Not
really -- but restroom instructions and a peanut butter and jelly sandwich
were. The examples illustrate a bureaucracy in crisis.
By
David Streitfeld
For
decades, finicky children have been eating peanut butter and jelly sandwiches
with the crust removed. From a legal point of view, however, 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 friend Len
Kretchman, a consultant. For lunch, their kids wanted peanut butter and jelly
with the bread trimmed and folded over. As they were preparing the meal,
Kristen Geske and Emily Kretchman told their husbands: "You guys should
make a sandwich with no crust."
That
offhand comment spawned Incredible Uncrustables, a sandwich the two
entrepreneurs mass-produced for Midwestern schools. It also began a
long-running dispute over whether the U.S. Patent and Trademark Office went too
far when it gave Geske and Kretchman the first patent on a mundane household
sandwich.
"This
doesn't mean your grandmother can't make you a peanut butter and jelly
sandwich," said Ann Harlan, a lawyer for J.M. Smucker Co., which now owns
Geske and Kretchman's company.
But
it does mean that Smucker will try to prevent other companies from making them.
For more than two years, Smucker has been arguing in court and the patent
office that a crustless peanut butter and jelly sandwich made by Albie's Foods
Inc. is violating its patent and must be taken off the market.
"They're
misusing the patent system," said Albie's lawyer Kevin Heinl. "It's
outrageous."
A
generation ago, Smucker's sandwich, which looks like a flying saucer, and
Albie's, which is a fat square, would have fought it out in the marketplace.
The best sandwich would win.
Now
the corporate urge is to get a patent to stifle competition. It's a process
being helped along by the courts and Congress, which keep broadening the nature
of what is patentable while limiting the patent office's ability to reject an
application on the grounds of common sense.
Meanwhile,
the system as a whole is breaking down. Patent applications are increasing in
complexity and length, but the 3,500 examiners still are evaluated by how many
they approve. The inevitable consequence, says one former examiner: "The
path of least resistance is saying yes." Three-quarters of applications
get approved.
Two
former heads of the patent office have described the agency as sitting "on
the edge of an abyss."
"Crisis
is a strong word," the American Intellectual Property Law Assn. has noted
in correspondence, "but we believe that it aptly describes the
situation."
James
E. Rogan, the former Republican congressman from Glendale who became director
of the patent office in December 2001, agrees with all but the most strident
critics.
"This
is an agency in crisis, and it's going to get worse if we don't change our
dynamic," Rogan said. "It doesn't do me any good to pretend there's
not a problem when there is."
Beyond
the plight of an antiquated government bureaucracy overseeing a field that is
undergoing explosive growth, there are deeper questions about the fundamental
role of patents.
They
played a key role in the technology boom of the last 25 years. Companies
licensed their innovations to others, who in turn used them as springboards for
new inventions.
Yet
there's a point where patents impede innovation. It can cost more to check
whether a software program infringes on previously patented programs than it
cost to write the program in the first place.
Since
patents tend to be complex, infringement can be determined only by a
professional. That's one reason the number of intellectual property lawyers has
quadrupled since 1985. During the same time, the number of court cases
involving intellectual property has doubled.
Technology
companies, in particular, spend massive amounts of time and money either suing
over patents or being sued. Research in Motion Ltd., maker of the popular
BlackBerry hand-held e-mail device, sued competitors for alleged patent
violations, gaining licensing fees. Then the company itself was sued for
infringement. A private holding company called NTP Inc. said Research in Motion
was violating its patents on wireless e-mail.
Research
in Motion lost the case, recording a $32-million charge for litigation and
related expenses. NTP is seeking an injunction to prevent the company from
selling BlackBerrys. Meanwhile, the patent office is reviewing whether it
should have granted the NTP patents in the first place.
"Developing
software is like crossing a minefield: With each design decision, you might
step on a patent that will blow up your project," said Richard Stallman,
an advocate of free software. "A modern program combines hundreds of
ideas, so be prepared for a long stroll among the mines."
The
system was never supposed to be so combative. Patents, which last for 20 years,
are enshrined in the Constitution as a means of promoting creativity and
encouraging progress by rewarding inventors.
For
a long time, the scope of patents was sharply limited and easily understood.
Ideas and natural phenomena were not patentable. Machines and industrial
processes were -- provided they were both new and useful.
In
1880, Supreme Court Justice Noah Swayne added a third requirement: A patentable
invention, he wrote, should be inspired by "a flash of genius."
This
put a high bar on patentability, and through the decades the courts raised it.
In 1950, Justice William O. Douglas wrote, "The Constitution never
sanctioned the patenting of gadgets. Patents serve a higher end -- the
advancement of science."
Inventors
and patent-seeking corporations didn't like that. Two years later, Congress
removed the "flash of genius" standard and replaced it with a vaguer
requirement of "non- obviousness."
That
began to loosen the patent floodgates. In 1980, the Supreme Court said life, in
the form of genetically engineered bacteria, was 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 Federal Circuit,
took the increasingly blurry line between what was patentable and what wasn't
and erased it.
At
issue was a patent held by the Signature Financial Group Inc. for a system that
channeled money from mutual funds into a central investment pool.
Under
existing law, two things should have invalidated this patent.
First,
it was a method of doing business. Previous courts had always held that
business methods, like ideas or laws of nature, were not something one could
patent. After all, companies already had plenty of incentive to improve their
business techniques. If they didn't, they'd lose out to the competition.
But
Signature's system wasn't only a method of doing business. It also was a
mathematical process using algorithms.
An
algorithm is a set of instructions for doing things in a certain order. And if
a business plan, like "sell quick, cheap food close to major
highways," seems like an idea that can't be patented, then an algorithm
had seemed doubly so. Like all forms of math, it had been considered part of
the realm of ideas -- as unpatentable as E = mc2.
This
time, however, the court said that because Signature's algorithms produced a
useful, concrete and tangible result, it could be patented. As for the
long-standing exception for business methods, the court found it
"ill-conceived."
The
ruling amazed intellectual property experts.
"What
the Signature system was doing was accounting. It was dividing numbers by other
numbers," said Duke University law professor James Boyle.
The
number of business-method applications, many of which involved algorithms, rose
sevenfold between 1998 and 2001. One patent that quickly became notorious was
given to IBM Corp. for a "system and method for providing reservations for
restroom use" on airplanes. The method: first come, first served.
For
Boyle, we've reached a point where we're "tremblingly close" to
patenting ideas.
"You're
no longer patenting the corkscrew," he said. "You're patenting the
idea of taking the cork out of the bottle so you can drink the wine."
Or,
in the case of Patent No. 6,004,596, the idea of the peanut butter and jelly
sandwich.
Products
Come Together
Jelly
has been around for centuries, commercial peanut butter from 1890 and
machine-sliced bread since the late 1920s. A decade later, some unknown genius
combined all three ingredients to make the quintessential American sandwich.
PB&Js
hit it big in the post-war years. The sandwiches weren't too messy, they didn't
spoil after a couple of hours in a lunchbox, and they encouraged the consumption
of milk.
A
PB&J is pretty simple, which didn't stop food companies from trying to make
it simpler. One such innovation was premixed peanut butter and jelly, reducing
the number of ingredients from three to two. Then Geske 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 the winter,
when demand for his packaged ice dropped, and Kretchman had some background in
selling food to schools. They developed the sandwich at home and then did taste
tests at schools.
Incredible
Uncrustables was an immediate hit. Not only was the product nutritional and
appealing, but it also eliminated the need for the schools to spend time making
sandwiches themselves.
An
intellectual property attorney helped secure a trademark on the name. The
patent came about more casually.
"One
attorney said, 'There's nothing here,' and we said OK," Geske recalled.
"But a new attorney came in, and he said, 'We can get this through, no
problem.' We gave them their fees. It took about a year and a half. "
By
the end of 1998, about 50 employees in Fargo were making 35,000 Incredible
Uncrustables a day for schoolchildren in eight Midwestern states.
Smucker,
the Orrville, Ohio, maker of jams and jellies, realized the sandwich could be a
valuable addition to its product line. Smucker bought the company and shortened
the name to Uncrustables.
The
company also got the patent, which was granted Dec. 21, 1999, for a
"sealed crustless sandwich."
"On
what basis they granted it, I have no idea," said Geske, who made enough
from the sale to Smucker to "take a couple of years off to enjoy the
family."
The
defendant in the sandwich lawsuit, Albie's, was founded in 1987 by two
childhood buddies to sell pasties, which are meat or vegetables baked in dough.
In the summer of 2000, the Gaylord, Mich.-based company began selling a peanut
butter and jelly sandwich called E.Z. Jammers. 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 stop.
Albie's sued to have the patent declared invalid. Smucker then sued Albie's for
infringement.
To
avoid the expense of a full-blown suit, Albie's asked the patent office for a
reexamination, a relatively rare procedure. The best way to get a patent thrown
out is by finding examples of so-called prior art -- proof that the patent
really didn't offer anything new.
One
such piece of evidence suggested by Albie's was a kitchen tool called the
Cut-N-Seal. This plunger-type device allowed an individual to seal and crimp a
filling between two slices of bread.
To
knock down the Cut-N-Seal, a Smucker lawyer filed an affidavit describing how
he had tried to use it to make a sandwich that looked as sleek and tidy as an
Uncrustable.
The
Cut-N-Seal sandwiches, the lawyer said, all had "rupturing problems,"
particularly in the "upper bread layer." The accompanying photographs
showed jelly bursting out all over.
"So
what?" said Heinl, the Albie's lawyer. "Anyone can make a defective
sandwich."
Although
the arguments were narrow, the business implications were large.
"The
Uncrustables brand sandwich defines its own market," Smucker said in an
affidavit arguing that anything so immediately popular had to be non-obvious
and therefore patentable. With sales of 50 million 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: "They
were filing suit to keep Albie's out of the market."
Smucker,
which recently solidified its hold on the peanut butter market by buying the
Jif brand, is confident the reexamination will help Uncrustables.
"The
claims will be narrowed," said attorney Robert Vickers, "but the
patent will be a lot stronger."
Patent
Office Challenges
Patent
officials decline to talk about specific patents, although they note that the
most controversial come under review or, like the IBM bathroom patent, are
quietly dropped by their owners.
"We
grant 170,000 patents a year," said Esther Kepplinger, deputy commissioner
of patent operations. "To focus on five, and extrapolate that the overall
quality is poor, is unfair."
Yet
the agency's director, Rogan, acknowledges that the problems have run deeper.
"Some
of the early business-method patents were fairly broad," he said. These
led to conflicting claims and lawsuits. "We're much narrower now."
And tougher: "We've gone from a 75% acceptance rate to a 75% rejection
rate" on those patents. Of course, those early, broad patents are still
out there, wreaking havoc.
Rogan
hopes to hire 2,500 additional examiners, but his strategic plan to solve the
patent crisis also includes outsourcing some of the basic patent search work,
saving time and labor. He wants to encourage electronic applications, rescuing
a patent office he says is "drowning in paper," and charge applicants
higher fees for bigger applications, a move intended to reduce unnecessary
patent claims.
Although
no patent director has been so ambitious, smaller reforms have failed before.
The patent office first promised a paperless office in 1983.
Outside
critics believe the problems are more intractable.
In a
recent speech, Judge Richard Posner of the U.S. 7th Circuit Court of Appeals in
Chicago said a large part of the recent jump in applications "is defensive
or strategic patenting."
"You
get a patent because [otherwise] someone else will patent it," he said.
"Or you get a patent because you would like to block a competitor."
The
walls protecting this ever-expanding pool of intellectual property are getting
stronger. One reason is the 1982 creation of the Court of Appeals for the
Federal Circuit. It handles only patent cases -- and usually rules in favor of
the patent holder.
"A
specialized court tends to see itself, I think, as a booster of the specialty
industry," Posner said.
Last
year, the appeals court said the patent office had incorrectly rejected two
applications for "obviousness." If an examiner rejects an application
using "general knowledge," the court said, that knowledge "must
be articulated and placed on the record."
In
other words, said deputy commissioner Kepplinger, "we can't reject
something just because it's stupid."
The
absence of sense seems to figure strongly in the most famous patent of the last
few years. Last spring, the patent office issued a patent to Steven Olsen for
"a new and improved method of swinging": pulling "first on one
chain and then on the other."
Even
if you didn't know Steven was 7 years old, the brief and elegantly written
application is obviously tongue in cheek, complete with a grand pronouncement
that this "invention" will enable "even young users to swing
independently and joyously, which is of great benefit to all."
Steven's
father, Peter Olson, a patent attorney with 3M Co. who wrote the application,
was merely trying to show his son what he did for a living. But the examiner
didn't get the joke.
The
patent office is searching for documented proof that children have indeed
always powered their swinging by pulling on the chains. Then, and only then,
will it kill the patent as quietly as possible.
Los Angeles Times, February 7,2003