The Prior Art

The AP's "hot news" lawsuit lives on; are scoops "quasi-property?"

A New York federal judge ruled Tuesday that The Associated Press can sue its competitors not merely for copyright infringement, but for a "quasi property" right in the news known as the "hot news" doctrine. See the AP's own coverage.

Well, let it not be said that I fell down on the job when "hot news" crossed my beat. I took a look at both sides' motions and the judge's ruling to learn more about the case. The doctrine raises some questions for me about journalistic practice and ethics. And, it has some interesting history to boot.

According to 2nd Circuit law quoted in the order in this case [PDF], a "hot news" misappropriation claim is viable when:

(i) a plaintiff generates or gathers information at a cost;

(ii) the information is time-sensitive;

(iii) a defendant's use of the information constitutes free riding on the plaintiff's efforts;

(iv) the defendant is in direct competition with a product or service offered by the plaintiffs;

(v) the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

Personally, I can't see how all five of these don't apply to any news organization that's writing a story that follows a "scoop" by a competitor. 

The (mis)reporting of patent lawsuits

One patent lawsuit that got a little buzz recently was Glasgow-based Picsel Technologies' lawsuit against the Apple iPhone.

CNN Money carried a short piece on the Picsel v. Apple lawsuit that used terminology that's pretty typical in reporting on patent lawsuits. According to CNN, Picsel claimed "that Apple's hot-selling iPhone and iPod Touch devices incorporate Picsel-patented technology that facilitates rapid redrawing of content displayed on devices' screens."

Now, that sentence is literally true and accurately reported. But there's a kind of breezy vocabulary around reporting on patent litigation that is quite problematic. It allows the patent-holder to strongly imply they've been copied, even though most of the time there's no copying even being alleged. Picsel is not claiming that Apple copied its patents or products, even though it's got a big incentive to put whatever evidence it has on the record.

Since there's evidence that most people believe—incorrectly—that patent lawsuits are about copying, shouldn't reporters go out of their way to clear about just what is being alleged?

Saxon Innovations ITC case moves forward

Last month, I wrote about how a patent-holding company that has launched wide-ranging litigation against cell phone manufacturers, Saxon Innovations LLC, made an unexpected entrance at the ITC. Today I learned from Oblon, Spivak's new ITC blog that the ITC has accepted Saxon's complaint and will proceed with a Section 337 investigation. (The ITC deals with a number of fair trade issues; intellectual property disputes are referred to as Section 337 investigations.)

The ITC saw about 50 such investigations last year—a record number—but companies like Saxon, sometimes denounced as "patent trolls" since their only business is licensing and enforcing patents, have been conspicuously absent from the ITC. One presumed obstacle for such companies has been the "domestic industry" requirement; another is the sheer expense of litigating at the ITC.

The fact that the ITC is moving ahead with the investigation is not surprising. It's very unusual for the ITC to shut down a case at this stage. But lawyers I've spoken to have generally agreed that the Saxon case is pushing the envelope in terms of what constitutes a "domestic industry." There's a lot more detail on that in my story linked above, but it will be interesting to see how much of an issue this becomes going forward. In part, it depends on whether the respondents (what defendants are called at the ITC) choose to go after Saxon on that point, or focus their energies on other defenses.

The Saxon ITC case has five respondents: Nokia, HTC Corp., Research in Motion, Palm, and Panasonic. Saxon filed a companion lawsuit in an East Texas district court the same day it filed at the ITC, asserting the same patents against the same companies, asking for damages and an injunction. That case has been stayed until the ITC trial is complete.

High-end patent disputes in district court average about $5 million from filing through trial, and it typically takes 2-3 years to get through a patent trial. Compare that to the International Trade Commission, where trials are completed and decisions issued 12-15 months from filing, and legal fees during that period can get up to $10 million, or even more.

Most non-practicing patent-holders rely on contingency fee arrangements to pay for their litigation, meaning their lawyers have some "skin in the game." But if your legal bills are pushing towards the $1 million a month mark in an ITC case... well, that's a whole lot of skin in the game.

Neither Saxon Innovations nor their attorneys at Pepper Hamilton returned my calls when I reported on their ITC complaint in December, so I'm not expecting a press release detailing the fee arrangements for this case anytime soon. It's worth noting that Saxon is backed by Altitude Capital, an investment bank with $250 million to invest in the patent lawsuit business. 

In any case, Saxon's mere presence at the ITC, backed by a major law firm like Pepper Hamilton, seems like a sign that the business of pure patent enforcement is toughening up, not fading away. Even if the patent-licensing shops lose their ITC battles, they're going to leave a lot of scorched earth.

Saxon Innovation's ITC case is Investigation No. 337-TA-667. The corresponding district court lawsuit is Saxon Innovations, LLC v. Nokia Corp. et al, 08-cv-00494-LED, E.D. Texas (Tyler).

Image via Wikimedia: Charlemagne at war with the Saxons.

New law firm blog will focus on International Trade Commission

Oblon, Spivak, McClelland, Maier & Neustadt has created a new blog focused on IP cases at the International Trade Commission (ITC). Check out their ITC 337 Law Blog, authored by the firm's ITC practice co-chairs, Thomas Fisher and Barry Herman, along with senior associate Eric Schweibenz. I've already added it to my RSS reader—and I've already learned something useful from it, which I'll post about soon.

But first, kudos to Oblon, Spivak for starting this project, which I think is a great idea. I've just started digging into ITC cases in the last few months, and while it's nice that the ITC provides so many public documents without charge, the ITC website and search functions can be quite unwieldy for newcomers. It's a stark contrast to the sources available to get federal court documents, like Pacer, Justia, Stanford Law School's new IP Litigation Clearinghouse, and the many excellent blogs that cover federal courts. And while there's more IP and law blogs now than anyone could possibly keep up with, there is an information gap around the ITC, as noted in the blog's welcome message.

Posting ITC complaints and basic case information in a simple, sequential way, and making documents easy to download, would be a nice public service in and of itself. But it's clear that this blog has the potential to do more, and I'm sure will add a layer of real insight. The best legal blogs go beyond self-promotion to become a true public good, and I already see this project moving in that direction.

With so many law firms eager to drum up more ITC work, I'm sort of surprised this is the first ITC blog out there (at least, that I'm aware of.) But like the patent lawyers are fond of saying… it's all obvious in hindsight, right?

 

Patent defendants aren't copycats. So who's the real inventor here?

Recently, I met up with a freelance photographer who was taking some photos for a patent infringement lawsuit I was reporting on. After I introduced myself, he asked me to sum up the story: "So the plaintiff is saying this company ripped off his idea, right?"

If you wanted a one-liner to capture the popular conception of what patent lawsuits are all about, that's a pretty good one. But here's the thing: it's nearly always wrong.

It's not just that defendants in patent lawsuits aren't found guilty of copying—with very few exceptions, they aren't even accused of copying, according to a new study by two leading patent academics. Taking that data as a jumping-off point, I took a closer look at the issue of copying and other popular misconceptions about patent lawsuits in my January IPLB story, "The Inventor's Tale." The story has now been published on Law.com as well, with a different title: "How Juror Misconceptions Affect Patent Trials."

In the course of reporting this story, I traveled to Marshall, Texas, where I watched my first full patent trial. Watching that trial, Mass Engineered Design v. Ergotron, I really started to see where the rubber hits the road in patent law. I will have more reflections from that trial and the trip that I'll share here. But today I want to take a closer look at the research on copying by law professors Mark Lemley (Stanford) and Christopher Cotropia (U. of Richmond). Their fascinating study, "Copying in Patent Law," is available on SSRN.