Apple's Smartphone Patent War Strategy

Today, Ars technica has an article that ponders why Steve Jobs decided to file over 200 patent applications to protect the features of the iPhone. The article argues this strategy arose from the sting of paying Creative $100 million to license a patent that related to the user interface of the Apple iPod. It sounds plausible, but I think Apple's strategy evolved from more than one event and may have originated when copyrights failed to protect the "look and feel" of the windows interface in Apple v. Microsoft. See Wikipedia Apple v. Microsoft for details.

Here's a link to the article: Creative pushed Steve Jobs to armor up for the smartphone patent war - Apple's patent zeal was apparently triggered by a long-forgotten MP3 player

Copyright © 2012 Robert Moll. All rights reserved.

Tech Company's New Favorite - The Patent Troll

The Wall Street Journal's article Corporate America to Patent Trolls: 'Well, Two Can Play at This Game' is worth reading. Ashby Jones of the WSJ notes how the divide between tech companies and non-practicing entities (i.e., patent trolls) is disappearing. Yes, the tech industry still complains about patent trolls while it spins out companies to license and sue on its patents and sells patents to trolls to generate cash. The article had no comments from tech companies on this trend. I guess the patent troll designation has a case of situational ethics.

Copyright © 2012 Robert Moll. All rights reserved.

Kodak's Stalled Effort to Sell Digital Patents

On June 8, the Wall Street Journal ran an article about Kodak's stalled effort to sell its digital patents, which may complicate Kodak's ability to emerge from bankruptcy. Kodak says "an independent review" values the patents at up to $2.6 billion and hopes to use money from patent sale to compete against HP in the market for printers. Competing with HP in the market for printers? Don't forget Canon, Brother, and all the others. Even if Kodak gets $2.6 billion this sounds like a difficult journey.

See the WSJ article Kodak's Patent Allure Fades for further details.

Copyright © 2012 Robert Moll. All rights reserved.

Zetta Research - Maximizing the Value of Patents from Failed Startups

Like a number of others, Zetta Research, LLC in San Mateo, CA buys patents from failed startups, but instead of just hoarding the patents, it works with the inventors of the startups to get the patent applications granted as patents and file any desired continuations that will maximize the overall value of patent portfolio to a big tech company.

For details see the Wall Street Journal article: Zetta Research Finds Friendlier Approach to Patent Business

Copyright © 2012 Robert Moll. All rights reserved.

In re Baxter International - Federal Circuit Affirms Ex Parte Reexamination Invalidity Over Litigation Validity

In the recent case In re Baxter International, the Federal Circuit affirmed the Board's decision in an ex parte reexamination that claims 26-31 of U.S. Patent No. 5,247,434 (the '434 patent) are invalid despite the fact the Federal Circuit previously affirmed a federal court's decision that claims 26-31 were not invalid. That's startling! Doesn't the Federal Circuit agree with its previous decision? And no, it is not a matter of a different CAFC panel.

The Federal Circuit explained as follows:

"Lest it be feared that we are erroneously elevating a decision by the PTO over a decision by a federal district court, which decision has been affirmed by this court, the following additional comments must be made. When a party who has lost in a court proceeding challenging a patent, from which no additional appeal is possible, provokes a reexamination in the PTO, using the same presentations and arguments, even with a more lenient standard of proof, the PTO ideally should not arrive at a different conclusion. However, the fact is that Congress has provided for a reexamination system that permits challenges to patents by third parties, even those who have lost in prior judicial proceedings. Usually one would expect that any such reexamination, such as the one before us, would raise new issues. In this case, the patent examiner relied on new prior art that had not been raised in the prior district court proceeding. Why Fresenius [the defendant in related litigation] did not present that prior art before the district court we do not know. But the Director apparently found that a substantial new question of patentability had been raised and the examiner was then entitled to conduct a reexamination on the basis of the new art presented and her search of the prior art. Thus, this case is not about the relative primacy of the courts and the PTO, about which there can be no dispute. Finally, we could not conclude that the PTO was barred from conducting the reexamination of the ’434 patent because of the final judgment in Fresenius without over-ruling Ethicon and Swanson, which we cannot do."

In re Baxter International highlights ex parte reexamination is not subject to a legal estoppel from the court decision such as applies to inter partes reexamination. Further, it reminds that patent challengers have a lower evidentiary standard in ex parte reexamination than in federal court. In ex parte reexamination, the challenger must only prove invalidity by a preponderance (i.e., it's more likely than not); in court, the challenger must prove invalidity by clear and convincing evidence. Accordingly, ex parte reexamination may be preferably over litigation if you seek to prove a US patent is invalid over written prior art.

Copyright © 2012 Robert Moll. All rights reserved.

Amazon Exposure to Lodsys' In-App Purchase Patents?

Tonight, Alan Cooper sent me a CNET article: Amazon's new Appstore feature could be patent suit bait. Amazon had announced an in-app purchase feature that offers software developers the ability to give users the option of spending money inside an app. Even if I don't like such a feature on my kids' iPad that can in a series of taps ring up a bill, the in-app purchase feature appears to be a billion dollar cash revenue source. Of course, if there is money to made, someone will claim patent protection on it.

So the article notes that Amazon has not entered into a licensing agreement with Lodsys Group LLC.  Lodsys (web site here) is the owner of the U.S. Patent Nos. 5,999,908, 7,133,834, 7,222,078 and 7,620,565. Lodsys has not been well received in the press as Lodsys (1) seeks compensation from sometimes tiny software developers; (2) has rebuffed Apple's position that the app developers have a license through their relationship with Apple; (3) has its headquarters in Marshall, Texas; and (4) has presumably been already well compensated from license agreements reached with hundreds of companies including American Express, Apple, eBay, Google, Intuit, Microsoft, Nokia-Siemens, Nvidia, SAP, Sony-Ericsson, Verizon, and Nokia. I don't haven't studied and therefore cannot quibble with the patents, but wonder about the wisdom of a strategy of chasing tiny software companies for licensing fees especially in view of the reexaminations pending against some of the patents.

Copyright © 2012 Robert Moll. All rights reserved.

Facebook Countersues Yahoo for Patent Infringement - Links to Articles

The Yahoo v. Facebook case with twenty patents has received lots of news coverage. Thus, I am supplementing my April 3rd post with links to recent articles:

Facebook Accuses Yahoo of Infringing on Patents - New York Times

Facebook files patent countersuit against Yahoo - BusinessWeek

Facebook brings patent counterclaim against Yahoo - San Jose Mercury News

Facebook files patent lawsuit against Yahoo - USA Today

Facebook launches patent counterattack against Yahoo - Reuters

Copyright © 2012 Robert Moll. All rights reserved.

Facebook Countersues Yahoo for Patent Infringement

When I was an associate at WSGR, a partner advised me: "Bob, if you ever advise a client to sue for patent infringement you better first check if the defendant has its own patents... otherwise, your client may get countersued!"

Today, Facebook countersued Yahoo for infringement of ten patents. I am guessing that Yahoo expected the countersuit, but sued based on an assessment that the Yahoo patents resulting in $290 million of Google stock would do just as well in days leading up to the Facebook's IPO.

 If you are interested in more detail regarding the Facebook patents, please see the Wall Street Journal article: Yahoo v. Facebook v. Yahoo: An Early Breakdown

Copyright © 2012 Robert Moll. All rights reserved.

The Yahoo Patent Offensive - Precipitating Factors?

Today, the CNET article Fred Amoroso: Is this the man behind Yahoo's patent offensive? discusses factors that may have precipitated Yahoo's patent infringement lawsuit against Facebook in March 2012:

• Hiring former Rovi CEO Mr. Amoroso who is reputed to be patent savvy to join the Yahoo board in February 2012
• Yahoo's declining business model
• Yahoo's prior success in signing up Google for a $270M patent license 
• Yahoo's relative patent strength over Facebook. Yahoo owns 1,029 patents in contrast to Facebook's 12 patents (The PTO search page indicates Facebook owns 21 patents)

Copyright © 2012 Robert Moll. All rights reserved.

Apple Patents Secure Microsoft Investment and Continued Development of Mac Office

Recently, Apple joined the $500B club. However, in 1997, Microsoft was the dominant company and Apple was nearly out of business. Local press discussed whether Sun or Oracle might acquire Apple. Then Microsoft invested $150M in Apple and agreed to continue Mac Office. Microsoft's surprising agreement was pivotal for Apple. What was behind that event? The following article states it was Steve Job's skillful negotiations and use of the Apple patents.

Steve Jobs used patents to pressure Bill Gates into 1997 investment in Apple.

Copyright © 2012 Robert Moll. All rights reserved.

Intellectual Ventures and Patent Aggregators - Mr. Rosoff's Article

After I posted Intellectual Ventures and Patent Aggregators on February 29, I read Matt Rosoff's REVEALED: How Giant Patent Troll Intellectual Ventures Does Business. At first I thought nice summary of the Giants Among Us article, but now Mr. Rosoff's article seems too negative:

1. Read the title: ... Giant Patent Troll Intellectual Ventures .... The author doesn't waste any time before branding Intellectual Ventures a giant patent troll.  
2. The author states Intellectual Ventures "does very little inventing," but according to many articles IV is busy inventing in many technology areas.   
3. He states IV uses more than 1,200 shell companies. This makes IV sound sneaky but it's legal. So why can't IV use shell companies to reduce its purchase costs?   
4. He asserts about half its patents originated outside the U.S. and IV exploits the disparities in IP valuations between the US and the rest of the world. Don't inport/export businesses exploit disparities in valuations between the US and the rest of the world?
5. Mr. Rosoff states big companies invest in IV then use its patents for defense. Boo hoo some company pays for patent rights then has the audacity to file a counterclaim when it is sued. Sounds like self-defense to me.
6.  He notes IV's activities are compared to "privateering" in the Giant article, a now-abolished kind of warfare where countries would encourage private sailors to attack enemies ships and auction off the proceeds. This appears to refer to IV's willingness to license its patents to third parties who do the "dirty work of licensing and suing." But why is licensing and suing "dirty work?" This "dirty work" argument sounds truly lame.
7. Mr. Rosoff concludes IV's business is referred to as "an ugly business, but also perfectly legal." So there you have it: "Giant Patent Troll" labeling at the front end and "ugly business" at the rear end. 
8. It's this negative slant that makes the siren song for more government regulation such a clunker. 
9. After the REVEALED article was published, Intellectual Ventures pointed Mr. Rosoff to the Intellectual Ventures corporate blog for the other side and in my opinion some necessary balance.     

Copyright © 2012 Robert Moll. All rights reserved.

Intellectual Ventures and Patent Aggregators

Whatever one may think about Intellectual Venture's merit, it has never lacked press coverage. Because of this when it was taking off I told Peter Detkin, a co-founder, at a WSGR alumni get together, "you have become famous." Peter politely denied it, but I think it is true and what Peter has built with Nathan Myhrvold and others is a radical and significant change to the U.S. patent system. Despite all the press, however, it has been difficult to fully understand the method of operation and activities of Intellectual Ventures, which has rapidly accumulated 30,000 - 60,000 patents, making it the fifth largest patent portfolio of any US company.

Tom Ewing and Professor Robin Feldman answer many questions about Intellectual Ventures and patent (the authors say mass) aggregators such as Acacia Research and RPX in Stanford Technology Law Review's The Giants Among Us. I expect more coverage on patent aggregators, but this article is the best I have seen so far.

Also see Patrick Anderson's guest post on Patently-O: Intellectual Ventures Flexes Some Patent Muscle discussing how Intellectual Ventures is increasing its patent litigation effort today.

Copyright © 2012 Robert Moll. All rights reserved.

Yahoo! Threatens to Sue Facebook for Patent Infringement

Today, we have news coverage on Yahoo's threat to sue Facebook for infringement of 10-20 social networking patents unless Facebook pays for a license as Facebook approaches its IPO. This tactic to sue for patent infringement right before the IPO is a well known tactic for reaching settlement (who wants to risk a lower evaluation and/or amend the S-1 document to describe a major patent suit?). Here's links to articles giving the details below:

Yahoo Warns Facebook of a Potential Patent Fight - New York Times

Yahoo Picks Patent Fight with Facebook - CNET

Yahoo Stabs Facebook in the Back, Says Pay for Its Patents or Get Sued - TechCrunch

Why Yahoo! Should Seek at least $3 Billion from Facebook for Patent Violations - Forbes

Copyright © 2012 Robert Moll. All rights reserved.

Fired CEO Claims Benchmark Stole His Ideas

Here's a cautionary tale if you are seeking VC funding for your startup: Fatdoor Founder Sues Benchmark Capital, Saying It Stole His Idea for Nextdoor.
The startup (Fatdoor) had plans to be the "Facebook" of local neighborhoods, had filed many patents applications, had thousands of viewers, an experienced entrepreneur as the CEO, had allegedly impressed Benchmark only to see it then pass on funding ... and fund another startup (Nextdoor) six months later on the "same idea." Because Benchmark signed no NDA, and the CEO's applications were assigned to the startup and later sold to Google, the fired CEO was reduced to filing a trade secret, interference, and fraud lawsuit. I read the complaint and it sounds like this will be a difficult case. Because you won't find many VCs willing to sign NDAs, and assignment of your patents and applications to the startup, only raises the defense of assignor estoppel if you leave the place, contracts and patents cannot protect against investors from "taking your idea." For one, it will be difficult to define what is your idea. Surely, the companies have differences. So how does one protect self-interest? If you are going to spend the time and effort that this CEO allegedly put into the venture, you need to be well advised and have a corporate structure that allows you to retain management and voting control while satisfying the VCs interest.

Thanks to Suzie Lipton-Moll on this article! 

Copyright © 2012 Robert Moll. All rights reserved.

Apple's Slide-to-Unlock Patent "Blocks" Motorola and Google's Application Depicts Future Lockscreen That "Slides Away"

The BBC article Patents: Apple wins over Motorola in 'slide-to-unlock' ruling describes Apple's victory in blocking two out of three embodiments in Germany. 

But is it short-lived? The Android Community article Google patent depicts future lockscreen features on Android. It basically "slides applications" to unlock zones on the display of the Android device. And that folks is design around life!

Thanks to Alan Cooper for the BBC article; yes, I am running to keep up with him!

Copyright © 2012 Robert Moll. All rights reserved.

Third Party Preissuance Submissions of Prior Art

The PTO recently proposed rules to implement preissuance submission by third parties, 35 USC 122(e) of the America Invents Act (AIA). Preissuance submission permits the public to submit relevant prior art against any US patent application pending on September 16, 2012.  

Professor Crouch comments new 35 USC 122(e) "opens the door to Peer-to-Patent style submissions for all published applications." But what is Peer-to-Patent? It was a PTO pilot that ran from 2007-2009 and 2010-2011 that permitted peers to submit prior art to examiner. It never received widespread adoption and is reported to have only affected a few hundred applications. Perhaps it was too much to expect applicants would want to submit their application to examination by "peers" in exchange for expedited examination. Preissuance submission has the potential to affect many applications since volunteering to participate is not a requirement.

Preissuance Submission by Third Parties - 35 USC 122(e):

(1) IN GENERAL.—Any third party may submit for consideration and inclusion in the record of a patent application, any patent, published patent application, or other printed publication of potential relevance to the examination of the application, if such submission is made in writing before the earlier of—

(A) the date a notice of allowance under section 151 is given or mailed in the application for patent; or
(B) the later of—

(i) 6 months after the date on which the application for patent is first published under section 122 by the Office, or
(ii) the date of the first rejection under section 132 of any claim by the examiner during the examination of the application for patent.

(2) OTHER REQUIREMENTS.—Any submission under paragraph (1) shall—

(A) set forth a concise description of the asserted relevance of each submitted document;
(B) be accompanied by such fee as the Director may prescribe; and
(C) include a statement by the person making such submission affirming that the submission was made in compliance with this section.

Here are several features and pitfalls to 35 USC 122(e) preissuance submissions:

1.  Proposed PTO fees for preissuance submission are inexpensive ($180 for up to ten references) or nothing if a first submission of up to 3 references.

2.  The PTO does not require the patent application owner be served and will not identify the third party making the preissuance submission to encourage submissions.

3. On the other hand, preissuance submissions may alert the applicant getting broad claims and filing continuations is warranted because somebody infringes the application claims.

4.  You must file a preissuance submission before the PTO mails a notice of allowance. If, however, the PTO hasn't allowed an application, you can file a preissuance submission up to 6 months after the PTO first publishes the application or up to the first Office action rejecting a claim, whichever is later. However, one cannot safely rely on filing before those later events, since the PTO has no duty to inform before mailing a notice of allowance or an Office action rejecting any claim.

5.  Once a preissuance submission meets all requirement, it will be treated in terms of procedure much like an information disclosure statement (IDS). However, unlike an IDS, an examiner will have the benefit of a description of the asserted relevance of each document. If nothing else, this should make it easier to write up an Office action rejecting the claims. 

6.  A preissuance submission may backfire. If the claims are not canceled or narrowed based on the preissuance submission, the third party may face a strengthened patent that is infringed, plus have lost practical benefit of the prior art. Further, any amendments that do occur to the claims to avoid the preissuance submission will not raise intervening rights such as those obtainable in reexamination or reissue. 

7.  Two reasons the preissuance submission may backfire. After submission, the third party has no right to participate further. Only the examiner and applicant get to exchange information on what it all means. If this happens in an interview, don't expect the interview summary to fully describe what was discussed. Second, examiners suffer from information overload, which tends to result in complex filings not being fully addressed. See Kuhn, Yale Journal of Law and Technology, Information Overload at the U.S. Patent and Trademark Office: Reframing the Duty of Disclosure in Patent Law as a Search and Filter Problem. Yet a presumption is raised the preissuance submission was duly considered.

8.  Although the third party is not estopped from raising the prior art in an ex parte reexamination, inter partes review, post-grant review, or in a district court, the third party will have a more challenging situation to use the references of the preissuance submission.

9.  I expect third parties to be therefore reluctant to submit the best prior art in a preissuance submission when stakes are high. Instead, they will save the prior art to support a request for ex parte reexamination, inter parties review, post-grant review, or a district court. 

10. An examiner will be required to inform of a submission when it issues an Office action, but applicant will be required to monitor applications to know at other times. 

Preissuance submissions may help to derail doubtful patents, but are best limited to when other post-grant procedures (e.g., ex parte reexamination) are too expensive and other relevant prior art can be kept out of the preissuance submission just in case.   

Copyright © 2012 Robert Moll. All rights reserved.

Two Different Views - Why Investors Are Focused on Patents

Well here's two articles giving disparate views of patent deals today:

In Patent-Palooza: Why Investors Are Suddenly Focused on IP, Paul Ryan, President and CEO of Acacia Research, argues corporations need for profit is driving the recent patent deals. Patent rich companies are simply selling their under-leveraged patents to non-practicing entities such as Acacia Research that assert them against other companies.

In Crushed innovation: When patent lawyers switch to NPEs, Ruth Suehle, writer in Brand Communications + Design at Red Hat, decries patent litigators, John Desmarais and Matt Powers, switching from corporate patent defense to represent non-practicing entities against corporations. Ruth asks, "Could the sordidness of a business based on bringing patent lawsuits be outweighed by large amounts of cash?" It's not clear to me, why they are engaged in a sordid business. Is going to court to enforce patent rights and seek damages for infringement a sordid business per se or does it simply cross the open source "party line?" 

Thanks to Alan Cooper for Ruth's article. 


Copyright © 2012 Robert Moll. All rights reserved.

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.

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.