[Am-info] (OT) This Headline Is Patented

[Mitch Stone]

The intellectual property system is running amok. Thought some might be =20=

interested. The second part will be on the internet.

http://www.latimes.com/business/la-fi-=20
patent7feb07,1,3782659.story?coll=3Dla%2Dhome%2Dheadlines

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Note: This Headline Is Patented
Not really -- but restroom instructions and a peanut butter and jelly =20=

sandwich were. The examples illustrate a bureaucracy in crisis.

By David Streitfeld, Times Staff Writer

First of two parts

For decades, finicky children have been eating peanut butter and jelly =20=

sandwiches with the crust removed. =46rom a legal point of view, =
however, =20
the lunchbox staple was invented on a patio in Fargo, N.D., in 1995.

David Geske, who ran a packaged ice business, was entertaining his =20
friend Len Kretchman, a consultant. For lunch, their kids wanted peanut =20=

butter and jelly with the bread trimmed and folded over. As they were =20=

preparing the meal, Kristen Geske and Emily Kretchman told their =20
husbands: "You guys should make a sandwich with no crust."

That offhand comment spawned Incredible Uncrustables, a sandwich the =20
two entrepreneurs mass-produced for Midwestern schools. It also began a =20=

long-running dispute over whether the U.S. Patent and Trademark Office =20=

went too far when it gave Geske and Kretchman the first patent on a =20
mundane household sandwich.

"This doesn't mean your grandmother can't make you a peanut butter and =20=

jelly sandwich," said Ann Harlan, a lawyer for J.M. Smucker Co., which =20=

now owns Geske and Kretchman's company.

But it does mean that Smucker will try to prevent other companies from =20=

making them. For more than two years, Smucker has been arguing in court =20=

and the patent office that a crustless peanut butter and jelly sandwich =20=

made by Albie's Foods Inc. is violating its patent and must be taken =20
off the market.

"They're misusing the patent system," said Albie's lawyer Kevin Heinl. =20=

"It's outrageous."

A generation ago, Smucker's sandwich, which looks like a flying saucer, =20=

and Albie's, which is a fat square, would have fought it out in the =20
marketplace. The best sandwich would win.

Now the corporate urge is to get a patent to stifle competition. It's a =20=

process being helped along by the courts and Congress, which keep =20
broadening the nature of what is patentable while limiting the patent =20=

office's ability to reject an application on the grounds of common =20
sense.

Meanwhile, the system as a whole is breaking down. Patent applications =20=

are increasing in complexity and length, but the 3,500 examiners still =20=

are evaluated by how many they approve. The inevitable consequence, =20
says one former examiner: "The path of least resistance is saying yes." =20=

Three-quarters of applications get approved.

Two former heads of the patent office have described the agency as =20
sitting "on the edge of an abyss."

"Crisis is a strong word," the American Intellectual Property Law Assn. =20=

has noted in correspondence, "but we believe that it aptly describes =20
the situation."

James E. Rogan, the former Republican congressman from Glendale who =20
became director of the patent office in December 2001, agrees with all =20=

but the most strident critics.

"This is an agency in crisis, and it's going to get worse if we don't =20=

change our dynamic," Rogan said. "It doesn't do me any good to pretend =20=

there's not a problem when there is."

Beyond the plight of an antiquated government bureaucracy overseeing a =20=

field that is undergoing explosive growth, there are deeper questions =20=

about the fundamental role of patents.

They played a key role in the technology boom of the last 25 years. =20
Companies licensed their innovations to others, who in turn used them =20=

as springboards for new inventions.

Yet there's a point where patents impede innovation. It can cost more =20=

to check whether a software program infringes on previously patented =20
programs than it cost to write the program in the first place.

Since patents tend to be complex, infringement can be determined only =20=

by a professional. That's one reason the number of intellectual =20
property lawyers has quadrupled since 1985. During the same time, the =20=

number of court cases involving intellectual property has doubled.

Technology companies, in particular, spend massive amounts of time and =20=

money either suing over patents or being sued. Research in Motion Ltd., =20=

maker of the popular BlackBerry hand-held e-mail device, sued =20
competitors for alleged patent violations, gaining licensing fees. Then =20=

the company itself was sued for infringement. A private holding company =20=

called NTP Inc. said Research in Motion was violating its patents on =20
wireless e-mail.

Research in Motion lost the case, recording a $32-million charge for =20
litigation and related expenses. NTP is seeking an injunction to =20
prevent the company from selling BlackBerrys. Meanwhile, the patent =20
office is reviewing whether it should have granted the NTP patents in =20=

the first place.

"Developing software is like crossing a minefield: With each design =20
decision, you might step on a patent that will blow up your project," =20=

said Richard Stallman, an advocate of free software. "A modern program =20=

combines hundreds of ideas, so be prepared for a long stroll among the =20=

mines."

The system was never supposed to be so combative. Patents, which last =20=

for 20 years, are enshrined in the Constitution as a means of promoting =20=

creativity and encouraging progress by rewarding inventors.

For a long time, the scope of patents was sharply limited and easily =20
understood. Ideas and natural phenomena were not patentable. Machines =20=

and industrial processes were =97 provided they were both new and =
useful.

In 1880, Supreme Court Justice Noah Swayne added a third requirement: A =20=

patentable invention, he wrote, should be inspired by "a flash of =20
genius."

This put a high bar on patentability, and through the decades the =20
courts raised it. In 1950, Justice William O. Douglas wrote, "The =20
Constitution never sanctioned the patenting of gadgets. Patents serve a =20=

higher end =97 the advancement of science."

Inventors and patent-seeking corporations didn't like that. Two years =20=

later, Congress removed the "flash of genius" standard and replaced it =20=

witha vaguer requirement of "non-obviousness."

That began to loosen the patent floodgates. In 1980, the Supreme Court =20=

said life, in the form of genetically engineered bacteria, was =20
patentable. The decision gave birth to the modern biotech industry.

A Case for Licensing

Five years ago, the patent court, the U.S. Court of Appeals for the =20
Federal Circuit, took the increasingly blurry line between what was =20
patentable and what wasn't and erased it.

At issue was a patent held by the Signature Financial Group Inc. for a =20=

system that channeled money from mutual funds into a central investment =20=

pool.

Under existing law, two things should have invalidated this patent.

First, it was a method of doing business. Previous courts had always =20
held that business methods, like ideas or laws of nature, were not =20
something one could patent. After all, companies already had plenty of =20=

incentive to improve their business techniques. If they didn't, they'd =20=

lose out to the competition.

But Signature's system wasn't only a method of doing business. It also =20=

was a mathematical process using algorithms.

An algorithm is a set of instructions for doing things in a certain =20
order. And if a business plan, like "sell quick, cheap food close to =20
major highways," seems like an idea that can't be patented, then an =20
algorithm had seemed doubly so. Like all forms of math, it had been =20
considered part of the realm of ideas =97 as unpatentable as E =3D mc2.

This time, however, the court said that because Signature's algorithms =20=

produced a useful, concrete and tangible result, it could be patented. =20=

As for the long-standing exception for business methods, the court =20
found it "ill-conceived."

The ruling amazed intellectual property experts.

"What the Signature system was doing was accounting. It was dividing =20
numbers by other numbers," said Duke University law professor James =20
Boyle.

The number of business-method applications, many of which involved =20
algorithms, rose sevenfold between 1998 and 2001. One patent that =20
quickly became notorious was given to IBM Corp. for a "system and =20
method for providing reservations for restroom use" on airplanes. The =20=

method: first come, first served.

For Boyle, we've reached a point where we're "tremblingly close" to =20
patenting ideas.

"You're no longer patenting the corkscrew," he said. "You're patenting =20=

the idea of taking the cork out of the bottle so you can drink the =20
wine."

Or, in the case of Patent No. 6,004,596, the idea of the peanut butter =20=

and jelly sandwich.

Products Come Together

Jelly has been around for centuries, commercial peanut butter from 1890 =20=

and machine-sliced bread since the late 1920s. A decade later, some =20
unknown genius combined all three ingredients to make the =20
quintessential American sandwich.

PB&Js hit it big in the post-war years. The sandwiches weren't too =20
messy, they didn't spoil after a couple of hours in a lunchbox, and =20
they encouraged the consumption of milk.

A PB&J is pretty simple, which didn't stop food companies from trying =20=

to make it simpler. One such innovation was premixed peanut butter and =20=

jelly, reducing the number of ingredients from three to two. Then Geske =20=

and Kretchman came up with the notion of prefabricating the whole thing.

They made a good pair. Geske had been looking for something to do in =20
the winter, when demand for his packaged ice dropped, and Kretchman had =20=

some background in selling food to schools. They developed the sandwich =20=

at home and then did taste tests at schools.

Incredible Uncrustables was an immediate hit. Not only was the product =20=

nutritional and appealing, but it also eliminated the need for the =20
schools to spend time making sandwiches themselves.

An intellectual property attorney helped secure a trademark on the =20
name. The patent came about more casually.

"One attorney said, 'There's nothing here,' and we said OK," Geske =20
recalled. "But a new attorney came in, and he said, 'We can get this =20
through, no problem.' We gave them their fees. It took about a year and =20=

a half. "

By the end of 1998, about 50 employees in Fargo were making 35,000 =20
Incredible Uncrustables a day for schoolchildren in eight Midwestern =20
states.

Smucker, the Orrville, Ohio, maker of jams and jellies, realized the =20
sandwich could be a valuable addition to its product line. Smucker =20
bought the company and shortened the name to Uncrustables.

The company also got the patent, which was granted Dec. 21, 1999, for a =20=

"sealed crustless sandwich."

"On what basis they granted it, I have no idea," said Geske, who made =20=

enough from the sale to Smucker to "take a couple of years off to enjoy =20=

the family."

The defendant in the sandwich lawsuit, Albie's, was founded in 1987 by =20=

two childhood buddies to sell pasties, which are meat or vegetables =20
baked in dough. In the summer of 2000, the Gaylord, Mich.-based company =20=

began selling a peanut butter and jelly sandwich called E.Z. Jammers. =20=

It weighed 2.8 ounces, bigger than Smucker's 2-ounce product.

By December, Smucker noticed the E.Z. Jammers and demanded that Albie's =20=

stop. Albie's sued to have the patent declared invalid. Smucker then =20
sued Albie's for infringement.

To avoid the expense of a full-blown suit, Albie's asked the patent =20
office for a reexamination, a relatively rare procedure. The best way =20=

to get a patent thrown out is by finding examples of so-called prior =20
art =97 proof that the patent really didn't offer anything new.

One such piece of evidence suggested by Albie's was a kitchen tool =20
called the Cut-N-Seal. This plunger-type device allowed an individual =20=

to seal and crimp a filling between two slices of bread.

To knock down the Cut-N-Seal, a Smucker lawyer filed an affidavit =20
describing how he had tried to use it to make a sandwich that looked as =20=

sleek and tidy as an Uncrustable.

The Cut-N-Seal sandwiches, the lawyer said, all had "rupturing =20
problems," particularly in the "upper bread layer." The accompanying =20
photographs showed jelly bursting out all over.

"So what?" said Heinl, the Albie's lawyer. "Anyone can make a defective =20=

sandwich."

Although the arguments were narrow, the business implications were =20
large.

"The Uncrustables brand sandwich defines its own market," Smucker said =20=

in an affidavit arguing that anything so immediately popular had to be =20=

non-obvious and therefore patentable. With sales of 50 million =20
sandwiches a year, it was the firm's fastest-growing product.

The point of the lawsuit was to keep it that way, Heinl said, noting: =20=

"They were filing suit to keep Albie's out of the market."

Smucker, which recently solidified its hold on the peanut butter market =20=

by buying the Jif brand, is confident the reexamination will help =20
Uncrustables.

"The claims will be narrowed," said attorney Robert Vickers, "but the =20=

patent will be a lot stronger."

Patent Office Challenges

Patent officials decline to talk about specific patents, although they =20=

note that the most controversial come under review or, like the IBM =20
bathroom patent, are quietly dropped by their owners.

"We grant 170,000 patents a year," said Esther Kepplinger, deputy =20
commissioner of patent operations. "To focus on five, and extrapolate =20=

that the overall quality is poor, is unfair."

Yet the agency's director, Rogan, acknowledges that the problems have =20=

run deeper.

"Some of the early business-method patents were fairly broad," he said. =20=

These led to conflicting claims and lawsuits. "We're much narrower =20
now." And tougher: "We've gone from a 75% acceptance rate to a 75% =20
rejection rate" on those patents. Of course, those early, broad patents =20=

are still out there, wreaking havoc.

Rogan hopes to hire 2,500 additional examiners, but his strategic plan =20=

to solve the patent crisis also includes outsourcing some of the basic =20=

patent search work, saving time and labor. He wants to encourage =20
electronic applications, rescuing a patent office he says is "drowning =20=

in paper," and charge applicants higher fees for bigger applications, a =20=

move intended to reduce unnecessary patent claims.

Although no patent director has been so ambitious, smaller reforms have =20=

failed before. The patent office first promised a paperless office in =20=

1983.

Outside critics believe the problems are more intractable.

In a recent speech, Judge Richard Posner of the U.S. 7th Circuit Court =20=

of Appeals in Chicago said a large part of the recent jump in =20
applications "is defensive or strategic patenting."

"You get a patent because [otherwise] someone else will patent it," he =20=

said. "Or you get a patent because you would like to block a =20
competitor."

The walls protecting this ever-expanding pool of intellectual property =20=

are getting stronger. One reason is the 1982 creation of the Court of =20=

Appeals for the Federal Circuit. It handles only patent cases =97 and =20=

usually rules in favor of the patent holder.

"A specialized court tends to see itself, I think, as a booster of the =20=

specialty industry," Posner said.

Last year, the appeals court said the patent office had incorrectly =20
rejected two applications for "obviousness." If an examiner rejects an =20=

application using "general knowledge," the court said, that knowledge =20=

"must be articulated and placed on the record."

In other words, said deputy commissioner Kepplinger, "we can't reject =20=

something just because it's stupid."

The absence of sense seems to figure strongly in the most famous patent =20=

of the last few years. Last spring, the patent office issued a patent =20=

to Steven Olsen for "a new and improved method of swinging": pulling =20
"first on one chain and then on the other."

Even if you didn't know Steven was 7 years old, the brief and elegantly =20=

written application is obviously tongue in cheek, complete with a grand =20=

pronouncement that this "invention" will enable "even young users to =20
swing independently and joyously, which is of great benefit to all."

Steven's father, Peter Olson, a patent attorney with 3M Co. who wrote =20=

the application, was merely trying to show his son what he did for a =20
living. But the examiner didn't get the joke.

The patent office is searching for documented proof that children have =20=

indeed always powered their swinging by pulling on the chains. Then, =20
and only then, will it kill the patent as quietly as possible.

Next: Patent holders battle for control of the Internet.