First, the good news: last month, I commented about the trio of cases for the Federal District (which is the appeals division for all IP cases in the US) that seemed to open the first chink in the Alice armor. As a refresher, Alice is the US Supreme Court case which – along with is progeny from lower courts – has proceeded to eviscerate most software patents and many other categories of inventions on the premise that they merely reflect “abstract ideas”). These three cases however, open the door for trial by jury removing judgement by summary motion and giving deprived patent owners their date in court.
But wait; enter newly-appointed USPTO Director Andre Iancu, who wasted no time attacking this pivotal issue head on. Last week, he made his first (and highly anticipated) public speech at the US Chamber of Commerce and left no doubt that he thought the pendulum had swung too far against patent owners and that his priority going forward was to “1. create a new pro-innovation, pro-IP dialogue, and 2. increase the reliability of the patent grant”. He correctly assessed the current situation when he stated: “We are at an inflection point with respect to the patent system itself. As a nation, we cannot continue down the same path if we want to maintain our global economic leadership. And we will not continue down the same path.” I encourage all of you to read his complete remarks here.
But Director Iancu wasn’t done there. A few days ago, when testifying before the US Congress, he made no bones that the PTAB is also ripe for reform, assuming the Supreme Court does not declare the maligned tribunal invalid altogether when it rules (any time before its June recess) in Oil States regarding its constitutionality. Here are some statements he made in front of the Senate Committee: “We are reviewing [PTAB proceedings] carefully to ensure that the Agency’s approach to these critical proceedings is consistent with the intent of the AIA and the overall goal of ensuring predictable, high quality patent rights. We are currently studying, among other things, the institution decision, claim construction, the amendment process, composition of judging panels, the conduct of hearings and the variety of standard operating procedures.” Wow! Anything is on the table, it would appear. And here is another statement pertaining to software inventions that should cause many supporters to rejoice: When Sen. Harris asked whether algorithms were mathematical representations of laws of nature, Iancu had this to say: “You’re getting right to the heart of the issue. This is one place where I believe courts have gone off the initial intent. There are human-made algorithms, human-made algorithms that are the result of human ingenuity that are not set from time immemorial and that are not absolutes, they depend on human choices. Those are very different from E=mc2 and they are very different from the Pythagorean theorem, for example.”
Last but not least, under the new director’s impetus, the USPTO made public on Friday morning new guidelines for examiners use when handling article 101 (“abstract idea”) rejections. These new guidelines put a much heavier burden on PTO examiners when wanting to rule on the issue, whereas that burden sat squarely on the inventor in recent years. Here is the statement from the PTO spokesperson: “The USPTO has issued today a Federal Register notice and memorandum to the patent examining corps in response to a recent decision by the U.S. Court of Appeals for the Federal Circuit in Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018), pertaining to subject matter eligibility. This new guidance pertains to the second step of the Alice-Mayo framework for determining subject matter eligibility, and is focused on how examiners are to analyze and document a conclusion that a claim clement is ‘well-understood, routine, conventional’ during the patent examination process.” You can read the new full guidelines here.
If you combine this new guideline with the recent case law on Alice (as per above) and other recent court decisions making the routine finding of obviousness from the PTAB a lot more difficult going forward, we believe this is the first major and substantive change that we have witnessed in the past few years that tend towards reinforcing patent rights in the US!
As such, we expect to see an uptick in patent valuations over the next few months, since most of the current values are a direct reflection of the relative uncertainty over patent validity as a result of Alice and the PTAB practice. A weakening of these two forces will only help restore confidence in the patent system and thus in the value of patents themselves. The Supreme Court still holds the biggest card in Oil States as it could simply do away overnight with a PTAB that may otherwise take years to reform, but the last few weeks have undoubtedly given cause for patent inventors and holders alike to feel pretty good for the first time in a long time about where the arrows are pointing. Now, we can only hope that companies who practice those patents will see the writing on the wall and revert to a more rational way of approaching licensing discussions other than the usual “Sue me” that has become their signature response.
Cryptocurrencies and Blockchain – Update:
In one of our recent newsletters, we addressed the impact of new technologies such as cryptocurrencies and blockchain technology in the IP realm. As previously discussed, many US companies have shown serious interest in acquiring IP rights in this field, particularly with blockchain technology. However, while US banks and tech companies may have taken the lead, Chinese companies took note and in 2017 filed roughly half of all blockchain patent applications.
Industry Buyers & Sellers:
On April 10, the USPTO made public an assignment of over 400 patent assets from Intellectual Ventures LLC (IV) to Vista Peak Ventures, LLC, an affiliate of Dominion Harbor Enterprises, LLC. This transfer appears to be part of a larger transaction announced by Dominion in February, involving over 1,200 US and foreign LCD patents originating with NEC.
Among the patent transactions made public by the USPTO during the second week of January was an acquisition by Intellectual Discovery Co. Ltd., involving two automotive portfolios.
InterDigital sold XCellAir, a product created to deliver the best wireless Quality of Experience (QoE), to Fontech, a provider of global residential Wi-Fi. Fontech will also incorporate XCellAir core product into its Wi-Fi portfolio. The financials of the sale were not disclosed.
Winners & Losers:
The Oracle v. Google saga continues as the Federal Circuit reversed the district court’s decision, sending the parties on their way to a third trial. This time, the appellate court disagreed with the trial court’s finding that Google’s use of the JAVA APIs constituted fair use. Oracle is seeking a payout of several billions of dollars, as the damages for the second trial were of 9 billion.
The eight-year legal battle that plagued Apple and VirnetX has finally ended. Apple was ordered to pay more than $500 million in damages to VirnetX over Facetime and IMessage patents. However, VirnetX, an NPE, may want to wait on the champagne as the US Court of Appeals is currently reviewing cases in which the NPEs’ patents were found to be invalid by the PTAB. If Apple remains true to its strategy, the case is likely to go to appeal.
Alice struck again as Nike, Fitbit, GoPro, to name only a few, won a lawsuit at the district court level on the basis that the alleged patent infringer relied on abstract ideas and not inventive concepts.
Yamaha has won its battle against inventor Ira Pazandeh, concerning alleged infringement of a a loudspeaker patent. The federal circuit court maintained the non-infringement judgment for Yamaha, and additionally awarded attorney fees to the Japanese manufacturer.
Ugg, the cozy-boots shoemaker was awarded $5.2 million from a jury to make up for damages for a design patent infringement claim. The jury found that Romeo and Juliette Inc., had infringed a three side-buttons design patent by Ugg and was required to attribute $3.1 million dollars of profits associated with their sales.
Funai Corp, a Japanese company who markets television for Sanyo, has won its case against Maxon LLC. Maxon accused Sanyo’s smart TVs of infringing methods of controlling entertainment subscriptions. The unanimous three-judge panel, at the appellate court, found that the patents asserted abstract ideas, and therefore were invalidated.
I’ll see you in court:
Fractus, a pioneer in the field of antenna technology, has filed a lawsuit against AT&T, Verizon, T-Mobile and Sprint for infringement of its the United States.
Snapchat is again in hot water, accused of infringing six messaging technology patents belonging to Blackberry. This is the second significant suit for Blackberry who went after Facebook earlier this year for similar infringement.
Apple was sued by a prospect partner over the Apple Watch heart rate technology. Between 2014 and 2016, Apple and Omni MedSci, a techco who specializes in “near-infrared and mid-infrared broadband lasers,” were in pourparler to collaborate over integrating the Omni MedSci’s technology to the Apple Watch.
Finally, Finjan has filed a patent infringement lawsuit against Carbon Black. Finjan’s complaint indicates that Carbon Black has infringed several patents owned by Finjan about cybersecurity. The parties seem to have been unable to find common ground, as they have tried to settle the dispute for two years now.
April’s been a rough one for social media giant, Facebook. If the privacy breach wasn’t bad enough, in order to focus on Zuckerberg’s supreme court hearing, Facebook settled a on top of the privacy breach scandal, Facebook has chosen to settle for $365M in Trade Secrets case against Bladeroom. Facebook decided to resolve the matter.
It’s always nice to see companies playing nicely in the figurative sandbox. In that spirit, TiVo and Mediacom have agreed to expand and extend their licensing agreement. Both parties seem to complement each other, as one recognizes the innovations produced by its counterpart as being of value for their customer’s entertainment experience.
Kyocera, a pioneer in mobile telecommunications devices, has closed a multi-year patent licensing deal with InterDigital. While the details of the agreement remain secret, it appears that the deal comprises a worldwide, non-exclusive, royalty-bearing license on terminal unit products.
Humach, a customer experience outsourcing company, has licensed its patent portfolio to RPX. Humach’s decision was motivated by its intention to focus on its innovative strategic initiatives to provide internet-centric programs to their customers.
BlackBird and Capital One have settled their lawsuit about three patents that relate to “methods for securely authorizing online transactions.”
While in mediation, AT&T and Bascom Internet Services Inc. decided to settle the alleged infringement case related to internet filtering. The telecom giant and the education technology company are in the midst of finalizing the settlement agreement.
Innovative Sonic, a leader in 4GB LTE space, has joined the Via Licensing Corporation LTE wireless licensing program. The Taiwan-based company’s standard-essential patents over LTE will complement Via’s expanding LTE patent pool and provide a much-desired feature for companies who wish to use innovative wireless technologies.
Memjet and Canon, the two large printing systems players, have entered a long-term cross-licensing agreement.
From the bench:
The federal circuit affirmed the USPTO’s rejection of a software notification patent. According to USPTO, the notification patent was obvious over prior art. The court added that “the prior art inventor’s knowledge of a feature was not that important to determining obviousness.”
The federal circuit came down hard on the PTAB by reminding the federal agency of its obligation to “adequately explain its reasoning on a point that was central to its analysis.” In two recent decisions (Arista Networks v. Cisco Systems and DSS Tech v. Apple), the court discussed the necessity to provide written reasoning and evidence in support of a PTAB decision. The federal circuit held that “the requirements to write a final decision ensure that their judgments are not arbitrary, capricious, an abuse of discretion,… otherwise not in accordance with law… or unsupported by substantial evidence.” This could be good news for patent owners and another sign of a shifting tide.
This month, the PTAB allowed a patent holder to amend his data storage patent, which historically, has been a near impossible task. In 2017, 92% of motions to amend were denied by the agency, and this new authorization has sparked new hopes for patent holders who wish to strengthen their applications.
In the closely followed Allergan saga, the federal circuit has decided to hear a case which will determine whether or not sovereign immunity can be used to prevent a patent invalidation by the PTAB. A decision should be rendered sometime in June 2018, as well as the well-anticipated decision in Oils States.
The United States Supreme Court has affirmed the federal circuit’s decision to validate a PTAB’s decision on new grounds. In a writ of certiorari petition presented by Droplets Inc., the owner of a web linking patent challenged by Google, the highest tribunal held that the Federal Circuit can affirm a decision on other grounds, as long as there is no “new issues of “fact, policy, or agency expertise.”
On the legislative front:
Watch out for the tax implications of the Tax Cuts and Job Act (TCJA). As part of the Trump administration Tax Reform, the TCJA will have a massive tax impact on patent rights holders. One of the objectives of the law is to create a tax-friendly environment in the United States for companies holding “patent boxes” overseas. Other characteristics include: excluding certain patents, designs, and secret formulas or processes from the definition of “capital asset”, removing the ability to treat such intellectual property as a capital asset– would have been subject to lower capital gains tax rate, and handling gain from the sale of such assets as ordinary income, subject to higher rates.
The House of Representative unanimously approved the Music Modernization Act. The law, which will target streaming music services, “would create a blanket license for streaming services to pay so-called mechanical royalties, which go to songwriters when a musical composition is reproduced.”
Around the world:
In a landmark decision, the Beijing IP Court has ordered a permanent injunction for the first time in history against Sony. The court has determined that Sony had infringed a Standard Essential Patent (SEP) related to wireless connectivity (WAPI) held by Iwncomm. The court discussed the limitations of FRAND (fair, reasonable, and non-discriminatory) licensing terms as a defense, the SEP injunctions threshold, and the damages calculation for past infringement.
The US and Japan have joined forces in a complaint against China in front of the World Trade Organization. Japan is also seeking remedies against China’s alleged theft of Intellectual Property and the Chinese government’s discriminatory treatment of foreign patent holders. China has retaliated with yet another tariff of their own. The Chinese government has released new Patent Transfer Guidelines in the hopes of securing a transparent business environment between Chinese and foreign companies/investors. The government is set only to review two categories of IP transfers: technology restricted for exports and international acquisitions of Chinese enterprises.
The demand for European patents hit an all-time high in 2017 up 3.9% according to the European Patent Office (EPO). Rankings for the most active EP filers based on country of origin show the US back on top in 2017 after what we assume was a slump caused by by US patent legislation in 2013. Close on the heels of the US were Germany, Japan and China. The EPO attributes the growth to the agencies “sustained effort to boost [patents] quality and [the EPO’s] efficiency”. Does the US have something else to learn from the EU?
Finally, France Brevets shifted its focus and raised the prospect of attracting additional shareholders.
On the Move:
Volvo has a new global chief IP counsel. Ray Millien, who stepped down as GE’s IP executive, was recruited by Volvo as part of an effort by the automotive company to “undergo an IP evolution.” Millien’s mandate includes: building an international IP function, strengthening the company’s portfolio (Volvo currently owns less than 1000 patent families); and turning the IP group from a cost center into a profit generator.
These and other relevant news below.
The Korea Herald
The South Korean company held 119,337 patents around the globe as of end-2017, with the US accounting for 46,150, followed by South Korea with 24,860 and Europe with 10,509 … (more…)
Samsung has been sued by U.S.-based data security firm PACid Technologies for allegedly infringing on two U.S. patents and one Korean patent with its Galaxy smartphone biometric features … (more…)
As discussed below, the amendment (1) introduces data exclusivity periods for new chemical entities and new/changed indications of previously approved drugs, and (2) establishes linkage between the approval of generic … (more…)
U.S. Patent and Trademark Office Director Andrei Iancu put the agency on a new course toward stronger patents with a speech Wednesday pledging to make the patent system more predictable, a move praised … (more…)
A court ruled on Wednesday that Monsanto cannot claim patents on its genetically modified (GM) cotton seeds in India, the Indian company that brought the case said. Citing an Indian law that excludes seeds … (more…)
Apple has been dealt what may be a short-lived blow in a long-fought battle with VirnetX. A federal jury on Tuesday awarded Internet security company VirnetX hefty damages after Apple was found to have violated … (more…)
If the downward slide continues, will this be due to smarter filing strategies, or will it be because less emphasis is being put on patents? Will it be because more emphasis is being placed on trade secrets? Is it because of … (more…)
China already has the largest number of Blockchain patents in the world, beating global economies such as the US and Japan. Moreover, the Chinese government has just funded another $1.6 bln Blockchain fund … (more…)
Chief Executive Group
Most people have no idea of the patent roadblocks their smartphones have to go through before they ever reach the hands of consumers. Take my company Lenovo, a $50 billion technology enterprise … (more…)
In previous articles, we have discussed how to determine your general patent risk and how to put a number on it. But where do you start when you are trying to estimate the value of your patent strategy? Our client … (more…)
“There is growing concern that without an approach that ensures that customers own key patents to their new solutions, tech companies will use the knowledge to enter their customer’s market and compete … (more…)
Last week, this blog reported that litigation activity is heating up in China’s hyper-competitive display industry. Among the signs: Foxconn panel unit Innolux filed 17 patent suits against mainland competitor … (more…)
Mondaq News Alerts
In late March, the USPTO made public five patent assignments from various Pendrell Corporation subsidiaries to Uniloc Luxembourg S.A. This transaction appears to be the one that Pendrell disclosed … (more…)
Facebook has been rocked due to its handling of its users’ private data. The privacy scandal has drawn the ire of global regulators and it threatens to undermine Facebook’s entire business model … (more…)
Approximately 35% of Qualcomm patents cite Nokia assets, research commissioned by IAM has uncovered. In a deep-dive into the Finnish company’s portfolio, published exclusively for subscribers yesterday… (more…)
The Preserving Access to Cost Effective Drugs (PACED) Act (S. 2514) would bar patent holders from asserting tribal immunity to escape Patent Trial and Appeal Board review proceedings. Allergen irked members… (more…)