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.