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December 30, 2013
Open Market, 314, and Obviousness
In a blog post titled "The CAFC Got it Wrong"
, Lawrence Stewart discusses a plan to ask SCOTUS to wade back into the patent and patent-obviousness waters. Given what a hash they made of 101 and 103 last time I'm not encouraged
but the losers in this case - for whom Stewart works as a consultant - appear to have no other option as the CAFC has ruled against them in Soverain v. Newegg
The patent at issue here is sometimes referred to as "the e-commerce patent", U.S. Patent 5,715,314. This patent is quite old in Internet years, as it's one of the first filed by a company that was then called Open Market - Soverain now holds Open Market's IP and uses it inside its own current-generation Transact e-commerce system. They sued Newegg contending that the retailer violated the 314 patent and the case has been winding along for years.
The 314 patent is a venerable piece of work. Unlike many of today's software patents, the 314 application included the entire source code and after multiple re-examinations the patent has hundreds of prior art citations. If more software patents were held to that level of rigor we'd have a lot fewer problems, in my opinion. However, the question here isn't its venerability, it's obviousness. Courts asked to rule on obviousness claims can't make judgments based on current understanding. Today HTTP has been around forever and there have been many advances in the art and science of working over stateless protocols. But for someone to claim that the 314 patent discloses something obvious (and therefore invalid) they must rule that it was obvious when the patent was filed. That's a tough job.
Dr Stewart, one of the original founders of Open Market, contends in the blog post linked above that up until recently courts got it right. The 314 patent was not obvious at the time, and it met stringent criteria for validity and usefulness. It has been upheld at trial several times. Recently, however, the CAFC issued a final ruling that two of the claims in the patent were obvious. Soverain has asked the Supreme Court for certatori and Newegg naturally opposes this.
The case is extra-special complicated because there appear to have been legal irregularities in the way the case was handled, not least of them a 17-month delay between oral arguments being heard and a ruling being issued. There are also Seventh Amendment-related issues here as each side makes competing claims about what should and should not have been the subject of a jury trial. Even if SCOTUS takes the case it's entirely possible (I would say likely) that they would not touch the intellectual property issues before settling the procedural and 7th Amendment issues.
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