Source: https://patentplanetblog.blogspot.com/2012/06/
Timestamp: 2019-04-25 08:47:02+00:00

Document:
European Union Paves Way for Single European Patent?
The European Patent Office (EPO) announced an agreement that the court's central division would be located in Paris with other courts in Munich and London. The EPO stated the European patent court would have exclusive jurisdiction in infringement and revocation proceedings of European and unitary patents.
This decision could pave the way for the adoption of a single European patent, sometimes referred to as a unitary patent. This would replace the national validation procedures with a single step, reducing costs and streamlining the present cumbersome arrangements for obtaining patent protection in Europe.
The EPO would grant the unitary patent and centrally administer it on behalf of the 25 EU members which have agreed to participate and maintain the register of unitary patents and collect renewal fees.
A European Patent Court and single European patent have been discussed for decades, but when the EU follows through it should simplify the current system and benefit small and medium-sized companies.
The PTO has announced Fall roadshows to explain the final rules implementing the provisions of the America Invents Act (AIA) that take effect on September 16, 2012.
A determination of willful infringement may greatly increase the damages. Under 35 USC 284, a judge has discretion to increase damages up to three times to deter patent infringement.
In Seagate, the Federal Circuit defines a test for willful infringement that requires clear and convincing evidence (1) that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent, and (2) that the infringer had knowledge (or should have known) of this risk.
In Bard Peripheral v. W.L. Gore, the Federal Circuit determined that a judge should decide the first prong: whether the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.
In the past, a jury would decide willfulness, but the Bard defendant asserted a judge should determine whether the infringer's actions constituted an objectively high-likelihood of infringement.
After reviewing the Supreme Court's precedent in similar contexts, as well as our own, we conclude that simply stating that willfulness is a question of fact over-simplifies the issue. While the ultimate question of willfulness based on an assessment of the second prong of Seagate may be a question of fact, Seagate also requires a threshold determination of objective recklessness. That determination entails an objective assessment of potential defenses based on the risk presented by the patent. Those defenses may include questions of infringement but also can be expected in almost every case to entail questions of validity that are not necessarily dependent on the factual circumstances of the particular party accused of infringement.
In considering the standard applicable to the objective prong of Seagate, it can be appreciated that "the decision to label an issue a 'question of law,' a 'question of fact,' or a 'mixed question of law and fact' is sometimes as much a matter of allocation as it is of analysis." Miller v. Fenton, 474 U.S. 104, 113-14 (1985). When an "issue falls some-where between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that, as a matter of sound administration of justice, one judicial actor is better positioned than another to decide the issue in question." Id. at 114; see also Markman v. Westview Instruments, Inc., 517 U.S. 370, 388 (1996) (applying this test to determine that claim construction is best left to the judge).
We believe that the court is in the best position for making the determination of reasonableness. This court therefore holds that the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, is best decided by the judge as a question of law subject to de novo review.
Thus, judges' gatekeeper role on willful infringement should help to prevent excessive damage awards in the future.
On June 23, Judge Posner issued a 38-page court order dismissing with prejudice the Apple v. Motorola patent case. Apple had four patents and Motorola, now Google, had just one in the case. Perhaps because of this some concluded Google won, but dismissed with prejudice means both Apple and Google will not be able to refile complaints on these patents and products in the future. Although the dismissal is appealable, I would be surprised if the Federal Circuit reversed it.
Judge Posner rejected Apple and Motorola's damage theories due to a failure of proof not because damages were incalculable. Judge Posner faulted the experts and attorneys, and was not willing to fill the evidentiary gaps. For example, one of Apple's expert stated a particular non-infringing chip was worth "a substantial fraction" of a $14.05 chipset, but conceded he could not quantify it. That kind of gap was held up for examination and skewered. Because of gaps like this, Judge Posner concluded neither party was entitled to an injunction nor damages and the case should be dismissed with prejudice, since permitting the parties to refile to fix the damage cases would be ridiculous.
This order is worth reading. It's a sharply worded tutorial on what evidence will be expected to establish damages in a patent infringement case in the future. Specifically, it discusses reasonable royalties, injunctions, and fair reasonable and non-discriminatory (FRAND) licensing of standard essential patents.
Judge Posner noted he wouldn’t ban a product that follows an industry standard unless the party (Apple) refused to pay a fair rate: "Once a patent becomes essential to a standard, the patentee’s bargaining power surges because a prospective licensee has no alternative to licensing the patent; he is at the patentee’s mercy."
On June 17, I posted an article here that AOL had expressed a commitment to return 100% of the proceeds from its $1 billion patent sale to its shareholders. Initially, I thought that's a real gain for shareholders whose stock has dropped about 20% in the last five years. Later I read the dividend may have been prompted to appease the hedge fund Starboard Value that pushed for the patent sale.
Ten days after AOL reelected eight directors it announced a stock repurchase not a dividend is the best way to handle the patent proceeds. CEO Tim Armstrong's timing seems to have outfoxed Starboard Value which pushed for a board seat and the dividend. Some speculate Starboard Value will sell its AOL shares (about 5% of that outstanding) now that AOL has decided to not distribute the dividend.
If you are interested in the details, I recommend reading All Things D Kara Swishers article: AOL Will Start Paying Out Its Pile-O'-Patent-Cash to Shareholders This Week Via Stock Buyback.
If you are interested in the legislative history of the America Invents Act (AIA), I recommend reading Joe Matal's A Guide to the Legislative History of the America Invents Act: Part I of II and Part II of II. Here are links to download Part I and Part II of the Guide. This article should be helpful to applicants for US patents and parties seeking to challenge issued US patents in the PTO.
As a brief summary, Part I describes the legislative history and origins of the first-to-file system and the modifications to 35 USC 102 (novelty and statutory bars), 35 USC 103 (obviousness), 35 USC 115 (inventor's declaration), 35 USC 122 (confidential status and publication of applications), and 35 USC 135 (derivation).
Part II describes the legislative history and origins of the new laws that apply to US patents. Thus, it describes the post-grant procedures, inter partes proceedings, supplemental examination, business method patent review, the new defense of prior commercial use, partial repeal of the best mode, virtual and false marking, advice of counsel, court jurisdiction, PTO funding, and rules for patent term extensions.
Although the article should prove useful, legislative history can be misleading. Indeed, the Supreme Court has warned against relying on legislative statements not anchored in the text of the statute. First, the statements may not pertain to a law that passed. It is also difficult to identify who drafted the law. Given we don't know who drafts the laws, how do we assign weight to the statements of various members of Congress? Also the legislative history of the AIA is lengthy as it stretches from 2005 to 2011. Nonetheless, organizing the legislative history of the AIA is a major undertaking so the article is a welcome start.
On June 14, Nokia's CFO stated Nokia is prepared to sell part of its patents to raise cash. It is unclear how many patents would be sold, but Nokia has about 30,000 patents and produces about 1,000 patentable inventions per year. This year's first quarter report states Nokia made about EUR500 million the previous year on intellectual property rights. This patent sale is part of the larger patent monetizing effort at Nokia, which successfully settled patent disputes with Apple last year and sued HTC and RIM for infringement of a number of its patents last month. This is yet another case of a patent rich company leveraging its patent portfolio to get much needed cash to catch up in the dynamic mobile computing space.
Apple and Motorola were scheduled to go to trial in June 2012. In brief, Apple claims that Motorola Droid and Xoom tablet infringe on its patents, while Motorola counterclaims that Apple infringes on one of Motorola's cellphone patent which appears to be a standard essential patent subject to FRAND.
Surprising many court observers, Judge Posner canceled the court date about a week ago, because he had concluded the parties had not proven a basis for a remedy. At that time, Judge Posner noted it was a tentative decision, but he would prepare a full opinion in case he changed his mind.
On June 13, Judge Posner changed his mind granting Apple's request of June 7 for a hearing on injunctive relief on June 20. Judge Posner noted the parties should be prepared to address the eBay factors and the possibility of a reasonable royalties as a substitute for injunctive relief as well as the issue of FRAND.
Here is a link if you are interested in Judge Posner's order of June 13, 2012.
Many readers know this, but just in case I note Judge Posner, handling this at the trial level, normally sits on the Court of Appeals for the Seventh Circuit, which does not handle US patent appeals. Yet, Judge Posner is one of the most respected judges in the USA and has written extensively on antitrust, IP and other legal topics so it is nice he changed his mind so we can get his views on these patent topics.
On June 12, the Patent and Trademark Office (PTO) moved to intervene as a defendant and counterclaim plaintiff in a lawsuit against the patent firm, McDonnell Boenen Hulbert & Berghoff LLP that John Wiley & Son accuses of copyright infringement in filing publications in information disclosure statements.
The PTO states copying or distribution of copyrighted material is a necessary and incidental part of patent prosecution and the damages sought by John Wiley & Son interfere with laws that exist to implement the Constitution’s goal for Congress to promote the progress of the useful arts (i.e., technology). The PTO's counterclaim for declaratory relief of non-infringement and fair use also argues the publications are submitted solely for their ideas and factual content and not for any expressive content.
I hope this can be resolved favorably for the public. Disclosure of non-patent literature is required in some cases to meet applicant's duty to disclose material literature of which they are aware to support examination. To make applicants pay fees (large or nominal) to each of the many publishers will be expensive for applicants or will cause some non-risk adverse applicants to disclose less non-patent literature which will not benefit the public.
FOSS Patents had an interesting article: ITC doesn't allow HTC to assert Google's patents against Apple -- Rent-a-Patent model fails. Apple's opening move? HTC, you don't have the right to sue! How embarrassing it must be to hear the judge agree. Specifically, Apple filed a motion that eliminated five of eight patents HTC asserted against Apple in the ITC. The administrative law judge (ALJ) ruled HTC lacked standing (the right to sue) because Google failed to transfer "substantial patent rights" to HTC.
Mr. Mueller suggests the dismissal impacts the HTC v. Google ITC proceeding and the patent aggregators. The first point is right, but patent aggregators shouldn't see a standing issue if they take action based on what can be learned from this case.
As to the HTC v. Apple ITC proceeding, Mr. Mueller notes that (1) Apple is unlikely to have to defend itself against the five dismissed patents, (2) an appeal against this dismissal is unlikely to succeed, and (3) Google could join as a complainant with HTC, but this would escalate the Apple-Google conflict. Further, Mr. Mueller notes that Google was not making phones at the time the complaint was filed so may not be able to join as it would not satisfy the domestic industry requirement.
Mr. Mueller suggests the limitations and restrictions in Google's agreement show Google's support for the Android ecosystem has "clear limits." I don't have a copy of the agreement, but Mr. Mueller must be kidding about the clear limits!
As to patent aggregators, Intellectual Ventures and RPX allow their members to "check out" a patent in order to bring a counterclaim. Mr. Mueller suggests this may raise standing issues, but amending the language of the agreement to transfer substantial rights should eliminate any standing issue as long as the patent is not already in litigation.
I re-read Peter Detkin's article Leveling the Patent Playing Field tonight. It explains how the US patent system doesn't treat small entities fairly when it comes time to monetize patents and why patent aggregators have an important role in this regard.
1. Many important inventions have come from small companies, universities, and individual inventors rather than large companies. In fact, small entities such as individuals, business with less than 500 employees, and non-profits filed 43% of the US patent applications in the 1990s.
2. Even worthy inventions by small entities may be difficult to monetize. Beside the expense of getting a US patent, small entities face difficulties in finding a manufacturer and/or investors. Further, they face difficulties in licensing inventions even when they offer major advantages. For example, Dr. James Cunningham, a chemical engineer and an electrical engineer, had 46 patents as an employee of six semiconductor companies including Texas Instruments (TI). Some of Dr. Cunningham's inventions allowed microprocessor companies to switch from aluminum circuitry to copper which greatly improved performance of the microprocessors. He had fundamental inventions and decades in the fields yet he did not know who to approach about licensing the inventions.
3. Corporate licensing professionals are trained to avoid paying "crackpot" inventors or trolls. Their job is to limit payment to such "crackpots" not pay them! So they play interminable rounds of phone tag for months and reschedule the meeting at the last minute. Then after a few months pass they discuss and argue whether the invention has any merit for 6-18 months more even if they are currently infringing the patents!
4. Licensing negotiation rarely lead anywhere, leaving litigation as the only viable option. Large companies can out-resource even a veteran such as Dr. Cunningham at all stages so after a long dragged out process the big company ultimately says no we don't want to license your patent. And such was the case for five of the seven major companies Dr. Cunningham sought to license. With this result is it a wonder that some choose to sue for patent infringement? No, but little guys rarely win these cases.
5. Small entities cannot participate in the successful vast patent portfolio licensing of an IBM and the well capitalized patent licensing of Qualcomm, Rambus, or TI or the corporate patent pools in support of industry standard technology such as MPEG or DVDs. Unlike most small entities, major tech companies typically have huge numbers of patents, lots of money and lawyers to enforce them, as well thought out licensing programs.
Mr. Detkin notes models of patent monetization that will help the patent system regain balance. He suggests consultants, e.g., Thinkfire and ipValue will help large companies evaluate and exploit their patents. Ocean Tomo can run patent auctions, develop a stock index to track patent strength in companies, and create a centralized IP exchange. Companies like Acacia Research and Mosaid can purchase and assert the patents individually rather than as a broad portfolio. And his own firm Intellectual Ventures can purchase small entity patents such as those from Dr. Cunningham as well as seek patents on its own inventions resulting in portfolios that permit rational licensing for multiple technology products. Mr. Detkin notes Intellectual Ventures presents pre-screened patents and expertise in licensing and patent defense that allow it to reach an efficient agreement like that of a veteran real estate broker who negotiates with individual condo and apartment owners standing in the way of a skyscraper to be built.
Mr. Detkin states the above business models can match patent owners with patent users, ensure fair and efficient compensation for inventions, improve the public's access to new products and services, ensure bad patents do not receive unreasonable compensation, and restore balance to the patent playing field so more can play the patent game enriching our society.
In the end a great article, but Intellectual Ventures' daily actions will determine if they achieve these goals.
Today, Groklaw invited Associate Professor Michael Risch of Villanova University School of Law to write an article Curing the Problem of Software Patents. The article and comments are worth reading as they point to the doctrines courts and the PTO are likely to use in the future.
Professor Risch also wrote an article America's First Patents that may surprise those who think the machine-or-transformation test is engrained in American patent law. That patent-eligibility test requires a claimed process be performed by a machine or transform matter to a different state. Professor Risch assserts 40% of the patented processes issuing in the first 50 years of the US patent system would have failed the test.
On June 8, the Wall Street Journal ran an article about Kodak's stalled effort to sell its digital patents, which may complicate Kodak's ability to emerge from bankruptcy. Kodak says "an independent review" values the patents at up to $2.6 billion and hopes to use money from patent sale to compete against HP in the market for printers. Competing with HP in the market for printers? Don't forget Canon, Brother, and all the others. Even if Kodak gets $2.6 billion this sounds like a difficult journey.
See the WSJ article Kodak's Patent Allure Fades for further details.
The America Invents Act (AIA) has many new laws that come into effect in September 16, 2012.
I recommend referring to Leahy-Smith America Invents implementation as a resource in the coming months. If you have particular questions, it's also worth checking out AIA Frequently Asked Questions.
PTO Struggling with Patentability of Computer Software?
In Avoiding Subject Matter Problems but Creating Written Description Problems, Professor Crouch states the PTO is struggling with determining the patentability of computer software.
To illustrate he used the prosecution of the recently issued US Patent No. 8,196,213 to Microsoft. The PTO had rejected a claim directed to a computer readable medium, because that medium encompassed "signals" that are unpatentable under 35 USC 101. See In re Nuijten, 500 F. 3d 1346 ( Fed. Cir. 2007).
As background, In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995) held computer software embodied in a floppy disk (i.e., a computer readable medium) was a patentable manufacture within the meaning of 35 USC 101.
instructions for denying, by the manager, an attempt by a managed application to access a native function of the operating system in response to determining that a second digital certificate associated with the managed application indicates that the managed application is required to access native functions of the operating system through the managed library (emphasis added).
As to whether the amendment was supported, Professor Crouch noted the specification discusses computer storage (e.g., flash, RAM) but not signals. My initial reaction is why do you need to amend the claim to exclude what is inherent in a computer storage medium? All data storage devices have I/O signals. Many patents recite a storage device without reciting that the various inherent features are "excluded."
After setting forth these facts, Professor Crouch asks readers should the PTO reject the amendment for failing to meet the written description of 35 USC 112?
Under US patent law, written description is whether the disclosure of the application relied upon reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.
By this standard, those skilled in the art would understand the inventors had possession of the claimed invention, because they would know the subject matter could be implemented on computer readable storage medium without signals.
Given the PTO prefers we use the "magic words," Microsoft's amendment might be less subject to debate if it recited: "A non-transitory computer readable storage medium ...." See the PTO notice Subject Matter Eligibility of Computer Readable Media.
Also see Patently-O's Survey Response: Does the Amendment Violate the Written Description Requirement? which indicates most readers agreed the amendment met the written description requirement.
On June 1, Oracle filed an action for declaratory judgment of noninfringement and invalidity of Lodsys' US Patent Nos. 5,999,908, 7,133,834, 7,222,078, and 7,620,565. In support of declaratory relief, Oracle states Lodsys sent notice of infringement letters with claim charts along with follow up emails and phone calls to dozen of Oracle's customers, who of course want to be indemnified. Lodsys has even sued some of Oracle's customers including Walgreen, REI, and Epicor in the Eastern District of Texas.
The press give Oracle lots of kudos for suing to invalidate the Lodsys patents. Groklaw reports Oracle Sues Lodsys! "Oracle is now the good guy. Major good guy.... Get a load of all the prior art Oracle lists.... Lodsys has made a mistake. One doesn't go after Oracle's money. No. No. Never a good plan.... I suspect Oracle will go for damages, tripled, and all their expenses, legal fees, etc. when this is over.... DLA Piper is a global law firm with 4,200 lawyers so no place to run or anywhere on earth to get away from DLA Piper and its hard-core patent warriors. GigaOm tells us "Larry Ellison's company gets to be the good guy" in Oracle sues to smash patent troll Lodsys.
1. Oracle is aggressive and believes the courts are open for business. I say this not due to any inside information, but just watching Oracle in action for years. If Oracle believes you infringe its IP rights, it will tell you this and if you refuse to pay for a license, Oracle will go to court to resolve the differences. On the other hand, if you believe Oracle infringes your IP rights, it will review the charges, and if it disagrees is willing to go back to court to resolve the differences.
2. The press tends to give Oracle a hard time and buys into the myth that it is not nice to sue for patent infringement. So Oracle is "a bad guy" for suing Google for what it believes constitutes patent infringement? The irony is not the bad to good guy switch, but that many other companies (e.g., Apple in mobile patent wars) escape these labels and assert patents more vigorously to exclude others from using, making, selling, offering for sale, or importing their patented inventions.
3. Company management has a duty to manage all corporate assets. If a patent is infringed, valid and enforceable, management must maximize the return on the patent as a corporate asset. This is why Apple, Google, Microsoft, Motorola, Oracle, and Samsung continue to aggressively turn to the courts to assert IP rights. They seek a return on IP rights (e.g., patent, copyright, trade secret) and to reduce the IP licensing fees. Here Oracle customers were being threatened and sued and were asking Oracle indemnify them. Seeking to remove that expense made Oracle's DJ action forseeable.
4. A typical jury may be influenced by the myth that a patent owned by someone who practices the invention (e.g., Apple) is different than a patent owned by someone who does not. Hence, the complaint (demanding a jury trial) mentions Lodsys is not practicing the invention, i.e., it is a "patent troll." But US patents have nothing to do with whether the invention is commercialized or not (sometimes it takes years!) US patent law only cares about whether the invention is practiced when it comes to a remedy ( i.e., practicing patent owners may be awarded lost profits and non-practicing owners are typically limited to a reasonable royalty as damages).
5. The press tends to villify the "patent trolls" who seek licensing fees and disparages the inventors too! Dan Abelow, who I have never met, is disparaged as the self-styled inventor with no science degrees. However, the following link: www.abelow.com says Mr. Abelow has degrees from Harvard and the Wharton School of Business which appear to be adequate background for the four patents. Although I don't appreciate Lodsys' tactic to threaten the small software developers (where's the money?), Mr. Abelow's patents have been licensed by over 200 companies including Apple, Google, Microsoft, Nokia, Verizon, Sony, and Netflix. Somehow these things about this "patent troll" never get much mention.
Like a number of others, Zetta Research, LLC in San Mateo, CA buys patents from failed startups, but instead of just hoarding the patents, it works with the inventors of the startups to get the patent applications granted as patents and file any desired continuations that will maximize the overall value of patent portfolio to a big tech company.
Much of Oracle’s evidence at trial went to show that the design of methods in an API was a creative endeavor. Of course, that is true. Inventing a new method to deliver a new output can be creative, even inventive, including the choices of inputs needed and outputs returned. The same is true for classes. But such inventions — at the concept and functionality level — are protectable only under the Patent Act. The Patent and Trademark Office examines such inventions for validity and if the patent is allowed, it lasts for twenty years. Based on a single implementation, Oracle would bypass this entire patent scheme and claim ownership over any and all ways to carry out methods for 95 years — without any vetting by the Copyright Office of the type required for patents. This order holds that, under the Copyright Act, no matter how creative or imaginative a Java method specification may be, the entire world is entitled to use the same method specification (inputs, outputs, parameters) so long as the line-by-line implementations are different. To repeat the Second Circuit’s phrasing, “there might be a myriad of ways in which a programmer may . . . express the idea embodied in a given subroutine.” Computer Associates, 982 F.2d at 708. The method specification is the idea. The method implementation is the expression. No one may monopolize the idea...."
Thus, Oracle's copyright case is finished unless the Federal Circuit reverses this ruling on appeal. Although legal questions are considered de novo (anew), appealing from the well reasoned 41 page-order seems like a long shot. See Judge Alsup's order in the first article below and the other articles. This case reminds all of us that we must use patents rather than copyright to protect the functionality of software.
Judge says Google only used uncopyrightable elements of 37 Java APIs in Android - Florian Mueller of FOSS Patents.
Copyright cases like Oracle v Google are more controversial than software patent cases - Florian Mueller of FOSS Patents.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v.