Philip Brooks' Patent Infringement Updates

CAT Patent Infringement Suits Could Spread to Others in Prepaid

An April 2008 featured article by Paybefore (an industry resource for prepaid and stored value cards) staff states, in part:

Chicago-based Card Activation Technologies, Inc. (CAT) is suing major retailers, including Barnes & Noble, Aeropostale, OfficeMax, TJX Companies, Sears and Walgreen Co. for infringement of its patent related to gift card activation and processing.

While the company’s focus is squarely on retailers, for now, lead counsel Mark D. Roth, of Orum & Roth LLC, tells Paybefore that there are other potential infringers, such as banks, processors and even terminal manufacturers that CAT could pursue in the future.

The full article is available to subscribers here.

CAT stated the following in an April 23, 2008 press release:

The Card Activation patent relates to a method used by most retailers for processing debit styled cards, which include gift cards and phone cards. Card Activation currently has lawsuits pending against Walgreen Company (NYSE:WAG), Sears Holding Corporation (Nasdaq:SHLD), TJX Companies (NYSE:TJX) and OfficeMax ((NYSE:OMX), as well as Barnes & Noble and Aeropastale. Card Activation has also placed on notice approximately 600 retailers relating to their potential infringement of the patent.

aai Requests FTC Investigation of Rembrandt

A reader alerted me to the "Request for Investigation of Rembrandt, Inc. for Anticompetitive Conduct that Threatens Digital Television Conversion" in a March 26, 2008 Petition to the Federal Trade Commission by the American Antitrust Institute.  Some excerpts include:

The American Antitrust Institute (“AAI”) petitions the Federal Trade Commission to investigate patent holdup conduct by Rembrandt, Inc., a patent licensing company (also known as a non-practicing entity, or “NPE”), under Section 2 of the Sherman Act and Section 5 of the FTC Act with respect to a government-mandated private standard for digital television broadcasting developed by the Advanced Television Systems Committee (ATSC).

In particular, Rembrandt has failed to abide by an obligation established by the ATSC to license on reasonable and nondiscriminatory (RAND) terms certain technology critical to the delivery of digital systems of terrestrial broadcast television. This RAND commitment was central to the Federal Communications Commission’s (“FCC”) adoption of the ATSC standard in establishing the process for the conversion to digital television. Because the entire U.S. television marketplace will convert to digital systems in the next year, the potential consumer harm from this conduct is enormous. Enforcement action is necessary to protect tens of millions of users of digital television devices, device manufacturers and broadcast networks and cable companies from paying excessive equipment prices and licensing fees due to Rembrandt’s exercise or attempted exercise of monopoly power.

Numerous government agencies are acting to assist and subsidize millions of consumers with the conversion to digital television. Yet the success and cost of this conversion is being threatened by Rembrandt, which is engaging in patent holdup by explicitly repudiating its RAND licensing obligation. Rembrandt brought 14 patent infringement suits against the four major television networks, the five major cable systems, and television and equipment manufacturers seeking licensing royalties that will increase the costs of digital television by tens of millions of dollars. Rembrandt is demanding royalties of 0.5% of “all revenues derived from the use of the ATSC standard” – an amount that would dramatically increase the cost of digital television equipment and the cost of digital television generally. All consumers will pay substantially more for digital and terrestrial television services unless this conduct is enjoined.

RELIEF

We request that the Commission commence an investigation of Rembrandt’s conduct and seek an order pursuant to Section 5(b) of the FTC Act requiring that Rembrandt cease and desist from its illegal conduct. In particular, the Commission should prohibit Rembrandt from enforcing the ‘627 patent unless it has first offered to license the ‘627 on terms consistent with the RAND commitment.

A failure to enjoin Rembrandt’s conduct could result in owners (or subsequent owners) of ATSC patents engaging in similar patent-hold-up conduct that could cripple the DTV industry. Private remedies through patchwork litigation in different fora are inadequate substitutes for FTC enforcement in this matter: First, “private litigation may not vindicate the same set of public interests that are addressed by the Sherman Act or Section 5 of the FTC Act.”81 Second, by the time any resolution of such private suits has been achieved – and even assuming Rembrandt’s claims were ultimately defeated – the February 2009 date for the transition to digital television will have long since passed and the mere threat of the harm described above will itself have caused irreparable harm to competition and to consumers alike.

Read the full petition here.

Troll Tracker Outs Himself

Posted by Debra Cassens Weiss today, February 26, 2008, at the ABA Journal:

The anonymous author of the Patent Troll Tracker blog has revealed that he is Richard Frenkel, an intellectual property lawyer who is a director in Cisco Systems' IP group.

Frenkel said he decided to out himself after he received an e-mail threat from someone who threatened to go public with his identity, the Recorder reports. Many patent lawyers told the legal publication they considered the blog to be required reading.

Chicago lawyer Raymond Niro had recently increased his reward offer to $15,000 to anyone who could provide him with the Troll Tracker’s identity. So far, no one has stepped forward to claim the reward. "Whoever did it did it not for the purposes of making money but rather for the purposes of exposing him," he told the Recorder.

Niro had offered the bounty because Troll Tracker had criticized his firm for representing so-call “patent troll” clients that owned patents without making products. Frenkel said in a post revealing his identity that he started his blog because of the lack of information about trolls.

“When I started the blog, I did so mainly out of frustration,” Frankel wrote. “I was shocked to learn that a huge portion of the tech industry's patent disputes were with companies that were shells, with little cash and assets other than patents and a desire to litigate, and did not make and had never made any products. Yet when I would search the Internet for information about these putative licensors, I could find nothing.”

Frenkel is weighing whether to continue the blog. He said only his direct manager at Cisco, which holds more than 5,000 patents, knew of his anonymous blogging.

DTL Licenses Key Cell Phone Patent to Ericsson

The following is excerpted from a press release that appeared today, January 22, 2008 at Business Wire:

General Patent Corporation International (GPCI), a leading patent licensing and enforcement firm, announced today on behalf of its client, Digital Technology Licensing LLC (DTL) that it has licensed a key cell phone patent to Ericsson, Inc., Ericsson AB, and LM Ericsson Telefonaktiebolaget (Ericsson).

The agreement with Ericsson follows a licensing deal reached earlier with Nokia for DTL, which owns a key patent for modern cellular technology.

DTL owns U.S. Patent No. 5,051,799 titled “Digital Output Transducer” (Patent), which is an essential patent for Adaptive Multi-Rate (AMR) codec and other cellular communication standards. The patented technology is also used to assure backward compatibility of cell phone handsets and base stations.

GPCI represents Digital Technologies Licensing LLC in the licensing and enforcement of the DTL Patent. DTL brought patent infringement suits against Verizon Wireless, Cingular Wireless, T-Mobile and Sprint and other companies. Ericsson was not a party to any of these lawsuits.

Read the full press release here.

Qwest Communications Settles Patent Litigation With Ronald A. Katz Technology

Trading Markets reported today, December 27, 2007:

Thursday morning, Denver, Colorado-based telecommunications company Qwest Communications International Inc. said it has settled the patent litigation with Ronald A. Katz Technology Licensing for an undisclosed amount. Under the settlement plan, Quest would also obtain nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications.

The automated interactive technology patents held by Katz include customer service, prescription refill services, securities trading, merchandising, prepaid services, telephone conferences, registration and home shopping. Katz also provides functions involved in securing information from databases by telephone, interactive cable transactions, and various other uses of toll free and local numbers.

Katz has invented a number of patents in the telecommunication and computing fields, including the formation of Telecredit, Inc, which was the first to provide online real time credit and check cashing authorization system.

There are about 25 energy and utility companies among the 200 companies holding various licenses under Katz portfolio. Some of the other major companies are American Express, Atmos Energy Corp., AT&T Corp., Bank of America Corp., Countrywide Financial Corp., Dell Inc., Delta Air Lines, Inc., HP Co., Hilton Hotels Corp., Home Shopping Network Inc., HSBC Bank USA, IBM, Merck & Co., Merrill Lynch & Co., Inc., Microsoft, Morgan Stanley, Prudential Financial, Inc., Sears, Roebuck and Co., Sprint Corp., Sunoco, Inc., Verizon California Inc. and its affiliates, Wachovia Corp., Walgreen Co., Wal-Mart Stores, Inc., WellPoint, Inc., Wells Fargo & Co., West Corp. and Zions Bancorp.

Your Design Is Infringing On My Patent

Paul Marshall's article titled, "Your Design Is Infringing On My Patent: The Case Against User Interface and Interaction Model Patents and Intellectual Property" appears at UXmatters.  UX means "user experience."  Mr. Marshall writes:

The current US patent system—in combination with the litigious nature of many high-tech companies—make it likely that, somewhere down the road, something you design might incur the wrath of a patent troll.

The sad fact is that companies often file for and the US government actually grants patents for user interface and interaction design “innovations” that are either strikingly obvious or have appeared before in other systems—that is, when prior art exists, as someone in the field of intellectual property would say. This means, as user experience practitioners, we are at risk of litigation every time we design an application. Each time we fire up Visio or Photoshop, create a new design, then put it out into the world, there’s a good chance we’re infringing on someone’s patent.

In their groundbreaking 1993 shareware e-book “Task-Centered User Interface Design,” Lewis and Rieman provided some guidelines for designers to consider when deciding how to meet users’ needs by providing user interface and interaction elements. They grouped their recommendations into four categories labeled “things you certainly can copy (unless the rights have been sold),” “things you probably can copy,” “things you probably can’t copy,” and “things you certainly cannot copy (unless you get permission).” What’s interesting are the things they cited as probably safe to copy:

• Sequences or arrangements of menu items, commands, screens, and so on—You can copy their order if, in the original application, the designer clearly ordered them to improve their usability. For example, if the order were alphabetical or most-commonly-used-item first, or if there were only one way or a very few other ways items could be arranged.
• Obvious icons, ideas, commands, menu items, or words—You can copy words or graphic images when they are such obvious choices for the functions they represent that usability would be reduced if you used other words or images. For example, using the word print for printing or an icon depicting a mouse device that lets users select mouse options.

While these guidelines have been extremely useful to practitioners over the past dozen or so years, I fear that those items I’ve cited above likely now belong in the “things you probably can’t copy” category. The USPTO has issued too many overly broad and obvious patents on user interface designs for me to feel confident following Lewis and Rieman’s guidance anymore.

Read the full article here.

Patriot Scientific vs. Matsushita Electric Stay Ends on Friday

In performing some research on the status of the TPL/Patriot Scientific v. Matsushita Electric patent infringement litigation stay that is due to expire this Friday, I found very little new information.  Dutton Associates did, however, report the following on November 9, 2007:

Patriot Scientific Cancels Presentation at Westergaard Investment Conference; Speculative Buy Rating Reiterated Patriot Scientific Corporation (Patriot Scientific) canceled their presentation at the Paulson Investment Company 30th Annual Westergaard Conference on Tuesday, November 13, 2007, at the Waldorf Astoria Hotel in New York City. No reason for the cancellation was given. The cancellation comes two days after the company canceled a web-cast by James Turley, Pres./CEO, that was to be given on November 7, 2007.

SUMMARY

A 30-day stay has been granted in the litigation for Technology Properties Limited (TPL) and Patriot Scientific vs. Matsushita Electric Industrial Co., Ltd., et al. Since the 30-day stay granting, rampant speculation of a possible settlement has pushed Patriot Scientific's common stock up over 70% from a recent intra-day low of $0.38 per share set on October 26, 2007, to an intra-day high of $0.65 yesterday, November 8, 2007. Volume on the up move has been massive. We deign to join in speculation of a settlement, since if there is one, the terms will need to be analyzed as to the effect on Patriot Scientific's 50% net receipts and future possible settlements. Further, there may be other reasons for this PR lock-down. TPL has the right of review and possible approval on news releases and we assume public presentations. An event that overhangs Patriot is the final ruling by the U.S. Patent and Trade Office (USPTO).

While we reiterate our Speculative Buy Rating and our $0.75 price per share target for Patriot Scientific, the stock may need to digest this 70% up move and we urge caution, keeping in mind any forthcoming news releases.

Separately, Dutton Associates reporting on TEAC Corporation's license from Patriot Scientific on November 16, 2007, stated:

Since January 2006, more than 25 companies, including Hewlett Packard, Sony, Casio, Fujitsu, Nikon, Seiko Epson, Pentax, Olympus, Kenwood, Agilent, Lexmark, Schneider Electric, NEC Corporation, Funai Electric, SanDisk, Sharp Corporation, Nokia, Bull, LEGO and Denso Wave, have purchased licenses to the Moore MMP Portfolio from the TPL Group, in partnership with Patriot Scientific.

See my previous posts here, here, here and here.

Wi-LAN Racks Up Deals With Hyundai, Others

Bert Hill of the Ottawa Citizen writes today, November 20, 2007:

Wi-LAN, an Ottawa technology patent licensing company, said the television division of Hyundai, the South Korean industrial giant, has licensed V-chip technology that allows parents to manage children's TV content. 

Terms were not disclosed.  Hyundai IT will pay licenses fees until 2016 when the patent expires. Three other companies also agreed to V-chip payments under a new U.S. program to help U.S. residents with older analog over-the-air televisions convert to newer digital television signals starting next January.

The program will distribute up to 33 million $40 U.S. coupons. Three makers of the new converter boxes signed Wi-LAN licences, including Dongguan Contel Electronics Co., Ltd. (China), Zhejiang Tianle Digital Electric Co., Ltd. (China), and PCT International Inc. (U.S.A.).  Wi-LAN also said that Contel has signed a license for Wi-LAN's Canadian V-chip technology.

Wi-LAN shares dipped last week after it disclosed that it anticipates that Marvell Semiconductor, one of 22 companies it is suing on infringement of another group of patents, will sue in a California court to have the patent claim thrown out.

Open Source Developers Must Chart Clear Defense in the Patent Wars

Dean Drako, co-founder, president and CEO of Barracuda Networks, wrote on November 2, 2007 at LinuxWorld:

The United States patent and legal system has turned into a battlefield where companies and technology developers can be attacked. Open source and free software developers have historically ignored this secondary battlefield, focusing instead on the primary battlefield of development and proliferation of their project. This omission leaves open source projects and individual developers vulnerable to patent infringement lawsuits. By creating its own defensive patent portfolio as commercial companies do, the open source community can arm itself for this battle.

...the development of prior art in the open source community is a tremendously powerful tool, and it is crucial that source code repositories with comments and details be maintained. However, although such prior art can be successfully used to invalidate patents, it still takes money to mount the legal defense. In the commercial software environment the only really good defense against patents is to develop your own patent portfolio, as it is the threat of mutual self destruction that keeps most patent lawsuits at bay.

There are primarily two sources of patent attacks: 1) Competitors suing to obtain royalties or stop competition, and 2) Patent trolls suing to obtain money. The patent troll can come in the form of a company that has decided to augment its business with patent licensing or in the more traditional form of an entity whose primary business is patent suits and licensing for profit. The open source and free software communities' biggest threats are the lawsuits from competitors aiming to stop the proliferation of open source software. Patent trolls are typically less interested in open source developers and projects, because only minimal amounts of money are available given the low revenue of most open source projects.

Competitors to open source projects, however, may be very interested in stopping or hindering the development and adoption of free or open source software. In addition to suing companies utilizing open source software, it is not inconceivable that an individual developer might inadvertently infringe a patent, widely distribute the code on the Internet, and ultimately be held personally liable for tremendous damages by the patent owner. Such a tactic might be viewed as a strong deterrent to continued free or open source development.

Though filing patents may seem counter to the mindset of free and open software, the open source community can model what many commercial companies have learned is a necessary task and develop its own defensive patent portfolio. If individual open source developers begin to patent their inventions, and if these patents are assigned to a nonprofit institution with an appropriate charter, the broader open source community could draw from this patent pool to create an arsenal for legal battles. This defensive patent portfolio would be an effective deterrent, creating a cold war truce.

Read the full article here.

Eon-Net CAFC Opinion

Eon-Net's President, Mitchell Medina, offered a comment yesterday on my October 11, 2006 post regarding Judge Marsah Pechman's Rule 11 sanctions motion in the Eon-Net, L.P. v. Flagstar Bancorp, Inc. case.  He indicated that the judge's ruling was overturned by the CAFC on appeal.  See also this related post.

Patent Hawk provides a post today, October 5, 2007, on the unanimous CAFC panel's ruling:

Judge Marsh Pechman in the Western District of Washington sanctioned Eon-Net for its swing at Flagstar and others for infringing 6,683,697. "The Court was shocked to learn" that Eon-Net had an enforcement campaign going, Pechman diddled. She then got hammered for her naiveté by the CAFC: Eon-Net deserves some respect.

Eon-Net v. Flagstar Bancorp (CAFC 07-1132)

District Court Judge Elaine Bucklo, writing for a unanimous CAFC panel, chided Pechman for ignoring facts in blithely slapping down Eon-Net.

In this circuit as in other circuits, a court may not sua sponte grant summary judgment on a particular ground without giving the non-moving party notice and an opportunity to present evidence and argument in opposition. Pandrol USA, LP v. Airboss Ry. Prods., Inc., 320 F.3d 1354, 1365 (Fed. Cir. 2003) (citing Fin. Control Sys. Pty, Ltd. v. OAM, Inc., 265 F.3d 1311, 1321 (Fed. Cir. 2001)); see also In re Rothery, 143 F.3d 546, 549 (9th Cir. 1998) (citing Fed. R. Civ. P. 56(c)).

Eon-Net also did not have an opportunity to raise evidence of infringement and claim construction in its motion to reconsider, as Flagstar argues it should have done; its motion to reconsider properly argued that the district court’s grant of summary judgment was without notice and appropriately requested an opportunity to present its arguments. The district court should have given Eon-Net an opportunity to fully present its arguments on these issues, even if the district court ultimately would have reached the same conclusion.

We agree that the district court erred in granting sanctions to Flagstar without allowing Eon-Net the opportunity to present arguments on claim construction.

See the post at The Patent Prospector for links.