2005: YEAR OF THE TROLL - This was the year that patent holding companies truly arrived. While many other issues in patent law were closely watched by lawyers, journalists and bloggers, nothing attracted more attention than the latest showdown between established corporations and a patent holding company.
In a sense, holding companies have done for patents what blogging has done for news distribution - it has empowered "ordinary" individuals to tread into areas that were previously dominated by institutional entities. Some people have embraced this evolution, some are uncomfortable with it (but have resigned themselves to this reality), and many others have decried or dismissed it.
Whatever your view is, holding companies have demonstrated that patent rights, in and of themselves, and extermely powerful and can bring tremedous benefit or catastrophic ruin. Companies and patent holders that are able to successfully harness the power of their portfolios will continue to tap into additional revenue streams and gain access to other technological markets that would not have been available without the backing of patents. And this year, a lot of companies have shown that developing such strategies are possible for any company, regardless of the size or the industry. Even some big-named businesspersons (e.g. Myhrvold, Perot) has jumped on the bandwagon and started enterprises that borrow heavily from the holding company playbook.
Alas, there are significant problems that holding companies have brought to the forefront. There is no denying that current means of patent enforcement are strongly skewed in the favor of the patent holder. The current cost of litigation almost prohibits smaller companies from challenging a patent plaintiff, and almost guarantee that larger companies will settle in lieu of engaging in a proactive defense. To its credit, the government has been attempting to address these problems by introducing significant patent reform, but there are some troubling aspects in the proposed legislation (e.g., first-to-file, redefining prior art), and it remains unclear which parts will survive when the legislation works its way through Congress.
Also, the issue of patent quality and prior art need to be addressed more seriously. While there always have been (and always will be) "bad patents," the USPTO has to take a more proactive role in searching and applying prior art, especially art that is found in non-patent literature. While there is a conventional wisdom to view every patent being asserted by a holding company as a "bad" patent, this is not typically the case in reality. Nevertheless, there are a few cases where lapses by USPTO personnel have ended up costing others millions of dollars in defending themselves against poorly examined patents. This simply has to stop.
In the coming year, the 271 Patent Blog will continue to provide you with the best available information on patents and patent law, and will try to provide you with the most straightforward analysis on developing trends. 2006 is shaping up to be a groundbreaking year for patent practice - make sure you stay informed every step of the way.
HAPPY NEW YEAR!
Thursday, December 29, 2005
2005: YEAR OF THE TROLL - This was the year that patent holding companies truly arrived. While many other issues in patent law were closely watched by lawyers, journalists and bloggers, nothing attracted more attention than the latest showdown between established corporations and a patent holding company.
Wednesday, December 28, 2005
RATES TECHNOLOGY INC. WANTS TO BE YOUR GATEWAY TO COST-ROUTING VOIP: Big news has surfaced that Google was sued in October by Rates Technology Inc. (RTI), holder of US Patents 5,425,085 and 5,519,769. The applications for these patent were respectively filed in the USPTO in March and And April of 1994. In the complaint filed against Google (view copy of complaint here, courtesy of searchenginewatch.com), RTI alleges that the recently-launched Google Talk VoIP infringes both of these patents.
After skimming through the patents, it is apparent that VoIP was not the main focus of the patents - however this is not preventing RTI from interpreting the claimed features as being applicable to VoIP. While VoIP hasn't really "emerged" until the last 5 years or so, it can be argued that the technology is merely a commercial realization of the experimental Network Voice Protocol invented for the ARPANET in 1973.
The patents cover "least cost routing" of telephone calls, and also claim a specific device for implementing the routing. The '085 patent claims the following:
1. A device for routing telephone calls along a least cost route originating from a first telephone to a second telephone having an associated telephone number via a network having a plurality of alternate communication switch paths corresponding to different carriers which can be chosen to route the call and normallyproviding a current to said first telephone when said first telephone is in use, comprising:
a housing forming an enclosure and comprising first jack means for connection to said first telephone and second jack means for connection to said network
switch means operatively connected to said first jack means for disconnecting said first telephone from said network,
means operatively connected to said switch means for generating a current through said switch means to the first telephone, corresponding to a current provided by said network,
database means for storing billing rate parameters for determining a least cost communication path for call corresponding to said telephone number,
means operatively connected to said switch means for detecting and storing said telephone number originating from the first telephone means for addresssing said database means for identifying a plurality of communication switch paths to to said second telephone and the cost rate of each path,
means for comparing the cost rate of each path so as to determine a least cost route, and
means operatively connected to said switch means and said second jack means for generating a number sequence corresponding to a desired carrier so that said call is routed through said second jack means to the selected communication path and carrier to establish a switched connection between said first telephone and said second telephone phone.
And the '769 claims the following:
1. A method for updating a database that stores billing rate parameters for a call rating device used for cost determinations for a calling station, comprising the steps of
connecting at a predetermined time and date via a data transfer line the call rating device to a rate provider having billing rate parameters for a plurality of calling stations,
transmitting over the data transfer line indicia identifying the call rating device and the date and time of the last update of the billing rate parameters,
verifying if billing rate parameters should be updated, and
transmitting from the rate provider to the call rating device the updated billing rate parameters when the rate provider determines that an update is required.
The USPTO transaction history for each of these patents may be viewed here and here. As you can see, RTI is likely trying to apply the claimed features to the voice router/phone adapter found in most VoIP configurations.
Some problems that pop out after reviewing the claims is that the '085 patent is replete with means-plus-function claims (i.e. database means, switch means, etc.). Under normal circumstances, such claims are interpreted more narrowly than normal patent claims. Furthermore, if RTI wants to apply the doctrine of equivalents to these claims, the legal analysis is an absolute nightmare (for patent practitioners, this is the "equivalent of an equivalent" situation that has sometimes vexed the Federal Circuit). Then again, this could work to the advantage of RTI, since Google will have to spend considerable time establishing non-infringement and invalidity positions.
A second problem I see in the '769 patent is that each of the independent claims require a rate provider to provide billing parameters - as far as I know, no such steps are performed by Google.
Rich Tehrani has an excellent expose' on RTI, and provides some very interesting information on the litigation habits of the company on his VoIP Blog:
- Overall, RTI claims to have agreements in place with 700-800 companies and have litigated 25 times in 15 years.
- RTI has agreements in place with 76 large companies such as Huawei Technologies, Lucent, and Cisco at this time. The company claims that larger companies "understand how intellectual property rights work in the US while the smaller ones usually don't."
- RTI claims that the '085 and '769 patents generally apply to hybrid cellphones, gateways, IP Phones, IP PBX's, edge routers, core routers, PC computers, ITSPs, and VoIP products, services and technologies, among several other telecommunications products, services and technologies.
- Mitel Networks was sued for $945 Million; Alcatel was sued for $1.155 Billion; and their default is pending in USDC EDNY. Hello Direct, GN Netcom and GN had been sued by RTI for patent infringement, and they recently settled with RTI; the terms are being kept confidential.
- RTI's licencing strategy doesn't extract royalties for the lifetime sales of a product, and only asks for a one-time fee.
Posted by Two-Seventy-One Patent Blog at 10:20 AM
COURT MUST GIVE SOME CONSIDERATION TO CLAIM CONTRUCTION FOR PRELIMINARY INJUNCTION (Shuffle Master Inc. v. VendingData Corp (05-1208)) - Non Precedential:
VendingData appealed the grant of a preliminary injunction in favor of Shuffle Master. During the lower court proceedings, the both parties contested the term "forming at least one set of cards within the apparatus from the at least one deck of playing cards," that was found in the asserted claim.
Although the question of the proper construction of the claim was clearly in dispute, the court did not address the claim construction arguments made by VendingData and did not provide an explicit construction of the critical claim language in the patent. Instead, the court simply concluded that Shuffle Master was likely to succeed on the merits.
In reversing the lower court's decision, the Federal Circuit stated:
We have held that a district court does not have to conduct a comprehensive and final claim construction in a preliminary injunction proceeding. Sofamor Danek Group, Inc. v. DePuy-Motech, Inc., 74 F.3d 1216, 1221 (Fed. Cir. 1996). Similarly, it is not necessary for a court to conduct an explicit claim construction if the claim construction issue is a simple one that needs no analysis, or in which there is no reasonable ground for dispute as to claim meaning. Toro Co. v. Deere & Co., 355 F.3d 1313, 1322 (Fed. Cir. 2004). However, a district court in a preliminary injunction proceeding has the duty to determine whether the movant is likely to prevail on the merits, and if that question turns on a contested issue of claim construction, the court must give the claim construction issue the attention necessary to determine the likelihood of success. In this case, the dispute over the meaning of the “set of cards” limitation is central to determining whether Shuffle Master is likely to prevail on the merits of its infringement claim. The district court was therefore required to provide some form of claim construction, even if abbreviated, preliminary, or tentative.
Also, the court refused to provide its own claim construction, stating that the district court’s analysis is important to the process of claim construction, and that construing the claim without the guidance of the district court’s construction would be improper.
Judge Mayer dissented from the opinion, stating that there was no abuse of discretion by the lower court, since the claim construction proposed by VendingData could nevertheless be found to encompass VendingData's product.
Posted by Two-Seventy-One Patent Blog at 8:20 AM
Friday, December 23, 2005
LEAVE IT TO ENGINEERS TO SUCK THE JOY OUT OF CHRISTMAS: I'm not sure where this was originated, but it has been making the rounds over the e-mail circuit (my personal favorite is truth #5). Enjoy.
The Truth About Santa
1. No known species of reindeer can fly. BUT there are 300,000 species of living organisms yet to be classified, and while most of these are insects and germs, this does not COMPLETELY rule out flying reindeer which only Santa (and a few alcoholics) have ever seen.
2. There are 2 billion children (persons under 18) in the world. BUT since Santa doesn't appear to handle the Muslim, Hindu, Jewish and Buddhist children, that reduces the workload to 15% of the total - 378 million according to Population Reference Bureau. At an average (census) rate of 3.5 children per household, that's 91.8 million homes. One presumes there's at least one good child in each.
3. Santa has 31 hours of Christmas to work with, thanks to the different time zones and the rotation of the earth, assuming he travels east to west (which seems logical). This works out to 822.6 visits per second. This is to say that for each Christian household with good children, Santa has 1/1000th of a second to park, hop out of the sleigh, jump down the chimney, fill the stockings, distribute the remaining presents under the tree, eat whatever snacks have been left, get back up the chimney, get back into the sleigh and move on to the next house. Assuming that each of these 91.8 million stops are evenly distributed around the earth (which, of course, we know to be false, but for the purposes of our calculations we will accept), we are now talking about .78 miles per household, a total trip of 75-1/2 million miles, not counting stops to do what most of us must do at least once every 31 hours, plus feeding, etc. This means that Santa's sleigh is moving at 650 miles per second, 3,000 times the speed of sound. For purposes of comparison, the fastest man-made vehicle on earth, the Ulysses space probe, moves at a poky 27.4 miles per second; a conventional reindeer can run, tops, 15 miles per hour.
4. The payload on the sleigh adds another interesting element. Assuming that each child gets nothing more than a medium-sized lego set (2 pounds), the sleigh is carrying 321,300 tons, not counting Santa, who is invariably described as overweight. On land, conventional reindeer can pull no more than 300 pounds. Even granting that "flying reindeer" (see point #1) could pull TEN TIMES the normal anoint, we cannot do the job with eight, or even nine. We need
214,200 reindeer. This increases the payload - not even counting the weight of the sleigh - to 353,430 tons. Again, for comparison - this is four times the weight of the Queen Elizabeth.
5. 353,000 tons traveling at 650 miles per second creates enormous air resistance - this will heat the reindeer up in the same fashion as spacecraft reentering the earth's atmosphere. The lead pair of reindeer will absorb 14.3 QUINTILLION joules of energy. Per second. Each. In short, they will burst into flame almost instantaneously, exposing the reindeer behind them, and create deafening sonic booms in their wake. The entire reindeer team will be vaporized within 4.26 thousandths of a second. Santa, meanwhile, will be subjected to centrifugal forces 17,500.06 times greater than gravity. A 250-pound Santa (which seems ludicrously slim) would be pinned to the back of his sleigh by 4,315,015 pounds of force.
HAPPY HOLIDAYS TO ALL!
[BTW, if you're wondering, the image for this post was pulled from US Patent 5,523,741, titled "Santa Claus Detector." The abstract provides: "[a] children's Christmas Stocking device useful for visually signalling the arrival of Santa Claus by illuminating an externally visable light source having a power source located within said device."]
Posted by Two-Seventy-One Patent Blog at 8:00 AM
Thursday, December 22, 2005
USPTO INVALIDATING NTP PATENTS = POTENTIAL BIG MESS FOR SETTLEMENT: Since reports have surfaced over the invalidation of NTP's patents, one point that doesn't get mentioned is that, if anything, the invalidation of the NTP patents will likely halt any progress in the ongoing settlement with RIM.
Why? You can't "settle" a reexamination proceeding.
Since reexamination proceedings are technically a matter of public policy (i.e., sparing the public from "bad patents"), reexaminations must be taken to their conclusion in the PTO, absent some parallel ruling in court that addresses the same issues being considered by the PTO. Since this isn't the case with NTP, even if RIM settles with NTP today, the reexamination will continue.
And since it looks like NTP will take a major hit, RIM has little incentive to settle. Even if NTP appeals the rejections, the subsequent workload will be taken up by NTP's attorneys and the Solicitor's Office in the PTO - RIM won't have to run up more legal fees waiting for a final decision.
Posted by Two-Seventy-One Patent Blog at 4:48 PM
Wednesday, December 21, 2005
**NTP PATENTS TO BE INVALIDATED BY THE USPTO** - In one of the most bizarre twists yet, the New York Times is reporting that the USPTO has taken the highly unusual step of personally contacting each side to inform them that NTP's patents will be invalidated. According to NTP, they have acknowledged the communication, and appear to all-but-concede that the USPTO's next step will be a final rejection.
This blog previously recognized NTP's perilous position, however it was not expected that the USPTO would take such a hard line against them.
This action follows the USPTO's other unusual step of giving NTP only one month to respond to the USPTO's rejection. Under MPEP 2263, the USPTO sets a statutory 2-month time limit for responding to rejections, unless there is a court order or a stay of litigation - neither of which exists in the present case (see Patent Prospector's excellent post on this here). These issues were argued to the USPTO by NTP (see NTP's "Reexam Request for Extension of Time" dated 12-05-2005 here). However, the USPTO dismissed the arguments, citing 37 C.F.R. 1.550(b) as authority for the USPTO to give NTP only 30 days (see USPTO denial dated 12-14-2005 here).
The USPTO has undoubtedly taken a more active position in bringing the RIM/NTP matter to a close. If NTP's patents are ultimately invalidated, this would be a monstrous showing by the USPTO that reexaminations are indeed viable alternatives (or supplements) to litigation.
Posted by Two-Seventy-One Patent Blog at 8:07 AM
Tuesday, December 20, 2005
MOVE OVER PRICELINE, HERE COMES PRICEPLAY: A company called PricePlay is touting newly minted US Patent 6,978,253, titled "Systems and methods for transacting business over a global communications network such as the Internet," as the "next generation Internet business model."
While PR like this is dime-a-dozen, this particular patent has some noteworthy elements to it. For one, the patent took almost 6.5 years to make its way through the USPTO, and survived numerous rejections, plus two appeals to the BAPI (see file history here). Also, the cited art is somewhat acceptable, although not terribly comprehensive (14 US patents, 2 foreign patents and 8 articles).
Most noteworthy however, is the scope of the claims that were allowed:
What is a "Price-Determining-Activity" you say? Well, according to the patent, the system works something like this:
1. A method of doing business over a global communications network comprising the steps:
communicating to a buyer via the global communications network, a description of a product;
accepting a first request from the buyer to buy the product for a price to be determined within a price range;
accepting a second request from the buyer to allow the price to be determined based upon a performance of the buyer while participating in a Price-Determining-Activity
receiving data from the buyer over the global communications network, said data representing the performance of the buyer during the PDA; and
determining the price of the product based at least partially upon the data received, said price being within the price range and scaled to the performance of the buyer.
A user pull up a web page, where numerous products or services are listed and offered at a range of prices. The user spots an 40gig iPod, offered for direct sale for $400. The user may simply buy the iPod for the listed price, or alternately "play" for the same iPod through a game, where the price of the iPod will be set to a specific range (say, $300-$450), depending on the game the user selects.
Once a game has been selected, the user plays the game, and the better the user plays, the lower the price drops. According to the patent, the price changes simultaneously as the user plays, and the price is ultimately scaled to the performance during the game.
The model is based off of other companies web sites (such as Dell.com, eprize.com, iwin.com, Hawaiian Airlines, and numerous online game sites) that offer cash and "reward" points for online games, but PricePlay claims this is the first application of the concept in determining the price of products. Predictably, PricePlay has high aspirations for the patented method:
"Most etailers' nightmare is the high marketing cost of attracting and converting visitors into customers; priceplay is the solution." Neal Benka at PricePlay says. "For the online game portals, the priceplay model can be the answer on how to generate revenues from their booming traffics." According to sources from PricePlay.com, "acquisition talk from at least one major internet powerhouse is underway." PricePlay.com intends to license its patent to interested etailers and online portals.
If you're wondering, the answer is yes - continuations are already on file in the USPTO.
Posted by Two-Seventy-One Patent Blog at 12:55 PM
Monday, December 19, 2005
IBM BRINGS UNIVERSITIES INTO ITS BIG, BIG TENT: In what seems to be a never-ending quest by IBM to trade patent enforcement for market penetration (and possibly even more patents), an announcement was made today that IBM and several other companies were teaming with universities to establish collaborative software projects for commercialization.
Software research labs have complained that the nature of software patents, as well as the patent process itself, has slowed the process of commercialization of technologies in universities. In the past decade, universities have found themselves working harder to address IP issues and sometimes face major difficulties in commercialization efforts even if those efforts involve a major industry partner.
To address this problem, IBM, Hewlett-Packard, Intel, and Cisco Systems have announced a collaborative patent consortion with universities that include Stanford, Carnegie Mellon, the Rensselaer Polytechnic Institute, and the Georgia Institute of Technology. Under the agreement, intellectual property arising from certain research collaborations will be made available free of charge for commercial and academic use.
According to John E. Kelly, senior vice president of technology and intellectual property for IBM, "open source software and open standards jointly developed by universities, government, and industry can create a powerful platform for collaborative innovation . . . These principles are based on a balanced approach to IP management and should stimulate additional joint industry and university research projects."
See IBM's online patent commons participation here.
See IBM's creation of "Ventures in Collaboration" for startups here.
Posted by Two-Seventy-One Patent Blog at 4:45 PM
DETAILS OF USPTO'S TELEWORK PROGRAM RELEASED- The USPTO released further details this weekend regarding the moving hundreds of employees working out of their offices and into a work-from-home arrangement.
The program is intended to free up office space required to accommodate a significant increase in the patent division's workforce. The workforce is projected to grow by about a thousand a year through fiscal 2008, as the USPTO brings on more people to help reduce its backlog of patent applications. Furthermore, the arrangement is being used to attract recent graduates that may be intimidated by the sky-high housing prices in the Washington DC area. All of the examiners are eligible for the program:
Starting in February, the agency plans to put 40 employees at a time through a two-week training course on telework. The courses will continue until September 2006, when the number of trained employees is expected to top out at about 500. The division plans to continue moving 500 employees to telework arrangements each year.
The system, known as "hoteling," is set up so that for every three employees in the telework program, there will be one office space, which could be a standard cubicle or an actual office. Participants are expected to work in the office as little as one day a week.
No details were given on how the USPTO would address interviews between applicants and teleworking examiners, although it is presumed that telephonic interviews would be conducted from the examiner's home, and in-person interviews would be conducted at the office, like before.
Posted by Two-Seventy-One Patent Blog at 8:31 AM
Friday, December 16, 2005
USPTO ASSIGNING 35 U.S.C. 101 "CONSULTANTS" FOR EXAMINING CORPS: In light of the recently published Ex Parte Lundgren decision by the BAPI and the subsequent USPTO guidelines, more senior USPTO personnel have been dispatched to various technical groups to act as consultants for matters pertaining to patentable subject matter. Under this program, examiners that have deemed claims to be in violation of 35 U.S.C. 101 are encouraged to review the claims with a consultant prior to making the actual rejection. The program is supposed to curb instances of such rejections, that were effectively neutered in light of Lundgren.
Posted by Two-Seventy-One Patent Blog at 4:20 PM
AMAZON ONE-CLICK, MEET MICROSOFT ONE-CLICK: A buzz has started over Microsoft being granted a patent on an interactive TV interface that pauses a show while the viewer clicks an embedded hyperlink, such as a URL.
US Patent 6,973,669 was granted on December 6, 2005 and claims priority to numerous continuations and CIPs dating back to 1993. This is the first patent to issue from that family of applications (after 12 years of fighting with the USPTO). After reading the background of the specification, the language reflects the application's age:
The Internet has recently exploded in popularity . . . A computer user with a modem can get on-line and access the business' web site to obtain more information about a particular product that the user is interested in. This form of advertisement will most likely become more and more common as internet use increases. However, the user must memorize or write down the advertiser's web site address, or perform a sometimes labor and time intensive on-line search to find the web site.
Obviously, this predated Google . . .
The features recited in claim 1 basically describe the entire invention:
1. In an interactive television system that is configured for displaying television programs, hyperlinks and corresponding data, a method for pausing the display of a television program that is displayed at the television system in response to a selection of a hyperlink that is displayed with the television program, the method comprising the acts of:
displaying a television program at the interactive television system while the television program is being broadcast, the television program being displayed with a hyperlink;
as a television program is being displayed, receiving input selecting the hyperlink;
in response to the input, accessing data corresponding to the hyperlink;
automatically pausing the display of the television program in response to the
input selecting the hyperlink and in response to obtaining the data corresponding to the hyperlink, while the television program is being broadcast, by recording a signal in which the television program is encoded on a recording medium, and so as to enable subsequent viewing of the paused television program in a time-shifted manner;
as the display of the television program is paused, displaying the data corresponding to the hyperlink; and
subsequently resuming the display of the television program by accessing the signal from the recording medium in the sequence in which the signal was recorded on the recording medium, such that the television program is displayed at the point at which the television program was paused.
More from The Register UK
Posted by Two-Seventy-One Patent Blog at 4:04 PM
Thursday, December 15, 2005
COMPETITORS POUNCING ON RIM AND STAKING NEW PATENT CLAIMS: Taking advantage of RIM's woes, competitors have started to make moves to muscle in on e-mail push technology. Recently, Nokia (who is an NTP licensee), acquired Intellisync Corp., a provider of wireless e-mail service for cellular carriers, adding to the mobile phone maker's growing arsenal of products to compete with RIM.
Visto Corporation has jumped out of the gate by forming an alliance with NTP, where NTP licensed its patents to Visto in exchange for an equity position in the company. Visto quickly followed this move with securing a big contract with Vodafone K.K. in Japan. Visto has current agreements with Cingular, Elisa, KPN, Rogers Wireless, SmarTone, SFR, Sprint-Nextel, and TELUS Mobility.
Now, Visto has decided to dive head-first into patent litigation by filing suit against Microsoft in - where else - the Eastern District of Texas. The suit targets Microsoft's Windows Mobile 5.0 software, and was likely spurred by Microsoft's recent decision to bundle Windows Mobile 5.0 with their already market-dominating Exchange server software. By running the Mobile 5.0 platform via Exchange, this could significantly increases the rate and manner of infringement being alleged by Visto. Similar to NTP, Visto is seeking a permanent injunction.
The complaint cites 3 specific patents:
U.S. Patent No. 6,085,192 titled, "System And Method For Securely Synchronizing Multiple Copies Of A Workspace Element In A Network"
U.S. Patent No. 6,708,221 titled, "System And Method For Globally And Securely Accessing Unified Information In A Computer Network"
U.S. Patent No. 6,151,606 titled, "System And Method For Using A Workspace Data Manager To Access, Manipulate And Synchronize Network Data"
The '606 and '221 patents claim priority to a myriad of applications (some filed within days of one another) dating back to 1996. Overall the patents deal with interfacing clients between trusted/untrusted sites, and synchronizing multiple copies of a workspace element in a secure network environment. Some notable claims:
('221 patent) Claim 1. A method for synchronizing workspace data,
storing first workspace data on a first device;
storing second workspace data on a second device;
determining differences between the first workspace data and the second workspace data;
storing the differences at a global server; and
sending the differences from the global server to the second device.
('606 patent) Claim 1. A computer-based method, comprising the steps of:
executing a workspace data manager on an untrusted client site;
requesting the workspace data manager to access data temporarily from a remote site, the remote being connected via a network to untrusted client site;
initiating a communications channel with the remote site;
downloading data from the remote site;
placing the data in temporary storage on the untrusted client site;
using the workspace data manager to present the downloaded data; and
automatically disabling the untrusted client site from accessing at least a portion of the downloaded data after a user has finished using the data.
Visto claims to holds 25 patents, including those related to mobile access email and data systems, and claims that 57 patent applications are pending before the USPTO (see patents assigned to Visto here).
Posted by Two-Seventy-One Patent Blog at 10:09 AM
Wednesday, December 14, 2005
WHY THE USPTO SHOULD MAKE PRE-APPEAL BRIEF CONFERENCES PERMANENT: Back in June, the USPTO formed a new pilot program where applications being appealed from a final rejection could request a USPTO panel to review the rejection for prima facie error. The pilot program is scheduled to run at least until the end of the year, with the possibility of further extensions or modifications. If the USPTO decides the program is helpful, they will permanently incorporate the process into 37 C.F.R.
In my opinion, this was the most significant move by the USPTO in 2005 for improving the examination process (arguably tied with the establishment of the reexamination unit). I've successfully used this program numerous times already, and I have been impressed. Here are the top 5 reasons I support the program:
(1) Speed/Cost - the decisions of the panel should come within 45 days after a request is submitted. So far, the USPTO has held true to its promise. The first round of requests I submitted in applications all came before the 45 day period. Also, tt doesn't cost anything extra to request it (how long will THAT last, I wonder).
(2) It's a form of arbitration for USPTO practitioners - when you hit a wall during examination, it always helps to get a third party involved to review the situation. Instead of waiting 6 months or more for a formal review by the BPAI, you get a preliminary assessment your position and the position of the Examiner within 45 days.
(3) It's a win-win proposition for applicants - if the panel agrees with your arguments, the rejection is reversed (and in one case I had, the application was allowed outright). If your arguments aren't dead-on persuasive, you continue to the BPAI for further review. Nothing is lost during the process.
(4) A memorialized record of the decision - the most frustrating part of bad rejections and the earlier appeals process was that, once the appeal brief was filed, it wasn't uncommon to have a new office action magically appear that contained new art. Such reversals typically happened after the appeal conference (see MPEP 1207). By that point, the client is forced to pay considerable sums for the preparation and filing of the brief ($1,000 in USPTO fees alone), only to find out that they were right in the first place. Also, there is no record that is produced from the result of the appeal conference, so you any unaddressed issues remain a mystery. For example:
Your appeal brief repeats your earlier arguments traversing a 102 rejection:
After an appeal conference, the examiner withdraws the rejection issues a new rejection based on 35 USC 103, stating
What did that get you? After spending all that time and money, you are only marginally better off than you were before. What about A and B? Under such rejections, you never get a clear picture on what took place.
(5) The pre-appeal brief conference also reviews obviousness - it's almost a mantra at the USPTO: "when in doubt, make an obviousness rejection." I don't necessarily blame the examiners for this, since finding a "teaching, suggestion or motivation to combine" is a pretty convoluted and fact-specific concept in patent law (a question of law based on underlying facts). It's always convenient to make such rejections from the examiner side of things, but they are often wrong, especially when a new examiner is involved. By turning to experienced examiners participating in the conference, the odds of having such rejections overturned should increase.
Dennis Crouch from Patently-O is seeking comments from practitioners on this topic and intends to post on the results soon.
Posted by Two-Seventy-One Patent Blog at 9:13 AM
THE 10 MOST PROLIFIC INVENTORS: After Kevin Maney's search to find the 10 most prolific inventors alive today, he found that getting this information was harder than one would normally think. Today he has provided an update on his research, which was assisted by a number of commercial search firms. Here is the list:
(1) Shunpei Yamazaki, Japan, 1,432 patents (semiconductors)
(2) Donald Weder, Highland, Ill., 1,322 (floral arrangements)
(3) Kia Silverbrook, Sydney, 801 (various)
(4) George Spector, New York, 723 (various)
(5) Gurtej Sandhu, Boise, 576 (semiconductors)
(6) Warren Farnworth, Boise, 547 (semiconductors)
(7) Salman Akram, Boise, 527 (semiconductors)
(8) Mark Gardner, Cedar Creek, Texas, 512 (semiconductors)
(9) Heinze Focke, Verden, Germany, 508 (packaging)
(10) Joseph Straeter, Highland, Ill., 477 (flower arrangements)
Posted by Two-Seventy-One Patent Blog at 8:04 AM
Tuesday, December 13, 2005
IBM TAKES ANOTHER HUGE STEP IN PATENT LICENSING: In addition to its participation in the OSDL project (where IBM donated 500 patents "free of charge"), IBM has announced a new licensing program called "Ventures in Collaboration," that will allow startups and other companies to work with IBM investors for access to the technology behind the patents. Unlike the OSDL project, IBM now claims to be offering over 40,000 patents for licensing.
While the program is affiliated with IBM, it will be administered by various venture capital groups. The program offers two types of cross licensing agreements:
- Start-ups with annual revenues under $10 million will receive a standard, three-year cross-licensing contract for $25,000
- Companies with more than $10 million in annual revenues that are in the process of bringing their products to market receive a custom, five-year cross-licensing contract and pay 1 percent in royalties. There is no revenue cap on a company's eligibility.
This is part of ongoing efforts by IBM to strengthen its relationship with young companies in the hope that its software and hardware will be used in a start-up's emerging products. The relationship also provides IBM with a glimpse of emerging technology trends.
Also, by using VC middlemen, IBM spends less time making direct investments in start-ups as a strategic partner and instead invests in funds run by VC's.
Posted by Two-Seventy-One Patent Blog at 12:48 PM
EU PATENT REFORM = JAIL FOR INFRINGERS? Legislation is being proposed by the European Commission to criminalize all intellectual property infringements, including patents. The law would provide blanket protection to all forms of intellectual property through the 25 countries of the union.
Currently, a WTO treaty in the EU provides prison sentences for copyright and trademark infringement, but it does not cover patents. Like everywhere else, patent infringement is exclusively relegated to civil actions in union member nations. However, a recent ruling by
Europe's top court in September said that criminal sanctions, including jail time, were available to prosecutors for enforcing European laws, which include intellectual property.
Accordingly, the European Commission is readying a law, scheduled for debate in 2006, for enacting criminal penalties for patent infringement. Under the current proposal, the criminal penalties must be enforced in national courts - countries that fail to prosecute wrongdoers will end up in the EU courts. Prison penalty levels will be drawn from a shopping list of minimum criminal sanctions agreed by EU justice ministers in April 2002, to allow approximations of sentences to be made across Europe. Also, Brussels will be able to stipulate that EU laws carry a criminal penalty and set the minimum tariff for offenders convicted in a national court.
Not surprisingly, just about everyone in the industry is opposed to the proposal (even Microsoft and the FII are on the same side of this).
Posted by Two-Seventy-One Patent Blog at 8:10 AM
Monday, December 12, 2005
THE NEXT BUBBLE: STOCKS? REAL ESTATE? . . . PATENTS? In this interesting article from Dominique Patton, a question has been raised whether the current slew of high profile patent ligitation is causing excessive valuations to permeate the IP portfolios of technology companies. It has been recently reported that intangible assets now make up two thirds to three quarters of corporate market value in the US for both old and ‘new-economy' businesses, and in many cases, intellectual property lies at the core of these assets - biotech firms around the world are claiming that intellectual property typically accounts for some 60 per cent of their market value.
One of the biggest problems with intangible assets (and especially patents), is that there are few fundamental accounting norms for actually calculating a patent's "value." While accountants, actuaries and the like can be called in as experts during trial to calculate damages (i.e., lost profits/Panduit test, reasonable royalty, price erosion, non-infringing alternatives, etc.), these types of exercises do little to inform the market on the real value of any specific (non-litigated) patent during a given time period.
Experts have long warned about the inadequacy of existing accounting norms in capturing the monetary worth of patents. Those that are generating licensing revenue and royalties can be valued on a discounted cash-flow basis. A further slice is deemed valuable because of the competitive threat it prevents.
In the food, pharmaceutical and biotech industries, for instance, where it is now commonplace to seek to block out an entire market space with a patent barricade, some 11 per cent of the patents filed are subsequently contested. A patent battle, alone, is the first mark of real value, according to some commentators.
Elsewhere, within some companies, the monetary value of patents are deduced by looking at what it would cost to license in the same notional technology. This provides a theoretical basis, but little real data to work with.
Yet the most striking fundamental of patent valuation, overall, is how few fundamentals there are. Companies themselves struggle to evaluate their own intellectual property.
And this problem at the level of book valuations is multiplied manyfold in market values. Specialists at the Inno-Tech institute in Munich's Ludwig Maximillian university have shown that the ratio of book value to market value for companies' intangible assets has declined dramatically from 1:1 in 1978 to 1:7 in 2000.
This means that any misplaced value on the books is now getting amplified by a factor of 7 in market valuation, and rising.
Posted by Two-Seventy-One Patent Blog at 10:04 AM
Friday, December 09, 2005
FRIDAY SHORTS: Rumors are flying furiously that RIM is in serious settlement negotiations with NTP. Investors and users alike have been howling for RIM to settle the lawsuit. Market research firm Gartner has even gone so far as to advise clients this week to put BlackBerry deployments on hold until the patent dispute is resolved.
Will they settle? Very likely. However, there is a major sticking point concerning the reexamination of NTP's patents in the USPTO. The latest round of rejections suggest that NTP is in a tight spot and may be facing a potential invalidation of their patents. Certainly this is what RIM is counting on. But it will take at least another 6-8 months before we get a firm grasp on the USPTO's rejections (if they are indeed forthcoming). If that happens, NTP will appeal to the BPAI, and possibly to the Federal Circuit (and even the Supreme Court). Even under a worst-case scenario for NTP, it will take at least 1-2 years to resolve these matters. And unfortunately for RIM, this is time that the district court said it is not willing to wait for.
What then, does NTP want? Money. Lots of it, and right away. It is in NTP's interest to exact as much money up-front to protect itself against a possible invalidation in the USPTO. Should RIM even manage to structure a $100mil a year settlement (say, for 6-10 years), it is possible that, after 3 years, the patents may be invalidated. And if that happens, RIM can stop writing checks to NTP and save a few hundred million over the long haul (talk about your pyrrhic victory).
Creative has spoken: "We will pursue all manufacturers that use the same navigation system."
It appears that Creative Technology has been generating more publicity over its music-interface patent, when the company took another stab recently at threatening Apple's iPod. Taking the quiet approach, Apple has so far refused comment.
The press is having conniptions trying decipher the "will-they-or-won't-they" innuendos being generated by Creative. They've certainly shown a lot of moxie in openly making such statements.
But will they? My gut tells me no. An important fact that doesn't seem to get reported is that Apple has a patent portfolio that is almost 5 times bigger than the portfolio that Creative Technology has. While many of Apple's patents have nothing to do with digital music players, I would venture to guess that there are plenty of computer/software patents that could be "re-packaged" to nab a few of Creative's products. After only a 30-second search, it appears that Apple has at least 10 patents of their own that deal with music interfaces. Countersuit? You bet.
In the meantime, Creative has launched their new Zen Vision M media player. Parlaying this release with the threat of cutting off Apple with their patent (think "RIM"), and you have a recipe for 5-star publicity that you can't buy on Madison Avenue.
Posted by Two-Seventy-One Patent Blog at 4:09 PM
Thursday, December 08, 2005
BREAKING DOWN USPTO'S ANNUAL REPORT: The USPTO released it's annual report for 2005. As expected, patent filings are up (by 7.2% over 2004), and pendencies for applications are growing longer. Not surprisingly, the longest wait for examining patent applications lies in Tech Center 2400, which deals with computer architecture and software (average pendency = 43.5 months). Following close behind is Tech Center 2600, which deals with communications (42.3 months).
The Patent Prospector blog provides more details here.
Posted by Two-Seventy-One Patent Blog at 1:49 PM
Wednesday, December 07, 2005
FINDING THE MOST PROLIFIC INVENTORS: Kevin Maney, technology writer for USA Today (who also happens to maintain his own blog) decided to write a column interviewing the 10 most prolific inventors alive today.
One problem - no one really knows who they are.
The USPTO apparently has only one individual that tracks such statistics, and the database for it hasn't been updated since 1997 (things have been busy, you see). USPTO and commercial databases aren't set up to do open-ended inventor searches, and multiple-listings for shared last names makes the process next to impossible. You want statistics on companies? No problem. Individual inventors? Good luck.
During the process, Kevin took the "gold standard" for prolific inventors - Thomas Edison - and saw if anyone had bested his rate of innovation (1,093 patents bearing his name).
What he found was shocking.
It turns out that Edison is apparently not the top American inventor of all-time. Instead, that distinction goes to Donald Weder of Highland, Ill., who bears 1,321 patents. Virtually all of his patents deal with - get this - floral arrangements:
Weder, who is still alive and whose family runs floral packaging company Highland Supply, has his name on 1,321 patents. Almost all have to do with items you'd find at a florist. Weder's most recent patent — No. 6,962,021, granted Nov. 8 — is for a sleeve for holding a group of flowers. Before that, on Oct. 11, Weder was issued a patent titled, "Method of covering a flower pot." On Sept. 20, he was issued a patent titled, "Method of covering a flower pot or floral grouping."
(Query: does he intend to pay all the maintenance fees? At 11.5 years, the fee for each patent is currently $3,800. I noticed that the patents are currently assigned to a trust, but that's a lot of money any way you cut it.)
Ultimately, Kevin determined that the most prolific inventor alive today is Shunpei Yamazaki, who works mainly in computer and video screen technology for Semiconductor Energy Laboratory in Tokyo:
Today, a search of the USPTO database turns up 1,432 patents bearing his name, whupping both Edison and Weder. Yamazaki's most recent patent, granted Nov. 22, was titled, "Reflective liquid crystal display panel and device using same." His first patent, for a computer chip design, was granted in 1980. Yamazaki has averaged about a patent a week for 25 years.
I did a quick check on the USPTO site, and it appears that he has gotten two more patents since Kevin wrote his article.
Also, I found that PatentStorm has an inventor search function, but I'm not so sure about the accuracy - a search for Yamazaki only comes up with 912 patents, and a search for Weder only comes up with 5 (which I know is wrong).
Posted by Two-Seventy-One Patent Blog at 5:06 PM
Tuesday, December 06, 2005
"INFRINGED? CALL 1-800-PATENT-L: THE 'L' STANDS FOR LAWSUIT!" In Marshall Texas, it appears that there is a stampede (I couldn't resist) of personal injury (PI) attorneys turning to patent litigation. With tort reform cutting into PI firm revenue, lawyers are now retooling practices to include patent litigation as a main staple (see Alan Cohen's article in IP Law & Business here).
Patent litigation is booming in Marshall, home of the U.S. District Court for the Eastern District of Texas. The Marshall court has a reputation for speedy litigation, judges that welcome patent cases, and (most importantly) plaintiff-friendly juries. The number of patent cases filed in Marshall jumped from 58 in 2003 to 110 in 2004, with another 115 filed this year through September.
Since 1994, patent owners have prevailed in 88 percent of all jury trials and 75 percent of bench trials in Marshall, according to a survey by LegalMetric, a St. Louis company that analyzed the patent cases tried in the courtrooms of the current judges. Nationwide, these figures are 68 percent for jury trials and 47 percent for bench trials.
Even the Texas State Bar is even getting in on the action. Realizing that tort reform has dampened many personal injury practices, the State Bar is turning lawyers to the next-best-thing:
Even if the outside lawyers stay put, referrals may get harder to come by if more tort reform sends more tort lawyers looking for patent work. New legislation passed this year is expected to limit the number of asbestos suits brought in Texas, says Rodriguez of the Texas State Bar. Rodriguez's organization is holding three seminars over the next six months that will focus on helping trial lawyers transition their practices.
Filling up those seats, it appears, isn't going to be a problem. "I'll run into med mal opponents at a cocktail party," says Smith, "and they're all getting into commercial litigation." Introducing Andy Tindel, a fellow personal injury lawyer turned commercial litigator at a seminar recently, Smith put it this way: "Andy is like the rest of us in East Texas -- he specializes in what's left."
Posted by Two-Seventy-One Patent Blog at 1:33 PM
MORE WAVES FROM ACROSS THE BORDER: Wi-LAN PREPARES FOR OFDM OFFENSIVE - While the RIM/NTP battle rages on, another small company from Canada, called Wi-LAN has completed a significant step in its patent enforcement effort by obtaining a settlement from Cisco for patent infringement in a Canadian court.
Wi-LAN was founded in 1992 by two Canadian researchers, and holds a variety of patents related to orthogonal frequency division multiplexing (OFDM), a modulation technique at the heart of the WiFi standards 802.11a and 802.11g, as well as the emergent WiMax standard 802.16 (see US Patents 5,282,222 and 5,555,268). Technology such as W-ODFM is part of the foundation of the Physical Layer of the 802.11a and 802.11g specifications.
One problem with Wi-LAN is that they have previously taken a visible role in the IEEE standards process for wireless data transfer (which includes the 802.11 standard). Under the standards process, the Wi-Fi field does not necessarily establish new principles, but uses techniques that a large group of users must agree upon in order to promote its widespread use. Typically, claimed inventions are combinations of old technologies used in a new way. Thus, any patents that purport to cover standardized technologies have some hoops to clear before they will be viewed as legitimate.
Also, participation in IEEE-based standards requires companies to file assurance letters with the organization in accordance with the bylaws of the IEEE Standards Board. These "letters of assurances" make it clear that an IEEE standard "may include the known use of essential patents and patent applications," and that any enforcement of existing patents will either be waived or provided with "reasonable" royalty rates "demonstrably free of any unfair discrimination." Wi-LAN has previously reneged on this pledge back in 1998, and has been open regarding its intention to enforce its patents.
The interesting thing about Wi-LAN is that they have, so far, limited enforcement of their OFDM patents to Canada. According to Wi-LAN:
By bringing the lawsuit in Canada instead of the U.S., Wi-LAN will be in a country where the cost is lower and the onus is on the defendant . . . If there are any smoking guns -- and we don't expect to see any -- then you get to see it up front and formulate your attack on that basis. Plus, it would set a precedent that could be viewed for future patent suits in the U.S. if needed.
Also, Cisco was specifically targeted by Wi-LAN "to eventually set a precedent that will bring more players to the table." Interesting to see what the next move will be . . .
Posted by Two-Seventy-One Patent Blog at 8:42 AM
Monday, December 05, 2005
USPTO PROVIDES RULING ON ESTOPPEL PROVISION IN NTP REEXAMINATION: In addition to the non-final rejection issued last week, the USPTO also denied a petition by NTP to sever and dismiss the inter-partes reexaminations currently being conducted at the USPTO. The petition filed by NTP submitted that, since RIM had exhausted its appeal rights as to the validity of the claims, they were now estopped from continuing the reexamination at the USPTO.
NTP based its petition on 35 U.S.C. 317(b), which provides:
(b) FINAL DECISION.- Once a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, that the party has not sustained its burden of proving the invalidity of any patent claim in suit or if a final decision in an inter partes reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent, then neither that party nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or inter partes reexamination proceeding, and an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings.
NTP argued that since issues of patent validity were decided at the district court and essentially upheld in the Federal Circuit (twice), the district court's decision should be deemed a "final decision" on claim validity.
The USPTO dismissed the petition on three grounds. First, the USPTO stated that the allowable time period for petitioning the Supreme Court for certiorari does not expire until January 6, 2006 (see page 12 of USPTO decision). As such, the appellate process had not been exhausted.
Second, the USPTO noted that the August 2, 2005 decision of the Federal Circuit vacated and remanded the case for further proceeding. While the original Federal Circuit decision upheld infringement of 6 claims (out of 659 claims), the USPTO stated the "[i]t is entirely possible for the District Court to alter its previous decision concerning the validity of the claims, which are also at issue in the present pending inter partes reexamination proceeding." More interestingly, the USPTO stated:
Even if the only issue on remand is directed to claim interpretation with respect to infringement, petitioner has not demonstrated that a different construction of the claim would not require revisiting of the validity of the reinterpreted claim. Thus, notwithstanding patent owner's arguments that 35 U.S.C. Â§ 317(b) defines "final decision" in the context of decisions on claim validity, it is clear that the action taken on remand in the District Court may reasonably have a potential impact on claim validity. Even crediting patent owner's position that continuing litigation on issues other than claim validity does not necessarily mean that a given court decision on claim validity is not final, petitioner has nevertheless failed to demonstrated that in this case, RIM will be unable to obtain a different outcome (from the initial District Court finding) regarding the interpretation of one or more of the claims of the '592
patent, and that a different interpretation would not necessarily require that the court revisit the issue of the validity of the involved claim or claims.
(See page 12 of USPTO decision).
Finally, the USPTO held that NTP failed to shown that all of the prior art relied upon in the reexamination proceeding "was raised" or "could have" been raised in the District Court litigation. NTP did not show that RIM had a legal right, as to a given patent or printed publication relied on in the reexamination proceeding, to introduce that patent or publication into the litigation after it became "available" to RIM.
According to the examiner, NTP neither alleged nor established that, at the inception of the litigation, RIM knew of the prior art that is of record in the reexamination proceeding that was not of record in the litigation. Alternatively, NTP had not established that RIM learned of this "additional" prior art subsequent to the inception of the litigation and could have raised that art during the litigation but failed to do so. In particular, NTP had not demonstrated that the prior art applied in the outstanding Office action dated September 28, 2005 that was not considered during the litigation was ever introduced into the litigation, or could have been raised therein by RIM.
Posted by Two-Seventy-One Patent Blog at 1:01 PM
Friday, December 02, 2005
RIM/NTP BATTLE HAS STAGE SET AT THE USPTO: As was reported earlier, the USPTO has issued a second non-final rejection for one of NTP's patents (US Patent 6,067,451) asserted in the battle-royale being conducted at the Eastern District of Virginia.
While most non-final rejections are somewhat anti-climactic, this one seems much more significant (you can view the USPTO documents here - simply click on "Reexam - Non-Final Action" dated 11/30/05).
For one, the non-final rejection should have been a final rejection, since the Examiner found NTP's arguments unpersuasive. However, the Examiner cited an additional reference (a document from the Norwegian Telecommunications Administration, submitted by NTP in a 1449), which the Examiner described as "strongly anticipatory." As such, the reference was added to the list and re-issued as a non-final rejection.
More importantly, NTP appears to be tangled in the litigation record before the USPTO. As part of its response to the first office action, NTP submitted a declaration setting forth conception and reduction to practice as part an effort to "swear-behind" one of the cited references. But once the Examiner reviewed the exhibits submitted during litigation, a different picture began to unfold.
After reviewing correspondence from NTP personnel, the Examiner came to the conclusion that the basic inventive concept was not reduced to practice prior to the filing date of the invalidating art. The NTP letters cited by the Examiner strongly suggested that NTP had not established the inventive concept that was being developed in collaboration with AT&T (transmitting email from an email system via RF network to an RF device). Worse still, the Examiner asserted that the deposition transcripts contradicted the patent owner's admissions contained in the declaration that was submitted to the USPTO.
Moreover, after reviewing these letters, the Examiner added an ominous footnote in the office action (page 9):
3. Leaving aside the issue of reduction to practice after the date of the Perkins Patent, the August 31 and November 21 letters raise a question at [sic] whether AT&T (rather than NPT[sic]) conceived and/or reduced to practice all or a substantial part the basic inventive concept of the invention: transmitting email from an (AT&T) email system via an RF network to an RF device (wireless laptop).This is pretty serious stuff. After reading through the office action, I definitely got the impression that the Examiner was not pleased with what he received from NTP. They may have a tough road ahead of them for the remainder of this examination . . .
Posted by Two-Seventy-One Patent Blog at 2:02 PM
Thursday, December 01, 2005
BLOGGING, D-I-Y REEXAMINATION, AND THE ONE-CLICK PATENT - according to this site, an individual by the name of Peter Calveley from New Zealand (who admittedly does not have a legal background) has decided to file a reexamination request on Amazon.com's "one-click" patent and start a blog about it. He is also using the blog to seek donations to fund this effort, since he currently does not have the funds to pay the reexamination fee (the reexamination request states that "a check for $25.20 is enclosed. The balance of the $2,520 fee specified in 37 CFR 1.20(c) will be sent as soon as possible"). So far, $9.50 in donations have been received.
What's kind of funny about it is that, according to the blog, he filed the reexamination request as a form of vengeance for receiving a book late that he ordered from Amazon.com.
He is also requesting that anyone with knowledge of other prior art forward it to his attention.
It would be interesting to point out to him the prior art that Tim O'Reilly obtained during the BountyQuest days (and subsequently paid a $10k bounty on). According to this site, the winning art includes US Patent 4,734,858, which describes the use of a remote data terminal to place orders; US Patent 5,303,393, which describes a simplified way of placing an order via a two-way radio system; and European patent EP680185 (U.S. equivalent 5,819,034), which allegedly describes one-click shopping within the patent specification.
Informal opinions on this art concluded that the references were in the "close-but-no-cigar" category, in terms of invalidating the claims. However, they appear to have potential for at least narrowing some of the claims contained within the patent. As far as I know, the art was never actually asserted against the patent.
Posted by Two-Seventy-One Patent Blog at 8:18 AM
Wednesday, November 30, 2005
ARE LEGAL FINANCING COMPANIES ENCOURAGING TROLLING? One of the reasons that patent litigation has increased dramatically over the last 5 years is that patentees have begun to really appreciate the importance (and power) of their patent portfolios. Companies that formerly viewed patents as supplements to their main product lines have now turned patents into a main financial staple through licensing and enforcement. Holding companies rely exclusively on patents to provide profits for the business.
However, enforcing patents is an expensive process. Previously, smaller entities were not financially capable to take an infringement action to trial. In such cases, patentees turned to a small cadre of lawyers and law firms that developed effective ways to represent patentees on contingency or other alternate billing arrangements.
But contingency cases are huge risks. For every multi-million dollar judgment that makes the headlines, there are at least 10 other cases that either provide marginal returns to the patentee or are complete disasters. Most of the larger firms are very reticent to take on smaller patentees for this exact reason - without some kind of guarantee that billable time will be compensated, the risk of representing a new client on contingency is too great.
Enter legal financing corporations.
Such companies, like Oasis Legal Finance, have begun to bridge the gap between smaller patentees and law firms that wouldn't normally consider taking them as clients. They are part of the growing business of financing commercial lawsuits, such as patent and contract disputes. Under a typical arrangement, if the litigant wins, the financing company gets a return on its loan of 20 to 50 percent, plus sometimes a percent of the final judgment. But since the loan is non- recourse, if the case is lost, the plaintiff doesn't have to pay back the money.
As a side note, the legal finance industry has been criticized as a form of predatory lending, because financing costs are so high. In an effort to raise standards and improve their image, industry players such as Oasis Legal Finance and LawCash organized a trade group earlier this year called the American Legal Finance Association.
To take a case, the potential damages in a case must be substantial -- generally more than $500,000 -- and the defendant must be big enough or have good enough insurance to pay out. Obviously, the facts of the case also must be strong enough for an investment. Under a typical contingency arrangement, the litigant doesn't have to pay the lawyer unless the litigant wins. But expenses like expert witnesses, deposition transcripts and travel often have to come out of a litigant's pocket.
One recent example of such financing is the case of Solomon Technologies, Inc. who brought suit against Toyota Motor Corporation, Toyota Motor Sales U.S.A. Inc. and Toyota Motor Manufacturing North America in the United States District Court for the Middle District of Florida, Tampa Division, on September 12, 2005, claiming infringement of a number of claims in Solomon's patent number 5,067,932, primarily relating to Toyota's use of the technology in its Prius and Highlander Hybrid vehicles.
It is likely that more of these arrangements will be made once patentees, law firms and financing companies become more sophisticated in handling such transactions. In a way, these arrangements will, in effect, validate claims of patent infringement once they are filed, since the case will be vetted by multiple sets of eyes prior to moving forward. A result of this may be that settlements will come more quickly, since larger companies can't necessarily engage in "ground 'n pound" tactics against smaller plaintiffs. And if this becomes routine for a particular company or industry, you can bet that they will become easy targets, especially for "emerging" holding companies.
Posted by Two-Seventy-One Patent Blog at 8:10 AM
Tuesday, November 29, 2005
IS OSDL TRYING TO CREATE A "BOUNTYQUEST-LITE?" Open Source Development Labs (OSDL), a global consortium dedicated to accelerating the adoption of Linux, recently announced the OSDL patent commons project designed to provide a central location where software patents and patent pledges will be housed for the benefit of the open source development community and industry.
While these patent pledges will do little to deter claims of patent infringement on open-source, OSDL is apparently taking a step further by preparing an expansion of the project's scope to include information on the website that might be used to overturn questionable software patents. OSDL is combining forces with the Public Patent Foundation, the Electronic Frontier Foundation 's Patent Busting Project and other groups, to provide easier access to companies seeking invalidating prior art.
Although there are no specific details yet, this is a great idea in principle. By openly publishing prior art (especially the non-patent variety), this action will do exponentially more to deter aggressive patentees than the simple act of sharing patents. Nothing scares a patentee more than the knowledge that invalidating prior art is being distributed among potential defendants.
For those of you that remember, BountyQuest used to be a Web-based service that connected those who seek prior art to invalidate a patent, with those who might be able to find it (the service went kaput around 2002). Typically, "posters" (i.e., people or companies who want to invalidate a patent) posted a bounty on a problematic patent. Posters usually listed the patent number and a description of the art they want to invalidate. "Bounty Hunters" who registered with BountyQuest for free could submit anything in the public domain that they think describes the same technology. The first Hunter to submit prior art that meets the Poster’s criteria wins the bounty.
One of the problems with BountyQuest was that BountyQuest’s stated policy was to award bounties only when a single piece of prior art fulfills the Poster’s requirements. Members of the community objected to this policy, stating that the requirement was not realistic. A single piece of art can invalidate a patent for lack of novelty, but the policy completely ignores questions of obviousness. In fact, it is quite rare when a single piece of art invalidates all of a patent’s claims. Accordingly, Hunters quickly recognized that they would receive no payment for submitting art, even though the art would be of great use to the Poster while not meeting the exact criteria of the posting. Subsequently, the project fizzled out.
It will be interesting to see what kind of system the OSDL will come up with. Having companies like IBM, Novell, Red Hat, Philips Electronics and Sony in your corner could certainly open up a wealth of technical documents that the public could access.
Posted by Two-Seventy-One Patent Blog at 8:12 AM
Monday, November 28, 2005
VoIP E911 DEADLINE QUICKLY APPROACHING: The Federal Communications Commission (FCC) order requiring full VOIP E911 service takes effect at midnight tonight.
To comply with the order, PSTN-connected VoIP providers must be able to connect the 911 calls from their customers to a local emergency operator. This entails an interconnection arrangement with a given market's local exchange carrier in order to connect with the PSAPs, or public safety access points. The VOIP provider must also be able to provide emergency operators with a subscriber's call-back number and location information, in case that caller becomes unable to talk.
In terms of enforcement, the FCC's E911 order prescribes fines of up to $11,000 per day per non-compliant subscriber line.
Most VoIP providers currently offer E911 services, but in some cases, the E911 services are not directly connected to the "traditional" 911 system. While VoIP providers have attempted to hard-wire their connections to 911, many have found complete compliance to be extremely difficult within the original four-month timeframe allotted by the FCC.
It will be interesting to see how this will mesh with the 20-or-so issued patents on VoIP E911 protocols, and some 50+ patent applications which I'm sure are causing headaches for VoIP telecom providers. It's bad enough to implement new features in a particular technology under normal conditions; I can't imagine the scrambling that is undoubtedly taking place to implement these features under the relatively short timelines provided by the government (the U.S. Court of Appeals for the D.C. Circuit this week denied an emergency motion for a partial stay of the FCC´s E911 order requiring Voice over IP service providers to provide E911).
Posted by Two-Seventy-One Patent Blog at 3:15 PM
SUPREME COURT PATENT CASES BEGIN TO HEAT UP: In a surprising move, the Supreme Court announced that it will grant EBay's petition for certiorari and review whether the U.S. Court of Appeals for the Federal Circuit erred in setting forth a general rule in patent cases that a district court must, absent exceptional circumstances, issue a permanent injunction after a finding of infringement. In effect, eBay is asking the court to say that injunctive relief in successful patent infringement cases will be decided on a case-by-case basis, and not by default (which has been the law since 1908).
While this is a significant development, EBay has apparently engaged in triage and abandoned its claim that they did not willfully infringe. According to MercExchange, if the Court decides against the automatic granting of a permanent injunction, this will mean that the court will agree to supervise all future payments for infringement throughout the life of the patent, which runs to 2015.
Also, a lot of buzz is being generated over Illinois Tool Works v. Independent Ink, which is scheduled for oral argument on Tuesday. The court will determine whether Illinois Tool Works violated antitrust laws under the Sherman Act by forcing consumers of its patented ink jet printer to buy a specific type of printer ink for use with its printer (a practice known as "tying").
According to Shaheen Pasha from CNN, for consumers the case boils down to a central question: If you buy a company's patented printer, should you also have to buy that company's ink ... even if there is a compatible and cheaper ink available from a small aftermarket supplier? And if you have to do it for printer ink, do you also have to do it for other supplies tied to a bigger product?
For major patent holders (and their investors), there is an equally straightforward counter-question: Shouldn't a company that has invested time and money into developing a patented printer have the right to protect the quality of its technology – as well as its profits – by requiring a user to only buy its brand of ink?
This promises to be an action-packed year for the Supreme Court, which is on pace to hear the largest number of patent cases in a single year . . .
Posted by Two-Seventy-One Patent Blog at 2:55 PM
TIME TO RETHINK SOFTWARE APPARATUS/SYSTEM CLAIMS? In the wake of IPXL Holdings, LLC v. Amazon.com, where the Federal Circuit held that mixing method and system claims results in invalidity, the USPTO Board of Patent Appeals and Interferences (BPAI) followed suit by recently releasing a similar (but non-precedential) decision in Ex Parte Moore.
The case revolved around a patent application filed by Xerox dealing with backlash reduction in printers by stopping a substrate (i.e., paper) short of a printing position, then slowly advancing the drive system to move the substrate to the printing position. A stepper motor drives a driven roller via a gear train, and stops the substrate a predetermined number of steps shy of the printing position. The stepper motor is then advanced by the predetermined number of steps, taking up backlash and moving the substrate to the printing position. A controller (i.e., processor) coupled to sensors assists in moving the motor.
The problematic claim was claim 24, which recited:
24. A backlash reduction apparatus comprising:
a drive motor operable in increments;
a drive train driven by the drive motor;
at least one substrate transport mechanism connected to the drive train and driven by the drive motor therethrough;
a controller . . . the backlash reduction apparatus executing a method comprising: advancing a substrate to a point short of a final intended position; and finally advancing the substrate to the final intended position, thereby taking up backlash in a substrate transport system.
The BPAI rejected the claim under 35 U.S.C. 112, second paragraph as indefinite for failing to specify whether an apparatus or method was being claimed. Also, the claim was rejected under 35 U.S.C. 101 for encompassing two statutory categories (apparatus and method).
Again, the problem here is not so much with the decision, as it is with the implications such rejections have for software patents. Obviously, the applicants will amend the claims to remove the words "executing a method comprising," and to massage the rest of the language to comport with the structural recitations in the claim (see, e.g. claim 9 in the application).
As was pointed out previously on this blog, it appears that a door has been cracked open to challenge software patents on this principle. Just about every apparatus or system that relies on processors and software for novelty will inherently mix method steps within a recited apparatus or system structure. And while this case and IPXL Holdings appear to be more clear-cut instances of incorrect claim format, there doesn't seem to be a "bright line" where functional claiming (which is allowed) can be transformed into a "method" claim that could render a claim invalid. In a business where we must explain how conduct should be adjusted to comply with the rules of patent law, things are beginning to move in a manner where at some point (especially in claim construction), it will become increasingly difficult to tell exactly where the line is at any given time.
Posted by Two-Seventy-One Patent Blog at 8:36 AM
Wednesday, November 23, 2005
USPTO REPORTS RECORD AMOUNT OF PATENT APPLICATIONS RECEIVED IN FY '05: In 2005, the USPTO received the most patent and trademark applications it has every received in one year, according to the agency’s Performance and Accountability Report released last week.
Last year the agency received 406,302 patent applications and 323,501 applications for trademark registration, according to the 156-page report.
The USPTO granted 165,485 patents, including 151,079 utility (inventions), 13,395 design, and 816 plant patents. Since 1790, more than seven million U.S. patents have been granted.
U.S. resident inventors received 85,238 U.S. patents in FY 2005.
California resident inventors received the highest share (23 percent, 19,928 patents), followed by New York (7 percent, 5,631 patents), Texas (7 percent, 5,660 patents), Michigan (5 percent, 3,907 patents), and Massachusetts (4 percent, 3,443 patents).
Posted by Two-Seventy-One Patent Blog at 8:21 AM