Unlike NPEs, defensive patent pools entities do not (at least initially) seek to generate revenues. Rather, they charge admission fees into the pool to fund IP acquisitions and the administrative costs to operate the pool. In sum, defensive patent pool aggregation is analogous to an insurance policy. But, where classic insurance lowers a company’s costs when accidents happen, patent pools are designed to reduce the likelihood of accidents (i.e., being sued for patent infringement) from happening at all.

In the case of product sales, 58 institutions (31 percent of the 186 respondents) reported that 2,821 of their licenses paid $662 million in running royalties based on $37 billion in product sales, implying an average royalty rate of 1.8 percent. In the case of startups, 66 institutions (35 percent of the 186 respondents) reported employment of 24,653 by 1,731 operational startups, an average of 14 employees per startup. Assuming all 3,927 startups still operational averaged 14 employees, total employment would have been 55,929.

In the past several years, the Second, Eleventh, and Federal Circuits have upheld these settlements (known as “reverse payment” agreements since the money flows from the patentee to the alleged infringer rather than the other way around). These courts have focused on the benefits of settling cases and the presumption of patent validity, and they have explained that payments fall within the “scope of the patent.” In contrast, the Third Circuit recently applied more aggressive scrutiny, rejecting the scope test and finding that payments for delay were “prima facie evidence of an unreasonable restraint of trade.”

As Myriad has correctly pointed out in its brief in opposition to the grant of certiorari, the question posed by the ACLU/PubPat (“Are Human Genes Patentable”) is absolutely the wrong one to answer: “The first question presented [by the ACLU/PubPat] bears no relation to the uncontroverted facts of this case.” (Myriad’s brief in opposition has also pointed out at least 4 other significant factual and legal “misstatements” made in the petition for certiorari by ACLU/PubPat.) As much as the ACLU/PubPat (and others) want to make the Myriad case into about “Who Owns You,” what Myriad has claimed does nothing of the sort. In fact, a “yes” answer to the question posed by the ACLU/PubPat does not automatically lead to Myriad’s claimed “isolated” DNA sequences being patent-ineligible. Those claimed “isolated” DNA sequences are not “genes” by any standard molecular biology definition of what that term actually means. Instead, and as accurately characterized by Judge Lourie, these claimed “isolated” DNA sequences are “novel biological molecules.”

This is very good news for defendants and for the patent system. If Rule 11 is actually enforced against those who sue without a reasonable basis the bad actors will be wiped out. It will also work to identify those who are REALLY the patent trolls compared with those who are patent owner who simply seek redress for rights that are being trampled. As long as the bad actors operate the patent system will remain in jeopardy because the popular press and critics of the patent system unjustifiably paint all non-practicing entities with the same brush. Meaningful and appropriate use of Rule 11 will deal with the bad actors, while distinguishing from those non-practicing entities that have reasonable grievances that deserve consideration rather that ridicule.

Crocs, Inc. (NASDAQ: CROX) announced earlier today that Chinese courts have sentenced 18 individuals to a total of more than 46 years in prison for producing and selling counterfeit Crocs goods. Seventeen individuals were convicted of counterfeiting, and two of the 17 also were convicted of offering bribes. Another individual also was convicted on bribery charges in connection with production of counterfeit Crocs™ shoes. In addition to prison sentences, the above men together face fines totaling RMB 2,832,500 (approximately $450,896).

On Monday, December 10, 2012, Intellectual Property Owners Education Foundation will honor 39th Annual National Inventor of the Year Alex Kipman, 2012 Distinguished IP Professional Judge James Holderman, and the six winners of the Second Annual IP Video Contest, in a ceremony at the Smithsonian American Art Museum and National Portrait Gallery.

Why is this fight so important? It could be a crucial decision for both companies, with the winner gaining leverage in the fast-paced and ever-growing billion dollar market. Each side wants to protect their stake, since they risk losing their high position on the mobile leaderboard as so many companies before them have done. Prime examples of companies that were once at the top of the game but are nowhere to be seen are BlackBerry and Nokia. Both of these were once the biggest names in mobile phones and handheld devices, but lost their edge once new technology started coming out.

On Wednesday, December 5, 2012, the House of Representatives passed two bills that are now await President Obama’s signature. The bill — S. 3486— implements both the Patent Law Treaty (PLT) and the Hague Agreement Concerning the International Registration of Industrial Designs. The U.S. Senate previously passed the same bill in the same form on September 22, 2012. Thus, the remaking of U.S. patent law and patent practice continues, and we will see more rulemaking coming from the United States Patent and Trademark Office.

If you haven’t noticed America doesn’t make anything any more, at least nothing that is tangible. Everything we buy is made in China, or Mexico or Viet Nam or somewhere else. The U.S. economy is based on intellectual property and the foundational intellectual property we have for the 21st century innovation based economy is software. We know from history that where patent rights are strongest is where companies locate, innovate and grow. Where patent rights are weakest there is no foreign direct investment, companies do not go there and economies suffer. Once upon a time the UK dominated in biotechnology, but now the U.S. is dominant thanks to a strong and liberal patent system. If we curtail software patents we will be forfeiting not a single industry, but an enormous software industry AND any number of other industries and sub-industries in various other technology fields that rely upon the development of software. Think bio-informatics, for example.

The brief addresses this issue in the context of patent infringement claims that Motorola, Inc. has filed against Apple, Inc. regarding technologies used in iPhones and iPads that allegedly are covered by Motorola’s SEPs. It concludes that a district court correctly applied the governing legal principles when it dismissed Motorola’s request for an injunction that could have blocked Apple from selling iPhones and iPads in the United States.

An online advertising company agreed to settle Federal Trade Commission charges that it used “history sniffing” to secretly and illegally gather data from millions of consumers about their interest in sensitive medical and financial issues ranging from fertility and incontinence to debt relief and personal bankruptcy. The FTC settlement order bars the company, Epic Marketplace Inc., from continuing to use history sniffing technology, which allows online operators to “sniff” a browser to see what sites consumers have visited in the past.

When the media paints images of all patents being bad they are doing a disservice to the industry and ignoring the good that has come from patented innovation and the sharing of such innovation via patent pools and other cross-licensing arrangements. Patent pooling is one example of a proven, effective tool that is helping industry better manage its licensing programs. By “pooling” patents from many license holders, licensors generally are able to lower transaction costs and administrative overhead, and benefit from a centralized model that encourages patent bundling and fair play. Licensees likewise enjoy advantages in the form of lower royalty fees and a single point of contact that eliminates the need to negotiate separately with multiple license holders.

On November 28, 2012, Forest Laboratories, Inc. (NYSE: FRX) and Forest Laboratories Holdings, Ltd. (collectively,“Forest”) announced that they entered into settlement agreements with Alkem Laboratories, Ltd. (“Alkem”), Indchemie Health Specialties Pvt. Ltd. (“Indchemie”), and Torrent Pharmaceuticals Ltd. and Torrent Pharma Inc. (collectively, “Torrent”) in patent infringement litigation brought by Forest in response to abbreviated new drug applications (ANDAs) filed by Alkem, Indchemie and Torrent each seeking approval to market generic versions of Forest’s BYSTOLIC® (nebivolol) tablets.

Several public interest groups recently filed a march in petition under the Bayh-Dole Act asking NIH to force Abbott Laboratories to license its competitors for the production of Ritonavir, a drug used to treat AIDS.  Drug developers face a daunting task. For every 5,000 drugs tested, about five proceed to clinical trials. Perhaps one is eventually approved.  That one must not only pay for itself, but for all the company’s other drugs that died along the way. This grim math eludes the petitioners.