Archive for the ‘Internet law’ Category

33 Months for Moviehouse Copyright infringer

26 Aug

Consider this interesting case from the UK where a copyright pirate was sentenced to 33 months in jail for downloading Fast & Furious 6 from the back of a moviehouse and then posting it where it was downloaded 700,000 times.


Amazon’s Domain Name Troubles Threaten ICANN Program

07 Aug

Corporate counsel are attacking ICANN for backtracking on the gTLD program and changing the rules to disallow famous trademarks as domains if countries claim rights. Rejecting .amazon and .patagonia makes corporations wonder if seeking gTLDs is viable. A corporate boycott of ICANN’s gTLD program is brewing that could derail the program.

See Corporate Counsel article on this.


ICANN approves new top level domains & awareness campaign

05 Jul

On 20 June 2011, ICANN’s Board approved a program that will add to familiar top-level domains such as .com, .org, and .net, the possibility of having almost any word in any language as a top-level domain. This massive expansion of the number of possible domain names calls for an equally significant communications campaign to raise global awareness about the program. The rest of 2011 is a communications period dedicated to raising awareness around the world about the opportunity and risks associated with applying for a new gTLD. The Application period opens 2012-01-12 and will run for 90 days (until 2012-04-12), and the evaluation fee is set at $185,000, with approximately a one-year approval cycle.  This is sure to raise a number of trademark battles and be an expensive new vanity asset for organizations, particularly multi-national corporations.

IP attorneys need to be advising their corporate clients about this, so steps can be taken to protect corporate tradenames and trademarks.

For information, see the ICANN new gTLD FAQ sheet

For those interested in possibly applying there is an Applicant’s Guidebook.

ICANN has issued a request for proposals (RFP). The objective of the RFP is to retain an advertising agency to help ICANN develop, implement and measure the success of a global advertising and awareness campaign for new generic top-level domains (new gTLDs), stating:.

“Please review the attached RFP for an overview of the program, our vision and proposal requirements. Send any questions about the RFP to by 11 July 2011. Responses to inquiries will be posted to a community wiki by 13 July 2011. All responses are due by 8:00a Pacific time, Monday, 18 July.

RFP – New gTLD Global Awareness Campaign [PDF, 633 KB]”



Twitter loses long-shot venue challenge

03 Jul article 2011/07/23

Twitter Tries To Move Patent Trial By Saying All Twitter Users Agree To Settle Legal Disputes On Twitter’s Home Turf

from the nice-try,-but-no dept

It’s no secret that patent holders suing for infringement prefer certain venues. And, many tech companies based in the Bay Area like to try to get those cases moved to a local court instead. There’s been some efforts to move cases to better locations, but thanks to some tricky games, lawyers can frequently keep the cases where they were filed.

Apparently Twitter thought that it might try some tricky lawyers’ games of its own to get one case transferred. The company tried arguing that because the patent holder, Dinesh Agarwal, who was suing them was also a Twitter user, it meant he’d agreed to Twitter’s terms of service… which state that all lawsuits against the company must be brought in San Francisco. That’s pretty clearly a tortured reading of the Terms of Service, because this lawsuit had nothing, whatsoever, to do with Agarwal’s use of the service… and the judge didn’t buy it, allowing the case to continue in Virginia, where it was filed. As the judge noted, agreeing to this “would potentially foster satellite litigation in every patent case involving a social networking market participant,” basically guaranteeing that such lawsuits could only be brought where social networking companies wanted them to be brought.

Burdlaw comment: This suit was pursuant to patent laws not Twitter service to Agarwal. First, the plaintiff was VS Technologies, which did not have a Twitter account and was not created until after Agarwal got a Twitter account, so the Judge found that VS Technologies could not have agreed to the TOS. Hard to dispute that. Second, the suit was not about Twitter’s service to Agarwal, but rather Twitter’s adoption of items covered by the VS Technologies patent. Third, if TOS trumped patent law choice of forum, a patentee suing multiple social networks would generate satellite lawsuits in each network’s TOS forum choice, rather than in one multi-defendant case in one jurisdiction before one judge, and judicial efficiency favors one case rather than an unlimited number when the issue is essentially the same. Hard to dispute that logic. Fourth, in this case the balance of convenience appeared to be either equal or favoring non-transfer. That balance is for the Court to determine, not Twitter. Fifth, Agarwal’s undisputed testimony was his Twitter account was only obtained in order to gather evidence for the suit, not to use the service. Sixth, the USDC-VA-E has a faster docket (it is one of the famous rocket docket jurisdictions for patent cases), and that was a minor factor favoring non-transfer to USDC-CA-N. Not mentioned was the real reason, which the Judge well knows, that the USDC-VA-E is much more pro-plaintiff than the USDC-CA-N so the plaintiff wants it to stay at the USDC-VA-E and Twitter, the defendant, wants it the hell out of there and into a more anti-patent forum like the USDC-CA-N. If Twitter were the patent owner and VS Technologies the defendant, Twitter would be arguing the other way, namely to keep the case there. All in all, this was a real legal stretch by Twitter, indicating desperation. Expect Twitter to try to settle this one.


facebook now playing the patent game?

30 Jun


Objective analysis of HR 1249 America Invents Act patent reform (S23 modified)

23 Jun

HR 1249 is cleared to go to the floor, with the sell-out (“compromise”) of fee-diversion whereby fees are diverted to a “pool” for possible appropriations to other programs.  Is there anyone who thinks that pool will not be tapped for earmarks or other appropriations.  Since when has Congress ever left a pool of Federal money untapped?  No, Congress lives hand to mouth and then robs any such pool and even writes hot checks if that is not enough, which it never seems to be.  In short “fee retention” has been unwisely sacrificed in order to get unwise conversion to job-killing First to File through so big business and foreigners can kill small American inventors.  Now that it is headed to the house floor for probable passage, let’s tally up the good and the bad, the pro-small business/small inventor/start-up and the pro-big business aspects of the bill.  It is pretty ugly, but here it is:[with editorial comments]

America Invents Act – (Sec. 3) Amends federal patent law to define the “effective filing date” of a claimed invention as the actual filing date of the patent or the application for patent containing a claim to the invention (thus replacing the current “first inventor to use” system with a “first inventor to file” system), except as specified. Requires the effective filing date for a claimed invention in an application for reissue or reissued patent to be determined by deeming the claim to the invention to have been contained in the patent for which reissue was sought. [Favors the bigs, so Bigs & Foreigners 1, Small Guys 0]

Establishes a one-year grace period (a prior art exception) for inventors to file an application after certain disclosures of the claimed invention by the inventor or another who obtained the subject matter from the inventor. Revises provisions concerning novelty and nonobvious subject matter (commonly referred to as conditions for patentability). [Favors the bigs, so Bigs & Foreigners 2, Small Guys 0]

Repeals provisions relating to inventions made abroad and statutory invention registration. [Favors the bigs, so Bigs & Foreigners 3, Small Guys 0]

Permits a civil action by a patent owner against another patent owner claiming to have the same invention and who has an earlier effective filing date if the invention claimed by the earlier patent owner was derived from the inventor claimed in the patent owned by the person seeking relief. Requires such an action to be filed before the end of a specified one-year period. [This is the resurrection of Section 5 of the 1790 Act, but only if the true and original inventor has filed within one year of the big business invention thief.  Since applications are not published until a year & a half, this needs to be 2.5 years, not 1 if it is to really give a year, so it is completely ineffective to accomplish the objective, and favors big business.  Favors the bigs, so Bigs & Foreigners 4, Small Guys 0]

Sets forth derived patent provisions. Replaces: (1) interference proceedings with derivation proceedings, and (2) the Board of Patent Appeals and Interferences with the Patent Trial and Appeal Board (the Board). [Derivation proceedings will be very costly, so only bigs can afford them. Favors the bigs, so Bigs & Foreigners 5, Small Guys 0]

Requires reports from: (1) the Small Business Administration (SBA) on the effects of eliminating the use of dates of invention in the patent application process, particularly on small businesses; and (2) the U.S. Patent and Trademark Office (USPTO) on the operation of prior user rights in selected countries in the industrialized world. [Neutral, it is only a report not any legislation.  Congress is free to and, if the current bill is any indication, simply ignore anything favors the small guy. Strongly favors the bigs, so Bigs & Foreigners 6, Small Guys 0]

Directs the Comptroller General (GAO) to submit a report on the consequences of litigation by non-practicing entities, or by patent assertion entities, related to patent claims under specified federal patent laws and regulations. [Again, simply a report, but since it is GAO, it will arguably be relatively impartial.  Thus a neutral provision, so still Bigs & Foreigners 6, Small Guys 0]

Expresses the sense of Congress that converting from a “first inventor to use” to a “first inventor to file” patent registration system will: (1) provide inventors with greater certainty regarding the scope of protection, and (2) promote international uniformity by harmonizing the U.S. patent registration system with systems commonly used in other countries with whom the United States conducts trade. [Tries to use “sense of Congress”, an oxymoron, to combat strong language from Supreme Court suggesting possible unconstitutionality. Falsely implies that downgrading to the inferior systems of other countries is good for the US due to “uniformity” and “harmonization”. Will we next have adoption of Sharia law for “uniformity and harmonization” with Islamic countries. Strongly favors the bigs, so Bigs & Foreigners 7, Small Guys 0]

(Sec. 4) Modifies requirements regarding the oath or declaration required of an inventor.

Allows a person to whom an inventor has assigned (or is under an obligation to assign) an invention to make an application for patent.

[There you go, big business can avoid even negotiating with the true and original inventor and file on its own behalf for a patent instead of the true and original inventor – or false and not original lying dog inventor. This promises to be the death of University patent rights and the death of employee patent rights. Very strongly favors the bigs, so much so that we give two points to bigs. Bigs & Foreigners 9, Small Guys 0]

(Sec. 5) Modifies the earlier inventor to file defense to infringement by: (1) eliminating provisions that limited the defense to business methods, (2) applying the defense to commercial uses of the subject matter of a patent in the United States, (3) removing an existing definition of the applicable effective filing date, (4) specifying that the subject matter must be reduced to a practice and commercially used at least one year before the effective filing date, and (5) prohibiting such a defense for certain derived patents or disclosed inventions excepted from prior art when the commercialization date is less than a year before such disclosure. [Expands prior user rights to all patents. This is a Big Software provision seeking to correct a bad legal strategy that backfired.  Big Software chose trade secrecy over patents to protect their software and now wants to avoid liability for infringement of patents to other later inventors who did not suppress and conceal those inventions, particularly small businesses and Universities.  Very strongly favors the bigs, and so much so that we give the bigs two more points. Bigs & Foreigners 13, Small Guys 0]

(Sec. 6) Allows a person who is not the patent owner to request to cancel as unpatentable one or more claims of patent by filing a petition with the U.S. Patent and Trademark Office (USPTO) to institute: (1) post-grant review on any ground that could be raised under specified provisions relating to invalidity of the patent or any claim, and (2) inter partes review (replaces inter partes reexamination procedures) on specified novelty and nonobvious subject matter grounds based on prior art consisting of patents and printed publications. [Favors the bigs, who can afford to defend these proceedings and not the small guys who cannot afford these proceedings, so Bigs & Foreigners 14, Small Guys 0]

Limits the filing of petitions for post-grant review to the one-year period beginning after the grant of patent or issuance of a reissue patent. Requires any petition for inter partes review to be filed after the later of: (1) one year after the grant or reissue, or (2) the date of termination of a post-grant review. [Favors the bigs, as these are sophisticated limits that small guys not familiar with the patent system cannot be expected to understand, but which the patent attorneys on staff at the Bigs will know in use to crush small guys. Bigs & Foreigners 15, Small Guys 0]

Directs the USPTO to make public data available on the length of time between the institution of, and issuance of a final written decision for, each post-grant and inter partes review. [Favors the bigs, as this is only a report not any requirement for action, so Bigs & Foreigners 16, Small Guys 0]

Prohibits the USPTO Director (defined as the Under Secretary of Commerce for Intellectual Property and USPTO Director) from authorizing: (1) inter partes review unless the petition shows a reasonable likelihood that the petitioner would prevail with respect to at least one of the challenged claims; or (2) post-grant review unless information in the petition, if not rebutted, would demonstrate that it is more likely than not that at least one of the challenged claims is unpatentable, or unless such petition raises a novel or unsettled legal question important to other patents or applications. [Makes the proceedings complicated in order to favor the bigs, so Bigs & Foreigners 17, Small Guys 0]

Disallows: (1) post-grant review and inter partes review if the petitioner (or real party in interest, or privy) has filed a related civil action before filing the petition, and (2) inter partes review if the petition is filed more than one year after the petitioner is served with a complaint alleging infringement. Prohibits the petitioner from asserting claims in certain proceedings before the USPTO and International Trade Commission (ITC) and in specified civil actions if such claims were raised or reasonably could have been raised in the respective reviews that result in a final Board decision. [Another sophisticated and complex provision, which as such, favors the bigs, since the small guys cannot be expected to know if this while the Biggs will use it, so Bigs & Foreigners 18, Small Guys 0]

Allows any person, at any time, to cite to the USPTO: (1) prior art bearing on the patentability of a claim, and (2) statements of the patent owner filed in a proceeding before a federal court or the USPTO in which the patent owner took a position on the scope of any claim of a particular patent. Requires, on written request of the person citing prior art or written statements, that that person’s identity be kept confidential.

[A real shot in the gut to small business, independent inventors and Universities, allowing virtually unlimited numbers of ANONYMOUS challenges both before and after allowance of the patent. Big business can afford this, but it’s no surprise that small guys cannot. Big business will love this provision and it will be the death of patent enforcement by underfunded small inventors and Universities. This is a killer to the small guys, worth another two points for the Bigs. Bigs & Foreigners 20, Small Guys 0]

(Sec. 7) Sets forth the Board’s required composition and duties. Allows appeals to the U.S. Court of Appeals for the Federal Circuit (CAFC) from specified Board decisions, including examinations, reexaminations, post-grant and inter partes reviews, and derivation proceedings. [If you are a big business, you want the proceedings to be appealable so that they can go on endlessly at great expense while delaying any award of patent damages and thus bury the small guy in expenses with no income, so Bigs & Foreigners 21, Small Guys 0]

(Sec.8) Allows any third party to submit any publication of potential relevance to a patent application (commonly referred to as preissuance submissions). [Guess who’s going to be submitting such stuff! Not the small guy. Favors the bigs, so Bigs & Foreigners 22, Small Guys 0]

(Sec.9) Changes appeals of USPTO decisions from USDC-DC to USDC-ED-VA.  [Neutral in effect.  This is logical since the USPTO is actually located in Alexandria, VA rather than in DC and the USDC-VA-E has recognized expertise in patents, is generally pro-patent and has a fast docket.  Appeals are likely to get resolved quicker.  However, this added burden on the USDC-VA-E may slow down the handling of patent infringement cases due to the added number of appeals from USPTO decisions. Still Biggs & Foreigners 22, Small Guys 0]

(Sec. 10) Authorizes the Director, for a six-year period and subject to conditions, to set or adjust by rule any fee established, authorized, or charged by the USPTO under specified federal patent and trademark laws. Requires the Director to notify Congress of (and publish in the Federal Register) certain proposed fee changes. [Let’s see, the director of the patent and trademark office is the former patent manager for IBM, so guess who these these he will have authority to independently set will be slanted towards. While he naturally claims he will be neutral, MS, and IBM naturally favor this. If they favor this, you know, it favors the bigs, so Bigs & Foreigners 23, Small Guys 0]

Reduces certain fees to qualified small entities (including fees for prioritized examination of utility and plant applications) and any micro entity. [While, a provision that actually favors the very small inexperienced patent filer, the Bigs were able to water this down with limits that make it generally inapplicable to small business. Still, small business scores its first point, so Bigs & Foreigners 23, Small Guys 1]

Defines the term “micro entity” as a certifying applicant who: (1) qualifies as a small entity as defined in regulations issued by the Director; (2) has not been named as an inventor on more than four previously filed patent applications, as specified; and (3) has gross income below a designated level without having transferred ownership interest in the application to an entity with gross income exceeding such limit. Authorizes the Director to impose income, annual filing, and other micro entity qualification limits under provisions related to public institutions of higher education. [As I told you, these are the strict limitations by which big business makes the micro-entity fees seldom applicable to anyone dealing with patents with any frequency. Favors the bigs, so Bigs & Foreigners 24, Small Guys 1]

Establishes a $400 fee for original patent applications filed non-electronically. [In 1790 this fee was $4 so it is now 10,000% higher, in 1970 it was still under $40 , and  since making patents expensive favors big business and hurts the poor small guy, big fees are made statutory in this big business bill. Favors the bigs, so Bigs & Foreigners 25, Small Guys 1]

(Sec. 11) Sets forth fees for filing, excess claims, examination, issue, disclaimer, appeal, revival, extension, maintenance, patent search, small entity, national fees (for certain international applications), and other specified fees. [Oh yes, big business likes a multitude of these and so does the patent office. The more expensive we can make patents, the better for big business. That’s why it’s in this big business bill. Bigs & Foreigners 26, Small Guys 1]

(Sec. 12) Establishes supplemental examinations to consider, reconsider, and correct information. Requires the Director to order reexamination if a substantial new question of patentability is raised by at least one item of information in the request. [As long as were slanting this toward big business, why not have yet another expensive procedure for small inventors to navigate and which big business will be able to use to steamroll the small guy by driving up expenses? Bigs & Foreigners 27, Small Guys 1]

(Sec. 13) Decreases the percentage of certain invention-related royalties and income that must be paid to the federal government and correspondingly increases the percentage that must be given to small business firms when a nonprofit organization has a funding agreement with the government for the operation of a government-owned, contractor-operated facility. (An existing provision defines the term “funding agreement” as a contract, grant, or cooperative agreement entered into between a federal agency and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the federal government.) [Favors the bigs who are the only ones that ever operate a GOCO plant, but adds a insignificant token teaser for small business so they can disingenuously say it favors small business. Bigs & Foreigners 28, Small Guys 1]

(Sec. 14) Deems any strategy for reducing, avoiding, or deferring tax liability insufficient to differentiate a claimed invention from the prior art when evaluating specified conditions of patentability. [This is just a stupid provision by a patent ignorant senator. If the patent system is desirable to encourage new inventions, why would we want to discourage such inventions just because they relate to tax strategies? Both big business and small business should be opposing this provision, as what stupid special interest will be protected next by excluding that interest from patent protection? Also, while perhaps not unconstitutional, as article 1, section 8, clause 8 of the Constitution is a permissive provision, carving out such special interests provisions greatly supports foreign governments in carving out whatever special interest they may have, such as software or pharmaceuticals that America might want to protect. What a folly!  Bigs & Foreigners 28, Small Guys 1, Idiots 1]

(Sec. 15) Prohibits using a failure to disclose the best mode as a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable. [Favors the bigs, particularly foreigners, who do not have best mode requirements in their native country. Also favors big business so that they can get patent and yet hide the good stuff so that nobody can effectively compete. In fact, this is so pro-big business that it also deserves two points. Bigs & Foreigners 30, Small Guys 1, Idiots 1]

(Sec. 16) Allows virtual markings (markings that direct the public to a freely-accessible Internet address where a patented article is associated with its patent number) to provide public notice that an article is patented. Requires the Director, within three years, to report to Congress on the ability of the public to obtain information from such virtual marking and related legal issues. [In order to avoid liability for mis-marking and the current multitude of qui-tam suits, big business wants to just refer people to a probably non-informative website that can be easily maintained where all of their patent numbers will be listed, probably without any description of what they relate to, in lieu of patent notices.  So what will the reference look like? Probably something like “May be protected by one or more US patents. See www.hidden” And, what will the webpage look like? Space probably something like “Our products may be covered by one or more of the following patents 1,234,567; 1,234,568, 1,234,569, etc. and others pending a yet to be issued, including published patent applications number xx-xxx,xxx; xx-xxx,xxy; xx-xxx,xxz, etc. and others yet to be published.”  That will conveniently force everyone to review every one of the claims of every one of the patents to know if anything is actually covered. For someone like IBM, that would mean merely searching 73,014 patents with a total of about 2 million claims to find out if one of them covers the product. Unless this spells out was specificity on the web notice for each patent number what products are claimed to be covered, so that they can actually be searched in a reasonable time, patent marking will become totally useless when applied to big business. On the other hand, small business listings,which will have only a very few patents, this will make a website available where big business can go quickly and check out patents. So while sounding great, this is a deceptive provision that so strongly favors the bigs, that we have to give them two points. Bigs & Foreigners 30, Small Guys 1, Idiots 1]

Revises provisions addressing false marking actions to: (1) prohibit anyone other than the United States from suing for the applicable penalty, and (2) allow only a person who has suffered a competitive injury to file a civil action for recovery of damages adequate to compensate for the injury. (Current law allows any person to sue for a penalty of $500 for every such offense, in which event one-half is awarded to the person and one-half to the United States.) [Big business wants to put an end to these “qui-tam marking suits”, so that big business can fraudulently leave patent markings without any reasonable exposure to liability for misleading the public, and present a read any reasonable recovery for the damages caused by false patent marking. Bigs & Foreigners 31, Small Guys 1, Idiots 1]

Exempts from false marking liability activity engaged in: (1) during the three-year period beginning after the patent expires, or (2) after that three-year period if the word “expired” is placed before the patent identification on either the article or its virtual marking. [Big business wants another nail in the coffin of patent marking suits, by allowing themselves three years of deliberate faults marking. Big business should know when it’s patents are expiring and schedule the adjustment of their markings appropriately in view of such expirations to avoid misleading the public. This provision would actually allow the idiotic self-contradictory marking “covered by expired patent number x,xxx,xxx; x,xxx,xxy; and x,xxx,xxz”   Nothing is covered by an expired patent, so this is a deliberately faults and misleading statement. Of course big business wants this to avoid liability for such false and misleading statements, but is the public really better served by such a fraud? since there are two escape provisions for big business in this item, we give two more points to big business. Bigs & Foreigners 33, Small Guys 1, Idiots 1]

(Sec. 17) Bars using an accused infringer’s failure to obtain the advice of counsel to prove that any infringement was willful or induced. [Reports are that Microsoft is instructing its engineers to simply not look for conflicting patents, it is understandable why they and other big businesses who do likewise, would want to avoid liability for deliberately ignoring patents. Even though that is willful, this statute would make such willful activity legally not willful. When slanting a bill so heavily toward big business, why let semantics get in the way? Ugggh…Bigs & Foreigners 34, Small Guys 1, Idiots 1]

(Sec. 18) Requires the Director to establish, with specified standards and procedures, a ten-year transitional post-grant review proceeding for reviewing the validity of covered business-method patents (claiming a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except technological inventions). [Sense big business is getting hammered for stealing business method inventions after failing to get the Supreme Court to invalidate all business method patents, they now want to kill them with post-grant review. Enacting this big business provision will single out small business patents on business methods for invalidation by introducing yet another expensive and complex proceeding for small businesses to wade through in order to enforce their patents, even after having to wade through all the other onerous provisions that this bill would add. What big business is really trying to do here is move patent litigation into a long, expensive, and less administrative series of proceedings so that small business can never really get around to enforcing these patents. [not satisfied with merely knocking out future business method patents, big business has added this provision to call into question every previous business method patent and required that they be re-examined. So if you are a small business, you can look forward to thousands of dollars of additional expense. If you have several business method patents, make that many thousands of dollars. Not a problem for big business with multimillion dollar patent enforcement budgets, but a huge problem for the small guys. Bigs & Foreigners 35, Small Guys 1, Idiots 1]

(Sec. 19) Amends the federal judicial code to deny state courts jurisdiction over legal actions relating to patents, plant variety protection, or copyrights. Grants the CAFC exclusive jurisdiction of appeals relating to patents or plant variety protection. Adds procedural provisions regarding joinder of accused infringers in patent cases. [sense small business might have equal footing in a small state court, big business obviously wants to keep any disputes out of such courts and put them into more expensive national courts where big business has a huge advantage. Bigs & Foreigners 36, Small Guys 1, Idiots 1]

Provides for the removal to a U.S. district court of legal actions involving patents, plant variety protection, or copyrights, and for the remand of unrelated matters. [While we are killing the small guy on utility patents, why not also add plant patents and copyrightsspace and “unrelated matters.”? This bill just gets more and more slanted the further you read. Bigs & Foreigners 37, Small Guys 1, Idiots 1]

Requires the CAFC to transfer any appeal concerning designs and unfair competition to the court of appeals for the regional circuit embracing the district from which the appeal has been taken. [Since the CAFC is known to be favorably disposed to enforcement of designs and unfair competition claims, big business would like to move those out of the CAFC into more favorable local forums, such as those downtown courts next to their big business skyscrapers. Bigs & Foreigners 38, Small Guys 1, Idiots 1]

(Sec. 21) Permits the USPTO to pay subsistence and travel-related expenses of persons attending certain USPTO-conducted intellectual property programs who are not federal employees. Authorizes the Director to fix a basic pay rate below a certain level for administrative patent and trademark judges appointed under specified provisions. [Although a minor provision, this provision would allow payment of speaker fees and higher pay for administrative patent and trademark judges. This is one of the few good provisions of the bill and seems to be fairly neutral. Still Bigs & Foreigners 38, Small Guys 1, Idiots 1]

(Sec. 22) Establishes the USPTO Public Enterprise Fund (replaces the Appropriation Account) as a revolving fund available to the Director without fiscal year limitation. [

Requires all fees paid to the Director and all appropriations for defraying the costs of USPTO activities to be credited to the Fund. Requires fees charged or established by the Director to be collected by the Director and available to carry out USPTO activities until expended. Directs fees from specified sources to be deposited in the Fund, recorded as offsetting receipts, and available to cover appropriate expenses. [This is the fund that would be set up as a means to capture all PTO revenue and expenses and make a ready fund available for easy diversion by congressional money grabbers eager to fund earmarks in totally unrelated areas by making inventors pay for them. This is an idiotic provision that will obviously run up patent fees and hurt American inventors of all sizes. So, we have to give another point to the idiots. Bigs & Foreigners 38, Small Guys 1, Idiots 2]

Requires the Director to submit an annual report to Congress including: (1) the USPTO’s operating plan, expenses, and staff levels; (2) long term modernization plans and related progress updates; and (3) the results of an annual independent audit of the USPTO’s financial statements required by this section. Requires the Director to annually: (1) notify Congress of its spending plan, and (2) submit to the President a business-type budget as prescribed by regulation for the federal budget. [This annual report is obviously designed to make the PTO budget subject to annual appropriation again so that PTO fees can be diverted to earmarks. Chalk another one up to the idiots. Bigs & Foreigners 38, Small Guys 1, Idiots 3]

(Sec. 23) Requires the Director, within a three-year period using specified criteria, to establish at least three U.S. satellite offices for the USPTO and submit a related report to Congress. [The first such office has been designated for Detroit, Michigan. This is a good provision that should make the PTO more accessible to those not located in the weird world of Washington, DC and environs. It should help big business and small business alike, so is considered neutral. No points. Still Bigs & Foreigners 38, Small Guys 1, Idiots 3]

(Sec. 24) Designates the satellite office to be located in Detroit, Michigan, as the “Elijah J. McCoy United States Patent and Trademark Office.” [So the Detroit office becomes an earmark. Assuming that Elijah J. McCoy is a deserving fellow, this would seem to be neutral. Still Bigs & Foreigners 38, Small Guys 1, Idiots 3]

(Sec. 25) Requires the Director to establish a Patent Ombudsman Program using available resources. [Although the Ombudsman has thus far proven more just a token than anything of substantial benefit to small inventors, this is presumably more favorable to small inventors than big business, so we finally get another point for the small guy. Bigs & Foreigners 38, Small Guys 2, Idiots 3]

(Sec. 26) Authorizes the USPTO to establish regulations providing, at the request of the applicant, prioritized examination of applications for products, processes, or technologies important to the economy or national competitiveness without recovering the aggregate extra cost of providing such prioritization. [Gets to will be getting these priority designations? It’s unlikely the small guy will even know they exist, let alone want to pay the extra price that will be exorbitantly set for such a request. This heavily favors big business in order to allow them to jump the priority of their applications over those of the small guys. Now big business is back on its roll. Bigs & Foreigners 39, Small Guys 2, Idiots 3]

(Sec. 28) Requires the Director, within four years, to submit a report to Congress assessing federal patent policies, the implementation of this Act, competitiveness of U.S. markets, and access to capital for investment by small businesses. [Well, this only requires a report which can be, and with competent big business lobbying will be, ignored. Noticed that the report is to be provided by the Director. Again, we point out the fact that the Director of the PTO is the former Director of the IBM patent program. Perhaps the Leopard can really change its spots, but there is at least a reasonable doubt that such will occur. In fact, the report could be damaging to small business is slanted to favor big business, as we think the much more lightly outcome will be. So, we have to call this neutral and give no points. Still Bigs & Foreigners 39, Small Guys 2, Idiots 3]

(Sec. 29) Directs the Director to support intellectual property law associations in establishing pro bono programs to assist financially under-resourced independent inventors and small businesses. [This is a token gesture without much substance. Intellectual property law associations, which really means the AIPLA, the IP section of the ABA, and the IP sections of the various state bar associations, are predominantly populated by corporate patent attorneys who represent big business. Corporate patent attorneys are notoriously reticent to do pro bono work since it does not serve to advance their corporate careers to spend time helping small inventors. The author of these comments was a corporate patent attorney for 20 years in a Patent Department of 13 patent attorneys, and not only did none of us do any pro bono work, we were all told specifically not to volunteer, because it might take away from our corporate duties and that would be bad for our careers. Still, this has to be said to be more favorable to small businessmen big business because it now would put a Congressional mandate to help independent inventors and small businesses who are financially under-resourced. So, the small guys now are considered equal to idiots. Bigs & Foreigners 39, Small Guys 3, Idiots 3]

So there you have it, this bill scores out to be so heavily slanted towards big business as to really be unconscionable. Do you favor big business like Microsoft and IBM this heavily? If not, you need to recognize that Microsoft and IBM are contacting their representatives and their lobbyists and have oodles of money available to throw at this legislation.  If you want to have any effect, now is the time to be urgently and loudly contacting your representative in Congress before this horribly slanted big business bill is passed and becomes a new job-killing law and begins stifling small business in America, making the rich richer and the poor poorer, and destroying the economic recovery by killing the jobs that are created by small businesses. And, by all reports, small businesses are currently and historically creating all the new jobs.  You may link to this article in any such effort as



Bruce E. Burdick

Managing Attorney

Owner & Founder, The Burdick Law Firm, Alton, Illinois (near St. Louis, MO)

Registered Patent Attorney since 1974, IP counsel to small inventors and small business for the last 17 years (1994-present)

Formerly Chief Trademark Counsel for Olin Corporation (WINCHESTER® arms & ammunition and Olin HTH® pool chemicals) for 20 years (1974-1994)

President & Founder, The Great Midwest Inventors Club

Member, The Inventors Association of St. Louis

Past Secretary and Past Acting President, Illinois Innovators & Inventors Association

Licensed, US Court of Federal Claims & US Court of Appeals for the Federal Circuit

Member of the State Bars of Texas, Illinois & Missouri

Publisher of the intellectual property portal and burdlaw IP blog



Illinois enacts Internet sales tax – Amazon and Wal-Market jockey for affiliates

11 Mar

Effective immediately, Illinois joins the ranks of states that tax Internet sales of any business that has a physical presence in Illinois. Amazon announces it will cut its affiliation with all current affiliates with a physical presence in Illinois. In a counterattack, Wal-Mart announces it welcomes all former Amazon affiliates to Who wins this depends on whether additional states adopt this type of tax. As states are having hard financial times, it seems to me that Wal-Mart has the better play here, as any Amazon affiliate dropped by Amazon will find this a wonderful opportunity to establish a relationship with Wal-Mart and to perhaps move from just online to online plus store retail in the biggest retailer in the world. More states are likely to adopt this tax, which IL says will generate around $160MM in new revenue.

DETAILS per (reproducing a breaking news report from :

Gov. Pat Quinn signed legislation Thursday to require online merchants with a physical presence in Illinois to collect and remit sales tax.

The controversial law, called the Main Street Fairness Act, means online retailers — including giant Inc. and Inc. — must collect sales taxes on purchases made by Illinois residents as long as the retailer has a physical presence in the state. The law is effective immediately.

The move is expected to have little effect on consumers’ online shopping habits, but deals a blow to small businesses that count the giant retailers as a major source of ad revenue.

Amazon and said they would avoid collecting sales tax by stopping their affiliation with Web site companies in Illinois that direct traffic to Amazon and Ovestock. Under the new law, online retailers are deemed to have a presence in Illinois if they have a contract with an affiliate based in here.

“Illinois’ main street businesses are critical to ensuring our long-term economic stability, which is why they must be able to compete with every company doing business online in Illinois,” said Quinn. “This law will put Illinois-based businesses on a level playing field, protect and create jobs and help us continue to grow in the global marketplace.”

Amazon and Overstock, along with other out-of-state online merchants, have ties to thousands of deal and coupon sites. These so-called affiliate marketing sites typically send potential customers to Amazon and Overstock in exchange for a cut of sales.

Illinois is among a handful of states that have instituted similar laws to extract sales taxes from online merchants and boost depleted state coffers. The Illinois Department of Revenue estimates it misses out on $153 million to $170 million in uncollected sales taxes each year from online purchases. The uncollected taxes of goods sold online and through catalogs totaled $8.6 billion in 2010 nationwide, according to a Wall Street Journal report citing the National Conference of State Legislatures.

The U.S. Supreme Court ruled in 1992 that companies without a physical presence in a state aren’t required to collect state sales taxes. sent a letter to its marketing affiliates in Illinois immediately after the bill was signed into law, notifying the businesses that it will sever ties with them as of May 1 unless the law is repealed or the affiliates move to another state where no such law exists.

“We think that states that do this are making a mistake,” said Jonathan E. Johnson, president of Salt Lake City-based Overstock. “We think this kind of law doesn’t really hurt Overstock that much. The affiliate business can be borderless. If a web shopper is looking for a coupon, they don’t care if they get it from an Illinois-based affiliate or an Indiana-based affiliate.”

Scott Kluth, founder and CEO of Chicago-based, called the new law “deeply disappointing” and said his company is “actively exploring” moving to Indiana.

“It’s a shame we have to consider leaving out longtime home in Illinois, but we will do what is best for our business,” said Kluth.

Rival retailers saddled with brick-and-mortar stores, for their part, cheered the new law.

In the past few weeks, Sears Holdings Corp., Best Buy Co., Barnes & Noble and Wal-Mart Stores Inc., among others, launched the effort to poach disgruntled Amazon affiliates in states the online retailer has threatened to leave.

As the biggest online retail company, Amazon’s ability to avoid collecting and remitting state sales tax has been the envy of brick-and-mortar retailers. Retail margins are so slim, typically less than 5 percent, that not charging sales tax amounts to a price advantage.

Wal-Mart said the new law “will help create a level playing field between online-only retailers and brick-and-mortar retailers.”