The Prior Art

With $4.5 Billion Bid, Group Led by Apple and Microsoft Claims Nortel Patents

In a patent auction unprecedented in size and scope, a consortium of high-tech heavyweights banded together to buy Nortel Networks Corporation's trove of more than 6,000 remaining patent assets for a record-shattering $4.5 billion.

The winning bidder, a team of six tech companies that called itself Rockstar Bidco LP, consists of Apple Inc., Microsoft Corp., Research in Motion Ltd., Sony Corp., Ericsson AB, and EMC Corp. The consortium will take control of the patents, which cover everything from online search and tablet computers to social networking and 4G LTE mobile technology, pending approval from U.S. and Canadian bankruptcy courts.

Google, the only contender whose identity was known when the auction kicked off on Monday, came away empty-handed. The search behemoth, eager to ward off would-be patent infringement plaintiffs and bulk up its relatively modest patent portfolio, had entered into a “stalking horse” agreement with Nortel to supply the minimum auction bid at $900 million.

Google was advised on the bidding process by lawyers at Wachtell, Lipton, Rosen & Katz, including lead counsel Philip Mindlin, corporate partners Adam Emmerich and Benjamin Roth, antitrust partner Ilene Gotts, and restructuring and finance partner Gregory Pessin.

"This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition," said Kent Walker, Google's senior vice president and general counsel, in a statement. "We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers."

Cleary Gottlieb Steen & Hamilton managed the auction for Nortel, which took place at the firm's New York office from June 27 through June 30. Leading the Cleary team on the bankruptcy aspects were partners Lisa Schweitzer and James Bromley. Partners Paul Shim and Paul Marquardt provided M&A advice, partner Craig Brod assisted on corporate matters, and counsel Daniel Ilan helped on IP matters. Partner Jeremy Calsyn provided antitrust advice. (All are in New York except Marquardt and Calsyn, who are in Washington, D.C.)

David Berten, whose Chicago-based Global IP Law Group was selected by Nortel to advise it on monetizing its patents, noted that the $4.5 billion selling price was unprecedented. "I don't know of any other stand-alone patent sale that's been higher than a billion dollars," he says.

Ericsson, which contributed $340 million to the transaction, was represented by Paul, Weiss, Rifkind, Wharton & Garrison partners Marilyn Sobel, Stephen Shimshak, Peter Rothenberg, Joseph Simons, Charles Googe Jr., and Lawrence Witdorchic, according to the firm.

Apple was advised on the auction by lawyers at Weil, Gotshal & Manges, including partners Marcia Goldstein, Kyle Krpata, and Ronit Berkovich, according to a person connected to one of the other firms involved in the auction.

No further information on which firms advised the other members of the winning consortium was available as of Friday afternoon.

Many observers expected Microsoft to stay on the sidelines given its position that existing licensing agreemens with Nortel already gave it access to the patents on the block. Along with several other companies, including Hewlett-Packard Co. and Nokia Corp., the software giant had filed objections to the auction before the U.S. Bankruptcy Court in Delaware earlier this month. Those objections have yet to be resolved.

But Berten says that it's not unusual for licensees to become buyers--an opportunity that Microsoft apparently didn't want to pass up. "Lots of times there are advantages to owning patents that a licensee doesn't have," he says. "They can do their own licensing, for example."

A hearing on the auction results is scheduled for July 11 in Delware bankruptcy court. Should the court bless the outcome, the deal is expected to close in the third quarter of this year.

 

 

App Backwards: Lodsys, Texas Troll, Targeted in Patent Suit

By Andrew Goldberg

Lodsys, the litigious patent-holding company that filed suit in the Eastern District of Texas last week alleging that several independent developers of software applications used on mobile devices infringe its patents on in-app purchasing, is now on the defensive and facing a patent infringement suit of its own.

ForeSee Results, a Michigan-based company that designs online customer-satisfaction surveys used by many businesses, brought an action Tuesday in the U.S. District Court for the Northern District of Illinois seeking a declaratory judgment that its product does not infringe Lodsys's patents.

In its complaint, the company contends that Lodsys’s patents are invalid and argues that the patent-holding company, which has threatened to sue ForeSee customers including Best Buy and Adidas over their use of ForeSee's surveys, should be enjoined from pursuing such legal action [Download Foresee Results Complaint].

Although ForeSee's lawsuit is not directly related to mobile device apps, it does implicate two of the same patents at issue in Lodsys's suits against Apple iOS app developers. As a result, a decision by the Illinois district court to invalidate Lodsys' patents could potentially throw a wrench into the holding company’s strategy of hauling app developers into court in Texas.

For its effort, ForeSee has tapped the kind of legal firepower that small app developers most likely can't afford in their fight with Lodsys. The survey company is being represented by lawyers at McDermott, Will & Emery. For its East Texas suits, Lodsys, which is based in Marshall, Texas, is being represented by the Seattle-based firm of Kelley, Donion, Gill, Huck & Goldfarb and The Davis Firm in Longview, Texas.

Among those presumably rooting for ForeSee to prevail in Illinois are the seven iOS app developers--including the makers of such iPhone apps as Twitterific and QuickOffice and the games Mega Poker Online Texas Hold ’Em and Hearts and Daggers--that have already been sued by Lodsys in East Texas [Download Lodsys v. App Developers]. That dispute hinges on the functionality that enables users to make purchases from within an app.

Lodsys claims it's litigating in Texas against the little guys in lieu of going after Apple directly because the tech giant already licensed the patent at issue as part of a mass licensing deal it struck with Intellectual Ventures, the patent-holding company that owned the patents in question prior to Lodsys.  App developers, according to Lodsys, are not covered by that licensing agreement.

In a blog post on its website about Apple, Lodsys wrote: “The scope of their current licenses does NOT enable them to provide ‘pixie dust’ to bless another (3rd party) business application," adding,  "From Lodsys’ perspective, it is seeking to be paid value for rights it holds and which are being used by others.” Specifically, the company is demanding .575% of all U.S. revenue from any app that uses its patents.

But Apple general counsel Bruce Sewell disputes Lodsys' contention, arguing in a letter, sent two weeks after Lodsys's notice to developers, that "there is no basis for Lodsys' infringement allegations against Apple 's App Makers."

"I believe that your letters are based on a fundamental misapprehension regarding Apple's license and the way Apple's products work," wrote Sewell. "Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them."

For anxious app developers, of course, Apple's letter is only a start. Indeed, as the Electronic Frontier Foundation put it, "Even careful developers who hire lawyers to do full-scale patent searches on potential apps surely would not expect to investigate the technology that Apple provides. Instead, they would expect (with good reason) that Apple wouldn't provide technologies in its App Store that open its developers up to liability – and/or would at least agree to defend them when a troll like Lodsys comes along."

For the developers' sake, it's worth wondering whether there's an app for indemnification.

 

Supreme Court Rules Against Microsoft in i4i Case

By Andrew Goldberg

In a unanimous decision that won't be well-received by tech industry heavyweights, the U.S. Supreme Court ruled this morning against Microsoft in the closely watched Microsoft v. i4i case, rejecting the software giant's argument to lower the evidentiary requirement to invalidate a patent.

The decision, which upholds the $290 million verdict against Microsoft won by the small Toronto-based i4i software company in the Eastern District of Texas, solidifies existing precedent and leaves intact the 28-year-old standard applied by the Federal Circuit in patent infringement cases.

"Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity," Justice Sonia Sotomayor wrote for the Court. "Since then, it has allowed the Federal Circuit's correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands." [ Download Microsoft v. i4i Supreme Court Decision]

Thomas  G. Hungar, a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher, argued the case for Microsoft.  Seth Waxman, a partner in the Washington, D.C. office of Wilmer Cutler Pickering Hale and Dorr represented i4i, which was represented at trial by McKool Smith and before the U.S. Court of Appeals for the Federal Circuit by Finnegan, Henderson, Farabow, Garrett & Dunner. Microsoft was represented at trial and before the Federal Circuit by Weil, Gotshal & Manges.

Microsoft, along with such heavy-hitting amici as Google, Apple, Verizon, and HP, had advocated for the adoption of the lower preponderance standard in patent cases, arguing that the heightened standard insulated "bad patents" from invalidity challenges and stifled innovation. The Obama administration backed i4i, which warned that a lower standard would too easily allow juries to overturn the wisdom of the experts at the PTO. Lower the standard for invalidating a patent, Microsoft and its allies argued, would level the playing field to give patent infringement defendants a fairer shake in litigation.

But the Supreme Court said it was up to Congress to weigh such considerations. "We find ourselves in no position to judge the comparative force of these policy arguments," wrote Sotomayor, adding, "Congress has amended the patent laws to account for concerns about 'bad' patents, including by expanding the reexamination process to provide for inter partes proceedings. Through it all the evidentiary standard adopted in §282 has gone untouched."

The legal battle between the world's largest software maker and i4i (which stands for "infrastructures for information") began in 2007 when i4i sued Microsoft for infringing its patented XML editing feature in Microsoft Word. Microsoft, the jury found, willfully infringed i4i's patent when it installed its own XML editing features in Word 2003. The six-day trial in Tyler, Texas resulted in a $290 million verdict for i4i, which, like the company's patent, was later upheld by the Federal Circuit.

Microsoft, which was also permanently enjoined by the district court from selling versions of Word that infringed i4i's patent, has since removed the disputed features from its software. Now, the software giant will have pay the damages.

 

 

 

 

 

 

Microsoft Joins Article One's New Preemptive Troll-Fighting Service

By Andrew Goldberg

Article One Partners, a New York-based startup that crowdsources the search for prior art by rewarding researchers who find evidence that can be used to invalidate questionable patents, announced last week that Microsoft Corporation has signed on to its latest initiative to thwart patent suits by non-practicing entities (NPEs).

 The new service, called Litigation Avoidance, is designed to help companies target poor quality patents before find themselves contending with them in court as a result of litigation launched by NPEs, which are often perjoratively as patent trolls. Previously, Article One and its global network of scientists and technologists focused on assisting companies once they'd already been sued.

Microsoft, the first official member of the new preemptive patent protection program, will pay Article One an undisclosed fee to participate in Litigation Avoidance.

"NPEs continue to actively target large technology companies and often with portfolios of questionable quality,” said Bart Eppenauer, Chief Patent Counsel at Microsoft, in a statement. “Litigation Avoidance gives businesses another tool to address patent quality issues prior to litigation to reduce risk and potential litigation cost.”

The software giant is a frequent target of trolls. For instance, Eolas, a patent-holding company, won a $521 million jury verdict against Microsoft in a 2003 patent suit over Internet Explorer plug-ins, before the case was remanded and the parties reached an out-of-court settlement. Last year, NTP, which extracted a $612 million settlement from Research in Motion, targeted Microsoft in another patent infringement suit. That suit has been stayed until the Patent and Trademark Office resolves the validity of the smartphone patents at issue. 

According to reporting by Reuters’ Alison Frankel, Article One will select the patents that it chooses to study in one of two ways: In one scenario, member companies can request ten specific studies of patents. In the other, Article One--based on its own analysis of when the certain patents were acquired, which NPEs purchased them, and how likely they are to be asserted--will decide which patents to ask its network of purportedly more than 1 million researchers to investigate.

Article One’s crowdsourcing initiative is one of several new business models aimed at neutralizing NPEs at a time when companies are exploring various ways to shore up their patent defense capabilities. RPX Corporation-- a self-styled defensive patent aggregator that caters to companies concerned about becoming troll targets--went public last month. RPX  buys up patents to keep them away from NPEs, then licenses them to clients for an annual subscription fee. Microsoft is also an RPX customer.

Article One, a privately held company which won the Silicon Alley Insider 2009 Best Startup contest, has raised more than $8 million in venture funding. So far, it has paid out more than $1.3 million to members of its patent research community in individual awards of $5,000 to $50,000.

The company's crowdsourcing initiative isn't the first of its kind in the patent realm. For instance, the PTO, in cooperation with New York Law School’s Peer to Patent project, has even launched its own modest, one-year pilot initiative to crowdsource the search for prior art that might not otherwise be found during the patent examination process.

Straight Outta Marshall: Local Lawyer Gilstrap Tapped to Replace Ward

By Andrew Goldberg

When Judge T. John Ward--the man most closely associated with turning the Eastern District of Texas into a patent litigation hotbed--retires in October, his likely successor shouldn’t have much trouble finding his new workplace.

After all, James Rodney Gilstrap, the 54-year-old Marshall, Texas, lawyer nominated last month by President Obama to succeed Ward, works right across the street from the federal courthouse where Ward presides, at the offices of Smith & Gilstrap, the law firm he co-founded in 1984. 

When it comes to substantive judicial policies, court observers don’t expect Gilstrap, a former Harrison County Judge, to stray too far from the path that Ward blazed.

“There will be style differences because every judge has a little bit different style on the bench, but I don’t anticipate the substance will change because Judge Gilstrap is familiar with how the local court is run,” says Michael Smith, a name partner at Marshall law firm Siebman, Reynolds, Phillips & Smith whose dealings with Gilstrap include the two men’s participation in a 16-year effort aimed at restoring the historic statehouse building that sits on Marshall’s town square. “The Eastern District judges tend to do a lot of things in similar ways, and I expect that he’ll follow in that tradition.”

Gilstrap, who was nominated by the Democratic president and has the support of the state’s two GOP senators, was one of three names on the shortlist formally recommended by the Texas Democratic delegation a year ago, according to Tex Parte, a sibling blog published by Texas Lawyer. The other two were Magistrate Judge Chad Everingham, who regularly presides over patent cases in the Eastern District of Texas, and Longview, Texas lawyer Eric Albritton, who served as co-counsel in patent infringement cases brought against Boston Scientific and Johnson & Johnson over cardiac stents that generated big jury verdicts for the plaintiff.

If confirmed, Gilstrap will likely inherit Ward’s packed patent docket, where the time to trial peaked last fall at just over three years. Much like Ward, who only tried one patent case before he came on the bench (He represented Hyundai Electronics in a $25 million patent infringement suit brought by Texas Instruments), Gilstrap also has only limited patent litigation experience, despite having served as local counsel in a number of patent cases. For example, he represents Bluestone Innovations Texas in an infringement suit brought against various foreign companies over LED technology, and defendant Capital One Financial Corp. in a patent suit brought by LML Patent Corp. against a number of large banks over patents on payment services. His representation, however, doesn’t appear to include the kind of big tech companies often dragged into patent suits in East Texas.

While it’s too soon to tell how Gilstrap’s ascension to the bench will affect patent infringement cases in the jurisdiction, Smith doesn’t believe that Gilstrap will be at a disadvantage. “He’s seen some patent cases. I don’t believe he’s actually tried one, but he has seen the cases go through the system for a number of years, so he’s familiar with patent litigation,” says Smith, who was planning to serve with Gilstrap as local counsel for co-defendants in a patent case before Smith’s client settled out.

Gilstrap, who declined an interview request, moved to Marshall after graduating from Baylor Law School in 1981, three years after receiving his B.A. magna cum laude from Baylor University. Before co-founding Smith & Gilstrap, where in addition to the occasional patent case his wide-ranging practice covered everything from oil and gas to real estate and probate law, Gilstrap worked as an associate at the law firm of Abney, Baldwin & Searcy from 1981 to 1984.

Smith first got to know Gilstrap personally during the 12 years that Gilstrap served as Harrison County Judge from 1989 through 2002. “My wife is the county treasurer, so he and my wife worked together for a long time in county government. Every four years, they ran together on the same ticket,” says Smith. (In Texas, the County Judge is the chief administrative position in county government, not a judicial office.) “I was going through some scrapbooks, and I found his picture at my wedding 15 years ago,” says Smith. “But it’s old Marshall family, so I’ve known him forever.”

Like Smith, Carl Roth of the Roth Law Firm is confident that things in Marshall won’t change too much with Gilstrap on the bench. 

“He’s very professional and even handed,” Roth says.  “He spearheaded several important projects for the county [as county judge], not the least of which was the restoration of the historic county courthouse and airport improvements, and he managed to do it without political controversy.”

Jeffrey Thompson, a Republican County Commissioner who worked with Gilstrap, a Democrat, on the Commissioner’s Court from 1995 to 1998, agrees that Gilstrap was adept at working across party lines on budget matters as County Judge. “We had no problems at all between party affiliations.  Anytime you’re dealing with votes, they can be construed as just Republican or Democrat. But during that time, I don’t think there was any straight Republican push or Democrat push,” he says. 

Thompson looked to Gilstrap as a mentor. “As a freshman commissioner coming on the court kind of green, I found his open door policy very helpful,” says Thompson, who is thrilled that Ward’s successor will come from the extended Marshall family.  “The candidate could come from anywhere across the United States,” he says.  “To fit the need locally right here from Marshall, it was very delightful.”

While judicial nominees are always subject to the vicissitudes of the Senate, court observers don’t see anything controversial about Gilstrap’s nomination.

“The two senators from Texas have wholeheartedly endorsed his candidacy. The White House has nominated him. He was recommended by the Texas Democratic delegation. He has literally dotted ever i and crossed every t that you can,” says Smith. “I’m just hopeful that there’s no unforeseen obstacle because of something unrelated to his nomination because I think his nomination is about as clean as a nomination can be.”

Gilstrap’s work ethic and experience in public service will serve him well on the federal bench, according to Thompson. “He’s not going to be blind-sided about issues that could come up during his tenure. He’s not going to shoot from the hip. He’ll do his homework. He’ll do a good day’s work. He’ll show up, he’ll suit up, and he’ll perform his duty. No questions asked,” says Thompson.

Federal Circuit Hears Arguments in Myriad Case

Oral arguments were under way at the U.S. Court of Appeals for the Federal Circuit Monday morning in the closely watched Myriad Genetics appeal (Association for Molecular Pathology, et al. v. USPTO, et al.), with a panel of three Federal Circuit Judges (Lourie, Bryson, and Moore) weighing whether human genes qualify as patentable subject matter.

Ruling in a case brought by several doctors' groups, the ACLU, and the Public Patent Foundation, New York federal district court Judge Robert Sweet last year struck down Myriad's patents on two genes related to breast cancer, holding that they merely covered isolated DNA from the natural world and thus were not eligible for patent production under section 101 of the Patent Act.

In his 152-page opinion [ Download Myriad Opinion], Sweet wrote: "It is concluded that DNA's existence in an 'isolated' form alters neither this fundamental quality of DNA as it exists in the body nor the information it encodes. Therefore, the patents at issue directed to 'isolated DNA' containing sequences found in nature are unsustainable as a matter of law and are deemed unpatentable subject matter."

As The American Lawyer reported in February, acting Solicitor General Neal Kaytal was to argue for the appellees along with attorneys for the ACLU and the Public Patent Foundation, marking the first time that a Solicitor General has argued at the Federal Circuit.

In a case with implications for the entire biotechnology industry, Kaytal will attempt to explain why the government now thinks that genes should not be patentable, despite the fact that the USPTO has historically disagreed and has been issuing patents on isolated DNA for more than 30 years.

For a good background on the issues likely to be raised at oral argument, check out Joe Mullin's previous  coverage of the district court's ruling and Andrew Cohen's discussion of the case at The Altantic. For the even more ambitious, an audio recording of the argument will be made available on the Federal Circuit's website later today.

 

 

 

 

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.

 

Paul Allen v. The Internet

Former Microsoft executive and billionaire Paul Allen sued several major Internet companies and three large retailers for patent infringement today, asserting that four patents originating at Interval Research, Allen's dot-com era think tank, cover basic web browsing and e-commerce technologies.

The lawsuit [PDF] was filed by Interval Licensing LLC, a patent-holding company owned by Allen, and names eleven companies as defendants: AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo, and YouTube.

Interval Research was founded in 1992. It closed its doors in 2000, but the lawsuit is necessary to monetize the investment that Allen made in the organization, said David Postman, a spokesman for Allen.

The patents cover "a variety of key processes in e-commerce," said Postman. "Interval Research was early—and right—on key pieces of the Internet," said Postman. "It's important now to protect that investment. We believe these companies are using that technology, in both e-commerce and search."

Allen is one of the world's richest people, with a fortune that Forbes magazine estimates as over $13 billion.

A Wired magazine profile of Interval Research suggests that by 1999, the institute was struggling, with Allen having spent upwards of $100 million on research and not much to show for it. "Interval always had a special buzz and a collection of talent that, even in the annals of technological genius, stands out."

The four patents-in-suit were filed between 1996 and 2000.

They are:

• No. 6,263,507, "Browser for Use in Navigating a Body of Information, With Particular Application to Browsing Information Represented By Audiovisual Data."
• No. 6,034,652, "Attention Manager for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device."
• No. 6,788,314, "Attention Manager for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device."
• No. 6,757,682, "Alerting Users to Items of Current Interest."

The suit was filed in the Western District of Washington. Interval Licensing is represented by Susman Godfrey, a Texas-based law firm that focuses on contingency-fee patent lawsuits, and Heim, Payne & Chorush is a smaller patent firm based in Houston.

More documents:

• Interval Licensing press release on the lawsuit
• Interval Licensing v. AOL et al. complaint [PDF]
• Coverage from Wall Street Journal

Cross-posted at Corporate Counsel.

 

 

The Post-Bilski landscape: Why some tried, but failed, to ban "business method" patents

It’s not a stretch to say that many members of the patent bar were relieved when the U.S. Supreme Court finally issued its decision in Bilski v. Kappos late last month. Considering that plenty of those lawyers—and the clients they represent—feared an opinion that would severely restrict what kind of technology is worthy of patent protection. As it turns out, those fears were misplaced.

Almost as soon as the decision came down Monday, The Prior Art’s inbox was filling up with e-mails from lawyers and law firm publicists offering expert commentary on what it all meant. (By the end, the number of pitches had hit nearly 40). One e-mail, from Goodwin Procter’s Stephen Schreiner, contained a statement that typified the joyous tone of the patent bar’s broader reaction. Schreiner said the Court had “launched the United States Patent System into the Information Age with the Bilski v. Kappos decision today....Rejecting the chorus from some demanding the Patent System be limited to Industrial Age technology, the Court answered with a flat ‘no,’ finding patents are available for software, business methods, medical diagnostic techniques, and other products of the Information Age.”

But while Justice Anthony Kennedy’s controlling opinion may not do much to change the status quo when it comes to the patent system, the more interesting Bilski story is one of an important "almost"—an "almost" that by all indications was hard-fought.

Indeed, for some folks—including those who hoped the Court would use the case to limit what they see as a plague of spurious patent litigation—this has to be a particularly painful “almost.”

Supreme Court Decides Bilski: Stevens and Allies Try to Ban "Business Method" Patents, but Fail to Get Fifth Vote

In the last batch of opinions to which he will ever contribute, retiring U.S. Supreme Court Justice John Paul Stevens fell one vote shy in his goal of moving methods of doing business outside the scope of the country’s patent system. And he marked the occasion by weighing in with a concurring opinion that reads an awful lot like a dissent.

Ultimately, despite widespread speculation that Stevens would cap his distinguished career by writing the majority opinion in Bilski v. Kappos, Justice Anthony Kennedy wound up as the author of the controlling opinion in the closely watched patent case.

While all nine justices agreed that the “invention” at issue in the case—a method for hedging weather-related risk in energy trading developed by Bernard Bilski and Rand Warsaw—was too abstract to merit patent protection, only four signed on to Kennedy’s opinion.

That opinion held that the "machine-or-transformation" test for patentability--created by the U.S. Court of Appeals for the Federal Circuit in its Bilski decision--was a "useful clue" when gauging a subject’s patentability but shouldn't be considered the only applicable test.

Read More: Court's Opinion (pdf)

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. 

In ACLU Suit, Judge Rules Myriad's Genetic Patents Invalid

Last year, several doctors' groups, together with the ACLU and Public Patent Foundation, filed a lawsuit seeking to invalidate patents on two genes related to breast cancer and owned by Utah-based Myriad Genetics. The plaintiffs, who can be viewed as arguing more broadly against all genetic patents, claimed in the suit that such patents are not only illegal under the nation's patent laws, but also unconstitutional.

On Monday afternoon, the plaintiffs won. Ruling on summary judgment motions filed by both sides, New York federal district court Judge Robert Sweet ruled on summary judgment invalidated Myriad's patents on the BRCA1 and BRCA2 genes. In his 152-page opinion [PDF], Sweet wrote that the patents in question cover parts of the natural world and therefore don't conform to section 101 of U.S. patent laws, which those govern what qualifies as patentable subject matter.

Sweet agreed with the ACLU's basic argument that the "isolated" DNA that Myriad claimed to have patented is still a product of nature, and can't be covered by patents. He wrote: "It is concluded that DNA's existence in an 'isolated' form alters neither this fundamental quality of DNA as it exists in the body nor the information it encodes. Therefore, the patents at issue directed to 'isolated DNA' containing sequences found in nature are unsustainable as a matter of law and are deemed unpatentable subject matter."

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].)

New York Times Publishes Graphic Featuring Nonexistent Patent Lawsuits

Saw an interesting chart in the New York Times this morning (via Techdirt) titled "An Explosion of Mobile Patent Lawsuits." Check it out:

Pretty big explosion! But some parts of the chart looked strange to me—specifically, Nokia's supposed barrage of seven patent lawsuits. Nokia, like a lot of companies, has litigated against Qualcomm over patent royalties, and I sure noticed Nokia's lawsuit against Apple and Apple's countersuit. But had I somehow managed to miss Nokia filing patent lawsuits against Sharp, Hitachi, LG, Toshiba, and Samsung?

Nope. After checking PACER, I can say that those lawsuits just don't exist. NYT blogger Nick Bilton cited this IHT article as his source, which seems to conflate Nokia's two patent disputes—one with Qualcomm, the other with Apple—with a broad price-fixing lawsuit over LCD displays it launched in December. But that lawsuit doesn't have anything to do with patents, intellectual property, or smartphones. The defendants in that litigation include such companies as Philips and AU Optronics, which aren't in this chart (or in the smartphone business for that matter). 

Nor could I find any recent example of Blackberry manufacturer RIM suing Sharp Electronics, as the chart shows, either in a U.S. District Court or at the International Trade Commission.

Whittling the "explosion" down to the correct size would require deleting 6 of the 16 (or roughly one-third) of the cool-looking interconnected lines, and would make the Hitachi and Toshiba globes drop off the chart as well. Doing that would also leave Kodak (a non-competitor in the smartphone space) responsible for a big chunk of the remaining action.

There are, of course, still plenty of real smartphone patent suits to go around. No need for The New York Times to add in extras.

UPDATE: The New York Times updated their post.

 

PubPat Releases Claim Construction Dictionaries

Does the word "user" mean a person or a machine? And when you say "connected," does that necessarily mean directly connected?

If your eyes are rolling back in your head while you're reading this, consider yourself normal. If you're getting excited, then you might love claim construction hearings, those patent litigation proceedings during which lawyers argue about the meaning of words—especially the meaning of everyday words. Other than the trial itself, the claim construction process is the most important part of a patent lawsuit, one that's been required since the Supreme Court's Markman decision in 1995. How a court decides to define a particular term can put an accused product definitively within, or outside of, the patent claims at issue in a lawsuit.

Now, the Public Patent Foundation has released a free "Claim Construction dictionary" that the group predicts could well reduce the expense and difficulty of conducting research on patents. In fact, David Garrod, who edited the dictionary, believes they could make researching patent claims—whether in connection with a claim construction hearing, or an infringement opinion—"dramatically cheaper."