In yet another twist to the often arcane but potentially far-reaching patent dispute between eLearning systems providers Blackboard Inc. and Desire2Learn Inc. (D2L), the U.S. Patent and Trademark Office (USPTO) in late March took “non-final” action that deemed all of Blackboard’s 44 patents invalid.
 
The latest development in the closely watched case came about a month after a federal district-court jury in Texas handed down a $3.1 million judgment in Blackboard’s favor. The USPTO’s action gives both companies 60 days to respond before a final decision is made, and Blackboard also will have a chance to appeal the final decision. It is not yet clear how this reexamination of Blackboard’s patent will affect the trial between the two companies.
 
After the court’s initial judgment, D2L vowed to press ahead with claims that the patent itself was invalid to begin with and should not have been approved because of the existence of previous products, known as “prior art.” 
 
“We’re thrilled about the most recent announcement from USPTO rejecting all 44 claims,” said D2L CEO John Baker. 
 
In a statement, Blackboard said that the USPTO’s action “was expected and is the first step in a reexamination process that often takes years to complete.”
 
The company claims that this non-final action has no impact “on the validity of the patent, the lawsuit between Blackboard and Desire2Learn, or the pending injunction against Desire2Learn that will go into effect on May 10, 2008, precluding ongoing sale or use of [its] Learning Environment products and services.” 
 
During a patent reexamination, the patent office will explore whether the party that requested the reexamination—in this case, D2L—has raised questions that need to be resolved with respect to the claims of the patent. The USPTO has accepted certain questions from D2L, and Blackboard now must respond and explain its position.
 
That process, Blackboard says, “is very similar in nature to the negotiation that takes place with respect to obtaining any patent, with the additional element that Desire2Learn, which requested the reexamination, also has the opportunity to comment.”
 
Blackboard claims that the majority of patents undergoing a reexamination of this kind are ultimately upheld, but D2L’s Baker says that Blackboard seems to be pointing to statistics from ex parte reexaminations, rather than from inter partes patent reexaminations. “The majority of inter partes [reexaminations, which D2L has filed,] have resulted in the patent being fully rejected,” he said.
 
USPTO figures confirm Baker’s assertion. About a quarter of all ex parte reexaminations result in the original patent being upheld, and 64 percent cause the patent holder to make changes to its patent, according to the federal patent office. Only 10 percent of ex parte actions result in the outright cancellation of a patent. But for inter partes requests, 75 percent of patents are cancelled and only 8 percent are confirmed; the rest are changed by the patent holder.
 
In addition to D2L’s request for a patent examination, the Software Freedom Law Center filed its own ex parte request in 2006 on behalf of the Sakai Foundation, Moodle, and ATutor.
 
In an ex parte filing, the filer essentially submits a request to the patent office asking it to consider new facts regarding the patent. If the USPTO decides to reexamine the patent, the patent holder will have a chance to file a response. If the patent holder files a response, the original filer may submit a reply to that response, after which the USPTO makes a ruling.
 
The law center’s request was separate from D2L’s filing, which was an inter partes request. In an inter partes request, the USPTO not only decides whether it will reexamine a patent, but also determines whether it will make an initial ruling. An accompanying appeals process lets the patent holder and the group that requested the reexamination become involved in a trial-like process.
 
“We remain very confident in the validity of our patent and that the patent office will agree with the ruling in federal court last month,” Blackboard officials said in late March. “While the reexamination process moves forward, the issued patent will remain both valid and enforceable.”
 
In mid-March, D2L was ordered to stop the sale of its flagship Learning Environment product. The company has since released Learning Environment 8.3, which Baker said is a stronger product.
 
“We never, ever felt, even today, that our products ever infringed Blackboard’s patent technology, and we’re obviously going to be appealing the decision made in court,” Baker said. “We do feel strongly that the verdict that came down shouldn’t have come down the way it did.”
 
In developing Learning Environment 8.3, Baker said D2L attempted to distance itself from anything that Blackboard claimed to have patented.
 
“We can now say that we’re not infringing what they’re accusing us of infringing, and it allows our clients to feel free and clear of whatever Blackboard’s trying to say … and the resulting product is a better product, and is a major step forward for our clients,” Baker said. “I can’t wait for us to get back to talking about innovative ways of delivering teaching and learning, because that’s what we got into this business for.”
 
Some are pointing to this dispute as a case for why the nation’s patent laws need reforming, so they can better deal with rapidly changing technologies.
 
“I’m not against intellectual property protection, but I do believe there are changes that need to be made to the system to prevent other companies from being ensnarled in a situation like ours,” Baker said. “I don’t think it has to do with bad judges, juries, or reexaminers; they have all done a lot of hard work. In general, I think people should be rewarded for intellectual property—and for sharing ideas.”
 
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