THE COST OF LITIGATION: Nobody likes litigation. Nobody (well, except maybe for some lawyers). It's expensive, it's messy, and it causes a lot of people ulcers, especially from a business perspective. A good example is the recent turmoil between RIM and NTP over the Blackberry e-mail patents. This blog covered the litigation and subsequent settlement of the patent lawsuit, as well as the dispute over the settlement that will ultimately take the case back to the courts.

While the legal world may follow the case as an intellectual curiosity, the business world is more brutal in its analysis since - after all - it is their money that's on the line. And according to current reports, investors are not liking what they see (never mind the NTP reexamination).

RIM is preparing to announce substantial earnings growth in their first-quarter report. However, a key question will be how much investors will care about this news:

"I'm not really interested in what they report," says Chyanne Fickes, a portfolio manager at Stone Asset Management, which used to be long RIM shares but recently sold off its stake. "I think they have bigger problems."

Fickes isn't the only fund manager who has soured on RIM in recent months. A number of long-time bulls on the stock have decided to throw in the towel because of uncertainties in the stock's direction and the company's prospects.

And that attitude seems to be playing out in RIM's stock price. In the year to date, shares in the wireless email device maker and service provider have been off roughly 7% despite the fact that analysts expect the company to continue to post strong results.

The biggest problem for Waterloo, Ontario-based RIM is its legal dispute with NTP Inc., which holds a portfolio of patents covering wireless email systems. Earlier this month, RIM announced the disintegration of a settlement agreement it reached in March with NTP.

Scenarios like this are undoubtedly a large part of intitutional companies desire to rid the patent system of injunctive relief. What's worse: facing a $450mil judgment, or losing $800mil in market valuation in the meantime? You can be sure that holding companies are counting on this effect during the course of the lawsuit, and will exploit it to no end to the detriment of the defendant.

ALADDIN KNOWLEDGE SYSTEMS PATENTS: I recently learned about Aladdin Knowledge Systems, and their previous spat with Symantec over virus scanning technology. Aladdin has been in the business of developing security solutionsfor reducing software theft, network user authentication and other anti-spam and anti-virus technology. Its security products are organized into two segments: Software Digital Rights Management (DRM) and Enterprise Security.

Recently, Aladdin sued a Chinese company by the name of Feitian Technologies Co. over patent numbers 6,748,541 and 6,763,399. 3 months after the filing of the compaint, both parties settled the litigation.

Patent 6,748,541, granted on June 8th, 2004, covers a method of using any portable or mobile device (USB/ Serial/ PS2, etc.) in order to store unique personal information or credentials in general, which can than be used for authenticating to a network or application.

Patent 6,763,399, granted on July 13th, 2004, covers portable devices or tokens featuring an on-board smartcard chip that communicates with a host through a USB port. Both patents support the award-winning Aladdin eToken two-factor authentication solution.

I didn't think much of this news, until I decided to check out the '541 patent (filed October 1999) - and get a load of claim 1:

1. A user-computer interaction method for use by a population of flexibly connectible computer systems and a population of mobile users, the method comprising:

storing information characterizing each mobile user on an FCCS plug to be borne by that mobile user; and

accepting the FCCS plug from the mobile user for direct connection to a port of one of the flexibly connectible computer systems and employing the information characterizing the mobile user to perform at least one computer operation.

In case you're curious, the term "FCCS plug" refers to a portable device which mates with a flexibly connectible computer system and, as opposed to peripherals which contain mechanical elements, typically comprises only memory and/or CPU and therefore is typically pocket-size. Because each peripheral connected onto a flexibly connectible computer system typically has at least one port, a flexibly connectible computer system of any configuration typically has at least one vacant port available to interact with an FCCS plug. USB tokens and Rainbow tokens are both examples of FCCS plugs.

In other words, the claim basically recites a dongle carrying user ID information. This technology has been around since the early 70's, and was popularized in the early 90's. If Aladdin has any intention of enforcing this patent on a wider scale, they may want to think about shoring up these claims - this seems like prime reexamination territory to me . . .

AMD FIRES SHOTS AT INTEL, IBM: Advanced Micro Devices has filed a wide-ranging antitrust suit against Intel, accusing it of maintaining its monopoly in the PC processor market by illegally coercing customers around the world into using its products, AMD says.

The suit, filed in U.S. District Court for the District of Delaware, identifies 38 companies on three continents that were allegedly coerced by Intel, including large-scale computer makers, small system builders, wholesale distributors, and retailers, according to a statement from AMD, in Sunnyvale, California.

AMD's litigation follows a recent antitrust investigation of Intel by the Fair Trade Commission of Japan (JFTC). In March, the JFTC found that Intel had abused its monopoly power to exclude fair and open competition in the Japanese microprocessor market. The result was to substantially restrain competition, the JFTC says.

The European Commission has also said it is pursuing an investigation against Intel for possible antitrust violations and that it was cooperating with the Japanese authorities.

IBM was another target of what AMD calls "Intel's relentless campaign to undermine marketing efforts by its one remaining competitor." Big Blue pulled its AMD-powered computers from the 2004 Palisades eServer and PC Show citing a contractual agreement with Intel that prohibited IBM from endorsing competing products, according to the complaint. And at the 2004 Super Computing Show, an annual conference devoted to high performance computing, Intel offered two other computer makers money to remove AMD systems from their booths, according to AMD.

The AMD complaint can be found here.

USPTO RESPONDS TO CRITICISM ON PATENT AUTOMATION PROBLEMS: Jon Dudas, director of the U.S. Patent and Trademark Office, told congressional auditors that he does not plan to further reassess the agency's patent automation plans, despite a critical audit and recommendations that USPTO fix what the auditors called ad hoc management practices.

A Government Accountability Office audit released June 17 states that USPTO officials violated many of the Clinger-Cohen Act's information technology management principles in an effort to develop an automated patent system. According to the audit report, the system is so problematic that the public is hesitant to use it.

Dudas disputed that conclusion. In his written response to GAO, he defended the agency's Web-based patent filing and document imaging systems as offering vastly improved capabilities compared with previous paper-based procedures for filing and processing patents.

GAO auditors say they are concerned that USPTO will be unable to handle the workload of patent applications, which has increased more than 90 percent in the past 10 years, if the agency does not institute more rigorous management controls. The auditors also faulted USPTO officials for not having a functioning architecture review board.

USPTO officials told GAO auditors that they recognize sufficient problems in the Image File Wrapper document imaging system that they plan to begin replacing it in September at a cost of about $56 million during the next six years.

DELEGATES SPEAK OUT IN FAVOR OF COMPUTER PATENTS IN BRUSSELS: After the European Parliament debated the introduction of an EU wide patent regime, over 250 delegates attended European Innovation Day in Brussels. Attendees includes businesses, large and small, trade associations, MEPs and a number of inventors from around the EU. Several companies also exhibited products in the technology demonstration rooms, offering first hand examples of European innovation.

During the course of the meetings, numerous people came out in support of expanding the EU's patent regime to include computer-implemented invention. Some notable comments:

Chinese and others would "dine off European initiative and innovation if
patents were removed or restricted by the EU amendments, but eventually the EU
might be reduced to scraping by on the equivalent of Chinese takeaways."

Traditional industries such as mining and metal casting are also benefiting
from computerised processes protected by patents. He described the proposed
amendments to the CII draft directive as "turning back the clock of the digital
age" to the 1970s. For a number of years, the Polish patent office has been
issuing patents in line with the proposed CII directive. Simplifying the EU
patenting process is an obvious step to complete the Single Market in
Intellectual Property.

On the one hand, too many patent restrictions could result in powerful
monopolies being created, thus restricting innovation. On the other hand, a lack
of patent restrictions would lead to risks of innovative companies losing their
investments. The EU's Common Position will please nobody entirely.

GAO ISSUES REPORT ON USPTO WORKFORCE: The Governemtn Accountability Office ("GAO" - the investigative arm of Congress charged with examining matters relating to the receipt and payment of public funds) issued a report on USPTO personnel issues, and specifically reviewed (1) overall progress in implementing initiatives in its strategic plan; (2) efforts to attract and retain a qualified patent workforce; and (3) remaining challenges, if any, in attracting and retaining a qualified patent workforce.

The GAO found that the USPTO faces three long-standing challenges that could also undermine its efforts to retain a qualified workforce:

• the lack of an effective strategy to communicate and collaborate with examiners;
• outdated assumptions in the production quotas it uses to reward examiners; and
• the lack of required ongoing technical training for examiners.

According to patent examiners, the lack of communication and a collaborative work environment has resulted in low morale and an atmosphere of distrust that is exacerbated by the contentious relationship between management and union officials. Also, managers and examiners have differing opinions on the need to update the monetary award system that is based on assumptions that were established in 1976. As a result, examiners have to contend with a highly stressful work environment and work voluntary overtime to meet their assigned quotas.

Similarly, managers and examiners disagree on the need for required ongoing technical training. Examiners said they need this training to keep current in their technical fields, while managers believe that reviewing patent applications is the best way for examiners to remain current.

AND THERE WAS MUCH REJOICING . . . The USPTO has been on a roll lately in terms of reexamination of patents percieved to be overbroad and obvious.

One such patent recently dinged at the USPTO was 6,442,574, which was acquired by SBC (from the late Ameritech) titled "Structured Document Browser." Back in 2003, there was a buzz in the software community regarding this patent after SBC tried enforcing the patent and there were calls to collect invalidating prior art.

The patent dealt with a structured document browser that includes a constant user interface for displaying and viewing sections of a document organized according to a pre-defined structure. The structured document browser displays documents that have been marked with embedded codes that specify the structure of the document. The tags are mapped to correspond to a set of icons. When the icon is selected while browsing a document, the browser will display the section of the structure corresponding to the icon selected, while preserving the constant user interface.

Claim 1 reads as follows:

1. A method for navigating a document comprising a plurality of sections, the method comprising:

(a) displaying a document with a browser comprising a user interface;

(b) displaying a plurality of selectors in the user interface of the browser and not in the document, the plurality of selectors automatically configured to correspond to a respective plurality of sections of the document regardless of what section of the document is being displayed;

(c) receiving a selection of one of the plurality of selectors;

(d) continuing to display the plurality of selectors after the selection is received in (c); and

(e) displaying a section of the document that corresponds to the selector selected in (c).

Well after 2 1/2 years, the USPTO - after a commissioner-ordered reexam - issued a final rejection on the remaining 6 of the original 20 claims recited in the patent. The folks at Slashdot are smiling and happy - there is however, a possibility of appeal, or that some magical amendmendment coud reopen prosecution. However, final rejections in reexam practice requires the blessing of a patentability review conference, so chances are this patent is toast . . .

STN OPENS RUSSIAN PATENT PRIOR ART DATABASE: FIZ Karlsruhe is offering access to Russian patent information in English language via STN International, the online service in science and technology.

The new online file RUSSIAPAT, produced by the Russian Agency for Patents and Trademarks (ROSPATENT), Federal Institute of Industrial Property (FIPS), Moscow, covers Russian patented inventions from 1994 to the present.

It currently contains about 300,000 records and about 245,000 images.

Titles and abstracts are in English, thus providing access to this valuable information also to those unfamiliar with Russian language and characters.

Besides titles and abstracts, RUSSIAPAT records contain the International Patent Classification (IPC) codes, and inventor, assignee and patent application information. Users can also access the drawings available from the full document ( i. e., the drawing from the first page, drawings from the drawing attachment, and embedded drawings from the complete text).

A special display field provides an indication of the number and size of all available drawings.
RUSSIAPAT is updated three times a month.

Automatic current-awareness alerts are also available: At each database update the system checks if any new answers have been added that match a user's saved search profile.
Where such matches are found, the answers are then forwarded to the user.

LOOKING FOR MORE INFORMATION ON THE GOOGLE WEB-RANKING PATENT APPLICATION? David Utter from Webpronews.com provides an initial breakdown here. It could be important stuff for people that rely on Google rankings to generate business:

If you're a legitimate site owner, you'll want to register your domain for more than one year. Otherwise, the Google PageRank algorithm may rate your site lower than you may deserve.

Spammers tend to register domains for the minimum amount of time, one year, and Google's patent application seems to say that's a bad move.

Another lesson to be gleaned from the application appears to deal with links. Pages or sites with loads of links, and which gain a number of links in a very short span of time, may indicate a site that is attempting to fool the algorithm. Numerous claims within the application point to the behavior of links over time, their freshness, and the documents they reference all as factors
being considered by the algorithm.

The "freshness" of sites also figures in the equation. Google appears to be tweaking its algorithm so sites that update frequently, but not so much that they appear to be gaming the search engine, get a more prominent placement in the search results.

MICROSOFT STRENGTHENS IP PROTECTION FOR PC MAKERS: Microsoft has upped the intellectual property protections it offers to PC makers, which shields them from claims of patent infringement and other IP-related disputes. The move comes after a number of high-profile lawsuits targeting manufacturers using Microsoft software.

New protections will include no monetary limits on legal fees and idemnification from patent claims, copyright claims, as well as trade secret and trademark claims. Microsoft will also provide capped monetary protections for damages and settlements related to an IP case.

The coverage extends to current and future versions of Microsoft software, including Windows Server, SQL Server, Exchange Server, Microsoft Office System, and Windows client software.

PROTECTING END-USERS AGAINST PATENT INFRINGEMENT FROM THE MANUFACTURER'S PERSPECTIVE: In an interesting article from Managing Automation, a question was raised regarding the targeting of end-users for patent infringement. Consider the following:

Earlier this year the Gillette Company sued Energizer Holdings Inc., alleging Energizer's QUATTRO, a four-blade, wet-shave safety razor, infringes on Gillette's 777 patent (U.S. Patent Number 6,212,777 issued in April of 2001). The 777 patent outlines a disposable safety razor with a group of blades placed in a particular geometric position.

But what if Gillette decided it wanted to go after every person who uses the QUATTRO? If one ignores the public-relations nightmare from such an act, this scenario is certainly possible. Over the last decade, the manufacturing community has struggled with machine vision patents held by the late Jerome Lemelson, the named inventor of 12 patents pertaining to this specific area. More recently, Solaia Technology LLC has assumed Lemelson-like status by suing everyone under the sun under its 318 patent (US Patent No. 5,038,318), which it acquired from Schneider Automation Inc. in 2001 ("Device for Communicating Real-Time Data Between a Programmable Logic Controller and a Program Operating in a Central Controller.")

What's interesting is that in both of these instances the patent holders didn't go after the manufacturers that were selling a product each claimed infringed on their IP. Instead, they went after the end users. In fact, Lemelson can be credited with starting this trend (other companies like Solaia and Acacia have followed suit).

And now, as the volume of patent disputes among vendors escalates -- the latest public battle is between Intermec Technologies Corp. and Symbol Technologies over wireless data capture and laser scan engines -- customers are fearful of getting caught in the crossfire. Moreover, some of the patents at the center of these legal wranglings are part of emerging industry standards, which muddies the waters even more.

So what is a technology buyer to do?

There's no easy answer here, but, ultimately, the legal responsibility must lie with the vendor from which the product was purchased:

Get the Vendor to indemnify - Before entering into any contract with a technology vendor, make sure there is a well-defined indemnity clause included. Often times products have an implied UCC warranty that the purchased product does not infringe on anything. However, explicitly stating the terms of the warranty should help remove any potential ambiguities.

Consider Patent Infringement Insurance - A patent infringement insurance policy can include a range of coverage from just legal costs to full indemnification for damages. However, insurance can be pricey. A policy's cost can range from $7 to $12 per $1,000 of coverage, but it can be worth the extra expense, especially given the "chain of commerce" in which liability can shift from one company to the next. For instance, many large companies require that their suppliers have a defense policy in place prior to doing business.

Join a Working Group or Defense Group - plaintiffs love to target end-users that are perceived as being too weak to defend themselves. 99% of the time, these types of targets settle quickly (usually at a cost between $40-300k, depending on the circumstances) to avoid escalating legal costs. By teaming up with others, your ability to actually fight back becomes much greater.

Manufacturers will always need to formulate various types of defense mechanisms to protect their companies from IP litigation. Of course, it's always best to get legal counsel before doing anything, but the bottom line for manufacturers purchasing technology is that someone else's IP is not necessarily your responsibility. Remember that if you are an end user that bought a product and you are sued for infringement, the vendor has an obligation to defend you.

NTP PATENTS - 0 FOR 5: The case against Research In Motion, the Canadian manufacturer of the popular BlackBerry wireless device, brought by a Virginia-based company suffered another blow as the U.S. Patent and Trademark Office announced Friday that it had rejected the fifth of eight patents the challenger is claiming.

The patent in question was the fifth in a row rejected by the patent office. Only three remain to be reexamined. The patent office had initiated the review of four of the disputed patents in January 2003, while Research In Motion requested a review of others. The patents are owned by NTP, a holding company founded by Thomas Campagna, an inventor who died in June 2004.

EU PARLIMENT WATERS-DOWN ANTI SOFTWARE PATENT PROVISIONS: (Reuters) The Parliment's legal affairs committee agreed 16 to 10 to a 'patentability of computer-implemented inventions' bill, which goes to the full parliament in July.

But the bill's sponsor in the legislature, French socialist Michel Rocard, suffered a string of defeats as key changes were made to his text.

Rocard wanted a narrow definition of what sort of inventions could be patented, insisting that only a programmable piece of hardware could be covered, such as ABS brakes on a car or an insulin pump.

Data processing and other inventions that are more pure software based should be excluded.
"Software is nothing more than a collection of mathematical formulae," the former French prime minister told a packed committee room.

But changes won by center-right and liberal opponents pushed the bill closer to a version adopted by the EU's 25 member states, which chose a far wider scope for patenting.

"It was a mixed result but it's clear that Rocard did not have a majority, and he lost many important compromises," center-right member of the European Parliament, Piia-Noora Kauppi, said afterward.

Rocard, who declined to comment after the vote, also failed to change the name of the bill to 'patentability of computer controlled inventions', a bid to focus patenting on hardware and leave out allied software.

SUPREME COURT REVISITS PATENT TYING CASE: The court will hear the case of Illinois Tool Works v. Independent Ink late this year and could restrict anti-trust lawsuits against patent-holders.

The case involves claims of anti-trust "tying" - where the purchase of a popular product is linked to the purchase of a related item. Tying is illegal when a company has "market power" in selling the popular product and can use that power to piggy-back the less desirable product along with it. The particular case involves an Illinois company that makes patented print-heads, and requires printer manufacturers to buy their ink from the company too.

Intellectual property owners are keen to overturn a decades-old precedent that says a company with a patent is presumed to have market power. The view is that this precedent is "outdated" and should be overturned, because of its alleged interference with the market.

According to the Intellectual Property Owners Association (IPO), "plaintiffs in tying cases involving patents should be required, like all other tying cases, to prove that the seller has market power in the tying product." The IPO joined Pfizer in an amicus brief to discard that presumption. The Federal Trade Commission (FTC) and the Department of Justice do not use such a presumption in cases involving patents.

The Federal Circuit appeals court said when it ruled in the Illinois case: "The Supreme Court has held that there is a presumption of market power in patent tying cases, and we are obliged to follow the Supreme Court's direction in this respect. The time may have come to abandon the doctrine, but it is up to the Congress or the Supreme Court to make this judgment."

So let it be written . . . . so let it be done.

IT MUST BE FRIDAY: The Museum of Sex in New York is showcasing an exhibit on U.S. Patent Office Sex Inventions.

The entire patent exhibit, which you can explore in an interactive kiosk on the second floor of the museum, is also available online.

enjoy.

CHINESE STUDY CLAIMS UNIVERSITY PATENTS ARE LACKING: Just when you thought the U.S. was the only country flagellating itself over lack of technological competitiveness with respect to the rest of the world, Zhejiang University of Technology has just concluded a special survey and study that shows 75 percent of the colleges and universities in China file little to no patent applications.

The survey shows there are huge gap in patent application among all the domestic colleges and universities. Tsinghua University, Fudan University, Shanghai Jiaotong University, Zhejiang University and South China University of Technology have applied a total of 4,809 patents in the past five years, accounting for 26.5 percent of the nation's total. Zhejiang University and Zhejiang University of Technology have applied 91.7 percent of all 1,706 patents done by colleges and universities in the Zhejiang province over the past five years.

WORAROUND IT IS! Research In Motion has claimed to have come up with a "workaround" to skirt patents at the center of its legal battle with NTP. Supposedly, the technology could be presently used with all existing BlackBerry email devices.

"We've completed the workaround," RIM chairman and co-CEO Jim Balsillie told CNET's News.com. "We've tested it and we have a legal opinion on it. We have it as an option."
In a phone interview, Balsillie declined to give specifics on the technology, citing both companies' nondisclosure agreements and RIM's so-called quiet period prior to announcing its earnings.
Balsillie said he is prepared to win the long-running legal battle and was encouraged that the director of the U.S. Patent Trademark office asked that four of the five patents in dispute be reexamined--a process that could take years.

UPDATE: Also worth noting, RIM has fast-tracked a challenge to a UK patent to fend off a German lawsuit against T- Mobile International AG, the mobile-phone unit of Deutsche Telekom AG. It wants the High Court in London to invalidate the British version of the patent, in a bid to stall proceedings in Germany

BLACKBERRY/NTP PATENT DEAL BEGINS TO UNRAVEL: After two-and-a-half years battling over the patents covering aspects of BlackBerry handhelds, Toronto-based Research in Motion Ltd., which makes BlackBerries, agreed to a $450 settlement in March with NTP Inc.

Now, it appears the two companies can't agree that the settlement would cover all future payment obligations to NTP for Research in Motion. Last week, Research in Motion said NTP refused to honor its obligations and complete final documents for the settlement.

In response, NTP is now taking the position that the settlement is off. In a brief filed with the U.S. Court of Appeals for the Federal Circuit, NTP claimed that during talks to finalize the settlement, "It very quickly became evident that the parties had interpreted the vague term sheet in entirely different manners regarding virtually every significant provision."

The term sheet is confidential, but NTP said royalty payments were one sticking point.

If the two companies can't agree that Research in Motion's payment covers royalties, then wireless carriers could be on the hook for future payments to NTP.

In the meantime, the U.S. Patent Office continues to question the validity of two of NTP's five patents in the dispute. If the court grants RIM's request to stay pending the reexamination RIM can possibly skate free from the deal (maybe this was the plan all along?). If that is the case, this would be one of the most significant examples of reexamination saving the day for a defendant (let's not forget Eolas!).

Furthermore, Research in Motion said on a call with investors last week that it could modify the design of its products to work around NTP's patent. However, this could likely spark another series of lawsuits from NTP . . .

EU COMMISSION TO REEVALUATE TELECOM STANDARDS TO AVOID POTENTIAL "PATENT AMBUSHES" - The European Commission is investigating the EU's main telecommunications standards agency to determine whether companies are able to exploit the body's patent rules for financial gain, according to this article in the Financial Times.

Commission officials fear that, under existing European Telecommunications Standards Institute regulations, companies may have the ability to turn their patented technologies into universal industry standards without telling rival groups about their patent claims.

According to a spokesman for the Brussels regulator, 'The European Commission is examining ETSI's intellectual property rights rules with a view to ensuring that these rules are framed in such a way that patent ambush situations within ETSI are avoided, and that standards are agreed according to transparent criteria.' Conventional opinion is that current rules do not appear to be able to prevent a situation where a company can potentially acquire a dominant position via a 'patent ambush'.

Once again, a bit of strangeness from an EU commission. Not that I'm any expert in EU telecom regulation, but it would seem that if you're joining a standard group, there are provisions in place to set licensing provisions for members, or create sharing or pooling arrangements. The commission is obviously trying its best to avoid a Rambus-type situation here, but what about non-members? Certainly, it's not all that hard to determine the basic activities of a standards-group member, and if there's going to be any "ambushing," my money's on the upstart outsider that has little or nothing to do with the standards agency . . .

ET TU, ANTOR? With all the Acacia's, Forgents and what-nots out there, it appears another company, Antor Media, is looking to create a splash in the world of mobile phone media downloading, by simultaneously suing Nokia, UTStarcom, Audiovox, Kyocera, Sanyo, Sharp, NEC, RIM, Virgin Mobile, LG Electronics, Palm One and Panasonic. The case was filed last month in the now-predictable venue of the Eastern District of Texas, Marshall Division.

The complaint alleges that the companies infringed patent number 5,734,961 and catchily called "Method and apparatus for transmitting information recorded on information storage means from a central server to subscribers via a high data rate digital telecommunications network". Antor was apparently assigned this patent on the 31st of March, 1998.

Antor alleges that the defendants infringe its patent by making devices and offering sales for the downloading of media including video, music and ringtones. Antor has also previously sued Apple Computer on similar grounds. I have a hard time believing this patent will survive invalidity challenges. Claim 1 reads:

1. Method of receiving information from one of a plurality of information systems via a high data rate telecommunication network in response to a request from one of plural subscriber stations, said method comprising the steps of:

initiating a two-way transmission from subscriber computer means of said one of said plural subscriber stations to one of said information systems via said telecommunication network,

outputting on output means of said one of said plural subscriber stations data related to plural information stored at one of said information systems,

selecting at said one of said plural subscriber stations at least one of said information by means of input means of said one of said plural subscriber stations and transmitting a signal identifying said at least one selected information from said subscriber computer means to a selected information system via said telecommunication network,

receiving at said one of said plural subscriber stations from said selected information system digital signals via said telecommunication network, expanding by expansion means said transmitted signals, converting said expanded digital signals into analog
signals and delivering said analog signals to transducer means.

Very broad stuff. There is also an EU equivalent to this patent, but it has been abandoned for failing to pay the yearly maintenance fees.

PATENT REFORM ACT SCHEDULED TO BE INTRODUCED TODAY: As mentioned on Patently-O and Promote the Progress blogs, the Patent Act of 2005 is expected to be introduced in the House of Representatives later today by Congressman Lamar Smith of Texas. Interestingly, it was good to see that the provision limiting injunctive relief was taken off the table. As Dennis did such a good job highlighting the more important parts of the legislation, I'll simply repeat it here (:P)

The legislation includes:

• Change to a first-to-file system (thus changing the definition of ‘prior art’);
  Changes to the duty of candor (violations will be adjudged by the PTO rather than in court);
• Damages to be limited to the inventive contribution rather than calculated on the selling price of an entire product;
• Limitations on damages for willfulness;
• Automatic stay of injunctions for appeals;
• Limits on scope of continuation applications (to be made by PTO);
• Introduction of a post-grant opposition procedure and submission of prior art by third parties.

STORAGETEK LOSES HUGE CASE AGAINST CISCO - A federal jury in California decided on Tuesday that Storage Technology’s patent infringement claims against Cisco Systems were invalid, ending a six-year-old suit in which StorageTek had sought hundreds of millions of dollars in damages.

Louisville, Colorado-based StorageTek, whose acquisition by Sun Microsystems was announced late last week, had originally sought damages of $3 billion when it filed the lawsuit in 1999.

StorageTek lowered that figure to $322 million by Monday’s closing arguments. After a three-week trial in San Francisco, the jury ruled that Cisco’s networking technology for speeding data flow across firewalls did not infringe on StorageTek’s patent and that the patent claims were invalid.

- Getting non-infringement and invalidity on all claims is a pretty rare thing.

Brenda Sandburg of the Recorder provides a blow-by blow of the case here. I found some of the comments by StorageTek's attorney (the illustrious Ernie Brooks) to be somewhat puzzling, and wondered what the intended effect was. For example:

Dressed in a dark suit with a pale orange shirt and an orange striped tie, Brooks opened by telling the jury it was troublesome to hear himself called an ambulance chaser by opposing counsel.

Brooks also questioned why Cisco had put forth three invalidity defenses.

"Why so many?" he asked. "Tell me which is the winner. Have some confidence."

(Don't you love the couture play-by-play? Nice.)

Why so many defenses? Because they're available! (And apparently persuasive). What an odd thing to say. Any company in its right mind would throw everything they had at a patent infringement claim, especially when the plaintiff is seeking $3bil in damages. This would be even more true when a case is taken on contingency. Although Mr. Brooks has a penchant for taking such cases, I don't know if there was a contingency factor involved in this case. God, I hope not. Losing 6 years of billed time is a pretty big pill to swallow . . .


BTW, in case you're curious what Cisco's counsel (Matt Powers) was wearing:

Wearing a dark suit with a white shirt and blue tie, Powers said when StorageTek filed suit the CEO at the time was "under extreme pressure to do something about StorageTek's financial performance" and the company had wanted to be acquired by Cisco.

'WHEN THE CAT AND MOUSE AGREE, THE GROCER IS RUINED" - Heads up to chip manufacturers - Patriot Scientific and the TPL Group have decided to team-up and begin "commercialization" and licensing of a 10 patent portfolio. Previously, Patriot successfully extracted money from AMD, and both companies previously argued with each other for years who owned certain CPU patents. But no more - the prospect of obtaining millions in licensing revenue has apparently smoothed over much of the ill-will that previously existed.

One practitioner described the portfolio as a "patent litigator's dream," and will likely cause great headaches for CPU firms. Three of the 10 patents are "elemental to virtually every microprocessor design",according to the companies. They are 5,809,336; 6,598,148; and 5,784,584.

CHINA STARTS GETTING WISE ON 337 ACTIONS - In a bit of poetic license, an undeclared "patent war" has been brewing between the US and China. Specifically, the US International Trade Commission (ITC) is becoming increasingly deluged by complaints from US companies about alleged infringement of their intellectual property, mostly patents, by Chinese imports.

Under US trade law, Section 337 of the Tariff Act of 1930 allows parties to petition the ITC for an order to stop importation of infringing goods at customs. As you can guess, Section 337 proceedings can be a huge headache for Chinese exporters, more so than anti-dumping measures, which, at worst, result in fines.

Potentially, the impact of a Section 337 order can be felt throughout an entire industry. When the ITC issues one against one product, it automatically applies to similar products as well. According to one comment, section 337 cases filed in the United States against Chinese companies since 1999 account for almost 40 percent of all Section 337 cases filed. Last year firms or goods from China again received the largest number of investigation notices, 11.
So serious has the trade threat become that the Chinese government has begun briefing companies on how to fight Section 337 claims.

[Blogger note - do you suppose advising companies not to blatantly infringe patents is a good idea, and such action could feasibly eliminate these pesky 337 actions?]

One interesting countermeasure for Chinese companies involves filing more patents in the US.

Why?

Well, for one, companies may give pause shooting off an infringement action knowing that you have some arrows in your own patent quiver. Second, and more importantly, once you start obtaining US patents, you can start filing your own 337 actions against competing products being imported into the US.

THE NEXT BRAVE NEW WORLD - INSURANCE PATENTS: According to Risk & Insurance, patenting insurance policies and other financial vehicles is a growing trend. Insurers, investment bankers and money managers are patenting aspects of policies and their administration, pricing and underwriting, as well as innovative financial products and services.

The trend could change the insurance industry, which has traditionally been a follow-the-leader market.

Since 1976, the U.S. Patent and Trademark Office has issued 404 patents using the word "insurance" in a filing; using the same criteria, 1,149 patent applications have been published at the PTO Web site since 2001.

It would seem from this that the insurance world is starting to heat up to patents (welcome!). I've noticed the same thing, where institutional insurance companies have been asking lots of questions and are starting to stockpile patents in their portfolios. However, I have noticed that there is still a lot of confusion regarding the patent system, especially in terms of "OK, I have a patent - now what?" Well good people, get out there enforce it!

MICROSOFT NICKED WITH EXCEL PATENT CLAIM - The US District Court of Central California court ruled that Microsoft had infringed Guatamalan inventor Carlos Armando Amado's patent and was ordered to pay almost $9m in damages. This figure relates to software sold between March 1997 and July 2003.

In a sense, Microsoft can breathe a sigh of relief, as the $9m is a far cry from the $500m originally being asked for. The jury rejected nine out of ten claims made by Amado.

In 1990 Carlos Armando Amado filed a patent for software which helped transfer data between Excel spreadsheets and Microsoft's Access database using a single spreadsheet. He said he tried to sell this technology to Microsoft in 1992 but they turned him down. According to Amado, Microsoft started including his software in their releases between 1995 and 2002.

So for now, Microsoft can go back to defending the other 60-or-so patent infringement lawsuits being asserted against it, including claims over Longhorn (from networking company Alacritech), as well as the battle with Forgent Networks, which claims the software giant infringed its JPEG picture compression patent.

WHO INVENTED THE JOY-STICK? Labeled "one of the most overlooked achievements of the last 100 years," CNET provides a soup-to-nuts breakdown of the joy-stick and its origin.

WHY DOES CHINA STEAL IP? In an article in Time, Anne-Stevenson Yang explains that pirating IP in China is not so much the function of greedy street-copiers, but is rather an official policy of the Chinese government, based on taxing regulated businesses:

China's trading partners tell themselves that this blatant disregard for the intellectual property of others is natural for a former command economy at an early stage of free-market development. The problem, they say, will ease over time as legal institutions and Chinese entrepreneurs mature and the country begins to attach the same importance to property rights as do Europe and the U.S.

No business should be foolish enough to believe this hypothesis. In a country where government-controlled companies comprise the industrial base, piracy is not derived from commercial callowness—it appears to be official policy. Authorities may be quite willing to mop up small, unregulated businesses to curtail street sales of counterfeit brands, but protecting core foreign technology is another matter. That is why Beijing declares victory when street sales of pirated DVDs move into licensed stores that present the same product in better packaging with money-back guarantees and, of course, taxes duly paid. That is why a decades-long campaign to clean up Beijing's "Silk Alley," a national showcase of pirated foreign sportswear and wristwatches, ends with fanfare when the new "Silk Street" shopping center opens, selling the same products under city regulation. And that is why China's leaders can promote a national campaign to protect intellectual property and at the same time declare that foreign patents useful to Chinese technologies may be legally expropriated, as Beijing's bureaucrats proposed in draft regulations released last year.

FRIDAY FUNNY: Last month, the Federal Circuit issued an opinion in Hoffer v. Microsoft, holding that courts can correct typos in issued patent:

When a harmless error in a patent is not subject to reasonable debate, it can be corrected by the court, as for other legal documents. See Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348, 1356-57 (Fed. Cir. 2003). Here the error was apparent from the face of the patent, and that view is not contradicted by the prosecution history.

Once the rule was established, the court published the opinion here - and then promptly issued an errata sheet to correct typos here - only to find that additional errors needed correction and issued a second errata sheet here.

- I'm refraining from making a "practice what you preach" comment . . . really I am.

(courtesy of Greg Aharonian's news service)

TIME TO CODIFY PATENT APPLICATION DRAFTING? Dennis from Patently-O brings up an interesting point, raised during a round-table discussion in Corporate Legal Times, in that one can write a patent application today that is almost indecipherable, and still come out of the patent office with a patent.

Foreign-filed applications, especially those with minimum edits, are often the fodder for first-year associate snickering (or groaning, depending on the case) over the convoluted sentence structure, and run-ons that pervade these applications. However, domestic filings are often messy as well, and the constantly changing law coming from the Federal Circuit gives attorneys conniptions when trying to draft applications to fit the law-du-jour. For example:

US 2005/0084103
Recognizer of content of digital signals

Abstract:
Described herein is a technology for facilitating the recognition of the content of digital signals. This abstract itself is not intended to limit the scope of this patent. The scope of the present invention is pointed out in the appending claims.

This is a reaction to Hill-Rom Co. v. Kinetic Concepts, Inc., 209 F.3d 1337, where the CAFC found nonbinding a PTO rule that abstracts were nonlimiting. Another favorite (which I will confess to using in applications) is:

Although the invention has been described in language specific to the structural features and/or methodological steps, it is to be understood that the invention defined in the appended claims is not necessarily limited to the specific features or steps described. Rather, the specific features and steps are disclosed as preferred
forms of implementing the claimed invention.

Do statements like this have legal significance? Probably not, but there is little in the caselaw that shows otherwise.

On top of this, embodiments in an application should described as generically as possible to establish a maximum scope of equivalents, and any definitive language needs to be tempered to maintain that scope.

Also keeping in mind that the application will be reviewed by and Examiner, and possibly (a) an administrative judge, (b) an Article III judge, and/or (c) a jury (possibly with less-than-a-high-school-diploma-education), and your application now serves a plurality of masters. As they say, when you try to please everyone, you end up pleasing no one.

Perhaps additional reform is in order - maybe the USPTO (or even Congress) should think about putting language into the C.F.R./U.S.C. to codify parts of specification drafting . . .

INTERESTING STATISTICS FROM CAFC: The Boston Patent Law Association Newsletter recently printed highlights of Judge Lourie's keynote speech to the group, where he updated some facts on the Federal Circuit:

• More cases are coming to the CAFC via summary judgment instead of a full trial (no suprise - thank you Markman);
• Since Festo, the number of equivalents cases have dropped (again, no real surprise there);
• As of December 2004, there were no cases that were pending for longer than a year;
• Appeals to the CAFC have increased 40% in the last eight years, and 83% in the last fourteen years;
• Reversal rate for patent cases from the district courts is a relatively high 35%;
• Decisions from the USPTO are reversed in only 5% of cases

UK PATENT OFFICE TESTING PUBLIC COMMENT VIA E-MAIL ON PENDING PATENT APPLICATIONS: The UK Patent Office is introducing an e-mail option to help the public make comments on pending patent applications. Accordingly, if someone has evidence which will help the Patent Office decide if an invention is worthy of a patent, then they are encouraged to submit it.

These comments are are referred to as "section 21 observations" (named after section 21 of the Patents Act 1977) and have always been accepted from members of the public who can help the Patent Office with their assessment of whether an invention is patentable. The Patent Office is now helping more people exploit this opportunity by explaining the simple procedures on its website, and launching an address for e-mail submissions.