Wednesday, April 29, 2015

WSJ - Data Storage Startup Infinidat Raises $150 Million at $1.2 Billion Valuation

Tonight, I suggest reading the Wall Street Journal article Data Storage Startup Infinidat Raises $150 Million at $1.2 Billion Valuation. So an Israeli makes a major contribution to EMC, leaves and sells a startup to IBM in 2008, and forms yet another data storage company with 200 employees and 100 software patents? That's an argument to respect your elders!

Copyright © 2015 Robert Moll. All rights reserved.

WSJ - Senate Tees Up Bipartisan Bill Aimed at Patent Litigation

Today, I suggest reading the WSJ article Senate Tees Up Bipartisan Bill Aimed at Patent Litigation:

"Last year, the House of Representative cast a vote in support of patent reform, specifically for measures intended to clamp down on a flood of patent lawsuits. Corporate defendants, academics and others thought plaintiffs were abusing the court system, filing 'nuisance' lawsuits that were likely to trigger quick settlements. But the Senate's effort to play ball with the House died amid a flurry of finger-pointing. Earlier this year, the House reintroduced its bill — the Innovation Act — and Wednesday afternoon, the Senate offered up a companion to the House bill that seems to have bipartisan support among some influential senators. The bill was introduced by Sens. Charles Schumer (D., N.Y.); John Cornyn (R., Texas);Senate Judiciary Chairman Charles Grassley (R., Iowa) and that committee’s ranking Democrat, Patrick Leahy (D., Vt).

This bipartisan bill shifts the legal burden back onto those who would abuse the patent system in order to make a quick buck at the expense of businesses that are playing by the rules," said Sen. Schumer, in a statement. 'I'm hopeful we can move quickly and in a bipartisan way to get this bill passed in committee and on the Senate floor this summer.'"

The article gives a summary of the Innovation Act that loses me on several points. The article never talks the dramatic decrease in patent infringement lawsuits last year. Is this carelessness or related to the sources of the article? It fails to talk about the defendants overwhelming success in the America Invents Act (AIA) trials. Defendants have had a long losing streak there, and the Innovation Act seeks to remove the estoppel provisions. Why isn't this discussed? The article exaggerates support for patent reform in 2014. It didn't die because of "finger pointing" in Congress. It died because it changed decades of how we conduct patent litigation. Congress hit a snag because it tried to pass laws that would weaken patent owner rights. Each party pays its own attorney fees unless it's an exceptional case in the USA to encourages patent owners to come to court if they cannot settle a patent infringement case. However, the Bill proposes mandatory attorney fee shifting for losers in patent litigation. Mandatory fee shifting would reduce patent troll lawsuits, but would also discourage patent owners with legitimate claims. It proposes to tilt the playing field further in favor of big companies who can shift all their legal fees on small companies who make the mistake of suing for patent infringement and losing the case.

I don't know if patent reform will pass this year. What seems more certain to me is tech lobbyists will push for patent reform (even reviving what failed) and present it as in the public interest and protecting us from those patent trolls. It's getting impossible to not conclude it's really about lowering costs of doing business (e.g., paying patent licenses) of big tech in the USA.

Copyright © 2015 Robert Moll. All rights reserved.

Sunday, April 26, 2015

Congresswoman Kaptur - The Innovation Act is Bad News for America's Patent System

Today, I suggest reading Congresswoman Marcy Kaptur's article in IP Watchdog: The Innovation Act is Bad News for America’s Patent System. Ms. Kaptur states certain ways this proposed Act would weaken US patent owners rights. I agree this Act is not what is needed today.

Copyright © 2015 Robert Moll. All rights reserved.

Sunday, April 19, 2015

Professor Shawn Miller - "Fuzzy" Software Patent Boundaries and High Claim Construction Reversal

Tonight, I suggest reading "Fuzzy" Software Patent Boundaries and High Claim Construction Reversal in the Stanford Technology Law Review.

Here is the author's summary:

"Bessen and Meurer theorize that a breakdown in notice of patent boundaries caused the patent litigation surge of the 1990s. They argue that a prime source of this breakdown was the proliferation of software patents with particularly uncertain scope. In this Article I seek evidence that software patent scope is more uncertain by extending the empirical literature on claim construction reversal rates to determine whether the Federal Circuit has been more likely to find error in district court construction of software patents. Not only do I find that it has, but since 2002 software patents account for 40% of the difference between the Federal Circuit’s high claim construction reversal rate and its lower average reversal rate on all other patent issues. These results are cause for optimism because, in general, the application of existing claim construction law has been more predictable than many have feared. However, that optimism does not extend to software claim construction, which is highly unpredictable."

In my view, the article supports that one might reasonably appeal to the Federal Circuit a software patent case lost on claim construction since you have a 40% chance of reversal. However, the Federal Circuit's 40% reversal rate does not establish the software patent owner and prospective defendant disagreed regarding claim scope leading to a litigation surge in the 1990's. I think it only says why we had a lot of appeals to the Federal Circuit. Moreover, should anyone care about a litigation surge in the 1990's-- more than 15 years ago-- given the big decrease in patent litigation in recent years?

Copyright © 2015 Robert Moll. All rights reserved.

Sunday, April 12, 2015

Professor Robin Feldman and Reseach Fellow Evan Frondorf - Patent Demands and Initial Public Offerings - A Comment

In a study Patent Demands and Initial Public Offerings, forthcoming in the Stanford Technology Law Review, Professor Robin Feldman and Research Fellow Evan Frondorf of UC Hastings law school state a "significant majority of information technology companies received patent demands near their IPO and "almost all of that activity originated from patent NPEs." Sounds like a problem, right?

In this study the authors checked with lawyers at recently public companies about exposure to patent demands as their company developed. Mr. Frondorf explains "Patent trolls thrive on extracting settlements from startup companies that don't have the time or money to litigate, even if the claims are dubious. An IPO is new leverage that can be used against a company that wants to avoid the negative effects that pending litigation might have on its offering price or public reputation. The results are consistent with monetizers issuing demands based on the economics of patent litigation, rather than on the legitimacy of the claims. It's more evidence of the need for comprehensive patent reform."

I appreciate the research of Professor Feldman, but I am not seeing that a study revealing patent demands occur before IPOs is more evidence supporting the need for comprehensive patent reform being considered by Congress.

Patent demands made before IPOs is not a new tactic, but a long standing strategy of patent owners. As a patent lawyer at Wilson Sonsini Goodrich & Rosati from 1993 - 1998, I saw a number of tech companies get hit with patent demands and even patent lawsuits before going public. That does not prove, however, whether the patent claim is legitimate or not. Patents owners simply show up when they have the most leverage to get paid. Whether the patent owner practices the invention is not relevant to whether or not a patent is valid or infringed.

I also question the suggestion that companies near an IPO have no time or money to fight illegitimate patent claims. Many tech companies have pending patent litigation or threatened lawsuits but have the resources to handle that as well as go public. How many of them withdraw from going public because the patent lawsuit drained their resources? I would venture rarely if ever. A patent lawsuit may be resolved before the IPO, but it is not required. Instead, the risk of that patent lawsuit is disclosed in the prospectus. Whether or not it settles is up to the parties. One notable example is Yahoo's online advertising patent lawsuit before Google's IPO. Google disclosed the risk in the prospectus, and settled with Yahoo, then went public, and life went on. Sure Google had to pay a chunk of stock, but a number of observers believed Yahoo had a legitimate claim. Google had the legal talent, financial resources and considerable momentum in the search engine space that enabled it to settle that patent case on its own terms.

If a company is successful to the point of going public, it usually also has smart management, a viable business, legal talent, and the financial resources to settle or fight the patent demands before, during, and after the IPO. Further, the AIA trials give a relatively low cost way to deal with dubious patent demands today. Just before a company goes public is not when it's vulnerable to illegitimate patent demands. Higher vulnerability occurs at a much earlier stage, but as the study notes "almost no companies received demands near another important funding moment-- obtaining the first round of venture capital funding." Another vulnerable time for a startup to receive a patent demand is when seeking a first round of funding, since investors do not want to invest in that situation, but of course you have exceptions.

Copyright © 2015 Robert Moll. All rights reserved.

Wednesday, April 8, 2015

EFF - Bringing Transparency to Patent Law

Tonight, I suggest reading Electronic Frontier Foundation's (EFF's) article Bringing Transparency to Patent Law.

I worked with Michael Barclay while at WSGR 1993-1998, and he is a great guy. Here's part of the article:

"Previously, the Federal Circuit issued many of its orders for free on its website. They were not necessarily easy to search, but it was at least possible to search by party name or download all orders they issued. But at the end of 2014, the Federal Circuit announced a new policy. Instead of publishing most orders, the Federal Circuit would only publish “selected” orders. (To be clear, PACER is still available, but it is notoriously difficult to navigate and charges both to search and download information. We’re not fans of PACER.)

Unfortunately, “selected” orders seems to mean “few if any” orders. Since the new policy went into effect, only 6 orders have been made freely available (compare that to the quarter from July 1, 2014 to September 30, 2014, where the Federal Circuit published over 180 orders).

We’re concerned that the new Federal Circuit practice is limiting the availability of the public to understand how our courts work. The Federal Circuit hears all appeals in patent cases so its recent practice is especially disappointing since it comes at a time when interest in patent law, and possible reform, is very high."

Copyright © 2015 Robert Moll. All rights reserved.

Tuesday, April 7, 2015

Federal Circuit - Carnegie Mellon University v. Marvell Technology Group - $1.5 Billion Damage Award

Today, the Federal Circuit heard oral arguments on whether it should uphold $1.54 billion damage award in favor of Carnegie Mellon University (CMU) based on Marvell Technology Group's  infringement of US Patent No. 6,201,839 and 6,438,180 relating to improved accuracy of reading data from hard disk drives.

Some commentary thinks this case will have impact on the extraterritorial scope of US patents.

Here are links to more information on this case:

CMU v. Marvell Technology Group - district court opinion (2012)

Patent Lawsuit - Carnegie Mellon v. Marvell Technology Group

Marvell Technology Group Ltd. Frequently Asked Questions Concerning the Status of the CMU Litigation Article - CMU patent technology lawsuit may set precedent as it moves to federal appeals court

Copyright © 2015 Robert Moll. All rights reserved.

Friday, April 3, 2015

US Supreme Court - Oral Arguments Transcript - Kimble v. Marvel Enterprises, Inc.

The US Supreme Court heard oral arguments in Kimble v. Marvel Enterprises, Inc.

The issue in Kimble: Whether this Court should overrule Brulotte v. Thys Co., which held that "a patentee's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se."

Here's a PDF copy of the transcript of the oral arguments.

Copyright © 2015 Robert Moll. All rights reserved.

PTAB - Program for Ex Parte Appeals

The Patent Trial and Appeal Board (PTAB) is hosting a free program on ex parte appeal from 9 - 10 am Pacific Time, Tuesday, April 6. Judges Bradley Garris, Linda Horner, and John Jeffery will discuss the ex parte appeal process, statistics, and tips for winning appeals.

For more information about the Boardside Chats and to access all slide materials:

Webinar Access Information:

Event address:

Event number: 994 593 512

Event password: 123456

Audio conference: Call-in toll number is 1-650-479-3208, access code is 994 593 512

Copyright © 2015 Robert Moll. All rights reserved.

Thursday, April 2, 2015

US Supreme Court - Oral Argument Transcript Commil USA v. Cisco Systems

The US Supreme Court heard oral arguments in Commil USA, LLC v. Cisco Systems.

The issue in Commil USA: Whether the Federal Circuit erred in holding that a defendant's belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).

Here's a PDF copy of the transcript of the oral arguments.

Copyright © 2015 Robert Moll. All rights reserved.