Posts Tagged: "non-practicing entities"

Judge McNamara explained that domestic industry is not limited to the activities of the patentee and may be satisfied based on a licensee’s activities alone… Judge McNamara explained that the Commission does not require third-party licensees to participate as co-complainants… Judge McNamara explained that the appropriate date for determining domestic industry is the date a complaint is filed even though, in cases where evidence shows a dwindling industry, the Commission may consider activities beyond the complaint date.

Non-practicing entities are especially likely to be subject to personal jurisdiction because the nature of their business involves asserting and litigating patent rights in foreign courts. This is especially true if the non-practicing entity has had other litigations in the state… Papst is a non-practicing entity engaged in the business of acquiring and asserting patent rights incorporated under the laws of Germany and having its principal place of business there. In October 2012, Papst acquired the patents-in-suit and investigated Xilinx, a Delaware corporation with headquarters in San Jose, California. Papst sent two patent-infringement notice letters to Xilinx in 2014 encouraging Xilinx to take a patent license. Three representatives from Papst traveled to California in October 2014 to meet with Xilinx to discuss Papst’s infringement allegations and Xilinx’s potential licensing.

The Supreme Court has run two areas of technology, bio and software, into a legal ditch from which there is no escape…. It should be no surprise then that research and progress in these two fields is decamping and moving off-shore, along with the attendant jobs and economic activity. In essence, the boundless technical future, upon which the US economy has long thrived, is being given to others with whom the US competes… As for the 35 USC 101 conundrums, here’s the fix. DO NOT MODIFY 101! Rather, modify the definitions in 35 USC 100 as follows, and also supply a one paragraph legislative history as to why this definition was changed.

Anyone who has followed recent developments in the U.S. patent landscape, however, might note something interesting occurring in this particular case. According to the recent patent assertion entity (PAE) report put out by the Federal Trade Commission (FTC), Network-1’s business activities would seem to put it in the category of what the FTC calls a “litigation PAE.”… Unfortunately for the FTC, Network-1’s license agreement with Polycom is horribly inconsistent with the agency’s findings on the exact business model that Network-1 seems to employ.

The Federal Trade Commission’s (FTC) recently released report on patent assertion entities (PAEs) includes a number of key findings made by the agency on the business model of such companies. The FTC identified two different business models employed by PAEs which differ in terms of litigation and licensing activity. Most of the FTC’s recommendations are legislative in scope but the report does include some advice for the country’s judicial system. For example, the report also includes a number of recommendations to deter what the FTC calls “nuisance litigation.”

Basing policy recommendations on no evidence, or at best anecdotal evidence, has great potential to do more harm than good…especially when some of the missing evidence is the other side of the equation – the benefits afforded by patent licensing activity… Instead of seizing the opportunity to survey the patent licensing landscape and shed light on behavior that otherwise is invisible to the public, the FTC squandered the chance and instead developed two arbitrary categories of PAEs, determined that one of these categories was not good, and developed a set of policy recommendations because of “nuisance” litigation. By making recommendations without gathering or using the very facts that were supposed to be the public benefit of this PAE study, the FTC’s report is undoubtedly going to do more harm than good.

Why should the costs of the tortfeasing infringer be relevant in determining whether the extracted value from a settlement is fair? The fact that law firms charge a lot of money to defend patent infringement cases, and don’t particularly have any incentive to settle cases early, somehow translates into certain settlements being for nuisance value without any consideration of whether the settlement is a fair value for the rights trampled upon by the infringer? The FTC has quite a lot of explaining to do, because it seems they picked an arbitrary number that is a function of what attorneys ordinarily charge infringing defendants through discovery. I don’t see how that is a function of the value of the innovation, or how it says anything about the merits of the infringement case, the damages case, or the tactics of the patent owner. In fact, it seems as if the $300,000 figure is completely irrelevant.

To be fair, the coverage by Ars Technica doesn’t take the same vituperative tone as other voices who have concerns related to abuses of the U.S. patent system. However, it’s paramount for those who are covering the patent world to be judicious in their use of the “patent troll” designation, especially as the problem has been used to support legislation proposed in both houses of Congress… Ars could absolutely be accused of having a knowledge of the U.S. patent system that fails to account for some important nuances in patent licensing and enforcement. Indeed, they would do well to take into consideration the FTC’s recent admonition in the long awaited PAE report: “In the Commission’s view, a label like ‘patent troll’ is unhelpful because it invites pre-judgment about the societal impact of patent assertion activity without an understanding of the underlying business model that fuels such activity.”

Despite what many thought were the intentions of the FTC going into this project, the FTC did acknowledge the important role patent enforcement plays within the patent system, specifically and directly acknowledging in the press release issued today that “infringement litigation plays an important role in protecting patent rights.” It is also particularly noteworthy that the FTC recognized that the term patent troll is unhelpful because it inappropriately prejudices the patent owner from the start, without any consideration of business model or the legitimate and rightful attempts to enforce property rights. All-in-all, probably a much better report than most in the patent owner community had anticipated.

Yahoo’s proposed auction of the Excalibur portfolio is likely to be the largest sale of computer-related patents since the Alice Corp. v. CLS Bank Int’l ruling in June of 2014. Alice may reduce the number of overly-broad patents in existence in the long run, but (ironically) in the short term the decision may have skewed patent value calculations in a way that encourages the kinds of behaviors it was supposed to negate. A sale of the Excalibur patents will provide an important test of Alice’s effects in the short term.

The validity of secondary markets for a variety of goods and services is never questioned. Securities are sold and resold many times after their initial offering, homes and buildings and built and resold many times, as are automobiles. A quick review of the products listed an eBay leaves little doubt that a robust secondary market exists for many goods and services across the American economy. However, not everyone is in agreement that a secondary patent market is beneficial. For some reason, many people villainize companies that practice patent licensing. Even resorting to the use of pejorative terms such as “patent troll” to describe these businesses. These detractors fail to account for the fact that inventors may not be the most efficient licensors. In addition, they don’t take into account that, just as a builder generates revenue to build more buildings by selling their current ones, companies that sell or license patents help fund further R&D with the proceeds.

The information the FTC has been collecting regarding patent assertion entities is extensive. Along with standard corporate information, the FTC is making a survey of each patent in PAE portfolios going back to 2008 to investigate the date of patent acquisition, the patent’s maintenance fee status as well as the assertion history for all patents upon which the PAE has attempted to enforce its rights. Firms are also being asked to describe their business model, the methods used to organize their patent portfolios and the aggregate costs of patent acquisition and assertion. The FTC has sent information requests to 25 PAEs in order to build its evidence.

The patent trolling by MPHJ and owner, Texas lawyer Jay Mac Rust, are well known. But now the SEC is going after Jay Mac Rust in federal court for fraud. The SEC’s complaint maintains that Atlantic had “no ability or intention to obtain these loans.” Rather, of the money the two collected, the SEC alleges that Rust took $662,000 from client funds for personal pay and risky securities investments; Brenner himself took $595,000, and both made investments claiming that the money was personally theirs and not from the client funds. Investigations at a brokerage firm where these trades were taking place led the SEC to discover the fraudulent activities.

Regulators face a twofold challenge: First, they need to balance the legitimate interests of patent holders and licensees in order to determine which activities and contracts the law will enforce, or otherwise recognize as creating legal rights. Second, they need to establish rules that minimize both the costs of assessing a given case, and the costs of taking wrong decisions. One traditional approach has been to use antitrust law.

“Patent troll,” the term employed by leading newspapers, magazines and online publications to describe how some patents are owned and used, provides a prejudicial impression of patent licensing that unfairly influences attitudes towards disputes. This is among the findings of the research conducted by Illinois Institute of Technology – Chicago-Kent College of Law Professor, Edward Lee.