The Prior Art

Recent Patent Litigation Weekly Columns

 

Much of the patent news that was published on this blog has been moved to the IP Insider section of the Corporate Counsel website. Here's a list of the last several Patent Litigation Weekly columns—

 

Oct. 25, 2010: Big Patent-Licensing Deals Push Acacia Earnings to a Stunning High

No one has filed more patent lawsuits against corporate America than Acacia Research. But Acacia CEO Paul Ryan says corporations are embracing, not rejecting, his business — and the company's new numbers prove it.

 

Oct. 18, 2010: Call it the Canadian Bilski

Citing U.S. patent laws, rejecting the European view, and opening the door to a potential rush on business-method patents up north, a Canadian judge says Amazon's controversial 'one-click'

 

Oct. 4, 2010: NPE Makes Offer Some Companies Can Refuse

Offered the chance to cough up $80,000 apiece to license a patent once held by Intellectual Ventures, drugmaker Novartis and auto parts manufacturer Tenneco decided to fight back instead.

 

Sept. 27, 2010: Uniloc Keeps Filings Software Suits, and NPE Patents Fare Poorly at Trial

Undeterred by its district court loss to Microsoft — and waiting on a Federal Circuit appeal in any case — Uniloc sues dozens of companies for 'software activation.' Plus, a new study shows that troll patents don't hold up at trial.

 

Sept. 20, 2010: Skyhook Takes a Shot at Google

This week: The search giant faces a new kind of patent lawsuit — one brought by (imagine!) an actual competitor in an increasingly important space — smartphones

 

Sept. 13, 2010: Costco v. Omega — The Patent Angle

The world's largest chipmaker hopes to use a Supreme Court case about Omega watches to 'correct' the Federal Circuit's rules on international patent exhaustion

 

Aug. 30, 2010: Inside Google's Second Patent Trial

Earlier this month, lawyers from Google and Yahoo dismantled a notorious Spangenberg patent. That leaves Google's perfect troll-fighting record intact.

 

Patent Litigation Weekly: International Trade Commission rebuffs Big Tech, keeps doors open to NPEs

The International Trade Commission is in charge of enforcing the Tariff Act of 1930, a law passed during the Depression to protect U.S.-based companies from unfair trade practices, including the sale of goods that infringe valid U.S. patents. In recent years, however, the agency's definition of what qualifies as "domestic industry" has expanded to the point that small patent-holding companies with just a handful of employees (Saxon Innovations, St. Clair Intellectual Property Consultants) and even individual inventors have been allowed to proceed with ITC litigation.

Congress helped expand the ranks of who could seek remedies at the ITC in 1988 when it amended the "domestic industry" requirement to include "licensing" as qualification. Patent-holding companies have relied on that change ever since to justify their arguments that the taxpayer-funded ITC should ban imports of certain products on their behalf. Of course, in 1988, the patent litigation landscape was very different, and patent-holding companies—aka "non-practicing entities," or "patent trolls"—in the modern sense simply didn't exist.

Patent Litigation Weekly: At Injunction Time, Ricoh Gets the Troll Treatment

This week: Japanese office equipment manufacturer Ricoh tried to cash in on patent litigation in a market in which it no longer competes—and succeeded. But when it sought an injunction, the company didn't make out any better than your run-of-the-mill patent troll. 

Last November, Japan-based Ricoh Company and Taiwan's Quanta Computer faced off in a federal courtroom in Madison, Wisconsin. At issue was Ricoh's claim that Quanta optical drives infringed two Ricoh patents, Nos. 6,661,755 and 5,063,552. The jury ultimately agreed, and awarded Ricoh $14.5 million in damages.

Ricoh's lawyers, from Washington, D.C.-based Kellogg, Huber, Hansen, Todd, Evans & Figel, moved swiftly to claim to what they believed should be their real reward: an injunction shutting down Quanta's optical drive business until the Taiwanese company—which assembles disk drives for Sony, Apple, Hewlett-Packard, and Dell—agreed to license the Ricoh patents. And Ricoh's lawyers made it clear in court documents that a license was not going to come cheap.

Patent Litigation Weekly: MobileMedia's Unusual Patent Infringement Campaign

This week: A closer at the holding company behind recent suits against smartphone makers Research in Motion, HTC, and, most interestingly, Apple.

MobileMedia Ideas LLC didn't create a big stir when it launched in January. Instead, the holding company simply issued a press release in which it let the world know that it would "make available" its innovations, (which is, of course, generally considered to be patent-speak for, "We will be suing people shortly"). MobileMedia, which holds 122 patents it acquired from Sony and Nokia, was even quieter when it acted on its euphemistic pledge in March by filing separate infringement suits against three leading smartphone makers.

There's nothing new or unusual about a patent-holding company tossing a few lawsuits against the wall to try to wring some cash out of the smartphone industry, which has lately become crowded with lawsuits filed by holding companies and competing companies alike. 

What is unusual is who owns MobileMedia: MPEG-LA, the private company that oversees a total of eight patent pools covering important digital video standards—MPEG-2 and MPEG-4 being the most common—used in DVD players and pretty much every other device that supports digital video. Contributors to those pools, whose contents MPEG-LA has licensed to literally hundreds of companies, include Hewlett-Packard, Panasonic, Sony, and Cisco subsidiary Scientific Atlanta (see full list). MPEG-LA's CEO Larry Horn also heads MobileMedia. 

Patent Litigation Weekly: DataTreasury Wins First Patent Trial, Against U.S. Bank

While the patent world awaits a Bilski ruling that could have a dramatic impact on business-method patents, an East Texas trial victory in a case involving, yup, business-method patents adds fuel into a what could become a billion-dollar licensing campaign for a holding company.

On March 26, an East Texas jury ordered U.S. Bancorp to pay $27 million for infringing check-imaging patents held by DataTreasury. That sum—which could be tripled since the infringement was found to have been willfull—will be added to the more than $350 million that DataTreasury has already collected from some 30 other banks and check-processing companies that have agreed to license the small company's patents. (Verdict Form, PDF).

The verdict is a first for DataTreasury, which has two additional trials scheduled against a total of eight banks. In those cases, the holding company is demanding a combined $1.39 billion in damages—more than half of it from Bank of America for processing 64 billion checks in a manner that DataTreasury says infringes its patents.  (See p. 5 of Scheduling Order, PDF).

Pat Lit Weekly: FedEx Sends Scott Harris Patent Packing

This week, a Scott Harris patent bites the bar-code dust, for now. And a close look at how it made its way from application to the courtroom shows how a lawyer-inventor was able to claim that FedEx infringed his intellectual property with every package it shipped.

Scott Harris is a former big-firm patent attorney who is also, according to his patents and related lawsuits, responsible for a wide array of technological innovations: from anti-spam software to toasters to "enhancing touch and feel on the Internet."

Over the years, Harris's patents have been used to sue a wide range of companies, including Dell, FedEx, Motorola, and Google. The Harris patent that had progressed furthest towards trial, No. 6,666,377, is controlled by BarTex Research LLC, a patent-holding company that filed an infringement suit against FedEx in the Eastern District of Texas two weeks after it was formed there. In the company's complaint, BarTex lawyers at the Chicago patent boutique Niro, Scavone, Haller & Niro claim that the existence of the '377 patent, which covers bar code-scanning technology, means FedEx should make the holding company a royalty payment on every package it ships.

But BarTex suffered a setback in that lawsuit last month when E.D. Texas Judge Leonard Davis finalized a claim construction order that could wind up invalidating the '377 patent. BarTex's attorneys have stipulated as much if Davis' claim construction is allowed to stand—something they hope to prevent. On March 16, they filed papers indicating they will appeal Davis's Markman order to the Court of Appeals for the Federal Circuit. (Read Judge Davis' order finalizing the claim construction [PDF].)

Patent Litigation Weekly: Digging Beneath the Surface of Apple v. HTC

This week: Good luck getting any lawyers in Silicon Valley to talk--even on deepest background--about this week's hot patent litigation story. That doesn't mean there isn't plenty of history and context to consider when assessing Apple's risky gambit.

Apple's lawsuit against HTC comes well into the Internet age, after a 10-year run of "troll" lawsuits has transformed the patent litigation landscape to the point that such suits now make up the bulk of many Silicon Valley litigators' practice.

It's fairly unusual in the modern era for a market leader to initiate a patent suit. Which is not to say large operating companies don't sue for patent infringement. They do. But on the relatively rare occasions when they do launch such litigation, it tends to fall into a couple of categories.

Patent Litigation Weekly: RPX Fattens Up On Saxon Innovations Patent Portfolio

A novel International Trade Commission case that expanded the limits of what the agency would consider a "domestic industry" has ended with the holding-company plaintiff that initiated that suit, Saxon Innovations, selling the lion's share of its patents to patent-defense aggregator RPX Corporation.

Under the deal, RPX acquires all but ten of Saxon's 180 patents, which originated with chipmaker AMD Corporation, for an undisclosed sum. The remaining 10 patents go to a patent-enforcement company called Norman IP Holding, which is managed by the same people who managed Saxon. Saxon has ended its innovative ITC litigation against Palm Inc., Nokia, Panasonic, Samsung, HTC, and Research in Motion, as well as two related federal lawsuits in the Eastern District of Texas.

Saxon is owned by Altitude Capital Partners, a New York private equity firm that invests in patent litigation. In a statement announcing the RPX deal, Altitude's managing partner, Rob Kramer, said he is proud of the profits Saxon's litigation has produced for the investment firm and especially proud that it was a Saxon suit that persuaded the ITC—the federal agency tasked with protecting the U.S. market from unfair trade practices—that a holding company with two full-time employees is indeed a "domestic industry" worthy of protection.

“I want to especially thank Saxon Chief Executive Officer, Bill Marino, for conceiving of and executing the novel approach of demonstrating domestic industry in the International Trade Commission,” Kramer said. “His entire management team and all of our strategic partners made great contributions to accelerate our realization of such outstanding returns."

Patent Litigation Weekly: Inventor from ESN v. Cisco and Troll Tracker Lawsuits Arrested on Weapons Charges

The inventor who holds the patent that was at the heart of two libel lawsuits against "Patent Troll Tracker" blogger Rick Frenkel and Cisco Systems was arrested last week, after police found an illegal stockpile of firearms, ammunition, and grenades in his home in Manchester, Massachusetts, about 30 miles from Boston. Gregory Girard, named inventor on U.S. Patent No. 7,283,519, believed he was readying himself for "Armageddon," according to police. In addition to having around 20 firearms, Girard was stockpiling food and medicine, camouflage, and body armor, and had built an indoor shooting range in the attic of his condominium, according to accounts of the arrest in the Gloucester Daily Times and the Boston Globe. Girard had a license for the guns, but his explosives, double-edged knives, and habit of shooting indoors are all illegal.

Last Wednesday, a Massachusetts superior court judge deemed Girard too dangerous to be released and ordered him held until his probable cause hearing on March 15. According to police reports, Girard recently told his wife: "It's fine to shoot people in the head because traitors deserve it," and "Don't talk to people, shoot them instead." (His wife reported concerns about his increasingly paranoid behavior to authorities the day before he was arrested.) For Girard, those "traitors" may have included most members of Congress; news blog TPM Muckraker notes that Girard has been an active poster in far-right Internet forums for the past month.

In 2007, Girard's patent was the basis of an infringement suit that his holding company, ESN, filed against Cisco Systems. For ESN, it was a hugely important suit; one of ESN's lawyers later testified that his client was seeking "potentially hundreds of millions of dollars" from an East Texas patent win against Cisco.

Patent Litigation Weekly: A Closer Look at a New Patent Study

Two years after Richard Frenkel—at the time an in-house Cisco Systems, Inc., lawyer and now of counsel at Wilson Sonsini Goodrich & Rosati—outed himself as the until-then-anonymous author of the controversial patent litigation blog, the Patent Troll Tracker saga appears to be over.

In January, a libel suit filed by East Texas lawyer T. John “Johnny” Ward, Jr. against Cisco over the contents of an October 2007 Troll Tracker post was settled under confidential terms. Frenkel—dismissed as a defendant in the case last August at Ward's request—has declined to comment on either Ward's suit or a second, related defamation claim filed against him and Cisco by East Texas lawyer Eric Albritton. (That suit settled in September after a week-long trial; see earlier coverage on The Prior Art here, here, and here.)

While it’s clear now that at least a few high-level Cisco employees knew the Troll Tracker’s identity, company lawyers say no one there besides Frenkel contributed to the blog. Still, because Cisco is helping to lead the lobbying charge in favor of reforming the nation's patent laws—with a particular focus on lowering litigation payouts to non-practicing entities (a.k.a. NPEs, or "patent trolls")—those who advocate for small patent holders sensed a Frenkel-Cisco conspiracy.

Putting aside the conspiracy theories aside and drama—two lawyers with a high profile in the Eastern District of Texas's lucrative patent litigation scene suing Cisco and one of its in-house lawyers for libel and defamation—it seems like an opportune time to take a broad look at the big issue at the heart of the Troll Tracker tale: that the huge piles of money at stake in patent litigation has created an independent class of IP professionals? As it happens, a PricewaterhouseCoopers study released in January on just that topic has some answers.

"Patent trolling" has its rewards.

Tech-sector executives and lawyers say privately—and an informed review of court dockets confirms—that so-called trolls aren't just surviving, they're thriving. The essential NPE tactic—suing a broad swath of companies for patent infringement, then settling with each defendant for less than the cost of fighting such a suit—is now an established business model. It's so solid, in fact, that patent-holders are starting to delve into previously untouched economic sectors, suing small retailers and even photographers.

Patent Litigation Weekly: Shutter Closing on Massive Photo-Sharing Patent Suit

FotoMedia is a patent-holding company that claims just about every photo-sharing website you can imagine infringes its three patents. Its lawsuits, covered by TPA last May and June, are notable not just for the audacity of the claims they make, but also because they target dozens of small- and medium-sized software companies that provide various types of photo-sharing services over the Internet.

In previous stories about the FotoMedia suits, TPA detailed the litigation’s effect on San Francisco-based Fotki.com, which has about 25 employees, and the three-man, Texas-based software company FotoTime.

As the new year starts, some of the FotoMedia defendants are breathing a sigh of relief—and the rest may be doing the same soon. That's because reexamination requests filed with the United States Patent and Trademark Office by Yahoo Inc. appear to have knocked out nearly all the patent claims at issue. FotoMedia's lawyers at McKool Smith have reacted to that development by offering to either stay the suits or have them dismissed without prejudice (leaving FotoMedia able refile the claims at a later date.)

Patent Litigation Weekly: So What Do E.D. Texas Jurors Really Think?

This week: The Prior Art returns after its winter blogging break. As Microsoft gets set to scrap software found to infringe a Canadian company's software, The Prior Art discusses the case with three of the eight jurors whose verdict helped put the software giant in this predicament.

As of Monday—thanks to a permanent injunction issued in August by Judge Leonard Davis of the Eastern District of Texas and upheld last month by the Federal Circuit Court of Appeals—Microsoft Inc. must stop selling any version of Microsoft Word 2007 or Microsoft Office 2007 that includes a custom XML editor found to infringe a patent held by a small Canadian software company called i4i, Inc.

It’s not every day that such a well-known product has to be modified—or possibly removed from store shelves—because of a patent dispute. Indeed, the U.S. Supreme Court made getting such an injunction in a patent case extremely difficult with its landmark eBay v. MercExchange ruling in 2006.

Microsoft isn’t giving up the court fight over the patent at issue just yet. On Friday, the company’s legal team, led by Matthew Powers of Weil, Gotshal & Manges, filed a petition with the Federal Circuit asking for a rehearing en banc. Powers didn't return calls for this story. Earlier coverage on i4i's trial win, post-trial action, and Federal Circuit win is available from the AmLaw Litigation Daily.

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: Eolas in Texas, Triune Star fee award, and Guardian Media saga moves to appeals court

For Eolas, a Texas address, Dallas lawyers, and Plano targets.

Eolas Technology, a company built on a patent that originated at the University of California, has gone Texan. Eolas—having settled a previous infringement suit against Microsoft after winning a jury verdict of more than $500 million—this week asserted its 5,838,906 patent in a suit filed against 23 companies, including large banks, technology companies, and retailers. The goal, obviously, is to amass a new fortune via the patent wielded against Microsoft, as well its flashier child-patent, No. 7,599,985. The common thread connecting the targeted companies: they all employ browser plug-ins and “AJAX” technologies that have been used in some form on the Web for more than a decade.

Despite that, Eolas attorney Mike McKool of McKool Smith is confident the '906 patent will hold up in the current litigation. Speaking with The Am Law Litigation Daily, McKool emphasized that the patent has already been tested three times in PTO reexaminations. (It’s worth noting, of course, that none of the present defendants were around for those hearings.)

As for Eolas itself, the patent-holding company has evolved since it was last heard from. It had just one employee—Dr. Mike Doyle, who lives in the Chicago area—when it sued Microsoft, and its payroll doesn’t appear to have grown much since then. The Eolas website, however, claims the company now does research and development in addition to enforcing patents, though the links its research accomplishments are mostly brief descriptions of patents or patent applications.