Patent Law Practice Center

Federal Circuit hands pop stars defeat on attorneys’ fees

The United States Court of Appeals for the Federal Circuit recently issued a non-precedential decision in a patent infringement action involving Justin Timberlake and Britney Spears and their production companies. The Federal Circuit’s decision vacated an earlier award of attorneys’ fees to Timberlake, Spears and the other defendants based on a finding that the case was exceptional within the meaning of 35 U.S.C. 285. 

The original action in this patent infringement litigation was filed by Large Audience Display Systems (LADS), who alleged that Timberlake, Spears and their production companies infringed upon U.S. Patent No. 6,669,346, titled Large-Audience, Positionable Imaging and Display System for Exhibiting Panoramic Imagery, and Multimedia Content Featuring a Circularity of Action. This patent protects a panoramic imaging and display system in which an array of speakers is positioned around a perimeter of the system’s screen to provide audible sound which pans in such a way that can be synchronized with the movement of objects on the screen. Read the rest of this entry »

Efficient infringers should have to pay

During a recent webinar on the current state of patent valuation, Ashley Keller, co-founder and Managing Director of Gerchen Keller, and I discussed the phenomenon of efficient infringement.

Efficient infringement, which can be a rather cold-hearted business calculation, is when a decision is made to infringe regardless (or in spite of) the presence of patents and whether the underlying activity will constitute patent infringement. Rather than seek out or take an offered patent license, it is determined that it would be better, cheaper and certainly more expedient to simply infringe.

To my surprise, Keller did not really have a problem with efficient infringement. Rather, Keller’s issue is more nuanced. Efficient infringement is an acceptable business decision but those that choose to efficiently infringe should be required to pay for infringement when caught, which is where the system is breaking down presently.

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USPTO instructs examiners on patent eligibility cases

The United States Patent and Trademark Office recently issued a new memorandum to patent examiners on recent software patent eligibility decisions from the Federal Circuit. The memo sent to patent examiners provides discussion of McRo, Inc. v. Bandai Namco Games America and BASCOM Global Internet Services v. AT&T Mobility.

The PTO acknowledges in the memo that the Federal Circuit even more recently issued another precedential decision in Amdocs (Israel) Ltd. v. Openet Telecom, which will be discussed in forthcoming subject matter eligibility guidance. For more on that case, please see Software eligible because it recites technical solution to technical problem.

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FTC report has no harsh words for patent trolls

On October 6th, Fortune published an article discussing the recent patent assertion entity (PAE) study released by the Federal Trade Commission (FTC). The title of the Fortune article reads, “The FTC Patent Report Has Some Harsh Words for Patent Trolls.”

Interestingly, however, the FTC did not have harsh words for patent trolls. In fact, the FTC report specifically explained that using the term “patent troll” is unhelpful. Early on in Chapter One of the report, it reads: “In the Commission’s view, a label like ‘patent troll’ is unhelpful because it invites pre-judgment about the societal impact of patent assertion activity without an understand of the underlying business model that fuels such activity.”

What the FTC’s report did address was several interesting issues posed by what is referred to as “nuisance litigation,” or in the view of the FTC, litigation that leads to licenses less than $300,000. The FTC chose $300,000 as the threshold because it is the lower bound for early-stage litigation costs. But what does the cost of litigation defense have to do with whether an assertion of patent rights is merely for nuisance value?

“The $300,000 line in the sand gets back to a point I’ve spoken on before,” explained Jaime Siegel, CEO of Cerebral Assets and Global Director of Licensing for the Open Invention Network (OIN). “Built into the system is a mismatch in valuation. Not every patent license is worth $1 million. I’m aware of patents that were valued at a $25,000 license, which was set not to be a nuisance, but rather because the alternative was a $50,000 work around, so the appropriate price was less than that amount. A patent license should be based on how much value is in the license, and it isn’t always $1 million.”

“$300,000 is a completely arbitrary number that attempts to put patent licenses into buckets and suggests that if it is $300,000 and below it must be a sham claim, and that generalization is absolutely untrue,” Siegel explained. “What makes a nuisance claim a nuisance claim is when a patent is not infringed or is almost certainly invalid; that is what makes a case a nuisance settlement. When a patent owner says we know we have a lousy patent, but we know the defendant will pay us X dollars because it costs so much to litigate, that is what makes a nuisance case.”

Of course, Fortune did not explore the merits of the FTC report, which is odd given it has long been regarded as one of the preeminent business publications. Instead, the Fortune article continues to force a ‘patent troll’ narrative on false pretenses. Indeed, the article obviously leaves out important facts and maybe gets other facts wrong, and seems to wrongly conflate PAEs with non-practicing entities (NPEs). Whereas a PAE is an entity that obtains patents to license or enforce them on other parties already practicing the technology, the FTC report defines NPEs separately as “patent owners that primarily seek to develop and transfer technology.” Technology transfer is a different business model than patent assertion, and something Fortune should be well aware of, but somehow seems to have missed.

That is improperly reporting what was said in this very important FTC report that will undoubtedly be used come January 2017 by those seeking further patent reform. But given the rather obvious errors in this article and Fortune’s past history of siding with the infringer lobby, legitimate questions can and should be raised.

FTC finally releases long-awaited report on PAEs

On September 27th, 2013, the Federal Trade Commission (FTC) announced that it had voted to collect public comments and gather information on 25 companies known as patent assertion entities (PAEs). The study was intended to shed more light on the PAE business model and create a better understanding of how their patent litigation activities affect innovation and competition in the U.S. economy. As defined by the FTC, PAEs are companies that do not produce, manufacture or sell goods but rather acquire patents from third parties which the PAE monetizes through negotiating licenses or litigating against an alleged infringer.

On October 6th, 2016, the FTC released the long-awaited findings of this report, titled Patent Assertion Entity Activity: An FTC Study, which includes analysis of 22 PAE respondents and more than 2,500 affiliates and related entities, conducted between January 2009 and mid-September 2014. The report’s findings and recommendations for legislative and judicial reform were intended to “balance the needs of patent holders with the goal of reducing nuisance litigation,” according to a quote attributed to FTC Chairwoman Edith Ramirez in the FTC’s official press release. Specifically, the FTC had concerns about the ex post nature of PAE patent transactions, in which licenses or settlements occur after a target has already developed a technology for marketing.

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