03.11.17

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Amid New Losses to Software Patents and to Patent Trolls, US Supreme Court Prepares to Deal Them Another Lethal Blow

Posted in America, Patents at 7:40 pm by Dr. Roy Schestowitz

The US Supreme Court (SCOTUS) is a patent rationalist, not maximalist

TC Heartland
Even the patent (meta-)industry anticipates the demise of trolls’ modus operandi and attempts to sell “services” around that

Summary: With the TC Heartland decision (SCOTUS level) looming, patent trolls are already losing all their marbles — including software patents — and motions are being made to shift venue of litigation (outside of the Eastern District of Texas)

A HIGH-PROFILE CASE that was mentioned here before, on Friday to be exact, enabled us to see the world’s largest patent troll losing a major test, which represented yet another big blow to software patents in the United States. CAFC has once again blown away several of them.

Days later we saw this report from Joe Mullin, who is very familiar with this patent troll. He wrote:

Intellectual Ventures boasts of having more than 30,000 patents—but you’d have to look for a long time to find one that can hold up under real scrutiny.

After staying quiescent for years, IV opened up a barrage of lawsuits to enforce its patents in 2010. But the companies that decided to stand up to IV rather than buckle under have been faring well, as judges have found the patents that IV has chosen to enforce in court less than impressive. It’s a telling sign about the giant patent-holder’s collection. Given the opportunity to pull just about any patent out of its huge collection, one would assume the company would choose the best of the lot. But much of it appears to be exactly the kind of easy handouts from the dot-com boom era that have been called out by critics of “patent trolls.”

Earlier this week, Intellectual Ventures lost two more major patent cases at the nation’s top patent court. It lost a case against Erie Indemnity Company and several other insurers, which had stood accused of infringing US Patent Nos. 6,510,434, 6,519,581, and 6,546,002. The same judges also tossed patents asserted against banking company Capital One. All were found invalid under the Supreme Court’s Alice Corp. precedent, which barred many patents that describe basic business processes and add computer jargon.

Compare that to Wall Street media’s coverage. How can one write about Intellectual Ventures without mentioning that it’s a gigantic patent troll which makes nothing? Here is an important reminder of what this troll is: “Founded in 2000 by former Microsoft Corp. Chief Technology Officer Nathan Myrhvold, Intellectual Ventures has raised over $6 billion to purchase patents and owns around 70,000 intellectual property assets, according to its website. The company has 40,000 intellectual property assets in programs to grow revenue through licensing and related litigation.”

“Not too shockingly, patents on software and even the most notorious patent trolls enjoy the support of some patent law firms; they have their ‘fan’ base out there.”It’s not a company, it’s a troll (or a “firm” at best). It does nothing but harass real companies. Many of its patents are worthless but are used in bulk in order to lower defendants to their knees (raising the cost associated with defence and making settlement the cheaper option).

Not too shockingly, patents on software and even the most notorious patent trolls enjoy the support of some patent law firms; they have their ‘fan’ base out there. It’s all about money to them; even when it’s working directly against innovation.

Asserting that a patent is not valid (as above) is not an “attack” but a defense (by the defendant). Attackers are not the “survivors”. But notice the language of liars — those to whom invalidated patents (after they got used offensively) are “killed” and otherwise “survived”.

To quote this new example: “Location Detector Patent Claims Survive an Alice/101 Attack by Uber: https://dlbjbjzgnk95t.cloudfront.net/0899000/899068/https-ecf-cand-uscourts-gov-doc1-035115212012.pdf

“We are worried not just about software patents but also patent trolls, which typically but not always rely on software patents.”The same person (an attorney who promotes software patents), linking to this post about Alice gaining momentum, basically chose selective emphasis. “In Thales Visionix Inc. v. United States,” it says, “the Federal Circuit reversed a decision of the Court of Federal Claims that found claims drawn to an inertial tracking system patent-ineligible under Section 101.”

This may sound like big news. It’s about the F-35 Joint Strike Fighter. It also cites the Supreme Court’s Diamond v Diehr (classic case) and it’s not the same case cited above. It was decided 3 days ago, on March 8th, and it was a lawsuit against a government and Elbit Systems, typically a military contractor. This decision is 11 pages long and it’s not purely about software, hence the court found it unsuitable for invalidation by Section 101. Does that mean that software patents “survived”? Not in this case, as the case isn’t inherently about software but about physics and sensors.

Moving on to a CBM review (business methods), Secure Axcess, LLC v PNC Bank N.A. got covered the other day and so was this case in Delaware, where the “federal jury found in 2014 that Sprint Communications Co. LP infringed three patents owned by Comcast IP Holdings I LLC. Sprint argued on appeal that the decision was based on incorrect claim constructions, but the Federal Circuit disagreed.”

“The trolls’ courts in EDTX might suffer an epic SCOTUS blow some time later this year.”These cases do not constitute much of a “software” element, but nonetheless we take note of them, for several other reasons. We are worried not just about software patents but also patent trolls, which typically but not always rely on software patents. Professor Paul Janicke expects all those patent troll cases from Texas (the Eastern District’s docket, EDTX) to be scattered around to other districts across the country, based on this new article which he contributed to Patently-O. To quote: “When the Supreme Court reverses the Federal Circuit’s venue ruling in the TC Heartland case, a reversal widely expected, it will return patent venue to the time prior to 1988, when the residence of a corporation for patent venue purpose was limited to (i) a district within the state of incorporation, or (ii) a district where the corporation has a regular and established place of business and has allegedly committed an act of infringement. Presently pending in the Eastern District of Texas are 1,000+ patent cases.”

The trolls’ courts in EDTX might suffer an epic SCOTUS blow some time later this year. Such an outcome is widely expected, knowing the dispositions of the existing Justices. Even if belatedly, it’s a much-needed ruling as there is this new article about present attempts to shift lawsuits out of the notorious docket. To quote: “A Federal Circuit decision faulting an Eastern District of Texas judge for refusing to transfer a patent case to California may provide guidance for defendants seeking to escape the patent hotspot, but attorneys say it will remain tough to win transfers out of the district.”

“Well, share buybacks are almost always a negative sign and it will hardly be so shocking if RPX altogether implodes and gets liquidated some time after TC Heartland (if not before that).”That will likely change after TC Heartland — a case that was covered here over the previous weekend. Trolls are already suffering a great deal and are increasingly collapsing, much to the patent microcosm’s chagrin. Even RPX, which marketed itself as a shield against trolls (it’s not really what it’s advertising itself as), seems to have lost its purpose. RPX just keeps collapsing, based on sympathisers of trolls. To quote, “criticising its growth attempts, calling for Amster’s departure and querying what it alleged was excessive staff compensation. The two sides announced something of a truce last May with RPX agreeing to a $50 million share buyback programme and to the appointment of a Mangrove representative to the board. It’s not clear at what price Mangrove might be willing to consider an offer, although there’s no doubt that last year’s dispute continues to cast a shadow over RPX’s direction.”

Well, share buybacks are almost always a negative sign and it will hardly be so shocking if RPX altogether implodes and gets liquidated some time after TC Heartland (if not before that).

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