Posts Tagged: "PAEs"

NPEs are uniquely positioned to help China by attacking foreign entities to clear the way for Chinese companies by exerting pressure in ways that only NPEs can. Even if Chinese semiconductor companies had the necessary patents and experience to engage their foreign competitors, they would risk retaliation from these foreign parties. NPEs, on the other hand, can unilaterally attack foreigners without fear of retaliatory patent suits. Although there are a few of antitrust issues, I do not believe that NPEs that act in the best interest of China should, or will, be attacked by the NDRC or any other antitrust agency in China.

Activist Supreme Court decisions in the last decade have been principally responsible for these changes, stimulated by aggressive technology company incumbent lobbying. The combination of these decisions has had a far greater effect on the patent system and the economy than the Court originally intended. The U.S. is now in a compulsory licensing regime in which large technology incumbents that control at least 80% of collective market share employ an “efficient infringement” model of ignoring patents and forcing patent holders to enforce patent rights in the courts.

To come up with the list below I’ve reviewed all of our patent articles, and have come up with these top 10 patent stories for 2016. They appear in chronological order as they happened throughout the year. Just missing the top 10 cut were the Supreme Court denying cert. in Sequenom and the USPTO being sued for Director Lee declaring a federal holiday. As interesting as those stories may have been, there was far more consequential patent news in 2016. Also missing the cut, but particularly interesting were the rather egregious and insulting response filed in an Office Action in September, and the embarrassing concurring decision by Judge Mayer in Intellectual Ventures. While the latter two were truly train wreck moments, they were fleeting. Judge Mayer has completely marginalized himself on the Federal Circuit with no one embracing his extreme and inaccurate reading of Alice, and that type of albeit cringe-worthy and unprofessional response to an Office Action happens very rarely.

Patents and the innovators who own them do not “cost” the U.S. economy tens of billions of dollars each year. This claim has been repeatedly and thoroughly debunked… But for a moment let’s buy into the fraud. If you actually do the math, which the Internet Association and infringer lobby obviously has never done, you will be amazed as how inconsequential even their grossly inflated estimates of cost are in terms of the scale of the overall U.S. tech economy… If the problems with patents are so awful because they create such a windfall for patent owners doesn’t that just admit that these companies are misleading their own shareholders and perhaps even not maximizing value?

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.

Peter Thiel, Reince Priebus and Jared Kushner are hosting technology industry giants for a policy discussion at Trump Tower on December 14, 2016. Patent reform is likely to be on the agenda as it is one of the issues tech giants (along with big banks and retailers old and new) have invested in heavily for over a decade… Is it possible that the positions of these three key Trump advisors will coalesce around a nuanced patent policy in a Trump Administration along the lines of the recent FTC PAE report, which sought to distinguish innovators and their need to enforce patent rights from bad actions of those who employ abusive litigation tactics?

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.

Simply stated, Fortune is wrong. The FTC report did not have harsh words for patent trolls. In fact, the FTC had harsh words for those who use the term “patent troll” to vilify patent owners! At the risk of upsetting the predetermined narrative obviously favored by Fortune, allow us to interject some facts into this discussion… Perhaps Fortune confined their coverage of the FTC report to the press release accompanying the report, which conspicuously leaves out any mention of patent trolls, or that they view the term “patent troll” as being unhelpful and prejudicial. Seriously, if you are going to cover a report shouldn’t you at least read all of Chapter One?

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.

Another incursion into research university governance and operations is now underway. And this time all research universities are affected. Led by the DC Based Electronic Frontier Foundation, a leftist anti-patent activist coalition that has initiated a 50-state legislative campaign to shrink research university patent licensing rights at the state level. (See) The measure’s purported objective is to prevent publicly funded university research patents from being licensed to so-called “Patent Assertion Entities” (PAEs, also known by the pejorative term “patent trolls”). The draft legislation is imprecise, making it even more dangerous than first appears.