09.19.16

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Patents Roundup: Disclosure Requirements, Mobile Patents, Patent Lawyers’ Plagiarism, USPTO Getting Sued, and Corporate Domination of the Patent System

Posted in America, Apple, Asia, Europe, Microsoft, Patents at 4:40 am by Dr. Roy Schestowitz

“Called “patent sharks”, they bought dormant agricultural patents and then sued farmers who were unknowingly using protected technology. This brass knuckles tactic outraged rural activists and led to the same calls for sweeping patent reform that we hear now.” —Gerard N. Magliocca, Blackberries and Barnyards: Patent Trolls and the Perils of Innovation

Blackberries and Barnyards

Summary: The unwanted elements of the patent system (as it stands at present) illuminated by very recent news and patent court cases

WE sometimes worry that our growing focus on the EPO has distracted somewhat from the patent quality problems at the USPTO. We spend an enormous amount of time looking into patent news from all around the world and occasionally something catches our eye that needs a quick comment but not a comprehensive rebuttal. Herein we lay out some recent patent news, with or without further comment.

Disclosure Requirements

“Patents cannot be used defensively, only as means of retaliation (M.A.D.) so that both sides suffer and only lawyers win (they profit from patent wars irrespective of the outcome).”When it comes to patents, rules vary wildly depending on the country. Here we have Switzerland-based site praising its own country on patents, but it’s only part of the story because for a rich country to have a lot of patents makes a lot of fiscal sense, for reasons we explained last month. The Swiss patent system and the role of Switzerland in the EPO requires taking into account Switzerland’s rather unique economy.

Mobile Patents

According to the patents-centric media, Judge Koh, probably best known in recent years for her involvement in Apple and Samsung trials, is still going strong. “The Senate Judiciary Committee on Thursday voted 13-7 to approve the nomination of U.S. District Judge Lucy Koh to the Ninth Circuit,” says this report.

One article, this one coming from a niche Web site, wrongly assumes that ‘app’ (buzzword, usually meaning software for mobile devices) development requires patents. If you develop a mobile ‘app’ and waste time/effort worrying about patents on software, then you’re probably doing it wrong and wasting resources. Patents cannot be used defensively, only as means of retaliation (M.A.D.) so that both sides suffer and only lawyers win (they profit from patent wars irrespective of the outcome). Deterrence using patents does not exist when trolls are involved.

“Microsoft had extorted HTC using patents as well; HTC chose to settle to avoid legal action and potential embargoes.”“Apple Was Hit with a $22M Verdict for Infringing an Acacia Patent,” wrote a patent attorney the other day. Acacia is a Microsoft-connected patent troll. As for Apple, when it sued HTC 6 years ago it showed that it too was quite a patent bully. “According to the complaint,” says another new report, HTC is being sued again and “the plaintiff [Infogation] alleges that Infogation Corp. suffered damages to its business from having its patent infringed. The plaintiff holds HTC Corp. and HTC America Inc. responsible because the defendants allegedly manufacture and distribute mobile phones containing software that infringes the plaintiff’s patents.”

They just can’t leave HTC alone, can they? Microsoft had extorted HTC using patents as well; HTC chose to settle to avoid legal action and potential embargoes. Speaking of embargoes (or injunctions), another example of the ITC being exploited for embargoes (using patent allegations before even a proper trial) can be seen in this new press release. So much for promoting innovation, eh? Promoting racketeering maybe… Microsoft has used the ITC for embargoes using patents for nearly a decade now.

“What’s a Patent Worth?”

“Patents are a lot like financial bubbles and are also an instrument of tax evasion some of the time.”That’s the headline of this article which says: “When a technology business fails, and the flesh of the going concern is stripped away, often the only thing that remains is a paper skeleton of potentially valuable patents. In 2011, Nortel Networks’ patent portfolio of wireless technology patents sold for $4.5 billion. A few years later in 2013, Kodak’s portfolio of digital imaging patents brought in $525 million. Now, Yahoo’s patent portfolio of nearly 3,000 patents is on the block, and experts estimate that it could sell for $1 billion. While “expert” valuations are not always accurate, (Nortel’s portfolio was initially valued at $1 billion, and Kodak’s portfolio was initially valued at $2.2-2.6 million; see http://spectrum.ieee.org/at-work/innovation/the-lowballing-of-kodaks-patent-portfolio) the estimates for Yahoo’s portfolio work out to more than $300,000 per patent, well in excess of the cost of acquisition.”

As we explained before, Yahoo’s patents are mostly software patents, thus they’re pretty worthless right now (after Alice).

Patents are a lot like financial bubbles and are also an instrument of tax evasion some of the time.

Hartig Drug Co. v Senju Pharmaceutical Co.

“Microsoft does this a lot to vendors that sell GNU/Linux, Chrome OS, and Android devices. It’s a form of extortion, depending on how it’s done and how severe the threats are, quality of patents (if disclosed) aside.”A patent maximalism site said about a fortnight ago: “Perhaps one of the most influential first year law school classes for the task of learning how to “think like a lawyer” is civil procedure. Particularly when the professor is bold enough to engage students on the intricacies of the topic, its intricacies can make for a challenging final exam. These experiences should come to mind for many antitrust lawyers when considering the Third Circuit’s decision in Hartig Drug Co. v. Senju Pharmaceutical Co., where the Court applied subject matter jurisdiction principles to reverse a District Court’s dismissal of Hartig’s antitrust allegations on the pleadings.”

Notice the antitrust element of it. It’s quite common when it comes to patent monopolies.

Asetek v AVC

“Patent lawyers say we need to respect patents, but they sure don’t respect copyrights some of the time.”This recent coverage of a case involving patents on cooling systems is also noteworthy. To quote: “The Asetek patents cover liquid cooling systems used to cool integrated circuits (such as those on a computer). Over the past several years, Asetek has sued several competitors for infringing the patents including CoolIT and Cooler Master. In 2014, Asetek sent AVC a letter accusing the company of infringing — however the letter mistakenly accuesd AVC of manufacturing the Liqmax 120s (it does not). After some letters back-and-forth, Asetek eventually sent a letter that it “believes that AVC is likely selling other infringing products in the United States.” After an unsuccessful meeting, AVC filed its declaratory judgment action. The question is whether these facts are sufficient to show an actual controversy between the parties.”

So this can formally become a lawsuit pretty soon, unless money is coughed out in pre-trial settlement. This too often turns out to be of an antitrust nature. Microsoft does this a lot to vendors that sell GNU/Linux, Chrome OS, and Android devices. It’s a form of extortion, depending on how it’s done and how severe the threats are, quality of patents (if disclosed) aside.

Stryker v Zimmer

Earlier this month we found some coverage of the case at MIP which explained: “The Federal Circuit has affirmed the jury’s finding of wilful infringement but vacated and remanded the district court’s award of treble damages, in its Stryker v Zimmer decision”

“Patent lawyers are so dishonest about so-called innovation, so why not plagiarise too?”We wrote about Stryker/Halo in the past. “The jury awarded Striker [sic] $70 million in lost profits,” explains another site. “On appeal,” it added, “the Federal Circuit affirmed as to infringement, validity and damages. [...] Most of the new Stryker opinion involves a recitation of the Federal Circuit’s previous opinion affirming the district court as to infringement and validity. The last three pages, however, deal with the § 284 enhancement issue on remand. What’s interesting is that the Federal Circuit is maintaining its bifurcated approach to enhancement of damages, first requiring a predicate willfulness determination followed by the judge’s discretionary determination of whether and how much to enhance damages. This is essentially the same process as before. See i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 831 (2010). Pre-Halo, the second step of the process (the district judge’s determination of whether and how much to enhance damages) was a totality-of-the circumstances analysis that was reviewed for abuse of discretion (i.e.: basically the same as the court required in Halo). Id. The Federal Circuit’s post-Halo approach to enhancement involves the same two steps, with the exception that the willfulness determination itself is guided by the holding in Halo rather than requiring the two-element objective/subjective determination of Halo. (The enhancement determination is too, but it’s hard to see much difference there.) Under Halo, the subjective component alone can be enough to establish willfulness.”

This was very good news for patent trolls. It still is.

Patent Lawyers and Plagiarism

“It sure looks as though patent trolling is a ‘thing’ in east Asia right now…”Patent lawyers say we need to respect patents, but they sure don’t respect copyrights some of the time. There is even plagiarism reported and potentially a lawsuit to provide evidence of it. “This creates some very interesting problems for lawyers,” said a patents pundit, “and calls to my mind the case a few years ago where a patent prosecutor was sued for using language from a patent in a specification for another client. I’m not a copyright lawyer, and so just raise this case for you to think.”

Patent lawyers are so dishonest about so-called innovation, so why not plagiarise too? Another article by Dennis Crouch speaks of patent malpractice today. It’s part of an outline of upcoming SCOTUS cases. To quote the introduction:

The Supreme Court will begin granting and denying petitions in early October. Meanwhile, several new petitions are now on file. Last week I wrote about the TC Heartland case as a mechanism for limiting venue. Without any good reason, the Federal Circuit overruled a 1957 Supreme Court case that had strictly limited patent venue as spelled out in the patent venue statute 1400(b). See VE Holdings (explaining its overruling of Fourco Glass). A result of VE Holdings is the expansive venue availability that facilitated the rise of E.D. Texas as the most popular patent venue. TC Heartland simply asks the Supreme Court reassert its Fourco holding – something that could almost be done with a one-line opinion: “REVERSED. See Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).” The best arguments for the Federal Circuit’s approach are (1) the reasoning of Fourco itself is a bit dodgy; and (2) VE Holdings is well settled doctrine (decided 26 years ago) and Congress has revised the statutory provisions several times without amending. As a side note, several members of Congress have suggested they will act legislatively if SCOTUS fails to act.

Two new petitions (Grunenthal v. Teva and Purdue v. Epic) stem from the same Federal Circuit OxyContin case and focus on anticipation and obviousness respectively. Grunenthal v. Teva questions how ‘inherently’ operates for anticipation purposes. Purdue suggests that – despite the final sentence of Section 103, that the actual circumstances of the invention should be available to help prove non-obviousness (but still not be available to prove obviousness). Another new petition includes the BPCIA case Apotex v. Amgen that serves as a complement to the pending Sandoz case questioning the requirements and benefits of providing notice of commercial marketing.

USPTO is Getting Sued Again

“What they mean by “monetisation” is shakedown or a gentle form of blackmail.”Last week we wrote about fraud at the USPTO, or examiners defrauding taxpayers as Florian Müller and others chose to frame it. According to this article, the USPTO has another embarrassment to cope with. To quote: “In Hyatt v. USPTO, Civ. No. 16-1490 (D.Nevada, Filed June 22, 2016), Hyatt asks for injunctive relief to stop the PTO from repeatedly ‘reopening prosecution’ in his cases and consequently shielding the cases from judicial review by either the PTAB or Article III courts. Hyatt is experiencing the common reality of examiners reopening prosecution once an appeal brief is filed.”

The Ts: Patent Tax and Trolls

“Well, patents on corn oil extraction are deemed invalid by a court, probably because the USPTO just issues a patent for every piece of paper that comes in, leaving courts to clean up their mess.”In recent weeks we wrote about what had happened in east Asia, where patent trolling is becoming an epidemic. It sure looks as though patent trolling is a ‘thing’ in east Asia right now and here is IAM writing about a new non-practicing entity (IAM would never use the T word). To quote: “Just over a month since display maker Sharp came under the formal control of Hon Hai Precision Industry (Foxconn), big changes to its IP operations are already in the offing. Nikkei Asian Review reported on Tuesday that the Japanese company’s IP function would be hived off into a separate IP management company on October 3rd, with one goal being to create more value from Sharp’s massive global patent portfolio. Speaking exclusively to IAM, Foxconn IP chief YP Jou confirmed how the responsibilities for the Sharp portfolio will be divided within the sprawling Foxconn IP apparatus, and revealed the team’s priority when it comes to monetisation.”

What they mean by “monetisation” is shakedown or a gentle form of blackmail. Speaking of so-called ‘monetisation’, this new report says that “[f]ive big holders of cellular patents, including Qualcomm Inc., are joining an effort proposed by Ericsson AB to jointly license patents in an emerging field called the Internet of Things.”

“Some person with an MBA spreads some myths about patents right now, as if companies just can’t do without them.”Here comes the patent tax to surveillance of all Things (IoT). “Qualcomm has long derived a chunk of their revenue from licensing,” said this one person, “so this isn’t a big change for them.”

Qualcomm also came under heavy regulatory scrutiny for it. Watch what IAM wrote about this. These guys are looking at the surveillance of all Things (IoT) only from the point of view of patents; yes, patents alone.

Patents on Corny Stuff

“Unless we get engineers to enter the political systems, we’ll continue to have lawyers with their lawyer buddies from college writing laws, including patent laws.”Well, patents on corn oil extraction are deemed invalid by a court, probably because the USPTO just issues a patent for every piece of paper that comes in, leaving courts to clean up their mess. This new press release says that “GreenShift Corporation (OTCQB: GERS) provided an update regarding the ongoing patent infringement action involving GreenShift’s subsidiary, GS CleanTech Corporation (“CleanTech”), and its corn oil extraction patents.”

Corporate Domination of IP [sic] Law

Some person with an MBA spreads some myths about patents right now, as if companies just can’t do without them. Watch the corporate sob story: “It’s clear the current system is working for no one except those who want money for nothing. America’s inventive spirit has been the lifeblood of our economic growth for generations, moving us from horse-drawn carriages to electric cars in just over a century. Missteps by the courts, Congress, and the Patent Office have threatened to drive that underground, unwittingly rewarding a few large corporations happy to profit off the work of others at no cost to themselves. That’s not the American way.”

“…TPP threatens to spread software patents almost everywhere. It is a truly villainous back room deal and it should be crushed.”What he is trying to say is that people accused of infringement “want money for nothing” and that it’s the “American way” to give large companies monopolies, so as to prevent others from competing. He advocates protectionism, not an American way. Unless we get engineers to enter the political systems, we’ll continue to have lawyers with their lawyer buddies from college writing laws, including patent laws. It’s the sad truth. Here is another new lawyers’ congregation (EPIP) where they speak ‘on behalf’ of inventors, developers etc. Notice the “IP” in the event’s name. The notion of so-called ‘IP’ (an umbrella for several totally separate things) helps mislead people into equating patents with copyrights and secrets; this event wasn’t about patents as it covered other aspects of so-called ‘IP’ (an umbrella for several totally separate things) and when people say “IP” we should always ask them to be specific. IP means nothing; copyrights, trademarks, patents and trade secrets do. Here is how EPIP started: “The plenary session kicked off with Professor Rochelle Dreyfuss highlighting the expansion of trade secrets protection globally, and the worrying potential unintended consequences. There are increasing concerns that trade secrets and economic espionage law in the US is being used to racially profile researchers. (Interesting coverage on the targeting of Chinese-American researchers here.) Dreyfuss discussed the potential negative impact of non-compete clauses on innovation, employees and economic growth. She argued that criminalisation related to trade secrets generates an especially strong chilling effect as high-tech workers are unwilling to risk incarceration. Dreyfuss also observed that TPP (Trans Pacific Partnership) does not create a minimum trade secrets standard, and is trying to express a new norm that information shouldn’t be free.”

Just to remind readers, TPP threatens to spread software patents almost everywhere. It is a truly villainous back room deal and it should be crushed.

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