Posts Tagged: "patent troll"

Prior to filing the lawsuit the Plaintiff sought the opinion of patent counsel to evaluate the prospect of a patent infringement suit against the Defendants, and received such an opinion in the form of a letter from opinion counsel. A claims chart was attached to the opinion letter, which identified the limitations of the claims, the opinion counsel’s interpretation of each of the limitations, and an opinion as to whether each limitation is present in the accused product. Neither the letter nor the chart contained explanation of counsel’s claim construction and his application of the claim limitations to the accused product. There were no citations to the specification or prosecution history, and no analysis provided to explain why counsel construed the patent terms the way in which he did.

Despite the gathering storm, some businesses would prefer to pretend that patent infringement is not a problem for them and they won’t be sued. The graph below shows that since 1980 the number of patent lawsuits filed has only gone up, with a record number (3,301) being filed in 2010. Add the frequency of the “dime a dozen” threatening letters sent by those seeking to extract licensing payments to the number of lawsuits filed and you can readily see that patent infringement litigation, and the associated threats thereof, are a growth industry. Here is what you need to know when you get sued or get that threatening letter.

Between 1995 and 2009 the overall median patent litigation damage award was $5.2 million, but between 2002-2009 there was a huge discrepancy between the average damage award for practicing entities versus non-practicing entities. The median award for non-practicing entities was $12.9 million, while the median award for practicing entities lagged far behind at $3.9 million. No wonder there is ever increasing activities by those the Federal Trade Commission refers to as “patent assertion entities,” which seems to be yet another sanitized name for patent troll.

Earlier today Apple, Inc. (NASDAQ: AAPL) poked a finger straight in the chest of alleged patent troll Lodsys, LLC, saying in no unmistakable terms — back off Apple App developers! For several weeks Lodsys has been sending threatening letters to Apple App developers and Apple has had enough and isn’t going to take it any more!

Overall there will be few large paydays for small and mid-size companies against the Fortune 1000, and fewer still for those who do not engage an appropriate strategy and simply rush head first into litigation or licensing negotiations. Notwithstanding, cultivating or acquiring a patent portfolio will allow small and mid-size companies to hold assets that are capable of being leveraged in the event a large corporation comes knocking. Additionally, as the business grows and revenues become available having a patent portfolio can enable small and mid-size companies to pursue litigation against Goliaths, but the odds of prevailing and having critical leverage go up if the plaintiff is a practicing entity. Simply stated, without the threat of a permanent injunction the Goliaths of the corporate world are exceptionally likely to just push you around.

I was surprised about how wrong my own intuition was, which is why I focus on the myths about patent trolls. Just about everything we thought we knew – good or bad – does not appear to be true. The article may not change too many minds about patent trolls. Those who believe NPEs are bad for society won’t care much about where they came from. However, I think that NPEs are a reflection of inventive society — their patents come from all sorts of sources, and how we feel about NPEs should depend on how we feel about the people who invested in the research that create the patents and the role patent law played in innovation.

Just like in the story-line of Independence Day, where the alien death ships slowly but surely positioned themselves over each major city, with the eventual outcome well understood, so too is Intellectual Ventures (I.V.) slowly positioning itself as the patent overlord over many major industry segments. Just like in the movie, the eventual outcome is well understood. To wit: Complete usurpation of the U.S. Patent system. The outcome is a ,gigantic tax/toll collector controlling the pulse of innovation in the U.S. or, like the movie, extermination of innovation.

What we need to focus on are those that are taking from the patent system without returning anything to the patent system. Rather than call these groups patent trolls, I would much rather call them what they really are — innovation vampires. These innovation vampires grab hold of as many patents as they sink their teeth into a company and begin to suck the life right out by holding the company, and often times the entire industry, hostage. No tax policy could ever do as much damage to an economy. This massive redistribution of wealth without an iota of benefit to society must stop!

If the remainder of her decision is any evidence as to what she was thinking, it seems pretty clear to me that if she were forced to have addressed that issue she would have said that as a result of Twombly and Iqbal the model patent infringement complaint no longer satisfies the requirements of Federal Rule of Civil Procedure 8. She also found unpersuasive the argument that since Twombly and Iqbal are not patent infringement cases they offer no appropriate guidance or insight.

What Motorola should do is file a motion to dismiss with prejudice. These types of complaints are an embarrassment and must be stopped. They should simultaneously file a Declaratory Judgment Action seeking a determination of noninfringement and invalidity in a federal district court of their choosing, perhaps in Chicago, which is close to their headquarters. They will lose the motion to dismiss with prejudice in Seattle, and likely have the DJ action kicked out in Chicago, but they will have preserved the matter for appeal to the Federal Circuit. It is high time that the Federal Circuit weigh in on what is undoubtedly the biggest problem facing patent litigation defendants, which is bogus, crappy, non-informing complaints that clearly violated the Rules of Civil Procedure.

On Friday, August 27, 2010, Interval Research Corporation brought a patent infringement lawsuit against a who’s who of tech companies in the United States District Court for the Western District of Washington at Seattle, specifically suing AOL, Inc., Apple, Inc., eBay, Inc., Facebook, Inc., Google Inc., Netflix, Inc., Office Depot, Inc., OfficeMax Inc., Staples, Inc., Yahoo! Inc. and YouTube, LLC.…

Put simply, Section 337 requires that an ITC complainant show that, as of the time of filing, (a) it maintains a certain level of economic activity within the United States in connection with the asserted intellectual property right, and (b) this economic activity is devoted to exploiting the intellectual property right at issue (in the case of a patent, at least one claim of the asserted patent). Alternatively, the complainant may show that a domestic industry “is in the process of being established.” This standing requirement is called the “domestic industry requirement,” and the two sub-requirements listed above are called respectively the “economic prong” and the “technical prong” of the domestic industry requirement. “Domestic industry” is a term of art that refers to the entity or entities exploiting the asserted intellectual property in the United States – the rights holder, plus its licensees, if any.

As so many run to condemn patent trolls and would like to compromise the integrity and strength of all patent rights to combat what they perceive as bad actors, I wonder whether patent trolls are really a drag on the high-tech industry. Are patent trolls really costing the industry, or is the industry making much ado about nothing? One theory holds that the tech industry is treating the patent troll phenomenon as nothing more than a nuisance, and a nuisance that is not worth doing anything about. I have for a long time stated that there are obvious strategies that could be employed, but they are ignored in favor of doing nothing. But earlier today I heard an interesting twist. What if they simply don’t want to do anything and they view the patent troll matter as simply a cost of doing business?

Acacia Research Corporation (Nasdaq: ACTG), which in some circles is known as the mother of all patent trolls, announced today that a wholly-owned subsidiary has become the General Partner of the newly formed Acacia Intellectual Property Fund, L.P. The Fund, who together with the subsidiary, have provided a total of $27 million as an initial funding commitment. The Fund is authorized to raise up to $250 million, which should strike fear in the hearts of all of the likely targets of patent infringement lawsuits, namely those that make high tech products.

These so-called false marking cases arise from 35 USC § 292, and were given new life thanks to a Federal Circuit decision from December of 2009 — The Forest Group Inc. v. Bon Tool Co. — which quite correctly and quite literally interpreted § 292. As a result, large companies are getting sued every week, and recently Americans for Fair Patent Use sued Apple, Sprint, Verizon and Samsung in the United States District Court for the Eastern District of Texas alleging that the companies are selling products that have expired patent numbers on them, making them the latest high profile targets of this new false marking patent troll. See AFPU v. Appel complaint. One source estimates that if successful the lawsuit could cost Apple alone a total of $60 billion.