Category : non practicing entities

Patent Month in Review: March 2017

No Laches in Patent Infringement Cases

The Supreme Court addressed the distinction between laches and statutes of limitations in patent cases. Its 7-1 SCA Hygeine Products AKT vs. First Quality Products, LLC (S. Ct. 2017) considered whether laches could be used as a defense by defendant First Quality when 7 years had passed from when it first received notice of potential infringement in 2003 and the date that SCA filed an infringement complaint in 2010.  Considering the Congress-passed statute for damages recovery in 35 USC 286 and the laches defense, the Court followed its 2014 Petrella decision in a similar case under copyright law, “Laches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.”

Eligibility: Get Technical or Get Denied

Dennis Crouch summarized a nonprecendential opinion well with the above maxim to apply to subject matter eligibility questions. The Federal Circuit’s conclusion provides some guidance for future applicants and practitioners, “In contrast to Diehr, claim 1 recites a method that changes the way electronic information is displayed via an unknown and unclaimed process. Absent any limitation to how the data are changed, there is little, if any, transformative effect.[1] Data are still data.” According to the court, the patent failed to show an inventive “technical manner” in which “data is gathered, analyzed, or output.”

[1] The machine or transformation test lives. See Older Supreme Court Cases Provide Guidance for Determining Patentable Subject Matter Post Alice

Assignment of Patent Alone May Not Extend to Child Applications

The Federal Circuit held that a party that had been assigned a parent patent lacked standing to sue for child patents issued from the parent patent. The assignment in question did not assign rights related to continuations, technical know how, or general IP rights.

Patent Month in Review September

dreamstime_s_38780059 2By Stephen B. Schott

Abstract Idea Step in Patentable Subject Matter: Animated Lip Syncing Not Abstract, is Eligible
MCRO, Inc. v. Bandai Namco Games America, Inc., 2015-1080 (Fed. Cir. 2016)

“Here, the structure of the limited rules reflects a specific implementation not demonstrated as that which “any [animator] engaged in the search for [an automation process] would likely have utilized.” By incorporating the specific features of the rules as claim limitations, claim 1 is limited to a specific process for automatically animating characters using particular information and techniques and does not preempt approaches that use rules of a different structure or different techniques. See Morse. When looked at as a whole, claim 1 is directed to a patentable, technological improvement over the existing, manual 3-D animation techniques. The claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice. Alice. Claim 1 of the ’576 patent, therefore, is not directed to an abstract idea.”

‘576 patent claim 1 reads as follows.

1. A method for automatically animating lip synchronization and facial expression of three-dimensional characters comprising:
obtaining a first set of rules that define output morph weight set stream as a function of phoneme sequence and time of said phoneme sequence
obtaining a timed data file of phonemes having a plurality of sub-sequences
generating an intermediate stream of output morph weight sets and a plurality of transition parameters between two adjacent morph weight sets by evaluating said plurality of sub-sequences against said first set of rules
generating a final stream of output morph weight sets at a desired frame rate from said intermediate stream of output morph weight sets and said plurality of transition parameters;
an applying said final stream of output morph weight sets to a sequence of animated characters to produce lip synchronization and facial expression control of said animated characters.

Declaratory Judgment: Even if you don’t identify a product, you might be sued for DJ
Asia Vital v. Asetek Danmark, 2015-1597 (Fed. Cir. 2016)
Asetek (1) rehashed the volatile relationship between the parties, saying that poor experiences with AVC [Asia Vital] in the past have “sown distrust in Asetek for AVC”; (2) stated that it “does not license its patents” generally and, more specifically, that it would not license them to AVC due to the previous conflicts between the parties; (3) accused AVC of “likely selling other infringing products in the United States”; (4) warned AVC that it “enforced its IP” and noted its “pending litigations against CoolIT and Cooler Master”— companies that AVC alleges sell products similar to the K7 and K9; and (5) emphasized that it has been allowed a patent in the European Union with claims similar to the asserted patents and also has similar claims pending in China…Moreover, AVC alleges that Asetek made threats to its customers regarding AVC’s infringement of the asserted patents.

The Federal Circuit concluded that “Such threats constitute affirmative actions by Asetek to impede and frustrate AVC’s attempts to meaningfully participate in the liquid cooling market and further support our conclusion that a substantial controversy existed between the parties.”

FTC Releases Patent Assertion Entity Report

The FTC issued a report on patent assertion entities (pejoratively called patent trolls by some). The FTC differentiated between litigation assertion entities (those that sue) and portfolio assertion entities (those that look to license and develop technologies).  This may be a critical distinction if legislators take action against patent assertion entities.

USPTO Raising Patent Fees on January 1, 2017
Official Announcement

Patent fees will rise on January 1. Most fees will increase by 10%, with some fees for reexaminations rising by more than 20-30%.

Patent Complaint Must Identify Infringement with Element-by-Element Specificity
Lyda v. CBS Corp., 2015-1923 (Fed. Cir. 2016)

Amended Complaint must plausibly allege that Defendants exercise the requisite “direction or control” over the performance of the claim steps, such that performance of every step is attributable to Defendants. The Amended Complaint alleges that CBS Interactive controls certain independent contractors who in turn direct and control the “participation” of unnamed third persons to send votes on either their own or borrowed cell phones. Mr. Lyda does not set forth any factual allegations in support of his assertion that CBS Interactive directed or controlled the independent contractors….There are thus no allegations in the Amended Complaint that can form the basis of a reasonable inference that each claim step was performed by or should be attributed to Defendants. The Amended Complaint fails to plausibly plead sufficient facts to ground a joint infringement claim under this court’s Akamai decision and does not satisfy the Iqbal/Twombly pleading standard.
Supreme Court Denies All Patentable Subject Matter Petitions For Upcoming Term
Patently-O Story


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For the next Two Weeks, Google is Buying Patents

By Stephen B. Schott

Do you have a patent you want to sell? Want to sell it to one of the biggest companies in the world? You might have a partner in Google.

How to Participate

googThrough May 22, Google is buying patents through an experimental Patent Purchase Promotion. The transaction process is simple. Patent owners go to this site, fill out some forms, name their price, then wait to hear from Google, who will finalize the form assignment agreement and wire the asking price, if it is interested.

The Details

Here’s how it works.

  • Google is only buying one patent at a time. If you have more than one patent you want to sell, you need to complete the form multiple times.
  • Google is only interested in US patents for now.
  • Google is not interested in your patent if you/your company share ownership in the patent.
  • Your patent cannot be subject to litigation, encumbrances, etc.
  • You must have the authority to sell the patent.
  • You must provide an asking price.
  • All terms in Google’s Patent Purchase Agreement are nonnegotiable.
  • You will retain a license back to your patent. The license is “irrevocable, non­exclusive, non­transferable, non­assignable (including by operation of law or otherwise), non­sublicensable, worldwide, [and] fully paid­ up.”
  • Google will let you know by June 26, 2015 if it tentatively accepts your offer and if it does, it will request more information from you. 
  • Upon finalization of the agreement, Google will wire the asking price amount to you.

Why is Google Doing This?

In its announcement about the Patent Purchase Promotion, Google states that

We view this as an experiment. We are looking for ways to help improve the patent landscape, and we hope that by removing some of the friction that exists in the secondary market for patents, this program might yield better, more immediate results for patent owners versus partnering with non­practicing entities.

dreamstime_xs_34612811Google’s employee Code of Conduct and unofficial Mission Statement is “Don’t be evil.” You have to read between the lines of the announcement and Google’s mission statement, and its previous criticism of nonpracticing entities (NPEs, often called patent trolls) to figure out Google’s possible motivation.

Google has long been in tension with patent trolls, and is regularly in the top 10 of companies most sued by NPEs. Gene Quinn at IPWatchdog argues that Google promotes the demise of the patent system. I’m fairly certain that Google is not actively promoting the demise of the patent system, but it is almost certainly trying to take on NPEs.

One of the problems with attacking NPEs is that they often buy patents from smaller inventors who don’t have resources to sue, license, or transact business around their patents. Thus the NPEs play a critical role in the idea economy–creating a marketplace for ideas.

Google, in buying patents, is entering the NPE arena and hoping to also become a buyer of ideas. In so doing, Google itself is taking on the role of NPE because it states that it “can license [the purchased patents] to others, etc.” It’s hard to see how this plays out, but I suppose the optimistic among us would hope that Google’s “Don’t be evil” will prevail over any nefarious use of the purchased patents.

Should you try this?

If you have a patent that is generating no value for you, or that has an upcoming maintenance fee that you don’t want to pay, you might want to give this try. Might be like getting money for nothing. You also might sign up to see if Google will give you more money than you think your patent is worth.

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John Oliver’s Anti-Patent-Troll Rant: Simple Thinking

By Stephen B. Schott

last-week-tonightUp is down and right is left when my inbox fills up with 10 friends linking me to something about patents. But this floppy-watches-hanging-from-trees moment came recently after comedian John Oliver, during his Last Week Tonight show, took on patent trolls. In doing so, he follows comedian Adam Corolla, who also had an anti-patent troll rant go viral (for patent news) last year.

Take a gander: It’s possibly not safe for work on language.

My favorite line, of a few that were excellent, is his comparison of patents to “legally binding ‘dibs.'” Unfortunately, as with his rant about pharmaceutical companies marketing to doctors, Oliver took the easy route and attacked a few bad actors who everyone would dislike and ignored many other businesses that fulfill an important role in the idea economy.

Who are these patent trolls?

Patent trolls prefer to be called non-practicing entities or NPEs, but the patent troll term is too pejoratively inviting to go away. The problem of patent trolls is, as my friends across the Atlantic might say, a sticky wicket. A lot of people feel like there’s some kind of a problem but no one seems to agree on who’s an actual troll.

A few examples illustrate the difficulty of defining a patent troll. Let’s say that a major automobile manufacturer invests several million dollars developing a new diesel engine. Along the way, it secures 50 patents on the technology, but then decides not to pursue the diesel engine and instead focuses on hybrid engines. A few years pass and one of its competitors releases a diesel engine using the patented technology. Is our automobile manufacturer a troll if it pursues the competitor for patent infringement, just because it didn’t produce the diesel engines?

Another problem example that commonly arises is universities, which are petri dishes of innovation that rarely make any products. Most universities do, however, have a technology transfer office that secures patent protection for innovations. If a university sees a company using its patented technology and approaches the company seeking a royalty, is the university a troll that should be punished?

And a third category is also troublesome. Picture a small business that invents a new technology and secures a patent on it. Later, a multinational corporation starts using the technology. The small business doesn’t have millions of dollars to bring a patent infringement lawsuit so it sells its patent to a third party who has enough money to bring the lawsuit. In this David and Goliath scenario, small-business David needed a sling, and the third party provided it. The third party may be in the business of nothing more than collecting promising patents—but legislation attacking the third party patent collector harms the small business and stifles innovation.

At the other end of the spectrum is an example where a patent attorney purchased a patent from an inventor. The patent was for a consumer product. The patent-owner/attorney sued a manufacturer for infringement even though it was clear that there was no infringement. The manufacturer was faced with a terrible decision tree: Choice 1: Pay the patent-owner a small amount of money to settle the lawsuit, or Choice 2: Pay litigation costs (hundreds of thousands of dollars at least) to win the lawsuit and pray for the never-to-be-found Questing Beast that is judge-awared attorney’s fees for bringing a frivolous lawsuit. Choice 1, as painful as it is, is often the better business decision. So yes, there are definitely bad patent trolls.

The Problems With Oliver’s Rant

One of the biggest problems with the Oliver rant is that he fails to acknowledge that in the last two years, a lot has happened to curb bad actors in the patent world. Patent litigation is down 20% in the last year. The most-abused patents, those based on software, are now undergoing heightened legal scrutiny following the Alice Supreme Court case. The US Patent and Trademark Office has set up several new procedures for challenging the validity of granted patents. In all, a lot of work has already been done to fix this problem: The laws, procedures, and cases are having an effect.

dreamstime_xs_8645058Another problem, and perhaps it is obvious from the above descriptions of trolls, is that some of these patent entities help, not hurt, smaller inventors. Patent enforcement is expensive, and without patent entity companies help smaller companies enforce their patent rights against infringers. Thus, many trolls fill an economic need by helping small inventors protect their rights when the costs for doing so get too high.

Oliver encourages more legal action to curb patent trolls, but no one yet knows how all the solutions that were enacted in the last 2 years will play out. In the end, Oliver will hopefully get his dream of fewer true trolls and more innovation, but that will take time and politicians should be careful not to create more problems in their haste to react to the anti-troll sentiment.

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