REPORT FOR INVENTORS BEING PUBLISHED: HJ Ventures is publishing a report for inventors and entrepreneurs to help them protect their patents and intellectual property. The report is a useful glossary of terms used in the patenting industry, and has rather detailed descriptions of each of the terms. This would be a useful tool and reference for a GC or other similarly situated executive that is relatively new to patents, and would like to get up-to-speed quickly on the lingo. While I think the glossary is a tad bit cumbersome to use, the report uses "real-world" language to describe many of the terms and procedures that I think is helpful.

RIM SETTLES BLACKBERRY SUIT: I was particularly happy to see this news, as I have become, as of yesterday, a full-fleged member of the "CrackBerry" masses (thank you - thank you - it's nice to be here), and God knows I wouldn't want anything as insignificant as a hundreds-of-millions-of-dollars patent lawsuit to encroach on my happiness.

Anyways, Research In Motion has agreed to pay $450 million to NTP to settle a patent suit against the BlackBerry maker. The company said Wednesday that the settlement included $137 million already held in escrow, while the remaining $313 million would be expensed in the fourth quarter, which ended Feb. 26.

Unfortunatley, from the academic side of things, we will have to wait another time to see what the Federal Circuit will hold on damages for certain infringing activity occurring abroad. In the RIM case, it was held in the lower court that the plain language of section 271(a) does not preclude infringement where a system is used within the United States even though a component of that system is physically located outside the United States. According to the Court, the test is not whether the infringement took place within the United States, but whether "control and beneficial use" of the infringing system was within the United States. Thus, in RIM's case, control of the system and RIM headquarters were in Canada. End users, however, were located in the U.S. At a minimum, control and beneficial use of the BlackBerry system was located in both the U.S. and Canada.

- See Dennis Crouch's analysis here and here

USPTO BEGINS "THE BATTLE OF THE BACKLOG": The U.S. Patent and Trademark Office has begun a hiring spree to reduce an expected backlog of 580,000 applications by the end of the year. The Office will hire close to 1,800 patent examiners over the next two years, increasing its current staff of 3,800 examiners by 47 percent.

The patent office processed 304,921 applications last year, 187,170 of which received approval for patent protection (that's 61%).

The hiring project is part of a five-year plan the patent office has implemented to cut down on the time businesses and inventors must wait for a patent. The average wait is about 2½ years from the time a request is filed. But patents for computer technology and biotechnology products are often more complicated and can take up to five years.

YAHOO VS. XFIRE LITIGATION UPDATE: Online gaming company Xfire has countersued Yahoo Inc. in a legal battle over instant-messaging patents.

Yahoo previously had sued Xfire, alleging that Xfire's online messenger service infringes a Yahoo patent on technology co-invented by Chris Kirmse, who subsequently went to work for Xfire.

Yahoo claimed that once at Xfire, Kirmse began to develop, test and offer an instant messenger product that violated the Yahoo patent. Among other things, Xfire's product lets a gamer see if other players identified as "friends" or "buddies" are playing an online game.

In its answer and countersuit filed in federal court in San Francisco, Xfire denied Yahoo's allegations and asked the court to dismiss Yahoo's complaint.

Xfire also filed its own charges, alleging that Yahoo's lawsuit was an attempt to drive Xfire out of business or to force Xfire to sell or license its technology to Yahoo for far less than fair market value to settle the litigation.

Xfire, which said that Yahoo never sent the company the customary "cease and desist" letter before filing its lawsuit, also is seeking unspecified damages resulting from Yahoo's alleged unfair business practices.

Xfire said it generated less than $750,000 in revenue in 2004.

Yahoo, one of the Web's marquee names, reported 2004 revenue of $2.6 billion, excluding fees paid to advertising partners.

YAHOO VS. XFIRE LITIGATION UPDATE: Online gaming company Xfire has countersued Yahoo Inc. in a legal battle over instant-messaging patents.

Yahoo previously had sued Xfire, alleging that Xfire's online messenger service infringes a Yahoo patent on technology co-invented by Chris Kirmse, who subsequently went to work for Xfire.

Yahoo claimed that once at Xfire, Kirmse began to develop, test and offer an instant messenger product that violated the Yahoo patent. Among other things, Xfire's product lets a gamer see if other players identified as "friends" or "buddies" are playing an online game.

In its answer and countersuit filed in federal court in San Francisco, Xfire denied Yahoo's allegations and asked the court to dismiss Yahoo's complaint.

Xfire also filed its own charges, alleging that Yahoo's lawsuit was an attempt to drive Xfire out of business or to force Xfire to sell or license its technology to Yahoo for far less than fair market value to settle the litigation.

Xfire, which said that Yahoo never sent the company the customary "cease and desist" letter before filing its lawsuit, also is seeking unspecified damages resulting from Yahoo's alleged unfair business practices.

Xfire said it generated less than $750,000 in revenue in 2004.

Yahoo, one of the Web's marquee names, reported 2004 revenue of $2.6 billion, excluding fees paid to advertising partners.

JAPAN TECH FIRMS REVAMPING INVENTION REWARD SYSTEMS: With scientists and engineers growing more assertive about receiving monetary compensation, Hitachi Ltd., Toshiba Corp. and other leading technology companies are moving to retool their remuneration systems for worker inventions.

Several high-profile court trials (most notably Nichia's Blue LED case) have placed a new urgency on firms to comply with the revised Patent Law taking effect in April, and to make their remuneration systems more transparent and more acceptable. Companies are looking to revamp their systems in an effort to hold on to researchers and create an environment that effectively promotes the development of excellent inventions.

Hitachi has already introduced several measures, including an arbitration committee to handle cases when workers are unhappy with their remuneration for inventions. To be more transparent, the firm discloses the basis for its calculations and announces which workers have received the most remuneration.

Toshiba is introducing similar measures. The company has put its invention reward calculation rules on its intranet, and starting next month it will introduce a system so that workers can protest if they believe that they have not received proper remuneration for inventions.

Asahi Glass Co. has also established a system to deal with inventors who are dissatisfied with their remuneration. It has revised its reward payment system as well. Starting with patents that generate license revenues this fiscal year, Asahi Glass will pay remuneration equal to 2.5% of the license revenues. Until now, the payout was only 0.25% to 1% of the license revenues. Matsushita Electric Industrial Co. and Sharp Corp. are also studying changes to their systems.

BURSTING MICROSOFT'S BUBBLE: Software giant Microsoft on Friday agreed to pay $60 million to Burst.com Inc. to settle a patent-infringement suit alleging it had stolen Burst's technology for sending video and sound over the Internet, the two companies announced.

Burst had charged that Microsoft had met with it over a two-year period and negotiated unsuccessfully for the rights to use Burst’s innovative technology. Burst also said in 2002, that Microsoft’s newly announced “Corona” product used technologies and trade secrets misappropriated from Burst.com. These proprietary technologies were protected by numerous U.S. and International patents (and patents pending).

The patent infringement case against Microsoft was due to be heard in Baltimore, Maryland yesterday.

Burst.com and Microsoft on Friday announced that Microsoft has taken a non-exclusive license to Burst’s international patent portfolio, for a one-time license fee of $60 million dollars. The license is for use only by Microsoft in its own product and does not include sub-licensing rights. The patent license also settles the outstanding litigation between both companies.

Richard Lang, Burst CEO, said that Burst intends to use the net proceeds from the license to Microsoft, after attorneys fees, in primarily 3 areas:

1. To payoff, or reserve for, its current and long term liabilities (approximately $2.8 million), which includes promissory notes (secured and unsecured), outstanding payables, debts to former employees of the company and all accrued salaries and bonuses.
2. To Reserve a sufficient amount of operating capital to launch a vigorous ongoing enforcement of its patent rights against all infringing parties, as well as pursuing software licensing and other avenues available to the Company to maximize the return to Burst shareholders.
3. Distribute a substantial portion of its funds through a cash dividend to its shareholders of record. The dividend per share and date of record will be announced at a subsequent date.

Burst said that when it is available, it will publish the settlement agreement and Microsoft patent license on its website, www.burst.com, except for any confidentiality provisions which may exist.

Get ready, because it looks like Burst is ready to spread out a whole lot of number two . . .

MICROSOFT REITERATES CALL FOR REFORM: Microsoft recently called for reform of the US patent system in a speech by Brad Smith to a speech to the American Enterprise Institute in Washington, DC. Ironically, Smith claimed that the long-term health of the system is threatened by a "flood of patent applications" as well as an "explosion of sometimes-abusive litigation." While Microsoft certainly has not been litigious on the plaintiff's side, being one of the top patent filers certainly throws water on the theory that filing gobs of patent applications presents a "problem" for Microsoft.

Nevertheless, Smith outlined proposals to reduce "abusive" patent litigation, create "more consistency among international patent systems [and] eliminate patent filing fees for individual inventors and small firms", and he also called for more consistent funding for the US Patent and Trademark Office leading to "more quality in the patent process".

Perhaps the most notorious patent dispute involving Redmond is its spat with Eolas regarding "a method of opening third party applications within a browser".

The case saw Microsoft slapped with a $565m penalty for allegedly infringing an Eolas patent. However, the US Court of Appeals last week sent the case back for a new trial. A delighted Redmond says it will "now be able to tell the jury the whole story of how this technology was developed and to present evidence that shows that Eolas did not invent this technology, and that it was developed by others"

CHINA'S INTERNATIONAL PATENT OUTPUT INCREASES: The number of patents filed under the PCT hit a new record last year with sharp increases from Japan, South Korea and China, a senior U.N. official said Wednesday.

Some 120,100 patents were filed last year under the Patent Cooperation Treaty, said Francis Gurry, deputy director general of the World Intellectual Property Organization.

Patent filings through WIPO have been rising steadily since the treaty system began in 1978, with a total 1 million applications since then. In 2003 there were 115,142 filings.

The most impressive growth, however, came from China, where patent filings rose 37.8 percent to 1,782. Although this represents just a tiny slice of total global applications - and of the 250,000 domestic patents filed in China last year - it is a clear sign that Chinese companies are going global, he said.

"The explanation is essentially that China's enterprises are now operating increasingly in export markets," said Gurry. "I'm sure that over the next five years the number will explode."

LET THE CLUCKING BEGIN! The press has been eagerly noting reactions from our EU friends since the EC adopted the software patent directive. And - surprise! - almost all of it is negative. And it's not your garden-variety negativity you'd get from a disgruntled advocate; it's more of a "get-out-the-tinfoil-hats-because-the-invasion-is-about-to-start" anger that has completely enveloped the more socialist elements in EU software circles:

"I do hope this is an error, and wishful thinking from the EC . . . If it is true then it is a very sad day for Europe and the World. The people responsible for this are criminals, the fact that it is white collar crime doesn't make it any better."

"With one hand they fine Microsoft £500m. With the other they give them the means to make £500bn," said Steve J, describing himself as a "soon to be poor software developer"

"Allowing software patents in Europe would basically allow the US to walk all over any European business." Chief technology officer Bill Franklin added: "OSS development is now going to be spearheaded in the third world."

"The sheer ignorance of using US patent protection and the word 'healthy' in the same sentence is repulsive," said Marcus Widerburg, "Seriously, I dont think anyone in the software industry with any insight would think [that the U.S. software industry is 'healthy']"

Horrors! But the most interesting thing I noted was a quote, highlighted by the staff at ZDNet.uk, analogizing algorithms to common tools used by skilled artisans:

Some readers explained their opposition so eloquently, it seems hard to believe the EU could ever support the directive: "Imagine a plumber not being able to use a clockwise turn with his spanner to tighten a leaky pipe due to the 'clockwise turn' being patented by a large international plumbing firm," said a systems engineer. "Or what about a carpenter not being able to hammer in a nail as 'hammering' had been patented by a large international carpentry firm. Make no mistake, when things as elementary as a progress bar can be patented, we ARE talking about this level of impact for small to medium business that are unable to afford to play the patent game. What's worse is that if this IS passed, any one piece of software may well cross over dozens of patented ideas."

Well, it's a valid concern in principle, but hardly a new sentiment that hasn't been addressed before, at least in the US courts. In Gottschalk v. Benson, Justice Dougles (hardly a cheerleader for software patents) rejected a BCD-to-binary conversion algorithm as patentable subject matter, stating that "[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." However, “[w]hile a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be.” Thus started the 30-year journey for US patent law to rationalize, and finally recognize, software patents as statutory subject matter.

Welcome to 1972, ladies and gentlemen . . .

USPTO UNVEILS 3 INITIATIVES TO IMPROVE PATENT PROCESS: The Director of the USPTO, Jonathan Dudas, announced a three-part initiative to improve the agency's processes for handling patent applications. The initiative was announced at a March 4 press briefing in Chicago.

(1) The first change to be implemented is a pre-appeal-brief conference to be held after an unsuccessful patent applicant has filed a notice of appeal, signaling their intent to challenge the examiner's rejection of the patent at the PTO's Board of Patent Appeals and Interferences. Before the applicant files a brief in the appeal, the PTO will convene a conference of three examiners--the examiner assigned to the application, that examiner's supervisor, and a senior examiner--who will review the file to decide whether to maintain the PTO position, or instead to allow the patent or reopen the application for further prosecution. Applicants will be required to request the conference in writing, identifying the rejections that they intend to challenge, and the reasons for those challenges. If the PTO decides not to contest the appeal, this intermediate reassessment of the case could spare the applicant the unnecessary expense of the appeal brief. For example, appeal briefs cost an average of $5,000 per case. The savings overall from the 9,000 appeals filed annually could amount to $30 million. Avoiding the need for briefing in complex appeals could produce even greater savings.

(2) The second component of the PTO's planned improvements is to "clean up" the backlog of pending ex parte patent reexamination cases. The agency will accomplish this goal by instituting a new panel review process, similar to the pre-appeal-brief conference, to consider each reexamination action on its merits. The panel, made up of senior and supervisory examiners as well as a reexamination specialist, will produce a "second office action" in each case that will be a final ruling on the merits.

(3) The third component is the search for prior art that is part of the patent reexamination process. To be an aide and improve the reliability of the patent search, the PTO will develop a "search template" for each of the more than 600 classes of patents in the PTO system. The references that comprise the search templates will be drawn from U.S. patents, foreign patents, and non-patent literature. The PTO hopes to produce the first templates for public comment by July. Such a search grid is already available in the business method patent Class 705. This augmented search tool will also assist the PTO in its hiring of contractors for the pilot outsourcing project underway for PTO searches, and it will let the other two trilateral patent office members--the European Patent Office and Japanese Patent Office--know what the PTO regards as relevant prior art.

ON TO THE EU PARLIMENT: (CNet) The EU Council has finally approved a proposal on software patents, despite opposition from numerous software developers and some European countries.

The European Council adopted the software patent directive on Monday, despite requests from Denmark, Poland and Portugal to reject the directive.

An EU Council representative said Monday morning that the Computer Implemented Inventions Directive had been adopted but was unable to give more details.

As it now stands, the directive would legalize software patents. Supporters say the directive would protect research and development investments by European companies. Opponents say it would stifle innovation.

Last week, it was reported that Denmark would attempt to have the directive listed as a B-item, rather than an A-item, allowing the text to be renegotiated.

The Luxembourg minister acknowledged that Denmark, Poland and Portugal would have preferred the directive to be listed as a B-item, according to Mueller. The directive now moves to the European Parliament, which can reject or amend the proposal, for a second reading.

NOT SO FAST! (ZDNet) The EU software patent directive was scheduled to be adopted next Monday, but a last-minute move by Denmark could now derail the process. Opponents of the Computer Implemented Inventions Directive are set to launch a last-minute intervention to try and prevent it being adopted by the European Council.

The directive, which many claim will allow the widespread software patenting in Europe, is scheduled to appear on the agenda of a meeting of competition ministers on Monday 7 March.
As an A-item, the directive had once again been expected to be approved without debate, but it emerged late on Friday that Denmark will attempt to have the directive listed as a B-item at a later meeting instead. This means the text of the directive could be renegotiated.

Denmark's representative at the meeting of ministers is compelled to ask for the change because of a vote by the Danish Parliament's EU committee that came out in favour of seeking to reopen discussions. Denmark's government is legally bound to adopt any parliamentary decisions regarding the EU.

Denmark's move could provoke a domino effect, encouraging other countries such as Poland and Spain -- who have concerns about the directive -- to also push for renegotiation.

THE AFTERMATH OF INDEPENDENT INK v. ILLINOIS TOOL WORKS: The decision in this case, decided last month in the Federal Circuit, increased the risk of antitrust tying claims against patent holders who condition the purchase of a patented product on the purchase of an unpatented product. As summarized in Dennis Crouch's Patently-O Blog, Trident, a wholly-owned subsidiary of Illinois Tool Works, manufactures printheads and owns U.S. Patent No. 5,343,226 covering the technology. The ‘226 patent discloses an ink jet device and a supply system with a hand actuated peristaltic pump. Trident also manufactures ink for use with the patented printheads. Although the ink is not protected by any of Trident’s patents, their standard license agreements grant the right to “manufacture, use and sell… ink jet printing devices…” to other printer manufacturers only “when used in combination with ink and ink supply systems supplied by Trident.”

The Federal Circuit held that Illinois Tool's patent covering its printheads "presumptively defines the relevant market as the nationwide market for the patented product itself" and "creates a presumption of power within this market." The court further held that Illinois Tool failed to rebut the presumption because it did not present sufficient evidence (e.g., expert testimony) that the boundaries of the relevant market extended beyond its patented printhead. In doing so, the court specifically rejected the notion that a patent creates an irrebuttable presumption of market power.

So what's a patentee to do? Danielle Fitzpatrick provides three considerations for businesses that are considering tying non-patented products to their patented products:

1. The court indicated that the presumption arises "when the tying product is patented or copyrighted." Therefore, both patent holders and copyright holders should take stock of sales practices.
2. The decision makes it easier to bring an antitrust tying claim where a patent or copyright holder links the sale of patented and unpatented goods. This may result in more tying claims under Section 1 of the Sherman Act, although the litigation of those claims will likely not change significantly.
3. Presumption or not, all patent and copyright holders who condition the sale of a patented product on the sale of an unpatented product (or are considering doing so) should undertake at least a preliminary analysis of the relevant market. A decision to tie products or services to patent rights or patented products raises serious antitrust concerns and should always be carefully reviewed by antitrust counsel. Even if the patent holder does not enjoy market power, it must nevertheless weigh the risk of antitrust litigation (which is widely recognized as one of the most expensive and time-consuming types of litigation) against the benefits of the sales practice.

INFINEON - BACK IN THE SADDLE AGAIN: Shortly after disposing one of Rambus' infringement suits, Infineon now finds itself (along with Micron) defending a patent infringement suit brought by Tessera Technologies Inc., who is charging that the companies infringed upon Tessera's IP for packages used to house memory and other semiconductor devices.

The suit, filed in the U.S. District Court for the Eastern District of Texas, revolves around packages used for dynamic random access memory (DRAM) devices, confirmed Doug Norby, senior vice president and chief financial officer for Tessera.

Tessera settled a patent suit last November with Samsung Electronics Co. Ltd. of Korea involving multi-chip packages. Tessera ended up licensing its packaging IP to major semiconductor suppliers.

In the past, Tessera has also tangled with Texas Instruments Inc. and Sharp Electronics Corp. of Japan in packaging IP disputes.

• TiVo TRIES PLAYING THE PATENT CARD: In recent years, TiVo has been hounded by competitors, seeking to take a bite out of the innovative company's DVR technologies. The market has been speculating that TiVo is all but doomed to be sold to a media/electronics giant such as Sony and Time-Warner by year's end, due to the stiff competition.
  
  In response, TiVo has been rolling out some interesting new features for their services, and have been placing a greater emphasis on their patent portfolio as a possible precursor to becoming a licensing entity.
  
  However, as is often the case, convincing the market that your patent portfolio has significant value is a difficult and complicated process. Taking into consideration that TiVo's portfolio hasn't been seriously tested yet in the courts, many pundits have been left speculating just how powerful the patents really are. One research analyst commented:
  
  

  "It's hard for us as outsiders to look at how much value there is in the patents . . . everyone is thinking about this from the perspective of whether or not TiVo can license the patents or whether or not TiVo can effectively keep competitors at bay because of their intellectual property. We are all curious."

The PVRBlog took a quick look at one of TiVo's newest patents, and correctly noted that the patent bears an uncanny resemblance to a feature described in Microsoft's Windows Media Center. Is a showdown ahead? If so, it will be a doozie . . .

THE NEXT PUSH BEGINS - (Reuters) European Union President Luxembourg expects the bloc's ministers to approve a controversial draft law on patenting computer-based inventions on Monday, a Luxembourg official has said.

The decision would mark a victory for advocates of patenting some computer software, notably big firms such as Microsoft and Nokia, against many small companies, which fear the planned law would push them out of the market.

The ministers' approval of the draft law would send it to a second reading -- the phase in which it is more difficult for the sceptical EU Parliament to push through amendments.

FEDERAL CIRCUIT ORDERS NEW TRIAL IN EOLAS V. MICROSOFT CASE: Dennis Crouch of Patently-O gets the scoop on the decision by the Federal Circuit to order a new trial in the $500 million dollar blockbuster. The court found that the district court improperly granted judgment as a matter of law (JMOL) in Eolas’ favor on Microsoft’s anticipation and obviousness defenses and improperly rejected Microsoft’s inequitable conduct defense -- and thus vacated the district court’s decision and remanded for a new trial on these issues. The CAFC also affirmed the district court's claim construction and related jury instruction.

I'M NOT SURE WHAT TO SAY . . . (Use BugMeNot for subscription access) From constipation to cancer, diarrhea to diabetes, they offer to cure nearly everything -- with medicines made from cow urine. India's Hindu nationalists, who were ousted from power last May, have a new job: promoting cow products that many Indians believe have great therapeutic value.

A stall at the headquarters of the main opposition Bharatiya Janata Party showcases more than two dozen tonics, potions, pills and a line of cosmetics. The products are sold under the brand name Goratna, or "jewels of the cow."

The Goratna offerings use five key cow products -- butter, milk, curd, urine and dung. Purushottam Toshniwal, the general secretary of the cooperative that manufactures the cosmetics, said workers there followed a "solid scientific process" based on India's ancient herbal remedies, known as ayurveda.

The science and technology minister in the previous Hindu nationalist-led government pushed officials to file an application with the U.S. Patent Office for a patent on cow urine distillate. The patent was granted in 2002.

"Even in the United States, they now recognize the worth of cow urine," Toshniwal said.

umm, no they're not . . .

BLAMMO! JUDGE DISMISSES RAMBUS SUIT AGAINST INFINEON: In a case that was closely watched on this blog, Judge Robert Payne of the U.S. District Court in Richmond, Va., dismissed all of Rambus's remaining patent claims in the case, after it was found that Rambus' "misconduct" in handling documents and presenting evidence. The ruling came just before the claims were to be heard at trial.

Rambus, of course, vows appeal.