abundant infringements that thrive around the
world in today’s fast-paced, electronic business landscape,
proactive brand protection and a positive attitude can help
grow a startup into a global brand.
By Charles Chen
48 Data Privacy and Cybersecurity in
M&A: A New Era
Changes in the cybersecurity and privacy landscape have
resulted in U.S. and foreign legislative and regulatory
measures and increased diligence in M&A transactions.
By Daniel Ilan, Emmanuel Ronco, and Jane Rosen
26 Corporate and Intellectual
Property Considerations for
Startups Seeking Venture
Capital Funding
As intellectual property may be a startup’s most
valuable asset, IP issues should be considered when
the company is formed, when it seeks to raise money
from outside investors, and when it enters into key
agreements.
By Chris Sloan and Emily Brackstone
31 Adventures in the Microverse:
A Solo Practitioner’s Learning
Experiences in a Post-AIA World
The America Invents Act’s micro entity pricing
structure has made it possible for micro entity inventors,
as well as their “micro” patent attorneys, to participate
in the patent process.
By Justin D. Cotton
Pg. 7
Pg. 48
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