The pending litigation between Grant Street Group and Realauction.com finally appears to be headed for trial. A trial date for Grant Street Group v. Realauction.com, LLC has been set for June 3, 2013, with jury selection commencing a few days prior on May 29, 2013. Grant Street Group is currently the world’s largest Internet auctioneer and according to its website was founded in 1997 in Pittsburg, Pennsylvania. Realauction while a bit smaller, was founded in 2004 in Ft. Lauderdale, Florida. This lawsuit has been pending since 2009.
The trial will take place in District Court for the Western District of Pennsylvania, and Grant Street Group is currently suing Realauction for patent infringement of U.S. Patent No. 7,523,063 (‘063 patent). The patent in question surrounds the process and apparatus for conducting auctions over electronic networks.
In the recent patent case of Mayo vs. Prometheus Labs, the United States Supreme Court continued its pattern of restricting the scope of patentable subject matter under 35 US 101. Historically, patents had been strictly limited to processes, machines, compositions of matter and articles of manufacture. Excluded from eligibility were business methods, software, laws of nature, naturally occurring phenomena and mathematical formulas. Then the US Court of Appeals for the Federal Circuit began to expand the patent eligibility rules.
In Diamond v. Diehr, decided in 1981 by the United States Supreme Court, established that an un-patentable formula could be transformed into a process by the addition of method steps after the formula. Most would agree, however, that software did not widely become patent eligible until 1994 when the Federal Circuit in the Alappat case held that a programmed computer was essentially a machine and when that same computer was programmed differently, it became a second different machine – both patentable. The Alappat holding led to the acceptance of “software plus token hardware” as being patentable. Ultimately, the Alappat ruling would give rise to the State Street Bank case, decided in 1998 by the Federal Circuit, which held that business methods were patentable.
Victoria Espinel, White House IP Enforcement Coordinator
Counterfeiting is an enormous problem for businesses all over the world. Counterfeiters rip off name brand products, making cheap knock-offs, easily (and conservatively) costing many hundreds of millions of dollars each year. According to the International Quality & Productivity Center: “The counterfeit and gray market luxury goods trade is so big that experts estimate it to be anywhere from $300 – $600 billion globally.”
There are always those who will dispute whatever estimates are made about the level of counterfeiting present in the global marketplace, and $300 to $600 billion does seem quite high. The trouble with those who challenge the estimates is that they have absolutely no proof of their own, just suspicions. Those who claim to have proof only engage in the totally disingenuous charade of pretending that a $10 name brand product sold for $1 is properly characterized as a $1 loss because that was what the counterfeit consumer paid. Such intellectually dishonest and near deceitful conclusions do nothing other than excuse criminal activity and ignore the obvious. When someone purchases a knock-off for $1 there is no need for that person to spend $10 for the name brand product. Calling this a $1 loss makes taking anything the counterfeit apologists say almost impossible to take seriously.
Paul Allen’s road to monetize his huge patent portfolio took an abrupt detour when Judge Marsha Peckham of the Western District of Washington stayed Allen’s eleven infringement cases, pending completion of reexamination proceedings for the patents-in-suit.
Allen, a co-founder or Microsoft, established Interval Research Corporation and then set about acquiring an enormous number of patents, assigning them to Interval Research. For years, his patents sat quietly as idle assets. The subject of constant speculation in the high-tech community, Allen’s patents remained untested. But on August 27, 2010, Allen, through corporate subsidiary Interval Licensing, sued a who’s-who of computer and Internet companies in the District Court in Seattle, notably AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo!, and YouTube. Apart from a minor hic-up in December, when Judge Peckham ordered Interval Licensing to state the basis for its infringement allegations with greater specificity, see Complaint Dismissed, the case proceeded smoothly.
As anyone who follows the United States Supreme Court knows, the Court has historically been extremely fond of taking important cases, with cutting edge issues, only to dodge the real issues and address some insignificant procedural or hyper-technical issue. Such disappointment is all to frequent, so Supreme Court watchers are seldom surprised when the Court passes on an opportunity to breathe clarity into otherwise unsettled waters. But what the Supreme Court did five years ago today in the eBay v. MercExchange case was far more sinister than merely refusing to address important issues of the day. The Supreme Court decided to throw out long standing and well established Federal Circuit jurisprudence and offered little or nothing in its place.
According to research Patstats.org, which is an ongoing patent statistics project by the University of Houston Law Center, since the Supreme Court’s decision in eBay v. MercExchange (through April 11, 2011) there have been 131 cases where a permanent injunction has issued and 43 cases where a permanent injunction has been denied. Some have tried to pass this off as not much of a departure from the practice prior to the Supreme Court’s decision. Such a viewpoint is, however, not correct. Prior to the Supreme Court’s decision it was virtually unheard of for a district court to deny a victorious plaintiff a permanent injunction in patent infringement case. So the Supreme Court’s decision in eBay v. MercExchange has been one that has significantly altered the patent litigation landscape and, therefore, is easily one of the most important Supreme Court patent cases in recent memory.
The January 17, 2011, edition of Fortune magazine has Chief Justice John Roberts on the cover. Roberts is the Chief Justice of the United States Supreme Court, a Court now made up predominantly of conservatives by a 5 to 4 majority. It is the contention of the author of the article on Roberts that the Roberts Court is the most pro-business Court the United States has ever seen. If that is the case, which I am not at all sure is the case, it would have to mean that one can be “pro-business” while being “anti-patent,” which given the state of American manufacturing and the future of the U.S. economy seems questionable.
Of course, if you are anti-patent then you are anti-innovation because those who innovate are not the behemoths of industry, but rather start-up companies that absolutely require patents in order to attract funding, expand and create jobs. Thus, given the hostility toward patents it is entirely accurate to characterize the Roberts Court as anti-innovation. The Roberts Court increasingly puts hurdles in the way of high-tech job growth. You see, it is easy for anyone to characterize the Supreme Court as “pro-business” because selecting a victor in a “business case” almost necessarily means that a business has been victorious. But what business? One that is likely to innovate, expand, create jobs and form new industry? Or one that once innovated and expanded, but now finds themselves stagnant and laying off employees?
John Roberts, Chief Justice of the United States Supreme Court
The latest edition of Fortune magazine has John Roberts, Chief Justice of the United States Supreme Court, on the cover. The Fortune cover proclaims that it will be taking “an unflinching look at the man who is presiding over the most pro-business court we have ever seen.” As I read that I couldn’t help but chuckle. Really!?!? The Roberts Court is the most pro-business court we have ever seen? I knew right away that this article couldn’t be about patents, or even mention patents, and I wondered how the article would treat the failure to get involved in the Chrysler bankruptcy, which fundamentally altered investors expectations in public companies beholden to unions. So how can it be that the Roberts Court, which has shown hostility toward innovators and contempt for patents that is unusual, is considered pro-business? On top of that, the Roberts Court seems poised to strike at the very heart of the patent right granted by the United States federal government; namely the presumption of validity. That sure doesn’t sound very pro-business to me.
On Friday, August 27, 2010, Interval Research Corporation (a Paul Allen non-practicing entity) 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. The complaint alleged infringement of United States Patent Nos. 6,263,507, 6,034,652, 6,788,314 and 6,757,682, but provided no useful information or detail as to the theory of infringement, did not identify the allegedly infringing devices and did not mention which claims were believed to be infringed. In short, it was a typical patent infringement complaint that offered absolutely no useful information and initiated a complaint by ambush, which is not what is supposed to be allowed. Thankfully, on Friday, December 10, 2010, District Court Judge Marsha Pechman took a stand and dismissed Mr. Allen’s woefully inadequate complaint. Perhaps it will no longer be business as usual for patent trolls; only time will tell.
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. Conspicuously missing from the target list was Microsoft Corporation, the company that Paul Allen, which is the co-founder of Interval Research, co-founded with Bill Gates. Many in the technology sector are wondering what Paul Allen is doing and why he is bringing this lawsuit, which to me seems rather naive. As discussed more fully below, it seems to me that Mr. Allen is attempting to enter the deep, dark world of patent trolls. The tell-tale sign being a complaint without any substantive information and naked recitation of a variety of patents that have “one or more” unspecified claims being infringed for unspecified reasons.
Over the last several weeks “patent trolls” have been back in the news. The mother of all patent trolls, NTP, which won over $600 million from Research in Motion as the result of a successful patent infringement litigation over the popular BlackBerry phone, is back at it again. NTP is now suing Apple, Google, Microsoft and others alleging that smart phone e-mail systems infringe its patents. See, for example Bad News for Tech Heavies?and NTP sues Apple, Google, Microsoft and others.
Not long ago Attorney John M. Desmarais, who wasone of the attorneys who represented GlaxoSmithKline in their effort to stop the claims and continuations rules from becoming effective, left the practice of law. He acquired 4,500 patents and is going to throw his hat into the ring, presumably representing himself, going after those large companies that he believes are infringing his patents. See Billion Dollar Lawyer Desmarais Quits Firm to Troll for Patents.
Just this past week, Kelley Drye & Warren, the firm that represented Dr. Tafas in the claims and continuations challenge, filed an $11.4 billion lawsuit on behalf of XPRT Ventures, LLC. Many in the popular press and in the blogging community are, like lemmings heading off a cliff, referring to XPRT as a patent troll. But what evidence do that have of that? As far as I can tell little or none; mostly none. See eBay’s PayPal Sued for $11.4 Billion for Patent Infringement.
Stephen Moore represented Dr. Tafas, now represents XPRT
The attorneys at Kelley Drye & Warren LLP are back at it making big news. You will likely recall that it was the attorneys of Kelley Drye & Warren that represented Dr. Tafas in the successful claims and continuations challenge, effectively prevailing against long odds against the United States Patent and Trademark Office. Now they are representing XPRT Ventures, LLC, in a enormous $11.4 billion lawsuit brought against eBay’s PayPal. The complaint filed in the United States District Court for the District of Delaware, asserts trade secret theft and patent infringement claims with respect to six XPRT patents. In a nutshell, XPRT asserts eBay unfairly stole the idea and method of payment used in eBay’s PayPal and similar electronic payment systems.
The complaint seeks $3.8 billion in damages at a minimum, but in no event less than a fair and full reasonable royalty, but also seeks tripled damages as a result of willful infringement, which would bring the total to $11.4 billion at a minimum. While willful infringement is quite hard to prove, if the facts actually are what is alleged it would seem as if the case is exceptional, which could lead to triple damages and attorneys fees as well. So when you add that all together and add pre-judgment and post-judgment interest, the total amount on the line could easily exceed $15 billion. And before you write this off as a patent troll trying to hold up a true innovator, which some of the uninformed in the popular press are doing already, read the rest of the article and take a look at the complaint. If the facts alleged even remotely resemble reality this could turn out to be an epic battle to which we will all want front row seats!