On November 6, 2014, the FTC announced that MPHJ Technology Investments, LLC, and its law firm reached a settlement that barred the patent assertion entity from sending letters making phony claims in licensing its patents and that each letter in the future would cost $16,000.
As background, MPHJ Technology had purchased patents that purported to cover network scanning then sent letters to more than 9,000 small businesses claiming they likely infringed and faced an infringement lawsuit if they failed to purchase a license. The letters gave a two-week deadline and included a complaint ready to file in closest federal court, but no complaints were filed and no preparation was made to file the complaints. This is the FTC first action against a "patent assertion entity."
For details see the agreement and consent order, the other FTC documents, and the FTC press release.
Also see Mr. Joe Mullin's FTC ends first case again a "patent troll" with a slap on the wrist - MPHJ owner Jay Mac Rust won't pay a fine, can sue all he likes.
Copyright © 2014 Robert Moll. All rights reserved.
Showing posts with label patent assertion entities. Show all posts
Showing posts with label patent assertion entities. Show all posts
Friday, November 7, 2014
Friday, October 17, 2014
Hovencamp - Predatory Patent Litigation: How Patent Assertion Entities Use Reputation to Monetize Bad Patents
Tonight, I recommend Northwest PhD candidate Eric Hovencamp's Predatory Patent Litigation: How Patent Assertion Entities Use Reputation to Monetize Bad Patents.
Here's the author's abstract of the article: "Despite their expertise in patent law, the most litigious patent assertion entities (PAEs) frequently file dubious infringement claims on which they are ostensibly very unlikely to turn a profit. Thus one might conjecture that these PAEs are mistaken to follow through on their litigation threats when their chances of coming out ahead are so scant. To the contrary, this paper demonstrates that this is in fact a calculated strategy of predatory patent litigation: by following through on its threats of seemingly irrational litigation, the PAE develops a litigious reputation that convinces other producers that these threats are credible, leading them to accept licensing offers they would ordinarily rebuff. This allows the PAE to garner substantial licensing revenues using low quality patents that would otherwise be difficult or impossible to monetize."
The article is interesting but suffers a bit from a heavy dose of mathematics guaranteed to knock out all but the economist. It also struggles with formulating a practical strategy to address patent assertion entities (PAEs) that file dubious infringement claims. It should note the AIA trials (e.g., inter partes review) that have been successful at invalidating dubious patent, but instead argues without a lot of evidence "potential defendants could better protect themselves by entering into a litigation cost-sharing agreement." How about avoid litigation altogether? I don't consider myself an expert on this topic, but I have only heard litigation cost-sharing does not works that well. Multiple defendants have different things at stake. Most should settle quickly, while a few may need to go further. So after you quibble over costs and strategy, you typically see a lot of free riding followed by "me first settlements."
Copyright © 2014 Robert Moll. All rights reserved.
Here's the author's abstract of the article: "Despite their expertise in patent law, the most litigious patent assertion entities (PAEs) frequently file dubious infringement claims on which they are ostensibly very unlikely to turn a profit. Thus one might conjecture that these PAEs are mistaken to follow through on their litigation threats when their chances of coming out ahead are so scant. To the contrary, this paper demonstrates that this is in fact a calculated strategy of predatory patent litigation: by following through on its threats of seemingly irrational litigation, the PAE develops a litigious reputation that convinces other producers that these threats are credible, leading them to accept licensing offers they would ordinarily rebuff. This allows the PAE to garner substantial licensing revenues using low quality patents that would otherwise be difficult or impossible to monetize."
The article is interesting but suffers a bit from a heavy dose of mathematics guaranteed to knock out all but the economist. It also struggles with formulating a practical strategy to address patent assertion entities (PAEs) that file dubious infringement claims. It should note the AIA trials (e.g., inter partes review) that have been successful at invalidating dubious patent, but instead argues without a lot of evidence "potential defendants could better protect themselves by entering into a litigation cost-sharing agreement." How about avoid litigation altogether? I don't consider myself an expert on this topic, but I have only heard litigation cost-sharing does not works that well. Multiple defendants have different things at stake. Most should settle quickly, while a few may need to go further. So after you quibble over costs and strategy, you typically see a lot of free riding followed by "me first settlements."
Copyright © 2014 Robert Moll. All rights reserved.
Friday, April 18, 2014
Startups Face Obstacles Protecting Innovation with US Patents
I was visiting Professor Hricik's blog tonight, and noticed his post with a link to an IP Today article by Joseph Hosteny on prosecution bars. Prosecution bars prevent prosecuting attorneys from viewing confidential information that is discovered during litigation that could be used to guide the strategy for patent prosecution of pending applications. When I arrived at IP Today it required a login, etc. I decided to sidestep all of that by visiting the Niro, Scavone, Haller & Niro's web site where Mr. Hosteny works to see if I could download the prosecution bar article and noticed he has his own website with publications. Although it didn't include the prosecution bar article, the articles were interesting.
Tonight, I mention one of them because it may cause some to think differently about how Congress is striking the balance in favor incumbents over startups with respect to patents. Lobbyists have Congress' attention on patent trolls, but startups interests tend to be ignored. This may be because they cannot afford lobbyists and must focus on innovation rather than changing laws. At the same time, the innovation needs legal protection from larger entities that can take it. Congress needs to give startups favorable patent laws to help them grow and if they deserve it, become incumbents. If we reform patent law in ways that generates obstacles for startups protecting their patentable innovation, we produce a world where only incumbents win.
In The Long Walk From the Gobi Desert to the River Styx Mr. Hosteny paints a stark detailed picture of the obstacles inventors face in profiting from patents. Although Mr. Hosteny talks about inventors, I think the ideas can be extended to startups which are built on inventions. He notes they have a long march to succeed. They have to invent something valuable, hire a patent attorney to prepare and file patent applications timely, build prototypes (let's assume real inventions), convince the examiner of the merits, then persuade skeptical companies to license the patent, and at times enforce the patent against companies with much more resources. Unfortunately, defendants' attorneys often treat inventors worse than robbers or embezzlers during enforcement. Don't expect to see it in court -- the judge is watching, but you do see it in depositions, where inventor's character is too often called into question. And the battle to enforce patents can stretch over years as it goes back and forth between the district court and the Federal Circuit on various issues. Definitely worth reading as it may help some realize that the playing field is not at all level for small companies and inventors that seek to license and enforce their patents.
Copyright © 2014 Robert Moll. All rights reserved.
Tonight, I mention one of them because it may cause some to think differently about how Congress is striking the balance in favor incumbents over startups with respect to patents. Lobbyists have Congress' attention on patent trolls, but startups interests tend to be ignored. This may be because they cannot afford lobbyists and must focus on innovation rather than changing laws. At the same time, the innovation needs legal protection from larger entities that can take it. Congress needs to give startups favorable patent laws to help them grow and if they deserve it, become incumbents. If we reform patent law in ways that generates obstacles for startups protecting their patentable innovation, we produce a world where only incumbents win.
In The Long Walk From the Gobi Desert to the River Styx Mr. Hosteny paints a stark detailed picture of the obstacles inventors face in profiting from patents. Although Mr. Hosteny talks about inventors, I think the ideas can be extended to startups which are built on inventions. He notes they have a long march to succeed. They have to invent something valuable, hire a patent attorney to prepare and file patent applications timely, build prototypes (let's assume real inventions), convince the examiner of the merits, then persuade skeptical companies to license the patent, and at times enforce the patent against companies with much more resources. Unfortunately, defendants' attorneys often treat inventors worse than robbers or embezzlers during enforcement. Don't expect to see it in court -- the judge is watching, but you do see it in depositions, where inventor's character is too often called into question. And the battle to enforce patents can stretch over years as it goes back and forth between the district court and the Federal Circuit on various issues. Definitely worth reading as it may help some realize that the playing field is not at all level for small companies and inventors that seek to license and enforce their patents.
Copyright © 2014 Robert Moll. All rights reserved.
Sunday, February 16, 2014
Professor Feldman - Patent Trolling: Why Bio & Pharmaceuticals Are at Risk
In the study, Patent Trolling: Why Bio & Pharmaceuticals Are At Risk, Professor Feldman and Harvard Fellow Dr. Nicholson Price discuss patent trolls- also referred to as non-practicing entities, patent assertion entities, and patent monetizers- moving into the biotech, pharmaceutical, and life science industries.
The authors state highlights include:
"With the Association of University Technology Managers revisiting its policy against selling to NPEs, the authors considered whether universities could provide an extensive pool of ammunition for NPEs to launch against current products.
To supplement increasing anecdotal evidence that patent trolling is moving into bio and pharma, the authors examined the life science holdings of five major universities.We skimmed the patent holdings for four of the of five university systems with the highest number of patents issued in fiscal year 2011: the University of California system, the University of Texas system, MIT, and CalTech. We added as a wild-card the University of Southern Florida, the school among the top 10 in 2011 patent grants which had the lowest ratio of license revenues to research expenditures.
The study identified dozens of patents that could be deployed against current bio and pharm industries, following the patterns that NPEs have used against other industries. These include patents on drug formulas, methods of treatments, research methods, dosage forms, and others.
In deciding whether to undertake the study, the authors agonized over whether the potential for harm outweighed the potential benefit. After all, if reform efforts are not undertaken, the work could simply provide a handy road map for those who would follow.
Life sciences trolling is predictable and in its infancy, however. The study is intended to sound a warning bell."
Even if you are not the biotech or life science industries, the study gives insight into patent troll strategies.
Copyright © 2014 Robert Moll. All rights reserved.
The authors state highlights include:
"With the Association of University Technology Managers revisiting its policy against selling to NPEs, the authors considered whether universities could provide an extensive pool of ammunition for NPEs to launch against current products.
To supplement increasing anecdotal evidence that patent trolling is moving into bio and pharma, the authors examined the life science holdings of five major universities.We skimmed the patent holdings for four of the of five university systems with the highest number of patents issued in fiscal year 2011: the University of California system, the University of Texas system, MIT, and CalTech. We added as a wild-card the University of Southern Florida, the school among the top 10 in 2011 patent grants which had the lowest ratio of license revenues to research expenditures.
The study identified dozens of patents that could be deployed against current bio and pharm industries, following the patterns that NPEs have used against other industries. These include patents on drug formulas, methods of treatments, research methods, dosage forms, and others.
In deciding whether to undertake the study, the authors agonized over whether the potential for harm outweighed the potential benefit. After all, if reform efforts are not undertaken, the work could simply provide a handy road map for those who would follow.
Life sciences trolling is predictable and in its infancy, however. The study is intended to sound a warning bell."
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, January 15, 2014
New York AG Investigation Results in Settlement with MPHJ Technology Investments
Professor Robin Feldman said I might find this interesting: A.G. Schneiderman Announces Groundbreaking Settlement with Abusive "Patent Troll." She is right, and thus it's my late night post.
I suggest reading the attorney general's press release, but the following passage describes the deceptive conduct that led to the attorney general's investigation:
"Certain patent trolls, such as MPHJ, have adopted a strategy of targeting small and medium sized businesses. These companies acquire patents of dubious validity, then send deceptive and abusive letters to a large number of small businesses in an effort to extract small, often nuisance-value license payments from them. This strategy can be successful, and the collective value of these smaller payments can be quite high, because smaller businesses often do not have the experience or resources needed to fully evaluate the patents. In MPHJ’s case, it told hundreds of New York businesses that they "likely" infringed its scanner-related patents, creating the impression that MPHJ had conducted a meaningful, individualized analysis of the targeted company’s business. In fact, MPHJ merely sent form letters to companies of a certain size and industry classification. In addition, MPHJ falsely told businesses that most other businesses it had previously contacted had acquired licenses when in fact only a handful of businesses had done so. MPHJ also provided misleading information about the fees that the (few) prior licensees had paid. And MPHJ falsely threatened to sue hundreds of businesses if they did not respond to its letters within two weeks; in fact, it has never filed a patent lawsuit against a New York business.
The AG also listed its guidelines to stop the most abusive tactics used by patent trolls:
"Diligence and Good Faith When Contacting Potential Infringers. The guidelines require a patent holder to make a serious, good-faith effort to determine whether a targeted business actually engages in infringement before making an accusation. This prohibits the mass mailing of accusations of infringement to hundreds of businesses with little regard to the actual likelihood that the businesses infringed. The guidelines also forbid using a lawyer as a threatening mouthpiece for baseless allegations. If a patent troll communicates through an attorney, the attorney sending such letters must also make diligent efforts to ensure that there is a good-faith basis for believing that the targeted business infringed the patents.
Providing Material Information So an Accused Infringer Can Evaluate the Claim. When a patent holder accuses a business of infringing its patent, the guidelines require it to explain the basis for the claim in reasonable detail. This information will allow the recipient to assess whether the accusation has any foundation in light of the actual activities of the recipient’s business. The guidelines also prohibit a patent holder from trying to collect revenue for a patent that has been held invalid, and from failing to disclose material information that reveals the patent’s likely invalidity.
No Misleading Statements about a License Fee. If a patent holder seeks to justify a specific licensing fee, it must clearly explain the factual basis for its proposed fee. This requirement prevents a patent troll from taking advantage of informational asymmetry to deceive businesses into paying more than a fair price for a license.
Transparency of the True Identity of the Patent Holder. The guidelines prohibit a patent troll from hiding its identity from its targets. This allows businesses that have been targeted by patent troll campaigns to find information about the patent troll. Ensuring transparency has a number of positive effects, including allowing targeted businesses to find and communicate with one another."
The attorney general says "the guidelines in this settlement are minimum standards- they are not a safe harbor."
"As redress, the settlement requires MPHJ to allow any licensees that received deceptive letters to void their license with it and receive a full refund, and it prohibits MPHJ from further contacting certain small businesses it previously targeted. The settlement also imposes a variety of obligations on MPHJ that should serve as guidelines for all patent trolls engaged in similar patent assertion behavior."
Copyright © 2014 Robert Moll. All rights reserved.
I suggest reading the attorney general's press release, but the following passage describes the deceptive conduct that led to the attorney general's investigation:
"Certain patent trolls, such as MPHJ, have adopted a strategy of targeting small and medium sized businesses. These companies acquire patents of dubious validity, then send deceptive and abusive letters to a large number of small businesses in an effort to extract small, often nuisance-value license payments from them. This strategy can be successful, and the collective value of these smaller payments can be quite high, because smaller businesses often do not have the experience or resources needed to fully evaluate the patents. In MPHJ’s case, it told hundreds of New York businesses that they "likely" infringed its scanner-related patents, creating the impression that MPHJ had conducted a meaningful, individualized analysis of the targeted company’s business. In fact, MPHJ merely sent form letters to companies of a certain size and industry classification. In addition, MPHJ falsely told businesses that most other businesses it had previously contacted had acquired licenses when in fact only a handful of businesses had done so. MPHJ also provided misleading information about the fees that the (few) prior licensees had paid. And MPHJ falsely threatened to sue hundreds of businesses if they did not respond to its letters within two weeks; in fact, it has never filed a patent lawsuit against a New York business.
The AG also listed its guidelines to stop the most abusive tactics used by patent trolls:
"Diligence and Good Faith When Contacting Potential Infringers. The guidelines require a patent holder to make a serious, good-faith effort to determine whether a targeted business actually engages in infringement before making an accusation. This prohibits the mass mailing of accusations of infringement to hundreds of businesses with little regard to the actual likelihood that the businesses infringed. The guidelines also forbid using a lawyer as a threatening mouthpiece for baseless allegations. If a patent troll communicates through an attorney, the attorney sending such letters must also make diligent efforts to ensure that there is a good-faith basis for believing that the targeted business infringed the patents.
Providing Material Information So an Accused Infringer Can Evaluate the Claim. When a patent holder accuses a business of infringing its patent, the guidelines require it to explain the basis for the claim in reasonable detail. This information will allow the recipient to assess whether the accusation has any foundation in light of the actual activities of the recipient’s business. The guidelines also prohibit a patent holder from trying to collect revenue for a patent that has been held invalid, and from failing to disclose material information that reveals the patent’s likely invalidity.
No Misleading Statements about a License Fee. If a patent holder seeks to justify a specific licensing fee, it must clearly explain the factual basis for its proposed fee. This requirement prevents a patent troll from taking advantage of informational asymmetry to deceive businesses into paying more than a fair price for a license.
Transparency of the True Identity of the Patent Holder. The guidelines prohibit a patent troll from hiding its identity from its targets. This allows businesses that have been targeted by patent troll campaigns to find information about the patent troll. Ensuring transparency has a number of positive effects, including allowing targeted businesses to find and communicate with one another."
The attorney general says "the guidelines in this settlement are minimum standards- they are not a safe harbor."
"As redress, the settlement requires MPHJ to allow any licensees that received deceptive letters to void their license with it and receive a full refund, and it prohibits MPHJ from further contacting certain small businesses it previously targeted. The settlement also imposes a variety of obligations on MPHJ that should serve as guidelines for all patent trolls engaged in similar patent assertion behavior."
This is an interesting development in patent law and it makes some sense for states to police deceptive practice. At the same time, why aren't manufacturers defending and indemnifying these small businesses? It should be universal practice and widely publicized. Most small businesses cannot conduct a patent investigation even if all the guidelines are followed nor can they afford defending themselves in a patent suit. Further, the manufacturers might add a web page up for purchasers to upload or email any patent dispute letter and a standard reply to the patent owner saying I bought my gear from company X which has requested all correspondence go directly to it, because it is handling this dispute. Finally, I have mixed feelings about state efforts. US patent law is federal law and most times best handled by Congress to avoid the risk of balkanizing US patent law state by state.
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, December 11, 2013
Europe's Top Regulator Warns Nokia - Patent Licensing Will Trigger Antitrust Action
On December 9, Europe's top regulator warned although he approved the $7.2 billion sale of Nokia's business to Microsoft, he was concerned Nokia would attempt to "extract higher returns" from its patents. He said this seeking higher returns (e.g., a higher royalty rate in patent licensing) was behaving "like a patent troll, or "a patent assertion entity" and he would not tolerate Nokia taking "illegal advantage" of its patents but instead sue it for the antitrust violation. So what can you Nokia do with its patents in Europe? Put them on a bookshelf-- and promise never to assert them.
See Associated Press article EU Warns Nokia Not to Become 'Patent Troll'
Copyright © 2013 Robert Moll. All rights reserved.
See Associated Press article EU Warns Nokia Not to Become 'Patent Troll'
Copyright © 2013 Robert Moll. All rights reserved.
Tuesday, October 29, 2013
Professor Robin Feldman - Patent Demands & Startup Companies - A Comment
Professor Robin Feldman published an interesting article Patent Demands & Startup Companies: The View from the Venture Capital Community on October 28, 2013.
Some of Professor Feldman's findings, based on responses from Members of the National Venture Capital Association and CEOs of the VCs member companies, are as follows:
The article is well researched and written, but I am not sure it supports major patent reform is urgently needed to protect startups from patent demands. Like any potential lawsuit (e.g., contract dispute, founder or shareholder suit, product liability, domain name, or employment suit) patent demands are not a positive development, but something to manage so they don't have "a highly or moderately significant impact," "distract management," "expend resources," or "alter business plans."
Many VCs want patents filed to protect their startups inventions, but readily vote to sell them to the highest bidder (i.e., a patent monetizer) if the startup fails. Maybe we should determine how many patent demands are based on patents purchased from VC backed startups that failed in case we are unsure of VC's role in this problem.
Copyright © 2013 Robert Moll. All rights
reserved.
Some of Professor Feldman's findings, based on responses from Members of the National Venture Capital Association and CEOs of the VCs member companies, are as follows:
- About 70% of VCs and 30% of startups report having received a patent demand.
- 80% of VCs think patent demands have increased over the last five years.
- 70% of VC believe patent demands most impact the IT sector, 30% life sciences, and 10% clean tech.
- VC report 60% of patent demands came from patent assertion entities whose core activity is licensing or litigating patents.
- 60% of VCs estimate defense costs exceed $100,000, with some reporting costs in the millions.
- 75% of VC and 60% of CEOs report patent demands had a highly or moderately significant impact on startups, since they distracted management, expended resources, or altered business plans.
- 70% of VCs don't think patent demands are positive. Every VC said a patent demand against a prospect could influence an investment decision, and 50 percent said it would be a major deterrent.
The article is well researched and written, but I am not sure it supports major patent reform is urgently needed to protect startups from patent demands. Like any potential lawsuit (e.g., contract dispute, founder or shareholder suit, product liability, domain name, or employment suit) patent demands are not a positive development, but something to manage so they don't have "a highly or moderately significant impact," "distract management," "expend resources," or "alter business plans."
Many VCs want patents filed to protect their startups inventions, but readily vote to sell them to the highest bidder (i.e., a patent monetizer) if the startup fails. Maybe we should determine how many patent demands are based on patents purchased from VC backed startups that failed in case we are unsure of VC's role in this problem.
Sunday, September 29, 2013
FTC Seeks Public Comments on Proposed Information Requests to Patent Assertion Entities
On September 27, the FTC stated in a press release that it "seeks to examine patent assertion entities and their impact on innovation, competition," and "is soliciting public comments on proposed information requests to Patent Assertion Entities ("PAEs") and other entities asserting patents in the wireless communications sector, including manufacturers and other non-practicing entities and organizations engaged in licensing."
The FTC defines a PAE as a firm that purchases patents then attempts to generate revenue by asserting the patents against those using the patented technology.
The FTC states the public comments will be considered before compulsory process orders seek information from PAEs and other entities concerning patent acquisition, litigation, and licensing practices.
Copyright © 2013 Robert Moll. All rights reserved.
The FTC defines a PAE as a firm that purchases patents then attempts to generate revenue by asserting the patents against those using the patented technology.
The FTC states the public comments will be considered before compulsory process orders seek information from PAEs and other entities concerning patent acquisition, litigation, and licensing practices.
Copyright © 2013 Robert Moll. All rights reserved.
Monday, July 22, 2013
Judge Posner's Patent Trolls - Chicken Little the Sky is Falling?
In Patent Trolls--Posner, Judge Posner tells us the big problem with the US patent system is patent trolls.
Judge Posner informs "a patent troll buys patents (sometimes thousands) with the aim not of making the patented product or process or licensing it to others to make but of finding companies or individual inventors that the troll can claim with more or less plausibility are infringing one or more of his inventory of patents. The troll demands a license fee from every such allegedly infringing company or inventor. If the target of the demand refuses, the troll may drop the matter or may sue the refuser for patent infringement, hoping that if the threat is plausible this will induce a favorable settlement. If the target refuses to settle, the troll, to maintain the credibility of its threats, may litigate the suit to judgment. The troll does not practice the patent; but, in its own terminology, 'asserts' it."
He concludes it is extremely difficult to discern any possible social benefits from trolls and extremely easy to discern substantial social costs. But what I find extremely difficult to discern is whether many patent owners can avoid the label "patent troll." It appears many could be labeled a patent troll if (1) they don't practice the invention and (2) go to court to enforce their patent rights.
To get rid of these patent trolls, Judge Posner tells us we need a rule that would bar enforcement of any patent that is not reduced to practice within a specified time after the patent is granted but there is no legal authority (e.g., Constitution, Congress, and court decisions) to support his idea, which would favor established corporations rather than startups.
Judge Posner's current crusade against patent assertion entities is burying years of his legal scholarship, but perhaps he deserves credit: he didn't delete reader comments that skewer his post.
Copyright © 2013 Robert Moll. All rights reserved.
Judge Posner informs "a patent troll buys patents (sometimes thousands) with the aim not of making the patented product or process or licensing it to others to make but of finding companies or individual inventors that the troll can claim with more or less plausibility are infringing one or more of his inventory of patents. The troll demands a license fee from every such allegedly infringing company or inventor. If the target of the demand refuses, the troll may drop the matter or may sue the refuser for patent infringement, hoping that if the threat is plausible this will induce a favorable settlement. If the target refuses to settle, the troll, to maintain the credibility of its threats, may litigate the suit to judgment. The troll does not practice the patent; but, in its own terminology, 'asserts' it."
He concludes it is extremely difficult to discern any possible social benefits from trolls and extremely easy to discern substantial social costs. But what I find extremely difficult to discern is whether many patent owners can avoid the label "patent troll." It appears many could be labeled a patent troll if (1) they don't practice the invention and (2) go to court to enforce their patent rights.
To get rid of these patent trolls, Judge Posner tells us we need a rule that would bar enforcement of any patent that is not reduced to practice within a specified time after the patent is granted but there is no legal authority (e.g., Constitution, Congress, and court decisions) to support his idea, which would favor established corporations rather than startups.
Judge Posner's current crusade against patent assertion entities is burying years of his legal scholarship, but perhaps he deserves credit: he didn't delete reader comments that skewer his post.
Copyright © 2013 Robert Moll. All rights reserved.
Sunday, June 23, 2013
FTC Plan to Investigate Patent Trolls Confirmed
On June 20, The NY Times published an article F.T.C. Head Seeks End to Misuse of Patents confirming the FTC is planning to investigate patent assertion entities or pejoratively "patent trolls."
FTC chairwoman Edith Ramirez's stated: A Federal Trade Commission investigation into the practices of "patent trolls" is necessary because there is little real evidence about the costs and benefits of a rising tide of patent litigation. This insight strikes at the assumption that the rising tide of PAE lawsuits is damaging the economy.
Ms. Ramirez noted "Despite the rapid growth in the number of lawsuits filed by those patent-focused companies, regulators have little more than anecdotal evidence of how patent trolls affect business innovation and whether the patent-enforcement companies help to produce benefits that small companies could not enjoy on their own. We have a role to play in advancing a greater understanding of the impact of P.A.E. activity and using our enforcement authority where appropriate to curb anticompetitive and deceptive conduct."
Although this is framed as an investigation, PAE's should be prepared to articulate how they actually level the playing field for small entities and in the end benefit America. If they cannot, well life can be tough. On the other hand, if they do a good job stating the value, it could be FTC investigation will inform the American public that not all PAE are alike nor deserving of the same treatment.
Copyright © 2013 Robert Moll. All rights reserved.
FTC chairwoman Edith Ramirez's stated: A Federal Trade Commission investigation into the practices of "patent trolls" is necessary because there is little real evidence about the costs and benefits of a rising tide of patent litigation. This insight strikes at the assumption that the rising tide of PAE lawsuits is damaging the economy.
Ms. Ramirez noted "Despite the rapid growth in the number of lawsuits filed by those patent-focused companies, regulators have little more than anecdotal evidence of how patent trolls affect business innovation and whether the patent-enforcement companies help to produce benefits that small companies could not enjoy on their own. We have a role to play in advancing a greater understanding of the impact of P.A.E. activity and using our enforcement authority where appropriate to curb anticompetitive and deceptive conduct."
Although this is framed as an investigation, PAE's should be prepared to articulate how they actually level the playing field for small entities and in the end benefit America. If they cannot, well life can be tough. On the other hand, if they do a good job stating the value, it could be FTC investigation will inform the American public that not all PAE are alike nor deserving of the same treatment.
Copyright © 2013 Robert Moll. All rights reserved.
Saturday, June 22, 2013
FTC Expected to Investigate Patent Trolls - NY Times Article
On June 19, The NY Times published an article F.T.C. Is Said to Plan Inquiry of Frivolous Patent Lawsuits that said FTC chairwoman Edith Ramirez is planning to request a sweeping general investigation including issuance of subpoenas to the patent assertion entities or pejoratively "patent trolls." Hopefully this investigation will result in an accurate detailed view of PAEs. I know we all hate to pay nuisance settlements, but not all patents lawsuits are frivolous and it is time to examine PAEs based on practices rather than lazily labeling them all as patent trolls.
Copyright © 2013 Robert Moll. All rights reserved.
Copyright © 2013 Robert Moll. All rights reserved.
Tuesday, June 18, 2013
USPTO Leadership Blog - USPTO and the Obama Adminstration Taking Action to Improve Incentives for Future Innovation via High Tech Patents
On July 17, Teresa Stanek Rea Acting Under Secretary of Commerce for IP and Director of USPTO posted an article about the USPTO's response to the Obama Administration's plans for improving the patent system: USPTO and the Obama Adminstration Taking Action to Improve Incentives for Future Innovation via High Tech Patents.
Copyright © 2013 Robert Moll. All rights reserved.
Copyright © 2013 Robert Moll. All rights reserved.
Saturday, June 8, 2013
White House's Plan to Improve US Patent System
On June 4, 2013, the White House proposed steps to improve the US patent system, including seven legislative recommendations and five executive actions designed to protect innovators from frivolous litigation and ensure highest-quality patents in our US patent system.
For details see Fact Sheet: White House Task Force on High-Tech Patent Issues. The White House also announced the National Economic Council and the Council of Economic Advisers report Patent Assertion and U.S. Innovation, which outlines the challenges we face and the need for legislative action.
The Obama Administration recommends that Congress pursue at least seven legislative measures:
1. Require patentees and applicants to disclose the “Real Party-in-Interest,” by requiring that any party sending demand letters, filing an infringement suit or seeking PTO review of a patent to file updated ownership information, and enabling the PTO or district courts to impose sanctions for non-compliance.
2. Permit more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees under 35 USC 285 as a sanction for abusive court filings (similar to the legal standard that applies in copyright infringement cases).
3. Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).
4. Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use. Also, stay judicial proceedings against such consumers when an infringement suit has also been brought against a vendor, retailer, or manufacturer.
5. Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts.
6. Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.
7. Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges.'
The Obama Administration also announced steps to "to help bring about greater transparency to the patent system and level the playing field for innovators. Those steps include:
1. Making “Real Party-in-Interest” the New Default. Patent trolls often set up shell companies to hide their activities and enable their abusive litigation and extraction of settlements. This tactic prevents those facing litigation from knowing the full extent of the patents that their adversaries hold when negotiating settlements, or even knowing connections between multiple trolls. The PTO will begin a rulemaking process to require patent applicants and owners to regularly update ownership information when they are involved in proceedings before the PTO, specifically designating the “ultimate parent entity” in control of the patent or application.
2. Tightening Functional Claiming. The AIA made important improvements to the examination process and overall patent quality, but stakeholders remain concerned about patents with overly broad claims — particularly in the context of software. The PTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, such as by use of glossaries in patent specifications to assist examiners in the software field.
3. Empowering Downstream Users. Patent trolls are increasingly targeting Main Street retailers, consumers and other end-users of products containing patented technology — for instance, for using point-of-sale software or a particular business method. End-users should not be subject to lawsuits for simply using a product as intended, and need an easier way to know their rights before entering into costly litigation or settlement. The PTO will publish new education and outreach materials, including an accessible, plain-English web site offering answers to common questions by those facing demands from a possible troll.
4. Expanding Dedicated Outreach and Study. Challenges to U.S. innovation using tools available in the patent space are particularly dynamic, and require both dedicated attention and meaningful data. Engagement with stakeholders — including patent holders, research institutions, consumer advocates, public interest groups, and the general public — is also an important part of our work moving forward. Roundtables and workshops that the PTO, DOJ, and FTC have held in 2012 have offered invaluable input to this process. We are announcing an expansion of our outreach efforts, including six months of high-profile events across the country to develop new ideas and consensus around updates to patent policies and laws. We are also announcing an expansion of the PTO Edison Scholars Program, which will bring distinguished academic experts to the PTO to develop — and make available to the public — more robust data and research on the issues bearing on abusive litigation.
5. Strengthen Enforcement Process of Exclusion Orders. Once the U.S. International Trade Commission (ITC) finds a violation of Section 337 and issues an exclusion order barring the importation of infringing goods, Customs and Border Protection (CBP) and the ITC are responsible for determining whether imported articles fall within the scope of the exclusion order. Implementing these orders present unique challenges given these shared responsibilities and the complexity of making this determination, particularly in cases in which a technologically sophisticated product such as a smartphone has been successfully redesigned to not fall within the scope of the exclusion order. To address this concern, the U.S. Intellectual Property Enforcement Coordinator will launch an interagency review of existing procedures that CBP and the ITC use to evaluate the scope of exclusion orders and work to ensure the process and standards utilized during exclusion order enforcement activities are transparent, effective, and efficient."
Copyright © 2013 Robert Moll. All rights reserved.
For details see Fact Sheet: White House Task Force on High-Tech Patent Issues. The White House also announced the National Economic Council and the Council of Economic Advisers report Patent Assertion and U.S. Innovation, which outlines the challenges we face and the need for legislative action.
The Obama Administration recommends that Congress pursue at least seven legislative measures:
1. Require patentees and applicants to disclose the “Real Party-in-Interest,” by requiring that any party sending demand letters, filing an infringement suit or seeking PTO review of a patent to file updated ownership information, and enabling the PTO or district courts to impose sanctions for non-compliance.
2. Permit more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees under 35 USC 285 as a sanction for abusive court filings (similar to the legal standard that applies in copyright infringement cases).
3. Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).
4. Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use. Also, stay judicial proceedings against such consumers when an infringement suit has also been brought against a vendor, retailer, or manufacturer.
5. Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts.
6. Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.
7. Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges.'
The Obama Administration also announced steps to "to help bring about greater transparency to the patent system and level the playing field for innovators. Those steps include:
1. Making “Real Party-in-Interest” the New Default. Patent trolls often set up shell companies to hide their activities and enable their abusive litigation and extraction of settlements. This tactic prevents those facing litigation from knowing the full extent of the patents that their adversaries hold when negotiating settlements, or even knowing connections between multiple trolls. The PTO will begin a rulemaking process to require patent applicants and owners to regularly update ownership information when they are involved in proceedings before the PTO, specifically designating the “ultimate parent entity” in control of the patent or application.
2. Tightening Functional Claiming. The AIA made important improvements to the examination process and overall patent quality, but stakeholders remain concerned about patents with overly broad claims — particularly in the context of software. The PTO will provide new targeted training to its examiners on scrutiny of functional claims and will, over the next six months develop strategies to improve claim clarity, such as by use of glossaries in patent specifications to assist examiners in the software field.
3. Empowering Downstream Users. Patent trolls are increasingly targeting Main Street retailers, consumers and other end-users of products containing patented technology — for instance, for using point-of-sale software or a particular business method. End-users should not be subject to lawsuits for simply using a product as intended, and need an easier way to know their rights before entering into costly litigation or settlement. The PTO will publish new education and outreach materials, including an accessible, plain-English web site offering answers to common questions by those facing demands from a possible troll.
4. Expanding Dedicated Outreach and Study. Challenges to U.S. innovation using tools available in the patent space are particularly dynamic, and require both dedicated attention and meaningful data. Engagement with stakeholders — including patent holders, research institutions, consumer advocates, public interest groups, and the general public — is also an important part of our work moving forward. Roundtables and workshops that the PTO, DOJ, and FTC have held in 2012 have offered invaluable input to this process. We are announcing an expansion of our outreach efforts, including six months of high-profile events across the country to develop new ideas and consensus around updates to patent policies and laws. We are also announcing an expansion of the PTO Edison Scholars Program, which will bring distinguished academic experts to the PTO to develop — and make available to the public — more robust data and research on the issues bearing on abusive litigation.
5. Strengthen Enforcement Process of Exclusion Orders. Once the U.S. International Trade Commission (ITC) finds a violation of Section 337 and issues an exclusion order barring the importation of infringing goods, Customs and Border Protection (CBP) and the ITC are responsible for determining whether imported articles fall within the scope of the exclusion order. Implementing these orders present unique challenges given these shared responsibilities and the complexity of making this determination, particularly in cases in which a technologically sophisticated product such as a smartphone has been successfully redesigned to not fall within the scope of the exclusion order. To address this concern, the U.S. Intellectual Property Enforcement Coordinator will launch an interagency review of existing procedures that CBP and the ITC use to evaluate the scope of exclusion orders and work to ensure the process and standards utilized during exclusion order enforcement activities are transparent, effective, and efficient."
Copyright © 2013 Robert Moll. All rights reserved.
Wednesday, April 24, 2013
FTC - Public Comments on Patent Assertion Entity Activities Workshop
The FTC has published 63 public comments on patent assertion entities: Public Comments of the FTC's Patent Assertion Entity Activities Workshop. Some interesting comments and lots of "patent troll slinging."
Copyright © 2013 Robert Moll. All rights reserved.
Copyright © 2013 Robert Moll. All rights reserved.
Thursday, January 17, 2013
Solutions to the Software Patent Problem - Conference Materials
On November 16, 2012, Santa Clara University staged a conference Solutions to the Software Patent Problem. After attending I posted: Richard Stallman and Professor Duffy Clash - Solutions to the Software Patent Problem - Santa Clara University - November 16, 2012.
Today, SCU emailed the conference materials:
View the videos
Where applicable, we’ve posted the speakers’ slides as separately downloadable files. Videos synced with presentation slides and just videos (for those that do not use Microsoft products)
Speaker essays. Also check out the related series of essays published in Wired.com Opinion
Media coverage of the event
Results of the audience polls about which solutions they liked best
Other conference resources
The conference page provides a one-stop inventory of all of these resources.
View High Tech Law Institute blog: http://law.scu.edu/blog/hightech/
Copyright © 2013 Robert Moll. All rights reserved.
Today, SCU emailed the conference materials:
View the videos
Where applicable, we’ve posted the speakers’ slides as separately downloadable files. Videos synced with presentation slides and just videos (for those that do not use Microsoft products)
Speaker essays. Also check out the related series of essays published in Wired.com Opinion
Media coverage of the event
Results of the audience polls about which solutions they liked best
Other conference resources
The conference page provides a one-stop inventory of all of these resources.
View High Tech Law Institute blog: http://law.scu.edu/blog/hightech/
Copyright © 2013 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.
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.
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