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09.22.17

Courts Are Losing Patience for Gilstrap’s Unbridled Support of Patent Trolls

Posted in Courtroom, Patents at 4:08 pm by Dr. Roy Schestowitz

He’s no better than Randall Rader, a facilitator of trolls (discharged with dishonor, so to speak)

Randall R. Rader
Photo from Reuters

Summary: The man whose court has become a trolling ‘factory’ is being refuted (but not reprimanded) by the CAFC, which certainly can see that something is amiss and serves to discredit the system as a whole

THE media does not usually name judges (personifying cases). But Gilstrap is a special case; he himself has become the story due to outrageous rulings on patents (and more recently copyrights, too). The judge whom prominent politicians have dubbed “reprehensible” keeps ignoring the Supreme Court [1, 2]. He has single-handedly decided that the litigation ‘industry’ in his town is more important than the law itself.

What will people think of the legal system, having read about the tales of Gilstrap? It’s almost as though he is proudly biased; he boasts about it and openly invites patent trolls to his court (for favourable treatment). If he continues to make complete and utter mockery of the law, how long will it take before higher courts intervene at a more personal level/capacity?

Well, towards the end of this week the patent microcosm’s media took note of one such development; “Federal Circuit rejects Gilstrap’s test for patent venue,” said the headline. Here is the opening paragraph (much of the rest is behind a paywall):

The Federal Circuit has reversed an Eastern District of Texas refusal to transfer the Cray case, and rejected Judge Gilstrap’s test for determining patent venue. This includes the appeals court stating there must be a physical, geographical location in the district from which the business of the defendant is carried out

Almost simultaneously the other site of the patent microcosm reaffirmed the view that Gilstrap is obviously rigging the system:

As a general matter, Judge Gilstrap’s interpretation appears fairly broad, and on writ of mandamus, the Federal Circuit has rejected Gisltrap’s analysis and directed that he transfer the case to a more appropriate venue.

Why is he tolerated after all he has done? The era of patent trolls in the US may be ending, but Trump’s nomination (USPTO Director) gives reasons for concern and judges like Gilstrap somehow maintain their job, in the face of growing controversy and outrage. Here is another new article to that effect (about patent venue):

Judge Leonard Stark of the District of Delaware has issues two rulings on motions to transfer that provide guidance for Hatch-Waxman and other patent litigation. This included ruling “regular and established place of business” requires a physical place of business in the district

The EFF has already commented on this. Yesterday Vera Ranieri wrote about Gilstrap , noting that this latest appeal/reversal is good news for those of us who work hard to stop software patents and patent trolls (overlapping issues). To quote some of the relevant parts:

In a closely watched case, the Court of Appeals for the Federal Circuit has issued an order that should see many more patent cases leaving the Eastern District of Texas. The order in In re Cray, together with the Supreme Court’s recent decision in TC Heartland v. Kraft Foods, should make it much more difficult for patent owners to pick and choose among various courts in the country. In particular, it should drastically limit the ability of patent trolls to file in their preferred venue: the Eastern District of Texas.

“Venue” is a legal doctrine that relates to where cases can be heard. Prior to 1990, the Supreme Court had long held that in patent cases, the statute found at 28 U.S.C. § 1400 controlled where a patent case could be filed. This statute says that venue in patent cases is proper either (1) where the defendant “resides” or (2) where the defendant has “committed acts of infringement and has a regular and established place of business.” However, in 1990 in a case called VE Holding, the Federal Circuit held that a small technical amendment to another statute—28 U.S.C. § 1391—abrogated this long line of cases. VE Holding, together with another case called Beverly Hills Fan, essentially meant that companies that sold products nationwide could be hailed into any court in the country on charges of patent infringement, regardless of how tenuous the connection to that forum.

[...]

One decision, Raytheon Co. v. Cray, Inc., written by Judge Gilstrap (a judge who at one point had ~25% of all patent cases in the entire country before him) appeared to take a broad view of what it meant to have a “regular and established place of business.” Judge Gilstrap held that “a fixed physical location in the district is not a prerequisite to proper venue.” More concerningly, Judge Gilstrap announced his own four-factor “test” that created greater possibilities that venue would be proper in the Eastern District.

The Federal Circuit has now rejected both that test and Judge Gilstrap’s finding that a physical location in the district is not necessary. The Federal Circuit specifically noted that the venue statute “cannot be read to refer merely to a virtual space or to electronic communications from one person to another.” Importantly, the Federal Circuit also held that it is not enough that an employee may live in the district. What is important is whether the alleged infringer has itself (as opposed to the employee) established a place of business in the district. The Federal Circuit did stress, however, that every case should be judged on its own facts. Based on the facts of Cray’s relationship to the district, the Federal Circuit ordered Judge Gilstrap to transfer the case out of the Eastern District.

What will it take for Gilstrap to accept that he is wrong to put the financial interests of litigators ahead of the law itself? What will compel those in charge to consider his dismissal (for making his mission as a judge akin to that of the disgraced CAFC judge, Randall Rader)? How are people expected to respect the patent system when rules are not being honoured even by these judges?

Update: Just an hour before publishing this article the CCIA’s Josh Landau wrote about this too. He mentioned the judge:

Yesterday afternoon, the Federal Circuit overturned the Eastern District of Texas’s test for venue. Even after TC Heartland, patent trolls were trying to keep defendants in the Eastern District of Texas. And in the first order issued by Judge Gilstrap, in a case called Raytheon v. Cray, it seemed like he was going to cooperate.

In Cray’s request to overturn Judge Gilstrap’s decision, the Federal Circuit ruled that Judge Gilstrap had abused his discretion in refusing to transfer the lawsuit out of the Eastern District. The Federal Circuit then established three key factors in analyzing the “regular and established place of business.” Their factors are based on the text of the patent venue statute, 28 U.S.C. § 1400, and the history of its development, a history that establishes that it was intended to restrict the availability of venue in patent cases.

The upshot? Having a website generally accessible in a district or a telecommuting employee isn’t enough to create venue. And that stems directly from the text of the statute – a district where “the defendant has … a regular and established place of business”.

Intellectual Ventures, GNU/Linux/Android/FOSS Patents, and the Ascent of European Patent Trolls

Posted in Antitrust, Asia, Europe, GNU/Linux, Google, Microsoft, Patents at 3:24 pm by Dr. Roy Schestowitz

Summary: The existing status of GNU/Linux in a world full of patent trolls, which not only target OEMs from Asia — typically in the US — but are also dragging them into Europe, aided by the EPO’s ‘patent bubble’

THE FREE/LIBRE software world is thriving. It’s spreading everywhere. But that does not mean that users of such software are protected from frivolous lawsuits, especially in countries where software patents exist. Developers too are occasionally being threatened or sued; we have given examples where projects got shut down due to these actions.

Readers might rightly wonder why we haven’t said a single thing about Red Hat’s latest press release; we instead included about a dozen stories in our daily links under the Red Hat section (not much new there, just reiteration of a promise from a decade and a half ago). We are more concerned about real, existing, potent threats to software.

According to today’s blog post from IAM, Microsoft’s patent troll Nathan Myhrvold now dominates the world’s largest troll, Intellectual Ventures. IAM is a fan of his and this is what it wrote:

Intellectual Ventures founder Greg Gorder has left the firm, becoming the latest of the quartet of its founders to step away from the business, following Peter Detkin and Ed Jung. According to his bio, which remains on the IV website, Gorder left earlier this month and will now “focus on his family’s philanthropic activities”.

Detkin stood down as vice chairman in January 2015, although he has continued to devote part of his time to IV-related work. Earlier this year he became a senior adviser to Sherpa Technology Group, the consulting business that was established by former VP of IP at IBM and IP Hall of Fame member Kevin Rivette. Jung also took on a new role at the start of the year, becoming CEO of Xinova, the innovation business that was spun out of IV in 2016.

“Intellectual property is the next software,” Myhrvold once said. It means that to him it’s all about patents. This Microsoft-connected patent troll is already suing quite a few companies that distribute BSD and/or GNU/Linux. It’s not a matter of “if” or “when”. The battle began years ago, but Intellectual Ventures operates through various shells. One of those is Dominion Harbor, which is publicly defaming me and smearing the EFF. To them, there’s much money at stake.

“HTC took some of these patents for defensive purposes after Apple and Microsoft had sued or blackmailed.”As is widely known by now (it’s in our daily links also), Google is taking over a large portion of HTC and IAM notes that “HTC does have around 2,000 US patents including third-party assets from the likes of HP, NEC and Nokia. It is now clear that those patents will stay in the Taiwanese company’s possession.”

HTC took some of these patents for defensive purposes after Apple and Microsoft had sued or blackmailed. HTC was Apple’s first Android target (before Apple moved on to Samsung, the largest Android OEM at the time).

Samsung’s home base, South Korea, still seems to have very low tolerance for patent parasites/trolls (and the likes of them). IAM says that the new antitrust boss (KFTC) will be tough on those who seek to restrict competition using patents:

Over the past few years, South Korea’s antitrust regulator has been one of the toughest on issues of intellectual property. Now, the leader of the Korea Fair Trade Commission (KFTC) says the body is about to start an inquest focused on how patents affect competition in the Internet of Things (IoT) or 5G space.

KFTC chairman Kim Sang-jo mentioned the role of patents in IoT during an appearance Monday at which he outlined five priorities for competition policy. 5G communications, digital broadcasting and connected devices were named as fields in which the KFTC plans to study the market for “monopolistic and oligopolistic situations”. Apparently the watchdog will establish a “monitoring network for prevention of patent rights abuse”; it is not clear what that means, but if it leads to investigations of specific patent owners, it will make waves given the commission’s history of dealing out major fines.

Germany, on the other hand, goes the other way, with the EPO being a prominent symptom of it. German companies, in a country where trolling has become a fast-growing epidemic, are stockpiling patents and Florian Müller expects those companies to become trolls before these patents expire. To quote what he wrote the other day:

Meet the patent trolls of the 2030s: Bosch, Volkswagen, Daimler, BMW

our days before the 67th International Motor Show (IAA) in Frankfurt will end, I’d like to offer a bold prediction: unless a miracle of the kind I can’t imagine happens, Germany’s automotive industry (car manufacturers as well as suppliers) will suffer a fate similar to that of the smartphone divisions of the likes of Nokia and Ericsson, ultimately resulting in “trollification” by the 2030s.

As Frankfurter Allgemeine Zeitung noted last month, 52% of all patent filings related to self-driving cars belong to German companies, with Bosch alone (which is number one and followed by Audi and Continental)holding three times as many patents in that field as Google and Apple or Tesla not having any significant patent holdings in that field yet. Besides Bosch, Audi, and Continental, three other German companies are among the top 10 patent holders in this field: BMW, Volkswagen, and Daimler.

Patent filings related to self-driving cars are picking up speed, so the landscape will almost certainly change in some ways in the coming years, but not entirely.

Müller can see these writings on the wall. We could not agree more; the situation at the EPO is untenable and patent grants in Germany are disproportionately high (almost an order of magnitude more than the UK’s). We certainly hope that EPO workers are paying attention to these trends; every patent grant can cause to an innocent engineer an equal (or greater) amount of agony than that inflicted by Battistelli. We’ll say more about patent trolls in our next post.

Shelston IP Blames “Well-Organised and Appropriately-Connected Open Source Lobby” for Ban on Software Patents

Posted in Australia, Patents at 2:50 pm by Dr. Roy Schestowitz

Shelston IPSummary: The activism is working and foes of programmers are feeling the pressure, for software patents are being more explicitly banned in some countries

THANKFULLY enough, New Zealand’s software industry (i.e. developers) managed to keep software patents away. The same is true, to some degree, in Australia (we wrote some articles about that a few weeks ago). We have covered the subject very closely for many years and it last intensified again a couple of years ago when Shelston IP et el — basically a bunch of self-serving liars (lying about the software industry) — reared their ugly heads again [1, 2, 3, 4]. No doubt they will keep on trying again and again until they get their way (if ever).

“It is now blaming FOSS — by name — for the de facto software patents ban (loopholes notwithstanding).”A couple of days ago Shelston IP had another go at it. It is now blaming FOSS — by name — for the de facto software patents ban (loopholes notwithstanding). The whole thing was “largely due to a well-organised and appropriately-connected open source lobby – however, the change of Government and its amenability to such campaigning cannot be ruled out as a contributing factor.”

Last year we wrote a lot of articles about the Productivity Commission of Australia, whose suggestions were more officially adopted only weeks ago, in defiance of pressure from law firms (whose agenda is altogether different; they’re patent maximalists).

Writing from Australia, here is what Shelston IP said about New Zealand:

With few exceptions, most of the reforms listed above are apolitical in the sense that they would likely have eventuated irrespective of which party held the balance of power at the time. That said, some of the specific detail of the various reforms may have had a slightly partisan political flavour to it – for instance, the issue of software patents in the lead-up to the new Patents Act 2013. Originally, when the exposure draft of the new legislation was published (2004), the Labour-led coalition of the time proposed no software-specific restrictions as to whether it was patentable. However, by 2010, the National-led Government had purported to impose not only an “as such” restriction – but, further, to align more with the English courts (exemplified in the Aerotel decision) than with the European system. New Zealand’s change in position over these six years was largely due to a well-organised and appropriately-connected open source lobby – however, the change of Government and its amenability to such campaigning cannot be ruled out as a contributing factor.

Unfortunately, in New Zealand and elsewhere, one cannot be too nice, courteous or polite; the only way to keep software patents away is to starve companies like Shelston IP which keep meddling in policy (and demonise/lie about people who are actually affected by those policies, e.g. software developers).

The EPO’s Latest Lies About the UPC and SMEs Unraveled, Long-Term Plan Described as Daunting

Posted in Deception, Europe, Patents at 1:43 pm by Dr. Roy Schestowitz

Battistelli sets up Europe for patent trolls and abuse

Troll bookSummary: The vision of Battistelli and the latest lies (about SMEs) are being criticised anonymously — for fear of retaliation — as Europe braces for impact with patent trolls from all around the world

THE EPO has sunk to new lows this week, at least as far as lying is concerned. As we said last night, one must now assume that everything the EPO’s management says is a lie. It’s almost always the case (and we’re barely exaggerating).

Look at the EPO’s Twitter account. When they don’t post ‘template’ promotions (e.g. of some upcoming event or section of the site) they just carry on with the usual nonsense. Earlier today the EPO wrote: “The very first guide for obtaining, maintaining and managing Unitary Patents is out: http://bit.ly/2xuHsjV pic.twitter.com/Wl4xuQjUWC

“Remember that EPO examiners are smart people. They are very well educated and they obviously know all the above. They know when they’re being lied to by the management and are conscious when the management lies in their name/on their behalf.”So I responded: “Why put out a guide for a system that does not exist and probably will never exist?”

Later on they wrote: “See if and where a patent has been granted, if it is valid, if there is still time to challenge it, etc. All here: http://bit.ly/2uVaOpR”

They also wrote: “Want to know more about the opposition procedure at the EPO? This course will help…”

I told them that “Battistelli [had] narrowed [the] oppositions window, attacked the appeal board/s, forced examiners to issue many bogus patents” (as leaks serve to reaffirm).

“It’s getting very frustrating to work as a patent examiner, no matter the level of compensation (salary).”Remember that EPO examiners are smart people. They are very well educated and they obviously know all the above. They know when they’re being lied to by the management and are conscious when the management lies in their name/on their behalf. They are not happy about it, they try to join the union (in spite of retaliation risks), and they occasionally reach out to the press (what’s left of it that’s not paid by Battistelli to keep silent or issue PR pieces). It’s getting very frustrating to work as a patent examiner, no matter the level of compensation (salary). It’s not as rewarding as it used to be. “Producing stronger patents (or being able to produce them) is also a matter of professional pride for the examiners,” somebody explained a month ago.

Earlier today in IP Kat we saw two good comments from what might be existing or former examiners. The first comment says almost exactly what we have been warning about for years, alluding to a long message from “Proof of the Pudding” (which had been suppressed, apparently algorithmically, until it was broken into parts).

“It is a frightening thought,” said this comment,” but the more one looks at the situation, one can discover what the hidden agenda of the actual president of the EPO could have been, now was: transform the EPO in an examination-light office, reduce the boards of appeal to nothing, and push the UPC at any rate.”

Yes, this is exactly what we have said over the years. Here is the comment in full (buried down in a comments section that’s weeks old):

Proof of the Pudding’s picture is scary, but it cannot be dismissed.

It is a frightening thought, but the more one looks at the situation, one can discover what the hidden agenda of the actual president of the EPO could have been, now was: transform the EPO in an examination-light office, reduce the boards of appeal to nothing, and push the UPC at any rate.

One does not have been scholar of the ENA (the posh stable where the president comes from) to guess who will benefit from this.

As far as the UPC is concerned, the SMEs have always been used as fig leaf to push the project through for the benefit of any other players than the SMEs. That even the Commission once thought to introduce a litigation insurance says a lot. The stance about SMEs is repeated with the regularity of a Tibetan prayer mill turning in the wind.

As SMEs benefit from a fee reduction when filing European applications, it would be interesting to see if the EPO is prepared to publish statistics about the number of filings by SMEs in member states of the EPC in general, and from SMEs in the EU in particular, and then from the countries having ratified the UPC. I take bets that the number is barely worth mentioning, otherwise those figures would have been already published.

The official filing figures at the EPO are clear in themselves, even abundantly clear: filings coming from EU states are barely above a third of all filings. The first beneficiaries are easy to find: all non EPC member states.

Another figure which would be interesting: how many EP are validated in all EU member states? How many are validated in all EPC member states?

That at the last conference on the UPC in Munich, the organisers managed to find a SME which reaves about the UPC is a good marketing coup. It is certainly not representative of the real situation of SMEs.

The UPC is a perfect example of lobbying at its best, when one sees who will be the beneficiaries of the whole system: litigation lawyers (some of them having written themselves the Rules of Procedure of the UPC) and large companies acting internationally and with deep pockets.

It might be more expensive to litigate in each and every EU or EPC country, but at least it was a barrier for stopping some bullies. And if it was worth it, the litigants had enough money to fight were the market share was worth it. How many cases of this kind?

With the UPC, no reason to refrain, in one go all are caught. In the long run the number of diverging decisions between EPC member states have gone down and will continue to go down, so why do we absolutely need an instance like the UPC?

But is looks so social to apparently care for the smaller and poorer among us….

Propaganda/echo chamber ‘events’ (or ‘forums’) are taken note of, too. The EPO organises quite a few of these nowadays (Margot Fröhlinger is doing another one in a few days in Canada), sometimes helped by IAM (which did this in the US, sponsored by the EPO’s PR agency) and Managing IP (it last did this earlier this month in major cities in Europe).

It’s just gross. As the above notes: “That at the last conference on the UPC in Munich, the organisers managed to find a SME which reaves about the UPC is a good marketing coup. It is certainly not representative of the real situation of SMEs.”

“It’s like politicians who attempt to pass laws by speaking about “terrorism”, “the children”, or “piracy” (they allude to copyright).”See how they’re distorting the record?

No matter if SMEs oppose the UPC (the European Digital SME Alliance too has made it very clear) and the EPO covertly offered fast lanes to large corporations, the EPO persists with this lie that the UPC is “for SMEs” (or something along those lines). It’s like politicians who attempt to pass laws by speaking about “terrorism”, “the children”, or “piracy” (they allude to copyright).

The EPO has lied about it again (as above) and later pushed a so-called ‘study’ with lots of EPO promotion of it (five times yesterday alone).

As the following new comment (received earlier today) puts it, the paper labels trolls “SMEs” and conveniently cherry-picks:

The choice of SME in the EPO paper is quite telling as well. Most of them are known in the industry as patent trolls. Just check a few of their patents application and see what their contribution to the art really is.

That, of course, is a direct consequence of the EPO choosing the SME with the larger number of patents for their case studies. Normal SME only patent what they really intent to manufacture and sell, which amounts to a relatively small number of patents. When a small company applies for dozens of patents each year, it usually means that their main business is litigation.

Going back to IP Kat, the next comment skewers the EPO ‘study’ and takes note of the incredibly low sample size:

A study about the benefits for SMEs of the patent system, and hence also the benefits they can gain by using the UPC, has been published today by the EPO:

http://documents.epo.org/projects/babylon/eponet.nsf/0/FF76F6F0783153B7C12581A2004DA0D2/$File/epo_sme_case_studies_2017_en.pdf

It looks at 12(sic) cases of successful SMEs spread all over Europe.

If a drug manufacturer would file a demand for approval supported by just showing 12 positive cases, among a total of unknown cases, and without any negative cases, no approval would be obtained, as the result is not statistically proven and the benefits of the drug have not been demonstrated. One should not be mesmerised by this apparent string of success.

To be fair, the Spanish SME which was raving about the UPC at the last UPC conference in Munich is among the 12.

The figures relating to all the filings by SMEs compared to the overall figures of filings should be urgently published by the EPO! Negative cases should also be examined as there certainly are some.

The number of cases in which SMEs have been harassed by large companies, is much more difficult to apprehend, but this figure would also be useful.

Only then, the stance about the usefulness of the patent system for SMEs will have been correctly established.

What has been done here is just blending out the full breadth of the problems faced by SMEs attempting to use the patent system, or in other words, blow smoke in the eyes and pull the leg of the inattentive reader. One wonders why?

In a conference held in 2015 at the German Patent Office, Bavarian SMEs made clear what they thought of the UPC: a nightmare, whereby the fee reduction and the help with translations costs are not worth the bother. This result can certainly be extrapolated to the whole of Germany, if not to the whole of the EU, and everybody can draw its own conclusion.

So this is the EPO in 2017.

So anti-scientific that it should be offensive to science itself.

Moreover, the EPO is offensive to human rights and labour rights. As someone explained to us today:

In 2018, the EPO will also cut another 2 public holidays for its Munich staff: corpus christi and whit monday. Both are bank holidays in Bavaria and the Munich branch of the EPO has always been closed on these days. So shops, banks, everything is closed in Munich, but not the EPO.

Nothing shall stand in the way of “production”; the trolls are relying on hastily-granted patents for them to abuse for many decades to come (even after Battistelli is no longer alive to see these consequences).

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