Video 27 Silly Patent 1

Video 28 Silly Patent 2

#28: Moistening Adhesive Coating

This one is good:

“Apparatus for moistening adhesive coatings on postage material and the like which includes an enclosure having a container of liquid therein. A plunger is provided to lift an absorbent applicator from the liquid and pass the applicator through an opening in the side of the enclosure. A closure member for the opening is opened in response to the applicator movement. The applicator may be in the form of a human tongue and the closure may be in the form of a human lip.”

And here is the official claim:

1. An apparatus for moistening adhesive coatings on postage material and the like, comprising:

(a) an enclosure member;
(b) an open top liquid container disposed within said enclosure member;
(c) a spring biased linkage member pivotally mounted within the enclosure member and biased to a predetermined position;
(d) a moistening member pivotally mounted to the linkage member, said moistening member being movable from a first position in which it is disposed within the open top liquid container to a second position in which it is extended outwardly from the enclosure member;
(e) a plunger reciprocally movable within the enclosure member, said plunger engaging the linkage member for applying a force thereto non-coincident with the linkage member's pivotal axis to overcome its spring bias; and
(f) a reciprocally movable closure member, said closure member being movable from a first position to a second position in response to a force transmitted by said moistening member for selectively closing and exposing of an opening in said enclosure member, said moistening member extending through said opening when said closure member is in its second position.


2. An apparatus as recited in claim 1 wherein said plunger engages said moistening member to effectuate pivotal movement of the moistening member relative to the linkage member.

3. An apparatus as recited in claim 2 wherein open top liquid container is slidable into and out of said enclosure member.

4. An apparatus as recited in claim 3 wherein said moistening member includes an absorbant sponge-like material capable of absorbing and maintaining moisture.

5. An apparatus as recited in claim 4 wherein said moistening member has a configuration resembling that of a human tongue.

6. An apparatus as recited in claim 5 wherein said closure member has a configuration resembling a human lip.

7. An apparatus as recited in claim 6 further including a lip configuration on said enclosure member disposed immediately beneath said closure member.

Basically, Donald Poynter from Cincinnati, Ohio Poynter wanted to come up with a solution to the problem many experience when they have to lick the adhesive coating on a postage stamp and cringe at its unpleasant taste. According to his claim many others avoid or object to licking stamps for reasons of “health and sanitation or personal propensities.” Therefore Donald came up with a solution and that is a novelty plunger device that can moisten the adhesive coatings for the individual. 

Donald filed the patent in 1980 and received his patent in 1981! First of all, super fast turn over, sounds like the patent system may have processed patents faster however this definitely had its drawbacks considering someone got a patent on the process of licking a postage stamp!

So….

Useful: Sure

Novel: Definitely not!

Non-obvious: Others definitely could have come up with this, I have definitely used a slightly damp kitchen sponge to get a stamp on an envelope.

#27: Silly Patent Beerbrella

In order for the USPTO to grant a patent claim it must be deemed “useful,” “novel,” and “non-obvious.” In class this week we discussed how many patents that have been filed in the past were theoretically determined as valid by these three legal terms but were pretty ridiculous in reality.

I found a long list of ridiculous patents at this site: www.freepatentsonline.com/6637447.html
 

Yup, you guessed it! Mason Schott Mcmullin from St. Louis, MO along with Robert Bell and Mark See filed a patent on 10/19/2001 for their invention called “Beerbrella” which is a small umbrella that can be attached to a beverage container in order to shade the beverage container from direct sun rays.

"The apparatus comprises a small umbrella approximately five to seven inches in diameter, although other appropriate sizes may be used within the spirit and scope of the present invention. Suitable advertising and/or logos may be applied to the umbrella surface for promotional purposes. The umbrella may be attached to the beverage container by any one of a number of means, including clip, strap, cup, foam insulator, or as a coaster or the like. The umbrella shaft may be provided with a pivot to allow the umbrella to be suitably angled to shield the sun or for aesthetic purposes. In one embodiment, a pivot joint and counterweight may be provided to allow the umbrella to pivot out of the way when the user drinks from the container."



As funny as this patent is it was deemed to be legally valid because of the following legal rational.

1. Useful: Although I find this completely useless and I would never want something like this because there are many other methods that I would consider much more effective in keeping a beverage cold it does work and it can be used. The USPTO definitely ruled it as a useful item and I guess it is something you might use at a tacky pool party.
 
2. Non-obvious – meaning anyone else with the same skills in this area could not have come up with the same idea. I am a bit on the fence on this one because I do not think this idea is very ingenious. However, the USPTO did deem the patent to be non-obvious.

3. Novelty: Is the idea new? Well lets think about it…

a. Prior Art – This patent would not be valid if it had been written down or drawn out by someone before. Perhaps the idea had been discussed previously however there is no valid "prior art" that would have invalidated this patent. It is a patent that no one else actually claimed or previously filed for and is therefore it is new. 
b. Valid – It is valid because it has been determined to be useful, non-obvious, and new.
c. Common Sense – it is not common sense, although the invention does not make much sense. There are many other more efficient ways to keep a beverage cold.
d. Enablement – “Any analysis of whether a particular claim is supported by the disclosure in an application requires a determination of whether that disclosure, when filed, contained sufficient information regarding the subject matter of the claims as to enable one skilled in the pertinent art to make and use the claimed invention” (http://www.uspto.gov/web/offices/pac/mpep/s2164.html). To this I say yes the enablement requirement has been satisfied there is enough information about what the product is made out of and how to use it to be build and used effectively.  
e. Obviousness- it is determined to be non obvious, meaning others with the same background would not have easily come up with this idea.

So, here we see a theoretically valid patent that the USPTO granted in 2003 that is pretty silly. However, it is valid and I am sure that many people found ways to use this random invention.

;Video #26: Samsung vs Apple

Video #25: IP

#26: Nokia vs. HTC

Nokia is experiencing a fairly high drop-out rate of its patent infringement claims against rivals. HTC has been consistently defending itself and shows no signs of backing down.

On April 23^rd, the Mannheim Regional Court held a trial on Nokia's patent infringement action against HTC over patent number EP1581016, "a communication network terminal for accessing Internet." The court unusually decided to announce its decision later that day.

Additionally, after another trial held in the afternoon that related to Nokia’s lawsuits against HTC over patent number EP0792077, a "multi-service mobile station" and against ViewSonic over that patent as well as its divisional patent EP1601167, Judge Dr. Holger Kircher dismissed Nokia’s case based on finding of non-infringement.

This is not the first of such dismissals, Nokia had claimed that Android’s app architecture centered around the Google Play store infringes the “o16 patent because of the way it allows third-party app developers to provide data to the end-user devices on which their programs run via a Google-operated server.” However, that went no where. And recently another lawsuit that targeted Google play was dismissed.
Judge Dr. Kricher has shown much skepticism concerning Nokia’s infringement theory. He and his colleagues felt that they could only side with Nokia’s infringement contentions if they seriously bent three rules:

1.      Nokia considered the term "service page" to include not only web pages (as the term suggests) but also apps. If this had been the only issue, an infringement would not have been too likely, but not inconceivable.

2.      Nokia faced an insurmountable challenge in persuading the court that two "means for wireless communication" limitations could mean one and the same mobile Internet connection. Based on the claim language the court felt that these claim limitations are meant to be different connections, with only the second one relating to communication "with a device", conversely suggesting a structural difference between the two consecutive limitations. The court identified further support for this position in the specification, such as its Figure 8 (which illustrates two types of connections), and in the fact that independent claim 11 uses a different article, presumably reflecting the author's awareness of this issue. Nokia's lawyers tried their best to argue that the patent also covers cases in which the same connection serves both purposes at the same time, but their arguments were of a functional nature and lacked a basis in the claims and the description.

3.      The court also touched on a third issue that the parties had not paid much attention to. It would take too long to explain this one here, and it wasn't outcome-determinative in the end.

The results concerning Google Play where a huge relief for Google as the company has been having a very difficult time winning any patent infringement cases lately (ever since it has been using its 12.5 Motorola purchase to file claims against other companies). To further this point, yesterday, the USITC tossed Motorola’s last complaint against Apple. Google’s attempts to gain a stronghold over Apple and Microsoft have been very unsuccessful.

Conversely, “the dismissal of Nokia’s second Google Play-related suit against HTC shows that Google is still a very effective defendant.” However, Nokia owns enough patents that it is only a matter of time until another break though emerges and a new lawsuit is filed. Therefore it is important to win offensive cases and fend off patent assertions.

HTC filed 3 countersuits against Nokia, Nokia won the first injunction against HTC over a power-saving patent. That one is already being enforced, but HTC’s German sales will apparently not be affected. The other cases have been dismissed. HTC will probably win something soon though.
The EP 167 Nokia asserted against ViewSonic was deemed too narrow. “The court was inclined to find the broader EP’077 infringed, but doubts the validity, making a stay the most likely outcome and an outright dismissal the second-most likely one.”

Nokia does have some gems in its patent portfolio, but it takes dozens of patent assertions to identify them. I've said on numerous occasions that the moment of truth for a patent is not when the patent office grants it: patent offices grant too many patents they shouldn't issue. The moment of truth is litigation. Once you assert a patent against a deep-pocketed, sophisticated rival, you'll see its true strength (or weakness). No patent valuation method is a substitute for this real-world test.

#25: New Munich Court Rulings

The Oberlandesgericht München (Munich Higher Regional Court) has made 3 important decisions regarding smartphone patents:

1. The court rejected Google’s attempt remove the injunction Microsoft won last year over a text-messaging-related patent. Google’s acquired IP from Motorola turns out again to not benefit Google in another lawsuit.
2. The court decided to postpone its decision on the cross-appeal of Apple’s photo gallery injunction against Motorola to May 16^th. Google obviously wants to remove this injunction but some predict that Apple may be able to get an even broader ruling on its current injunction.
3. The court sided with Google to remove the injunction over Apples slide-to-unlock patent because the Bundespatentgericht (Federal Patent Court) ruled that the patent was invalid on April 4^th. Apple will have a chance to revisit this case if it is able to appeal successfully and nullify the courts ruling. The decision will probably be made in 2014.

Florian Müller said there is nothing very special about these rulings except for that they continue trends we have seen and that it is important to note the decisions to stay on top of what is going on in the patent war.

Video # 24 Paterns Display Improving Patent System

Video #23: Designing Around Patents

Video #22: Reduced Royalty Demand for SEPs

#24: More Google Setbacks

As we have read about in many previous blog posts from students in our class, Google has not gained much if any actual leverage from its $12.5 billion spent on acquiring Motorola’s patents as they are constantly unsuccessful in proving patent infringement by other companies such as Apple, Microsoft, and Nokia. Google was wrong to think that owning many patents would enable the settlement of any infringement issues no matter what the scale. So it is clear that this has not worked, however, licensing has been successful.

In Mannheim, Germany, Google lost again when the regional court announced that Motorola is not entitled to an injunction against Microsoft over its push notification patent because “Google owes Microsoft a license under an AciveSync license agreement.” This result is not that surprising considering Judge Richard Arnold and Wales High Court of Justice declared the suit invalid for multiple reasons. In addition, Google was about to loose its right to that particular patent anyway because the patent was going to expire in two years. Considering the costs and time involved in most patent litigation this law suit doesn’t even seem logical for Google to waist its time an money on especially if many Justices also argue the suit to be invalid!

“Google cannot currently enforce, and isn't going to be able to enforce anytime soon, an injunction against Microsoft. But Microsoft has already won a U.S. import ban and three German injunctions against Motorola's Android-based devices (1, 2, 3), and is likely to win a fourth one, relating to Google Maps, on June 3. In November Google's lawyers told an appeals court that their client lost four months of German sales as a result of Microsoft's patent enforcement (and, which they didn't say, Google's unwillingness to join the likes of Samsung, HTC, LG and Acer in taking a royalty-bearing Android patent license).”

What we can see here is that licensing is supported and for good cause. Licensing is key to open innovation.

#23: Federal Judge set FRAND rate for Microsoft's license to Google's SEP

Today Judge James Robart, the federal judge that ruled over the Microsoft v. Motorola FRAND contract case in the Western District of Washington determined a FRAND license fee for a case that was brought to the courts attention in November of last year.

The actual fee has not yet been published, Florian Mueller just noticed an order after which the court "issue[d] its Findings of Fact and Conclusions of Law (the 'Findings and Conclusions') determining a reasonable and non-discriminatory royalty rate and range for Motorola's standard essential patents". The decision will be filed under seal and were emailed to the council of record. The parties have until April 25^th at noon to propose redactions of confidential business information. On April 26 the court will hold a telephone conference with the parties to determine what information will be made public. So stay posted!

On August 26^th Judge Robart scheduled a second trial, “a breach-of-contract trial that may be another bench trial or could be (if Google gets its way) a jury trial.” This trial will discuss whether Motorola’s initial royalty demand, of about $4 billion per year. Was blatantly unreasonable and constituted a breach of Motorola’s FRAND pledge (which is apparently an enforceable contract). “Microsoft won a summary judgment decision against Motorola’s pursuit of injunctive relief” after the first trial.

Microsoft one its case against Motorola in November 2010 because Motorola was said to have failed adhering to its FRAND licensing commitment. Motorola’s conduct was judged to be so bad that the United States as well as the European Union conducted antitrust investigations. Based on these previous rulings it will be interesting to see whether Motorola will face similar consequences in the current cases.

#22: Samsung Reduces 2.4% Royalty Demand for SEPs

The USITC postponed its decision on Samsung’s complaint against Apple until May due to raised issues regarding FRAND licensing obligations and an excision order. There is now an interesting development that has come about in the Apple-Samsung dispute: in December 2012, “Samsung abandoned the 2.4% royalty demand for its wireless standard-essential patents (SEPs) it had been adamant about for well over a year.”
This issue arose in the Netherlands in 2011 when a Dutch court denied Samsung’s injunction request as its 2.4% royalty demand was considered to be outside the FRAND terms. In December, however, Samsung decided to withdrawal all of its European SEP-based injunction requests. The filing does not specify what the new demand is or weather that complies with the FRAND terms.


Samsung behaved similarly with Ericsson. It reduced its demands on Apple a week after it reduced its royalty demands with Ericsson. Samsung realized that its tactics were not working and had to shift gears. However, it still has to defend itself against Apple and Ericsson’s claims as well as the European Commission and countersuing. Apparently, the European Commission is still investigating Samsung to determine if it violated the European antitrust law in use of declared-essential patents against Apple.

Apple wants FRAND rates to be set in a district court and highlighted Samsungs track record of overdeclaring patents (where Samsung said certain patents were essential to standards when they were not) twice as much as the average industry rate. Apple has used Samsungs statements against them. Samsung and Nokia and others agreed licensing cost of a wireless standard should not exceed 5-7%, and Samsung would then get a fraction of this. There is still one SEP that remains on the table but apparently is quite trivial as far as functionality goes and accounts for less than 0.01% of the code in the accused device. In addition, this small amount is a relatively unimportant portion of the UMTS standard. All in all, there should be a standardized license so everyone pays the same amount, claims Dr. Nils Rydbeck, former Chief Technical Officer at Ericsson.

Just as Samsung, Google’s Motorola Mobility might agree to a 100-125 million annual royalty cap after Microsoft had dealt with years of 2.25% royalty for its Motorola patent use. SEP licensing is not something companies are able to hold over others heads any longer.  

Video #21: Samsung vs. Apple: Import Ban

#21: The Other Side of The Silicon Valley

I just read an interesting article in TechCrunch this week about the other side of the Silicon Valley. Because I was pretty unaware of this issue I thought others may be interested. While we discuss patents and the big companies I think it is important to look at how influential the decisions of huge tech firms are.

http://vimeo.com/63373007

Veteran Journalist Bill Moyers has fueled a new conversation about the Silicon Valley in his segment called, "Homeless in High Tech's Shadow." "It is a very interesting look at the growing homeless problem in the South Bay of San Francisco that's happening in stark contrast to the growing wealth in the same area."
Instead of looking at the Google cafeteria that provides its employees with gourmet food, the segment features a former worker in that same cafeteria who was laid off as the company tightened its hiring policies and now lives in a tent. It takes a new look at the wealth disparity that has developed in the Valley. 

“Food stamp participation just hit a 10-year high, homelessness rose 20 percent in two years, and the average income for Hispanics, who make up one in four Silicon Valley residents, fell to a new low of about $19,000 a year— capping a steady 14 percent drop over the past five years”

Moyer aruges that offshore tech manufactuing has played a large part in this trend. It is a hard and complicated situation that has resulted from various factors and it is not easy to get a comprehensive picture of everything in this six minute video. However, I think it is an interesting trend that is quite important as it depicts how the decisions of these corporations shape our society in more ways that just the products we consume. 

Video #20: Envrionmental Issues

Video #19: Apple vs. Samsung Contunied Rulings and Issues

#20: Judge Oversite Resolved

Last week, Administrative Law Judge Thomas Pender made a preliminary ruling on remand issues concerning Apple’s complaint against Samsung. That ruling is available on the ITC’s document system. Now a Commission review will be held.
The remand was an opportunity for Apple to broaden its preliminary win with respect to two patents. The review that will commence shortly is an opportunity for Samsung to narrow or overturn Apples win. One of Apples two patents were broadened.
U.S. Patent No. RE41,922 on a "method and apparatus for providing translucent images on a computer display" already infringes by Samsungs Android devices, especially in the text selection feature on the Android browser app and the translucent buttons of the android photo gallery. Judge Pender cleared Sumsung’s “designaround products.” Apparently, Judge Pender may not have had jurisdiction over the designaround products, which Apple is claiming.


Apple is asserting multiple claims of the RE'922 patent in this investigation. The initial determination identified infringements of claims 29, 30, and 33-35, and deemed all these claims valid. All of these claims are method claims, which (as Google is just experiencing in its attempt to get Microsoft's Xbox gaming console banned) (I wrote about this in a previous post http://patentengineering190g.blogspot.com/2013/03/google-vs-microsoft.html) can only give rise to an ITC exclusion order (i.e., U.S. import ban) if the act of importation itself constitutes a patent infringement (as opposed to post-importation use per se). In this case, the fact that Samsung provides manuals that tell users how to use the accused features means Samsung is liable for induced infringement, and with this finding of inducement, the act of importation also constitutes a violation of the statute governing the ITC's intellectual property enforcement (Section 337).

In the original determination Judge Pender made a slight oversight when he found that claim 33 did not infringe as he later decided that the text selection feature did in fact infringe claim 33. The remand gave him the opportunity to make this correction and then easily apply that judgment to claims 34 and 35 because those claims derived from claim 33.

·             Claim 34 adds to claim 33 the limitation that the base image (the one that's overlapped by a translucent image) must be active to receive user inputs. The initial determination had already established the fact that this requirement is met in connection with claim 29.

·         Claim 35 additionally requires the electronic device to be a "handheld device", which is obviously the case in this investigation of Samsung smartphones and tablet computers.

#19: Sansung and Apple: At it again...

Disputes between Samsung and Apple continue this week as a ruling is due on May 31^st regarding Apples infringement on U.S. Patent No. 7,706,348. This issue has to do with the scope of the import ban, should one be ordered. Here is a link to read more about the specific patent http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=7,706,348.PN.&OS=PN/7,706,348&RS=PN/7,706,348. 348 is described as an “apparatus and method for encoding/decoding transport format combination indicator in CDMA mobile communication system.” The main issue is outlined in the statement below. 

"4. With respect to the '348 patent, Samsung’s infringement case before the Commission relied upon accused third and fourth generation Apple products that operate on the AT&T wireless network. If the Commission were to issue remedial orders covering articles covered by the asserted claims of the ’348 patent, would such an order cover (a) Apple products that operate on other wireless networks in the United States, and (b) later generation Apple products (e.g., iPhone 5, later iPad versions)?"

Basically, in the proceedings before the ALJ Samsung accused only older Apple products of infringement of the '348 patent: the AT&T models of the iPhone 4 (but not the 4S or 5), 3GS and 3, and of the iPad 3G and iPad 2 3G. Apple did not believe that Samsung could enforce and exclusion order against newer Apple products because of technical reasons. The Office of Unfair Import Investigations (“ITC” staff) acknowledged that there is no evidence in the record concerning other networks or newer Apple products. If any exclusion order were to be issued the ITC staff agreed it should include a certification provision to help enforce the ban.  The U.S. Bureau of Customs and Border Protection would have to decide on a case-by-case basis whether future products could be in the scope of this infringement through a certifications process or scope ruling.

Now Samsung is taking the dispute to another level as the company is taking the position that that not only the AT&T versions of the accused iPhones and iPads but versions sold by other carriers infringe and should fall within the scope of this import ban.

"At the time the complaint was filed, Apple's iPhones and iPads with UMTS connectivity were only available through AT&T. Since then, Apple has expanded its sales to other UMTS carriers. Because all iPhone 4 (UMTS version) and iPad 2 (UMTS version) devices infringe the asserted claims of the '348 patent, regardless of carrier customer, they would be subject to the Commission's remedial orders. However, AT&T remains the largest UMTS iPhone 4 carrier by volume. [...].

Based on Samsung's understanding, the current configurations of the iPhone 4 (CDMA version), iPhone 4S, iPhone 5, iPad 2 (CDMA version), iPad (third and fourth generations) and iPad mini contain [REDACTED]. Accordingly, unless these devices are altered to incorporate [REDACTED], they would not be subject to an exclusion order or cease and desist order. Similarly, future devices incorporating [REDACTED] would not be subject to an exclusion order or cease and desist order."

If there is a ban on older iPhones and iPads, Apple will only be affected at the low end and the repair business. They could delay before the ban takes place and solve the majority of the problem. Is it likely that the ITC will ban any Apple products? Especially as Samsung failed to comply with its FRAND licensing obligations? And if it does happen would the impact even be very significant?

Video #18: Autobiographical Trial Evidence

Video #17: Patent Trial Consolidation

#18: Skyhook vs. Google

“Skyhook Wireless sued Google in 2010 for patent infringement and anticompetitive contact after the company controlling Android bullied Samsung and then independent Motorola out of partnerships with Skyhook concerning its location-positioning software.”

Google was able to postpone the trial by consolidating the lawsuit over nine more patents filed in September with this one. Because of all of the work that has to be done now the trial will not take place until next year in 2014 but when it does finally take place it will be a bigger deal.  

The consolidation of the two Skyhook v. Google cases was ordered over two weeks ago. Basically another trial date will have to be established. Skyhook’s lawyers knew that this could possibly happen. The only way they could have avoided that was to further postpone the second case that was to take place in September. Skyhook decided to schedule the second case at that time because two of the four patents-in-suits were tossed and they wanted to assert themselves as much as possible despite the risk of a delay.

This is a prime example of how patent cases are taking an unbelievably large amount of time to be handled in court. This suit was filed in 2010 and will not go to trial until 2014. The industry changes too quickly for this sort of legal debacle to occur. Google can delay the trial for now but will eventually have to deal with the infringement violations. Unfortunately for Skyhook this process is far too lengthy. 

#17: Google vs. Microsoft

Google just lost out again in a preliminary ruling that stated Micosoft's Xbox gaming console dose not infringe Google's (Motoroloa's) U.S. Patent Number 6,246,862 on a "sensore controlled user interface for portable communication device." This was the only patent-in-suit left in this particular investigation because Google has already withdrawn for SEPs (standard essential patents). In october it dropped its WiRi patents, and after Microsoft told the ITC of the settlement Google wanted, Google went ahead and withdrew two H.264 video SEPs. 

"Once again the judge's decision can be reviewed by the Commission, the six-member decision-making body   at the top of the ITC. Google already told the media that it's "disappointed with today's determination and look[s] forward to the full commission's review"."

In June, Judge David Shaw, apparently already believed that Google would loose its case. In his notice he claimed that  no violation was found. "There are different possibilities: a finding of no infringemenent, a finding of invalidity, or some other (less common) reason. A detailed version of the ruling will become available. It usually takes several weeks before a redacted version is published."

I like what Fosspatent's had to say about this. Basically after every Microsoft-Google ruling in which Google looses, its 12.5 billion dollar purchase of Motorola Mobility becomes more questionable. Microsoft has one 3 German patent injunctions, 1 U.S. import ban, and will probably win another injunction in Germany due to Google Maps. Google's Motorola, on the other hand, has one a few minor cases in Germany that were never enforced. Imagine if Google was charged for its own legal fees as well as Microsoft's fees because it keeps loosing. Maybe then the company would think twice before it waisted time and money on such litigation. In addition, perhaps Google would no longer be as powerful. 

"I believe Google will soon realize, or may already have realized, that it needs to pay Android patent royalties to Microsoft, and that Motorola's patent portfolio doesn't give it enough leverage for a "freebie" cross-license."

Video #16: Three Types of Trolls

Video #15: IP Aquisition

#16: Some Empirical Data on PAEs

I found a post on http://www.patentlyo.com/ called “Paten Trolls in Public” that discusses empirical evidence on 10 publicly listed Patent Assertion Entities (PAEs) in business from 2005 to 2010. More specifically the study looked at Acacia, Asure, Interdigital, Mosaid, Network-1, OPTi, Rambus, Tessera, Virnetx, and Wi-Lam. It is interesting to take a look at this data while Congress considers the SHEILD Act. Just to reiterate the SHEILD Act would place a higher burden on PAEs, by making them liable for both sides’ legal fees if they sue and lose. They were able to come up with data for three very interesting questions.

1. How much licensing revenue do PAEs get per company sued?
Looking at these PAEs lawsuits flied in the Patent Freedom’s database of patent trolls they found that the average licensing revenues totaled nearly $6 billion. (You can find more information in there paper The Private and Social Costs of Patent Trolls for details on this database and the matching). The mean licensing revenue per defendant comes to 3.8 million in 2010 however this number is a bit low as it does not account for accruals.

2. How does revenue vary with PAE business model?

We identified three different types of business models:
A) "middlemen" who acquire or license patents from third party inventors (e.g., Acacia). Middlemen based PAEs file 80% of the lawsuits but earn only 0.7 million per defendant.
B) "R&D-based" who conduct R&D and file their own patents (e.g., Rambus). The R&D based PAEs file fewer lawsuits but their licensing revenues are greater. More specifically they account for  6% of all lawsuits but 83% of the revenues. This means that they earn about $54 million per defendant.
C) "salvage" where an operating company becomes a PAE using patents it developed for its own business (e.g., Asure / Forgent).

I think this suggests that the SHEILD Act could destroy these middlemen-based PAEs as they would have a much higher risk of loosing money because they sue so much more, inevitably they will lose some cases and will have to pay even more money. In addition, their revenue per case is lower which makes it riskier to sue as they may loose more money than they could earn from winning the case.

3. How much of the licensing revenue flows to inventors?
In addition, the study reported that only 7% of PAEs licensing revenues earned flowed to third party investors. For the “middlemen” 31% and for R&D only 26% of licensing revenue flows to third party investors. Most of the revenue then is needed for transaction costs and investors really do not benefit as much as they could at perhaps a more innovative company. If the SHIELD Act reduces profits, investors will get even less which may lead them to back off.

#15: Google vs Apple Regarding Patent 6,246,862

FOSS Patents recently posted about Google’s attempt to use Steve Job’s biography as a way to salvage a patent and win the iPhone import ban. Basically, U.S. Patent No. 6,246,862, known as a “sensor controlled user interface for portable communication device,” hinders actions made on a touch screen when a phone is held “in close proximity” to the head. This patent is a “high level idea” and therefore gives Google “some leverage” against Apple “if successfully enforced.” Judge Pender who first reviewed the case in 2012 determined that Apple did infringe a 3G patent but not the 6,246,862 patent, “which he deemed invalid for indefiniteness.” However, the U.S. trade agency reversed this indefiniteness and called for a reinvestigation. Now Google has to prove that the patent is valid and infringed an even narrower claim. Apple will win if the patent is still ruled as invalid or if it’s upheld only on the basis of a claim construction so narrow that Apple no longer infringes.

           Basically, the issue here lies in whether the invention has obviousness, meaning “that it was not known in its entirety but there was no inventive step involved that would justify the grant of a new patent” or anticipation, meaning “the invention as a whole was already known on the priority date.” In a 2002 decision the Federal Circuit said that "[a]ppreciation by contemporaries skilled in the field of the invention is a useful indicator of whether the invention would have been obvious to such persons at the time it was made".

          The biography ties into this story when “Apple's expert, Mr. Lanning, could not deny that Mr. Jobs himself characterized the incorporation of a proximity sensor into the iPhone as a 'breakthrough' to his biographer, Walter Isaacson: '[a]nother breakthrough was the sensor that figured out when you put the phone to your ear, so that your lobes didn't accidentally activate some function.' [...] The sensor described by Mr. Jobs is the very technology that the ALJ found to infringe. [...] And there can be no doubt that this passage refers to the technology of the '862 patent: it describes a sensor that prevents the inadvertent actuation of the phone when it is put to the user's ear. The recognition that the invention of the '862 patent was a 'breakthrough' weighs heavily against a finding of obviousness, particularly since it came from Apple itself.”

          “Assuming the quote is correct, Steve Jobs was impressed by the sensor that figured out when you put the phone to your ear. But Motorola's '862 patent is not a patent on a way to detect such proximity. The sensor that Google's (Motorola's) patent references is an "an infrared (IR) proximity detector" and "has an IR transmitting element [...] and an IR receiving element [for example, a photodiode] that are mounted side by side in the housing behind a lens". Motorola didn't invent such basic infrared technology.”
 
         “Steve Jobs was certainly knowledgeable about phones sold in the market, but he wasn't aware of all patent applications, granted patents and other publications relating to proximity detectors. Chances are that he had not read even one of the prior art references relevant to this case.”

#14: Living the "High" Life

Today in Businessweek an article discusses how many workers in the Silicon Valley have medical Mariana cards. Apparently, “People just don’t care,” if you smoke, “you don’t need to hide it” and if you don’t smoke, “you accept [the fact] that there are people around you who do.” However, it is not used illegally as buyers in California are allowed to have medical marihuana cards. Palliative Health is a medical marijuana dispensary in San Jose right in the heart of the Silicon Valley and sells everything from marijuana infused sodas to chocolates. 40% of Palliative Health’s customers are engineers, programmers, as well as other tech workers who get back and whist pain from programming 15 hours a day. 

MedMar Healing Center, which is only a half-mile away from Adobe, offers marijuana infused chocolates known as “Veda Chews.” Apparently, they do not give workers a “high” but do provide them with “the mental clarity…and pain relief” allowing them work more effectively.  There are even infused breath sprays available

The big tech firms are less happy about it and do not formally approve, however, companies are finding it harder and harder to find employees that can pass pre-employment drug tests. However, as the drug does not inhibit tech workers intelligence or value it seems like it will stay popular. And as for the distributes, they will probably be getting more and more business.

           

#13: Who really invented the telephone?

The article “Innovation, Intrigue, Subterfuge, and the Birth of an Industry” sheds light on the fact that patent filing has hurt inventors and stifled innovation from the very beginning. Basically, Alexander Grahm Bell, the man who was granted with the first telephone patent in 1876, represents how money has corrupted the patent industry. Antonio Meucci’s was actually came up with the idea first around 1856. However, he was unable to patent his invention because he lacked the funding. Although, some believe he may not have actually understood how the telephone would have actually worked. Elisha Gray did understand electric telephones. He was a prominent American inventor and one of the founders of Western Electric. His invention was the liquid transmitter and he would have been the first to transmit sound with this technology if it had not been for Bell. Bell and Gray were apparently working on the technology at the same time. Bill found Antonio Meucci’s work on phones and then bribed the USPTO to let him know if any other telephone patents were filed. When Gray’s lawyer filed a partial patent on Feb. 14^th, 1876, Bell filled a full application on the same day. The filings were similar and Bell received the patent, although he had not even fully tested the product.

Reading about this is frustrating as Meucci and Gray deserved to get the patents over Bell but because bell had a good lawyer and money he was able to manipulate the situation. It is a bit disheartening that even then, patent wars were happening on a smaller scale. Especially as the little guy always looses out. Small start ups truly struggle when trying to compete with Apple, Samsung, Google, and the other established giants. Although they did make it, now it is almost impossible to break into that market.

Video #14: Money Buys Influence

Video #13: Funny News

Video #12: Germany's Patent-Holder Friendly Policy

Video #11: FRAND

#12 FRAND Licensing New Policy Proposal

I read through the articles posted on http://www.fosspatents.com/ and one story caught my eye. On Tuesday March 5^th, 2013 an article called Chief economists of EU Commission and FTC make proposals for FRAND dispute resolution, discusses how three European economics professors, “believe their proposed reforms to the IP policies of leading SSOs ‘would greatly improve efficiency in patent licensing’ and help address the ‘holdup’ problem (SEP holders seeking supra-FRAND royalties at the threat of injunctions).”

FRAND is a legal term that stands for “Fair, Reasonable, and Non-Discriminatory” and is used to describe patent licensing terms. Companies often have to agree to license a patent under FRAND terms before it is fully approved. For example, Qualcomm’s WCDMA, Wideband Code Division Multiple Access which is the 3G technology, uses many core CDMA, code division multiple access, technologies created by Qualcomm. As I understand it this licensing agreement had to adhere to FRAND standards in order to be legally sound.

In case all of this sounds like gibberish to you…. This site is really helpful it defines all of these technical terms in greater detail. http://www.mobileburn.com/definition.jsp?term=UMTS

Going back to the point of the article, the CPI (Competition Policy International) has published a paper that is hoping to help solve the patent licensing problem. The views are not shared by the European Commission, Department of Justice, or the FTC. However, the ideas of these three professors has resonated due to the large amount of power and influence they maintain within each of their institutions.

FRAND licensing is continuously a core problem of pending litigations. But the professors argue that SSO can and should do more about the problem. SSO, Structure, sequence and organization, is a term used to compare one software to another in order to determine if any parts infringe on the copyright protection of a software. The term was introduced in the case of Whelan v. Jaslow in 1986. The method of comparing the SSO of two software products has since evolved in attempts to avoid the extremes of over-protection and under-protection, both of which discourage innovation. More recently, the concept has been used in a major case brought against Google by Oracle. The professors argue that the membership of SSOs are divided on the questions of SEP enforcement: “SSOs typically specify very little as to the meaning of 'fair' or 'reasonable,' perhaps partially because there is heterogeneity among the firms, technologies, and products within a given SSO."

SSOs should bring people together and unite them to agree unanimously on policy so that a serious proposal for improvement can be reached. The professors shed light on the issue and advocate for more meaningful FRAND rules inside SSOs. Experts even believe that their logic may be referenced in future FRAND-related cases as it warns against awarding excess amounts of money that exceeds the value of the technology itself. I think this has the potential to eliminate patent trolls entirely as their business model runs on the revenue they collect from suing other companies. If the financial reward one could get was low, it would completely deter people from wasting their time and money on litigations.

#11: Microsoft vs. Google: Patent Litigation in Germany

The article "Google Play and Google Maps under Patent Fire," on the FossPatents blog discusses how “Google (the parent company) and its wholly-owned subsidiary Motorola Mobility have to defend themselves against Microsoft assertion that Google Maps (with a particular focus on the Google Maps Android app) infringes EP0845124 on a ‘computer system for identifying local resources and method therefore.’" This case, which press claim to be "the climax to date in the so-called smartphone wars," will be resolved in the Munich I Regional Court. Apparently, Microsoft would have just sued Google’s subsidiary, Motorola, however, because Motorola denied that they knew about “how Google's server farms integrate map image data and geographic search results” the responsibility of infringing falls on Google. The German court system works a bit differently than the US system. In Germany, “when a litigant succeeds in an action for infringement, an injunction is immediately available.” Conversely, in America injunctions will only be “granted if a patent is deemed exploited and monetary damages remain the primary remedy.”

Furthermore:

German patent law has made the country something of a patent shelter in Europe. Germany provides expedient decisions and easy-to-obtain injunctions that are hard to challenge for defendants. All that sounds fantastic until a corporation or small business is the target of those laws rather than the one benefiting. Furthermore, in these tough economic times, Germany’s patent regime has broad consequences for economic and technological development. http://www.law.illinois.edu/bljournal/post/2012/04/17/Germany-and-Patents-All-that-Glitters-isnt-Gold.aspx

Because Germany has these different patent litigation procedures, Microsoft was able to strategically halt Google. This is a huge issue as Google allows Android producers to license their services to provide Android users with the benefit of being able to use Google maps which generates massive returns for Google though online advertising and app sales.

I am not sure how big this issue is compared to any of the other patent litigations we have had. However, I do find this interesting because it brings international patent procedures to our attention. However, I do think it is interesting that an injunction is issues so quickly in Germany, if that were the case in the U.S. perhaps less companies would sue as often knowing that they too may be at risk one day.  
http://www.fosspatents.com/

#9: First to File System

The patent system used to work on a first-to-invent basis. That system has been used for the last 200 years. This means that when 2 people file for the same patent the patent office should identify and reward the patent to the inventor who was the first to come up with the invention even if they were not the first to file the patent application.

Today the first-to-file/first-to-disclose system is being implemented which will basically de-emphasize the invention date. Many argue that this will be an issue as patent trolls may have to opportunity to file patent applications on inventions that have not yet been filed by small start ups. However, according to this article an inventor can post their idea on a site or blog and then still file that application within one year of public disclosure. This is where the American patent filing system differentiates itself from the rest of the world. In other countries, once an idea is disclosed you cannot get a patent for that idea or invention.

In order to successfully adjust to this new system, companies need to act quickly. Implementing a process to quickly identify inventions is key. If a company does not have enough funding to file an actual patent application, a carefully prepared provisional application should be filed to ensure that the invention is disclosed in a legal way.

If the technology is worthy of patent protection, filing a series of low-cost provisional applications during the course of development of the technology can be a cost-effective way to establish a series of early “first-to-file” filing dates for the technology.
On the other hand, if it is decided that an invention is not worth immediately filing a patent application for, publicly disclosing the invention should prevent others from receiving patents on the same technology. But the decision to publicly disclose an invention before filing a patent application should not be taken lightly. Public disclosure prior to filing a patent application will likely cause foreign patent rights to be forfeited. In the case of software, which is not patentable in most foreign patent systems, this is not a problem. Therefore, disclosures for software-based inventions can be an ideal way to create prior art for others without the trade-off of forfeiting any patent rights that a company would otherwise be entitled to.