1 2 3 4 • These are factors that go beyond the usual realm of a patent prosecution counsel • broad claims • well supported by spec • clean prosecution history • Timely issuance • Can the patent stand alone as an asset?
à How much is the patent worth in the market place?
5 • Life after AIA • Presumption of validity at the district court level is no longer there • Parallel proceedings at PTAB • High rate of IPR institution and claim cancellation (especially at the outset of AIA) • While the application of AIA rules and new processes are being hashed out, presumption of validity is definitely gone. • Case law is always evolving – Pendulum still swinging • Gottschalk v. Benson • Parker v. Flook • Diamond v. Diehr • State Street Bank v. Signature Financial Group • In re Bilski • Alice Corp. v. CLS Bank International • DDR Holdings v. Hotels.com (one patent held as patentable! • Enfish v. Microsoft • Certain PTAB decisions being designated precedential
6 http://www.ncsl.org/research/financial-services-and-commerce/2016-patent-troll- legislation.aspx http://www.law360.com/articles/836578/the-post-aia-battleground-for-patent- challenges http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=3aad1da2- 08a9-4f14-a147-611b1e39ff75 ITC: Availability of Cease and Desist orders and Limited or General Exclusion Orders; speedy proceedings
“anti-patent troll” — i.e., entities that have made a business out of directly challenging patents via IPR for financial gain (“...IPR process is being misused by hedge fund companies whose motive isn't to develop their own products but to make money by selling company stocks short.” https://www.bna.com/inter-partes- review-n73014447528/) (http://www.epmmagazine.com/opinion/patent-challenging- lucrative/) e.g., nXn partners (Kyle Bass and Erich Spangeberg) taking on the issue of evergreening of pharma patents
7 e.g., http://www.itbusinessedge.com/slideshows/top-10-strategic-technology-trends- for-2017.html http://fortune.com/2016/12/01/blockchain-patents/ https://blockstream.com/about/patent_pledge/ (Blockstream’s patent non- aggression pledge) SCOTUS decision on Lexmark (http://www.scotusblog.com/case- files/cases/impression-products-inc-v-lexmark-international-inc/) and Apple v. Qualcomm will have bearing on patent exhaustion/double-dipping
8 CY16Q3 list: 1. RPX 2. IV 3. Acacia 4. Google 5. IP Bridge 6. Philips
CY16Q4 list: 1. RPX 2. Hynix 3. Apple 4. Intellectual Ventures 5. Hitachi, Panasonic, AT&T
Note RPX, IV, Allied Security Trust (and arguably Google) are patent aggregators – sell membership as defense/insurance against patent enforcement actions • IV took over the top spot from RPX from CY16Q3, although IV is reportedly scaling back on patent acquisitions starting in CY17Q2 (http://dominionharbor.com/news- iv-pulls-back-patent-acquisition-market-focus-monetising-existing-portfolio-sale- licence/), e.g., by transferring 4000-patent Kodak portfolio to Dominion Harbor • The list changes Q-to-Q depending on timing of deals
9 Google also uses its Google Patent Acquisition Program as a defensive mechanism • Bought 28% of offered patent assets for an median price of $150k each during a 3-week program window (as of October 2015) • (http://spectrum.ieee.org/computing/software/google-tries-to-keep-patents- out-of-the-hands-of-trolls) • Still have “Patent Opportunity Portal”
Acquirers may also sell, sellers may also acquire (see next slide)
9 CYQ3: 1. Google; 2. Toshiba; 3. Broadcom; 4. Panasonic; 5. SK Telecom CYQ4: 1(tie). Hitachi, Panasonic, AT&T; 2. Huawei • Certain technologies are hotter than others (IoT, autonomous vehicles, AI, VR/AR) • IV might make the list for CY17Q2 as it sold the Kodak portfolio to Dominion Harbor • Panasonic has launched an active IP sale subsidiary in recent years (Panasonic Intellectual Property Corporation of America, Panasonic IP Management Co., Ltd.), and has sold assets to IP Bridge, WiLAN, etc. • Google has a Patent Divestiture program for operating companies to acquire Google portfolio(s) for defensive purposes (https://www.google.com/patents/licensing/#tab=pd) • Toshiba sold 500+ patents to IP Bridge in 2016 (http://www.iam- media.com/blog/detail.aspx?g=75ba041f-410e-4d62-a27b-d5d95f6bcf4d) as well as a portfolio to Inventergy (http://www.iam- media.com/blog/detail.aspx?g=30736f64-dd3d-46a1-a2a4-bedcd54e8fa6) . • Also, Toshiba is Fujitsu’s wholly owned subsidiary — Fujitsu has been actively making IP deals in and outside of Japan since 2010. • Avago Technologies completed acquisition of Broadcom, in addition to Emulex and LSI, earlier in 2016, so assumedly there are ongoing IP portfolio pruning efforts • SK Telecom is putting a lot of effort into the new 5G standards, thus likely selling off patents related to LTE and older technologies (“Via Expands LTE Patent Pool License Coverage to Include LTE Advanced”
10 (http://www.businesswire.com/news/home/20160928005305/en/Expands-LTE- Patent-Pool-License-Coverage-Include)).
10 Medicines Patent Pool (www.medicinespatentpool.org — funded by UNITAID) DVD6C (www.dvd6cla.com) HEVC Advance (High Efficiency Video Coding) (www.hevcadvance.com) Avanci IoT (avanci.com) RPX Corp (www.rpxcorp.com) Intellectual Ventures (www.intellectualventures.com) Allied Security Trust (www.alliedsecuritytrust.com) Unified Patents (www.unifiedpatents.com) MPEG LA (www.mpegla.com)
Consider also patent non-aggression pledges, like the Blockstream one mentioned earlier
11 12 • Uniloc USA, Inc. v. Microsoft Corp killed 25% Rule of Thumb (2011) • LaserDynamics initially awarded total of $57,456,136 after jury trial; • QCI was granted motion for new trial on “entire market value” considerations; LD given the option of taking $6.2M or new trial; • LD subsequently awarded $8.5M after new trial; QCI appealed to US CAFC for a new trial based on Judgment as a Matter of Law —> new trial ordered based on improper reliance on unrelated licenses (prior license with BenQ as a result of prior settlement agreement); • LD & QCI eventually settled • The question is whether the patented functionality is what motivates consumers to buy the complete product “in the first place.” • It is not sufficient to show that the patented feature is “viewed as valuable, important, or even essential.” • It is also not sufficient to show that a product without the patented feature would not be commercially viable. • It is not even sufficient to show that consumers would buy a product with the patented feature over one without the patented feature. • The patented feature must motivate consumers to purchase the type of product at issue, not merely choose one model over another. • Matthew Holohan, “Making Sense Of Apportionment In Patent Damages: Part 1” Law360 (March 13, 2015)
13 Nash Bargaining Solution: 50-50 split of incremental profits, assuming perfect knowledge https://www.law360.com/articles/529437/nash-bargaining-may-not-be-right-for- patent-damages
Note: As an aside, Virnetx was more successful against Apple (VirnetX Inc v. Apple Inc, U.S. District Court, Eastern District of Texas, No. 10-417) • Federal jury awarded $300M+ to Virnetx in retrial in September 2016 • Of course, Apple has successfully challenged the Virtnetx patents at PTAB (IPRs 2015-00810, 2015-00811 and 2015-00812) – VirnetX is using other patents in their portfolio, as well as challenging the PTAB’s lack of use of expert testimony at the Federal Circuit
VirnetX reached a $200 million settlement in a related patent case with Microsoft in 2010, which was VirnetX’s first patent licensee. (http://arstechnica.com/tech- policy/2013/03/cisco-beats-patent-troll-virnetx-which-sought-258-million-over-vpn- patent/)
14 • USPTO May 2016 subject matter eligibility update (https://www.uspto.gov/sites/default/files/documents/ieg-may-2016-memo.pdf) • USPTO April 2014 Interim guidance on subject matter eligibility (https://www.gpo.gov/fdsys/pkg/FR-2014-12-16/pdf/2014-29414.pdf) • Step 1: IS THE CLAIM TO A PROCESS, MACHINE, MANUFACTURE OR COMPOSITION OF MATTER? Statutory categories: 1. Process 2. Machine 3. Manufacture 4. Composition of matter • Step 2A: IS THE CLAIM DIRECTED TO A LAW OF NATURE, A NATURAL PHENOMENON, OR AN ABSTRACT IDEA (JUDICIALLY RECOGNIZED EXCEPTIONS)? • Step 2B: DOES THE CLAIM RECITE ADDITIONAL ELEMENTS THAT AMOUNT TO SIGNIFICANTLY MORE THAN THE JUDICIAL EXCEPTION? • Recitation of “conventional” computer functions and components is not enough • “Merely adding a generic computer, generic computer components, or a programmed computer to perform generic computer functions does not automatically overcome an eligibility rejection”
15 • Enfish is a reaction to Alice Corp. v. CLS Bank International • CAFC did affirm non-infringement by MS on one claim • Software can make non-abstract improvements to computer technology just as hardware can • "We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two [i.e., transformation test of Alice]...Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis...Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis. ” Id. • District court is not allowed to describe “... the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to §101 [i.e., laws of nature, natural phenomena, and abstract ideas] swallow the rule. Id. • “...we are not faced with a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation. Rather, the claims are directed to a specific implementation of a solution to a problem in the software arts. Accordingly, we find the claims at issue are not directed to an abstract idea.” Id. • In parallel, instituted IPR proceedings found some of the claims (including one of
16 the claims (Claim 31 of USP 6,163,775) involved in the suit) invalid due to obviousness
16 Improvement over prior art can lead to eligibility [Mark Lemley, 2017 Patent Law Update, presented at 2017 Rocky Mountain IP & Technology Institute (1 June 2017)] Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. Nov. 1, 2016) The Federal Circuit reversed the district court’s judgment, providing similar reasons for all four patents. The court’s analysis for the ‘065 patent is representative. The court bypassed step one of the Alice framework, holding that even if claims are directed to ineligible abstract ideas under step one, the claims are eligible under step two because they contain sufficient inventive concepts.62 In particular, the court focused on the claim requirement, as construed, that data processing occur on distributed architecture.63 The court found that such distributed processing is an unconventional technological solution to a technological problem of “massive record flows which previously required massive databases” found in the prior art.64 Although this technological solution requires the use of generic components, like network devices, the court found that these generic components must operate in combination in an unconventional (i.e. distributed) manner to improve computer performance.65 Moreover, the court noted that the claims are narrowly drawn as not to unduly preempt “any and all generic enhancements of data.”66
17 All footnotes to Amdocs, 842 F.3d at 1300. Thales Visionix, Inc. v. United States, 2017 WL 914618 (Fed. Cir. Mar. 8, 2017) The Federal Circuit reversed and remanded, finding that the claims are not directed to an abstract idea under Alice step one.79 The court first cautioned that although claims of the ‘159 patent do “utilize mathematical equations to determine the orientation of the object,”80 that a “mathematical equation is required to complete the claimed method and system does not doom the claims to abstraction.”81 Thales, 122 Fed. Cl. The court found the Supreme Court’s decision in Diehr to be particularly relevant.82 There, the Court explained that claims are patent eligible under § 101 “when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect.”83 The claims in Diehr were eligible because they were directed to a system for improving the rubber curing process, not just a mathematical formula.84 Diamond v. Diehr, 450 U.S. 175 (1981). Without improvement over existing technology, still patent ineligible (step 2 of Alice)
Side note: Covidien LP v. U. of Fla. Res. Found. Inc., Nos. IPR2016-01274, -01275, & - 01276 (P.T.A.B. Jan. 25, 2017) The PTAB dismissed inter partes review proceedings against the University of Florida Research Foundation (“UFRF”), holding that UFRF, as an arm of Florida, is entitled to sovereign immunity.917 ( Covidien LP v. U. of Fla. Res. Found. Inc., Nos. IPR2016-01274, -01275, -01276, at *3 (P.T.A.B. June 15, 2017) (“Covidien”).) Kilpatrick Townsend presentation at RMTI&IP Institute re: using Examiner statistics (e.g., via LexisNexis Patent Advisor) to determine likelihood of 101 rejections
17 In re Seagate Technology LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), cert. denied, 129 S. Ct. 1917 (Feb. 25, 2008).
18 19 20 21 http://www.mbhb.com/files/FirmService/45b8d1e9-4cb4-49fe-aeb0- b59d77cfc7f1/Presentation/ceSnippetIssue/MBHB-Snippets-Fall-2014-111814- FINAL.pdf
22 Octane Fitness, LLC v. ICON Health & Fitness, Inc., LLC, 134 S. Ct. 1749 (2014). • a district court can award attorneys’ fees in any case deemed “exceptional”; the case need only be “one that stands out from others.” • lowered the burden of proof from a “clear and convincing evidence” to a “preponderance of the evidence” standard.
23 24 1. (Cuozzo Speed v. Lee (579 U.S. __, No. 15-446 (June 20, 2016)) (Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005)) (http://www.sughrue.com/Broadest-Reasonable-Interpretation-vs-Ordinary- and-Customary-Meaning-8211-Challenges-Introduced-by-Applying-Different-Claim- Construction-Standards-at-the-PTAB-and-District-Courts-09-11-2014/)
2. Note willful infringement is now “egregious cases of misconduct beyond typical infringement,” not “clear and convincing evidence” (Halo)
4. https://www.arelaw.com/images/article/link_pdf-1-1415047685- ARElaw_Understanding_PTAB_Trials101414.pdf • Institution decision in 6 months • No more than 12 months until final written decision, with possible 6-month extension
5. Cuozzo Speed v. Lee
25 Here’s an example of a plaintiff doing a lot of things right to extract value from a patent.
26 WARF = “...designated patent and licensing organization for UW–Madison...” (http://www.warf.org/about-us/about-us.cmsx)
27 28 http://www.techtimes.com/articles/96627/20151021/apple-loses-patent- infringement-lawsuit-against-warf-here-is-the-technology-at-issue.htm
Opinion for the invalidity challenge section of the Opinion and Order begins with the sentence, "Oddly enough, given its efforts to prove it had a license to the '752 patent, defendant contends that the patent is invalid as anticipated by disclosures in the '662 patent.” (Document #405, 9/17/09, pp. 45-46)
29 30 “In our Decision Denying Institution, we determined that, in view of the alternative approaches cited by Patent Owner, we were not persuaded by Petitioner’s argument that only the three alternatives identified by Petitioner would be considered by one of ordinary skill. Id. at 16” (Case IPR2014-01567, “Decision on Request for Rehearing,” 8/19/2015.
31 Involved MIT professor and Carnegie Mellon/Northwestern emeritus profesor (http://www.analysisgroup.com/insights/cases/wisconsin-alumni-research- foundation-v--apple/) (http://www.techtimes.com/articles/96627/20151021/apple-loses-patent- infringement-lawsuit-against-warf-here-is-the-technology-at-issue.htm)
32 33 LD patent was not challenged via IPR (pre-AIA)
34 35 5. First action allowance is not a positive indication of validity à Open to challenges; thorough IDSs
36 1. Broader claim = larger scope of potential prior art 2. Variety can provide more flexibility in enforcement strategies 3. Especially when the assets, as well as the company holding the assets, have changed hands. 4. When you are describing key features of your invention, strategize with your IP practitioner whether to include the description in the Summary of the Invention section, or in the Detailed Description of the Invention section. Descriptions in the Summary section may be viewed as being more broadly applicable to the larger inventive concept, while descriptions in the Detailed Descriptions section may be more narrowly construed for specific embodiments (WARF v. Apple 14-cv- 0062, Doc. 193, pp. 21-22)
37 38 How will the patents be used by the company? How do the patents mesh with the company’s business growth strategies?
39 40 Converse applies: Large patent portfolio does not necessarily equate to a higher valuation (e.g., Yahoo/Excalibur) http://www.ipwatchdog.com/2016/06/22/yahoo- excalibur-patent-portfolio-optimistic/id=70232/
41 42 43