In September of last year, the Federal Circuit overturned a “mega” jury award of over $357 million damages in Lucent Technologies, Inc. v. Gateway, Inc. because the “lump-sum” royalty payment was not supported by “substantial evidence.”  See Entire Market Value Rule Lives As $357 Million Verdict Dies .  At the heart of the Lucent case was how to calculate damages based on a reasonable royalty using the Georgia-Pacific factors, especially the “entire market value” rule (aka factor 13).  In the recent case of ResQNet.com, Inc. v. Lansa, Inc., a majority of a Federal Circuit panel (per curiam) overturned a even more modest damage award (just over half a million dollars) based on an allegedly incorrect royalty rate based on the Georgia-Pacific factors, this time factor one (aka “existing licenses”).  Judge Newman, who was a member of the Lucent panel, took a different view of the evidentiary value of these “existing licenses” and dissented in part.

Patent litigation often turns on obscure and long-buried facts, and some private investigative firms are developing expertise that can help patent counsel – on both the defendant and plaintiff sides – find information to support and even shape litigation strategy.

Below are five examples of common problems that patent counsel often face in contemplating, bringing or defending lawsuits, and how investigative firms can help. Think of the cases described below as hypothetical – but we believe they capture how the fact-gathering in actual patent litigation cases can unfold, and how fact-gathering specialists are actually being used.

Last week a patent application on an energy efficient device that provides enhanced copyright protections was published, not surprisingly with Apple, Inc. as the assignee. On Thursday, February 4, 2010, US Patent Application 20100030928 published, titled Media processing method and device. Certainly not the most sexy title possible, but the thrust of the invention is a device that allows the central processing unit (CPU) to “loosely” connect multiple media devices in such a way that the CPU does not need to be in a constantly powered on state. Among other things, this will extend the life of the battery charge for the device, and it also enables the digital music, for example, not to be streamed through the CPU. This in turn provides enhanced protection for digital media, making it more difficult to capture the digital media for later unauthorized distribution.

Judge Pauline Newman, CAFC

Yes, a message from the shameless commerce division no doubt, but there are a handful of excellent PLI patent related programs coming up in February and March that deserve a mention.  After all, how often can one attend a program, get CLE credits and meet Federal Circuit Judge Pauline Newman?  Not all that often to be sure, but Judge Newman will be attending and presenting at the Reexamination and Reissue program in New York City on February 11-12, 2010.  If you cannot make it to New York for the live program the event will be broadcast live via webcast.

In May 5, 2009, Sam Keller, a former quarterback at Arizona State and Nebraska University, filed a complaint against Electronic Arts (EA Sports), the National Collegiate Athletic Association (NCAA), and the Collegiate Licensing Company (CLC) for using his likeness. Keller is bringing a class-action lawsuit on behalf of all NCAA athletes for the “blatant and unlawful use” of student-athlete likenesses in video games.

EA Sports has created a long line of profitable games, some of which are based on NCAA sports, including: NCAA Football, NCAA Basketball, and NCAA March Madness. For EA Sports games based on professional sports, Electronic Arts bargains with the players’ association for a license to use player names and their likeness. For example, if EA Sports would like to use player names and their likeness on Madden 2010, the NFLPA can, and have, assigned those rights to Electronic Arts for roughly $35 million per year, according to Keller’s complaint. EA pays the NFLPA a fee, the players obtain a royalty through the NFLPA, and their likenesses and names are used in the games. In its repertoire of games based on NCAA sports, EA Sports does not use the athletes’ names nor does it bargain with the NCAA and the CLC to use such. Additionally, EA Sports claims that the player’s likenesses are not being used.

Joe Walsh, Republican Candidate for Congress, 8th District IL

Anyone who has spent any time at a political rally or watching video from such a rally on the evening news understands that music and politics go together.  Sometimes they mix well, for example when Bruce Springsteen is playing live for INSERT LIBERAL DEMOCRAT HERE, and sometimes they do not mix very well, almost like oil and water, for example when INSERT REPUBLICAN HERE uses music.  Yes, what I just said was over broad, but not by much.  If you take away certain country music stars who aren’t afraid to be blackballed and are willing to stand up for what they believe, you are left with a statement that is hardly over broad and probably far more descriptive.

My purpose for writing this is not to inflame, although there will likely be some “tolerant” liberals who object vehemently to my voicing such an observation.  Instead, the point is to set the table between what could become an incredibly interesting battle over copyright law and parody.  Joe Walsh (the Rockstar), known perhaps most for his days with the Eagles, is rattling the saber through his attorney, who seems to know little or nothing about copyright law, and is directing his ire at Joe Walsh (the Republican) who is a candidate for Congress in the 8th Congressional District of Illinois.

The United States Patent and Trademark Office wants YOU, at least if you are  an intellectual property professional willing to apply for a rewarding and challenging position as a US patent examiner.  Yes, the USPTO is once again hiring patent examiners, at least in a targeted way (whatever that means) as part of an initiative to help reduce the application backlog.  As of now the #1 news story on USPTO.gov is the launching of a targeted effort to recruit patent examiners.  The job description says there are “many vacancies,” the starting salaries range from $69,899.00 to $90,866.00 per year and applications will be accepted through March 2, 2010.

Below is a screen shot of the rotating #1 news story complete with Uncle Sam, wearing what appear to be stereotypical nerdy glasses above the caption “I want YOU for the patent examining corp.”

On January 21, 2010, the United States District Court for the Central District of California issued a ruling in Big Baboon, Inc. v. Dell, Inc. et al, staying further consideration on the motion for summary judgment for invalidity until such time that the United States Supreme Court issues its much anticipated decision in Bilski v. Kappos.  This is exactly what suggested (see Offering Help), and it has amazed me that other district courts and the United States Patent Office are plowing ahead and making Bilski rulings.  Reality be damned, many district courts and the United States Patent and Trademark Office would rather waste their own time, the time and money of litigants and patent applicants, knowing full well that the United States Supreme Court will issue a ruling that will change the Federal Circuit machine or transformation test announced in Bilski.

Did you know that while a total of 4,849 ex parte and inter partes patent reexamination requests were filed from 1999 to 2009, only 55 are reexaminations of patents associated with FDA approved products and listed in the FDA’s Orange Book? This is just one of the most surprising and interesting facts that emerged from our first of its kind study – “Reexamination Practice of Biotech/Pharma Patents in Group Art Unit 3991.” (For a full analysis and discussion, download the full paper at The Reexamination Center.) Other interesting facts emerged from our study, including:

• The patent owner is much better off putting its own patent into reexamination than having a third party do it.
• Of the 55 reexaminations, the top 5 patent owners were attacked by third parties almost 40% of the time.
• Of the 55 reexaminations, 36% were owner initiated, whereas 64% were third-party initiated.
• 21 of the 55 reexaminations went abandoned either for failing to respond to an office action or file an appeal brief (all were third-party initiated).
• 30% of owner initiated reexamination proceedings are associated with litigation as compared with 46% of third-party initiated reexamination proceedings.
• In 31% of owner initiated reexaminations all the original patent claims were confirmed, as compared to just 11% of third-party initiated proceedings.

EDITOR’S NOTE: President Obama’s recently submitted budget would allow the USPTO to hire 1,000 patent examiners during both FY 2011 and FY 2012.  It would also provide an interim fee increase on certain patent fees which is estimated to generate $224 million.  There is no mention of fee diversion, but reading between the lines it seems the budget would allow the USPTO to keep all, or at least more, of the fees collected.  More to come, but below is a press release issued by the USPTO on February 1, 2010.  It is worth a read.

########## PRESS RELEASE STARTS HERE ##########

Washington – February 1, 2010 – Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO) David Kappos today announced President Obama’s $2.322 billion fiscal year 2011 (FY 2011) budget request for the USPTO.

The president’s budget request for FY 2011 will support a five-year plan designed to enable the USPTO to achieve the strategic objectives laid out by Under Secretary Kappos and Commerce Secretary Gary Locke – a significant reduction in patent pendency periods and the existing patent inventory backlog; improvement in patent quality; enhanced intellectual property (IP) protection and enforcement; global IP policy leadership; and investment in information technology (IT) infrastructure and tools to achieve a 21st Century system that permits end-to-end electronic processing in patents and trademark IT systems.

Former Head of Patents at Microsoft and IBM, Marshall Phelps, Appointed to Article One Partners Board of Directors

New York — February 1, 2010 — Article One Partners, the world’s largest patent validation firm, today announced the appointment of Marshall Phelps to its Board of Directors. The Director position with Article One is Phelps’ first board involvement within the IP industry since he left Microsoft last year.

Mr. Phelps has had an extraordinary career and is a prominent leader in the patent industry. He oversaw Intellectual Property and Licensing at IBM for 28 years. Chairman Bill Gates then recruited Phelps – the legendary “godfather” of intellectual property who had turned IBM’s modest IP Portfolio into a $2 billion per year revenue stream – to work his magic for Microsoft. In his role as Corporate Vice-President of IP Policy and Strategy at Microsoft, Phelps was responsible for setting the global Intellectual Property Strategies and Policies for the firm. Phelps has also served as the Microsoft Deputy General Counsel for Intellectual Property for the Legal & Corporate Affairs group, where he supervised Microsoft’s intellectual property groups and oversaw the company’s IP portfolio management (comprising well over 60,000 patents and patent applications worldwide).

Invention promotion firms, sometimes referred to as invention submission companies, have been widely criticized in numerous circles, including political circles in Washington, DC, for many years.  The American Inventors Protection Act (AIPA) was enacted into law in 1999 and by its very name sought to address head on the problems faced by so many inventors.  In truth, the title of the Act probably had more to do with selling the patent reform bill, which many individuals did not think would benefit independent inventors.  Whatever your view of whether the AIPA was a net positive or net negative for independent inventors, it is clear that certain provisions of the Act, which are now law and codified at 35 USC 297, unequivocally attempted to provide important protections for inventors against those invention promotion firms who have such a checkered past.

In light of recent developments, namely InventHelp suing IPWatchdog, Inc., me personally and my wife Renee personally, I thought it might not be a bad idea to take a stroll down memory lane, explain a bit about the Act, take a look at what US Senators Joseph Lieberman and Orrin Hatch had to say and made a part of the legislative history, and then take a look at the statistics reported by InventHelp and Davison.  So without further ado, just sit right back and you’ll hear a tale, a tale of a fateful… well,  you get the idea.

This case comes to light courtesy of the Docket Report daily e-mail newsletter.

On Tuesday, January 26, 2010, the United States Federal District Court for the Middle District of Florida, per Magistrate Pizzo, granted summary judgment against Solomon Technologies, Inc. and in favor of Toyota Motor Corporation relating to claims of infringement relative to U.S. Patent No. 5,067,932. The case already had an interesting history prior to this stage, having been pursued unsuccessfully by Solomon through the United States International Trade Commission and up to the United States Court of Appeals for the Federal Circuit. In fact, soon after initiating this action for damages and injunctive relief, Solomon lodged a complaint with the ITC pursuant to 337 of the Tariff Act of 1930, 19 U.S.C. § 1337(a)(1)(B), alleging that Toyota and its affiliates imported and sold hybrids that infringed its ‘932 patent. At the joint request of Solomon and Toyota, the Middle District of Florida stayed the federal court litigation pursuant to 28 U.S.C. § 1659(a) so that the administrative proceedings could run their course. After an extensive investigation, the ITC’s ruling against Solomon as to infringement, and an unsuccessful appeal to the Federal Circuit, Solomon renewed its claim of infringement with the Middle District. The Magistrate summarized the dispute by noting that the same parties were arguing about whether the same hybrid vehicles infringed the same claim in the same patent as they argued previously before both the ITC and the Federal Circuit.

Some may recall my “dissertation” on the case of Amgen Inc. v. F. Hoffman-La Roche Ltd. See CAFC: A Divisional By Any Other Name Is Not a Divisional .  In Amgen, the Federal Circuit made it clear that you had better characterize an application as a “divisional” if you wanted the benefit of the “safe harbor” provided by 35 U.S.C § 121.  And if you didn’t, you would face the consequence of an obviousness-type double patenting issue.

So does this “safe harbor” apply if you file a divisional of a divisional?  What if each of these divisionals has claims to more than one of the groups restricted in the original patent application?  Those were the questions that confronted the Federal Circuit in Boehringer Ingelheim International GMBH v. Barr Laboratories, Inc.  In responding to these questions, the entire Federal Circuit panel agreed that this “safe harbor” could apply to a divisional of a divisional.  Where the majority (Judges Linn and Prost) and dissent (Judge Dyk) diverged was on whether each of these divisionals, and especially the subsequent second divisional, could have claims to more than one of the restricted groups and still receive the benefit of this “safe harbor.”

As many undoubtedly know, Invention Submission Corporation has sued IPWatchdog, me personally and my wife Renee.  I learned moments ago that they have filed paperwork requesting a preliminary injunction and filed a Motion for Summary Judgment.  Presumably at some point I will be served and the fight will commence.

I am in talks with counsel to represent us and hope to soon have settled on a firm to defend the case.  I appreciate the encouraging messages I have received.  In some of the messages I have received, some in the patent bar have suggested that I consider opening a defense fund.  I have some funds myself and IPWatchdog, Inc. also has funds to mount a defense, but Invention Submission Corporation is an enormously large company with seemingly vast resources, at least enough money to advertise in many outlets that presumably are quite expensive.

By now many in the patent and inventing community know that Invent Help has sued IPWatchdog, Inc., me personally and my wife Renee personally.  The InventHelp complaint alleges, among other things, that IPWatchdog competes with InventHelp in the same industry.  This is, of course, nonsense.  I am a Registered Patent Attorney and have been since 1998.  I provide patent related legal services to clients, just like so many other patent attorneys and patent agents.  I do not, nor have I ever, engaged in invention submission or competed with InventHelp or any of the other invention submission companies in the industry. I am an attorney and the services I provide are all aimed at providing clients legal representation or legal advice, which is something InventHelp simply cannot do, at least legally.  When a client requires assistance that I cannot provide I do not pretend to have the ability to adequately assist the client, but rather refer the client to other professionals at other companies that specialize in whatever is needed.  If that makes me an invention submission company, which is absurd to even assert, then every patent attorney, patent agent and law firm in the country is an invention submission company that competes with InventHelp.  How ridiculous!

Below is a question that we received recently, which is one that many folks likely have. Thus, I thought it might make a good article, particularly given that there is no “right” answer.

Question (in edited form):

Should I file a patent application and obtain a patent before I submit my invention to a company like Lambert & Lambert for their review?

Answer:

You ask an age old question, which is really the patent/invention equivalent of the chicken or the egg. Moving forward with a patent doesn’t make a lot of sense if the invention is not likely to be marketable. I always tell folks that the best invention to patent is one you will make money with regardless of having a patent, so I do believe there needs to be market considerations factored into the analysis.  After all, the goal is to make money and investing in a business or to obtain a patent makes sense only if there is a reason to believe more money will be made than spent.  Having said that, without a patent pending you have absolutely no protection, at least unless you obtain a signed confidentiality agreement and even then the protection will be applicable only to those who have signed the agreement.

Those who are readers of IPWatchdog.com on a regular basis are familiar with the jousting that goes on in the comments between myself and a core group of patent believers and those who are, shall we say skeptical of the value of patents and would prefer that patents simply not exist, or at least not exist in certain areas, such as software. Without getting into that debate directly here and now allow me to observe that if you are an independent inventor, start-up or small business one successful way to responsibly move forward is to pattern yourself on successful companies. There is no mileage in following the lead of a company in decline, so lessons can be learned by observing successful companies and weaving together a strategy that will lead to market success. Perhaps no other company today so aggressively pursues patents on core technologies and products than Apple, and they enjoy enormous success. So why not take a page from the Apple playbook? Innovate, patent, commercialize and dominate.

I learned earlier today that IPWatchdog, Inc. has been sued by Invention Submission Corporation (dba Invent Help) in the United States Federal District Court for the Northern District of New York.  The complaint was filed yesterday, January 21, 2010, by attorneys at Bond, Schoeneck & King, PLLC, alleges that I have engaged in false and misleading advertising that has cost Invent Help business.  They apparently do not like the fact that I have written about invention submission scams and have recounted the many stories that I have heard from inventors who feel they have been taken advantage of by Invent Help. They mention the articles I have written in the complaint, and you can view IPWatchdog.com Blog articles about Invent Help here — Articles Tagged Invent Help.  Rest assured, I will vigorously defend.

Apple, Inc., the tech giant that has revolutionized how we listen to music and the functionality of a cell phone, is now seeking to expand its extremely popular iPod and iPhone products into greener pastures. Specifically, in a US Patent Application No. 20100013309, which published earlier today, Apple is seeking a patent on a solar powered electronic device, such as an iPod or iPhone.

Every week Apple obtains patents and every week more pending patent applications are published where Apple is the assignee (i.e., owner). Apple aggressively pursues patent protection because quite frankly patents make good business sense. There is a reason that the iPod and iPhone dominate the market, and other alleged substitutes lag far behind. It is because Apple has a well developed and ever expanding patent portfolio that protects these core products and prevents competitors from getting too close.