Wednesday, June 04, 2008

Patent Enforcement Companies Keep Trying to Skirt eBay v. MercExchange

Say what you will about patent enforcement companies (i.e., "patent trolls", "non-practicing entities", etc.), but they certainly aren't short on creative ideas when it comes to getting new angles on patent litigation strategy. Since the Supreme Court's decision in eBay v. MercExchange, patent holding companies have been looking for ways to tip the scales of the four-factor injunction test in their favor.

In mid-2007, the E.D. Texas heard CSIRO v. Buffalo Technology, Inc., where the court recognized "research institutions" as participants in the research group market, thus qualifying them for injunctive relief. Accordingly, companies like Wi-LAN began forming "research and development teams" that complemented their patent holdings in an effort to get move favorable treatment in the jurisdiction on injunctions. According to a CNNMoney article:

In addition to providing Wi-LAN with future patents . . . the firm's research
and development activities and university funding may also help the firm obtain
permanent injunctions in litigation, as the courts could recognize the firm's
status as a research and development organization (see earlier 271 Blog coverage here).
Rembrandt IP has taken a few creative steps of their own. When litigating contact lens-related patents against CIBA Vision and Bausch & Lomb (who competes with CIBA), Rembrandt allegedly tendered to Bausch & Lomb (B&L) a unique settlement offer: purchase rights in the patent so that Rembrandt keeps monetary damages, but B&L obtains the right to seek an injunction against CIBA if Rembrandt prevails at trial. In earlier coverage from the Troll Tracker Blog (no longer accessible), CIBA noted with the district court that this arrangement would "effectively cause" B&L to switch sides in the case, and "[b]y purporting to transfer the right to seek an injunction to B&L, Rembrandt Vision hopes to improve its chances of obtaining an injunction." While it is unclear whether this strategy will prove successful, it is worth noting that Rambrandt recently obtained a $41 million dollar verdict in the case.

Not sitting still, Rembrandt recently made news again when it was reported that the company teamed with a small Taiwanese cable modem manufacturer to make "Rembrandt" cable modems (branded "Remstream") to complement ongoing patent litigation against a multitude of cable companies. According to a court filing by defendant Comcast, “Rembrandt has endeavored to become a supposed market participant or direct competitor of the MSOs and/or DOCSIS-compliant equipment manufacturers for the sole purpose of seeking injunctive relief and/or lost profits in its infringement suits.” Additional parties have alleged that Rembrandt's “sham” attempts to portray itself as a cable-modem vendor violated antitrust regulations.

See Multichannel News, "Operators, Vendors Accuse Patent Firm Of Modem 'Sham'" (link)

See DowJones Newswire: "New Strategy To Obtain Injunction Alleged In Patent Dispute" (link)

See Forbes, "Patent Payday" (link)

10 Comentários:

ryanwarn said...

Just to illustrate the danger that patent trolls pose to entire industries, check this out:
http://www.politico.com/news/stories/0608/10808.html

Data Treasury is exactly the sort of patent troll that industries should be watching out for -- they are dangerous in terms of innovation, efficiency, and general market health.

Anonymous said...

I just read this Politico story- I don't know much about the history of DataTreasury but these guys sure seem creepy. Politico seemed to be saying volumes in what they didn't say about the company and they eluded several times to some shady dealings. What's up with this company? Are they really a patent troll? It makes me sick when this happens. It is like the mob trying to "go clean" by getting involved in casinos in Vegas. Trading one sin for another. Does this company even make anything?

Anonymous said...

Inventor A invents, gets a patent for himself, never builds anything, enforces it. Troll.

Inventor B invents, assigns rights to his employer Microsoft, who enforces it. Not a troll.

Inventor A's patent is sold by Inventor A at auction to Intel, Intel enforces it. Not a troll.

Inventor B's patent is sold by Microsoft at auction to Bob's IP, Bob's IP enforces it. Troll.

Chewbacca has a patent. Not a troll, a wookie.
Can get an injunction.

Anonymous said...

Please get your facts straight. Wi-LAN did not begin, but actually had a Research & Development team and in fact did sell wireless products. As well, they acquired Tri-Vision which also make their own set-top converters.

You can glance at their products: http://www.tri-vision.ca

Tri-Vision also owned the patent for the V-Chip 2.0.

Will said...

Two words: Patent Reform!

Reasons:
1) Congress should stop companies from using other people's IP to sue banks. The Data Treasury debacle that gets more than its fair share of press now is a case and point. The NY Times once said they only business was suing banks. That counts as a TROLL according to the above definitions.

2) Current legislation is too easy on Trolls and needs to fix this market failure that allows bottom feeders to mooch off the brilliance of others. Which leads to point 3.

3) Wookies who get injunctions clog the judicial system with frivolous lawsuits- we all know 3PO was the brains of the bunch.

Carl said...

I agree that patent reform is needed. Patent trolls are the greatest menace to Intellectual Property imaginable and DataTreasury is the classic Troll. It didn't create the patent- rather is bough someone's great idea- and is now using this to wage war on our nations banks. The worst part is that the banks are complying with a law (Check 21 Act 2004) that mandates that they use a system to image checks. DataTreasury then says that they own the idea of imaging checks and demands that banks pay huge sums to this company. Such things should be a crime. The one of the two employees of this company should know something about crime- he was arrested and served time for robbing an armored truck!

Marc said...

Carl,
And the banks aren't crooks ???!!!
Ask Countrywide Financial, a member of the coalition for patent "fairness" (CPF).

Carl said...

Marc, no the banks aren't crooks for using the idea of taking pictures of checks. Banks should pay for the technology to process imaged checks but that isn't the issue here. DataTreasury's business method patent, they claim, gives them sole access to the idea of processing imaged checks. That is a big problem. Plus, banks have been experimenting with electronic check transfers since the 1970s. DataTreasury is the Johnny Come Lately who is trying to make money off an already established system. As for asking financial institutions, Note that no court has upheld DataTreasury's side. Some banks of settled outside of court with DataTreasury but that is not an admission of guilt. It could simply be to avoid a long, expensive trial that will hurt the bank more than the tiny 2-man DataTreasury that no one has ever heard of. The banks aren't the crooks- that title belongs to DataTreasury.

patent enforcement force said...

So guys, have you seen Flash of Genius? good movie about this debacle.
(just wanted to get it out there).

Patent Trolls, on the other hand, what a big business eh?

Also, you might want to check out Google's own patent litigation these days. It was a shock to me also. Apparently, "Android" is patented and Google actually knew about it. But they still pushed through with using the name/brand.

John Dale said...

You gives me an idea on what i am working on right now, lucky to dropped by on your blog. It is really an informative one. Thanks for sharing this to us. nice post.

Patent Enforcement

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