Overnight Technology

OVERNIGHT TECH: Everyone claims victory in patent ruling

THE LEDE: Companies and groups on all sides of the patent reform debate are claiming victory after a Thursday decision from the Supreme Court struck down certain software patents.

The court ruled unanimously that patents in the case Alice Corp. v. CLS Bank — which added a software component to a common financial transaction — were invalid because they merely applied a computer to an abstract idea. Abstract ideas are not patentable, and adding a computer doesn’t change that, the court ruled.

{mosads}The ruling comes after the Senate shelved its efforts to rein in “patent trolls,” the companies that profit by suing and threatening to sue using broad and vague patents. Those who pushed for broad patent reform say the ruling justifies their cause.

Jon Potter — president of the Application Developers Alliance, which includes Google, Yahoo and thousands of app developers — said the case highlights the problematic patents being issued by the U.S. Patent and Trademark Office (PTO). “The question for Congress and for app developers is how many of these mistakes has the PTO made? And how will Congress help patent troll victims that are abused by hundreds of trolls wielding thousands of patents that never should have been issued?” he said in a statement, calling on Congress to pass patent reform that allows defendants to challenge broad patents.

The Main Street Patent Coalition, which includes a number of retail groups, agreed that the ruling was good for business and also claimed that it would help limit activities of patent trolls. “Overbroad and abstract patents like the one invalidated today provide the ammunition for patent trolls to prey on businesses,” spokesman Michael Meehan said in a statement. The court’s decision to strike down Alice’s patents “further proves that the time to reform the patent system is now, and that reform should include measures to improve patent quality in order to relieve businesses and the courts from claims involving unwisely issued patents,” he said.

The ruling was also a victory to many software companies who have advocated for more narrow patent reform and warned that an overly broad ruling could invalidate all software patents and undercut their businesses. 

Microsoft Deputy General Counsel Horacio Gutierrez said the company is pleased that the court “distinguished the Alice patent from software inventions” when striking down the patents. “Software powers nearly every inventive device, service and product in our world today, and providing patent protection for software-enabled technologies is critical to incentivizing innovation,” he said in a statement.

Victoria Espinel, head of BSA/The Software Alliance — which represents Microsoft, Adobe and IBM — called the decision “a victory for innovation” since it helps clarify the rules of the road for software patents. “The opinion makes clear that real software inventions are patentable under US law and that merely connecting an abstract idea to a computer doesn’t make it patentable,” she said in a statement.

Adobe Vice President of Intellectual Property Dana Rao said the “ruling supports true innovators while helping reign in the abuse of the system by the patent trolls” and urged Congress to continue its work to address the patent troll problem.

Intellectual property lawyers at Trading Technologies also praised the narrow ruling. “This ruling will not have any broad impact because very few patent claims are even arguably directed to a fundamental economic practice or to just applying such a practice on a computer,” Steve Borsand and Jay Knobloch said in a statement. With its narrow ruling, the court “did not adopt suggestions to strike down software patents and did not even touch the basic standard of patent eligibility for software inventions and innovations,” the pair said.


House to hear net neutrality arguments: The House Judiciary Committee has a hearing Friday morning that will focus on net neutrality, the idea that Internet traffic should be treated equally. The issue has been a hot topic for lawmakers as Federal Communications Commission (FCC) Chairman Tom Wheeler looks to rewrite the agency’s net neutrality rules, which kept Internet providers from blocking or slowing access to certain websites before they were struck down by a federal court earlier this year. 

Joshua Wright, a Republican on the Federal Trade Commission (FTC), will repeat his calls for his antitrust-focused agency, rather than the FCC, to take the lead on net neutrality. “It is my belief that antitrust offers a superior approach to addressing anticompetitive business conduct in broadband markets in a manner that achieves the best result for consumers,” he said in his written testimony.

Former FCC Republican Commissioner Robert McDowell will echo Wright’s calls for the country’s antitrust agencies — the FTC and the Department of Justice — to handle net neutrality. In his written testimony, McDowell urged limited involvement for the FCC and challenged calls to treat Internet providers like the more heavily-regulated telephone companies, an option currently on the table at the FCC. “Creating new regulations, or foisting antiquated laws on new technologies, would be counterproductive, create uncertainty, hinder innovation and investment and expose the entire Internet ecosystem to the risks of unintended consequences,” he said.

Columbia Law professor Tim Wu — credited with coining the phrase “net neutrality” — will push back on Wright, arguing that the FTC is not equipped to address the non-economic concerns around net neutrality, like free speech and innovation. “For the agency to safeguard the open Internet would be to make it an agency dedicated to the protection of speech, innovation and non-economic values,” he wrote. “I don’t think this would be impossible, but it would require the development of a different kind of expertise and mindset at the agency,” sacrificing its current consumer protection and antitrust focus.

Ahead of Friday morning’s hearing, consumer advocates warned about creating a “two-tiered” Web with slower service for some than others. Officials at Consumers Union, the advocacy arm of Consumer Reports, sent subcommittee leaders a letter arguing for a “regulatory framework” that enshrines net neutrality once and for all. “We need the FCC to restore network neutrality rules that will ensure an open and accessible Internet for everyone,” they wrote. 


Cable industry welcomes Scalise as Whip: A coalition looking to change television policy cheered Rep. Steve Scalise on Thursday, after the Louisiana Republican was elected House majority whip. “He has been the epitome of a leader during his time in the Congress,” the American Television Alliance — which includes public interest groups and companies like Time Warner Cable, DirecTV and Verizon — said in a statement. “We have seen up close how he puts policy knowledge and political skill to use for the benefit of functioning markets that help consumers” and have “no doubt that as he approaches this leadership position, he will put those skills to use across the full range of issues.”

Scalise has been one of the strongest supporters for changing the country’s TV laws and in December introduced legislation to lift rules requiring cable companies carry certain channels and remove regulations on “retransmission consent” deals.


Senate Judiciary punts on STELA: The Senate Judiciary Committee has bumped back its consideration of a satellite television bill by a week. The committee was scheduled on Thursday to take up a bill from Chairman Patrick Leahy (D-Vt.) and ranking member Chuck Grassley (R-Iowa) to reauthorize the Satellite Television Extension and Localism Act — which governs the satellite television marketplace and expires at the end of this year — but used its often-invoked rules to defer consideration for a week.

During the meeting, Leahy noted the support for the bill and encouraged his committee to “act swiftly to move a bipartisan, non-controversial STELA reauthorization through the Senate.”


Thune heralds Internet after S.D. crawl: The Internet Association released a video on Thursday heralding the Internet’s power to help businesses from towns large and small. The clip features businesses in Sioux Falls, S.D., from a crawl the trade group did with Sen. John Thune (R-S.D.) last month. 



The House Judiciary Antitrust subcommittee’s net neutrality hearing gets underway at 9 a.m.

At 10 a.m., the House Science Committee will discuss whether NASA can protect sensitive information. 

The legal authority for the National Security Agency’s phone records collection program is set to expire on Friday, likely prompting the Obama administration to ask for a renewal. 



The Supreme Court on Thursday dealt a blow to some software patents, ruling that they cannot cover abstract ideas carried out on a computer. 

Rep. Kevin McCarthy’s (R-Calif.) ascension to House majority leader is good news for the tech sector, according to some of the industry’s biggest names. 

The Federal Communications Commission announced Thursday that it plans to charge a Chinese tech company $34.9 million for marketing illegal signal jamming devices to U.S. consumers. 

A bipartisan pair of senators fear that new Obama administration intelligence policies could crack down too hard on whistleblowers

Sen. Ed Markey (D-Mass.) moved Thursday to prohibit the Federal Aviation Administration from approving the use of non-military drones unless the agency takes steps to protect U.S. residents’ privacy.


Please send tips and comments to Kate Tummarello, katet@thehill.com, and Julian Hattem, jhattem@thehill.com

Follow Hillicon Valley on Twitter: @HilliconValley@ktummarello@jmhattem

Tags Chuck Grassley Ed Markey Federal Communications Commission Intellectual property John Thune Network neutrality Patent law Patent troll Patrick Leahy Technology

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