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marymosley · 5 years

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New PatentlyO Law Journal article: Colleen Chien, Deferring Patentable Subject Matter

This past fall at the Administering Patent Law symposium at Iowa Law, Professor Colleen Chien presented an argument in favor of more intentional experimentation by administrative agencies such, as the USPTO to test policy concepts and proposed several possibilities. Below, Professor Chien describes one such project, based on the Merges/Crouch proposal for deferring patentable subject matter analyses in prosecution. Read the accompanying PatentlyO Law Journal article here:

Colleen V. Chien, Piloting Applicant-Initiated 101 Deferral Through A Randomized Controlled Trial, 2019 Patently-O Patent Law Journal 1. (2019.Chien.DeferringPSM)

Guest post by Colleen V. Chien, Justin D’Atri Visiting Professor of Business Law, Columbia University School of Law; Professor, Santa Clara University Law School

This post is the second in a series about insights developed based on USPTO data. An accompanying PatentlyO Patent Law Journal article includes additional data and experimental design details; both are drawn from Policy Pilots: Experimentation in the Administration of the Law, written for the 2018 Iowa Law Review Symposium on the Administrative State.

“The journey of a thousand miles begins with a single step.” – Lao Tzu

Responding to frustration with the Supreme Court’s patentable subject matter (PSM) decisions, the Federal Circuit has issued clarifying decisions, the USPTO has released new guidance regarding applying Section 101 (and 112), and Senators Coons and Tillis have holding roundtables. 101 appeals and rejections, including pre-abandonment rejections, have risen following Alice and Mayo, particularly within impacted technology areas. (Figs 1A and 1B, details here and here). To support tracking the impact of its own guidance and related developments, the USPTO should release updated versions of office action data (the last release was in 2017).

In this post, I propose a complementary approach that aims to conserve agency and applicant resources even while policymakers work to clarify the law. It builds on the idea of deferring 101 subject matter until other issues are exhausted first proposed by Robert Merges and Dennis Crouch, but with some important modifications. Deferral would be at applicant’s option, not mandatory, and the USPTO should roll out this intervention through a controlled trial with randomization, as the agency has done previously, to determine the practice’s effectiveness.

Experimenting with Ordering

The case for deferring subject matter builds on the insight that 101 is rarely the single dispositive issue – among office actions prior to abandonment, less than 15% of TC36BM and medical diagnostic applications and 2% applications overall are “only 101.” Yet 101 is controversial – the rate of ex parte decisions addressing 101 has also shot up, from less than 10% to over 80% in 2018 in medical diagnostic and software technology areas, and to 26% overall. (Fig 1B)[1]

Deferring 101 would borrow from the Supreme Court doctrine of avoidance, which allows the Court to “resolve[] cases on non-constitutional grounds whenever possible,” in order to conserve court resources and legitimacy. Other federal agencies have also used deferral, for example, in the mid to late 2000s, when the application of immigration law to same-sex couples in some cases required family separation. To avoid this harsh consequence, Department of Homeland Security prosecutors administratively closed some cases, immigration judges granted continuances for unusually long periods in hopes that the law would change, and US Customs and Immigration enforcement officials granted requests for deferred action. That is to say, they avoided the law by deferring its application.

Avoiding PSM issues would allow cases to resolve, through allowance or abandonment, on less controversial, non-101 grounds.[2] (The USPTO’s new guidelines implement this logic to a degree, shifting focus towards 112 and away from 101). But making 101 deferral optional, at applicant’s discretion, would preserve the benefits of compact prosecution and the freedom applicants enjoy to select a fast or slow track for each application.

The Advantages of Experimentation

Trying out applicant-initiated 101 deferral through a rigorous pilot has several advantages. First, unlike changing the law or its application which requires all to adjust, only applicants dissatisfied with the status quo would see a change. 85% of office actions don’t even include a PSM rejection I’ve found previously.

Second, implementing 101 deferral as a pilot with randomization, like the USPTO did when it conducted the post-trademark registration proof-of-use pilot, will support effective policy-making through evaluation, iteration, and refinement.[3] Design (intent-to-treat), ethical (through consent) and methodological (power, randomization, etc.) concerns and details are discussed in the accompanying piece.Rigorously tracking the impact of PSM on patent prosecution over the course of a pilot can also provide much-needed empirical support to 101 policy-making in general.

Finally, my proposal preserves the benefits of the status quo, including the little-discussed incentive prosecutors now have to add details to their patent applications and claims, a good thing. In work with students that I presented at the Federal Trade Commission’s recent hearings building on an earlier analysis in IP Watchdog by Will Gvoth, Rocky Bernsden, and Peter Glaser from Harrity & Harrity LLP, I observed that there has been a “flight to quality” among patent complaints and applications. Carrying out a differences-in-differences analysis, we found that specification length and counts of words and unique words in the first claim have grown among software applications relative to others following the Alice decision. Deferring 101 would preserve this previously unexplored impact of the “Mayo-Alice effect” on software patent drafting. If 101 were eviscerated by Congress, so too could the incentive to be more concrete in describing and claiming inventions.

Conclusion

If successful, the treatment would result in the diminished presence of 101 subject matter issues within ex parte appeals and pre abandonment rejections and, potentially, resolution time, e.g. closer to pre-Mayo or Alice levels. Applicant and prosecutor satisfaction with the process, changes made to what gets filed, timelines, and such factors would also be worth tracking.

Read it here: Colleen V. Chien, Piloting Applicant-Initiated 101 Deferral Through A Randomized Controlled Trial, 2019 Patently-O Patent Law Journal 1. (2019.Chien.DeferringPSM)

With thanks to Santa Clara Law University students Jiu-Ying Wu, Nicholas Halkowski, Marvin Mercado, and Saumya Sinha and to William Gvoth, Peter Glaser, and Rocky Bernsden of Harrity LLP for assistance with data, and Hans Sauer and Jonathan Probell for their comments on earlier drafts.

[1] Even though 101 patentable subject matter issues appear in a quarter of 2018 appeals decisions, this share is still small compared to the share of decisions that mention, for example, “102�� (, “103”, or “112” issues though note that these numbers are inflated because they do not include case specific limitations that can weed out false positives based on incidental mentions (such as “ 10/282102”)

[2] For example, if an invention is incurably anticipated, obvious or unsupported, the case will have been resolved without considering subject matter. Likewise, if the claims have been re-formulated responsive to non-101 rejections and mooted any subject matter defects in the process, PSM will not factor into the application’s outcome.

[3] In that pilot, the USPTO randomly selected 500 registrations to participate in the initial program to assess the accuracy and integrity of the trademark register. Though companies selected to participate in the pilot had to comply with additional regulatory requirements, randomization ensured that the pilot’s findings were representative and its burdens, fairly distributed. See, 77 FR 30197, 30198 (explaining that randomness in the pilot was necessary to “ensure that the resulting assessment is not skewed by consideration of registrations with particular criteria, and that implementation of the rules does not create an unfair burden on specific types of trademark owners”). The results of the test and related USPTO reports, outreach and deliberations were used to expand and make the program permanent.

Prior Patently-O Patent L.J. Articles:

David A. Boundy, Agency Bad Guidance Practices at the Patent and Trademark Office: a Billion Dollar Problem, 2018 Patently-O Patent Law Journal 20. (Boundy.2018.BadGuidance)

Colleen Chien and Jiun-Ying Wu, Decoding Patentable Subject Matter, 2018 PatentlyO Patent Law Journal 1.

Paul M. Janicke, Patent Venue: Half Christmas Pie, And Half Crow, 2017 Patently-O Patent Law Journal 13. (Janicke.2017.ChristmasPie.pdf)

Paul M. Janicke, The Imminent Outpouring from the Eastern District of Texas, 2017 Patently-O Patent Law Journal 1 (2017) (Janicke.2017.Venue)

Mark A. Lemley, Erik Oliver, Kent Richardson, James Yoon, & Michael Costa, Patent Purchases and Litigation Outcomes, 2016 Patently-O Patent Law Journal 15 (Lemley.2016.PatentMarket)

Bernard Chao and Amy Mapes, An Early Look at Mayo’s Impact on Personalized Medicine, 2016 Patently-O Patent Law Journal 10 (Chao.2016.PersonalizedMedicine)

James E. Daily, An Empirical Analysis of Some Proponents and Opponents of Patent Reform, 2016 Patently-O Patent Law Journal 1. (Daily.2016.Professors)

Tristan Gray–Le Coz and Charles Duan, Apply It to the USPTO: Review of the Implementation of Alice v. CLS Bank in Patent Examination, 2014 Patently-O Patent Law Journal 1. (GrayLeCozDuan)

Robert L. Stoll, Maintaining Post-Grant Review Estoppel in the America Invents Act: A Call for Legislative Restraint, 2012 Patently-O Patent Law Journal 1 (Stoll.2012.estoppel.pdf)

Paul Morgan, The Ambiguity in Section 102(a)(1) of the Leahy-Smith America Invents Act, 2011 Patently-O Patent Law Journal 29. (Morgan.2011.AIAAmbiguities)

Joshua D. Sarnoff, Derivation and Prior Art Problems with the New Patent Act, 2011 Patently-O Patent Law Journal 12 (sarnoff.2011.derivation.pdf)

Bernard Chao, Not So Confidential: A Call for Restraint in Sealing Court Records, 2011 Patently-O Patent Patent Law Journal 6 (chao.sealedrecords.pdf)

Benjamin Levi and Rodney R. Sweetland, The Federal Trade Commission’s (FTC) Recommendations to the International Trade Commission (ITC): Unsound, Unmeasured, and Unauthoritative, 2011 Patently-O Patent Law Journal 1 (levi.ftcunsound.pdf)

Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent Law Journal 111 (Collins.KingPharma.pdf)

Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent Law Journal 95 (matthews.falsemarking.pdf)

Kristen Osenga, The Patent Office’s Fast Track Will Not Take Us in the Right Direction, 2010 Patently-O Patent L.J. 89 (Osenga.pdf)

Peter S. Menell, The International Trade Commission’s Section 337 Authority, 2010 Patently-O Patent L.J. 79

Donald S. Chisum, Written Description of the Invention: Ariad (2010) and the Overlooked Invention Priority Principle, 2010 Patently‐O Patent L.J. 72

Kevin Collins, An Initial Comment on Ariad: Written Description and the Baseline of Patent Protection for After-Arising Technology, 2010 Patently-O Patent L.J. 24

Etan Chatlynne, Investigating Patent Law’s Presumption of Validity—An Empirical Analysis, 2010 Patently-O Patent L.J. 37

Michael Kasdan and Joseph Casino, Federal Courts Closely Scrutinizing and Slashing Patent Damage Awards, 2010 Patently-O Patent L.J. 24 (Kasdan.Casino.Damages)

Dennis Crouch, Broadening Federal Circuit Jurisprudence: Moving Beyond Federal Circuit Patent Cases, 2010 Patently-O Patent L.J. 19 (2010)

Edward Reines and Nathan Greenblatt, Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009, Part II, 2010 Patently‐O Patent L.J. 7 (2010) (Reines.2010)

Gregory P. Landis & Loria B. Yeadon, Selecting the Next Nominee for the Federal Circuit: Patently Obvious to Consider Diversity, 2010 Patently-O Patent L.J. 1 (2010) (Nominee Diversity)

Paul Cole, Patentability of Computer Software As Such, 2008 Patently-O Patent L.J. 1. (Cole.pdf)

John F. Duffy, The Death of Google’s Patents, 2008 Patently O-Pat. L.J. ___ (googlepatents101.pdf)

Mark R. Patterson, Reestablishing the Doctrine of Patent Exhaustion, 2007 Patently-O Patent L.J. 38

Arti K. Rai, The GSK Case: An Administrative Perspective, 2007 Patently-O Patent L.J. 36

Joshua D. Sarnoff, BIO v. DC and the New Need to Eliminate Federal Patent Law Preemption of State and Local Price and Product Regulation, 2007 Patently-O Patent L.J. 30 (Download Sarnoff.BIO.pdf)

John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21. (Duffy.BPAI.pdf)

Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1 (Casino-Seagate)

New PatentlyO Law Journal article: Colleen Chien, Deferring Patentable Subject Matter published first on https://immigrationlawyerto.tumblr.com/

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repwincoml4a0a5 · 7 years

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The Urban Condo Boom Has Reached Its Final Frontier: Detroit

Tim Galloway for The Wall Street Journal

DETROIT—When David Di Rita first tried to develop luxury apartments in this city’s downtown, entire skyscrapers were vacant, storefronts were boarded up, drugs were peddled openly and most of the neighborhood’s residents were squatters.

The project flopped before it got off the ground. Mr. Di Rita and his fellow investors lost roughly $1.5 million.

A decade later, Mr. Di Rita is rolling the dice again and has erected the first new high-rise apartment building in 25 years in the downtown of America’s poorest major city.

Detroit is one of the last frontiers in the nation’s apartment-development boom. Bank lending remains scarce and the risks are enormous. The landscape is pocked by about 70,000 empty homes and the population, which has plunged by almost a third since 2000, continues to slide. Unemployment remains about twice the national average.

As such, it is shaping up as the toughest test yet of the back-to-downtown luxury-living movement that developers have been pushing in urban centers from Cleveland to Nashville, Tenn. Across the U.S., such development has reached its limit. Rents are dropping in some major cities, and bank lenders are pulling back even in strong markets.

Detroit developers, a small group of mostly local businesspeople, are gambling they will defy those odds because so little has been built there for decades.

Mr. Di Rita’s 15-story downtown project, the Griswold, built on the site where he failed before, opened Feb. 9. The 80 units feature floor-to-ceiling windows, granite countertops and polished concrete floors. He is asking $2,000 a month for one-bedroom apartments, roughly three times the going rental rate for a house in the area. He says it is already 50% leased.

The Griswold, a five-story apartment building, sits on top of a pre-existing, 10-story parking facility.

Tim Galloway for The Wall Street Journal

Dan Gilbert, the founder of mortgage lender Quicken Loans Inc. and the owner of the Cleveland Cavaliers, is building a 400-unit complex in the northeastern corner of downtown and another 200 so-called micro-units for young professionals.

St. Louis-based developer McCormack Baron Salazar is putting up nearly 300 units in an enclave called Orleans Landing on the Detroit riverfront. The first residents began moving in recently. Another 200-unit building called the Scott, which occupies nearly an entire block in a once-desolate corner of downtown, opened Dec. 1.

In all, about 2,000 new rental units came onto the market last year or are expected to in 2017, according to apartment-data firm MPF Research. That is the same number of units built in the city over the previous 16 years.

Detroit’s renewal has been heralded before, only to be undone by economic forces. Following the Super Bowl held here in 2006, city boosters predicted a revival before a national recession two years later halted progress.

This time, developers and city officials point to buildings actually being built and filling up. Downtown’s residential occupancy rate is more than 99%, according to the Downtown Detroit Partnership, a nonprofit that promotes development. As more units come online, however, developers say they have begun seeing a drop-off in leasing activity and a shrinking of waiting lists.

The national apartment market, meanwhile, is poised for a slowdown. A flood of luxury apartments has driven up vacancy rates and caused rent growth to slow. Of 189,000 multifamily rental units completed in 2016 in 54 U.S. metropolitan areas, 85% were in the luxury category, according to CoStar Group Inc., a real-estate research firm.

More than 378,000 new apartments are expected to be completed across the country this year, almost 35% more than the 20-year average, according to real estate tracker Axiometrics Inc. Rents, which have jumped more than 26% since 2010, are now growing much more slowly, and banks are retreating from making apartment loans in traditionally strong markets.

The Detroit projects face some unique challenges. Bank lending, the lifeblood of the commercial real-estate sector, is just starting to pick up in Detroit. To pay for their buildings, apartment developers have been combining public subsidies with capital from wealthy individuals, kicking in the rest themselves.

Also, some of the new properties have been appraised at well below their construction costs, meaning it could take developers years to recoup their investments.

“You ask yourself, can I put hundreds of thousands of dollars into this project and risk that I’m not going to get a return?” says Mr. Di Rita. “It requires a certain amount of personal wherewithal and personal risk.”

A view of the intersection of Griswold and State Streets from inside Mr. Di Rita’s building.

Tim Galloway for The Wall Street Journal

It has only been three years since Detroit filed for bankruptcy protection, the largest U.S. municipality ever to do so. Many of the city’s 139 square miles are blighted. On many blocks, boarded-up homes and grassy lots outnumber occupied residences.

Downtown Detroit, however, has added about 20,000 jobs since 2010, according to the Downtown Detroit Partnership. Mr. Gilbert himself has moved or created downtown about 17,000 jobs at Quicken Loans and its affiliated companies since 2010.

Although the median family income in Detroit is only about $26,000, according to census data, barely half the national median of about $52,000, the people moving downtown have a median income of roughly $55,000, according to the Downtown Detroit Partnership. Trendy eyeglass retailer Warby Parker and fast-foot eatery Shake Shack both opened in recent weeks.

Mr. Di Rita, who grew up on Detroit’s now-gritty east side, gave up a career as a lawyer for automobile supplier Visteon Corp. to become a developer in 2005. He set his sights on downtown.

At the time, there were no major multifamily-housing developers based inside the city. No banks had experience making loans for apartment projects, and there was little evidence of demand for such properties in a city brimming with empty homes.

Metropolitan Detroit’s unemployment rate then was the second-highest of any major U.S. city, after only Hurricane Katrina-ravaged New Orleans. The city faced a budget deficit of up to $155 million, forcing it to lay off police officers and close recreation centers.

Market rents weren’t high enough to support new construction. The young people coming to Detroit were mainly artists and other urban pioneers hoping to squat in vacant buildings.

Mr. Di Rita says he and his partner, Stacy Fox, plowed more than $1 million of their own money into their new company, Roxbury Group. He started touring empty office buildings to renovate. In one he found a People magazine with the page open to “Who Shot J.R.?”—an ’80s story line from the hit TV show “Dallas.”

He persuaded the city to sell him the air rights to build luxury condominiums above a planned city parking garage. By the time his company was ready to build in 2007, the national real-estate market had begun to slide and Roxbury Group couldn’t persuade enough buyers to put down deposits. The project collapsed.

In 2009, Mr. Di Rita set his sights on safer terrain north of the downtown. The area, home to Wayne State University, had remained relatively stable during the recession.

It took two years to raise financing, which eventually included federal and state tax abatements, a city tax credit and a grant from the Ford Foundation, a philanthropic organization. The resulting 58-unit building, which opened in 2012, featured balconies, two patios and, on the street level, a Thai restaurant, bookstore and clothing store.

His next project was converting a boarded-up 19-story office building into apartments and a boutique hotel. This time, he got a traditional bank loan to cover 5% of the construction costs, well below a more typical level of more than 60%.

A partnership led by the Higgins family of Detroit converted a 34-story office building into residential properties that opened in 2012. Bank of America Corp. financed the project with a loan of about $20 million.

“It was an extremely risky time and a really bad time reputationally for the city,” says Richard Hosey, then the senior vice president at the bank who arranged the loan.

It was a battle to get his colleagues on board. “They were like, ‘Don’t get us fired.’ ” Mr. Hosey is now a developer himself.

A Bank of America spokeswoman said “nothing worthwhile is ever easy. We were able to get the project done because of great leadership” in Detroit.

When the 124-unit building opened, it was fully leased at rents 20% above expectations, according to Stewart Beal, president of Detroit-based Beal Properties, one of the partners in the project.

Alexis Bradley, a 26-year-old retail coordinator, moved out of her parents’ suburban home last April and into a duplex apartment in Detroit, where two-bedrooms start at around $1,900 a month. She and her boyfriend can see Detroit Tigers games from their living room window.

The bank appraised the project at just $25 million a couple of years ago—a fraction of the $58.5 million construction cost—suggesting that developers might have a wait before they can sell at a profit.

Detroit native Richard Baron, chairman of McCormack Baron Salazar, spent years looked for an opportunity to develop an apartment property. Six years ago, he settled on a riverfront spot just a few blocks from the former site of his grandfather’s fabric store, where he worked as a child. The city-owned parcel had been vacant for about two decades, ever since industrial buildings were demolished and at one point were slated for casinos that never materialized.

Bank lenders passed, and investors were afraid of “getting stuck” and being unable to complete the project, he says.

To make matters worse, the city was going through bankruptcy and many public officials Mr. Baron needed to deal with had been laid off.

“It’s going to take many decades for Detroit to recover from what happened there—the economic downturn, loss of jobs, the abandonment of neighborhoods,” Mr. Baron says.

Ultimately he managed to stitch together funding, including from the state of Michigan, the Goldman Sachs Social Impact Fund, a fund created by the Wall Street bank, and the Ford Foundation. The first tenants moved into the 278-unit project last month.

The post The Urban Condo Boom Has Reached Its Final Frontier: Detroit appeared first on Real Estate News & Advice | realtor.com®.

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realtor10036 · 7 years