Inter Partes Review and the Covered Business Method Patent Program are the new O.K. Corral and it is High Noon
There is a battle cry against abusive litigants in the patent industry. Among the tactics suggested is a “loser pays” system to try to mirror Europe, where this type of abuse is minimal. The Congressional Research Service presents that 92% of companies who assert but do not make products (over broadly and derisively called “trolls”) lose litigation that reaches judgment on the merits. [i] So far, direct fee shifting has received criticism under US jurisprudence, but the US Supreme Court on Sept. 30, 2013 agreed to hear cases involving the award of attorneys’ fees in patent litigation.[ii] Also, several of the proposed bills in Congress support more aggressive fee awards for bad conduct and enhanced rules. In particular, Rep. Bob Goodlatte’s Innovation Act recently cleared the House Judiciary Committee with a specific focus on cutting down on abusive patent litigation.
The America Invents Act (AIA), the first patent reform in decades, created a new forum to resolve patent disputes that effectively shifts fees. The AIA created the Inter Partes Review (IPR) and the Covered Business Method (CBM) program, which are “mini-trials” before an appeal board of specialized legal and technical expert judges. In these proceedings, the board takes a second look at patents the USPTO has already granted to determine whether they are valid. The judges on the USPTO Patent Trial and Appeal Board (PTAB) have been prolific in decisions clarifying the rules of engagement. The result? Up front costs for patent owners where 85% of the IPR/CBMs involve parallel litigation in court, and 66% of the time, the litigation is stayed pending the PTO proceeding. This can increase the overall cost of litigation for patent owners, while increasing the alternatives for defense strategies – pay up extortion fees or pay the PTO IPR/CBM fixed and potentially higher initial fees. However, the defendant then triggers the same level of fees for the patent owner now taking the defense in IPRs/CBMs.
In December of 2012 Article one Partners (AOP) announced that they would be launching a new program geared towards military veterans. As someone from a family of many military veterans, I hold the utmost respect for anyone who has served in the United States Armed forces. We have been following the program and were thrilled to learn that the program was a success when they announced that Iraq war veteran Jason Maples of Mountain View CA, was the overall Winner of the Article One Partner’s Veteran Program.
Mr. Maples, who was part of the original invasion into Iraq in 2003, was one of more than 20 other veterans, ranging in age from 17 to 54, who participated in the study. Not only did he receive $2,500 for his success in the research projects that AOP calls “Studies”, but he will also be receiving an additional $5,000 for his exemplary performance overall.
The Studies, which were meant to provide participating veterans with hands-on experience in patent research I can proudly say has been a great success. In fact you may have already read my interview with Jason So in continuing coverage of the program, I had the distinct pleasure to speak with the CEO and Founder of AOP, Cheryl Milone about her views on the success of the program.
In December of 2012 Article One Partners announced that they would be launching an educational contest series geared towards military veterans with an interest in research, science and technology. The program, known as the Article One Partners Veterans Program or AOP-Vets for short will consist of three main pillars; an educational curriculum on patent research, a series of career guidance sessions from intellectual property executives, and an “exciting Grand Challenge” with the opportunity to win rewards for success on the research platform. In fact, at the end of the program, which is set to begin on April 8, 2013 and will run through May 17, of 2013, the best-performing participant of the program will receive a $5,000 reward.
Given that I come from a family of military men, and came so close to signing up for the military myself, I hold the topic of veterans near and dear to my heart. In fact when I heard about this program I was thrilled because I know that many veterans have been affected by this recession are out of work themselves. I know a few veterans in particular who could benefit from a program such as this and feel that programs like this are the very least we should give veterans in return for the sacrifices they and their families make for our country. But the best part about this program is that it affords veterans who wish to participate the opportunity to become trained in the area of intellectual property that should ultimately lead to additional career opportunities that otherwise they would not have qualified for.
In any event, and for all to see my diminished powers of prediction, AOP, the world’s largest patent research community, has passed another significant milestone. This time the company has passed the $3 million threshold in financial rewards paid to its global research community. Actually, the milestone was reached at the end of August 2012, but AOP only officially made the announcement last week. In fact, as of the writing of this article the reward calculator found prominently on the AOP homepage shows that some $3,371,500 in reward money has been paid to its community of crowdsourcing researchers.
The announcement that Article One has reached the $3 million milestone comes only six months after reaching the $2 million milestone, which took place at the beginning of February 2012. It took AOP 11 months to the day to reach the $2 million milestone, and since they opened for business in November 2008 it took approximately 27 months to pay out its first million in reward money. What this shows is that AOP is gaining steam, constantly shaving months off the time it takes to reach the next milestone award figure.
The recent decision by Judge Richard Posner in Apple v. Motorola (No. 1:11-cv-08540 )(N.D. IL., June 22, 2012) will likely be instructive for the parties in the Apple v. Samsung litigation in San Jose, California. See Apple, Samsung patent trial starts with jury selection. Judge Posner of the U.S. Court of Appeals for the Seventh Circuit (and a law professor at the University of Chicago) issued this ruling after deciding to take a stint as a trial judge so he could preside over this case. His Honor’s decision places a huge burden on patent owners to support the pedigree of their asserted patents.
J. Posner highlights that the complexity of private and public sector patent events limits an “objective” assessment of patent value by judges or juries. What J. Posner demands is clarity derived from objective evidence. Parties must identify objective comprehensive damages evidence and provide a clear syllogism to arrive at a damages position. Where attained, he also suggests that the sophistication of worldwide brands as litigants can enable negotiated resolution.
The mobile app economy is estimated to have created nearly 466,000 jobs in the United States alone as of the beginning of 2012, up from zero jobs in 2007. See New ‘App Economy’ Creates Nearly 500,000 Jobs. Further, mobile app downloads are expected to hit 76.9 billion in 2014. This growing technology based industry, like so many other similar growing industries, is facing increased threat of patent infringement claims, which are hampering the process of bringing new mobile innovations to market.
In order to attempt to combat the use of dubious patents against mobile app developers, Article One Partners (AOP), the world’s largest patent research community, today announced the formation of a partnership with the Appsterdam Legal Foundation, a global trade organization for mobile software developers.
Typically I am not one to say that patent infringement lawsuits are responsible for stunning the growth of an industry, but with respect to mobile app developers there is something quite different than what we have witnessed in the past. Many mobile app developers are individuals or truly small businesses. When faced with threats of patent litigation or demands to pay licensing fees, many of these mobile app developers leave the market. Still more are simply not entering the marketplace out of fear.
New York – April 26, 2012 – Article One Partners (AOP), the world’s largest patent research community, today announced that Peter Vanderheyden, a seasoned IP industry veteran, has assumed the role of Chief Product Officer, where he is responsible for product strategy, technical staff and product development. Vanderheyden is also responsible for recruiting, training, rewarding and retaining AOP’s global research community.
Vanderheyden joins AOP from the legal software and solutions corporation LexisNexis, where he was Vice President and Managing Director, Global IP Solutions. While at LexisNexis, he helped to develop TotalPatent, a leading patent research tool supported by the world’s largest patent database, and PatentOptimizer, a software tool that conducts word-level analysis of the legal integrity of a patent or application. Prior to LexisNexis, Vanderheyden served as Vice President of Marketing and Business Development for IP.com, a global patent and non-patent literature database, where he re-established the corporate brand, launched new products, and developed a patent for a new market opportunity. Vanderheyden held previous positions at IBM and founded Delphion, the first to make US patents searchable on the web.
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