Are Frequently Litigated Patents Different? Yes!

I want to highlight a few points from an article I read tonight: Allison, Lemley, and Walker's, Extreme Value or Trolls on Top? The Characteristics of the Most-Litigated Patents (2009). The authors found most-litigated patents (8 times or more) had quite different characteristics than once-litigated patents: 

• 70% of the most-litigated patents are software patents 
• 72% of the most-litigated patents are in the computer industry
• The most-litigated patents are disproportionately owned by non-practicing entities (i.e., patent trolls)
• The most-litigated patents include more claims (39 claims v. 24 claims in terms of mean)
• They cite more prior art, backward citations, in terms of means and rounding to nearest integer: 
• 61 to 23 US patents 
• 9 to 4 Foreign patents 
• 53 to 6 Non-patent references (printed publications)
• Later issued patents more often cite the most-litigated patents, forward citations
• The most-litigated patents are part of a patent family with more continuations and divisionals 

It is a 50-page paper based on Stanford IP Litigation Clearinghouse data that compares the 106 most-litigated US patents to 106 randomly selected once-litigated patents between 2000 -2007. 

The abstract states the paper might be useful to guide patent reform, but I think it also indicates what type of patent is likely to be fit for multiple rounds of litigation and what a patent owner should consider if it is heading to litigation. Further, if you plan to enforce or license your patents, you can control nearly all of these characteristics. Even forward citations can be increased by citing to one's previous related patents and published applications. It is not simply a numbers game, as additional relevant references will strengthen validity of a patent and diversity of claims of different scope give more options on what one can assert in litigation. If you are interested in patent strategy, defense or offense, this paper is worth reading. 

Copyright © 2012 Robert Moll. All rights reserved.

US Patent Spending Continues - Intel Adds RealNetwork Patents and Applications

Many are writing about the patent spending spree in Silicon Valley that continues unabated in recent months. On January 26, 2012, the BBC News reports Intel has agreed to pay $120M for about 190 patents and 170 patent applications from RealNetworks and commit to co-develop video encoding software in the future. 

Here's a link to the BBC article with details that my friend Alan Cooper sent earlier today:

Intel buys RealNetworks' patents and video coding tech

Thanks again Alan!


Copyright © 2012 Robert Moll. All rights reserved.

From Highly Paid Patent-Defense to Hugely Paid Patent Troll

Well known patent litigators, John Desmarais and Matt Powers, left multi-million dollar partnership draws at Kirkland & Ellis LLP and Weil Gotshal & Manges, respectively, to form practices around non-practicing entities (i.e., patent trolls) to pursue companies for patent infringement.

The WSJ Online has their story: The Amazing Adventures of Mr. Desmarais and Mr. Powers. 

Copyright © 2012 Robert Moll. All rights reserved.  

Stanford Professor Mark Lemley's Things You Should Care About in the New Patent Statute

I had the pleasure of speaking with Professor Mark Lemley at the Advanced Patent Law Institute, Palo Alto on December 8-9, 2011. 

Professor Lemley has authored and co-authored many papers with penetrating insights into the US patent system. He may be even the most prolific patent scholar of our time given he ranks third in total downloads among all law professors. He mostly writes about intellectual property and patent law, presumably niche topics with a small audience, so this is quite a feat. 

I commented we have been around this for years, but it must be difficult for people getting into US patent law now given all these changes. He replied you can imagine the challenge I have teaching two bodies of US patent law (past law and the America Invents Act law (AIA)) to my class at Stanford. 

How do we address the changes and complexity in US patent law today? An important part of understanding the AIA is identifying the effective dates. To help you avoid being buried in all the details, I point to Professor Lemley's Things You Should Care About in the New Patent Statute which outlines twenty significant AIA changes by their effective dates.  

If you are interested here's a link to Professor Lemley's other papers. 


Copyright © 2012 Robert Moll. All rights reserved. 

Twist in Kodak's Bankruptcy - Apple Claims Ownership of Kodak Patents

On January 19, 2012, Apple filed papers claiming ownership of Kodak's digital imaging patents, including US Patent No. 6,292,218.  Apple argues Kodak can't attach an interest on a patent it doesn't own, and Kodak misappropriated and filed patent(s) based on confidential information Apple gave Kodak in the early 1990's.
  
Mr. Macari's article has details: Apple claims ownership in key Kodak patents on digital camera 

Of course, ownership turns on which companies employees are inventors. I expect it will be difficult to establish only Apple inventors (and not Kodak inventors!) should be named on the '218 patent by clear and convincing evidence. It's asking too much of the Kodak employees, don't you think? However, sole ownership may not be necessary. Apple only needs to prove its employee(s) made a small inventive contribution (e.g., 1%) and may allow so generously that Kodak inventors did the rest (e.g., 99%)! This situation would result in equal ownership, allowing Apple freedom of operation with respect to the patent as well as the ability to license the patent to anyone wanting better terms than those offered by Kodak. 

Copyright © 2012 Robert Moll. All rights reserved. 

Need A Patent Litigation Strategy for Europe? Sue in Germany!

The vast majority of European patent lawsuits are filed in Germany today. One source estimates 50 patent infringement suits are filed in the United Kingdom and the Netherlands in a year while as many as 1,300 are filed in Germany. 

Apple, Microsoft Patent Lawyers Spend Fridays in Mannheim helps explain why German courts have become a favorite for patent litigants. 

Copyright © 2012 Robert Moll. All rights reserved.

USPTO Patent Appeal Rules Effective on January 23, 2012

The PTO published the final rules of appeal practice before the Board of Patent Appeals and Interferences. They apply to all appeals in which the notice of appeal is filed on or after January 23, 2012. 

Although detailed (30 pages of fine print), the final rules simplify the current process and level the playing field in favor of appellants. More specifically, the current rules are amended to: 

1. Remove certain requirements for the appeal brief; 
2. Provide the Board take jurisdiction earlier in the process;
3. No longer require the examiner acknowledge receipt of the reply brief; 
4. Allow one to seek review of an undesignated new ground of rejection in the examiner's answer or the Board's decision;
5. Presume an appeal is taken for all rejected claims; and 
6. Clarify a rejection in examiner's answer that relies on evidence not presented in the last Office action is a new ground of rejection.

Fortunately, the PTO withdrew the appeal rules proposed in 2008. They were too technical and had little support from the patent community. However, I don't expect the final rules to do much to reduce the backlog of nearly 25,000 appeals displayed in Patently-O's BPAI Backlog: Only Growth in August 2011. This will require more Board members who are willing to write brief opinions.  

It's usually best to work with examiners, but if a case is ready for appeal, don't let the backlog cause you to "shrivel up"as the PTO may intercept and allow a case after review of the appeal brief without waiting for the Board to decide. See e.g., US Application No. 10/683,204 using PAIR.

Copyright © 2012 Robert Moll. All rights reserved.

PTO Reports - Prior User Rights and International Patent Protection for Small Businesses

On January 13, 2012, the PTO delivered to Congress the Prior User Rights Report and the International Patent Protection for Small Businesses Report as required by the American Invents Act (AIA).  The following links lead to PDF copies of the reports:

• Prior User Rights Defense Report
• International Patent Protection for Small Businesses Report

The Prior User Rights Defense Report compares US prior user rights with that of foreign countries. It considers prior user right's impact on innovation, startups, small businesses, and individual inventors. And it looks at how first-to-file in the AIA relates to the prior user rights defense.

Under current law, the prior user defense is limited to business method patents. The AIA expands the defense to any subject matter provided (1) the subject matter was reduced to practice and commercially used at least one year before the patent's effective filing date or the patent owner's disclosure of the invention, whichever is earlier; and (2) the subject matter wasn't derived from the patent owner or an entity or person in privity (having a legal interest in the patent) with the patent owner.

The International Patent Protection for Small Business Report considers how to help small businesses with respect to foreign patent protection.

The PTO prepared the reports with the United States Trade Representative, the Department of Justice, the Department of State, the US Small Business Administration and incorporated input from public hearings and comments.

Copyright © 2012 Robert Moll. All rights reserved.

Software Patents - Merely A Dog or Software Startup's Best Friend? - Part 2

A startup may consider it has arrived when a giant software company engages them about a possible acquisition or a joint venture. In that glow, the giant reviews the technology of the startup to determine how much competitive advantage can be obtained by the proposed acquisition or venture, and investigates the scope of the startup's intellectual property protection. During the diligence period, the startup is typically asked to progressively disclose its technology. 

During this period, some startups have assumed its non-disclosure agreement (NDA) will suffice to protect their interest, but giants may require using its own NDAs, which may have loopholes. One of the more brazen is a residual term which says something like this: "any information disclosed (by the startup) but not expressly designated in writing as confidential and retained in the memory of the recipient (giant) is not considered confidential and can be used by recipient for any purpose ...."

The NDAs may also say signing the NDA is not a license of either party's intellectual property, which likely works in favor of the giant who typically has a much larger portfolio of intellectual property. 

If the giant determines during diligence that it makes economic sense to code the software without buying the startup and has enough residual information, it may decide to enter the market without the startup's help so the acquisition or joint venture game is over. After all, the giant must decide in favor of its shareholders. 

So how does the startup disclose its products to a giant software company without creating a big competitor? Seek effective software patent(s) on your technology. In negotiations seek to delete the residual term from the NDA. However, if you don't have the bargaining power to delete the residual term, stay within the scope of what is designated confidential in the NDA and within the scope of your patent claims to reduce the risk.


Copyright © 2012 Robert Moll. All rights reserved.

Software Patents - Merely A Dog or Software Startup's Best Friend? Part 1

In A Generation of Software Patents (2011) James Bessen examines patenting behavior in the software industry since the 1990s. He argues we saw a large increase in software patents after In re Alappat in 1994, because the Federal Circuit held a novel software algorithm with "a trivial physical step" eligible for a US patent. I'm not sure why it was "a trivial physical step" given Alappat's claims are drawn to a rasterizer to smooth waveform data prior to displaying a waveform on an digital oscilloscope. On the other hand, I agree software patenting increased dramatically in the 1990s.

Mr. Bessen concludes software patents are not a net societal benefit, but acknowledges they account for one quarter of all US patent grants and one quarter of the lawsuits. Even if his numbers are only roughly accurate, they speak to a motive for continued controversy regarding software patents-- big money is at stake. 

Software patents will continue to be sought by startups and large companies. Nearly 2/3 of VC backed software companies seek patent protection. Large software companies also perceive their value and have sought to patent or purchase as many software patents as possible (e.g., Apple and Microsoft's $4.5B purchase of the Nortel patents and Google's $12.5B purchase of Motorola Mobility). In 2011, Microsoft was sixth in US patent grants. According to Freepatentsonline.com Microsoft owns 19,405 US patents, Apple owns 4,509 US patents, among which 2,606 mention software, Oracle owns 2,431 US patents, and Adobe Systems owns 1,248 US patents. Do I need to mention IBM? 

Twenty years ago, Bill Gates sent a confidential memo to senior executives. It indicates what has led to Microsoft's major increase in software patenting:

I feel certain that some large company will patent some obvious thing related to interface, object orientation, algorithm, application extension, or other crucial technique. If we assume this company has no need of any of our patents, then they have a 17-year right to take as much of our profits as they want. The solution to this is patent exchanges with large companies and patenting as much as we can. Amazingly we haven't done any patent exchanges that I am aware of. Amazingly we haven't found a way to use our licensing position to avoid having our own customers cause patent problems for us. I know these aren't simple problems, but they deserve more effort by both legal and other groups. For example, we need to do a patent exchange with HP as part of our new relationship.

Sure Mr. Gate didn't foresee patent trolls but in other respects his insight has proven correct. Around this time, the League for Programming Freedom questioned the value of patent exchanges for small companies stating they only allow companies like Microsoft, Apple, and IBM to continue and would shut new companies out of the field. As we watch the continued growth of the software industry, this prediction has not occurred. However, small companies may not be in good shape if they have nothing to exchange. For details see my post on You Have to Pay for that Banana! As the League paper stated, "A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high: established companies have an interest in excluding future competitors." 


Copyright © 2012 Robert Moll. All rights reserved.

Microsoft's Patent Licensing Program - 70% of Android Smartphones Sold in US Licensed

Today, Microsoft announced that LG, the second largest smartphone manufacturer, had signed a patent license agreement covering Android devices. Samsung the largest smartphone manufacturer and others have signed up. Microsoft taunts Google which has not....

Horacio Gutierrez, vice president of intellectual property and deputy general counsel at Microsoft, said "This agreement with LG means that more than 70 percent of all Android smartphones sold in the U.S. are now receiving coverage under Microsoft's patent portfolio."

Microsoft did not reveal the patent license terms, but Citibank's Walter Pritchard previously reported Microsoft's patent license with HTC is $5 per Android device.

See details in the San Jose Mercury News today.

Copyright © 2012 Robert Moll. All rights reserved.

Three Interviews of Patent Leaders at other Blogs

The Web has made it easy to hear from many smart people. Staying with this thought, let me point to some interviews of leaders in the patent community this week:

1.  IBM was announced as the leader in US patent grants in 2011. No surprise here but still perfect timing for Gene Quinn's interview of IBM's Chief Patent Counsel Manny Schecter.

2.  In Gene Quinn's second interview of PTO Director Kappos, Director Kappos talks about the never-ending (impossible) job of getting examiners to uniformly apply US patent law, PTO rules, and policies to the various inventions they review.  

3.  The Reexamination Center interviews patent attorney Dr. Nancy Linck on post-grant review, inter partes review, and ex parte reexamination in the past and under the America Invents Act.

Copyright © 2012 Robert Moll. All rights reserved.

Track I - Prioritized Patent Examination

Blogger Gene Quinn interviewed Director Kappos about challenges facing the PTO.

Director Kappos showed enthusiasm for Track I prioritized examination. An applicant requests Track I by filing a one page PTO form and paying $4,800 (large entity) or $2,400 (small entity) for a maximum of 30 claims and 4 independent claims. This should result in a 12-month patent process. 

The PTO has received a few thousand Track I requests since the program began on September 26, 2011. The program closes (unless extended) this fiscal year once 10,000 requests are granted.  

The early results are remarkable compared to the status quo. Instead of years of delay, a patent application is examined in one month. Further, the Commissioner of Patents, Peggy Focarino reports that the PTO has mailed Office actions in all Track I applications within 70 days of the filing date.

Track I could result in a quick final rejection, but I don't see how this is worse than receiving a final rejection after a long passage of time. In any event, Commissioner Focarino blogs the denial/grant rate is similar to regular patent applications. 

Whatever the case, on December 19, 2011, this PTO press release states the rules now permit requesting Track I after filing a request for continued examination (RCE). 

Professor Crouch's blog post provides additional details on Track I. 

Track I can speed the patent process as long as you are willing to spend the money.  

Copyright © 2012 Robert Moll. All rights reserved.

PTO Publishes Four Proposed Rules for the America Invents Act

On January 5-6, 2012, PTO Director David Kappos announced publication of four proposed rules to implement the America Invents Act (AIA). See the details in the links below:

• Inventor’s oath and declaration
• Third party submission of prior art in a patent application
• Citation of prior art in a patent file
• OED Statute of Limitations

Publication opens a sixty-day comment period on the proposed rules. Director Kappos encouraged the patent community to comment on the rules and attend an AIA roadshow where the PTO will discuss proposed rules and receive public feedback. 

See the Leahy-Smith America Invents Act Implementation web page for details and the AIA Roadshow schedule in 2012.


Copyright © 2012 Robert Moll. All rights reserved.

 

Kodak on Brink of Bankruptcy - Seeks Patent Sale

Yesterday, the Wall Street Journal ran an interesting article about Kodak's last ditch effort to avoid Chapter 11 bankruptcy by selling some of its digital patents. 

No surprise here as Kodak has struggled with changes in business for decades. In the 1980s, foreign competitors stole its market share in film and later its film business was damaged by the rise of digital photography.

The article notes that Kodak's patent litigation and licensing program has run dry so now it seeks to sell its large patent portfolio following other well-known companies such as Nortel.   

See the WSJ article Kodak Teeters on the Brink for further details.

Copyright © 2012 Robert Moll. All rights reserved.

US Patent Spending - Google Adds IBM patents

Many are writing about the patent spending spree in Silicon Valley in recent months. On January 4, 2012, the BBC News reports Google has now acquired 187 patents and 36 applications, adding to the 1,000 it purchased from IBM last summer as it continues its spending spree. Google has spent billions building its patent portfolio, including the $12.5B deal for Motorola Mobility in the face of lawsuits from Apple and Microsoft.

Here's a link to the BBC article with details that my friend Alan Cooper sent earlier today:

Google adds IBM patents as it looks to future

Thanks Alan!

Copyright © 2012 Robert Moll. All rights reserved.