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06.09.18

A Post-TC Heartland (and Post-Alice) Patent System is Bad if Not Fatal News to Patent Trolls Like Microsoft’s Intellectual Ventures

Posted in America, Microsoft, Patents at 12:27 pm by Dr. Roy Schestowitz

Intellectual Ventures is connected to some Texas-based 'offspring' trolls

Microsoft and trolls

Summary: The gold rush for patents on algorithms (disguised as “AI” or “blockchain” among other hype waves which are being popularised nowadays) and why it’s going to be a lot harder to enforce these in the courtrooms now that the Eastern District of Texas is ever more isolated (recent rulings which deny ‘forum shopping’ or litigation venue hopping)

THE USPTO is improving (quality of patents). Patent courts in the US are improving (standards/bars). Innovation carries on. Patent litigation is declining (we shall cover that separately).

“We are pleased to see the way things are going and we receive online abuse from the aforementioned types, who are very angry because they’re used to making money from lawsuits.”Go to all (or virtually any) of those sites that tell us patents of any kind encourage innovation (any patent, even patents on life or algorithms). Check the background of the author/those quoted. It’s almost always lawyers with law degrees, i.e. the nontechnical types who make money from patenting and litigation. Did innovation suffer/stop because the US became tougher on patents? No. There’s no evidence of it. Did law firms earn less money? Probably. But they never produced any innovation anyway.

We are pleased to see the way things are going and we receive online abuse from the aforementioned types, who are very angry because they’re used to making money from lawsuits. They lose sleep over what’s going on.

“The trolls are struggling and quite a few have gone out of ‘business’ (when we say business we mean suing and engaging in extortion, as they do nothing else).”This post will focus on patent trolls, especially those that are exploiting lenient courts and now find it difficult to access those. We’ve been seeing nothing but good news on this front, except perhaps in Europe, where Samsung has just been extorted by a European patent troll.

The patent trolls’ lobby (IAM) currently celebrates Sisvel’s latest blackmail. Joff Wild says this:

The deals come on the back of other recent positive developments for Sisvel, including US litigation settlements with LG Electronics and Buffalo, which saw both companies agree royalty-bearing licences to the same Wi-Fi patents that Samsung now has access to; and Columbia University joining the Wi-Fi licensing programme, the first Ivy League university to do so. The programme now has over 100 licensees.

Sisvel began life in 1982 as a joint venture between Italian TV set manufacturers and now operates out of offices in the US, Europe and Asia, through which it offers a variety of pooled rights covering technologies, including wireless, digital display and audio/video coding. Its portfolio runs to thousands of patents – both managed on behalf of others, such as Fraunhofer, KPN and Orange, and acquired – with well over 1,000 licences in place.

Techrights wrote about Sisvel dozens of times in the past. They’re like Europe’s patent Mafia (and they happen to be Italian too, so maybe there’s a source of inspiration from the Italian Mafia).

“…AI is just software and in very few places in the world will such patents have real value (except outside the courts).”In the US, however, things have changed. The trolls are struggling and quite a few have gone out of ‘business’ (when we say business we mean suing and engaging in extortion, as they do nothing else). We have given many examples and we shall continue to give more. Several days ago we wrote about Intellectual Ventures losing a lot of money — mostly money that had been invested in it by Microsoft. Intellectual Ventures lost a lot of staff — managers and executives included — and Ericsson hired from Intellectual Ventures not too long ago (seeking trolling expertise).

As we covered here last week (owing to Docket Navigator’s coverage), Ericsson and Intellectual Venture now have a patent dispute between them and earlier today Watchtroll said more:

Ericsson Inc. v. Intellectual Ventures I, LLC, No. 2016-1671, 2018 (Fed. Cir. May 29, 2018) (Before Prost, C.J., Newman, and Wallach, J.) (Opinion for the court, Newman, J.) (Dissenting opinion, Wallach, J.)

The ‘408 patent, owned by Intellectual Ventures I LLC (“IV”), covers a method of frequency hopping used in wireless systems in which a base station communicates with other entities on varying radio frequencies to reduce interference among communications. Ericsson petitioned for inter partes review of the ’408 patent, and the PTAB upheld its validity. Without separately analyzing the challenged dependent claims, the PTAB held that claim 1 was not anticipated or obvious. On appeal, the Federal Circuit reversed with respect to claim 1 and vacated and remanded as to the remaining claims.

We expect the Federal Circuit to relay this back after the Patent Trial and Appeal Board (PTAB) found the patent ineligible. What will happen at the end? Well, in the meantime (amid all these court battles/motions) only the lawyers profit. Who loses? Both Intellectual Ventures and Ericsson, which itself feeds patent trolls and often acts like a troll itself.

“…patents on “AI” should therefore not be accepted (algorithms are abstract; they’re not patentable) and are not patent-eligible in the eyes of most courts worldwide.”In other news about Intellectual Ventures (Microsoft’s truly massive patent trolls network which likes to distribute its patents to thousands of other trolls), IAM indicates another gold rush for blockchain patents, i.e. software patents. An Intellectual Ventures ‘veterans’ is named:

The IP market officially has its first blockchain start-up. A group of executives with experience across patents and finance have launched a company called Operem, which will enable the tokenisation and trading of IP assets. Unveiling the new project exclusively to IAM, CEO Tim Londergan explained why his team believes the distributed ledger technology behind blockchain brings something radically new to the traditional IP exchange model.

[...]

Londergan, who spent eight years across several senior roles in Intellectual Ventures and more recently has been running a start-up incubator in Singapore, faces the challenge of building a business that combines two complex fields – IP and blockchain – which are often misunderstood by the uninitiated. But he thinks intellectual property, which Operem describes in a slide deck as “one of the last massively closed asset classes”, is ripe for disruption.

Remember that all of these patents are software patents. Mastercard too has been using the blockchain hype to disguise software patents as something patentable (courts would invalidate them). Here’s the latest on this:

Mastercard has won a patent for a travel itinerary system that uses a blockchain for a travel auction platform.

Consumers enter their planned itinerary and merchants submit bits for each request. The blockchain would connect travelers, travel agents, and other travel companies; along with a middle party that would vet the travel providers.The system could cut into travel providers’ marketing costs while making it easier for travelers to shop.

Mastercard is also pursuing patents for several other blockchain use cases, mostly with an eye on improving merchant and consumer navigation.

Over at a Japenese patents blog, Satoshi Watanabe takes note of so-called ‘FinTech’ patents (similar to the above) and starts by saying that “new technologies such as AI and IoT are progressing,” alluding to patents on these. Well, those are just buzzwords which are being exploted for bunk software patents (likely invalid). “As previously reported,” he wrote, “patent applications of business-related inventions have been on an increasing trend since 2011, and approximately 7,900 patent applications for business-related inventions were filed in 2016 (increase of 11.1% over the previous year), in spite of the downward trend in the number of domestic patent applications. Especially, patent applications in the financial sector (which should include FinTech) markedly increased in 2016 (increase of 40% over the previous year). The patent grant rate for business-related inventions is almost 70%. Therefore, many business-related patents have been generated in Japan.”

“Stop using meaningless old buzzwords to urge for patents on things that are clearly abstract.”Those are more like software patents, which are related in many ways to patents on business methods (both covered by Alice and to a lesser degree Bilski).

This new article relaying Withers & Rogers talking points (basically marketing for a law firm) speaks of an upcoming “event, which runs from 9-20 July 2018, featur[ing] patents in eight different categories from AI to software.”

Well, AI is just software and in very few places in the world will such patents have real value (except outside the courts). The “AI” buzzword is nowadays being promoted by the EPO and by IP Kat, which keeps painting software patents as “AI”, even as recently as a few days ago when it wrote: “DeepMind is a London based artificial intelligence (AI) research company, widely recognized as being at the forefront of the field. DeepMind was founded in 2010 and acquired by Google in 2014 for £400m. In 2017, DeepMind famously developed AI capable of defeating a world-champion at Go (Silver et al. Nature).”

The title of it was “DeepMind: First major AI patent filings revealed” and the sole comment says:

Just sounds like a company trying to pilfer all companies with patent trolls. All this will do is prevent AI from progressing because someone wants to make a $. AI should be banned from patent requests imo.

Well, it’s difficult to tell where these patents might end up. “AI” is just a vague term that applies to most algorithms; patents on “AI” should therefore not be accepted (algorithms are abstract; they’re not patentable) and are not patent-eligible in the eyes of most courts worldwide.

“In places like the Eastern District of Texas (E.D. Tex. or TXED) the judges might say “yes” to such patents, but not elsewhere.”Here goes another mindless tweet: “Should #AI created inventions be eligible for #patents? If so, the standards for what is considered patentable need to change…”

Stop using meaningless old buzzwords to urge for patents on things that are clearly abstract. In places like the Eastern District of Texas (E.D. Tex. or TXED) the judges might say “yes” to such patents, but not elsewhere. Therein lies the importance of TC Heartland, which very recently turned one.

“From “venue/forum shopping” we’ve meanwhile moved to “judge shopping”…”In an effort to keep abreast of TC Heartland and what goes on in the Eastern District of Texas we’ve found some interesting new developments. The court that is notorious for its patent trolls epidemic decided as follows: “The court granted defendant’s alternative motion to transfer for improper venue because defendant did not have a regular and established place of business in the district through its “necessary” distributor.”

This is basically another fight over interpretation of the Supreme Court’s ruling on TC Heartland. Quite a few such cases became public recently and Watchtroll wrote about one of them a couple of days ago:

In an opinion made public on May 9th, a federal judge in the Eastern District of Texas denied a motion to dismiss for improper venue. See Tinnus Enters. v. Telebrands Corp., Case No. 6:17-CV-00170-RWS (E.D. Tex. May 1, 2018). Notably, the Court in Tinnus found that a “regular and established place of business” can exist when a manufacturer or wholesaler leases a space within a brick-and-mortar retail store. Id. at 4-5.

District Judge Robert W. Schroeder supported the report and recommendation of Magistrate Judge John D. Love which found that defendant Telebrands consistently leases space with retailers in the district, creating ongoing, long-term relationships with those retailers. Id. at 4. Judge Schroder concluded that the defendant had crafted a regular and established place of business for patent venue purposes by holding out leased store space as their own, paying fees to construct the leased space, and controlling product placement, sales, and displays within that space. Id.

[...]

The Supreme Court’s recent decision in TC Heartland reset the definition of residency in § 1400(b), divorcing the patent venue statute’s construction from § 1391(c). TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1520 (2017). In TC Heartland, the Supreme Court held that “residence” in § 1400(b) refers only to the state of incorporation, and further held that the expanded definition of “residence” in § 1391(c) was not intended to alter § 1400(b)’s construction of the term. Id.

As noted by Mark Deming yesterday, this is one among a “trio” of such cases: “The Federal Circuit issued a trio of decisions this month further clarifying the application of the patent venue statute in the post-TC Heartland era. The case specifics are: In re HTC Corporation, No. 2018-130 (May 9, 2018); In re ZTE (USA) Inc., No. 2018-113 (May 14, 2018); and In re BigCommerce, Inc., No. 2018-120 (May 15, 2018).”

“This means that companies like Microsoft, for instance, may struggle to float patent trolling (and selling ‘protection’) as a long-term business model.”From “venue/forum shopping” we’ve meanwhile moved to “judge shopping” — a practice which is considered rogue and regarded as serious misbehaviour based on the latest Docket Report:

Following a dismissal for failure to prosecute after six years of litigation, the court granted defendants’ motions for attorney fees under 35 U.S.C. § 285 because plaintiff’s litigation tactics were unreasonable.

This case, yet again, demonstrates that the attempts to pursue some particular judge or district are risky; these can now collapse or sink entire cases. The legacy of TC Heartland, including its ‘edge cases’ (like non-US companies), has aged pretty well. This means that companies like Microsoft, for instance, may struggle to float patent trolling (and selling ‘protection’) as a long-term business model. This is what Microsoft has been aiming for with “Azure IP Advantage” [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19].

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