Austin Technology Law Blog : Texas Technology Lawyers & Attorneys for Copyright, Trademarks & Software Licensing in Houston, Dallas & Austin TX

Back in 2004 the FCC investigated the government billing practices of AT&T.  The investigation lead to a settlement in which AT&T paid $500,000.  Afterwards, a trade group representing some of the telecommunication giant's competitors wanted to find out exactly what the FCC discovered during its investigation, and so they filed a Freedom of Information Act request.  

Exemption 7(C) of FOIA  allows the government to withhold releasing information that would cause an unwarranted invasion of personal privacy.  AT&T, claiming a right of personal privacy, appealed within the FCC to prevent the release of the information.  The FCC disagreed and AT&T then appealed to the Third Circuit.  The Third Circuit reversed and sided with AT&T stating, "corporations, like human beings, face public embarrassment, harassment and stigma” by having their private information released.  Now the Supreme Court has decided to hear the case this term.

The "personhood" of corporations has always been a controversial concept under the law.  Last term, in the Citizens United case, the Supreme Court held that corporations have free speech rights under the First Amendment when it comes to political advocacy. 

If corporations are found to have privacy rights similar to individuals it could have a profound effect on the public's knowledge of corporate behavior.  Many feel that the citizens' right to know about information affecting the public interest outweighs the privacy rights a corporation might have.  For example, some fear that corporate privacy claims could be used in cases involving safety records (think Toyota, BP), or certain policies of financial institutions (think Goldman Sachs).  Stay tuned.

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Recently, Paul Allen (co-founder of Microsoft and worth roughly the GDP of Jamaica) filed a patent infringement lawsuit against most of Silicon Valley.  The Defendant's list reads like a who's who of modern technology giants:  Apple, Google, Facebook, eBay, AOL, Netflix, Yahoo, Office Depot, Office Max, Staples, You Tube (not listed: Microsoft).

The patents at issue extend back to the late 90s when Allen's now defunct company, Interval Research, was granted a number of patents dealing with e-commerce and search process.  In fact, it was so long ago that Google wasn't even in existence when some of the patents were applied for. This is obviously a big deal for Silicon Valley companies as they struggle to work within the current patent system.  The sheer number of defendants and the issues at stake has lead some to surmise that this could be the tipping point for software patents as a whole.  Earlier this year, many were guessing/hoping that software patents would finally be invalidated in by the Supreme Court in the recent case, In Re Bilski, but that didn't happen.  Obviously, an entire industry cannot constantly be fighting out their innovations in the court room because in the long run, it only ends up hurting consumers and stifling progress.  So we'll see if this is actually a turning point in our current patent system or just another addition to our patent thicket.  Stay tuned. 

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In the highly anticipated decision, Bilski v. Kappos, the Supreme Court affirmed the rejection of a specific business method patent, but left the door wide open on the validity of thousands of similar patents.  In what has become typical for decisions under the Roberts Court, the majority opinion was narrowly defined.  The court ruled only on the specifics of the case while failing to provide much guidance for similar patents. 

Watching the case intently were both sides of the patent divide. Of course, large sectors of the economy depend on patent rights for growth and innovation, and many feel that more patent rights further innovation. However, there exists a large segment of the business community, including many in the tech industry, who were hoping the court would take this opportunity to put an end to controversial business method patents (and software patents) by applying the "machine or transformation" test adopted by the Federal Circuit.  The test requires any patent to either: 1) be tied to a particular machine devised to carry out a process in a non-conventional, non-trivial way, or 2) transform an article from one thing or state to another.  Abstract ideas like business methods would not satisfy the test. 

At issue in Bilski was a rejected business method patent for a system to hedge on energy prices using weather projections.  And while the court rejected this particular patent, it went out of its way to state that it was a narrowly defined decision, and the machine or transformation test is only "useful and important clue," but should not be the sole test.  Many justices on the court expressed doubt about the validity of business method patents, but a majority of them were not ready to categorically exclude them from patentability.  The result is that thousands of business method patents and software patents remain valid, but future litigation will be needed to determine which ones.  So the lesson as always: nobody really wins except the lawyers. 

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