I find it striking that amidst the carnage of COVID-19, we are once again singularly focused on innovation and having to think outside the proverbial box. From masks and ventilators, to preemptive vaccines or potential cures, everyone has rediscovered the saying that indeed “necessity is the mother of invention.” In these unprecedented times, we witness companies retooling their factories on the fly to crank up test kits or masks and visors, employees quarantining for a month without seeing their families to mass produce important PPE components, while others are sharing important medical information in real time in order to speed the process for a vaccine, etc.
In parallel, the rest of us do not fully appreciate that our ability to function almost normally while confined at home relies in large part on technology innovations of the past decades. Think of it next time you conduct a team zoom conference, order food online, crowdfund, produce a webinar, binge watch a new series on Netflix or collaborate with peers around the world seamlessly.
We are all in this together and most people are acting out of the sheer goodness of their hearts. However, once the dust settles, the innovators will need reassurances that the game is not rigged against them, as it has these past years; that their contributions navigating this crisis will not simply be coopted by some giant company who easily emulates what they did at a lower cost with complete disregard for their intellectual property.
This period is the perfect time to reflect on the importance of our innovators and that we, as a society, will only go so far if we do not adequately protect their intellectual property rights (as was always intended). When it is again safe to socialize (without the distance), and after giving the utmost gratitude to our first responders who have put their lives at risk to save others… hug an inventor!
We have added several new portfolios available for sale or license to our website. The technologies range from cybersecurity (Rubicon) to connected vehicles/asset tracking (International Tech. Inc.) and originating from well-known companies such as ST Microelectronics, Seiko and Siemens in a variety of technical fields. Please feel free to reach out to myself or Erika Warner, our VP of Brokerage Services, at email@example.com for more specifics.
Buyers & Sellers
Apple recently agreed to buy NextVR, a California-based company that streams live events to augmented and virtual reality devices, for $100 million. NextVR holds over 40 patents for those technologies. In the meantime, Chinabased Huawei, still under sanction in the US, is said to continue its patent acquisition activities (which are permitted).
We hear that Huawei also sold a group of patents to prolific US-based NPE IP Edge. This is the first time we see Huawei make this move, but not that surprising as this is about the only kind of assets it can currently monetize on the US territory since it is barred from selling products.
South Korean ballast treatment system maker Techcross has acquired patents from Mitsubishi Shipbuilding and Hitachi which it says resolves potential conflict regarding source technology.
Winners & Losers
Losers: The American Inventors
It has finally dawned on US inventors that they have been given a raw deal by Congress, the USPTO and the courts. How can we tell? Very simple: look at the chart below.
There is a historical high in the number of issued patents that inventors have simply decided to abandon rather than paying a few hundreds to a few thousand dollars to maintain for another 4 ½ years. And this mostly occurred prior to COVID-19. Given that the last time the AIPLA published the average cost for obtaining and maintaining a single patent in the US, hovering over $55,000, you can estimate the lost investment here is massive. More importantly, someone who abandons its patents will likely not file new ones and has no incentives to go back in the garage and tinker. With millions of people home with time to spare, the lost faith in the IP system could not come at a worse time. What a missed opportunity! The VC community, which has often complained about the presence of “patent trolls” and their assertion against startups, is also finally reckoning with the damage this situation has done to the innovative engine.
“Society at large is losing out on discoveries that have not been founded, funded or grown because of a weakened patent system,” Gary Lauder, Silicon Valley venture capitalist and technology investor said recently at the annual Intellectual Property Awareness Summit. “The destruction of the patent system brought about by big [technology] companies and their trade associations is the single most destructive thing they have done. The current ‘techlash’ is misplaced on issues of lesser importance. Many lives will be lost.”
Losers: Sovereign Patent Funds (SPF)
South Korea and Japan were among the first countries to use public funding to invest in patent collectives that would protect their national crown jewels from too much exposure to patent litigation. Thus, were born Intellectual Discovery (SK) and IP Bridge (JP), who became two very active NPEs. Now both have recently gone (mostly) private and will focus mostly on monetization efforts instead of providing some defensive air cover to Asia-based companies. This is the end of an era for SPFs as most of those around the world, such as France Brevets, have had to reinvent themselves in order to stay afloat.
After close to a decade of litigation and surviving several appeals lodged from Apple, the VirnetX case finally came to an end recently when the US Supreme Court refused to hear Apple’s last challenge. In its more recent filing, VirnetX, a publicly traded IP company (PIPCO) confirmed that Apple had paid the $454M USD it owed the NPE. This was a lesson in persistence to say the least. It was also a bad month for Apple who saw the ITC confirm that it had opened an investigation as to whether its touch screen technology infringed patents owned by Ireland-based Neodron.
I’ll See You in Court
With dozens of new cases filed each day, we don’t attempt to cover each of them through this newsletter. We usually comment on those via LinkedIn or Twitter. Yet, a couple of cases are worth mentioning as they stand out from the ordinary. In the first one US behemoth IBM has sued Airbnb over some online commerce related patents. IBM much prefers a licensing approach to litigation and they rarely use others, and only do so normally when all other options have failed. Last time they did was against Groupon and they scored a resounding victory. This one will be interesting to watch.
Also in the US, chipmaker Broadcom is suing Netflix, claiming the video streaming service infringes on several patents that cover key parts of Netflix’s platform. In all, Broadcom cites eight patents that deal with data transmission and video playback.
In Germany, Japan-based electronic giant Sharp (which belongs to Taiwan-based FoxConn) filed a complaint against phone maker Oppo (which itself belongs to Chinese BBK Electronics) on some 4G/LTE patents. This is one of the few remaining battles around LTE patents as most of the action is now centered around 5G.
Companies have taken the COVID guidelines quite literally and there were no “handshakes” of significance reported lately.
From the Bench
A decision from the Eastern District of Texas (judge Gilstrap) from a few months ago is receiving more attention these days, as it puts in question the wisdom of most corporations’ inhouse policy not to look at others’ patents in order to avoid being labeled a “willful infringer”. In a direct blow to this approach the Court rather stated that: “A well-pled claim for willful blindness is sufficient to state a claim for willful infringement.” It will be interesting to see if the Federal Circuit will eventually confirm this view. In the meantime, this reinforces the importance of conducting a thorough Freedom to Operate (FTO) analysis before launching a product or service. Knowledge is power!
Patent owners often dismiss the importance of marking their patents (as the law requires) and it generally comes back to kick them in the behind later on when claiming damages for past infringing activities. This obligation must also extend to their licensees, as the Federal Circuit recently reminded us all in the Artic Cat v. Bombardier decision. Failing to do so, there is no constructive notice of infringement and claims to past damages will not be sustained. Licensors beware.
In an rare dissent with his conservative colleagues in Thryv, Inc. v. Click-to-Call Tech., LP, which was on an appeal from the Fed Circuit, U.S. Supreme Court Justice Neil Gorsuch revealed his pro-patentees support as he championed a patent owner’s ability to obtain judicial review of certain threshold administrative decisions from the PTAB. Unfortunately, he was only joined by Justice Sotomayor. His following comments though are worth noting: “[T]he Court . . . carries us another step down the road of ceding core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy…. Inventors like Mr. DuVal just have to hope that the bureaucracy revoking their property rights will take the extra trouble of doing so in accordance with law.”
On the Legislative Front
There is not much going on in Congress these days as far as pushing any legislation forward.
Around the World
In what could be a harbinger of a more global practice in the future, on March 20, 2020, the Chinese Securities Regulatory Commission (similar to the Securities and Exchange Commission in the U.S.) released the Science and Technology Attribute Evaluation Guidelines (Trial) stating requirements to list on the Shanghai Stock Exchange’s Science & Technology Board. Among other requirements, applicants to list must have Chinese invention patents. The Shanghai Stock Exchange will formulate specific rules to implement these guidelines. If this practice catches on with other filing authorities, the next step is likely to be a requirement to actually place a value for these patents on the books, something that patent owners have been able to avoid so far.
In Germany, the Court finally released its decision following a constitutional challenge to the European Unified Patent Court System (UPC), which it declared null and void on formal grounds. Many see this decision, along with Brexit, as the last nail in the coffin of the long awaited UPC.
In Japan, after some initial reports that Japanese courts might not allow injunctive relief for litigants who asserted 5G related patents, the JPO apparently denied that this would be the case
On the Move
Two of the former top IP bosses at Microsoft made interesting moves lately; former VP and Chief IP Counsel Erich Andersen joined Chinese based Bytedance/TikTok as its new VP and General Counsel. He will be moving to NYC. Meanwhile his former right-hand man Micky Minhas announced that he has joined Marconi as its new Senior VP. No more details were available. Best of luck to you both fellows!