Intellectual Property Owners (IPO) has made a call to arms agains the patent reform legislation in the Senate (S.1145), which may be considered for a vote within the next few weeks. IPO is all-out against the dreaded Applicant Quality Submissions (AQS).
Section 11 on AQS would require nearly all patent applicants to (1) search the prior art and (2) submit a search report and analysis to the USPTO with their applications.
As it appears in S.1145, if enacted, AQS would:
- impose substantial new costs on applicants without meaningful benefits to the USPTO;
- create additional opportunities for inequitable conduct claims to be raised at trial;
- open up opportunities for litigation claims related to the adequacy of the mandatory search; and
- subject applicants to different standards by exempting micro-entities from the requirement.
The provision adds additional burdens on applicants, increases the cost and complexity of prosecution and litigation and fails to provide meaningful assistance to help the PTO do a better job of examining patent applications. It will deter filing of applications and weaken incentives to invent.
You may find additional information along with instructions on how to contact your Senators on the IPO website at: www.ipo.org/AQSCampaign. The IPO Staff is available to answer any question you may have on this or other parts of the bill. Call (202) 466-2396 or email Dana Colarulli at: dana@ipo.org.
Make your voice heard.
They’re banking on getting away with it
By TOM GIOVANETTI
Special to the Star-Telegram
Property rights protect the little guy. It doesn’t matter how wealthy or politically connected you are — you have control and full legal standing with regard to your property. Because of your property rights, you can’t be run over and abused.
The same is true of intellectual property rights. There is something heroic, even romantic, about the small inventor who comes up with a breakthrough idea. The patent is his property right; his protection. It means that big companies can’t just steal his idea and kick him down the road. A just society is reinforced by property rights that protect the weak against the strong, and the small against the large.
At least, that’s how it’s supposed to work. But sometimes the powerful and politically connected see property rights as an annoyance. Unfortunately, that is happening on Capitol Hill, where a consortium of major banks that have repeatedly infringed a patent are asking Congress to give them immunity for their violations.
Worse, these banks also are asking Congress to make taxpayers pay the patent holder for their illegal actions. According to the Congressional Budget Office, the bailout would cost the federal government at least a billion dollars.
If granted, this would reward the banks for ignoring patent rights. It also would set a precedent by which wealthy, politically connected patent infringers could go to Congress and ask for similar immunities and taxpayer bailouts. Such a precedent would undermine the U.S. patent system and American innovation.
Unfortunately, the banks have managed to persuade a number of senators to support this harmful legislation.
The story starts more than a decade ago, when the founder of a small Plano company called DataTreasury Corp. invented a system for digitally scanning and sending images of checks. The inventor received patents for it in 1999 and 2000.
DataTreasury Corp. tried to sell its technology to the banks, but instead of buying or licensing the technology, several big banks expropriated it and began using it to change the way they processed checks.
The value of that technology grew exponentially in 2003, when Congress legalized the digital processing of check transactions. Instead of physically returning cancelled checks to their signers, banks could perform the whole process electronically.
DataTreasury’s technology created a windfall for the banks. According to the industry’s own experts, the banks save between $2 billion and $6 billion annually because of the switch to digital processing.
Of course, that switch would not have been possible without DataTreasury’s technology, which was covered by patents that the banks callously ignored. Understandably, the company has sued for damages.
The banks initially responded by trying to get the patents invalidated with some legal jujitsu. But the U.S. Patent and Trademark Office upheld the validity of DataTreasury’s patents in their entirety. So rather than face a jury, where they obviously feared losing, the banks decided to call on their friends in Congress for legal protection.
The politicians who have pushed to grant banks immunity from their patent violations should reconsider. The U.S. Commerce Department has objected to this legislative provision, which was added onto the pending Patent Reform Act. Such a law would pave the way for Congress to start interfering in legal cases on behalf of the highest bidder.
The Commerce Department — the parent agency of the Patent and Trademark Office — also pointed out that “limiting patent holders’ rights and remedies in this instance could reduce innovation in this technology area.”
In other words, revoking someone’s property rights affects not only the disenfranchised property holder but also the next round of inventors. In this instance, moreover, Congress is sending the bill for the bailout to us — the taxpayers.
All this makes for quite a lobbying coup. The banking industry makes off with a few extra billion dollars, robs a small business of its intellectual property and sticks taxpayers with the tab.
Legislation should not be used to grant retroactive legal immunity to large corporations that willfully ignored the property rights of a small, innovative company. And no elected official who has pledged to maintain the integrity of our legal system should be a party to such a travesty.
Tom Giovanetti is president of the Institute for Policy Innovation, a nonpartisan think tank based in Lewisville.
Subject: Patent reform legislation
A legal battle has been raging between Data Treasury and the financial institutions for over five years. Thus far, the banks have lost ground on all patent related issues. In their quest to invalidate these patents, they have spent in excess of ( seven hundred million dollars). The USPTO. has re-examined the patents and found them to be fully valid and enforceable. Having failed in every court attempt, the banking industry has stooped to an unconscionable new low. They have enlisted Senator Jeff Sessions, R-Ala, backed by the the Financial Round Table. (The Financial Round Table is an institution that represents the nations one hundred largest banks). Their goal, to add an amendment to the patent reform bill. The purpose, to remove all financial responsibility, for patent infringement from the banks, should Data Treasury prevail in court. The responsibility will then be passed on to the American tax payer. The US. Government estimates this responsibility to be in excess of( one billion dollars). Private estimates range from (five to twenty billion. dollars.) I challenge Jeff Sessions to give a logical explanation as to why he is attempting to get the banks off the financial hook. Personally, I do not believe greed nor political contributions to be a logical explanation. How can we condone banks attempting to buy a new law, if they are dissatisfied with existing legislation? How can we condone political corruption , that assaults our legal system in such a manner ? How can we condone putting a price on Truth, Justice and the American way? This nonsense has got to stop! I am a share holder of Data Treasury stock and have been for eight years. Yes, my concern is for my investment but, above all my concern is for the future of this country. I challenge each and every member of the Senate and the Congress, that believes that our legal system must not be offered for sale, to vote this legislation down! This E-mail is being sent in hopes that you will use it ,or any portion their of to bring this travesty of justice, to the attention of the American public! Respectfully submitted, F. Paul DiMaria
Sessions isn’t trying to get banks “off the financial hook” and stick Americans with the bill. He is trying to clear up what, apparently, was unclear language in the Check 21 act, passed in 2004. This is a useful and prudent action. Public policy passed after a traumatic event like 9/11 should be revisited and improved when we have more information about how the policy is working. Far from “putting a price on Truth”, this allows us to consider our national security interests, which include efficient transfer of funds. Immediately following 9/11, billions of dollars in paper checks sat on runways causing financial services to ground to a haul and preventing small businesses from accessing the due funds. Sessions amendment has unanimous bi-partisan support in the Senate Judiciary Committee and is in American’s best interests now, and in the future.
Hey Parental Guidance,
I really like your romanticism concerning the “little guy.†You do realize that the overwhelming majority of the 7 million patents issued in the history of the US Patent Office were filed by big corporations, right?
However, I completely agree with your sentiments for protecting our patent system and justice system in general. But, if you are going to place blame for the destruction of patents that could protect the little guys, why not place blame on the trolls who abuse the system (read: Data Treasury).
Congress should do what it takes to prevent Patent-Trolls from taking a common business practice, patenting it and then holding it ransom against all those that previously used the method. The “method†that Data Treasury patented is merely dressed up version of electronic check processing, and that technique is very old. This is an example of a technique that was never patented just because it was so obvious that no one would have patented the idea.
Personally, I don’t think DT deserves one penny of anybody’s money. They have already collected more than they deserve from the banks that cowered to them in settlement.
And, DiMaria, I really respect how you have overcome being prejudiced in this matter even though you are a stock holder in Data Treasury, since, after all, (cue violins playing “America the Beautifulâ€) you’re biggest concern is this great nation . That must be really hard to do since your stock will likely quadruple if Data Treasury is able to cash in on its bogus patent. Convenient that your political views line up with those of your wallet. I mean you sound extremely objective in your analysis. I particularly appreciate how you were able to conclude that Jeff Sessions is obviously biased in his support of the amendment because he is in your words “backed†by an organization that will benefit from the amendment. Poor Sen. Sessions has not been able to achieve your level of objectivity.
Actually I am surprised that you stayed with Data Treasury so long. If you have been a stock holder for 8 years that means you bought stock back when DataTreasury wasn’t yet in the business of suing for profit. Back in 2000 it was just a “Biometric Database Info Company.†In case you are wondering, Biometrics have little to do with banking. Of course when Check 21 went through in 2004 I guess Data Treasury was a good buy. But, didn’t it ever worry you that as of January 2008 the company still just had two employees – one of whom is the kind of guy who’d rob an armored car (and actually did)?
All right, Drake, now that you’re finished trashing the personal histories of the DataTreasury staff, let’s move on.
The way I see it, this amendment would only encourage further innovation. The folks at DataTreasury didn’t create anything, but merely patented an already existing process. If this amendment stops them from receiving money for claiming rights to what was already out there, it discourages other parties from cashing in on already-existing processes–something small inventors should appreciate, as the potential creators of said processes.
I concur with Drake. DataTreasury is not the the “little guy” entrepreneur a partisan like Tom Giovanetti makes them out to be. He states, “The story starts more than a decade ago, when the founder of a small Plano company called DataTreasury Corp. invented a system for digitally scanning and sending images of checks. The inventor received patents for it in 1999 and 2000.”
DT is merely a front for a shady, patent-squatting, frivolous lawsuit-filing operation. DT did not create or actively market any software in 1999, 2000 or afterwards. DT saw a financial opportunity and pounced on it the same way cybersquatters jumped on nike.com when the internet was brand-new. Congress put a stop to this with the Anticybersquatting Consumer Protection Act (ACPA) of 1999 and the Congress has a right to do something parallel here.
LKeens, normally I would agree with you that “trashing the personal histories” of the DataTreasury staff is out-of-line. However, in this instance when there is a history of disregard for the law and personal relationships in general (getting sued by your own father) I think they become relevant. If these individuals running DT and filing the lawsuits were lawyers they would be disbarred.
[…] proposed rules to reduce their workload. For more creatures from the depths, see the much-loathed Applicant Quality Submissions […]
Claudio Ballard of DataTreasury invented this technology and methodology just like the famous inventor, Thomas Edison invented the lightbulb. No, Thomas Edison did not invent the materials to make a light bulb, but through trial and error he assembled the right components for a bulb that would last thousands of hours. Mr Ballard introduced his methodology and invention for sale to JP Morgan. They review it and decided it was of no use to them. They then tried to reverse engineer his invention with their team of experts behind his back to no avail. What they could no attain in reengineering, they instead decided to steal for themselves.
These patents have merit and have withstood dozens of lawsuits. The banking industry has unleash it formitable might to defeat Mr. Ballard. It has shown it can’t win on merit alone in court so it calls on its crooked politicans with its protection money to do their dirty work. This is another case of the politicans filling their ever expanding pockets with money of the big interest.
If you have enough big bucks you can say or get away with anything. eg. Buying a new law to stamp out the little guy. Shame, Shame.
“‘Back in 2000 it was just a “Biometric Database Info Company.—
And, back in the early 1900s GE was just about Edison.
And, back in the 1920s Mickey Mouse was just another mouse.
The relevance? The sought patent protection. They received the patents. And, are at the “pay me” portion of their coroporate journey.
and, who cares if “most” patents were filed by big corporations, most patents having “value” (yes, even if litigation was *required*) are filed by small entities and individual inventors. American inventors.
“DT is merely a front for a shady, patent-squatting, frivolous lawsuit-filing operation. DT did not create or actively market any software in 1999, 2000 or afterwards. DT saw a financial opportunity and pounced on it the same way cybersquatters jumped on nike.com when the internet was brand-new. Congress put a stop to this with the Anticybersquatting Consumer Protection Act (ACPA) of 1999 and the Congress has a right to do something parallel here.”
sounds a bit iffy on the libel side. do you mean adam curry getting the mcdonalds.com domain name? what’s your point? this is not about domain name registration, or taking down Napster, this is a valid US Patent (upheld through re-examination and survived trial, etc.)
congress put a stop to patent infringement when they enacted the Patent Act in 1790 (Thomas Jefferson was the first patent commissioner)
sounds like a bit of jealously not a rational interpretations of all of the publicly available information and the publicly available decisions made by judges and juries.
apparently you appear to be of the types that only scream “activist judge” when the decision does not go your way. me thinks you should say “thief!” to the banks that have lost their cases in front of judges and juries. plain and simple. the courts got it right.
what a crying shame it is to see this utter distortion of reality.
btw, who do you all work for? what do they make? how do they protect the business from competition? any intellectual property? how about intangible value? can someone else do your job cheaper? uh huh.
LKeens, is it?
not sure if i understood your post, but i felt it necessary to politely point to issue.
comments inserted
1) “The way I see it, this amendment would only encourage further innovation.”
how so? you invent something related to a big business with close ties to the government and “bam” the folks who said your invention was not worth it alas copy what you have done and go to congress to have the rules changed. but the rule changes means that the taxpayer not the infringer has to pay the owner of the patent.
is that like legislative innovation? or “lobbying”, perhaps? which is easier? how about cheaper? if it takes less money to lobby congress for something than to pay for that something — what is the likelihood of lobbying instead?
if you are an inventor and observe this behavior, why go “further”? fear uncertainty and doubt (“fud”) are not contributors to a sense of confidence about anything let alone starting a business or inventing something you believe to be useful.
if you can’t get paid for what you already did, what is it that makes you think that others are willing to bark up that tree, again? and, yeah, it may seem “obvious” to you 10 years after the fact, why didn’t you file your own patent?
gotta love hindsight it is ALWAYS 20/20
2)” The folks at DataTreasury didn’t create anything, but merely patented an already existing process.”
what is your definition of “create”? like intelligent design? what is “merely patented”? is that to *differentiate* between patents filed by certain companies or individuals compared with other companies or individuals?
how could it be fair to determine the value of something by first stating that something is “merely patented”? what is the alternative? “merely copyrighted”? “merely trademarked”? “merely stolen”?
there is an entire legislative and legal history to patents which is neither “merely” nor anything but central to a government that is to be competitive and free from industrial “policy” and special interests. i believe firmly in national defense, industrial policy, however, starts and stops where? 4 dollar gasoline? 30 dollar pills for arthritis? what exactly?
our patent system is the best in the world and represents the fairest “industrial policy” any government has. an inventor “merely” invents something. prepares a specification and claims that defines the metes and bounds of the invention, according to law and statute, and has the government fairly and objectively search and examine whether the claims are indeed “merely” patentable.
if so a patent results. all of the work and money comes from the applicant – not the taxpayer. AGAIN, the patent is paid by the applicant and the taxpayer does not pay anything. whether or not the patent is worth “merely anything” is largely a function of whether or not the inventor got it right — alas, as with many things in life, most people most of the time do not invent anything with “mere” value.
but, a patent when issued is presumed valid – or why bother with the process? and a pending, not issued, patent will be published in 18 months regardless of whether the inventor ever pursues the process or even gets anything but an official letters patent with a red ribbon.
and, guess what, NO MORE SUBMARINES! because 20 years from the date that inventor filed the rights over the subject matter whether in the claims or left out is not in the possession of the public at large. we all benefit because someone took the time to prepare what is a publicly accessible document with limited protections — namely 20 years from the date of the file, period.
compare that with a bank. do they have to provide you with as much information about YOUR account and YOUR money? think about that.
3) “If this amendment stops them from receiving money for claiming rights to what was already out there, it discourages other parties from cashing in on already-existing processes–something small inventors should appreciate, as the potential creators of said processes.”
nice synopsis — except you got it BACKWARDS!!! the amendment CONCEDES that the patents are valid and CONCEDES that the remedy is under the 5th Amendment (Takings clause) similar to the “Kelo decision” that got many folks upset with the Sup Ct about taking property rights from a homeowner in favor of development rights to benefit the city that “took” the property/rights away.
you see, instead of being up front about the amendment, it is there because the Congress already knows it will have to pay at least $1.4 bil against existing claims that ARE being paid LEGALLY and projects a number as high as $20 bil. because of the likely underestimate of the market value of the inventions (DT’s patents) which inevitably will be challenged by DT or its shareholders or other future owners of the patents.
now that is truly “creating” a disincentive to passing bad bills. even the Founding Fathers (not like the ridiculous comment about suing your father?!) did not see it fair to “take” property away (including rights) without proper and just compensation, which is exactly why we have the 5th Amendment takings clause to begin with.
now how do you feel about the fairness of the amendment? you pay the patent royalties, NOT the banks. btw, you are currently paying for the patents and seeing none of the cost savings. the dt patents reduces the processing of a check to about 10-20 cents, max – it used to be maybe 1-2 dollars. have you seen any fee reductions come your way?
your banking fees are “merely” market based fees.
great way to cheerlead legislation that is horribly misguided and punishes inventors.
reject the patent reform act.
Wes–I agree with you that some of LKeens comments were misguided. I think there is very little else that we can agree on. It appears you expect a Euraka! response to your posting, but I’m afraid you give yourself far too much credit.
You miss entirely the point of the patent reform measures currently before the Senate. This amendment is being considered for reasons of national economic security, and economic efficiency! It may cost the taxpayers something (the amount is far from uncontroversial, despite your implications). And it will certainly alter the course of some legal proceedings (however, you should keep in mind that Congress chooses to change laws and affects our judicial system in so doing every day. It’s job is to do just this. You seem interesting in the Constitution and the intent of our founding fathers, so you should look to both bodies too review the role of Congress)
This amendment seeks to fix a problem with the Check 21 legislation passed shortly after 9/11 and because of these catastrophic events– a problem created by DataTreasury’s desire to cash in on the law.
On September 11 and in the days after nearly $50 BILLION DOLLARS in checks were frozen and unable to be transfered when all air traffic was halted. This has quite a few detrimental effects on our business climate and overall economy, and we had to resort to monetary policy to adjust these effects. In short, a HUGE vulnerability to terrorism that had not been seriously considered before 9/11 was revealed.
Naturally, Congress wanted to close this vulnerability and so they passed Check 21 which allowed banks to electronically process and transmit checks. The idea is that if another terrorist attack strikes, a halt in air travel will not affect our economy to nearly the same degree as on 9/11. Surely we can all agree this is a good thing.
Unfortunately, DataTreasury saw a prime business opportunity in the Check 21 legislation and the events of 9/11. In fact, since the passage of this law DataTreasury has not sold or created a single thing. The company and all two of its employees have spent their time instead suing banks who have been trying to comply with the wishes of our government. Their legal actions understandably and predictably made many banks, especially smaller ones which comprise the large majority of our financial industry, unwilling to transfer to electronic check processing because they did not want to adopt the liability which could go with such a transfer. And so not even 30% of banks use electronic check processing, and many of these also use paper checks. The result: economic inefficiency and a continued vulnerability to terrorism. This is where we stand today.
Regardless of the validity of the patent or the effect on inventors, the amendment before Congress to Check 21 seeks to fix a serious flaw in the Check 21 legislation and actually achieve the purposes of this legislation to make our economy more secure. Congress takes action of this sort all the time. Comparing this action to Kilo just shows an inherent misunderstanding not only of the role of government, but of 5th Amendment Takings law in particular and law in general. You should read up.
In the meantime, it is certain that this amendment will remove a huge disincentive to banks adopting electronic check processing. It is likewise certain that this amendment will improve our economic security a great deal.
Why should DataTreasury with its two employees and no products or services profit while the rest of America remains unsecured?
It is not being considered with the intent to promote innovation, or to reward small inventors, or to promote a massive conspiracy between big business and Congress and hand the former large amounts of cash. It probably will foster innovation, but this is not the point.
I agree, Wes, that the process of using electronic fund transfers is cheaper. And, like Scott said, electronic fund transfers are needed for national security. At this point, we may want to put some faith in our political leaders who have given the amendment their unanimous support (Senate Judicial Committee).
As for Wes’s comments about creating the method patent- the idea of electronic transfers was first posited (as are all great ideas) in science fiction back in 1887 by Edward Bellamy. DT did create software to accommodate an electronic transfer of imaged checks and (as far as I know) banks do pay for this. The patent in question is the method of imaging and electronically transferring checks. DT claims to own this idea but as we know, the idea has been around a long time. Further, the idea is so important that the Check 21 law mandated that banks have to use this method. I
DT did create software to accommodate an electronic transfer of imaged checks and (as far as I know) banks do pay for this. The patent in question is the method of imaging and electronically transferring checks. DT claims to own this idea but as we know, the idea has been around a long time.
There are 2 very incorrect comments in this post….#1…the banks are refusing to pay for anything..just useit,abuse it and don’t pay anyone..thats the banks approach…#2…ideas are always around for many yrs…the actual execution (the process that DT has a patent for) is were value is stored and DT wants to be paid rather than stripped naked…Not an unusual request. If they are so wrong..pray-tell…how coe the USPTO has stated that the patents are valid…NOT ONCE BUT TWICE.
DT did create software to accommodate an electronic transfer of imaged checks and (as far as I know) banks do pay for this. The patent in question is the method of imaging and electronically transferring checks. DT claims to own this idea but as we know, the idea has been around a long time.
There are 2 very incorrect comments in this post….#1…the banks are refusing to pay for anything..just useit,abuse it and don’t pay anyone..thats the banks approach…#2…ideas are always around for many yrs…the actual execution (the process that DT has a patent for) is were value is stored and DT wants to be paid rather than stripped naked…Not an unusual request. If they are so wrong..pray-tell…how come the USPTO has stated that the patents are valid…NOT ONCE BUT TWICE.
There is a new story in Politico about the GAO investigation of DT: http://www.politico.com/news/stories/0608/10808.html
It is pretty interesting. It looks like the Senate has asked the GAO to look into what DT actually does (shocker). I’m not a betting may, but the odds are better than nothing that they will find DT is a shell company of two crazy guys attacking banks with whatever ammunition they can find.
[…] Patent Baristas » IPO Urges Action Against Patent Reform Bill Provision (IPO) has made a call to arms agains the patent reform legislation in the Senate (S.1145), which may be considered for a vote within the next few weeks. IPO is all-out against the dreaded Applicant Quality Submissions (AQS). (tags: patent s1145 reform) […]