IP’s Reader’s Digest

Hello all,

These last few weeks were packed with important IP related news. There was new activity on the hill for patent reform, a couple of large verdict awards and a related court decision that could mean even more in the future, a new Canadian budget that contains some good and some bad news for IP owners and tech companies, some interesting patent transactions, including between NPEs, another lost opportunity for the US Supreme Court to clarify the rules for patent validity, a huge patent owner leaving the LOT Network and what this represents, some other interesting updates and new challenges posed by AI to intellectual property rights.

Fasten your seatbelts and enjoy this reader’s digest version of what the IP market brought to us in the past 3 weeks only!

Happy reading!

 Louis

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Tangible IP News

We successfully brokered a voluntary license with a Fortune 500 company on a small patent portfolio in the video sharing technology area. A formal announcement will follow soon.

We also just started outreach a few days ago on a substantial portfolio from one of the largest and most respected tech company in the world. The portfolio comprises over 230 assets spread across the following areas: Healthcare, Data Management and Security. If you would like to review this opportunity, please email us at info@tangibleip.biz.

We also have several other portfolios for sale that offer great opportunities to savvy buyers. All of our patents for sale are listed here. Similarly, if you’d like to be added on our distribution list in the future so that you are the first to receive new opportunities, please email us at info@tangibleip.biz.

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Patents Wanted

Call for high quality portfolios!

We are always open to reviewing high quality portfolios. Some of the areas of most interest to our buying network right now include:

• Physical Security Systems and Devices
• AI, Cloud, Security
• Robotics, Automation of Processes, Digitalization
• Sustainability/New Energy, Smart Mechanics (e.g., for battery exchange)
• Enterprise software
• IoT, Wireless Comms, Networking, and E-commerce
• Medical Device technology

 LOT Network Encumbrance is OK!

You can review our criteria here but if you own a patent portfolio with at least five issued US patents and have knowledge of others using your technology (infringement), we are happy to review for potential brokerage. We will also look at larger portfolios where evidence of use is uncertain.

Please reach out to info@tangibleip.biz with any assets that may match these requests.

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Recent News:

What Non-Compete?

Just in! On Tuesday, the U.S. Federal Trade Commission (FTC) approved a final rule banning employers from using non-compete clauses for most workers. Existing non-competes for senior executives remain valid, but new ones are prohibited for all workers. The ban aims to increase wages and stimulate business innovation. The rule defines “senior executives” as those earning over $151,164 annually in a policy-making position. Commissioners voted in favor of the rule, citing its potential to boost entrepreneurship and patent filings. Opponents, including the U.S. Chamber of Commerce, argue that non-competes protect investments and promote workforce training. Concerns about trade secret protection and legislative overreach were raised by dissenting commissioners and industry experts. The FTC maintains that the rule is within its authority and necessary to prevent anti-competitive practices. The rule’s legality is expected to be challenged in court, with potential implications for trade secret litigation and future regulations.

My take: I have been teaching startups for years about the fact that most IP leaks and trade secret theft comes from ex-employees who join a competitor or become one themselves. Until now, many were prevented (or delayed) from doing so due to their non-compete (California being the main exception). This new rule, should it remain, will force companies to be a lot more disciplined about documenting, partitioning, and granting access to trade secrets, or they will likely regret it. It may also indeed lead to more patent filings as they may be needed as a replacement for enforcing the non-compete, though patents may still be pending (thus unenforceable) in the short term.

Scotus Pocus

We witnessed another disappearing act from the US Supreme Court last week when it rejected a petition by Vanda Pharmaceuticals seeking clarity on the standard for showing obviousness in patent cases.

Vanda’s petition stemmed from a decision by the U.S. Court of Appeals for the Federal Circuit (CAFC) invalidating its patent. The CAFC cited evidence from clinical trials as indicating a reasonable expectation of success, a standard Vanda argued was too low compared to established precedent. Vanda’s petition was supported by amicus briefs from Salix Pharmaceuticals and advocacy groups representing visually impaired individuals, highlighting concerns about the impact on pharmaceutical innovation and patient access to treatments. The denial of certiorari maintains the CAFC’s standard, prompting ongoing debate about the balance between patent protection and accessibility to medical advancements.

O Canada

Canadian IP enthusiasts received some good news in the latest federal budget a few days ago. Tech entrepreneurs and VCs, not so much. On the bright side, the Innovation Assets Collective (IAC) budget was renewed for a couple of years, although one wonders what it will be able to accomplish with a paltry CAD $14.5M (US$ 10.7M) to spread over 24 months. The budget also creates a new “patent box”. A patent box regime taxes income from certain types of IP at preferential rates. In so doing, it discourages the transfer of mobile IP from its jurisdiction of development to a lower tax jurisdiction for further commercialization. Patent box regimes are currently used in the U.K. and 13 EU member states, including France, Spain and the Benelux countries.

But the most talked about measure was the surprising increase in the portion of capital gains that will be taxable come June 2024, going from 50% to 66%. This has the technology industry and investor community up in arms, as it will greatly disincentivize the risk taking that is typical with entrepreneurs and investors alike who hope for higher returns down the road and are willing to sacrifice a cushy salary in the meantime.

Apple vs Massimo: It’s Not Over Yet!

I commented extensively in previous columns on the Apple vs. Massimo situation and how this represents the worst example of “predatory infringement” from some Big Tech companies, Apple being Exhibit No.1. After having lost at every stage in court and failing to convince the Biden administration to give it a free pass, Apple is now trying – via its appeal and intense lobbying – to demolish the ITC rules that made it accountable in the first place. This rather brazen assault is the last of many attempts to get away with serial copying of innovative technologies developed by much smaller technology outfits.

Finally Some PTAB Reform?

Will we witness some reform of the maligned PTAB during our lifetime? After writing this column for over a decade, I have sadly come to doubt it. But just when I am ready to throw in the towel, something happens that gives me hope. This time, with the help of some lobbying from the Medical Device Manufacturers Association (MDMA) and the Alliance of U.S. Startups and Inventors for Jobs (USIJ), it looks like Congress might finally move the Promoting and Respecting Economically Vital American Innovation Leadership Act (PREVAIL) out of committee for a full vote. In the meantime, the USPTO has finally issued a Notice of Proposed Rulemaking (NPRM) relating to several changes to the Code of Federal Regulations as they pertain to patent challenges at the PTAB that appear at first sight to be more friendly to patent owners.

About Patent Damages

We get bombarded every day by inventors who want us to help them sell their one or two patents and expects to receive “several millions” (sometimes even billions) from their worthy invention, based primarily on reading some headline about a large patent verdict and thinking, naturally, “why not me”?

I love large patent awards mostly because I like to delude myself in thinking that these will get a boardroom’s attention and, just maybe, next time they infringe a portfolio, will reason that it is better to take a much cheaper license than to roll the dice in court. Dream on, Louis!

We also witnessed two such verdicts in the past few weeks that will no doubt fuel the “inventor’s greed” of those who forget how rare these cases really are; how often they get reduced or simply overturned. So here we go: a few days ago, Amazon was slapped with a half billion US dollars verdict in a case filed by Kove IO over some cloud software patents. Amazon has already indicated that it will appeal. So, no reason to get excited just yet. Also reported were a few other – smaller – verdicts against Samsung for $142M and another one for $18M, which took 11 years to conclude…

On this topic, IP Watchdog recently published a good article from Elizabeth Manno of Venable IP summarizing recent developments in patent damages that show some promise. Here is the link.

UPC Update

We couldn’t skip an update on the red-hot UPC docket. In the months leading to its launch, many who opposed it (mostly infringers) said that this would be the second coming for NPEs and Europe would be soon invaded by patent trolls. Interestingly enough, what we have witnessed to date is primarily a resurgence of innovative operating companies suing others over patent infringement, examples include NEC suing Chinese TV giant TCL and Dolby going after a Turkish TV maker, just to name a few. What is happening is actually very simple: many innovative tech companies have stayed on the side lines in the US and deferred asserting their patents in a court system that is now stacked in favor of infringers. Once they saw that the UPC was actually willing and able to enforce their rights, including issuing injunctions, they rapidly flocked to it. This is what we witness now. And large US tech companies are now forced to defend themselves on a turf they no longer control.

This Means a LOT

For those who are not familiar with the LOT Network, it is a membership-based organization with close to 5000 members whose goal is to reduce patent litigation originating from NPEs by having its members agree to a “springing royalty free license” to all other members the minute they assign their patents to an NPE. See this as a poisoned pill. Since many patent buyers are NPEs these days, the flip side to this pledge is obviously that it greatly diminishes the market value of a given member’s patent portfolio, something not all members readily realize.

So when a top tier member like Broadcom-VMWare announces that it will leave the LOT Network (arguably so that it can sell some of its patents to an NPE), people take notice. Talking of notice, one has to give advanced notification of its intention to leave the organization and that only those who were members at the time of the departure will benefit from the license pledge. In response, LOT has seen a flurry of new members join in the last week in order to shield themselves from future assertion activities from whoever will acquire those patents.

NPEs Going Strong

In a recent column, we announced the scaling back of a very active NPE and we have seen others similarly go by the wayside these past years, in the US at least. This reflects a tougher environment for asserting patents. However, going against the grain, there was a noteworthy transaction a few weeks ago whereby Dominion Harbor acquired no fewer than 1500 patents (spread across 675 families) from Avaya related to VOIP. Dominion Harbor will no doubt want to monetize these as soon as possible, first by asking politely and then by having to sue the various infringers.

Similarly, it was reported that well known Korean NPE Intellectual Discovery is on the rebound and has large aspirations to become a “top 3” monetization entity, whatever that means, and eventually file for an IPO. Just like in the good old days! We wish them well. Finally, we note that a former executive of IPWe (which filed for Chapter 11 recently) has reappeared through a new entity and which has wasted no time before suing Apple and Google in Europe through the UPC.

Laches: Are They Back?

There was a time where you had to be quite diligent before filing a lawsuit against an alleged patent infringer as you otherwise risked seeing your case dismissed based on the equitable doctrine of “laches”. Then, in 2017 in the SCA Hygiene Products case, the US Supreme Court held that laches is no longer an available defense to patent infringement damages, even if a patentee “lies in wait” for more than six years before bringing suit.

However, in a case opposing Sonos and Google last year, district judge Alsup sitting in the Northern district of California, breathed new life into the prosecution laches doctrine, which took a lot of people by surprise given the foregoing background. This case is now on appeal and pundits on both sides are tracking this very closely, as this could directly impact many current and future assertion plays and how patent owners prosecute their cases and file (or not) continuations in the US.

AI and IP

Finally, we have been drowning lately in a flurry of reports about how AI will bring human civilization on its knees. While many of these scenarios are extreme, there is no doubt that AI is already having an impact on many facets of society, and the world of IP is not exempt. Below are just a few examples of where we need to remain vigilant as AI tools and creations become more ubiquitous.

1. Protection of algorithmic assets: Companies must secure patents and trade secrets to safeguard proprietary algorithms animating AI avatars.
2. Digital likeness and personality rights: Obtaining licenses and defining their scope, duration, and territoriality is crucial when AI avatars mirror real individuals.
3. Challenges of deepfake technology: Establishing protocols and investing in technologies like digital watermarking can deter misuse and preserve content integrity.
4. Global IP rights management: Managing IP across different legal jurisdictions requires strategic planning and adherence to international treaties.
5. Collaborative efforts and licensing: Comprehensive licensing agreements are essential for managing collaborative frameworks involved in AI avatar development.
6. Copyright ownership of AI-created content: Determining copyright ownership of AI-generated works necessitates legislative amendments and engagement in policy-making processes.
7. Evolving IP laws: Proactive advocacy and adaptation of IP legislation are crucial to address the unique challenges posed by AI technologies.

Companies that proactively address these IP challenges can navigate the AI-centric landscape effectively, shaping the evolution of IP norms and regulations in the digital age.