Philip Brooks' Patent Infringement Updates

Troll Busters

Put out a Hit!

Yes, you, sitting on the fence, unsure if you want to take the plunge into the wacky world of patent reexaminations or (if Congress gets off its backside and passes patent reform) U.S. patent oppositions.  Remember, under Medimmune v. Genentech even if you’re a licensee and paying some outrageous royalty on a patent you know is invalid but did it to avoid the risk and uncertainty of litigation, you can hire Troll Busters to invalidate it and stop paying the tolls to the trolls.  That “thou shall not shoot down the licensor’s patents” clause in the license agreement is not enforceable under Medimmune.

Troll Busters invalidates patents, not just any patents but patents being asserted by patent trolls, those ugly beasts who try to dominate the innovations of others. We file reexaminations to invalidate the patent claims of patent trolls. 

If you are a company or even an industry, each being hit with patent troll claims, Troll Busters takes aim and fires in our own name.  The Patent Troll will never know who or how many are behind the “hit.”

PricewaterhouseCoopers Patent Litigation Study

The Patent litigation study provides an overview and analysis of trends in patent litigation. The Study also addresses issues regarding companies’ patent positions, protection and enforcement strategies, and litigation tactics.

2009 Patent litigation study

The debate over patent reform has become more strident in the past few years as many of the world's largest companies face increasing threats of litigation from competitors and from organizations known as nonpracticing entities (NPEs) that do not design, manufacture, or distribute products.

2008 Patent litigation study

There is heightened action in the patent arena -- senior executives are facing a myriad of issues on the use of litigation to protect and monetize their patented products and ideas. Although the risks in patent litigation have increased, the damages awards remain significant.

2007 Patent litigation study

The number of patent infringement actions has declined, according to the 2007 Study. While filed patent cases increased more rapidly than growth in patent grants during the past 15 years, filed patent cases have been declining in the past two years.

Patent Trolls: Acacia is One Company Tech Giants Like to Avoid

The following is excerpted from a February 2, 2010 article by Susan J. Campbell, TMCnet Contributing Editor:

An intense look around any industry is likely to turn up companies that seem to operate on a different level. For the technology sector, that company is Acacia Research.

According to a recent Business Week report, this company has filed at least 337 patent-related lawsuits in the 18 years since its inception.
 
Just what does the company make? Nothing.

Acacia’s business plan consists of acquiring patents from inventors and seeking fees from companies that it claims infringe on those patents. The company has been quite successful in its pursuits, anticipating $68.8 million in sales this year, up from $34.8 million in 2006.

The company licenses technologies it does not design or distribute and is classified as a nonpracticing entity. A number of tech companies refer to Acacia as a somewhat less friendly term: patent trolls.

Read the full article here.  In related news by Robin Wauters of TechCrunch.com at The Washington Post on February 3, 2010:

Nice timing, Acacia Research Corporation. The mother of all patent trolls patent acquisition, development and licensing company, which was profiled in depth by BusinessWeek just two days ago, this morning announced that it has been awarded a total of $12.4 million in a patent infringement case against Yahoo.

Read the full article here.

Federal Circuit Expands Declaratory Judgment Jurisdiction

The following is excerpted from a December 14, 2009 Morgan Lewis Intellectual Property Lawflash:

On December 4, the Federal Circuit issued an opinion that could make it considerably easier for companies faced with implied threats from patent licensing entities to file a declaratory judgment (DJ) action. In Hewlett-Packard Co. v. Acceleron LLC, the nonpracticing patent owner (Acceleron) had approached Hewlett-Packard (HP) by sending a cautiously worded letter, bringing a particular patent to the “attention” of HP and requesting an “opportunity to discuss” the patent. The letter also specifically asked HP to agree that no case or controversy had been created, and thus no DJ action could be filed. HP asked Acceleron to enter into a “mutual standstill agreement,” pursuant to which neither party would file any legal action for 120 days. When Acceleron refused the offer, HP filed a DJ action in the U.S. District Court for the District of Delaware.

Read the full story here.

Patent Protection For Sale

The following is excerpted from a December 10, 2009 article by Lee Gomes of Forbes Magazine:

It's hardly surprising that many companies would rather pay to settle a patent claim than risk the exposure and expense of a trial. So patent claims have soared in recent years. Roughly 80% are entirely without merit.

That figure is a guess provided by John Amster, the 41-year-old chief executive of RPX. The entrepreneurial insight at the heart of the company is simplicity itself. Start a for-profit company that buys up patents and then charge other companies a yearly fee for being a client. In return for a set annual payment, which tops at $4.9 million for the biggest outfit, you're protected from being sued for any of the patents RPX holds.

Like most tech business plans that attract venture capitalists, it's all a matter of scale. Given enough clients, RPX can have the resources to take all problematic patents off the market.

Read the full article here.

Troll Tracker Defamation Case Settles Before Going to Jury

The following is excerpted from a September 22, 2009 post by Joe Mullin (a reporter at IP Law & Business) at The Prior Art blog:

After four days of testimony, the "Troll Tracker" defamation lawsuit ended in a confidential settlement the day before the East Texas jury hearing it was set to begin deliberations. 

Plaintiff Eric Albritton and defendants Cisco Systems and Rick Frenkel, a former Cisco lawyer who blogged anonymously as the Patent Troll Tracker, settled the case Monday night, shortly after Judge Richard Schell ruled that the jurors would have to find "actual malice" on the part of Frenkel and Cisco in order for Albritton to win the punitive damages he was seeking from the tech giant. 

"Actual malice"—a high standard for a defamation plaintiff to meet—was established by the Supreme Court in its historic New York Times v. Sullivan decision. To prove "actual malice," a plaintiff must show that the defendant either knowingly published falsehoods as facts, or showed "reckless disregard" for the truth. In general, a plaintiff must be a public figure to trigger the "actual malice" standard. Someone considered a private figure only needs to prove that a publisher was negligent in its actions.

Throughout the litigation, Frenkel maintained that the two blog posts at the heart of the case—which he wrote about a changed date in the docket in Albritton's ESN v. Cisco patent infringement suit—contained both true facts and constitutionally protected opinion about "abusive" patent litigation in East Texas. On the witness stand, Frenkel apologized for referring to the Eastern District of Texas a "Banana Republic" in one of the offending posts, which he later revised to eliminate that reference.

A second defamation lawsuit, Ward v. Cisco Systems, has been brought by T. John "Johnny" Ward Jr., another Eastern District patent heavyweight representing ESN in its patent suit against Cisco. That lawsuit has dropped Frenkel as a defendant personally, and continues only against Cisco. It is scheduled for trial in early 2010. The ESN v. Cisco patent suit that launched the dispute also remains active.

Read the full post here.

Tech Patents Run Amok

Rob Preston, VP and editor in chief of InformationWeek, writes in the October 12, 2009 print issue:

Opposition to software patents, especially the specious ones, makes for strange bedfellows. Big business aligning with digital freedom fighters. The open source faithful breaking bread with the commercial software elite. All in the name of defeating so-called patent trolls whose lawsuits extract billions of dollars each year from U.S. industry--and thus every one of us.

There's a reason so many diverse interests are in agreement. This isn't just a "software industry" problem. Every company that develops software or uses a Web site that implements software processes is a potential target of the trolls.

Case in point is a suit filed last week by University of California spin-off Eolas Technologies related to its patent for technology, developed 15 years ago, that lets Web browsers "act as platforms for fully interactive embedded applications." The suit reaches beyond software industry giants such as Adobe (NSDQ: ADBE), Apple, and Google (Eolas reached a settlement with Microsoft (NSDQ: MSFT) years ago) to the likes of Blockbuster, Frito-Lay, JPMorgan Chase, and JCPenney. As my colleague Paul McDougall reported, an Eolas victory "could give the company a claim on virtually every Web site that hosts interactive applications." I'm in no position to judge the validity of the Eolas suit, but it's worth noting that it was filed in U.S. District Court in Eastern Texas, known for its favorable patent rulings.

Read the full article here.

Eolas Patent Suit Volley

The following is excerpted from an October 7, 2009 news item found at TechCentral.ie:

Eolas Technologies has begun a new round of patent suits based on its browser plug-in patent. The company fought an eight year battle with Microsoft, claiming that the software giant's implementation of ActiveX in Internet Explorer violated the now notorious '906 patent.

A court sided with Eolas, awarding the company $521 million in damages and leading Tim Berners-Lee to describe the verdict as "a substantial setback for global interoperability and the success of the open web."

However, it now appears the Microsoft verdict, finally settled after many appeals in 2006, was only a test case. Eolas is now going after 23 companies, including Apple, Google, Adobe, Amazon, eBay, Playboy, Yahoo, and YouTube, amongst others, citing violations of patent '906 and '905, which covers embedded apps using Ajax.

... the company's lawyer, Mike McKool, was keen to point out that Eolas isn't just another patent troll. "What distinguishes this case from most patent suits is that so many established companies named as defendants are infringing a patent that has been ruled valid by the Patent Office on three occasions."

Read the full news item here.

How Korean Industries Should Prepare for Patent Troll Attacks

The following is excerpted from the above-titled article by Moon Kim in the September 21, 2009 issue of Korea IT Times:

When Worlds.com filed a patent for its invention of a system and method for enabling users to interact in a virtual space (US patent 7,181,690), it might not have even conceived of 3D virtual Internet and on-line gaming. Recently, however, Worlds.com claimed to hold a patent dating back to 1995 that could apply to every 3-D online world currently in existence. In fact, Worlds.com has already initiated litigation against NCSoft claiming infringement on its patent.

Recently patent litigations became a big issue to large Korean consumer electronics companies and industries, and even the Korean government recognizes the importance of IP protection.

Patent troll litigation has been growing rapidly in recent years due to the emergence of start-up venture finance. The current modus operandi of the patent troll is to purchase a patent, often from from bankrupt firms, academic institutions or individual inventors, and then sue another company by claiming that one of its products infringes on the patent. Patent trolls attempt to claim patent rights against purported infringers. Notably, what patent troll companies have in common is that they do not produce products relating to the inventions whose IP rights they own, and they neither own nor facilitate product manufacturing-related R&D.

...how can a company protect itself from patent trolls, and what best practices exist to strengthen a company's defenses?

IP management teams, which usually consist of technical professional leaders (such as IBM's Master Inventors) and legal professionals, initiate periodic reviews to examine a company's IP policies and the mechanics of IP generation, valuation and use of patents continuously. This effort, combined with an analysis of the company's patent portfolio and patent intelligence, allows an IP management team to identify the weakest area of company's IP portfolio, providing them with valuable information on how to quickly and efficiently fill gaps in the company's IP protection. Profitable patent licensing businesses also play an important role in IP management, bringing multiple billions of dollars of revenue to the company every year.

Often, the responsibility of managing a company's patent defense strategy lies with the company's IP department. For a well-managed company, however, the first line of IP defense comes from the company's technology developments, which often arise as a response to its competitors. These activities include:

• Creating a core technology and protecting it by filing broader IPs to surround it.

• Creating strategic IPs.
• Alternate Design Approach.
• Better Search capability.
• IP Intelligence.
• IP Product Clearance Search.

Read the full article here.

Microsoft Sale Of Linux Patents Roils Open Sourcers

The following is excerpted from a September 11, 2009 InformationWeek article by Charles Babcock:

Microsoft (NSDQ: MSFT) put 22 patents up for sale in July, listing them all as in the "open source" category, with some of them, "Linux-focused." The ultimate buyer was the Open Invention Network, a consortium of Linux backers that wanted to take them off the market.

But in between Microsoft marketing and OIN ownership there was a bit of behind the scenes maneuvering. OIN was never approached by Microsoft to buy the patents, even though it was an obvious, interested party.

And the actual bidder, Allied Security Trust, was acting as a front man for OIN as well as its own 11 members. OIN was approached by AST "early in the process and invited to be a surrogate bidder," unbeknownst to Microsoft, says OIN CEO Keith Bergelt.

When AST's bid won the auction, AST and OIN signed a deal that made OIN the ultimate holder of the patents. The irony of the maneuver is that it was an unlikely outcome.

AST normally bids for patents on the open market, licenses its members to protect themselves from them, then quickly resells the patents. By using this "catch and release" policy, it leverages its members investments and gets income that allows it to protect its small membership from more patents. One result is that many AST acquired patents end up on the open market and in the hands of patent trollers, who claim royalties from companies whose products might be covered by their patents.

Read the full article here.