Tag Archives: patent litigation

“NPEs generate higher damages awards,” 2017 litigation study finds

The disparity in patent damages awards between non-practicing and practicing entities favors NPEs and is growing wider. 

These findings, counter-intuitive to some, are part of the useful, just-published report from PwC, 2017 Patent Litigation Study – Change on the Horizon.

PwC’s analysis shows the continuation of a trend that began in the early 2000s: significantly higher damages awarded to NPEs relative to practicing entities.

The median damages award for NPEs was significantly higher than PEs in the last 15 years. While this disparity had narrowed to about 1.6x in the 2007–2011 period, in the most recent five-year period, the NPE median damages award climbed to 3.8x the median for practicing entities.

It is not clear if the findings are a result of NPEs owning better quality, more highly infringed patents than PEs, or that NPEs are simply more adept at enforcing them.

“The disparity has perplexed us for some time,” stated Chris Barry, one of the 2017 Litigation Study’s authors and a partner in PwC’s Forensics Practice. “Operating business that asserts patents typically are more interested injunctive relieve – halting a competitor’s product sales – than in generating revenue. Most patent cases are dismissed on summary judgment or settled.”

Higher Success Rate

Over a 20 year period from 1997 to 2016, PE’s have a higher success rate at trial than NPEs at trial, 36% vs. 25%, but a significantly lower recovery rate, $4.9 million vs. $11.5 million. For the 2012-2016 period, NPEs out generated PEs in damages by almost 4 to 1 (see above infograph). 

Among NPEs, universities fare best at trial with median damages awards of $16.3M, as opposed to $13M for NPEs and just $6.7M for individual inventors who enforce.

No information on trial costs was provided, although AIPLA tracks them by the size of the case. There also was no tracking of PTAB results or influence on patent litigation. Many law firms address this, as does Unified Patents.

Despite a handful of large, headline-grabbing patent damages awards – most of which are never paid – patent trials have been flat for almost three decades, with a little more than 100 disputes going to trial annually.

There are an estimated two million plus active U.S. patents.

For the full 2017 patent litigation report, go here.

 

Image source: PwC

 

China is poised to overtake the U.S. as the leading patent system

A few years ago a company whose patents were violated in China had little or no chance of defending its rights. 

Determined to move beyond its role as a low-cost provider of look-alike consumer products, and establish itself as an innovation leader, China has learned from the successes – and mistakes – of other intellectual property systems, especially the U.S. The nation of 1.4 billion inhabitants has rapidly emerged as what is currently among the fairest and most patent holder-friendly systems in the world.

Chinese patent courts second only, perhaps, to Germany in quickly and fairly adjudicating disputes.

A fascinating article in the current IAM magazine, “Defending a patent case in the brave new world of Chinese patent litigation,” details China’s rapid rise from low-cost copier to a patent power, and a nation that has caught the attention of major global technology powers who are often defendants.

Damages awards are relatively small in China, with median awards currently around 35,000 Renminbi or about $5,000, but injunctions, the power to stop a likely infringing product from being sold, are now issued over 99% of the time to winning parties. NPEs, what some U.S. companies refer to as patent “trolls,” are treated fairly as long as they their patents are of sufficient quality and are the companies are generally supportive of Chinese welfare.

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Patent litigation win rates, according to the article, average around 80%. Startlingly, foreign plaintiffs fare better statistically than Chinese. 

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The U.S. effectively ended the granting of patent injunctions in 2006 with EBay v. MercExchange. Now, only operating companies can obtain them in rare circumstances. This removes most of the leverage afforded patent holders. Granted, injunction abuses are a fact of life, and dubious patents have at times been used to enjoin products, costing companies time and money. But without the power to stop a product from being sold, patents have little meaning.

Race to the Bottom

“Largely as a result of the United States’ race to the bottom in terms of patent enforcement, Germany has emerged as a go-to patent jurisdiction, with virtually guaranteed injunctions, quick time to trial and no discovery resulting in a highly efficient system,” writes Beijing-based Erick Robinson, chief patent counsel, Asia-Pacific for Rouse, a global IP strategy firm.

Patent-holder Win-Rates and Median Damages Awards 

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“Enter China. For years the laughing-stock of all things IP related, the Middle Kingdom was ridiculed for the easy availability of counterfeit handbags, software and DVDs. However, over the last 15 years, and especially in the last two to three, China has put together an extremely effective patent enforcement system. Based largely on the German system and all of its advantages, but with selected portions from US law, China has now become a top forum for patent litigation.”

Unlike most countries which enjoin making, using and selling allegedly infringed products in-country, as well as imports, Chinese law also bans infringing exports from leaving the country. So, for example, if the accused device is Apple’s iPhone, not only can sales of iPhones in China be enjoined, but also exports of the devices from China. This would enable a patent owner to achieve an effective worldwide ban, since iPhones are manufactured in China.

Slippery Slope

With U.S. patent protection significantly diminished over the past decade, and China’s on the rise, the U.S. is on a slippery slope when it comes to stimulating R&D, innovation and investment. It is well on its way to becoming a second-rate patent system, and a slip in disruptive innovation, necessary for the creation of new industries, difficult to measure in real-time, has probably started. Certainly, companies and their stakeholders are thinking twice before pursuing or relying upon USPTO-issued patent protection.

It remains to be seen if China, a continuing source of counterfeit goods that are shipped worldwide, is committed to providing its businesses, as well as those outside of the country, with a legal system that can meet the needs of all business holders, and permit fair and timely resolution of legitimate disputes.

High Win-Rates; Low Damages Awards

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China is now the second largest filer in the U.S. and, while its companies have rarely resorted to filing suits in the U.S. against U.S. companies, there is little doubt that it will do so in the future. Technology giants include Alibaba, Xiaomi, Huawei and Lenovo.

China is likely to be more aggressive enforcing its patents than U.S. frequent-filer Japan, which has been reluctant to engage in domestic or foreign patent disputes. (There are some signs that is changing.) Samsung, by far the largest holder of U.S. patents in the world, has shown a greater willingness use its patents for licensing and leverage.

China may or may not be deliberately attempting to embarrass U.S. and eventually surpass its moribund IP system, but the impact is the same. Continued lack of awareness of what IP rights achieve and for whom, and lobbying, has significantly compromised the once-exemplary U.S. patent system. The Chinese are not too new to capitalism not to see this as an opportunity to compete. For the U.S.’ sake, let’s hope it’s not too late to make invention rights a priority again.

Subscribers can access The brave new world of Chinese patent litigation here.

FUTURE POST: What patent experts believe China’s patent-friendly system means for the U.S. – Experts: Void from U.S. patent “train wreck” is being filled by China’s patent system

Image source: IAM magazine

Gov’t study of economic impact of patent infringement is needed ASAP, experts say

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

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“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

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“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

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“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

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Image source: ltrdigitalgroup.com

 

 

Top patent defendants have faced far fewer suits in 2016, so far

The size of businesses sued most frequently for patent infringement in 2016 were significantly larger than in 2015, when five little-known patent holders were among the top defendants. The amount of litigation also is much lower this year.

Pharmaceutical company Eli Lilly (341) is the top patent litigation defendant in 2016, with a ten-fold lead over number two Samsung (31). No doubt much of Lilly’s defense is the result of ANDA procedures brought by generic drug manufacturers against branded competitors to establish bio-equivalent drugs.

The rest of the list – Amazon, Actavis, AT&T Mobility I, Huawei Technologies, LG Electronics, AT&T, T Mobile USA and Motorola Mobility – all have 21 or fewer suits filed against them so far this year.

2016

This represents a significant drop over last year, according to data supplied by Patexia.com.

Actavis, which acquired Allergan in 2014, is another diversified pharmaceutical company. Actavis is based in Dublin, Ireland, and is a subsidiary of Teva, an Israeli company. Five of the top ten defendants this year are foreign companies. Absent from the 2016 list is Apple and Google, which owns Motorola Mobility.

More Suits Filed Against Unknowns

For the entire 2015, Lilly had 977 patent suits filed against it. That is in contrast with the 341 filed so far this year. Samsung was again number two last year, with 49 cases filed against it.

The rest of the top-ten defendants for 2015 had some less-known names, including: Spin Screed, Sandi Scales, Conlin Properties, Amneal Pharmaceuticals and Lupin Pharmaceuticals. Rounding out last year’s list was H-P, Actavis and Amazon. Only three companies, Samsung, H-P and Amazon, appear to be IT pure-plays.

The number of suits filed against Lilly last year was almost three times higher than 2016 to date, and those for companies in the two through ten spots were about two times higher.

2015

Response to Increased Risk?

The increase in litigation filings against more established patent holders may have to do with the greater likelihood of favorable settlement or payout of damages from them as opposed to smaller players.

It may also have to do with the changing economics of patent litigation which must anticipate the likelihood, time and costs associated with inter partes reviews.

For access to the top-ten patent litigation defendants and the number of suits filed against them from 2007-20016,  go here.

Image source: patexia.com

Reporter: Patent system failed heart valve inventor

One of the biggest obstacle to inventors today may the system created to protect them. Research cardiologist Tory Norred thinks so.  

In a recent post on IP Watchdog, excerpted below, I summarize how investigative reporter Scott Eden skewers the U.S. patent system in the July-August Popular Mechanics article, “How the U.S. Patent System Got So Screwed Up.”

Eden, an award-winning reporter, whose credits include the Wall Street Journal, ESPN and TheStreet, examines the devastating impact of recent changes to the patent system by focusing on an inventor who got caught up in it.

The NPR-style article tells the story of Tory Norred, a fellow in the cardiology program at the University of Missouri cardiologist, who in 1998, came up with the idea for a collapsible prosthetic aortic valve that could be fished up through an artery with a catheter, and implanted in the hearts of patients who suffered from failing aortic valves. Unlike previous valves, Norred’s stent disperses the force needed to hold it in place against the aorta’s walls, requiring no sutures.

gallery-1466458424-pmx07116-patentoffice15In November 2002 he received U.S. Patent No. 6,482,228, “Percutaneous Aortic Valve Replacement.” Norred knew that he was onto something important, but that was not the beginning of success, it was the start of a nightmare that led to repeated frustration.

“That’s my valve!”

Norred spent the next four years talking to venture capitalists, medical products companies and even a Stanford University consultant, in an effort to finance his invention. Despite many quality meetings, no one was interested in providing capital or product development – including the product-development people he signed non-disclosure agreements with at Medtronic, Edwards Lifesciences, Johnson & Johnson, and Guidant.

“By September 2003,” writes Eden, “Norred had all but given up on his dream when he and a colleague were strolling the exhibition hall at an important cardiology congress held annually in Washington, D.C. They came upon a booth occupied by a California startup called CoreValve. With increasing alarm, Norred studied the materials at the booth. He turned to his colleague: ‘That’s my valve!'”

The rest of the story is not unfamiliar: CoreVale basically ignored him, and Norred settled into private practice. Then, in 2009, Norred saw the news online: CoreValve had sold itself to Medtronic for $775 million in cash and future payments.

In fact, collapsible prosthetic valves fished up through an artery with a catheter and implanted in the aorta are well on their way to becoming the standard method of replacing worn-out heart valves. Thee annual market has already surpassed $1.5 billion and is expected to grow.

Immediate Suspicion

The remainder of “How the U.S. Patent System Got So Screwed Up,” is devoted to the slow decline of the patents system over the past decade, and how a handful of patent “trolls” have been used as the reason to systematically dismantle much of the patent system. The same system that was the envy of the free-world and spawned many breakthrough inventions, as well as successful businesses that employ millions.

“Norred wasn’t a troll,” continues the article, “and the decision to sue did not come easily for him. His lawyer told him that the cost to litigate could exceed half a million dollars. Norred did not have half a million dollars. He considered letting it drop and moving on with his life, but in the end he couldn’t. ‘It’s gallery-1466458804-pmx07116-patentoffice17hard to give up on something you’ve worked so hard on,’ he said.”

“Whenever an independent inventor sues for infringement today, an immediate suspicion attaches to the case,” states Eden. “The anti-patent feeling is such that to assert one is to become stigmatized as a troll or, worse, a con artist or a quack. But there’s another way to look at these litigants. It could be that an inventor-plaintiff is a modern-day Bob Kearns, the Michigan engineer who spent decades fighting the global automobile manufacturing industry over the intermittent windshield wiper. They made a movie about it called Flash of Genius.

Greater Uncertainty

Inter partes reviews (IPRs) were supposed to clear up much of the uncertainty surrounding patents that are thought to be infringed, by determining which, if any, of their claims are valid in the first place. But IPRs also have had an unfortunate side effect. IPR tribunals make it easier for sophisticated defendants to kill patents held by legitimate inventors.

“The IPR isn’t an effort to figure out whether an inventor invented something,” says Ron Epstein, the former Intel attorney. “It has turned into a process where you use every i-dot and t-cross in the law to try to blow up patents… There isn’t a patent that doesn’t have some potential area of ambiguity.”

Go here to read, “How the U.S. Patent System Got So Screwed Up.”

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Popular Mechanics was first published in 1902. It is known as the monthly bible of the independent inventor. 

In 2011, two of Scott Eden’s pieces received “Best in Business” awards from the Society of American Business Editors and Writers (one for investigative reporting and one for feature writing). Eden is former staff reporter for TheStreet and Dow Jones Newswires.

Image source: popularmechanics.com

Raymond P. Niro, pioneering patent litigator, is dead at 73

Raymond Niro, a highly successful patent litigator who represented primarily inventors and other plaintiffs, passed away on August 9 at the age of 73.

It was reported that he was in ill-health and died of heart failure while vacationing in Italy.

IP Law 360 described him as a “pioneering intellectual property attorney and who often represented patent licensing companies and inventors in infringement disputes against larger corporations.”

“If I had to write my obituary – and I hope that I don’t have to do that very soon,” said Niro in May, “I’d say this is a guy who … dedicated his life to try to promote innovation and to help level the playing field for inventors who had to take on some of the big corporations.”

A chapter that Niro wrote for my 2006 book, Making Innovation Pay (Wiley), asks “Who Benefits from Patent Enforcement?” My introduction to the chapter is below. 

*****

Profile: Little Guys Like Him

“I don’t have to be liked by everyone, just respected,” Ray Niro once told a reporter.

The founder of Chicago litigation boutique Niro Scavone Haller & Niro has developed a reputation for representing independent inventors and smaller companies in patent lawsuits in which he has an equity stake. To his adversaries, he is often painted as a predator or “troll,” or, at least, representing them; to his clients, he is a white knight.

Niro is praised for giving independent inventors and small companies a voice and for helping them to level the playing field. In the high-stakes poker game that is called patent litigation, spending $10 million or more on a dispute that goes to trial is not uncommon. Needless to say, Niro, whose firm foots the bill for his time and costs, is selective about the cases he is willing to take on contingency.

His team conducts extensive due diligence, which he discusses in the following chapter. He accepts fewer than 20% of the cases his firm reviews. By any standard, Niro’s track record is impressive: more than $500 Niro_Raymondmillion won in jury and bench trials and in settlements in more than 200 patent cases over 20 years. His best-known cases include a $57 million jury verdict in a trade secret suit against a snowmobile manufacturer and its engine supplier, which was later increased to $75.5 million; a $48 million jury award against an ink manufacturer; and a $20 million patent infringement award against Square D Company.

In 1997, the National Law Journal named him “one of the ten best U.S. litigators,” and in 1999 it named him “one of the ten best trial lawyers in Illinois.” Contingency wins, where he might share 40% or more of the recoveries, have made Niro a wealthy man. He lives most of the time in Boca Raton, Florida, and has a home in Aspen, Colorado, which he built with former partner, Gerald Hosier, who is best known for generating more than $1 billion in damages and royalties on behalf of inventor Jerome Lemelson, a known patent submariner until a 1996 change in the patent law to 20 years’ exclusivity from filing effectively ended the loophole. (The Lemelson-MIT Program, endowed by the Lemelson Foundation, rewards unsung inventors. MIT describes Lemelson as “one of the world’s most prolific inventors.”)

Niro loves to go to trial. At 67 years old, the admitted sports fanatic remains fighting fit and lifts weights for 45 minutes four times a week and cycles in Aspen’s 8,000-foot altitude. He owns a Falcon 10 jet and at one time owned six Ferraris, including two 360 Spiders and a 575 Maranello. He has 10 grandchildren and million, which the trial judge later increased to $20 million. Calabrese died 19 days later. “Frank was grateful for what Ray Niro did for him,” said Kathleen Calabrese, the inventor’s widow.

“Ray was the only attorney we could find [who was] willing to take the case on contingency. He worked hard and never gave up on Frank.”

But not all of Niro’s has been married to the same woman for 41 years. The son of an immigrant bricklayer from Abruzzi, Italy, Niro grew up in Pittsburgh, where he says he learned to root for the underdog and still does.

Trained as a chemical engineer, Niro is still able to connect with juries and judges. “I learned early on that as a litigator you need to tell a story that juries and judges understand,” he told me. “You can’t talk down to anyone. I get great personal satisfaction from helping people to win cases that may not otherwise have been heard.”

Frank Calabrese was an underdog. A Waynesboro, Pennsylvania inventor, he claimed his invention, a patented data relay system, was stolen by Square D in the 1980s. He sued when he discovered that the company had been marketing a similar system and refused to pay him for it. In the four years it took for the case to go to trial, Calabrese developed colon cancer.

“Towards the end of the trial,” says Niro, “Frank, who was dying, told me ‘the money doesn’t matter. I want to be vindicated.’” And vindicated he was on January 26, 2000, when a jury awarded Calabrese $13.2  clients are defenseless little guys. Some are investors, like publicly traded Acacia Technology (NASDAQ: ACTG), which buys patents and asserts them because they understand some companies’ aversion to risk and low tolerance for the costs associated with complex patent litigation. To that Niro responds that while he prefers to work directly with inventors and small companies, middlemen can benefit the system and have the right to exist.

Niro’s chapter, “Who Benefits from Patent Enforcement?” discusses the importance of asserting patent rights not only for the less resourceful plaintiff but for society as a whole and for innovation. “When it comes to using patents for business advantage,” concludes the bearded litigator, “the little guy is not the one who is gaming the system, although many defendants would like you to think so.”

*****

Photo caption from book: It’s the high life for litigator, Ray Niro, who tools around in his Ferrari near Independence Pass (elevation 12,095 feet), not far from his Aspen home.

Those wishing to read Raymond Niro’s chapter in Making Innovation Pay can order here.

Image source: legalexecutiveinstitute.com

A record number of major holders were granted far fewer US patents

Many significant tech companies experienced dramatic declines in US patent grants, fueling speculation about the reasons why. 

While total patent grants were virtually flat, according to USPTO data, down just 53 patents from 326,032 to 325,979, and utility patent grants and applications were up, many top US holders received significantly fewer US patent grants in 2015. Patent reform and uncertainty are the most likely reasons why.

Notable declines in patents received include Microsoft, off 17.2%, Sony, down 23.8% and AT&T, which dropped 31.3% after increasing 14.4% in 2014. The immediate result has been a noticeable drop in US patent grants received in 2015 by information technology companies, both domestic and foreign based. Japanese companies led the foreign declines.

Businesses of foreign origin were issued a record of 52.8% in 2015 US patents. US company patent applications abroad was likely up.

Digesting the Declines

Fifteen of the top 26 US patent recipients (58%) were granted fewer patents by the USPTO in 2015 than in 2014.  Even IBM, a leading patent recipient for more than two decades, was down by 0.5%. (See IPO top 300.)

Bucking the trend with net increases among top ten patent recipients include Qualcomm, Google GE , Intel and Samsung Display. Biggest percent increases among the top 300 were from NXP Semiconductor (147.9%), Amazon Technologies (53.3%) and Ford Global Technologies (49.1%).

These are in contrast to 2014, when top US-based patent recipients were all up (see 2014-2013 chart below).

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Litigation Down, Too

It is too early to be certain about why the issuance declines among major IT holders are occurring, but if it is in keeping with the recently announced 30.7% drop in patent litigation for the first half of 2016 (see IAM story), a pattern may be emerging.

What this means for some major technology companies is that patent quantity is no longer king. The arms race may be abating, somewhat. It also indicates that US patents mean less today to many companies than in the past, and paying to secure and enforce all but the best few may no longer makes sense. (I will try to cross-check this with US company foreign filing in a future IP CloseUp.)

Decreases in IT company patent filings can be interpreted in several ways.

The Intellectual Property Owners Association (ipo.org) list of top 300 US patent recipients for 2015, published recently, illustrates a downward trend, with some exceptions noted above. It is difficult to tell whether NXP, Amazon and Ford are playing catch up or see an opportunity that others do not. Also, is it that semiconductors, e-commerce and financial transactions, and automotive are inherently more innovative and potentially combative.

“A combination of factors”

Clearly there are many IP rights in portfolios that should never have been issued, and would be invalidated under further review. Also, patents are less reliable than ever, so why bother? It may be that some companies want to rely on fewer, better quality patents, for freedom of action, but it also may be that they see less value in obtaining them or in identifying new inventions.

“It is a combination of factors,” one veteran patent attorney and analyst told IP CloseUp. “Businesses are seeking better patent quality, and chartoftheday_4260_top_10_patent_recipients_n
USPTO examinations are getting somewhat tougher. Also, there is 
pressure on software patents from the courts, frequent PTAB invalidity rulings, and a general anti-patent environment. Weaker corporate balance sheets also have led to cost cutting.”

The America Invents Act and PTAB reviews have made it much more difficult to license patents, and have diminished their defensive value, too. Patents role in some businesses’ corporate strategy and ROI is under scrutiny.

Interestingly, despite the 2015 drop in patents to top holders, corporate patent buying activity was relatively high. Rock bottom prices may have made portfolio purchases attractive to some.

Patent-dubious Google, which has been an active buyer through various programs (e.g. experimental Patent Purchase Program), as well as a more active filer, experienced a 10.9% increase in patents received in 2015. In 2014, it was up by 31.6%.

Image source: patentdocs.com; aulainip.com; statista.com

 

 

 

Financial patent summit to focus on IP and cybersecurity, July 20-21

Fintech, or financial technology, is a rapidly growing industry with more than $15 billion of venture capital invested to date and even more on the part of financial institutions.

An array of banks, e-commerce businesses, product developers, and software companies are vying for a leadership role in financial transactions and cybersecurity.

Those interested in IP rights in the context of authentication and transactions should consider attending the 13th annual Patents for Financial Services Summit in New York at the Sheraton Times Square, July 20-21. Many of financial services’ leading patent holders and advisers will be present.

Major Players Attending

IP executives and counsel from top banks and services providers are participating this year, including those at Visa, Time Warner, Royal Bank of Canada, Barclays, TD Bank, Morgan Stanley, JP Morgan Chase, Google, Microsoft, AST, LoT and Red Hat.

Top patenting organizations: exchanges and stocks

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Patent and IP counsel from the financial services industry and patent attorneys from leading law firms will participate in this year’s Summit, says conference producer World Congress, “to discuss recent rulings and strategies to protect patents against NPEs, successfully file patent applications post-Alice, and foster innovation.’

IP CloseUp readers who use the conference code IPCNYC can save $100 off of registration.

New for 2016:

  • Updates on the Alice decision and understand its impact on patent applications
  • Discussion about prosecuting business method patents
  • Analyze recent patent cases including, Halo Electronics, Inc. v. Pulse Electronics; Stryker Corporation v. Karl Stroz Endoscopy-America, Inc.; Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., and more
  • Hear in-house counsel views discuss pending legislation, including The Innovation Act, The Patent Act, and The Strong Patents Act
  • Evaluate their impact on PTAB and post-grant proceedings
  • Protect patents from NPEs and understand approaches to successfully defend against trolls
  • Improve patent quality and drive innovation within your organization
  • Explore the interplay between patents and cybersecurity

extThe Summit was approved in 2015 by the New York State Continuing Legal Education Board for 12.5 CLE credit hours in the areas of Professional Practice. In 2016, World Congress are programming for and anticipate approval for 13 CLE credit hours.

The full conference agenda can be found here.

For a list of speakers, go here. This year’s location is the Sheraton Times Square on Seventh Avenue.

To register, click here.

Image source: worldcongress.com; thomsonreuters.com

Media use of patent “troll” is unfair says professor in Stanford Technology Law Review

The use of inaccurate, prejudicial language by newspapers, business publications and technology magazines to describe patent licensing activity biases readers and courts.

That is among the findings from research conducted by Illinois Institute of Technology – Chicago-Kent College of Law Professor, Edward Lee. Writing in the Stanford Technology Law Review, Professor Lee states that while “some courts have even barred the use of the term [patent troll] altogether during patent trials on the ground that the term is unfairly prejudicial. But, among the mainstream media, the term is pervasive.”

“Patent troll,” the term employed by leading newspapers, magazines and online publications to describe how some patents are owned and used, provides a prejudicial impression of patent licensing that unfairly influences attitudes towards disputes.

 

table1. Total Number of Uses of Each Term and Contested Uses

Moral Panics

Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform, published on April 22, is the first empirical study of how the term patent trolls is treated in the media, and the results confirm what some courts have already stated: patent trolls is an inaccurate and often misleading term.

The scholarly paper states that starting in 2006, the U.S. media surveyed used “patent troll” far more than any other term, despite the efforts of scholars to devise alternative, more neutral-sounding terms (see table). The tipping point was the combination of the controversial Blackberry and eBay patent cases in 2006 — prior to that time, “patent holding company” was the most used term.

table3. Top Seven Sources Reporting

Since then, the media more often portrayed such patent entities in a one-sided, negative light with very little analysis or factual support.

Until now, few works have provided statistics or discussion of any studies to support their negative portrayal. Practically no articles mentioned the lack of a working requirement in U.S. patent law, which permits all patentees not to practice their inventions, should they so choose. Lee’s findings provide support for the recent judicial decisions that have barred, at trial, the use of the term “patent troll.”

Further Exploration

A useful next step would be to drill down below this Professor’s Lee’s excellent initial work to determine which reporters at what types of publications have used patent troll and other misleading terms, and when they took place.

This type of media analysis – sorely lacking in the IP space – will be conducted by the Center for Intellectual Property Understanding, a non-profit education organization that I recently established with several thought-leaders.

CIPU board members include Marshall Phelps, Keith Bergelt and Harry Gwinnell. Retired Chief Judge for the Court of Appeals for the Federal Circuit, Hon. Paul Michele, also is a supporter and assisted in the formation. The Center for IP Understanding focuses on improving attitudes towards patents through better awareness and innovative education.

table2. Types of Works Describing Entities in Positive or Negative Light

“The findings of this study,” concludes Professor Lee, who is Director of the Program in Intellectual Property Law at IIT, “suggest that the term may operate as a moral panic in a way that is detrimental to reasoned analysis and consideration of the root problems related to the issue of abusive patent litigation tactics.”

To view the full article, Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform, click here.

A motion in limine (lim-in-nay), n. Latin for “threshold,” is a motion made by a party at the start of a trial requesting that the judge rule that certain evidence may not be introduced.

Image source: Stanford Technology Law Review

*A version of this post originally appeared in IP Watchdog.

Validated Merck patents could mean a $3B+ windfall, after appeals

While many high-tech patents are suffering from devaluation the value of some pharmaceutical patents is soaring.  

Merck & Co. won a legal victory over rival Gilead Sciences Inc. on Tuesday when a California jury upheld the validity of two patents it has been attempting to enforce. Merck believes that its upheld patents should entitle it to a portion of the $19.1 billion annual global sales of Gilead’s blockbuster hepatitis C drugs.

MRK-GIL-3B-2016The patent trial began earlier this month in federal court in San Jose, Calif., where Gilead argued that it shouldn’t have to share any of the sales of its hepatitis C drugs Sovaldi and Harvoni with Merck, reports The Wall Street Journal. Last year, combined U.S. sales of the two drugs were $12.5 billion.

Havoni costs $1,125 per pill before discounts, or $94,000 for a 12-week regimen.

In 2013, Merck proposed to license its patents to Gilead in exchange for a royalty of 10% of U.S. sales of products containing Sofosbuvir, according to Gilead’s lawsuit against Merck. Gilead countered in a court document that a 10% royalty is a “prohibitive demand.”

Gilead Acquisition

Pharmasset Inc., the company that developed Sofosbuvir and was acquired by Gilead in 2011 for more than $11 billion.

A jury has yet to rule on past damages award for Merck and its co-owner of the patents, Ionis Pharmaceuticals Inc.  A judge will rule separately on future royalties. 

Merck has demanded more than $2 billion in damages and 10% of Gilead’s sales of the products going forward.

Should the jury rule in favor of Merck and agree to a $2 billion in damages, Gilead would not have to pay this amount until multiple likely appellate options are exercised. There is also a possibility that the companies may choose to settle the dispute before the jury decides damages and the judge rules.

Image source: shearlingsplowed.blogspot.com

“Patent Investor” tracks licensing company shares & developments

A new weekly is the first to feature in-depth coverage of public intellectual property monetization companies (PIPCOs). 

I’ve been following The Patent Investor for a few weeks, wondering what news it could provide beyond what I already know and hear about the PIPCO space.

What I discovered is that TPI regularly contains news of developments and trends useful to those interested in or affected by patent licensing businesses – especially the publicly held kind. Editor/reporter Dan Lonkevich goes beyond news releases and news about PIPCOs reported in the business press, to provide the relevant facts that investors need to make informed decisions, and those on that defendants in NPE disputes may wish to be aware of.

He is also not afraid to report bad news or delve into SEC filings, nor is he reluctant to portray a company in a less than favorable light – essential for a credible investor newsletter.

Lonkevich previously worked as the senior editor for The DealFlow Report, a unit of The Street Inc. Prior to that he was a reporter for Bloomberg News in New York. While at Bloomberg, he covered the insurance TPI_Mastheadbusiness, mergers and acquisitions and oil and gas companies. Prior to that, he worked as an associate editor for The National Underwriter and was a reporter for Bestweek, a newsletter  covering the insurance business published by insurance rating company A.M. Best Co.

The Patent Investor, which began publication last year, looks at the publicly listed businesses involved that license and sell patents, and the performance of their shares. TPI differs from Intangible Investor, a column that I write for IAM magazine, which considers PIPCOs, as well as a broad range of indirect investors or IP stakeholders, including operating businesses.

The website describes the newsletter as “uniquely and solely devoted to covering the patent monetization business, unlike more mainstream business and legal publications. It is intended to be of interest to investors, inventors, entrepreneurs, attorneys and investment bankers who work with the growing number of patent monetization companies.”

At $899 for an annual group subscription ($299 for individual subscriptions) TPI, while good value, is not for everyone. However, the cover of each issue, with the first paragraph of key stories, is available for free. Those interested in a sample issue or subscription can receive one.

To see the cover of the latest issue or for a sample, go here.

TPI’s article archive can be found here.

Image source: thepatentinvestor.com

Quinn: Patent PERPs are the real bullies of the licensing world

A disturbing article by IP Watchdog’s Gene Quinn asks “Who are the real bullies of the patent world?” It’s not patent trolls. They are far less of a problem than Patent PERPs – Practicing Entities that Refuse to Pay.

The founder and editor of IP Watchdog, one of the leading IP blogs, pointed a finger at reluctant patent licensees today in “A Patent Owner Defending Property Rights is NOT a Bully,” an article that attempts to reveal who are the real villains of patent licensing.

Exhibit One in Quinn’s indictment of the twisted rhetoric that surrounds patent licensing is Colleen Chien, a Santa Clara University law professor and former senior IP adviser to President Obama. Professor Chien wrote in the The Wall Street Journal recently, “that small businesses may want to simply ignore letters they receive from patent owners alleging infringement of a patent.”

Ignore the Nuisance

“This is rather astonishing for several reasons,” says Quinn. “First, a patent is a right granted by the federal government that is supposed to imagesbe legally presumed to be valid. A recently departed senior adviser to the President who is advising potential infringers that they should just ignore notices telling them they are infringing speaks volumes about how the Executive Branch views patents and patent owners. Once upon a time patents and inventors were very highly regarded in our society, today they are seen as a nuisance that can and probably should be ignored, even by the White House apparently…”

“A patent owner that seeks to prevent another from infringing is NOT a bully, period. A patent owner that takes action to prevent infringement is merely protecting the property right they have been granted; a right purposefully granted by the federal government after a lengthy examination process. It should be self-evident to everyone that you cannot be a bully when you are standing up to protect a right you have been given. It is utter nonsense to even suggest that a patent owner seeking vindication from the trampling of rights could ever in any fair way be characterized as a bully…”

PERPs are Perpetrators 

“Frankly, if we want to be perfectly honest about the state of the industry, we would be talking about those Patent using Entities that Refuse to Pay (PERPs),” concludes Quinn. “Thanks to the confluence of patent reform and Supreme Court precedent the people who are getting bullied the most are patent owners. These PERPs simply ignore all inquiries even from those with large portfolios and valid patents that are being infringed. They engage in a game of efficient infringement, or so it is called. Efficient infringement is such a sanitary way to say – willfully stealing without paying.

“With the deck so substantially stacked against the patent owner, companies know that if they simply ignore all inquiries, both legitimate and those smaller number that are extortion, they can willfully infringe patented technology without having to pay anything. lady-justice-head-sand-ignoranceSo why pay? That is efficient infringement; a cold business calculation that results in the patent owner being screwed.”

Negative Right

Efficient infringement means that given the risk-reward of using someone else’s invention, it is economically viable for most companies, in many industries, to infringe patents at will most of the time. It’s like a parking violation. First, they have to catch me breaking the law. What are the chances? And if they do, paying the price of the ticket is often easier (and cheaper) for large companies than obeying the law.

A patent is a negative right – the right to sue to protect an owner’s intellectual property, an invention. A patent suit is a costly and time-consuming process, and defendants know that. Patents are meant to be used (enforced) where appropriate. Quinn is saying that the behavior of those refusing to pay a license (PERPs) – and who invent delaying tactics to avoid doing so – is ethically questionable, legally suspect and damaging to innovation.

For the full IP Watchdog article go here.

Image source: ipwatchdog.com

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