USPTO Director Kappos comes out swinging in defense of software patents

Perhaps emboldened by the re-election of President Obama, USPTO Director David Kappos gave a remarkable speech yesterday at the Center for American Progress defending software patents–and the patent system generally. Not mincing words he criticized those who lament that the patent system is “broken.” Implicit in his comments is the admonishment that it is easy to be an armchair critic when one does not have to actually try to build or perfect an innovation system.

“So to those commenting on the smart-phone patent wars with categorical statements that blame the “broken” system on bad software patents, I say—get the facts—they don’t support your position.”

Kappos and his team have done their homework on patent quality and how patents are faring in the examination process, reexaminations, and in the courts. They find that in fact a high percentage of issued patents are being upheld as valid, while most rejections by the PTO are being affirmed as well. He correctly notes that the smartphone patent wars are not so much a sign of a broken system, but rather a strong showing of how enormous and valuable is the market for the stunning innovations in smartphones. Innovation is coming at a blazing pace, thus how can the system be “broken”?

“So to those reporting and commenting on the smart-phone patent wars as if to suggest that the system is broken: let’s move beyond flippant rhetoric and instead engage in thoughtful discussion.”

Again, everyone’s a critic. Far too few of us–especially among law professors who are the fastest to criticize the system as broken–either offer any workable solutions or attempt to actually build something: whether that be a new innovation incentive system or the new innovations themselves. I’ve been involved on the innovation building side. It is incredibly hard and is usually messy. It is rarely if ever a perfect process. But you move ahead constructively and in good faith without critiquing every little issue (especially when sitting safely on the sidelines).

“So to the commentators declaring the system is “broken” I say: give it a rest already, and give the AIA a chance to work. Give it a chance to even get started. But we’re not done. Not nearly.”

Innovation is an ongoing, never-ending process. Our Constitution says “We the People of the United States, in Order to form a more Perfect Union . . .” It’s an odd locution because  “perfect” should be an end, something cannot be “more perfect,” right? But one interpretation of this is that it reflects the sentiment that we are never done as a people in innovating to adapt to new circumstances. We should strive to evolve and adapt constantly. What was perfect–or even good–for previous days is no longer so. This is what we do, and have excelled at as a diverse nation for more than 200 years: we roll up our sleeves and create the new solutions needed for each new day. We don’t sit on the sidelines and carp and needle about every little imperfection and perceived limit. We work around them. We imagine, invent, and, most importantly, we implement. The last is the hardest. And in doing so we often discover that the imagined solution doesn’t exactly work the way we thought it might. But we don’t give up there and bemoan the real world restrictions or challenges we found. We go “back to the drawing board” and revise the imagined solution taking into account the challenges we’ve found in implementation.

This is what Director Kappos and the USPTO are doing, under the mandate from Congress in the form of the AIA. Let’s both encourage them to continue doing so and offer to help in constructive ways.

Tip of the hat to my former student and star D.C. based patent attorney David Orange for the lead on this speech which he sent me yesterday.

Categories: Commerce, Commercialization, Creativity, Electrical & Digital Arts, Entrepreneurship, Intellectual Property, Law, Methods, Uncategorized

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Does Law School Really Need to Take Three Years?

NYU Law is the latest school to revamp its 3L curriculum to address the clear problems with traditional legal education:

http://www.law.nyu.edu/news/NYU_LAW_ANNOUNCES_STUDY-ABROAD_PROGRAM_CURRICULAR_ENHANCEMENTS_THIRD_YEAR

While this is generally good news, the New York Times coverage of the announcement noted that a key premise is that the professional law degree needs to be a three year program. This was cited as due to both ABA requirements and the fact that “law schools are huge profit centers for universities”:

http://dealbook.nytimes.com/2012/10/16/n-y-u-law-plans-overhaul-of-students-third-year/?ref=business

These two facts are technically true, but quite problematic. I suggest that the three year standard is simply a vestige of the twentieth century decision to make the professional law degree a doctoral degree.

Take the latter fact first. It cannot be that we justify keeping students around for another year (and charging high tuition) because they are essentially cash cows. What kind of a horrible message and wrongheaded rationale is that? On the other hand, the former fact is derived from the ABA’s Standard 304 that prescribes 58,000 minutes minimum of instruction time (with 45,000 of those minutes spent in “regularly scheduled class sessions at the law school”). This was, in all likelihood, not motivated by the cash cow rationale. But neither was it likely generated by an independent, objective inquiry into how many credits are really needed to prepare a law student to become a lawyer.

Notice that the ABA Standard 304 is set in terms of minutes–not years–of instruction. The same Standard does reference minimum months as well, but that is set at 24 months. And this must be how Northwestern Law has put together its “two year” JD program. In fact, Northwestern makes no pretense that it is doing anything other than cramming three years of coursework into two calendar years (as it must to meet ABA Standard 304). This has some downsides for students in that the course load is high and year round, and, perhaps more importantly, precludes the opportunity to participate in law firm summer associate programs–which are traditionally one of the main ways that students get permanent jobs for after graduation.

Thus, the key ABA limit is the instruction minutes requirement. Are all of these minutes (translating into roughly 53 credit hours of instruction) necessary for a legal education?Outgoing Dean of Stanford Law School, Larry Kramer, is quoted in the NYT story above as saying “no.” According to him, “One of the well-known facts about law school is it never took three years to do what we are doing; it took maybe two years at most, maybe a year-and-a-half.”

NYU’s Dean and faculty seem to agree in that a major component of their 3L overhaul is to allow students to engage in year long externships or internships off campus that are primarily practice-oriented. If there was something critical about students being on campus and learning directly from law professors for three regular years of courses, then the NYU program would not work.

So what have we been doing with this superfluous third year? Apparently allowing students to loaf and/or take intellectually interesting but somewhat irrelevant courses (at least for the practice of law). In truth, many students will seize the opportunity to take relevant classes they could not fit in during the second year. Some may be changing their ideas about the practice they would like to engage in, and so the third year can allow them the chance to take courses they now know they need. This is all fine at some level, but hardly necessary such that we should require students to stay around.

Here is my take on what happened. When the push for the law degree as a professional doctoral degree took off–for prestige, credibility, and other reasons–U.S. universities were likely already on their way to the de facto minimum standard of three years of coursework (plus dissertation) for research doctoral degrees. Further, the M.D. appears to have long been a four year degree program. Only masters degree programs are less than three years. Therefore, to be approved as a doctoral program by their university, law schools would need to have at least a three year program. Note that the M.B.A. is only two years, but is only a masters degree, not a doctoral degree.

My guess is that the ABA simply picked up on this de facto standard and incorporated it into its own approval standards. So to say that the ABA requires three years is probably misleading. It was the drive to transform professional legal education into a doctoral degree program that led to this state of affairs. If the legal community decided that we don’t need a doctoral degree, then we could transform the professional law degree from a doctorate to a masters and reduce the number of years.

And the kicker is that we don’t even use the doctor title! (This seems to be a mix of custom and perhaps some state bar or state professional licensing restrictions.)

Note that I am not saying that legal education should be a one or two year proposition. I am a firm believer instead in one or two years of classroom education coupled with a rigorous residency or intern program similar to what medical doctors undergo. And indeed this is where much of the 3L curriculum reform effectively aims to go. But why are we unnecessarily tying ourselves up with a mandated three year instruction model that seems to be based originally on the push to become “doctors” when we wound up not even considering ourselves to be doctors? Further, it makes the use of the LL.M. degree–a masters degree–as a very odd follow-on to what is technically the terminal professional degree in law (the J.D.). The LL.M. was supposed to be a research degree, but it is currently used just as much (if not more) for advanced professional training in a specialty field like tax or intellectual property.

Categories: Uncategorized

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Corbis’ new “GreenLight” stock/commercial music licensing service

I just found out about an intriguing new service in the digital music space.

Called “GreenLight Music” it has just launched in beta. A good friend of mine tipped me off as he is leaving his law firm to be counsel to the venture. Maybe now he’ll have time to contribute posts to this blog . . .  😉

Like Corbis other stock object services, this one will make digital music available to commercial players to use in their projects. For example, a business wants to add some tracks to a new web page on its site. Rather than having to license the tracks directly from the copyright owners, and worry about clearing both composition and digital performance rights, the business can just go to GreenLight and clear all rights to the track. Presumably even individuals can use the service for their blogs and websites. (Maybe I should set up a theme song for this blog?)

But because clearance of digital performance rights does not work the same as traditional analog and broadcast clearances there are no set rates nor rights for digital performances. This is where the heart of GreenLight comes in: it provides a “make an offer” system that essentially brokers the deal between the potential user and the rights holders. So, this doesn’t necessarily guarantee that you’ll get your track for the price you want, but at least it provides a one-stop shop to try to do so.

I’ll poke around with this some more over the next week and probably have some critiques. But for now, this looks to be a cool and much-needed service.

Categories: Art, Commerce, Creativity, Fine Arts, Information Technology, Intellectual Property, Law, Services

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More on YouTube’s “ContentID”

An intern in our fabulous Gallagher Law Library at UW Law posted this entry about YouTube’s ContentID system on Gallagher Blogs:

A Case of Mistaken ContentID

Thanks to Mary Whisner for pointing this out.

 

Categories: Art, Commerce, Creativity, Intellectual Property, Law

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More on the new WA Social Purpose Corporation act

Now that I’ve had a chance to reflect further on the WA State Social Purpose Corporation Act (“SPCA”) passed by the Legislature, I’ve amended my earlier post to remove my concern that the new act does not fully free ride on the underlying Washington Business Corporation Act (“WBCA”). I’m comfortable that the inclusion of the new chapter within Title 23B of the Revised Code of WA (“RCW”) for the WBCA and the amendment of the definitions of the WBCA to include SPCs, among other things, serve to fully embed the SPCA within the existing provisions of the WBCA.

Lingering concerns remain over who exactly will use the SPC form and to what ends. I expect many firms who wish to use triple bottom line accounting will welcome this new law. They can shift to SPC status and then adopt triple bottom line accounting without worrying about shareholder suits based on arguments that management did not maximize profits for investors. New triple bottom line firms who were on the fence about where to incorporate, but who intended to have their main operations here in Washington, may now decide to incorporate here under the SPCA.

My skeptical side worries that some firms however may use the SPCA form as a kind of greenwashing (on the environmental side) or whitewashing (for other social issues) to wrap themselves in the mantle of social responsibility while not actually doing anything with material social benefits. The baseline obligation is simply that a firm organized under the SPCA must “carry out its business purpose . . . in a manner intended to promote positive short-term or long-term effects of, or minimize adverse short-term or long-term effects of, the corporation’s activities upon any or all of (1) the corporation’s employees, suppliers, or customers; (2) the local, state, national, or world community; or (3) the environment.” SPCA Sec. 3

This is pretty squishy. Understandably so, because we don’t want to hamstring firms with one particular notion of social responsibility. But, combined with the business judgment rule that gives management wide berth to make decisions for the corporation without liability to shareholders, it seems unlikely that the management of any firm would ever be found to have violated the general social purpose mandate. The mandatory disclosure of social purpose efforts required by Sec 16 may help because that management will have to commit in writing to what it purports to be doing for social purposes. Like the Federal securities law mandatory disclosure system for public corporations, this section may give shareholders the legal hook they need to keep management accountable. Under the Federal system, management is often sued based on errors, omissions, or misleading in the disclosures, in addition to the underlying alleged fraud or mismanagement. The disclosure claims are often more successful than the fraud or mismanagement claims. The smoking gun evidence required to show intent for fraud and the business judgment rule shield for mismanagement claims can make such claims hard to maintain. At the same time, nothing I see in the SPCA gives a cause of action to shareholders where management fails to abide by its social purpose disclosures or for errors, omissions, or misleading statements in them.

Firms do have the option of designating special social purposes in their charters under Sec 5(2). This may wind up being used by firms who are really serious about social purpose and/or triple bottom line. It will signal a high degree of commitment and commit the firm to these special social purposes until/unless the firm changes its charter (which under the SPCA will require a supermajority of shareholder votes). But advisors may counsel firms against this because it could overly restrict the company when the inevitable ebbs and flows of the corporation, its products/services, and general business/market condition require the company to adopt different tacks or businesses. So a firm that simply adopts the general social purpose minimum under the SPCA in its charter should not necessarily be looked at askance.

Of the suggested special purpose provisions the SPCA offers (under Sec 5(2)), I am intrigued by the one to limit the duration of the corporation’s existence to a specified term. Regular business corporations under the WBCA can do this as well. But the fact that at least some people are now actively thinking of limiting the term of a corporation’s life to something less than “perpetual” is heartening. In some cases, indefinite terms of existence make sense. But in other cases they simply foster cultures of corporate self-perpetuation at any cost and lead to unhealthy aggregations of assets and power. More on this in future posts related to a new working paper I just finished on corporate speech, authorship, and ownership.

Categories: Commerce, Corporate/Securities Law, Entrepreneurship, Innovation, Law, Nonprofit & Social Entrepreneurship, Uncategorized

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