MICROSOFT PUTS THE PRESS ON OUTSIDE LITIGATION COUNSEL: Microsoft is in the middle of a global review of its law firms as it attempts to control spiralling legal costs caused mainly by its endless antitrust and patent litigation.

It's being reported that the world's largest software house has frozen hourly rates until the selection process is completed. Those firms chosen so far have had to conform to a whole new set of terms and conditions, which include demonstrating a commitment to diversity.

Moreover, with Microsoft's antitrust battles against the European Commission showing no sign of settling any time soon, the focus has also extended to Europe.

Money Quote: Microsoft's European general counsel Horacio Gutierrez declined to comment on the review "because it makes law firms nervous".

THIS IS GETTING TO BE COMICAL - THE EU COMMISSION REFUSES TO REWRITE PTENT DIRECTIVE: In another twist in the "will they or won't they" saga to computer-implemented inventions, the EU Commission has recently indicated that it will likely refuse to rewrite the Computer Implemented Inventions Directive that has been kicking around the EU for the last year. Predictably, the anti-software crowd is furious.

An EC spokesman confirmed on Monday that the Commission had declined requests from the European Parliament to go back to basics on the CIID, which opponents claim will allow the widespread patenting of software in Europe.

"We expect the European Council to formalize the common position. The Commission stands ready to review all aspects of the directive," said the EC spokesman, adding that this meant that changes could yet be made to the directive when it reaches the European Parliament.

Florian Mueller, who runs an anti-patent Web site (you have to read it to believe it), condemned the EC's decision, accusing those responsible of "negating democracy".

The CIID has sparked many months of argument, debate and confusion within Europe. It has yet to be formally adopted by the European Council, but if this does happen the directive will return to the Parliament. The EC spokesman said he understood that the Council is planning to put the CIID on the agenda of the 7 March meeting.

NOTABLE INVENTORS PASSING ON: Jef Raskin, a computer interface expert who conceived Apple Computer Inc.'s groundbreaking Macintosh computer but left the company before it came to market, has died. He was 61.

Raskin died Saturday night at his home in Pacifica, Calif., his family said in a statement. In December, he told friends he had been diagnosed with pancreatic cancer.

Raskin joined Apple in 1978 -- as its 31st employee -- to start the young company's publications department. At the time, computers were primarily text-based and users had to remember a series of arcane commands to perform the simplest tasks.

In 1979, Raskin had a different idea: A computer that's priced affordably, targeted at consumers and extremely easy to use. A small team, under his command, was put together at Apple to pursue his concept that would eventually become the Macintosh.

Also, Robert Kearns, the inventor of intermittent windshield wipers who won multimillion-dollar judgments against Ford and Chrysler for using his idea, has died. He was 77.

Kearns died of cancer Feb. 9 at his home in suburban Baltimore, his family said. Kearns, a onetime Wayne State University professor, received numerous patents in 1967 for his design for wipers that paused between swipes, making them useful in very light rain or mist. The invention allows the driver to set the interval at which the wiper sweeps the window.

Kearns sued Ford Motor Co. in 1978 and Chrysler in 1982, claiming patent infringement.

In 1990, a jury decided that Ford infringed on Kearns' patent, though it concluded the infringement was not deliberate. Ford had contended the patent was invalid because the windshield system contained no new concepts. But Kearns argued a new combination of parts made his invention unique.

That jury failed to reach agreement on how much he should be awarded, and another jury later ordered Ford to pay Kearns $6.3 million, trimmed by a judge to $5.2 million. To settle the case, the car giant later agreed to pay $10.2 million and to drop all appeals.

Chrysler ended up being ordered to pay Kearns $18.7 million plus interest. The Supreme Court rejected Chrysler's bid to overturn the award in 1995.

CHINA ENCOURAGES PATENTING FOR IT COMPANIES: As of this year, intellectual property rights (IPRs) will be a recognized criterion for evaluating technological achievements of companies, the Ministry of Information Industry has announced.

The move aims to stimulate domestic IT firms to develop more independently created technologies under IPR protection, according to the ministry's Electronic IPR Service Center.

With the progress of economic globalization, domestic companies, especially IT firms, are facing tough competition from their foreign counterparts, China Intellectual Property Rights News quoted the center's official Zhang Heteng as saying.

In order to deepen IPR awareness among domestic companies, the ministry set up the IPR threshold and list it as the first benchmark. Companies which fail to pass this threshold will be excluded from further technological evaluation.

Starting this year, companies must obtain patent or copyright registration before they take part in technological evaluation.

CHINESE COMPANIES WADE INTO THE WORLD OF 專利訴訟 (PATENT LAWSUITS): China's new electronics companies, lured by riches in foreign markets, are feeling the bite of well-honed patent protection systems that have become effective weapons of business war for their competitors.

Such lawsuits filed in the United States would have been considered little more than a nuisance by Chinese firms just two years ago, carrying little or no clout in China.

Multinationals are reluctant to file patent lawsuits in China, where intellectual property (IP) laws are new and the courts lack experience handling such cases.

But with China's exports of machinery and high-tech goods reaching $490 billion last year, up 45 percent from 2003, the threat of being shut out of lucrative western markets has become a potent deterrent against IP theft by Chinese companies, experts say.

Attorneys said the number of IP lawsuits in the United States is relatively small, in the dozens each year.

But they added the number has been growing as companies try to nip new competition from China in the bud and avoid losing market share the way they did to aggressive competitors from Japan and later South Korea starting in the 1970s.

Also, a growing number of Chinese firms are also finding they can use the system to their advantage in a range of disputes with their overseas business partners.

Two Chinese companies sued a consortium of DVD patent holders, including Philips, Sony, Pioneer and LG Electronics, alleging cartel-like behavior.

China's top TV maker, Sichuan Changhong Electric Appliances, sued U.S. distributor Apex Digital in California in December to recover an alleged $484 million in unpaid bills.

LOYOLA (LA) FEATURES SYMPOSIUM ON OUTSOURCING PATENT WORK: the event is titled "Cost Effective Patents: Is Outsourcing the Answer?" and will take place at Loyola Law School - Los Angeles on March 4 from 8:30 a.m.-2:00 p.m. The program is the first in a series of Special Intellectual Property Focus Events that will be taking place in the near future (Link).

A NEW PATENT PORTFOLIO STRATEGY - INVEST IN PATENTEES SUING YOUR COMPETITORS: AMD has decided to invest in a small chip technology development company, called Patriot Scientific, that's suing Intel for alleged patent infringement.

Patriot Scientific this week confirmed that AMD has bought an undisclosed number of the company's restricted shares and licensed not only its ShBoom processor patent portfolio but also its Ignite 32-bit processor design.

In January 2004, Patriot sued Sony, Fujitsu, Toshiba, Matsushita and NEC for alleged infringement of patent number 5,809,336, which it owns. The company sued them because they had shipped product containing Intel processors that it also claimed violated its intellectual property rights. If the move was intended to force Intel to license the patent, it failed - Intel countersued, and was itself sued by Patriot in February 2004. Patriot is seeking monetary damages to the tune of "several million dollars" for the alleged infringement.

Since then, Patriot has notified 150 other companies that it believes their products infringe its patent, though as yet it has not initiated legal proceedings against them, undoubtedly while it awaits the outcome of its action against Intel.

AMD's interest in the Ignite technology is also interesting because Ignite is a Risc-like 32-bit processor core with a strong SIMD component. According to Patriot, multiple Ignites can work together within the company's InFlame architecture to create a multi-SIMD processor. It just so happens that this configuration shares similarities with the architecture Sony and IBM have been discussing as of late to power the PlayStation 3.

NOT FRIDAY YET, BUT CLOSE ENOUGH: In one of the more "interesting" stories, a Westchester County paralegal just pleaded guilty for running an identity theft scam, stealing over $1 million from two companies. The rub here is that she used a patent law firm as a front for stealing all the money.

While working as a paralegal for a large corporation on Long Island, the thief submitted seven fraudulent invoices totaling over $595,000 for legal work that had never been provided. The company issued checks for the counterfeit invoices to a "well known patent law firm" that had done work for the company before. Instead of mailing the checks, Nicholson insisted the checks be given to her for disbursement. Then, posing as an attorney, she secured a business certificate using a name nearly identical to the patent law firm’s, opened a bank account and deposited the checks into that account.

D'OH! SOFTWARE IS PATENTABLE IN INDIA, AND NOBODY NOTICED: The latest patent ordinance in India has already raised strong protests from the people for allegedly favoring global pharmaceutical corporations. What has gone relatively unnoticed is the fact that computer programs (read software) can now be patented. The new ordinance has supposedly been brought in to make the Indian Patent Act TRIPS compliant.

Kapil Sibal, the minister for science and technology, is reported to have said that patenting of software is due to the demand of the Indian software industry whom it will help.

The Indian Patent Act, as modified in 2002 had made non-patentable the following:

• a mathematical method or a business method or a computer prgramme per se or algorithms.
  

The recent amendment states instead:

• a computer programme per se other than its technical application to industry or a combination with hardware; a mathematical method or a business method or algorithms.

Are anti-software loonies going bannanas over this development? Natch! Just check out this article on TheAge.com (see BugMeNot to bypass registration). The sky is falling!

J'ACCUSE! RAMBUS ACCUSED OF DESTROYING EVIDENCE IN DRAM RE-TRIAL: John Desmarais, who represents German chipmaker Infineon Technologies AG in a retrial of a patent infringement case initiated by Rambus before U.S. District Court Judge Robert Payne in Richmond, Virginia, claimed that Rambus Inc. destroyed documents knowing that competitors would need them to defend against the company's patent infringement lawsuits. Desmarais presented video-taped witness testimony that he said supports Infineon's defense.

Earlier this month the judge said he would rule on Infineon's motion to dismiss Rambus's lawsuit only after he heard testimony from witnesses about Infineon's "serious charges'' that Rambus purposely destroyed documents and then made misrepresentations in court to ensure that chip companies couldn't challenge its patents.

In today's hearing, the first phase of the retrial, Desmarais showed what he said was conflicting testimony from Rambus executives. In court documents he has said the contradictions show how Rambus attempted to build a false record to thwart the defense of companies that it sued for patent infringement.

CANTOR'S BOND-TRADING PATENT RULED INVALID: (Bloomberg.com) Cantor Fitzgerald LP's patent for electronic bond trading, the subject of an infringement lawsuit with ICAP Plc, isn't valid, a jury ruled.

The federal court jury in Wilmington, Delaware, made the decision after 15 hours of deliberations following a two-week trial, saying that Cantor failed to provide adequate written description of the technology.

Cantor and its ESpeed Inc. electronic-trading unit sued ICAP units Garban LLC and BrokerTec USA units in 2003, contending they infringed a patent awarded to Cantor that same year. ICAP and Cantor are the biggest players in the $3.9 trillion market for government bonds. Cantor, headed by Howard Lutnick, 43, has been losing business to Britain's ICAP, headed by 49-year-old Michael Spencer, who claims a 61 percent share.

The jury also decided that Garban infringed the patent that was ruled invalid. U.S. District Judge Kent A. Jordan ruled before the trial that BrokerTec didn't infringe the patent, and that Cantor couldn't seek damages in the case.

ATOM FEED PROBLEMS: I've been informed that the blog is not being updated in the Atom Feed. I'll be looking to fix this problem, and will hopefully be up and running in this regard before the end of the week. Many thanks to those that brought this to my attention.

SOFTWARE PATENTS GETTING MORE PRESS: I've been noticing that over the last two years, many magazines and newspapers have been digging deeper into software patents and their impact on the marketplace. Take, for instance, this article where Real Software, the maker of the Realbasic application development tool, has raised concerns over Microsoft's IsNot operator patent application. The gist of the article is that Real Software is saying that no one should be able to patent fundamental programming operations.

Now, there is nothing inherently earth-shattering about the article (yet another company decrying a competitor's software patenting strategy, right?). Certainly Slashdot is full of programmers that have been howling for time immemorial about the "evil" intentions of companies trying to obtain software patents. But then, why would the news services reprint the article in so many publications? This is only a patent application after all, and not some issued patent that Microsoft is trying to enforce.

My theory is that the attitude towards software patents is becoming more tempered in the mainstream press, and this will have a tendency to affect the overall outlook by government officials and practitioners with respect to software patents. Most practitioners have known about the effects of software patents for a long time (see Paul Vick's blog entry on the Microsoft patent), and have essentially treated them as a necessary evil. However, I think that we may be turning a corner, where the voices of the naysayers are getting elevated over that of the software patent proponents. For those that are following the FTC patent reform efforts, there certainly seems to be a push to tame the lottery-type mentality that is so pervasive among holding companies. Now, I'm not saying that software patents are in jeopardy of falling outside the scope of 35 USC 101 again, but I would be very surprised if there aren't some significant reforms that will take place over the next year.

RUSSIA TAKING MOVES TO BOLSTER IP AND PATENTS: The Russian Federal Service for Intellectual Property, Patents and Trademarks (Rospatent) oversees the protection of intellectual property rights in the Russian Federation. Rospatent issues patents and certificates of recognition, and is a state executive body under the jurisdiction of the Ministry of Education and Science.

It takes up to five to six months to register a patent in Russia. Rospatent officials believe this is a decent indicator by global standards, considering the current level of economic activity in the country. However, if we take into account the fact that Russian economy is growing rapidly and the number of applications for patents might increase by 250-350%, the existing resources are naturally insufficient. Accordingly, Rospatent is currently working on the introduction of new information technologies. At present, work is underway to establish an electronic system for patent applications. In the future, new IT-technologies will be used in the entire technological process.

Furthermore, intellectual property legislation has been overhauled in the last few years. The most important developments were the introduction of amendments and addenda to the law On Copyright andNeighboring Rights, and the Patent Law, and the adoption of the Law on Commercial Secrets. In general, Russian legislation in the intellectual property sphere corresponds to international standards. At present, Russia has joined 14 out of 24 international treaties related to this issue. Moreover, the Russian Criminal Code contains two articles specifically dedicated to this problem: Article 146, Violation of Copyright, and Article 147, Violation of Patent Rights. It is the Interior Ministry's responsibility to ensure compliance with these articles.

(YET) ANOTHER WARNING ABOUT US TECH INNOVATION: The Task Force on the Future of American Innovation, created by leading US companies and scientific and business associations, sounded an alarm with a report indicating that the United States was gradually slipping as the world leader in scientific and technological research.

The signs of trouble outlined in the report range from a slowdown in the growth of technical research to stagnant government funding for fundamental sciences.

As the US share in global high-tech exports was dropping, China, South Korea and other emerging Asian economies boosted theirs from seven percent in 1980 to 25 percent in 2001, according to the study.

While technological article output over that 14-year period increased 13 percent in the United States, in Western Europe it went up by 59 percent, in Japan by 67 percent, while countries such as China, Singapore, Taiwan and South Korea it jumped a whopping 492 percent.

However, US patent applications from China, India, Singapore, South Korea and Taiwan grew by 759 percent over the 1990s while similar applications in the United States increased only by 116 percent, the report said.

I don't really buy into these types of stories, as they have been legion since the 1970's (remember when the press was predicting that Japan would own most US businesses in the 1980's?). Also, some of the premises - such as government funding for research - is a red herring. Just because you're blowing large wads of cash on research doesn't mean that you are being productive or efficient. Many of the technological imports from overseas happen because of the cheap cost of manufacturing and labor. Finally, while the report cites percentages as a basis for their comparison, this ignores the actual output of a particular country o business.

For example, if my company filed 20 patents in 1995, and I filed 100 patents in 2004, this would reflect a 500% increase in my patent filings. This is certainly a great improvement, but you would be hard-pressed to argue that I am now poised to overtake IBM.

PATENT POOLING FOR NONPROFIT FUNDRAISING? (eWeek) Shabbir Safdar, CTO of Mindshare Interactive Campaigns, a Washington firm that runs many nonprofit and political fundraising efforts, has created a cross-licensing patent pool for nonprofits who do the kind of work he does.

Safdar's worried that nonprofits—whose resources are spent on fundraising—will not be able to protect themselves if they're accused of violating patents. There haven't been any suits yet, but Safdar worries that the fight over the patents used to register and protect the various processes involved in online fundraising—currently the focus of most online political activity—isn't far away.

So Safdar's created the Nonprofit Innovation Alliance. The group, which includes Beaconfire Consulting, CharityWeb, Convio, GetActive, Mindshare Interactive Campaigns, Itero, Public Interest Data Inc. and RightClick, hopes its no-cost cross-licensing agreements among patent holders will cut out the lawyers. The group is hoping to expand.

"No one may be refused," Safdar joked of the organization's motto. "Our goal is to make the nonprofit marketplace a business method patent-free zone,'' he said.

Unfortunately, Kintera, possibly the best-known nonprofit software company, isn't really interested in participating. Or if it is, its CEO, Harry Gruber, has a funny way of showing it. "I think it's naïve,'' he said.

Claiming that none of the Innovation Alliance members have patents to share with his company, Gruber said it makes little sense for Kintera to enter into any sharing agreements with them. "It's like saying, 'Let's go play marbles. You have marbles, I don't.'"

PATENT POOLING FOR NONPROFIT FUNDRAISING? (eWeek) Shabbir Safdar, CTO of Mindshare Interactive Campaigns, a Washington firm that runs many nonprofit and political fundraising efforts, has created a cross-licensing patent pool for nonprofits who do the kind of work he does.

Safdar's worried that nonprofits—whose resources are spent on fundraising—will not be able to protect themselves if they're accused of violating patents. There haven't been any suits yet, but Safdar worries that the fight over the patents used to register and protect the various processes involved in online fundraising—currently the focus of most online political activity—isn't far away.

So Safdar's created the Nonprofit Innovation Alliance. The group, which includes Beaconfire Consulting, CharityWeb, Convio, GetActive, Mindshare Interactive Campaigns, Itero, Public Interest Data Inc. and RightClick, hopes its no-cost cross-licensing agreements among patent holders will cut out the lawyers. The group is hoping to expand.

"No one may be refused," Safdar joked of the organization's motto. "Our goal is to make the nonprofit marketplace a business method patent-free zone,'' he said.

Unfortunately, Kintera, possibly the best-known nonprofit software company, isn't really interested in participating. Or if it is, its CEO, Harry Gruber, has a funny way of showing it. "I think it's naïve,'' he said.

Claiming that none of the Innovation Alliance members have patents to share with his company, Gruber said it makes little sense for Kintera to enter into any sharing agreements with them. "It's like saying, 'Let's go play marbles. You have marbles, I don't.'"

P & G's NEW LICENSING STRATEGY - COME ONE, COME ALL: A new corporate trend seems to be emerging in the land of IP licensing. IP Law & Business reports that Procter & Gamble, which was previously known as being extremely selective is granting licenses, has taken a more "open" approach to their IP, and it seems to be taking off.

Described as "open innovation," P&G's strategy is now taking hold at a number of leading companies. Few people thought of P&G as open in late 1996, when the company was forming a small intellectual asset management group. "At that time, we were totally focused on outlicensing stuff that P&G wasn't interested in," says Jeffrey Weedman, vice president for external business development and global licensing. "It's morphed an awful lot since then, thank goodness."

Weedman's first lesson in licensing: Most companies weren't interested in assets that P&G itself didn't want. On the other hand, there was plenty of interest in the rest of the patents in the portfolio. Weedman's group devised new rules: All patents at P&G can be licensed out either five years after they were awarded or three years after they were first used in a P&G product, whichever came first. Licensing royalties flow back to the business unit where the patent originated, instead of being claimed at the corporate level. Next, Weedman's group added in-licensing responsibilities, working with business units, R&D, and other organizations to find what they needed and to structure the deals to secure it. As of 2001, the business development group was on its way to being what Weedman says it is today: a "preferred portal" for anyone looking to work with P&G to create value.

P&G's competitors traditionally didn't bother developing new products to compete with P&G's. Instead, they now know that in three years--when P&G makes its patents available--they can piggyback on the company's technology. At the same time, P&G has three years to sell its new products without much competition.

HP TO OPEN-SOURCE: GET OVER IT - (ZDNet.com) Open source programmers might not like the idea of software patents, but those critics would be better off adapting to the fact that they're not going away, HP's top Linux executive said on Tuesday.

"At the end of the day, software patents are a way of life. To ignore them is a little bit naïve," Martin Fink, HP's vice-president of Linux, said in Boston at the LinuxWorld Conference and Expo. It's fine to object to software patents, but it's foolhardy not to try to acquire them, he said.
"Refusing to patent one's ideas is leaving oneself exposed for absolutely no good reason," Fink said. "For some, (getting patents) may seem like selling out. You can comfort yourself that it's what you do with the patent that matters, not the fact that you have one."

Intellectual-property issues are attracting more attention because of open source software, which by definition may be shared, changed and redistributed. Those freedoms stand in stark contrast to the secrecy and distribution constraints of traditional proprietary software.

STOCK-BUYING TIPS - FOLLOW THE LITIGATION: The gurus have started to give greater emphasis to "Litigation Profits," which bolster stock prices for companies that have little market penetration, but also happen to have strong litigation positions with respect to their competitors. Rambus has been getting lots of press in this regard, and has been labeled a "top guru buy" in Forbes:

Los Altos, Calif.-based chip design firm Rambus was another guru buy involved in litigation. In May 2004, the company sued competitors Infineon Technologies, Micron Technology and Siemens, among others, for price fixing. On Monday, Rambus won a preliminary battle, with the courts setting the venue for the trial as San Francisco, where Rambus had wanted it.

The litigation-happy company is also suing competitor Hynix for patent infringement, and Rambus has already received a handful of summary judgment victories in that suit. Nevertheless, Rambus is off 23% in 2005 to $18.71. Last week, the stock was, the top guru buy by a significant margin. The M100 are not fazed by the price-to-earnings ratio of nearly 61 and price-to-book ratio of more than six. Gurus like the momentum building in the court decisions favoring Rambus.

Phillips v. AWH Oral Arguments MP3 - Dennis Crouch, in classic form, has posted the oral arguments in downloadable and streaming MP3 format on his Patently Obvious blog. Haven't listened to the whole argument yet, but I will do it the next time I have a free moment.

ARIBA SETTLES WITH ePLUS: (From eWeek) software developer ePlus Inc., of Herndon, Va., on Monday announced that it has been awarded a $37 million settlement in a patent infringement suit against rival Ariba Inc.

The settlement, awarded by a Federal Court jury in Alexandria, Va., also awards ePlus the rights to cross-license Ariba's software patents—including pending patents—for the next three years.

The court determined Ariba "willfully infringed" three ePlus software patents relating to electronic procurement technology, according to a statement released by ePlus.

Ariba officials were not available for comment.

The technology in question, seemingly ubiquitous throughout any electronic procurement software, lets users perform a number of essential e-procurement functions including: electronic searches, selections and comparisons; viewing items in multiple supplier catalogs; finding equivalent items and replacements; generating purchase orders from multiple vendors; and electronically checking inventory.

Ariba, of Sunnyvale, Calif., is ordered to pay the $37 million in three installments, the balance of which is due by March 31, 2005. The deal does allow Ariba to continue selling its procurement software, enabled by the patented technology, under a license arrangement with ePlus. However, any late payments by Ariba would result in a revocation of the license agreement, according to ePlus.

ePlus initially filed a patent infringement suit against Ariba in spring 2004.
Ironically, Ariba's one-time archrival in the electronic procurement sector, Commerce One Inc., also had a recent patent skirmish of sorts. On Dec. 8, 2004, the company held a controversial fire sale in San Francisco where it auctioned off 39 Web services patents for $15.5 million.

The patents, acquired by JRG Acquisition Inc., were a hot-ticket item not only because of the XML Web services technology they encompassed, but because of what the new owners could potentially do with the patent rights. The fear of some major companies using Web services is that a new owner could essentially go door-to-door to "shake down" any companies that operate in Web services, demanding some sort of payment in lieu of a patent infringement suit

WANTED: PATENT ENGINEERS - NO PATENT EXPERIENCE NECESSARY: Microsoft is recruiting patent engineers - but actual knowledge of patent law is not considered an obstacle to being hired, according to the job ad.

Last year, Redmond began outsourcing the task of researching and analysing patents to a firm called Intellevate, and the team is based in New Delhi, India. The applicant must be a computer science or electrical engineering PhD, and will be involved in prior art searches, patentability research, "file wrapper analysis", "claim scope mapping" and technical analysis.

But "patent experience" itself "is helpful but not mandatory," for potential recruits. To emphasize the point, the ad stresses that "although advance knowledge of patent law is helpful, it is not required".

Andrew Orlowski of The Register takes Microsoft to task for some of their patenting attempts (and successes), including

• a patent for tabbing through a web page ;
• a patent for online bill payment (which includes the innovation "'the consumer is in direct control of the amount to be paid and the payment date") ;
• a patent for fine-grained IM presence ("... a participant might not want someone else to know whether or not the individual is logged in or out to lunch. Thus, one might want to prohibit other individuals from viewing such presence information");
• a patent (issued to Expedia) for matching a quote with an offer, which asserted that "an effective electronic exchange system for satisfying an offer by a purchaser with a quote from a supplier has eluded those skilled in the art";
• applications for patenting the "y-axis", the "IS NOT" operator in Basic, interactive test feedback, and reading ahead 20 records at a time in a database, when the user clicks the Previous or Next buttons, as well as an application for patenting a latitude/longitude co-ordinate stored as a base-30 number.

To be fair, this is not so much a problem with Microsoft, as it is with the USPTO and some of the shoddy examinations being conducted by the examiners. Spotting bad patents has almost become a sport in this business, and it's high-time the USPTO start acting seriously about patent quality. Then again, I'm sure the readers of Greg Aharonian's newsletter have known about this for a looooooooong time . . .

...AND FROM THE ASHES ROSE IMMERSION: In the "one for the little guys" column is the great story of Immersion Corp. from San Jose which patented technologies in haptics, which combines software and motors to add a tactile interface to the digital world. Its surgical-training machines reproduce the sensation of inserting a catheter into a vein. BMW uses Immersion's haptics to help drivers fiddle with dozens of functions of their iDrive dash-board knob. Last month Samsung showed off Immersion-enabled mobiles that iden-tify callers by different vibrations and add customized pulsations to games and ring tones.

Founded in 1993 by a group of Stanford and MIT engineers, Immersion financed its early days partly by developing technology the Navy used to feel around the ocean floor for lost submarines. Dreams for haptics as a component in every PC never panned out.

But "vibrotactile" features were becoming common in PCgaming, and Immersion's lock on the technology earned it increasing license revenue on steering wheels and joysticks from the likes of Logitech, Microsoft and MadCatz. In late 2000 gamers started shifting their allegiance to the powerful PlayStation system from Sony, which promoted its vibrating "Dual Shock" controller prominently on the box. Immersion began calling Sony to negotiate a licensing deal. Sony repeatedly declined. Microsoft, openly planning its Xbox for release in late 2001, told Immersion it would not pay unless Sony started paying.

On Feb. 11, 2002 Immersion filed suit against both companies, a move meant to draw attention. That it did: Immersion's stock got savaged, falling 50% in a week, from $4.50 to $2.30. Then litigation began to drag on. Microsoft, which had a decent prior relationship with Immersion, settled in July 2003.

Sony chose to keep fighting. The case went to trial in August in the federal district court in Oakland. However, the jury came back with a verdict on Sept. 21, agreeing that Sony's controllers infringed two Immersion patents, one applied for in 1995 though not issued until 2001. The jury awarded Immersion $82 million in lost licensing revenue, and the judge later ordered Sony to pay Immersion 1.4% of ongoing revenue from its PlayStation 2 system and offending games, a rate that would double Immersion's revenue.

Read the whole story on Fobes.com

BICYCLES AND PATENTS - ALL YOU EVER WANTED TO KNOW: In this interesting article, Bob Mionske chronicles the business and legal history of bicycles through the early 20th century.

Starting in 1879, the infant bicycle industry was almost destroyed by a decade of protracted patent litigation. Col. Albert Pope, the great bicycle magnate, was the driving force behind most of these legal skirmishes. Many observers believed that the colonel's ultimate aim was to monopolize the bicycle industry. Pope and his lieutenants loudly dissented, arguing that their actions brought stability and prosperity to what otherwise would have been commercial anarchy. While he did rationalize much of the technology that went into the bicycle, there is no doubt that Pope's core intent was self-interest and his actions frequently stretched ethical and legal boundaries, even by the no-holds-barred business standards of the gilded age. Pope's men came very close to gaining a perpetual monopoly over the American bicycle industry, and were defeated only by the United States Supreme Court and a handful of adversaries who vowed to fight him to the finish.

GOLIATH VS. DAVID: (from GameShout) In a twist on the classic David-and-Goliath formula, Web giant Yahoo! is suing Menlo Park, CA, start-up Xfire for patent infringement. The basis of the complaint, filed last week in US District Court (Northern District of California) and served to Xfire representatives just two days ago, alleges that Xfire is willfully infringing on a patent controlled by Yahoo! Inc.

US Patent No. 6,699,125 was granted to two then-Yahoo! employees Brian Gottlieb and Chris Kirmse on March 2, 2004. As is typical, ownership of inventions by employees remains with the corporation the employees work for. Such ownership rights are usually sealed in hiring contracts signed by the employee when he or she is first brought on.

In the case of the '125 patent, Gottlieb and Kirmse were employed by Yahoo! when they developed certain technologies for a game-specific variation on Yahoo!'s popular Yahoo! Messenger. Yahoo! has been the sole assignee--or owner--of the '125 patent since it was granted.

The complaint describes the Yahoo! Messenger instant message service--in this case, the GameProwler instant messenger application--as one that "allows users to use a game server in connection with a messenger server to permit 'buddies' to know when other 'buddies' are playing games online, and easily join such games."

Xfire offers a client application that allows gamers to chat with other gamers online. It also serves to help quickly facilitate gameplay on remote servers.

WHEN IN DOUBT, GO AFTER THE RETAILER: Athletic shoe maker Reebok claims in a federal lawsuit that retail giant Wal-Mart sold a line of basketball shoes that violated Reebok's patent for a three-layer cushioned sole.

Reebok asked that Wal-Mart stop selling its Starter Oxide shoes and notify customers who bought them that they are unauthorized copies of Reebok's DMX Reflex shoe, and should be returned. Reebok's lawsuit, filed in U.S. District Court in Boston in December, also seeks unspecified damages and legal costs.

Wal-Mart denies the allegations. Spokeswoman Mary Heires said the company sold out of the Oxide shoes and no longer carries them. It does carry other basketball shoes under the Starter label.

Heires said Nike Inc. bought the rights to the bankrupt Starter brand last year, and indemnified Wal-Mart against any damages in the case. Nike is not named as a defendant in the lawsuit.

PRESS RELEASES FOR RCE? I can understand companies wanting to promote their own technologies, but Paid, Inc. is apparently publishing press releases over their decision to file an RCE.

"We've had several discussions with the USPTO Examiner assigned to the patent application since the USPTO's issuance of an Office Action on our patent application in November 2004," said Greg Rotman, CEO of Paid, Inc. "We're pleased that the patent office is continuing to review Paid's patent application for our online shipping calculator and related technology. Based upon our discussions with the USPTO Examiner, we've filed a request for continued examination with new claims focusing on some core aspects of our online shipping calculator technology."

Well, that's just super - I can hardly wait for the press release for the next Office Action.

DEVELOPING COUNTRIES SQUAWK AS U.S. "QUIETLY" PROMOTES PATENT HARMONIZATION : Trade analysts are concerned that a number of industrialized countries, led by the US, are trying to move negotiations on patent harmonization outside the ambit of the World Intellectual Property organization (WIPO), according to Intellectual Property (IP) Watch, a Geneva-based reporting service on IP issues. They believe that this would risk undermining the multilateral process for harmonizing patent law and procedures. The United States Patent and Trademark Office (USPTO) invited representatives from certain developed countries to a meeting in Alexandria, Virginia on 3-4 February 2005, to discuss patent law harmonization and other IP related issues.

A number of developed countries have been highly critical of the WIPO secretariat for being slow to move the patent harmonization process forward. IP Watch quotes developing country sources as being concerned that the US and other developed countries are "trying to show they can take the negotiations outside of WIPO if that organization cannot keep the talks on track by keeping developing countries in check." The 'exclusive' nature of the recent meeting has raised concerns about the forum in which patent harmonization might be determined. Another trade source suggested that the USPTO is trying to take negotiations on patent harmonization outside the multilateral track in order to achieve standards for patent harmonization that are closer to US objectives than any likely result of the WIPO process. These allegations were rejected, however, by a patent official from a participating country, who asserted that meeting was simply a dialogue and there were no specific ideas about its potential outcome prior to the event.

PHILLIPS V. AWH TRANSCRIPT: Dennis Crouch, of the "Patently-O" blog, has posted a transcript of the oral arguments. One notable exchange:


Linn: If we use the dictionary, then which one, and what meaning(s) from that
dictionary?

A: The parties should get deference. The patent owner might propose multiple
definitions, and the defendant would propose narrower definitions. Then the court should
narrow it down to two competing definitions. Then we can run those through the
specification. If they are both plausible, then OK.

Lourie: ---

A: Any dictionary for common terms, and a treatise for technical terms.

Newman: What if it s not in lit igat ion? Persons read patents for technical informat ion. We
can t impose an elaborate st ructure on these people? You read the specification as a
whole and figure out what was claimed? Don t you begin with the specificat ion? What
about priority of sources?

A: The invention is defined by the claims. If the claims are broader than the specification,
then it s OK unless there is an explicit narrowing.
Newman: What about enablement?

A: That s not at issue here. The specificat ion doesn t indicate breadth. That s the purpose
of the claims.

Lourie: Mustn't the specificat ion enable the full scope of the claims?

A: Yes.

Michel: If we agree with you about restricting implicit redefinitions, what about our prior
case law such as Bell Atlantic?

A: The reason this court went en banc was to set some guidelines. Maybe it can be
implicit if it is very clear.

PATENT GRABBER 3.3 OUT FOR MACS: Patent Grabber makes it easy to download U.S. patents and PCT published applications for free from public patent archives. Instead of going to the U.S. Patent & Trademark Office or European Patent Office web site and loading and printing patent or application pages one at a time with your web browser, you simply give Patent Grabber a list of patents or PCT applications and click "Get Patents." Patent Grabber then downloads every page of all the patents or applications to your Mac while you do something else. And once the patents are downloaded, they are yours to keep and print from Patent Grabber's special Library folder at any time.

FIRST REPORTS IN ON PHILLIPS V. AWG CORP.: The Federal Circuit Bar Association just completed a meeting with counsel for Phillips, AWG, and the USPTO immediately after their arguments at the Federal Circuit. The arguments were heavily attended at the Federal Circuit(250+ people), and it was standing-room-only. While nobody was ready to make any hard-and-fast predictions, there were a few interesting observations that were made about the oral proceedings:

(1) Of the "seven questions" presented in the en banc order (and the 50,000 sub-parts), the court was not able to address each of these questions individually. The perception was that the first three questions were the main focus of the court's attention.

(2) Everyone agreed that the Federal Circuit (uncharacteristically) focused on factual issues in the case. The court normally bemoans appellants that rehash factual issues instead of arguing the law, so everyone was surprised that they spent so much time on the facts.

(3) The court had virtually no discussion on prosecution history or expert witness testimony (question 6).

(4) The issue of deference to lower courts was only mentioned by Judges Rader and Mayer, and the other judges didn't address this issue at all. One commentator mentioned that this case was a poor one to resolve issues of deference, as the Markman hearing took place back in 2000, and was subsequently transferred before litigation resumed again.

Everyone seemed in agreement that this case had way too many issues that could be effectively decided on appeal. All together, there were approximately 35 amicus briefs filed, and the complexity of the issues presented were such that the court could not reasonably deal with them properly in the time allowed.

Nevertheless, one commentator predicted that he thought that the Federal Circuit would "quietly" conform the law more closely to Cybor, where lower courts could use extrinsic evidence to understand, but not to interpret, the claimed terms in a patent.

I will provide more details and links to other blog sites as they become available . . .

PROTECTING YOURSELF FROM PATENT INFRINGEMENT: In this two-part interview on SearchEnterpriseLinux.com, Bruce Sunstein discusses various mechanisms companies can use to protect against infringement lawsuits. Part One discusses issues of indemnification, and Part Two discusses issues such as insurance and patent opinions. Worth a quick read for anyone wanting to bone up on infringement protection.

UK TAKES A FIRST STAB AT "TECHNICAL EFFECT": One of the big sticking points in the EU software patent debacle is that, under one proposal (the "UK model"), software would be provided patent protection, if it has a "technical effect." The problem is, no one has provided a clear definition of what this actually means.

Accordingly, The UK Patent Office is to hold a series of workshops that will discuss the definition of what constitutes a technical effect; a major point of conflict in the debate about software patenting in Europe.

The Patent Office says: "Participants will be shown a variety of definitions for 'technical contribution' and invited to work in groups to test these against a range of innovations. They will also be welcome to propose definitions of their own."

Participants must register by 18 February.

The workshops will be held on the following dates:
15 March - Coventry
17 March - Bolton
18 March - Bristol
4 April - Belfast
5 April - Glasgow
7 April - London
8 April - Cardiff

ACADEMIC IP - PATENT OR PERISH? Universities' ability to augment their revenues by licensing patents from faculty research has sparked new discussion about the tension between teaching and research responsibilities.

The recent surge in research disclosures in American universities over the last 20 years or so has turned into a whole new enterprise. Particularly in the sciences, patents are gaining new prominence - and ideas that are successfully patented have become an important source of revenue for universities.

For example, at Tufts University, if a professor submits a research disclosure of patent potential, the worth of the disclosure is determined in a three-person dialogue including the professor who made the disclosure, an administrator and a patent attorney.

If a professor's patent is licensed by a business, any income received is divvied up. 40 percent goes to the investigating professor who originally made the disclosure, 20 percent is given to the professor's department, while 20 percent goes to the professor's school and 20 percent to Tufts' general fund.

Since 1999, Tufts has earned $10,557,822 from the licensing of patents to private businesses, according to a survey by the Association of University Technology Managers. The year-to-year income, however, is unsteady. In 2003, the most recent year that numbers are available, Tufts only earned $738,331 from licensing. In contrast New York University reaped the most of the universities surveyed, earning more than $85 million.

REVIEWING INDEMNIFICATION CLAUSES: More proprietary vendors will be offering indemnification protection to their customers in the coming year; however, not all indemnification offers will be equally valuable.

Karen Copenhaver, general counsel and executive vice president for Black Duck Software, offers advice in this article about indemnifications, getting support from open source projects and protecting internal software developed on open source code.

One interseting point brought up was the collaborative effect that results from a single infringement lawsuit. If one company is using an open source project that many, many other people are using, then you know that if anyone in that user group is sued, others will be concerned as well. In the end, you could get a very powerful reaction to that claim. In patent claims there will be an entire community that will be providing prior art for the validity challenge. They will be looking at how to provide an instantaneous workaround, and they will be testing that workaround. Companies can be in a much better position if they face an infringement claim under these circumstances because there will be a large open source community actually addressing the infringement issue.

EU SOFTWARE PATENTS - BACK TO THE DRAWING BOARD: The battle to prevent software patents being introduced in Europe received a major boost on Wednesday afternoon when the Legal Affairs Committee (JURI) of the European Parliament (EP) demanded that the Computer Implemented Inventions Directive (CIID) be rewritten.

A EP spokesman confirmed on Thursday that the president will be asked by the European Commission (EC) to take the patent directive back to the drawing board.

Piia-Noora Kauppi, a Finnish MEP who was present at the JURI meeting, said this decision had considerable support from the members of the Legal Affairs Committee.

The EP spokesman said the EC is not obliged to agree to the EP's request for a restart, but is likely to adhere to the will of the parliament. But an EC spokesman said that the Commission has not yet decided anything and will "keep its options open" and "see what happens with the EU Council".

OPEN-SOURCE NON-PROFIT LEGAL CENTER OPENS: Eben Moglen, a Columbia University law professor who has represented the Free Software Foundation in legal cases, has set up the Software Freedom Law Center to provide free legal advice to those in the open source movement, and it should have four full-time lawyers by the end of the year.

The center said in a statement that it will employ two full-time intellectual-property attorneys, who will help provide consulting services to non-profit open source organizations. The staff count is expected to expand to four later in 2005. The help they provide could include training lawyers, supporting litigation, dealing with licensing problems and keeping managing contributions to open source projects.

Overseeing the Software Freedom Law Center will be Moglen; Diane Peters, OSDL's general counsel; Daniel Weitzner, the principal research scientist at Massachusetts Institute of Technology's Computer Science and Artificial Intelligence Laboratory; and Lawrence Lessig, a Stanford law professor and author.

INDIA HO! While people decry the outsourcing of legal work, India seems ripe for the "patent-pickings" so to speak. However, this recent article, which calls for greater recruiting of patent attorneys, seems to indicate that India is experiencing a gross understaffing of registered patent attorneys within India itself.

In a country of more than one billion, the number of actual patent attorney practitioners does not even cross the 100-mark.

Says Ramesh B Vishwanath, advocate and registered patent and trademarks attorney from Hyderabad, "There may be several registered patent attorneys in the country today but the number of actual patent attorney practitioners is just around 50."

According to the official website on patents, the number of registered patent agents (attorneys) as on May 31, 2004, was 607.

"Till now there were only about 2,000 patents filed by Indian companies and 25,000 by foreign companies in India, on a yearly basis. Within a couple of years, we expect these numbers to grow to 10,000 from India and 1 lakh (Rs 100,000) from abroad," he adds.

OPEN SOURCE - KEEPING THOSE LICENSES STRAIGHT: (From CNET) The latest tactic in the software-patenting battle is the granting of patent rights to open-source developers. Sun Microsystems recently made software patents available for use by open-source developers. But its patent grant came with strings attached: The 1,600-some patents may only be used under Sun's Common Development and Distribution License, which is incompatible with the General Public License used on Linux.

So while claiming to make the patents available to open-source developers, Sun can sue folks who work on Linux rather than Solaris. The irony here is that Sun's open-source license is derived from the same license used for Mozilla.

But Mozilla's developers have made most of their software available under the GPL, as well as under terms of their own license. If Sun wants to be a partner in the open-source community, then shutting out the Linux developers isn't a good start.

Philip Albert of Linux Insider writes that while IBM's patent release was generally well-received by the open source community, Sun's move has so far been viewed with suspicion by some, including its competitors, IBM, Red Hat and Novell.