ILNews

Lawmaker asks General Assembly to study creation of state patent law

Back to TopCommentsE-mailPrintBookmark and Share
Indiana Lawyer Focus

An Indiana lawmaker wants to explore whether the state should create its own patent law, focusing on specific business method processes that aren’t covered by the federal patent system. The idea addresses long-standing uncertainty about patent coverage for the inner workings of a product or service that a business might want to create, and for Indiana it applies to both existing and emerging industries where these methods become more important. Those who want to explore a state statute say it could resemble the approach taken by jurisdictions on trademarks and other intellectual property issues that aren’t specifically regulated by the federal patent law, but within the Indiana legal community opinions differ on whether this would even be possible.

What’s clear about the debate is that Indiana may be one of the first states to begin addressing a controversial issue that even the nation’s highest court has refused to offer guidance on, creating uncertainty for attorneys and judges who must address these patent questions.

In January, Sen. James Merritt, R-Indianapolis, authored Senate Resolution 10 that urges the state’s legislative council to establish an interim study committee during the General Assembly’s off-months that would explore the creation of state patent law. That resolution isn’t binding, but asks the legislative leadership to consider that idea later in the year. The resolution was assigned to the Senate Judiciary Committee but did not receive a hearing.

The idea surfaced when Indianapolis patent attorney Dan Lueders with Woodard Emhardt Moriarty McNett & Henry, approached Merritt and asked him to start the legislative discussion. He’d been contemplating this patent law possibility for some time, but a June 2010 ruling from the Supreme Court of the United States pushed him to get the discussion going.

That ruling came in Bilski v. Kappos, 561 U.S. ___ (2010), in which the justices rejected a patent for a type of business process that a Pittsburgh consumer energy product company wanted to patent – the method for how it hedged energy trade. But at issue was whether its process for doing that was patent-eligible through Section 101 of the U.S. Patent Act, which details four categories of inventions eligible for patents – processes, machines, manufacturers, and compositions of matter. This case questioned what legal criteria a process must meet in order for it to be patentable.

The Federal Circuit Court of Appeals held in October 2008 that the process for predicting and hedging risk in commodities markets didn’t deserve a patent because it wasn’t tied to a machine or did not result in any physical transformation. In affirming the patent claims rejection, the federal appellate court also reiterated the “machine-or-transformation test” that had been long used as a standard in these cases.

Leading up to the decision, IP attorneys, businesses, and inventors worried that the court could have upheld the ruling in a broad way that would have invalidated hundreds of software business patents already secured; or that it would have restricted or shifted the standard for how those types of patents are obtained in the future.

The justices decided it wasn’t necessary to make broad sweeping decisions about patents to dispose of the case, but they instead relied on existing precedent to make a decision. The court chose not to further define what constitutes a patentable process.

“With even more people trying to innovate and thus seeking patent protections for their inventions, the patent law faces a great challenge in striking the balance between protecting inventors and not granting monopolies over procedures that others would discover by independent, creative application of general principles,” Justice Anthony Kennedy wrote. “Nothing in this opinion should be read to take a position on where that balance ought to be struck.”

Lueders said that the Bilski ruling “galvanized his developing thought” on state patent law creation.

“As patent lawyers, you read the concurring justices’ opinions that demonstrated a lot of hostility to the federal business patents,” he said. “That’s telegraphing the future of federal patent law into an area that will be unprotected.”

That is what makes it important for Indiana to delve into this area, according to Lueders and Merritt. Both said they haven’t heard of this happening elsewhere.

“I’ve reached out to other IP lawyers, and like anytime you get a bunch of lawyers together there are different views,” Lueders said. “But we’re collecting good input and this is gaining some interest.”

Merritt said his challenge in the General Assembly is to convince his colleagues that this is an interesting idea, and that it could be an economic development tool if businesses know they can come to Indiana to protect these business processes in a way that isn’t offered anywhere else. Both recognize that could be a challenge open to interpretation.

“You could envision some scenarios where people might not see it that way, and this might go against business,” Lueders said. “But I’m a pro business capitalist without apology, and I believe you create a market or those business rights if you encourage innovation like this does.”

A draft concept that legislators could study includes language that would allow state statute to focus on areas where federal preemption isn’t an issue, according to Lueders. A starting framework calls for “protectable business methods” not being protectable, and that would entail anything within the meaning of the Patent Act’s sections 101, 103, and 112, as well as one or more of any “idea, procedure, process, system, method of operation, concept, principle, or discovery” within Section 102.

Additionally, the language quotes the landmark ruling Bonito Boats v. Thunder Craft Boats, 489 U.S. 141 (1989) that is considered a guiding principle on patent protections to say that states are only prohibited from offering any form of patent protection to articles or processes that fall within the meaning of the broad scope of patentable subject matter.

This state law would apply to those non-protected areas. States are currently able to have statutes regarding topics such as trademarks and right of publicity. Though the areas might overlap with what’s offered with copyrights federally, they aren’t necessarily preempted by federal law.

“We’re talking stuff that is not protected by federal statutes, like books or music or software,” Lueders said. “By recognizing federal supremacy, you can avoid federal preemption. Beyond my initial framework, though, it’s not my place to decide how broad or narrow a law might be. That’s the Legislature’s job.”

But not everyone sees this as a topic the state should be examining. IP attorneys and those in academia see insurmountable issues regarding federal preemption. Just because a “process” might not be patentable through federal law, it doesn’t mean a state is able to bypass that process, they say. Some also wonder whether a state patent office would have to be created to review these types of patent questions and what administrative costs that would create for the state.

Indianapolis attorney Bob Null with Baker & Daniels doesn’t believe that even this proposed structure could sidestep preemption concerns. That would prevent Indiana from crafting its own patent protections on ineligible patent subject matter.

Quoting from the same precedent that Lueders cited, Null looked to a passage that reflects states are not free to offer equivalent protections to ideas that Congress had determined should belong to all.

“I’ve never really given this any thought, and can’t see any benefit to having a state patent law,” he said. “Among other things, it seems that it would only be enforceable within the state and that just isn’t logical for most companies to have different patent procedures based on where you’re located at.”

Indiana University Maurer School of Law professor Mark Janis said this issue has surfaced nationally and internationally in the patent community for years, and he doesn’t see it as productive for the Indiana General Assembly to jump into the fray.

He said that founding father James Madison once examined this issue and said it wouldn’t be effective, and that was a topic addressed in the Federalist Papers.

“In my view, they’d be far better off considering ways to better connect Indiana businesses with intellectual property law expertise, to ensure that those businesses are able to secure the federal intellectual property rights to which they are entitled and to build on the existing intellectual property infrastructure in the state,” he said.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. He called our nation a nation of cowards because we didn't want to talk about race. That was a cheap shot coming from the top cop. The man who decides who gets the federal government indicts. Wow. Not a gentleman if that is the measure. More importantly, this insult delivered as we all understand, to white people-- without him or anybody needing to explain that is precisely what he meant-- but this is an insult to timid white persons who fear the government and don't want to say anything about race for fear of being accused a racist. With all the legal heat that can come down on somebody if they say something which can be construed by a prosecutor like Mr Holder as racist, is it any wonder white people-- that's who he meant obviously-- is there any surprise that white people don't want to talk about race? And as lawyers we have even less freedom lest our remarks be considered violations of the rules. Mr Holder also demonstrated his bias by publically visiting with the family of the young man who was killed by a police offering in the line of duty, which was a very strong indicator of bias agains the offer who is under investigation, and was a failure to lead properly by letting his investigators do their job without him predetermining the proper outcome. He also has potentially biased the jury pool. All in all this worsens race relations by feeding into the perception shared by whites as well as blacks that justice will not be impartial. I will say this much, I do not blame Obama for all of HOlder's missteps. Obama has done a lot of things to stay above the fray and try and be a leader for all Americans. Maybe he should have reigned Holder in some but Obama's got his hands full with other problelms. Oh did I mention HOlder is a bank crony who will probably get a job in a silkstocking law firm working for millions of bucks a year defending bankers whom he didn't have the integrity or courage to hold to account for their acts of fraud on the United States, other financial institutions, and the people. His tenure will be regarded by history as a failure of leadership at one of the most important jobs in our nation. Finally and most importantly besides him insulting the public and letting off the big financial cheats, he has been at the forefront of over-prosecuting the secrecy laws to punish whistleblowers and chill free speech. What has Holder done to vindicate the rights of privacy of the American public against the illegal snooping of the NSA? He could have charged NSA personnel with violations of law for their warrantless wiretapping which has been done millions of times and instead he did not persecute a single soul. That is a defalcation of historical proportions and it signals to the public that the government DOJ under him was not willing to do a damn thing to protect the public against the rapid growth of the illegal surveillance state. Who else could have done this? Nobody. And for that omission Obama deserves the blame too. Here were are sliding into a police state and Eric Holder made it go all the faster.

  2. JOE CLAYPOOL candidate for Superior Court in Harrison County - Indiana This candidate is misleading voters to think he is a Judge by putting Elect Judge Joe Claypool on his campaign literature. paragraphs 2 and 9 below clearly indicate this injustice to voting public to gain employment. What can we do? Indiana Code - Section 35-43-5-3: Deception (a) A person who: (1) being an officer, manager, or other person participating in the direction of a credit institution, knowingly or intentionally receives or permits the receipt of a deposit or other investment, knowing that the institution is insolvent; (2) knowingly or intentionally makes a false or misleading written statement with intent to obtain property, employment, or an educational opportunity; (3) misapplies entrusted property, property of a governmental entity, or property of a credit institution in a manner that the person knows is unlawful or that the person knows involves substantial risk of loss or detriment to either the owner of the property or to a person for whose benefit the property was entrusted; (4) knowingly or intentionally, in the regular course of business, either: (A) uses or possesses for use a false weight or measure or other device for falsely determining or recording the quality or quantity of any commodity; or (B) sells, offers, or displays for sale or delivers less than the represented quality or quantity of any commodity; (5) with intent to defraud another person furnishing electricity, gas, water, telecommunication, or any other utility service, avoids a lawful charge for that service by scheme or device or by tampering with facilities or equipment of the person furnishing the service; (6) with intent to defraud, misrepresents the identity of the person or another person or the identity or quality of property; (7) with intent to defraud an owner of a coin machine, deposits a slug in that machine; (8) with intent to enable the person or another person to deposit a slug in a coin machine, makes, possesses, or disposes of a slug; (9) disseminates to the public an advertisement that the person knows is false, misleading, or deceptive, with intent to promote the purchase or sale of property or the acceptance of employment;

  3. The story that you have shared is quite interesting and also the information is very helpful. Thanks for sharing the article. For more info: http://www.treasurecoastbailbonds.com/

  4. I grew up on a farm and live in the county and it's interesting that the big industrial farmers like Jeff Shoaf don't live next to their industrial operations...

  5. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

ADVERTISEMENT