Kinsella Law

NSK Interview on Patents, by Taylor Conant

Update: link above is defunct; here is the original, from WayBackMachine:

APRIL 6, 2007

“Big Dig #3” – Patent Law

The following was an assignment, “Big Dig #3,” for a business journalism class. I researched the patent process and interviewed a patent attorney from Houston, Texas, Stephan Kinsella (his personal website is available here).

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On November 28, 2006, the Supreme Court heard oral arguments in the KSR v. Teleflex patent case, a trial which could produce the most important ruling for patent law in forty years.

The case involves a dispute between KSR, a company which manufactures gas pedals that use an electronic signal rather than a mechanical cable to signal the engine, and Teleflex, a company which claims KSR has infringed a patent it was issued in 2001 for a similar technology. The dispute revolves around whether or not KSR’s system was an “obvious” integration of known technologies or not.

“The implications of this case to the patent system are huge. It could impact millions of U.S. patents currently in force and over 700,000 patent applications currently being examined by the PTO,” according to an interview conducted by PRNewswire.com of Robert Greene Sterne, a member of the counsel for KSR.

Patents, like trade secrets, trademarks and copyright, seek to protect “intellectual property,” or “IP.” Of the general IP category, only patents and trade secrets protect inventions.

According to Stephan Kinsella, a patent attorney from Houston, Texas, there are four criteria the United States Patent and Trademark Office (or PTO), use when judging whether or not an invention is patentable—statutory subject matter, utility, novelty and non-obviousness.

“Basically you can patent machines and processes that produce a useful result, so that’s the first one, and utility means it just has to do something useful,” says Kinsella.

So, based on the first two criteria, drugs are in (potentially make you healthier), while nuclear bombs and perpetual motion machines are out (nukes can only do harm or disutility, while perpetual motion machines are impossible according to the laws of thermodynamics).

“Novelty means it has to be new, and that’s usually pretty easy to overcome,” Kinsella continues. “But then you have to ask yourself if it’s an obvious difference or a non-obvious difference, and in most other parts of the world this is called the ‘inventive step.’”

So, by way of example, Kinsella says patenting the use of an LCD panel with a computer would not be a possibility because it is already obvious that you would use a display device with a computer, even though and LCD is new in comparison to a standard CRT monitor.

As the Supreme Court case shows, and as Mr. Kinsella emphasizes, obviousness – or lack thereof – is the central issue of patent law being debated these days. And the spread of the Internet and electronic goods will serve only to further complicate the patent system in that regard.

“About five years ago, Amazon got an injunction against Barnes and Noble to stop their one-click—they had a patent on clicking once on the basket to buy something as opposed to clicking twice,” says Kinsella, recounting a key moment in the growth of e-commerce. “It’s ridiculous, utterly ridiculous… Barnes and Noble is lagging behind now and I don’t know if that’s why, but it’s possible.”

According to Kinsella, there may even be a kind of populist revolt against the concept of IP by consumers who are increasingly frustrated by restrictions on the way they use their electronic media and information technologies.

“I believe there is a growing hostility towards IP in general, at least among Gen-X and the tech people,” Kinsella says, citing the examples of the RIAA, Disney and the recent Blackberry patent suit in which the company was forced to pay hundreds of millions of dollars to another company which claimed Blackberry had violated one of its patents. “There is an increasing fear a lot of small companies are in of patent infringement when they’re just trying to do business.”

That’s a concern worth taking seriously—after all, the patent system is predicated on the belief that the limited-monopolies granted by it incentivize creativity and create a net benefit for the economy. But if the arbitrariness of the patent system leads to exponentially-increasing costs, the economic usefulness of the system might need to be reexamined.

“If you really take seriously the idea that anyone who comes up with an idea has some property right in it, it either has to be definite or infinite. If it’s infinite, the human race probably would’ve died out a long time ago, because no one would be able to use the wheel, or fire or build a house without getting permission,” says Kinsella. “Therefore, the only way to make them work is to define their duration, but then you run into the problem of arbitrariness—twenty years for a patent, seventy-five years for a copyright, ten year renewable terms for trademarks.”

Until the time comes for Mr. Kinsella’s ideal system which only respects trade secrets and trademarks, he and others concerned with the patent system will just have to cheer on the right outcome in court cases such as KBR v. Teleflex. Depending on the way the ruling goes, that case could result in a striking down of current notions regarding “secondary conditions of non-obviousness,” which Kinsella views as currently helping to promote the arbitrariness of the patent system which is responsible for situations like the Amazon one-click patent.

According to the industry blog PatentlyO.com, Justice Scalia has already hinted that a conclusion in the case has been reached, saying, “I know how that one comes out, but I’m not going to tell you.”

Stephan Kinsella has his fingers crossed.

POSTED BY THE OWNER AT 2:43 PM 

Latest comments on of my book International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide published in late 2005, by Kazakh attorney Bakhyt Tukulov (Legal Department, (K’Cell) “GSM Kazakhstan OJSC “Kazakhtelecom” LLP) (from an email by Tukulov to my co-author Noah Rubins):

I’d like to again thank you for the book, as now, upon completion, I understand the real value it has. I’d advise it to anybody, who has basic understanding of and interested in arbitration, I’d definitely advise it to foreign businessmen; moreover, valuable citations and references to sources found in the book can help if deeper research of certain aspect is necessary.

The book is also very useful for its annexes as a reader can easily locate certain provisions in relevant convention and to grasp it easily. I’d say this book may easily serve as a handbook to practicing lawyers.

Another fact is that by means of this book I got considerably familiar with basics of customary international law (mainly of ICSID framework). International law has always seemed to me like vacuum to some extent as in University we have studied conventional international law only.

[Update: The Second Edition was published by Oxford in 2020]

[Note: See other reviews here]

Latest review of my book International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide published in late 2005, by the well-known Scottish practitioner/arbitrator Hew R. Dundas, in Arbitration: The International Journal of Arbitration, Mediation and Dispute Management, the journal of the Chartered Institute of Arbitrators:

“Oh No – not another book on investment arbitration!” might be one’s first response but, if so, a wrong one; while “I couldn’t put it down” is a time-honoured publisher’s cliché, it genuinely applies to this book. The book is a collaboration between a well-known international arbitration lawyer (Rubins) and the General Counsel (Kinsella) of [AOI, a laser manufacturer], and therefore avoids the tendency dryness that can infect some over-specialist academic tomes. It is in three parts (i) Assessment and Pre-Investment Management of Political Risk (ii) The International Law Framework of Investment Protection and Political Risk and (iii) Dispute Resolution – these three parts total 442 pages; there are also extensive (300 pages) appendices (see below) and a reasonably-comprehensive index Your reviewer has approached this book wearing two main alternating hats: first, that of an international arbitrator closely involved with the investment arbitration world and, secondly, that of the former Head of Legal and Group Insurance Manager (including Political Risk) of a large oil company. So far as this book is concerned, both hats are very comfortable. Part I is, perhaps for the specialist, sometimes a little too general but this is reflected in the wide range of matters covered, typically in a succinct and clear style so that even in specialist areas your reviewer welcomed the authors’ analysis since, as a minimum, it helps the reader reassess his/her thoughts and priorities; for example, the list of definitions (at page 34ff) of BT/BOT/BLT/BOO/BOOT/BTO is useful clarification. The authors’ analysis (page 53ff) of stabilisation clauses proved most welcomely succinct with a clarity and precision sadly lacking in a recent (and turgid) PhD thesis on this topic for which your reviewer was External Examiner.

Part II changes up a gear and includes some excellent material e.g. a thorough yet succinct section on the nationality of claims (135ff), and an interesting analysis of arbitral decisions (250ff). Part III is, so far as arbitration and dispute resolution are concerned, and quite properly in context, focussed wholly on investment and other international arbitration issues including 56 pages on procedure forming a compact and useful summary. There is also a useful 40-page chapter on conciliation including even a section on Med-Arb. Part III continues in that higher gear with interesting sections on “Preliminary Treaty Concerns” (272ff), “Problem Areas” (297ff) and “Challenge of Awards” (353ff); these were a pleasure to read. Throughout the book, the materials are well-integrated and very much up-to-date as subscribers to OGEMID will recognise (but note that the authors’ preface is dated August 2005 and the book published in 2005) Too many arbitration textbooks reproduce the same materials leading to much unnecessary duplication (the Arbitration Act 1996, ICC Rules, LCIA Rules etc etc appear far too often). This book includes materials I do not otherwise possess including the OPIC Contract of Insurance, the MIGA Contract of Guarantee, even a private insurance contract and the Foreign Sovereign Immunities Act (USA). The Washington Convention (1965), the UNCITRAL Model Law (1985) and the UNCITRAL Rules (1976) reappear as in so many texts. Most of these are easily available on the ICSID and UNCITRAL websites so a single page of URLs would be a more constructive approach. Importantly, there is an extensive and valuable list of book/article sources, such list not being otherwise readily available; you reviewer notes for the record that he discovered he had been cited only after completing this review ! The book reads well as regards literary style, generally easy on the eye and not overusing jargon; key issues are generally well-explained and, perhaps, we see the benefits of the collaboration between in-house Counsel and a practising lawyer at the sharp edge of modern developments. In conclusion, this book is valuable in its own right but, at a mere £90, must be considered a bargain.

Since the purchase of my publisher, Oceana Publications, by Oxford University Press in late 2005, Oxford has assumed various Oceana titles I authored or edit, and seems to have finally added them to its print and online catalogs, e.g.:

• International Investment, Political Risk and Dispute Resolution: A Practitioner’s Guide (Oceana listing)
• World Online Business Law (Oceana listing)
• Digest of Commercial Laws of the World (Oceana listing)
• Online Contract Formation (Oceana listing)
• Trademark Practice & Forms (Oceana listing)

Just uploaded: my article In Defense of Evidence and Against the Exclusionary Rule: A Libertarian Approach, co-authored with Pat Tinsley and Walter Block, published in the Southern University Law Review.

Latest blurb on my book International Investment, Political Risk, and Dispute Resolution: A Practitioner’s Guide published last year:

I’ve been reading through your book International Investment, Political Risk and Dispute Resolution. It is a remarkably helpful, well-written, and well-researched work. It is quite scholarly and at the same time a thoroughly practical and useful guide.”
—Alexandre de Gramont, Crowell & Moring LLP

Re my previous post about suggestions to eliminate substantive patent examination, I was just made aware of D.C. Toedt, “Reengineering the Patent Examination Process: Two Suggestions,” 81 J. Pat. & Trademark Off. Soc’y 462 (1999). This is based on Toedt’s suggestion in 1994 “that the PTO steal two ideas from the SEC:

• Suggestion 1: create a convertible “low end” patent (CLEP)
• Suggestion 2: conduct examinations as administrative trials.

Check it out. Email me with any comments.

Interesting article in a Malaysian/Singaporean IP firm newsletter (it appears in the Q1/2006 issue of Henry Goh Intellectual Property Updates:

In recent years, there has been talk of a crisis in the patenting system worldwide. This reflects a concern over growth in the numbers of patent applications being filed and lengthening delays by patent offices in processing the applications through to grant.

Even the patent offices of countries that have traditionally been seen as relatively fast are slowing down under the sheer volume of work. A 2005 survey by the US-based Intellectual Property Owners Association showed that two-thirds of respondents expected the patent granting process in the United States to take longer over the next three years.

People unfamiliar with the world of patents are always surprised that it takes a period of years for a patent to be granted. The principal reason for this delay is the process of substantive examination under which the patentability of the invention is checked by a technicallyqualified examiner.

The reaction of the major patent offices of the world has been to recruit and train ever more examiners, increase sharing and recognition of each other’s work, as well as to impose fees that penalize lengthy applications.

Malaysia has not escaped criticism for its delay in examining patent applications, either. It has been proposed that a further 500 patent examiners be recruited to add to the existing 42. However, the author submits that this will not solve the problem locally because of the way examination is currently done in Malaysia for most applications.

Instead, a more radical proposal is made. Do we need substantive examination as a pre-condition for grant of every patent? There are already countries such as France and South Africa whose patent systems do not provide for it. Instead, substantive examination could be made compulsory only prior to starting an infringement action or even sending a preliminary warning letter. A provision under which the Registrar of Patents and third parties could require an application to be examined may also be included.

The grant of an examined patent is never a guarantee of its validity. However, many patented inventions are not commercially exploited and even less are litigated. So, is it not logical that the expense and time of substantive examination be reserved for those that really matter?

Just an FYI–for anyone who does not have a good backup service for their computer documents and files: there’s a great service i’ve been using –I have struggled with good backup solutions for a long time. I have tried several. A few months back I stumbled across Mozy.com which I tried and love. It’s an online backup service, and does 2GB of storage FREE. It is very cool; seems to work seemlessly, and without error. I set it to backup a few times a day. The first time it backs up, it might take a day or more; but after that, each backup is incremental so it’s pretty fast. I use it at home, and also at work. For work I purchased the $4.95/month version which gives you like 30GB or something like that. For home I just use the free version. Actually you get an extra 250MB (a quarter of a GB) of space for every person you refer–I have done this and now have over 5GB of space. In fact if you sign up using someone else’s referral link, you start out with 2.25GB instead of 2GB. If you want to try it for backup purposes, click on my referral link (https://mozy.com/?code=P52E8G) to get 2.25GB (instead of just 2.0GB) free space. I’ve done a few sample backups just to test it (and one time to recover a file I had accidentally deleted), and it worked great. Highly recommended.