Microsoft Patent Ruled Invalid in Germany

On Foss Patent, it was reported that the patent court in Germany ruled the German part of a Microsoft patent, EP0845124, as invalid today. This patent was related to the Google Maps Android app and was filed by Google's Motorola Mobility, following an infringement filing by Microsoft prior. Thus, the invalid ruling is a huge blow to Microsoft. It could have been used to leverage settlement from Google's Motorola Mobility (although it is bought over by Lenovo) as all the infringement claims filed by Microsoft against them in 2010 has yet to go to trial even now.

The case is special as Microsoft is filing for an appeal to salvage the patent immediately. This is special as the appeal is usually filed after the court's written decision is out, which is typically months after the hearing. However, the discussed patent is actually expiring in the Summer of 2015, and the delays from each procedure could eventually mean the patent expires (if appeal turns out to be successful) before any infringement can be ascertained. Since the reversal rate in the patent court is very high, at more than 40% for nullity cases, Microsoft still stand a chance to gain some usefulness out of the patent. It will be a marginal race with time though.

Sources:
http://www.fosspatents.com/2014/02/federal-patent-court-of-germany.html
http://worldwide.espacenet.com/publicationDetails/originalDocument?FT=D&date=20000517&DB=worldwide.espacenet.com&locale=en_EP&CC=EP&NR=0845124B1&KC=B1&ND=4

A Letter to the UPC

The Unified Patent Court (UPC) Industry Coalition, which includes big tech firms such as Apple, Cisco, Google, Microsoft and Samsung, issued a second open letter to the UPC, the common patent court of EU, to highlight the current limitations of the court which allows for NPEs, or PAEs, to abuse the system. They thus urge the UPC to address this lest the EU becomes a patent troll's paradise.

The letter listed the main flaw being that the court order for an injunction is separated from the determination of validity of a patent. This is also known as bifurcation, as mentioned in the letter. NPEs can use their patents to cause the court to order an injunction on products, even if the patent can be proven to be invalid, since a much longer time is taken to determine validity. As such, NPEs can make use of the flaw to ask for a settlement and thereafter use the patent on another company. This is a serious threat since they are not contributing anything to get some money in return, and the money actually comes from consumers.

Although there are not as many NPE in the EU compared to US, with the tightening of laws making it hard for NPEs to profiteer in the country, they will soon target the EU. In fact, seeing the path we are heading, NPEs will be akin to parasites moving across countries to find a suitable host when the existing host has lost its usefulness. I hope that the various patent courts across the world will be aware of the situation and plan to mitigate it before the NPEs strike them.

Sources:
http://www.fosspatents.com/2014/02/growing-industry-coalition-urges-eu.html
http://www.scribd.com/doc/209104430/25-February-2014-UPC-Industry-Coalition-Open-Letter

Some Patent-related Policy Initiatives

The guest post by Professor Jorge Contreras on Patently-O (Industry Responds to White House Calls for Prior Art, Examiner Training) summarises the significant patent-related initiatives in place now, as well as how the private sector has responded to them. In particular, the call for the private sector to help provide additional training for the patent examiners at USPTO and to disclose and share prior art piqued my interest.

Although the patent examiners know about their sector of expertise well, given they are busy with examining patent applications on a daily basis and the rapid advancement of technology right now, they are certainly not up to date with the technology progress. It will be beneficial to the companies to keep the examiners up to date, else more bad patents may pass through and, in turn, be used against them. However, I feel that there might be limited impact from the training as there is just too much to cover. It will take weeks or even months to be able to fathom what the progress is in every area under the examiner's expertise. Nevertheless, I still agree that this will be a necessary step to take lest they become cavemen. Every bit of training does help.

This brings to the point that I feel the disclosure and sharing of prior art would be more effective for the PTO. With greater accessibility to hitherto unknown technological development, examiners will be able to ascertain if patent applications are indeed new. Anyone will definitely be able to see why this is the case. However, a drawback would be that other companies can then figure out how some processes are done and attempt to copy them, especially since no patents were filed for them. A way to go about this might be to privatise this database of prior art such that they are only available to patent granting offices, which can also prompt more companies to be willing to disclose their knowledge. This way, overlapping patents can be rejected by explaining there is prior art, and companies can make use of the concepts for themselves but without monetising them through litigation.

Sources:
http://patentlyo.com/patent/2014/02/industry-examiner-training.html

Approach to Demand Letters

A bill which spells out what could and could not be considered as evidence for a bad faith assertion in demand letters was passed by the Kentucky Senate last Thursday. This seeks to prevent patent trolls from sending out demand letters on patent infringements without doing a comprehensive analysis and yet attempt to benefit from the unreasonable demand. It prompts the patentee to "engage in a good faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy". While it does not mean that it is absolutely necessary, it will better substantiate the claim, along with several other points. Another important point is that if the patent-holder is a non-practicing entity, it could also be used as evidence.

This attempt to lower the odds for patent trolls in lawsuits would definitely help to protect the defendants, at least currently in Kentucky. As the defendants have to litigate the case when they do not meet their demands by the plaintiffs and thus get sued, it could end up costing a lot of money and time. If it is shown to be invalid, the time and money wasted would be for nought. With this new bill, the plaintiff would have to pay for any damages and distress it caused to the defendants with the demand letter and subsequent lawsuit. Hopefully, the bill will soon be replicated in other states, especially Texas, Delaware and California which sees the most patent lawsuits.

Copying directly from Foss Patents, which summarises the bill:

These factors may be considered as evidence of a bad-faith assertion:

• A demand letter fails to state the patent number, the name and address of the patent owner(s)/assignee(s), or specific factual allegations relating to the infringement claim.
• A patent holder fails to conduct a reasonably specific infringement analysis prior to sending a demand letter.
• Information reasonably requested by the taret of a royalty demand is not provided within a reasonable period of time.
• The roaylty demand is not based on a reasonable valuation.
• The claim is meritless and the patent holder knew or should have known this.
• The claim or assertion is "deceptive" (not defined).
• Previous behavior and litigation can affect subsequent actions (for example, earlier demand letters that failed to satisfy the criteria laid out in the bill).
• The patent holder is a non-practicing entity.
• Any other factor the court finds relevant.

And these factors can support a patent holder's claim that an assertion was not made in bad faith:

• The demand letter contains the information the bill requires.
• If the original demand letter did not contain it, the patent holder may still be able to cure the defect by providing the information, on request, within reasonable period of time.
• The patentee "engages in a good-faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy".
• Substantial investment in use of patent or in production or sale of product or item covered by it.
• The anti-NPE assumption is counterbalanced by assumptions in favor of patent holders or original assignees who enforce a patent themselves, and institutions of higher education and any technology transfer entities they own.
• Previous behavior can be helpful to a patentee if he previously demonstrated good-faith business practices in enforcement of the same patent or a substantially similar one, or successfully enforced the patent or a substantially similar patent through litigation.
• Any other factor the court finds relevant.

Sources:
http://www.fosspatents.com/2014/02/kentucky-senate-committee-approves.html
http://www.lrc.ky.gov/record/14RS/SB116.htm

AIA's joinder rule? First-filed case? Writ of mandamus?

I was reading up on the post, HTC, LG, ASUSTek, Pantech join Samsung in moving for dismissal of Rockstar Android lawsuits, and it ended up being more confusing to me than it is an update on the situation. The article is primarily an update on the situation, but it is a learning experience for me on the technicalities. I went on to do a bit of research on the technical terms mentioned in the article which helped make sense of it.

Below is a brief summary of some of these foreign terms (at least to me)

America Invents Act (AIA)'s joinder rule: Previously, the patentee was allowed to sue unrelated companies through a single patent lawsuit, and that made it difficult for transferring cases. It also allowed the patentee to reach high settlements from many companies through a single lawsuit. However, with the change in joinder rules in 2012, multiple, unrelated defendants may be joined only if the case relates to the same accused product or process, and not because they all infringe the patents brought to court.

First-to-file: Not to be confused with first-to-file for patent application, this means that if there are two lawsuits in different locations relating to the same companies and case, the case will be tried in the district where it was first filed. However, there are exceptions to it such as if the first cased was filed as an anticipated lawsuit. In layman terms, if I know you will be suing me, I should sue you first in a place that is more advantageous for me, knowing that if you sue me, by first-to-file ruling, it will get transferred to my chosen place. For such a situation, there is thus some exception to try the case in the second place.

Writ of mandamus: Simply put, it is an order by a superior court to a subordinate court to properly fulfill its duties, such as making a decision when due, or correct a mistake.

Sources:
http://www.fosspatents.com/2014/02/htc-lg-asustek-pantech-join-samsung-in.html
http://www.insidecounsel.com/2013/04/09/ip-the-failure-of-venue-and-joinder-reform-in-pate
http://www.jha.com/us/blog/?blogID=1372
http://www.law.cornell.edu/wex/mandamus

Patent Courts, Copyright Courts

As mentioned in an earlier post, the Eastern District of Texas and District of Delaware are popular regions for patent lawsuits. With all the talk about patents lately, we may have forgotten about copyright and trademark infringements. In the Patently-O blog entry, Disjunction in IP Litigation: Patent Courts are not Copyright Courts, it is found that there is barely any copyright and trademark lawsuits ongoing in the above two districts. The Central District of California, which is third in place for patent lawsuits, ranks first in the number of copyright and trademark lawsuits.

It is interesting to find out that this is due to the different Courts for patent, copyright and trademark infringements. Even though they are all infringement of intellectual property, they are managed by different government offices. This is, as the author Dennis Crouch said, odd. There could be some generality that could be applied for the different forms of infringement, but due to the different courts, there will be different rulings for similar cases. A collaboration between the two courts could also lead to faster cases.

Still, with the large number of patent lawsuits that are ongoing, it probably would be good to separately classify them. Copyright and trademarks have been around and well known by the community for a long time and they tend not to be as technical as patents. Combining them could make the delay for pending lawsuits even longer. Looking at some statistics, there is a huge increase in patent lawsuits from 1,165 cases filed in 1990 to 5,163 filed in 2012, while the number of copyright and trademark cases filed increased from 2,095 to 3,074 and from 2,410 to 3,400 respectively. The total number of patent cases filed in US each year, will soon be more than the sum of copyright and trademark cases together.

Sources:
http://patentlyo.com/patent/2014/02/disjunction-litigation-copyright.html
http://www.uscourts.gov/uscourts/Statistics/JudicialFactsAndFigures/2012/Table407.pdf

Google's Mobile Application Distribution Agreement

According to Florian Mueller of Foss Patents, there was a shocking revelation of the Mobile Application Distribution Agreement (MADA) just yesterday, from a blog post by Harvard Professor Ben Edelman. The MADA is an agreement between Google and companies using Android for their mobile devices, which requires the companies to distribute devices only if they are all the Google applications pre-installed and Google's software should run as default, such as the search engine. Only then will the companies be allowed to label them as Android devices.

According to Edelman, the MADA simply eradicates competition. Simply put, having multiple apps with the same function is pretty redundant. There is little purpose in having Yahoo or Bing searches installed, if Google search has to be the default search engine when the devices are sold off the shelf. I do agree with Edelman, even though I am happy using a Galaxy S2. Even though we can change the default settings after we download another app, most users would be contend with the existing apps, and this can mold the user preference towards Google when they are using their laptop or other non-Android devices. One feature that I think might be linked to the MADA, is that by default the Google Play store will install the new Google apps that were added on after I got my phone. Since my S2 is an old handset, the memory is extremely limited, in current terms, and I was forced to disable many of the additional Google apps which I found no use for. Although the MADA does not affect me much, its revelation will definitely affect Mueller and other app developers' opinion of Google. Their apps might get relegated when Google introduces their own app of similar functions.

Source:
http://www.fosspatents.com/2014/02/googles-once-secret-restrictive-android.html
http://www.benedelman.org/news/021314-1.html

Acquisitions and Sales

Following my post about the sale of Motorola Mobility by Google to Lenovo, I did more readings about the initial purchase and whether it was worth it, given they are selling off to Lenovo at a much lower price. Google first acquired Motorola Mobility in August, 2011 for $40 per share, for a total of $12.5 billion. According to Google, they attributed the purchase to two reasons - innovation and to protect the Android ecosystem. I would say the primary reason was to protect the Android ecosystem though. At that point in time, both Apple and Microsoft were already suing almost every Android maker, and Oracle was also seeking up to $6.1 billion from Google. With Motorola's roughly 24,500 patents, Google will be better equipped to battle against the onslaught.

With the upcoming sale of Motorola to Lenovo at $2.91 billion, many are debating whether the initial acquisition was worth it. Jean-Baptiste of Forbes did some "fuzzy math" and estimated Google to be paying less for their remaining patents than valued. Personally, I feel that the price to pay for the initial acquisition was worth the risk. Not many know the details of the acquired patents, and with the sheer amount, we are probably too lazy to find out. Nevertheless, those patents may have or will be protecting Google and the Android system in the years to come. Taking HTC vs Apple for example, HTC's injunction did not just have a short term impact, it allowed Apple to continue growing their market share. As we know, once people uses an Android or iOS, they are more likely to stay loyal to the system due to the cloud support. People usually make the switch only when there is a disgrunt with the existing operating system.

Sources:
http://www.google.com/press/motorola/
http://www.reuters.com/article/2011/06/18/us-oracle-google-lawsuit-idUSTRE75H0FP20110618
http://www.dailytech.com/Can+Microsoft+and+Apple+Kill+Googles+Android+with+Lawsuits/article22114.htm
http://basicsmedia.com/google-inc-nasdaqgoog-posts-huge-losses-with-its-motorola-unit-8619
http://techday.com/the-channel/news/was-buying-motorola-a-costly-mistake-for-google-or-a-clever-move/179073/
http://www.forbes.com/sites/jeanbaptiste/2014/01/29/google-profits-billions-with-motorola-sale-to-lenovo-keeps-patents/

Jury Trials - A Recent Trend

One of the topics discussed in this week's class was that the choice of jury, to a large part, determines the location of patent infringement lawsuits. For example, Districts of East Texas and Delaware ranks first and second respectively in the number of patent trials in 2012, due to the higher likelihood of getting a less educated jury. Professor Mark Lemley from Stanford Law School wrote a paper, Why Do Juries Decide If Patents Are Valid?, where he discussed that jury trials for patent case has only become a only the norm in the recent decades.

There is no written rule that states that patent infringement lawsuits has to be jury trials, and they can very much be a bench trial. However, as Lemley mentioned in his dissertation, "the evidence that juries favor patentees is overwhelming", and lawyers began to realise that in the late 1970s, thus significantly increasing the ratio of jury to bench patent trials since then. Also, prior to that, it was generally taken that there was no right to a jury trial in patent case, the details of which is in the paper.

Since lawsuits can only be filed by the patent holders and not vice versa, they do not have much to lose opting for a patent trial. The process may be long drawn and cost more money, but it may be worth more than the losses the defendant may suffer, which translates to larger profits for the plaintiff.

Sources:
http://patentlyo.com/patent/2014/01/jury-trials.html
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2306152
http://arstechnica.com/tech-policy/2013/01/east-texas-courts-are-back-on-top-for-patent-lawsuits/

Acquisitions, patents, the war and the future...

Despite planning to sell off Motorola, Google will be retaining "majority of the 17,000 Motorola Mobility patents" from its 2011 acquisition. ("Google to sell Motorola Mobility to Lenovo in $2.9bn deal") The vast amount of patents involved in the deal highlights the importance of patents in the ongoing war and why technology companies are so interested in acquisition of start-ups.

Mergers and acquisitions used to be the talk some many years back, when banks and multi-national companies did M&A to expand. This allowed them to enter into new markets - other countries, and also other industries.

Nowadays the topic is all about the digital world. Coming from Singapore, I have long heard about youths creating start-ups in the US, hoping to the bought over by Google (I always hear about Google, so I am not too sure about the rest). I never really thought about it, but I guess there is a link between start-ups and patents, leading to their acquisition. Sure, they are all smart people with smart ideas, but why would Google want to acquire so many. One possibility is that they get to grow their pool of innovative people, and allow for a place for cross communication between different groups which might lead to grander, better ideas. And Google gets to own the patents under their name. It would be easier then to implement more things without as much fear of infringement.

Unfortunately for the phone segment, there has already been so many competitors in it, right from the time of boring candy bar cell phones by Nokia. Apple may have come up with the revolutionary iPhone, but many companies might have owned some patents which they may have unknowingly "copied", and more so the later contender Google with Android. So where am I going with this? Nowhere much, just that the talk of the town will change someday. Although the bulk of patents is currently in smartphones, there are loads of patents elsewhere too. The focus might shift to other segments of the digital world where they might be another revolutionary product (hint: driver-less cars, integrated transport systems, etc?) if they do pick up the pace. This century will definitely be an exciting one.

The smartphone patent thicket

The article "The sky is not falling: Navigating the smartphone patent thicket" by Jeffrey Lewis and Ryan Mott, dated February 2013, is an excellent summary of the ongoing patent war and its representation of "a milestone of progress". With their professional expertise on intellectual property, Lewis and Mott has shown that the ongoing patent war is nothing new in the world of patents. They term the situation as a "patent thicket" which means that every company owns a patent to a part of the whole, but none to everything, which led to multiple companies suing one another. By using an example from history - the sewing machine, they explained how the then patent thicket came to an end. It is definitely an interesting read and I recommend all of you to check out the article if you have not done so.

As for my personal take on patent wars, I agree with the writers that the war represents a huge milestone in technological advances. After all, it created a whole new market well worth the investment. It changes the lifestyle of people. It became easier and faster to come up with individual unique designs at a low cost of failure. Tailors are able to try out different kinds of designs and patterns and industrial machines do not need to be modified to cater to each new design, until they are proven to suit the consumers. Ain't that a milestone? Fashion changes so fast that there's a new style almost every decade, while previously people wore the same designs for decades before cultural interaction influence their sense of dressing. Of course, before that happened, many long years and much money were spent battling for supremacy.

The current smartphone patent war may not be near its end, but I feel proud to be living through its fight. It will end one day, everyone will get sick and tired of fighting anyway, and it will be interesting to compare how different life is before and after the war. Already, it is currently way different from a decade ago! For now, it might be the least of their concerns but I do hope, one day, the corporations will take into account the social impact of such devices when coming up with newer products. There is a growing trend in technology addiction. We'll see how it goes in the decade to come.