Friday, November 30, 2012

PTO Seeking Transparency in Patent Ownership Roundtable

The PTO is considering regulations to require greater transparency concerning ownership of patents and patent applications. I am interested to see patent aggregators or patent monetizers views on this topic.

For details see Notice of Roundtable on Proposed Requirements for Recordation of Real-Party-in-Interest Information Throughout Application Pendency and Patent Term.

Copyright © 2012 Robert Moll. All rights reserved.

Microsoft v. Motorola Mobility - Google's Motorola Standard Essential Patents Not Entitled to Injunction or Hefty Royalty Rate

Today, in Microsoft v. Motorola Mobility, the federal district court judge granted Microsoft's summary judgment motion that Motorola Mobility's standard essential patents (SEP) are not entitled to injunctive relief and will be subject to FRAND. We may see a consensus that we cannot have patent hold ups on SEPs since that gives SEP owners too much negotiating leverage against competitors.

I am a little surprised at how this case evolved. Google's Motorola Mobility would not sign up under  Microsoft's patent licensing program despite the vast majority of Android makers doing so. Second, after Motorola Mobility was sued it didn't think maybe it should settle. Instead it counterclaims that Microsoft XBox infringed patents essential to the H.264 (video codec) or IEEE 802.11 (WiFI, or WLAN) standards. We were talking about my Android, but let's talk about your XBox? Then Motorola insists on injunctive relief and unreasonably high royalty rates on those SEPs?

Despite this Groklaw suggests the judge's decision is based on local bias: Surprise Surprise ... Seattle Judge Grants MS Motion, Bans Injunctions for Motorola's RAND Patents

Groklaw argues the Seattle judge is in Microsoft's home court and handed out a predictable victory to Microsoft based on a sealed motion (i.e., who knows what) that is likely to be appealed. In my opinion, the judge is being unfairly impugned. Motorola lost because it pushed beyond the outer limits of remedies available for SEPs.

Also see other reviews of this decision such as Joe Mullin' In a blow to Android, judge says Moto patents can't get injunctions - Motorola can't use standard-based patents to enjoin Microsoft's Xbox and FOSS Patents' Google's Motorola loses a summary judgment decision after Microsoft FRAND trial.

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, November 29, 2012

American Invents Act Driving More Provisional Application Filings

Professor Dennis Crouch's Provisional Patent Applications as a Flash in the Pan: Many are Filed and Many are Abandoned contains a graph showing provisionals have steadily increased from 1995 to 2012. In FY 2012, we are up to 160,000 filings! In a smaller study he found that 35% of provisionals do not include a single claim. Claims aren't required so this is not surprising, but it is surprising that 15% of the provisionals are a stack of presentation materials (e.g., PowerPoint?) since a provisional must enable the claimed invention. See my articles for an explanation:

The Benefits of Provisional Applications: Slip, Sliding Away

Leader Technologies v. FaceBook - Provisional Fails to Save Patent from On Sale Bar and Public Use

Whether or not we love or hate provisionals, we should expect the annual filing rates to rise. The AIA first inventor to file provisions contained in 35 USC 102 and effective on March 16, 2013 retain a one year grace period for inventor (and inventor derived) disclosures, but do not expressly shield a pre-filing offer for sale, a public use, or a publication that cannot be traced back to one of the inventors.

Harold Wegner says the scope of the AIA grace period is an open question. See Wegner, The 2011 Patent Law: "Leahy-Smith maintains the concept of a one year grace period for inventor's pre-filing activities but defines the grace period as limited to the applicant's 'disclosures' of the invention, making it an open question whether a secret commercialization or other 'public use' or 'on sale' events fall under the grace period because they may not constitute 'disclosures' of the invention."

For now it's safer to take a narrow view of the grace period. Thus, a provisional or a nonprovisional satisfying 35 USC 112 must be filed before an offer for sale or public use of the invention. If an examiner assumes a nonprovisional is entitled to the provisional filing date, a sketchy provisional may as well have a flag: "litigators here is a promising date range for prior art to invalidate a patent-- between the provisional and the nonprovisional filing dates" (i.e., when the technology is most developed and time-wise qualified). Many provisionals do not satisfy 35 USC 112 and nonprovisionals depending on them for priority may find the effective filing date is the nonprovisional filing date.

The fact more than half of provisionals are abandoned without the filing of a nonprovisional is consistent with the PTO's stated purpose: to give inventors one year to explore whether the invention has commercial prospects before filing a more expensive nonprovisional. The AIPLA Report of the Economic Survey 2011 says a typical charge for a provisional is $3,500, while the typical charge for a nonprovisional is $7,000 - $12,000. I see the cost savings, but given the price difference note it isn't realistic to expect both are equal to the task of satisfying 35 USC 112.

Copyright © 2012 Robert Moll. All rights reserved.

Tuesday, November 27, 2012

Oracle v. Google - Patent and Copyright Cases - Groklaw's Timeline and Court Papers

Wikipedia says "Groklaw is an award-winning website covering legal news of interest to the free and open source software community." Its slogan: "digging for the truth" is accurate in that Groklaw does a great job of posting legal documents that would be typically not found inexpensively; it seems less accurate if it means the opinions of a blog that functions as a bully pulpit for paralegal Pamela Jones ("PJ") to articulate the rightness of the free and open source software communities opposition to intellectual property and particularly software patents.

Still Groklaw is an excellent resource for tech people having to deal with intellectual property law. For example, I spent many evenings reading about the Oracle v. Google patent and copyright trials then news coverage vanished after Oracle lost its case. Thus, I appreciate Groklaw's effort in doubling back and posting the complete trial transcripts: Oracle v. Google Timeline when it is not a hot topic. There is lot to learn from them.

The trial transcripts suggest why billing by the hour is so profitable for litigation attorneys: "If you are paying by the hour, I see where I can file another paper to advance your cause." Joking aside, they don't have much choice. The Federal Rules of Civil Procedure and modern patent litigation dictate a number of the filings. If an attorney files a motion, the opposing litigator must reply to avoid conceding unless the client authorizes it.  And when you have mobile computing at stake, and Oracle's and Google's financial resources, the massive transcripts are inevitable and indicates why this litigation was so expensive despite reexamination eliminating all but two Oracle patents.

Updated November 30, 2012: FOSS Patents reports: Oracle's appeal of ruling in Google/Java case focuses entirely on copyright, drop patents

Copyright © 2012 Robert Moll. All rights reserved.

Monday, November 26, 2012

Director David Kappos to Leave USPTO in January 2013

Professor Dennis Crouch reports: USPTO Director Kappos will leave in January 2013. Many in the patent community will miss his leadership of the USPTO over the last three and half years.

Hopefully, USPTO Deputy Director Ms. Teresa Stanek Rea will continue his standard of excellence, which helped the USPTO tackle the application backlog, work with applicants to determine patentable subject matter, and adopt reasonable final rules implementing the America Invents Act.

Thanks for such a great job Director David Kappos!

Copyright © 2012 Robert Moll. All rights reserved.

Sunday, November 25, 2012

FTC and DOJ Workshop - Patent Assertion Entities

The FTC and DOJ is hosting a workshop to consider the impact of patent assertion entities (PAE) on innovation, competition, and any implications for antitrust enforcement.

It's a free workshop, with a great set of panelists, including academics, attorneys, economists, and industry representatives in Washington DC on December 10, 2012.

If you are interested in attending, submitting comments, or learning more, see Federal Trade Commission, Department of Justice to Hold Workshop on Patent Assertion Entity Activities and Patent Assertion Entity Activities Workshop Page.

Copyright © 2012 Robert Moll. All rights reserved.

Thursday, November 22, 2012

Richard Stallman and Professor Duffy Clash - Solutions to the Software Patent Problem - Santa Clara University - November 16, 2012

I signed up for the Santa Clara University Law School conference Solutions to the Software Patent Problem then nearly decided to skip it. I didn't need the MCLE and I didn't want to take the day off. It sounded like rain, traffic, etc. Further, I didn't feel like listening to proposals all day long to eliminate or reduce the value of software patents. I didn't expect a warm welcome as a software patent attorney either. Maybe I would be viewed as part of the problem! Yet I felt compelled to attend to hear how others might eliminate my job fixing the "software patent problem."

Despite these misgivings, it was a good conference with 34 presentations! The caliber of the speakers made it interesting and each had ten minutes to propose a solution to the software patent problem.

Of course part of any good conference is meeting people and seeing old friends at the breaks. I talked with my colleague and friend Michael Barclay about his hobby of learning difficult guitar pieces, Eric Clapton's habit of self-recording before he joined John Mayall, the book Guitar Zero about a NYU professor's sabbatical learning the guitar and to check out Eric Clapton's isolated track of "While my guitar gentle weeps" on Youtube.

I didn't convince Joe Mullin, the prolific journalist at ars technica, that Apple's damage award against Samsung is needed to address the free riding problem. Joe said all of the similarities between the Samsung products and Apples patents were just the result of competition.

I met Richard Stallman, founder of the Free Software movement, and fabulous hacker of Emacs and GNU used with the Linux OS. He convinced me that the latest revision of his book was worth getting and gave me "GNU and Linux - the Dynamic Duo" stickers for my kids. We have to convince the kids, right? I had an interesting talk with a patent damages expert, Elvir Causevic of Ocean Tumo, and met SCU law students such as Michael Quinn and William Jacobs, and others. No one seemed to cared if you were an academic, an executive, a public interest advocate, a businessman, an entrepreneur, or even a software patent attorney.

It is too late tonight to summarize all the proposed solutions but if you are interested, I would start by reviewing Santa Clara Law School's conference resources page. Note the conference was both streamed (except for Richard Stallman's talk - he did not want to use any Microsoft product) and videotaped.

Most speakers proposed various changes to US patent law, PTO rules, and/or how they are implemented today. For example, Professor Love argued patent trolls often assert patents near the end of the term so we could cut that problem off by increasing the cost or frequency of maintenance fees. Professor Arti Rai argued the PTO needed to rigorously apply the written description requirement. Professor Lemley argued that we need to eliminate functional claiming. Claims should not be interpreted to cover all implementations of a given function, but just the structures and equivalents described in the specification that perform the function. Some of the solutions were thought provoking, but as the day wore on, some speakers noted there would be no silver bullet.

Professor John Duffy of University of Virginia Law School proposed we must raise the nonobvious requirement. It seemed persuasive and likely to be adopted in practice. He had read some speech recognition patents and saw the value in patent protection of such complex computer software related inventions. He said patents are needed to induce these types of inventions. To Professor Duffy "worse than a patented technology that burdens the public is not having a technology at all."

Professor Duffy seemed to be building upon his paper with Professor Abramowicz's The Inducement Standard of Patentability, Yale Law Journal, 2010 that noted in Graham v. Deere the Supreme Court held the nonobviousness requirement was intended to limit patents to only those inventions which would not be disclosed or devised but for the inducement of a patent.

During the Q&A following Professor Duffy's presentation, Professor Duffy suggested something that could be taken as criticism of Richard Stallman's proposal. Richard raced from the back of the room to the front and was handed a microphone. He shouted "So many stupid insults—and mistakes! I proposed a way to solve the problem! It's elegant, and it gets right to the point. Your criticisms are completely wrong." His proposal? Deem all computer related patents not infringed. For details see: Stallman, Let's Limit the Effect of Software Patents, Since We Can't Eliminate Them

As to the need to induce inventions? Mr. Stallman's response: Consider the MP3 patent that caused a lot of harm. It's not trivial, it came from a research institute. But we can fund research institutes in other ways. Okay, but before we abolish software patent protection tell me exactly what are the other ways and how do we know it will be better? Will falling back to a trade secret regime be better?

Professor John Duffy seemed to be taken aback by Mr. Stallman's heart felt comments, but noted he respected Mr. Stallman's views to which Mr. Stallman responded don't give me your irrelevant flattery. I like Mr. Stallman's bracing honesty and he is a very smart guy, but Professor Duffy's proposal seemed more likely to be adopted than Richard Stallman's.

Given this type of exchange, the money involved, I don't expect the software patent controversy to end. We have debated solutions, and the PTO, federal courts, the CAFC, and even the Supreme Court have given inconsistent and confusing guidance on software patents for 40 years. I hear we don't even agree on the definition of a software patent. This conference was worthwhile, but mainly gave notice the software patent debate is not likely to end soon.

Updated Nov. 27, 2012: Professor Risch does a great job of articulating the software patent debate in his article today: Two Software Worlds

Copyright © 2012 Robert Moll. All rights reserved.

Wednesday, November 21, 2012

Director Kappos: An Examination of Software Patents Speech on Nov 20, 2012

Under Secretary of Commerce for IP and Director of the USPTO, David Kappos strongly defended valid software patents in a keynote address at the Center for American Progress on November 20, 2012.

Director Kappos' speech: An Examination of Software Patents sets forth a convincing case for software patenting and the U.S. patent system. This speech should be considered by all who think or hear the U.S. patent system is broken.

Copyright © 2012 Robert Moll. All rights reserved.

Sunday, November 18, 2012

Vringo v. Google - Laches Dashing Expectations - From $493M to $31M?

The recent Vringo v. Google patent infringement case illustrates an issue that may arise for prospective licensors and licensees. In a nutshell, Vringo purchased U.S. Patent No. 6,314,420 and U.S. Patent No. 6,775,664 from Lycos, filed a lawsuit in September 2011 claiming Google's system of advertising infringed the patents, and stated it expect to recover $493 million. At the end of trial, the jury held the patents infringed and not invalid, but only awarded $31 million against Google et al. based on a 3.5% royalty rate on a 20% increase attributable to the invention.

Why didn't Vringo receive $493 million? You might think it wasn't realistic and mere saber rattling to encourage Google to settle before trial. But as I looked further, I learned Vringo assumed it would get damages for infringement from 2005 to 2011, since U.S. patent law permits damages up to six year prior to the filing of the lawsuit (i.e., September 2011).

During this trial, there was a fair amount of trading going on. On the last day of a two-week trial, Mr. Dan Ravicher disclosed he was shorting Vringo (VRNG) in Vringo vs. Google: Outcome Probabilities. In his opinion, Vringo had not established Google was aware of the patents and had failed to elicit sufficient jury sympathy to support damages of $493 million. He estimated the net present value to Vringo was $95 million.

Vringo's facts would not generate much jury sympathy. Vringo had not invented anything and had bought the patents from a search engine company that Google had passed long ago. Its press releases saying Google's revenue would go to zero and Vringo would make billions sounded of hubris. Vringo trial slides were cartoon-like. Vringo told the jury Google's SmartAdServingSystem ("Google's SmartASS") infringed the patents. For some of the slides see Mr. Mullin's article: Google infringes old Lycos patents, must pay $30 million.

Much more than lack of jury sympathy, laches reduced Vringo's damages. Under the equitable doctrine of laches defense: (1) if a patent owner unreasonably and inexcusably delays filing an infringement suit, and (2) the alleged infringer has been materially prejudiced by the delay, a patent owner cannot recover damages that occurred before the complaint was filed. The statute says Vringo could get damages up to six years prior to filing the complaint, but a judge can rule in equity to supplement statutory law to achieve a fair result.

The Vringo lawsuit had laches written all over it from the beginning. The '420 patent issued 11 years ago, November 6, 2001, and the '664 patent issued over eight years ago, August 10, 2004. Even six years of delay raises a rebuttal presumption of laches. It's true a patent owner may "burst" the presumption by producing evidence sufficient to raise an issue the delay was reasonable or excusable under the circumstances, but Vringo was unable to do it. Thus, laches precluded recovery before the complaint was filed in September 2011. A six year period of infringement was reduced to one year. I guess the judge wasn't sympathetic.

Whenever a patent is enforced near the end of its term, you must consider laches. For more about laches, I suggest the Federal Circuit's case A.C. Aukerman Co. v. R.L Chaides Construction and cases citing Aukerman.

Copyright © 2012 Robert Moll. All rights reserved.

Friday, November 2, 2012

Solutions to the Software Patent Problem - Santa Clara University - November 16, 2012

Tonight, I signed up for the Santa Clara University conference Solutions to the Software Patent Problem, which is premised on the idea software patents are a problem, and asks what should be done. Whether or not you agree with the premise, I think it is a good to listen to what this group has to say.

Wired has published two of the speakers' opinions in The Patent Fix series: Richard Stallman, founder of GNU and the Free Software Foundation, and Stanford professor Mark Lemley:

Stallman, Let's Limit the Effect of Software Patents, Since We Can't Eliminate Them

Lemley, Let's Go Back to Patenting the 'Solution,' Not the 'Problem'

If you wish to register to attend the Solutions to the Software Patent Problem conference, here's the link. It will be held at the Locatelli Center, Santa Clara University, 8:45 am - 5:30 pm.

Copyright © 2012 Robert Moll. All rights reserved.