The Prior Art

Bilski v. Kappos Oral Arguments: Supreme Skepticism Toward Method Patents

For the first time in almost 30 years, the U.S. Supreme Court on Monday considered the issue of what types of technology should be eligible for patent protection when it heard oral arguments in Bilski v. Kappos.

Across the board, the justices indicated a deep skepticism toward the invention described in the patent application at issue, which was rejected by the U.S. Patent and Trademark Office and describes a method for trading commodities. Some of the justices went even further—expressing both a fair amount of disdain for the idea of granting broad "method" patents and a concern that ruling in favor of the petitioners would lead to patent grants on fundamental ways of conducting business or organizing human behavior.  (Click here for a related story by sibling publication The National Law Journal Supreme Court correspondent Tony Mauro.)

Based on the justices' attitude during the arguments, it not only seems extremely unlikely that Bernard Bilski will ever get the patent at issue, it also seems clear that the court is poised to establish a new, and most likely stricter, test of what is patent eligible.

Patent Litigation Weekly: How to win $25 million in a patent suit—and end up with a whole lot less

This week: DeepNines collected $25 million when it won an infringement suit against anti-virus software giant McAfee Inc. in the Eastern District of Texas two years ago. But after paying off its Fish & Richardson lawyers and outside investors at Altitude Capital Partners, the small network-security company wound up with less than $800,000 of the $25 million. And now DeepNines is being sued by Altitude, which wants millions more than it's already gotten. A revealing look at how a leading player in the lawsuit-investment trade does business.

Third-party financing of lawsuits—often described as a new and growing phenomenon—has been much in the news lately. But outside investors have been making multimillion dollar bets on patent lawsuits for years. One of the field's leading players is Altitude Capital Partners, founded by investment bankers Robert Kramer and Warren Hurwitz. Altitude, which has been investing in patent lawsuits since at least 2006, boasts of having more than $250 million to spend on such litigation.

Last week, The Prior Art reported on one patent-holding company Altitude has invested in. This week, we offer the story of another Altitude investment—one that resulted in an acrimonious lawsuit between parties that used to be on the same side.

Patent Litigation Weekly: Revealed! How Much Money a "Patent Troll" Makes

This week: a motion filed by a convicted felon/inventor spills the details of how he, patent-holding company SP Technologies, and the Niro Scavone law firm divvied up the loot from a set of suits against top tech companies—including one over Apple's iPhone.

One thing that can make reporting about civil litigation frustrating is that so much of it ends in confidential settlements. Occasionally, though, a ray of light pierces the shroud of secrecy, and it's possible to find out how much money changed hands when a case settles before going to trial. Thanks to an unlikely source—an Iowa ear, nose, and throat doctor currently residing in a federal prison in Wisconsin after being convicted of insurance fraud—we now know how much patent-holding company SP Technologies collected as a result of filing suit against four leading tech companies: $2.17 million.

That information is contained in a motion to intervene filed in July by otolaryngologist Peter Boesen in connection with a pending suit brought by SPT against GPS makers Garmin and TomTom in the Northern District of Illinois. In addition to being a convicted felon, Boesen happens to be the inventor on the patent SPT has asserted in the suit—and in previous suits against Apple, Magellan, and Samsung—as well as a second patent asserted in a suit against LG Electronics.
 

Patent Litigation Weekly: Foley Tries Turning Tables on Spangenberg

This week, the man behind a notorious network of patent-holding companies finds himself in an unaccustomed spot: on the defense.

When it comes to litigation, Erich Spangenberg, well known for running a network of patent-holding companies, is usually a plaintiff. Now, though, he's on the other side of a lawsuit, having been named as a third-party defendant in a dispute between patent-holding company DataTern and its former lawyers at Foley & Lardner.

DataTern—a spinoff of an operating company, Firestar Software—made news last year when it settled a closely watched East Texas patent infringement suit against open source software leader Red Hat Inc. The settlement was considered novel because of the protection it offered to Red Hat's developer community. At the time, the parties kept financial terms of the settlement confidential; it has since been revealed that $4.2 million changed hands. (See Red Hat's press release on this settlement; analysis of the agreement at Groklaw; IPLB profile of Red Hat lawyer Richard Fontana.)

Foley & Lardner, which represented DataTern in the suit, claims it is still owed more than $1.5 million in fees for its work on the case. But rather than paying up, DataTern filed suit against Foley in January, essentially saying the firm did such poor work on the matter that it should be the one doing the paying. With the litigation now heating up, Foley has named Spangenberg, his wife, Audrey, and several related companies as defendants in a third-party complaint filed on October 1.

U.S. Senate committee passes bill against "pay for delay" drug settlements — more in October/November IPLB

The Judiciary Committee of the U.S. Senate passed a bill today that would ban "reverse-payment settlements," which are settlements that end patent litigation between branded and generic drug companies in which the branded company pays money to the generic. The Federal Trade Commission, which calls the agreements "pay for delay" settlements, has been fighting against these settlements for a decade now, but hasn't been doing well in court. Three separate appeals courts have ruled that different reverse-payment schemes are, in fact, legal. Both generic and branded pharmaceutical companies, and lawyers who work for them, have defended the settlements; but the FTC says consumers are losing out on billions of dollars in potential savings.

It's a development that makes the cover story in the October/November issue of IP Law & Business, recently mailed to subscribers, particularly relevant. 

The story looks at the history of how reverse-payment settlements developed, and focuses on what this controversy says about the different views on patent rights held by courts, federal antitrust enforcers, and the drug industry.

It's a hot topic for the drug industry, but the underlying question could affect all patent owners: Are patents truly "property" rights, or merely an option to litigate?

It's available now on IPLB.com: "One Man's Drug War."