Blackboard Vows To Press On

An interview with Blackboard Chief Legal Officer Matthew Small

• By David Nagel
• 04/02/08

There have been some shockers in the electronic learning world in the last month or so. First, Blackboard won its patent infringement suit against rival Desire2Learn. Then, soon after, the patent itself was rejected by the United States Patent and Trademark Office on reexamination (though that action is not final). But despite the setback in the Patent Office, Blackboard is vowing not to go down without a fight even as Desire2Learn and the Software Freedom Law Center--the two groups that sought to have the patent revoked--celebrate victory.

Blackboard Chief Legal Officer Matthew Small spoke to Campus Technology about the lawsuit and the latest developments in the USPTO action. In this first interview since the action, he said that Blackboard's "Alcorn" patent is still as strong as it ever was; that the patent is justified and will likely emerge from this reexamination at least largely in tact; and that the company is not in any way backing down from its patent infringement case against Desire2Learn.

We present a fairly unabridged transcript of our interview with Blackboard here for two reasons: We've already presented, in detail, the arguments from Blackboard's opponents in this case; and there are subtleties involved here that simply can't be summarized--subtleties in the patent law, in the history of software patents, in the arguments involved for and against Blackboard's patent, and in the claims in Blackboard's patent itself.

The Reexamination and the Patent's Validity
Blackboard's point of view is that no other course management system in the education space allowed a single user with a single logon and single user account to hold multiple roles across multiple courses during the relevant timeframe, and therefore the patent is valid. We have presented the arguments of others on this topic. Here Small expands on this and provides background on the patent process.

David Nagel: Just to get this out of the way right off the bat, Blackboard isn't planning to abandon the Alcorn patent at this point, right?

Matthew Small: No.

Nagel: Can you explain how you see the current situation as far as the reexam is concerned?

Small: Sure. Please allow me to provide some context. I think that there's been some misunderstanding about what exactly it means to have a patent reexam. Let me say it does not affect the validity of the patent, the judgment that we won in federal court, [or] the injunction pending against Desire2Learn.

Certainly we believe the reexamination process is a healthy process. It serves to generally strengthen patents, and this case is no different.

When you apply for a patent to begin with, you submit claims to the Patent Office and prior art, and they look for prior art and look at the claims in light of prior art, and there's a discussion around the claims. Typically they will reject those claims, and then they'll send them back to you, and you will look at their rationale, and you may modify the claims or strike the claim. It's an iterative process with the Patent Office until you have something that is patentable and it is issued. And when it's issued, it's presumed valid.

In fact, if you submit a patent and it gets through right away, the very first time in initial application, without having anything rejected, you probably underclaimed your invention. A good patent drafters will draft broader claims, and they'll get narrower and narrower. And you know you did a good drafting job when you get your patent back and the broadest ones are rejected and the narrowest ones haven't been rejected because then you know you hit the right balance between what you've been claiming for your invention.

Once [the patent is] issued, anyone can do what's called an ex parte reexamination, which means you find a piece of art--it can be anything from anywhere--and you can send it to the Patent Office, and they will look at it, and they can decide whether they'll want to consider it.

Likewise, anyone can file what's called an inter partes reexam, which is a new process that wasn't available until 1999. It's a higher-stakes process. The party seeking the inter partes reexam has to submit all of the art that they're aware of--all of the material art that they're aware of--and then once the process is over, that party is statutorily barred from ever trying to use that same art to claim invalidity in court.

So Blackboard brought a patent suit against a single commercial competitor--Desire2Learn. Desire2Learn filed this inter partes reexamination, and the Software Freedom Law Center filed three references as an ex parte reexamination, and the Patent Office combined the two together and last week issued what's called a rejection of the claims.

It's similar to what happens before the original patent is issued. It means the Patent Office said, "Well, there's a question here; there's an issue. We'd like to talk about it. Here's our rationale."

In the inter partes context, unlike the ex parte context, the filing is a third party, and they can participate in the discussion. They can debate with the applicant or with the patent holder their side. And the Patent Office will make a decision.

When you go through this process, it doesn't mean the patent's invalidated or overturned or anything like that. It has no effect on prior judicial decisions. It just means that we will answer the questions raised by the Patent Office. Will they ask us to change any language or accept some comments or strike a claim? [They] could. With ex parte reexaminations that happens about 75 percent of the time. But does it mean the patent goes away? The answer's no. The patents, 90 percent of the time, get through in some way.

Nagel: Even at this point, when the Patent Office has sent its first response, and all of the patent claims were rejected?

Small: Yes. That's not an uncommon thing where there's a reexamination. That's what they do. It's very similar to the original process you go through when you get a patent. They're saying, "Okay, explain to me why your patent is different from this art." Sometimes they just need to understand what we meant by the wording. Sometimes they'll agree with the wording; sometimes they'll say, "Well, I think it would be clearer if you changed this wording and you clarify it." And then they kind of reinstate the claims. Or they remove their rejection. And the patent goes through.

It would be highly, highly unlikely for not one claim to get through. And in the end, for the patent to survive, you only need a single claim. We have 44. And we think it's a very, very healthy patent.

In our case, I think our patent is very, very strong because we just proved the validity of the patent over the exact same prior art references and the exact same arguments being made in this inter partes reexamination in federal court.

The Patent Office will look at these references and consider them, but Blackboard and Desire2Learn just spent a lot of time and effort going through these references in detail with witnesses and experts and looking at them, and we won every single count. We showed that it's valid--it's not invalid for obviousness; it's not invalid for anticipation--and that they infringe ... directly and contributorily and by inducement. We won every single claim that they had before the court. The jury found that [Desire2Learn] didn't meet their burden of proof. And quite frankly the judge indicated it was his opinion that they did not meet their burden of proof. And this was in a very sophisticated patent jurisdiction that hears a lot of patent cases with a very sophisticated judge.

Criticism of the Blackboard Patent
Since the announcement of the Blackboard Alcorn patent and the lawsuit against Desire2Learn, there has been considerable controversy over the quality of the patent--as in whether it should have been issued at all--and over the standards by which the USPTO grants software patents. The two questions are not the same, as Small discusses here.

Small: I think what's happening is there are some people in the e-learning community who quite frankly don't understand patent law, and, if they understood what is typically patentable, what a patent looks like, what a good patent looks like, they wouldn't read the Blackboard patent and say, "Oh, I don't think this should be a valid patent."

I think for many of the commentators, this is the first patent they've ever read, and many of the arguments that are coming up really are issues for Congress about what should be patentable or what shouldn't or whether there's need of reform or whether patents should apply to software at all. It's not really a critique of [the validity of the patent under current law]. When you look at the facts, at the end of 1998--a decade ago--when you look at course management systems and see how many of them allowed a single user with a single logon and a single user account to have multiple roles across multiple courses, none of them did.

All of the references ... were closely explained in trial, and they did not do those things. They're not [invalidating] prior art.

Nagel: How many times did you go back and forth with the Patent Office before the patent was issued?

Small: I don't know exactly.

Nagel: Three or four?

Small: It was at least twice.

Nagel: All right.

Small: I personally went to the Patent Office and sat down with the examiners at least twice.

Nagel: Okay.

Small: ... It's a very strong patent. I think one of the reasons people have criticized it is because they're applying what they believe is obvious today in 2008 to the patent, and the legal standard is what was obvious to someone of ordinary skill in the art at the conception of the invention.

Nagel: There's been some question about this. In terms of the items that you patented, did Blackboard develop these entirely in house?

Small: Yes.

Nagel: There were no external contributions to it?

Small: No.

Nagel: Okay....

Small: Now, when you say "developed," you mean the actual product?

Nagel: Just the items in the patent.

Small: Well, let me be clear. It was certainly an invention of some of the founders of the company. Some of the elements in that were around for a long time. So for example, if you have a patent on the ... intermittent windshield wiper [for] an automobile, you may describe the automobile; you may say intermittent windshield wiper with steering wheel, with car, with windshield wipers, but it doesn't necessarily mean that you invented the windshield wiper or the car or the steering wheel. It could be the intermittent function. But you describe that function with other things.

So did the course management system exist prior to our patent? Absolutely. It was a very robust market. In early 1998 there were a number of products in the market, including our own, including WebCT, including Prometheus, including Web Course in a Box and Top Class and SERF and a whole bunch of others.... There were also role-based access control[s] in the world that had been around since the mid-'80s, in other industries primarily, such as banking. But in late 1998, it was not obvious that you would take role-based access control and apply it in the way that we did to a course management system.

The LMS Market Past
Small: You really have to remember what the Web was like a decade ago. It was HTML. We didn't have browsers like we have now. And all of the course management systems that were out there treated each class as an island unto itself. If you were a student in one role and a teaching assistant in another course, you would be two logons, two accounts, two profiles, two calendars. You couldn't just move from course to course and retain your online identity and have your rights and privileges change as you did that.

At the time, there was fierce competition, and everyone was focused on features and functionality--the next best bell or whistle to sell more of these things. Blackboard stepped back and said, "You know what, let's stop the feature war, and let's go back to our code architecture and rebuild [the] enterprise course management system from the ground up."

There were no enterprise course management systems at the time, and we came out with the very first one. And it was received very well by the market. It kind of swept the market. The next best system at the time was WebCT. We had CourseInfo 1.5; they had WebCT 1.0. We came out with CourseInfo 2.0. It had this invention in it, and it was very popular. That's one of the things people look at when they're evaluating obviousness: commercial success. Well, if it was that obvious, why wasn't everyone doing it? In fact no one was.

Nagel: I wasn't around at the time. CourseInfo 2.0?

Small: ... The predecessor product to the Blackboard Learning System was CourseInfo. CourseInfo was the name of the company founded by a group of students at Cornell that merged with Blackboard in 1998. Their product became the Blackboard product. That product was like he other ones on the market: Each class was an island unto itself.

We stepped back and re-architected the whole thing so it could be scalable. School administrators were struggling with the number of online accounts or identities for the same student, multiple passwords. It just wasn't scalable. You wouldn't know, for example, if David Nagel [were in certain] classes by just looking up your name because you might have five different user names and five different passwords. And it was also inconvenient for you, as the user, to have to log in at different times and memorize those passwords.

At the time, it was very difficult. People were typing in long, complicated HTML addresses because we didn't have the browser functionality or the Web 2.0 capabilities that we have today. This was a very convenient thing for people. They could go to one page, log on one time, and then have access to all their courses, whether they were an instructor, a student, a teaching assistant, a course builder, a grader, or what have you.

The LMS Market Present
Nagel: Let me ask you this: Blackboard has something like 90 percent of the commercial LMS market share, right?

Small: I wouldn't put the number that high.

Nagel: How would you ballpark it? Higher than 75 percent? Higher than 80 percent? I just mean commercial.

Small: Of post-secondary universities in the United States using a commercial, i.e. non-open source, course management product it is probably between 70 [percent] and 80 percent.

Nagel: Do you know what your breakdown is of your market share between K-12 and higher ed? Just of your own customers.

Small: In the United States, we have about [1,915] colleges and universities and about [388] K-12 districts.

Nagel. All right. That's a pretty enormous market share, and you achieved it without the patent being in effect, so how significant would it be if the patent were eventually completely rejected? I know you're not expecting it to be, but how significant would it be if that did happen?

Small: I don't think we win accounts because of the patent. I think we win accounts because of the quality of our products, services, and the company that we are. I think that the invention was very well received by the community, and we developed what we patented, and people have bought it, and they license it. However, if a company such as Desire2Learn comes along and just copies the functionality and picks up where you left off without paying a royalty for it, it is generally accepted in the software world that you can seek a royalty. If they don't want to agree to one, then your only recourse is the court. And, if we're talking about patented technology, your only recourse is the patent law that we have. We can't apply a different patent law.

I think that Blackboard has been accused of using the current patent law, and much of the critique is what the patent law provides. That is a different debate from whether Blackboard is legally entitled to patent protection.

Nagel: You mean the debate is between whether this sort of thing should be patentable versus what is the current law.

Small: ... Does Blackboard have a valid, enforceable patent? That is one question. There's another question: Should the patent law allow software patents, and what should the standards be, and is there need of reform? Those are different, larger questions.

Nagel: Where do you stand on it? What if somebody came around and was able to patent, for example, having a student named Mary in a course management system, and all of a sudden your learning system can't have a student named Mary in the system? That would be an extreme example, but what's your position on what the standard should be?

Small: ... Do I think there is room for patent reform and a very healthy discussion around whether the patent system in the United States with respect to software needs repair? I would say absolutely.

However, if you say, "Well, given that, Matt, should Blackboard not protect its intellectual property?" I would say no.

There can be very healthy debate around patent reform, but, in the meantime, you seek patent protection. You follow the law that we have, and patent protection is a Constitutional, American right. This goes back to the founding of the country. How it's been applied over time to software patents is ... you know, there's a lot of discussion over where we are now, whether it's the right result or whether it should be curtailed or whether the process should be different from other areas. I think those are all very healthy debates. I think the law has changed a lot over the last two years from the courts. Standards have changed, and the laws applicable to patent cases have changed quite a bit. The law is changing all the time, and the best you can do as a public software company that's invested lots of money in your technology and your invention is to look at whatever the law is at the time and seek the protections that you have for yourself under the law, not under other laws that you wish you had.

The Impact of the Patent on the Case Against Desire2Learn
Nagel: Okay, now, I think you agree that this patent is going to come out in a modified form to some degree. I think everyone would disagree about what that degree would be. Let's just say it's just modified slightly as a result of this process....

Small: If there's any modification at all. We don't know. Twenty-five percent of these aren't modified at all.

Nagel: Even at this stage?

Small: The statistics published by the Patent Office don't break down the stages.

Nagel: Okay, well let's say it comes out with some sort of modification. How does that impact the patent infringement suit? Do you have to go back and retry the case based on the new description of the patent based on what items were patentable?

Small: No. If the patent were to be invalidated in a reexamination, I think the court ruling would stand. It is done. Those damages still have to be paid.

Nagel: Even if it were rejected entirely?

Small: That's right.

Nagel: But then Desire2Learn would have a pretty good case on appeal, right?

Small: In court? No, we have a great case on appeal.

Nagel: No, I mean if the patent were rejected.

Small: First of all, the court to which an appeal would go is the Federal Circuit Court, which is the same court above the Patent Office. So the inter partes reexam has built-in appeals that go all the way to the Federal Circuit. So we're going to be in the Federal Circuit in the D2L case before we before we would ever reach the Federal Circuit--if it ever came to that--in the reexam. The ruling of the Federal Circuit will be binding on both.

We will prevail on appeal. That will have a positive effect on both fronts.

Nagel: As a result of that case, Desire2Learn did come out with that 8.3 release as a design workaround. Have you guys had a chance to review that?

Small: No.

Nagel: Do you have any idea what the timeframe is that you'll review it? Are you in general satisfied with what they've said in terms of the changes they've made?

Small: I have no idea what changes they made. I will certainly look at it when they provide it, and I hope that it doesn't infringe. And if it doesn't infringe, then that'd be great; that would be the best result for everyone. However, if it is a half measure or something that does infringe, they would be in violation of a court order.

Nagel: Did you read the statements that Eben Moglen made in our coverage from Friday?

Small: I did.

Nagel: Do you have any comment on what he said?

Small: No.

Nagel: Have you seen any action from them as far as other patents go that you have pending?

Small: No.

Blackboard's Next Moves
At this point, Blackboard has nearly two months in which to respond to the current action of the USPTO. As of this writing, Blackboard has not yet submitted its response, but will do so, Small said, within the given timeframe.

He added that Blackboard continues to honor the pledge it made last year not to press

Small: The main takeaway is Blackboard has been an incredibly responsible member of the e-learning community. We have a patent. Lots and lots of people in the e-learning community have patents: universities, publishers, other software providers, other course management system providers. There's cross-licensing that happens all the time between competitors, between software companies, especially commercial software companies. This one has taken on a lot of publicity because I think Desire2Learn has chosen to fight in the court of public opinion. These things are usually negotiated between parties. The fact is they do infringe. We had a sweeping victory in court. They have an injunction pending against them right now. And they're in very dire straits. I hope that they will do the right thing and come up with a valid workaround or sit down with Blackboard and work out a reasonable royalty or obey the court's injunction. The ball is in their court.

With respect to the rest of the world, Blackboard has been very forthright in promising that it will never assert this patent against home-grown systems or open source software. We put together a patent pledge, which we issued last year to that effect, and we stand by that. I'm not aware of any other company that has gone as far as our patent pledge in conveying those assurances. This is an isolated suit between us and Desire2Learn, and I think the claims that they've made [that] this reexam is meaningful to this case or in any way circumvents the injunction pending against them or in any way invalidates our patent are misleading. Desperate moves given the very difficult position that they're in. I think the community will be best served if Desire2Learn focuses on the patent law and does the right thing and comes up with a valid workaround or takes a license or obeys the court order. [Then] we can all focus on the more important mission of teaching and learning instead of arguing in the press about what preliminary Patent Office reexamination rulings mean.

Nagel: Now that wasn't a shot at me, was it?

Small: No, not at all.