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23 October 2015Patents

AIPLA 2015: Don’t dump portfolios due to section 101, patentees told

Software patent owners should not jettison their portfolios despite worries over the impact of Alice Corporation v CLS Bank and its application of section 101, an industry conference heard.

Michael Chernoff, chief intellectual property officer at MDB Capital Group, Wall Street’s only intellectual property-focused in vestment bank, said “the pendulum is still swinging” and that it is premature for companies to change strategy just yet.

In his talk at the AIPLA 2015 Annual Meeting in Washington, DC, Chernoff predicted there will not necessarily be a slowdown in patent filings from major players such as IBM, Amazon and Google.

Noting that he was not providing any financial advice by addressing the conference, Chernoff was speaking in a session called “An Overview of the impact of Alice across patent preparation, prosecution, litigation, legislation, and post-grant proceedings”.

In June 2014, the US Supreme Court ruled that computer-implemented inventions are not eligible for patent protection.

Chernoff said that post Alice the number of issued patents in this area plummeted, partly because the US Patent and Trademark Office (USPTO) used section 101 to reject 1,200 applications that had previously been allowed but hadn’t been granted. The number had then begun to rise again but after the USPTO published guidance on patent eligibility in July 2015, it dropped sharply, he noted.

With the significant increase in rejections based on 101, “it’s not looking pretty” for the e-commerce industry and others, Chernoff claimed.

Discussing patents challenged at the Patent Trial and Appeal Board (so which have been issued), Chernoff revealed that of 126 instituted trials since Alice, “everything was okay” in just three cases (although some trials has been terminated).

“I don’t like those odds,” he said.

“At the end of the day we as a patent bar need to let the public know about the importance of patents that are based on computer-implemented technology because if the public and Congress don’t understand that, nothing will change.”

However, he did say it is too early for patent owners to change tact just yet.

The AIPLA 2015 Annual Meeting takes place from October 22 to 24 at the Marriott Wardman Park Hotel in Washington, DC.

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