On Friday, March 22, 2013, Administrative Law Judge David P. Shaw of the United States International Trade Commission issued a remand determination relating to the investigation instituted by the Commission to investigate patent infringement allegations leveled against Microsoft’s Xbox . Judge Shaw determined that the Xbox does not infringe the remaining patent involved in the ITC investigation, which is a complete reversal of his earlier determination that the Xbox did infringe (see below).
Shaw’s remand determination was brief:
It is held that a violation of section 337 of the Tariff Act, as amended, has not occurred in the importation into the United States, the sale for importation, or the sale within the United States after importation, or the sale within the United States after importation, of certain gaming and entertainment consoles, related software, or components thereof that are alleged to infringe asserted claims 1 and 12 of U.S. Patent No. 6,069,896.
The full Commission now has until July 23, 2013, to consider Judge Shaw’s remand ID.
More news to report in the ongoing ITC battle between Motorola Mobility (owned by Google) and Apple. Earlier this week the U.S. International Trade Commission announced that it will review part of the presiding Administrative Law Judge’s (“ALJ”) initial determination issued on December 18, 2012, finding no violation of section 337 of the Tariff Act of 1930 by Apple. The ITC case is styled In the Matter of Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, and is Investigation No. 337-TA-745
The ITC had originally instituted an investigation on November 8, 2010, based on a complaint filed by Motorola Mobility, Inc. The complaint alleged violations of section 337 as the result of importation into the United States and the sale within the United States after importation of certain wireless communication devices, portable music and data processing devices, computers and components thereof. The violation of section 337 was alleged to be the result of patent infringement. Specifically Motorola Mobility charged Apple with infringing U.S. Patent Nos. 6,272,333 (“the ‘333 patent”); 6,246,862 (“the ‘862 patent”); 6,246,697 (“the ‘697 patent”); 5,359,317 (“the ‘317 patent”); 5,636,223 (“the ‘223 patent”); and 7,751,826 (“the’ 826 patent”). The ITC subsequently terminated investigation into the ‘317 patent (on June 28, 2011) and the ‘826 patent (on January 27, 2012).
Paul Ryan is a more common name than you might think. In the world of politics when one speaks of “Paul Ryan” they are talking about the Republican Congressman from Wisconsin who was Mitt Romney’s running-mate and would-have-been Vice President. But in the intellectual property world, particularly the patent litigation world, the name “Paul Ryan” refers to the CEO of Acacia Research Corporation. It is the later Paul Ryan that went on the record with me to discuss Acacia, patent enforcement, how large companies who are infringers disregard innovative independent inventors and much more.
This two-part interview took place on December 20, 2012. With the holidays looming and various articles already in the pipeline for the end of the year and start of 2013 publication slid a bit.
Sometimes when I’m doing an interview I have a good feeling about it and know it will turn out very good in print. This was one of those times. I enjoyed my conversation with Ryan and think you will find it quite informative and interesting as well. Without further ado, here is my interview with Paul Ryan.
Google Inc. has agreed to change some of its business practices to resolve Federal Trade Commission concerns that those practices could stifle competition in the markets for popular devices such as smart phones, tablets and gaming consoles, as well as the market for online search advertising.
Under a settlement reached with the FTC, Google will meet its prior commitments to allow competitors access – on fair, reasonable, and non-discriminatory terms – to patents on critical standardized technologies needed to make popular devices such as smart phones, laptop and tablet computers, and gaming consoles. In a separate letter of commitment to the Commission, Google has agreed to give online advertisers more flexibility to simultaneously manage ad campaigns on Google’s AdWords platform and on rival ad platforms; and to refrain from misappropriating online content from so-called “vertical” websites that focus on specific categories such as shopping or travel for use in its own vertical offerings.
“The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy,” said FTC Chairman Jon Leibowitz. “This was an incredibly thorough and careful investigation by the Commission, and the outcome is a strong and enforceable set of agreements.”
On December 19, 2012, ARRIS Group, Inc. (NASDAQ: ARRS) and Google Inc. (NASDAQ: GOOG) jointly announced that ARRIS and Motorola Mobility, a Google subsidiary, have entered into a definitive agreement under which ARRIS will acquire the Motorola Home business from Motorola Mobility, for $2.35 billion in a cash-and-stock transaction approved by the Boards of Directors of both companies. The acquisition will be on a cash-free, debt-free basis and is expected to be significantly accretive to ARRIS’ Non-GAAP earnings starting in the first full year after closing.
Under the terms of the agreement, upon closing of the transaction, Google will receive $2.05 billion in cash and approximately $300 million in newly issued ARRIS shares, subject to certain adjustments provided for in the agreement, representing an approximately 15.7% ownership interest in ARRIS post-closing.
Shortly after the Nortel transaction and Google’s acquisition of Motorola Mobility in the summer of 2011, some industry observers quickly warned us that patent market was a bubble (here, hereand here). The debate over the patent bubble has been going on since then (examples can be seen here, here and here). Some were saying that the patent bubble has already burst (hereand here), some saying it’s about to, while still others keeping hailing the booming patent market.
To be sure, all of the concerns over the patent bubble are legitimate, and as always, rational debate is beneficial to the healthy development of patent market. There is no doubt that most of the opinions expressed were based on the observers’ experience and the information available to them at the time. Unfortunately, unlike in the well-established financial markets where transaction information and price data are mostly available for research and analysis, the prices and deal terms in patent transactions are usually kept secret by the parties. Except for meeting certain regulatory requirements (such as SEC filing in the US) for publicly-traded companies, there is usually not much additional motivation for the parties to release the prices and deal terms in patent transactions.
The lack of disclosure leads to the scarcity of data, and what comes with the scarcity are the incompleteness and obscurity, all of which lead to misinterpretation of the data and information. More importantly, misinterpretation, in turn, can lead to mispricing and market inefficiency when the misinterpreted data is applied to value patents for transaction. For example, after the Nortel transaction and Google’s acquisition of Motorola Mobility, some observers noticed that both deals were concluded on a $750K per patent basis. Therefore, as the story goes, market price per patent was about $750K per patent.
On Thursday, June 7, 2012, the U.S. International Trade Commission (ITC) announced that it had launched an investigation into whether certain RF Micro Devices, Inc. (RFMD) products infringe patents owned by Peregrine Semiconductor Corporation, a leading provider of high-performance radio-frequency (RF) integrated circuits (ICs). The action and investigation initiated by the ITC include Motorola Mobility, Inc. and HTC Corporation (HTC), whose products incorporate the alleged infringing RF ICs. Peregrine holds numerous U.S. and foreign patents based on its work in developing and manufacturing high-performance products that can be produced using standard CMOS-based semiconductor manufacturing processes. These patented innovations allow RF solutions to be produced with a combination of high levels of monolithic integration and performance, small size and low power consumption.
This ITC investigation is the result of complaints filed by Peregrine by and through Rosa Jeong, an attorney in the Washington, DC, offices of Greenberg Traurig. The first complaint was filed with the ITC on February 14, 2012 and an amended complaint filed on May 11, 2012. The ITC specifically identified the amended complaint filed by Peregrine on May 11, 2012 as the complaint that provoked the investigation. The amended complaint alleges violations of section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain radio frequency integrated circuits and devices containing same that infringe patents asserted by the complainant.
In my last article, I posed the question whether the “Smart Phone Patent Wars” were giving IP rights – and more specifically, patents – a bad rap? My conclusion was an unfortunate “yes,” with the villains being a handful of companies that willingly contributed patented technologies to various standard setting organizations (SSOs), encouraged their use in a host of consumer electronics, and years later charge the very producers they encouraged to implement these standards with patent infringement. Now in this article – the second in a six-part series – I examine the so-called “Fair, Reasonable and Non-Discriminatory” (FRAND) licensing terms that SSOs require of their participants.
First, before discussing the meaning of FRAND licensing terms, we must understand the nature and importance of SSOs. These national or international organizations are typically private, non-profit organizations whose members include for-profit company participants seeking to establish one or more technical standards that will be incorporated into a product or technical system. Some of the more widely recognized SSOs include the Institute of Electrical and Electronics Engineers (IEEE), the Joint Electron Device Engineering Council (JEDEC) and the Telecommunications Industry Association (TIA). The technical standards adopted by these SSOs are voluntary (unless they are enacted into law by, for example, a state legislature), but influential. Why, however, have technical standards? Well, would you buy a smart phone if it could not connect to a mobile network so that you can communicate (by voice or text) to your peers, visit all your favorite websites on the Internet or download pictures, videos and the like? That is, standardization delivers consumer benefits, especially in product markets where the very value of the product is the fact that a great number of other consumers use the same or a compatible product.
In the last decade, a substantial market has begun to develop for contingent fee representation in patent litigation. Wiley Rein — a traditional general practice law firm with hundreds of attorneys practicing all areas of law — represented a small company, NTP, Inc., in its patent infringement lawsuit against Research in Motion, the manufacturer of the Blackberry line of devices. The lawsuit famously settled in 2006 for $612.5 million, and the press reported Wiley Rein received over $200 million because it handled the lawsuit on a contingent fee basis. And Wiley Rein is not alone in doing so. Many patent litigators around the country have migrated toward handling patent cases on a contingent fee basis.
In the past, patent litigation was almost entirely performed on an hourly fee basis rather than on a contingent fee basis. That made sense because patent litigation appeared a poor candidate for contingent representation. Among other reasons, patent cases were expensive to litigate, took years to resolve, and outcomes on liability and damages were considered uncertain and unpredictable. In contrast, personal injury cases are relatively inexpensive to litigate, are adjudicated quicker, and often the liability of the defendant is not seriously disputed.
I have often stated that the lifeblood of any high-tech enterprise is the intellectual property (IP) rights that it controls or potentially controls. This is especially true for my small- and medium-sized enterprise (SME) clients with respect to their short-term salability, long-term profitability, and eventual ability to undertake an IPO or sale exit. It seemed that public sentiment and the popular press were in accord with this view no more so than when President Obama signed the America Invents Act into law on September 16, 2011. The law, which received bi-partisan support by passing the U.S. House of Representatives 304-117, and the U.S. Senate 89-9, was widely-praised as the first major overhaul to the U.S. patent system in almost 60 years. The recent (and mostly negative) headlines concerning the “Smart Phone Patent Wars,” however, has made me wonder if IP rights – and more specifically, patents – are once again getting a bad rap?
The smart phone wars began in 2011 as mobile industry giants either gained or lost profits due to the growth of alternative mobile platforms. As the wars heated up, Google, Inc. acquired Motorola Mobility Holdings, Inc. – and its 17,000 patents – for US$12.5B on August 15, 2011. (After netting out other assets and liabilities, the price per patent was US$510,204.08!) This led to the increased headlines. A nice graphicalsummary of the wars – whose battlegrounds have been the U.S. International Trade Commission (ITC) in Washington, D.C., the European Commission in Belgium and federal trial courts all over the U.S., Europe and Asia – can be found here.
Earlier today Intellectual Ventures (IV) sued Motorola Mobility for patent infringement in the United States Federal District Court for the District of Delaware. At issue are six patents that IV claims relate to Google’s Android operating system — US Patent Nos. 7,810,144, 6,412,953, 7,409,450, 7,120,462, 6,557,054 and, 6,658,464.
This litigation is worth noting for several reasons. First, this is yet another patent infringement complaint against Google’s Android operating system. It seems that practically every month there is another lawsuit claiming that Android infringes this or that patent, which has to raise eyebrows with respect to the underlying intellectual property Google owns in its operating system that is intended to compete against Apple. Second, once upon a time Google funded IV and vouched for the company and its founder, Microsoft alumnus Nathan Myhrvold. Now IV has turned the tables on Google, is going after Android and in so doing is suing the company that Google is set to acquire for $12.5 billion.
Whenever a company name is splashed through the headlines regarding some big deal, unsolicited advice is never far behind. Cocktail party chatter and water-cooler insight all include some sage observation. I cannot resist, even if I am a little late to the party.
Firstly, well done. Buying Motorola Mobility was an excellent move. No one ever said Google (NASDAQ: GOOG) had to be a pure play on or in anything in particular. If it wants to integrate laterally/vertically, good. Google is well funded and can leverage Motorola know-how into many spaces. Next up, HPs moribund computer biz.