RealTime IT News

RealNetworks Case Highlights Sea-Change In Patent Law

Discerning what's obvious and what isn't when it comes to technology patents became a bit less gray last week when a federal judge in San Francisco reversed himself and abruptly dismissed a case brought against RealNetworks.

Attorneys as well as U.S. patent examiners say Judge William Schwarzer's surprising about-face is just the first of what will be many reverberations felt in courtrooms in the coming months, changing not only the way patent-infringement cases are adjudicated but also whether or not patents are granted in the first place.

RealNetworks  is the first high-profile beneficiary of a new standard established in April when the Supreme Court issued its ruling in the case of KSR International v. Teleflex Inc. At the core of the Court's decision was the notion of "obviousness," a fundamental component of patent law.

In its ruling, the High Court said the current "rigid" application of existing tests for determining obviousness that courts have used since 1851 should be changed to allow for a more "expansive and flexible approach" that gives judges more latitude to apply commonsense to these lawsuits.

This fundamental shift in determining obviousness, experts say, means technology companies with legitimate patents will have a much easier time defending themselves from expensive and occasionally frivolous patent-infringement lawsuits.

And companies that have simply tied together obvious combinations of existing products -- for example adding an eraser to the tip of pencil -- will have a much harder time making their case in court.

"There has been a confidence crisis within the high-tech industry in regard to some of these patents," Morgan Reed, executive director of the Association for Competitive Technology, told internetnews.com.

"Too many poor-quality patents got through the system, and this decision will give examiners and judges the opportunity to put these patents to the 'duh' test. If patent examiners pay attention to the Supreme Court, it will restore confidence in the system and reduce the amount of money companies waste on frivolous lawsuits."

In 2003, Friskit Inc., a San Francisco-based patent-licensing company, filed a suit alleging RealNetworks infringed on patents related to technology used for organizing and playing video and audio files. While dismissing the case, Judge Schwarzer cited the Supreme Court's ruling in KSR v. Teleflex and concluded that Frisket's "idea of integrating these different components was not novel."

RealNetworks spokesman Matt Graves said the company had no comment on the decision but would be making a statement Wednesday.

Technology companies of all types are constantly fighting off patent-infringement lawsuits of varying degrees of merit. In August, Apple agreed to pay Creative Technology $100 million to settle a squabble over patents for music players.

Analysts and technology executives have argued that patent-infringement litigation stymies innovation and compatibility and force companies to waste money that could be used on research and development on legal fees.

"The KSR decision provides courts more flexibility in determining whether a patented invention is obvious in view of the prior art," Peter Sullivan, a partner at New York City law firm Hughes Hubbard, said in an e-mail.

"This may result in the invalidation of patents that represent routine variations in the prior art. Innovation will still be rewarded, however, and the patent on an innovation may prove even more valuable (now) because it will be less encumbered by follow-on patents that seek to cover routine improvements stemming from the innovation."

But high-tech companies are hoping patent examiners at the United States Patent and Trademark Office (USPTO) will follow the Supreme Court's lead and nix the so-called obvious patent applications long before they ever see the inside of a courtroom.

Today it takes between 28 and 40 months to process and grant a patent, according to Howard Locker, a primary patent examiner who has processed an average of 100 patent applications a year for more than 25 years. In 1995, the USPTO received more than 288,000 patent applications and granted more than 114,000 patents. Ten years later, it received 417,000 applications of which 157,000 were approved.

Locker estimates the USPTO has a backlog of roughly 750,000 applications waiting to be processed.

"I can tell you that as a result of the KSR decision, we are receiving new training to determine how we process patent applications," Locker said. "Right now it's an open question as to how it will impact us. But it very well may mean that it will be a lot tougher for people to get patents."