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« Tafas v. Doll (Fed. Cir. 2009) | Main | Biotech/Pharma Docket »

March 23, 2009



The ABA proposal is a significant improvement over Kyl's bill, but still doesn't go far enough. Here's my proposal for removing inequitable conduct as the "plague" it is because it is alleged all too often with no facts to support:

1. The "materiality" prong can be proven only if it is shown that one or more patent claims (or the entire patent itself if we're talking an issue like improper inventorship) would not have issued "but for" the deliberate omission or misrepresentation of the alleged "mateial" information.

2. The "intent to deceive" prong requires proof of specific intent or "wanton or reckless disregard" as to the omitted/misrepresented information. So-called "gross negligence" shouldn't be the standard.

3. Completely dump the "sliding scale test." This conflates the "materiality" and "intent to deceive" prongs in a way that's not helpful.

4. Each of the "materiality" and "intent to deceive" prongs must be proven "beyond a reasonable doubt." That will leave inequitable conduct to address only the truly "egregious" instances.

5. Inequitable conduct must be alleged with the particularity required for fraud under FRCP 9.

6. 35 USC 285 and FRCP 11 should be liberally applied to "frivolous" allegations of inequitable conduct.

That's my 2 cents to get this "plague" put back in the bottle, and to get back to judging patents on the merits.

It came as no surprise that Senate Minority Whip Jon Kyl (R-AZ) has recently introduced HIS latest Patent Reform Act (S610) a copycat of his last version to the bill he proposed last September (S3600) in the wake of the failure of the other patent reform bill then pending in the Senate..
It again includes a "Check 21" exception (sec. 13,): "With respect to the use by a financial institution of a check collection system that constitutes an infringement under subsection (a) or (b) of section 271, the provisions of sections 281, 283, 284, and 285 shall not apply against the financial institution with respect to such a check collection system."
Although a small Technology Company named Data Treasury and its patents were NOT specifically mentioned, the intent of the exception is aimed directly at Data Treasury and its on going litigation against the banking industry for infringing upon its "Check Collection" remote image capture technology.

If passed, the exception would shift the financial responsibility for infringement to the American Taxpayer. Billions of dollars in taxes would be passed on to us in the name of (honesty and justice). The U.S. Commerce Department has recently objected to this type of legislative provision. Such a law would pave the way for Congress to start interfering in legal cases on behalf of the highest bidder. The Commerce Department -- the parent agency of the Patent and Trademark Office -- also pointed out that "limiting patent holders' rights and remedies in this instance could reduce innovation in the technology area." In other words, revoking someone's property rights affects not only the disenfranchised property holder but also the next round of inventors. In this instance, moreover, Congress would be sending the bill for the bailout to us -- the taxpayers. All this makes for quite a lobbying coup. The banking industry makes off with a few extra billion dollars, robs a small business of its intellectual property and again sticks taxpayers with the tab. Legislation should not be used to grant retroactive legal immunity to large corporations that willfully ignored the property rights of a small, innovative company. And no elected official who has pledged to maintain the integrity of our legal system should be a party to such a travesty. The windfall is not 2-6 billion of savings to the banks, but at 40 billion checks per year for the major institutions at $1 to $2 per check the savings is $40 to $80 billion dollars. The vast majority of banks who offer RDC have stated they have seen growth in deposits due to RDC. Deposits represent the lifeblood of any financial institution and have pervasive impacts throughout the organization. Recent research conducted by RemoteDepositCapture.com has revealed that for every dollar a financial institution has in deposits, they make over $2 in loans and investments. Of course Data Treasury is suing for 5 cents per check and settling for even less. The industry used to claim that it cost close to $2. per check so what justifies the banks STEALING this for FREE , except why pay if you are not forced to. The proposed legislation places the US government in the position of accountability. Since the US government both issued and affirmed the validity of the DT patents, it seems to place the government in the curious position of stipulating patent validity without having any control over the question of whether infringement is or is not occurring and with the bank's interest's non-aligned with the government's interests. The enactment of such an exception would result in litigation against the federal government for DT to seek compensation for the taking of its private property. The federal government would have to pay $1 billion+ to Data Treasury over 10 years as compensation for taking its property under the exception, according to estimates (albeit, a conservative estimate) by the Congressional Budget Office. Senator Kyle by championing this exception should be made (with a clear answer devoid of spin) to explain why exactly, banks should be immune to patent law that applies to everybody else and why the public should fund any patent royalties when infringing returns billions in operational savings to the banks !! Source: 2008 FDIC Data, RemoteDepositCapture.com
The funny part about this campaign is that everybody will take a sudden, but belated, interest in this fiasco if and when the bill comes due and has to be paid by the American taxpayer. But he does not mind does he? After all, I'm sure he wanta to show as much love to Bank of America, Citibank, etc. as Citibank and its group shows to him!!. All this on the heels of the recent Wall Street bailout. I guess business as usual is still the main diet of some elected officials!! DISGRACEFUL!!!

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