Wednesday, May 2, 2007

Vonage Asks for a Retrial

Finally, some common sense has made its way into the patent system in the United States. In the recent supreme court decision KSR v. Teleflex, the Supreme Court tore into the US Court of Appeals for the Federal Circuit for their obviousness test for patents...or almost complete lack thereof.

The patented technology was "a mechanism for combining an electronic sensor with an adjustable automobile pedal so the pedal's position can be transmitted to a computer that controls the throttle in the vehicle's engine". In other words, the patent holder received a patent on combining two pieces of pre-existing technology, neither of which was created by the patent holder. Teleflex, the owner of the patent, accused KSR of infringing on the patent, and KSR counted that "claim 4 was invalid under the Patent Act, 35 U. S. C. §103, because its subject matter was obvious". In other words, KSR claimed that the patent was so blatantly obvious as to be invalid and unenforceable.

In the ruling, the Supreme Court found that "The results of ordinary innovation are not the subject of exclusive rights under the patent laws... Were it otherwise, patents might stifle rather than promote the progress of useful arts". Essentially, the Supreme Court found that the Federal Circuit's standards for patent validity were far too lax.

Which brings us to Vonage. Verizon recently sued Vonage, accusing the VOIP phone service provider of infringing on 5 of its patents. A jury trial found that Vonage had infringed on 3 of the 5 patents, despite the patents being of dubious validity and certainly far from innovative. An injunction was later imposed on Vonage, with Vonage later winning a stay against enforcement.

Vonage has now asked the US Court of Appeals to vacate the original ruling and retry the case, this time employing the new, more rigid, standards imposed on the lower courts by the Supreme Court decision. Hopefully, the case will be retried and Verizon's patents will be invalidated.

It is ridiculous cases like these that highlight the need for patent reform. Patents, much like copyrights, were originally intended to advance the arts and sciences, and unofficially, to protect the little guy from the big guy (preventing large manufacturers from ripping off the ideas of individual inventors or small companies). Now, the outrageous costs of both filing for patents and defending against patent infringement lawsuits (in the millions of dollars), the fact that massive corporations are amassing thousands upon thousands of patents and the ridiculously low standards for patent validity imposed by the USPTO have resulted in patents being used as an anticompetitive weapon to keep the little guys out of the market. This is precisely what happened in this case when Verizon went for Vonage's jugular simply because Vonage posed a competitive threat (last time I checked, capitalism is supposed to encourage competition), and without reform, it will continue to happen.


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