Retail Patent Litigation

Illinois Patent Trial Attorney | R. David Donoghue

Modifying the Innovation Act to Selectively Target the Patent Troll Problem

Posted in Patent Litigation Tips

The following is a blog post by Varun Shah, Aruba Network’s Director, Intellectual Property — full disclosure, I previously represented Aruba.  Shah has an interesting alternative patent reform proposal that seeks to target the patent troll problem.  It is interesting for retailers because it is under-inclusive.  On the one hand, that is less than ideal because it does not cover all trolls (or at least all entities that are arguably trolls).  On the other hand, it is intriguing because by being under-inclusive it minimizes the impact of the legislation outside of the troll world, which may make it easier to get it a vote in both houses of Congress.  Similar to the limited discovery example above, other sections of the Innovation Act may be considered for modification such that the rights and requirements related to patent assertion activities depend on whether or not the current patent owner is one of (a), (b), or (c) identified above.  So, while Shah’s proposal is not perfect, it is an interesting proposal and is, at a minimum, positive in that it is creating new discussion around patent reform.

With that, here are Shah’s thoughts: 

The Innovation Act was a great attempt at reducing the patent troll problem for the Information Technology industry. For example, the Innovation Act proposed regulating patent litigation practice by increasing pleading standards, placing limitations on patent discovery, and providing cost-shifting mechanisms. However, the Innovation Act is now stalled in Congress, in part, due to the rejection by the Pharmaceutical and Biotech industries of the new proposed regulations such as the limitations on discovery. A solution is needed that reduces the patent troll problem for the Information Technology industry while balancing the needs of the Pharmaceutical and Biotech industries.

I propose modifying the Innovation Act to limit discovery only if the current patent owner is not one of:

  1. The inventor
  2. The assignee, including subsidiaries and parent companies thereof, to whom the inventor was obligated to assign to at the time of filing an application for the patent
  3. An acquiring entity that acquired the patent in a sale of an established line of business originated by (a) or (b), the sale including all trademarks, copyrights, and patents related to the established line of business.

Additional criteria for qualifying as a sale of an established line of business (such as a minimum annual revenue for the established line of business) may be needed in order to ensure that patents are not held in shell entities for selling of patents to third parties and designing around this proposal.

Similar to the limited discovery example above, other sections of the Innovation Act may be considered for modification such that the rights and requirements related to patent assertion activities depend on whether or not the current patent owner is one of (a), (b), or (c) identified above.

This proposal reduces the patent troll problem for the Information Technology industry without reducing the patent assertion rights for the original patent Applicant. More generally, this proposal will protect the interests of all innovators that actually generate the ideas/patents while partially diluting the value of the patents if commoditized and transferred to others that are abusing and burdening the patent system. This re-structuring of patent value is in-line with the true goals of the patent system, i.e., the promotion of innovation.

– — – –

Mr. Shah is actively discussing the proposal with bill writers in Representative Goodlatte’s office to modify the Innovation Act.  If you are in support of the proposal, Mr. Shah suggests contacting the key policymakers: Representative Goodlatte, Senator Reid, Senator Leahy, Senator Cornyn, Senator Schumer, and the White House Office of Science and Technology Policy (OSTP).

Measuring the Cost of Patents: Smartphone Royalty Stacking

Posted in Patent Litigation Tips

Ann Armstrong (Vice President and Assistant General Counsel for Intel Corp.), and Joseph J. Mueller and Timothy D. Syrett (WilmerHale) recently released a working version of their article, The Smartphone Royalty Stack:  Surveying Royalty Demands for the components Within Modern SmartphonesThe article is not perfectly applicable to retailers because it is focused upon smartphones (hardware) as opposed to the software/internet technologies usually asserted against retailers.  But it is instructive regarding the overall tax patent assertions and licensing programs placed on technology.  Additionally, there are patent families included in the analysis that were also asserted against retailers, for example the Innovatio 8802.11x wifi portfolio. 

The study looks at a $400 smartphone — roughly the average price of smartphones before the consumer discounts — and estimates the various license demands for the phone.  Here is a summary of the results, which total $121-$124/$400 phone:

Technology

Potential Royalty Demands

Cellular Baseband Chip (Standardized)                                     $54
Wi-Fi/802.11                                     $50
AAC                                     $0.20
MP3                                     $0.95
H.264                                     $10.60
Operating system software (Microsoft or Android)                                     $5-8
Total (approx.)                                     $121-124

 

That is approximately 30% of the phone’s price.  30% is a massive innovation tax.  The tax on internet functionalities, for example the oft accused shopping cart functionality, could also easily be 30% of its price/value depending upon how you calculate the value.

Are Bilateral Troll Prosecution Bars Going the Way of the Dodo

Posted in Patent Litigation Tips

With a hat tip to Justin Sobaje at IP Litigtion Current, there appears to be a growing – and national – trend of district courts entering troll-only prosecution bars, and not just on unopposed, agreed motions.

In the E.D. Texas, the Court held that the troll and the target were not similarly situated, making a one way prosecution ban appropriate.  Smartflash LLC v. Apple Inc., No. 6:13-cv-447 (E.D. Tex. May 12, 2014).  D. Delaware has also come to similar conclusions.  DN Lookup Technologies v. Charter Communications, Inc., No. 11-1177-LPS (D. Del. June 11, 2012); Systems, LLC v. Draeger Medical GmbH, No. 11-1114-RGA (D. Del. Dec. 28, 2011) (holding that what is good for the goose is not necessarily good for the gander).

What does this mean for retailers?  It allows retailers the freedom to exclude a troll’s counsel that receives your highly confidential technology information from prosecuting future patents using that knowledge, without limiting your own choice of counsel if you are prosecuting your own patents in the space.  While most retailers are not prosecuting in the space trolls are suing them in, it is still nice to have available if you eventually need it.

January 2014 Retail Patent Litigation Report

Posted in Retail Litigation Report

The trolls started slow in January.  Repeat filers included Landmark Technology, Hawk Technology, MPHJ, Marshall Feature Recognition, and Wolf Run Hollow.

As usual, I prepared the report in partnership with and using Docket Navigator and its powerful database.  Docket Navigator is a valuable resource, and the place to go if you want to keep track of new patent litigation filings or want to know what is happening in particular cases, how your judge has historically handled a particular type of motion, or a particular plaintiff’s litigation history.

Finally, please let me know if you have thoughts about the report or changes you would like to see.  I am preparing it as a service for retailers and their supply chain who may want an overview of the patent litigation landscape.  So, I am very open to ways to improve the report for you.

JC Penney Corporation, Inc. v. Eolas Technologies, Inc. et al, (N.D. Cal.).

Claim:             Declaratory Judgment

Defendants:

  • Eolas Technologies, Inc.
  • The Regents of the University of California

Plaintiff:         JC Penney Corporation, Inc.

Pls. Cnsl:        JC Penney Corporation, Inc.

Patents:          8,082,293 (Distributed hypermedia method and system for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document); and 8,086,662 (Distributed hypermedia method and system for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document).

Hawk Technology Systems, LLC v. Hollywood Beach Resort Rental Program, LLC, (S.D. Fla.; D.N.J.; M.D. Fla.; N.D. Ill.) (multiple cases).

Judges:           District Judge James I. Cohn; District Judge K. Michael Moore; Magistrate Judge Douglas E. Arpert; District Judge William J. Zloch; District Judge Roy B. Dalton, Jr.; Magistrate Judge Gregory J. Kelly; District Judge John Z. Lee

Claim:             Infringement

Defendants:

  • Hollywood Beach Resort Rental Program, LLC
  • Sakert Shoprites, Inc.
  • Costco Wholesale Corporation
  • Universal City Development Partners, Ltd.
  • Pacific Langham Chicago Corporation, d/b/a The Langham Chicago

Plaintiff:         Hawk Technology Systems, LLC

Pls. Cnsl:        Lipscomb Eisenberg & Baker; Patrick J Cerillo, LLC; Schulz Law

Patent:           RE 43,462 (Video monitoring and conferencing system).

Tejas Research, LLC v. Dillard’s, Inc., (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • O’Reilly Automotive, Inc.
  • QVC, Inc.
  • Starbucks Corporation
  • Tractor Supply Company

Plaintiff:         Tejas Research, LLC

Pls. Cnsl:        Austin Hansley PLLC

Patent:           6,006,231 (File format for an image including multiple versions of an image, and related system and method).

NovelPoint Tracking LLC v. Austad’s Golf, Inc., (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • Budget Golf II, Inc.
  • Dick’s Sporting Goods, Inc.
  • Golf Galaxy, Inc.
  • Edwin Watts Golf Shops, LLC
  • Global Value Commerce, Inc. dba Global Golf
  • Pro Golf Discount, Inc.
  • Golfsmith International Holdings Inc dba Golfsmith          
  • Golf & Tennis Pro Shop, Inc.
  • The Golf Warehouse, Inc.
  • Worldwide Golf Enterprises, Inc.

Plaintiff:         NovelPoint Tracking LLC

Pls. Cnsl:        Spangler Law; Stamoulis & Weinblatt

Patent:           6,442,485 (Method and apparatus for an automatic vehicle location, collision notification, and synthetic voice).

MPHJ Technology Investments, LLC v. Dillard’s, Inc., (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:

  • The Coca-Cola Company
  • Huhtamaki Americas, Inc.
  • Unum Group  

Plaintiff:         MPHJ Technology Investments, LLC

Pls. Cnsl:        Farney Daniels; Stamoulis & Weinblatt

Patents:          7,477,410 (Distributed computer architecture and process for virtual copying); and 8,488,173 (Distributed computer architecture and process for document management).

Ideative Product Ventures, Inc. v. CTA Digital Inc., (E.D. Tex.) (multiple cases).

Judge:             District Judge Richard A. Schell

Claim:             Infringement

Defendants:

  • Staples, Inc.
  • StarTech.com USA, LLP
  • Lindy Computer Connection Technology, Inc.
  • Hewlett-Packard Company
  • Monoprice, Inc.
  • Monster Cable Products, Inc.
  • Tera Grand Corporation
  • Philips Electronics North America Corporation
  • TigerDirect, Inc.

Plaintiff:         Ideative Product Ventures, Inc.

Pls. Cnsl:        Klemchuk Kubasta

Patent:           7,494,343 (Multiple degrees of freedom connectors and adapters).

Marshall Feature Recognition LLC v. Kao USA, Inc., (E.D. Tex.) (multiple cases).

Judges:           District Judge Rodney Gilstrap; Magistrate Judge Roy S. Payne

Claim:             Infringement

Defendants:

  • Select Comfort Retail Corporation
  • The Procter & Gamble Company
  • Walgreen Co.

Plaintiff:         Marshall Feature Recognition LLC

Pls. Cnsl:        Austin Hansley PLLC

Patent:           6,886,750 (Method and apparatus for accessing electronic data via a familiar printed medium).

Wolf Run Hollow, LLC v. Kohl’s Department Stores, Inc., (E.D. Tex.)

Judge:             District Judge Rodney Gilstrap

Claim:             Infringement

Defendant:     Kohl’s Department Stores, Inc.

Plaintiff:         Wolf Run Hollow, LLC

Pls. Cnsl:        Austin Hansley PLLC

Patent:           6,115,817 (Methods and systems for facilitating transmission of secure messages across insecure networks).

Landmark Technology, LLC v. Deluxe Corp., (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • Louis Vuitton North America Inc.
  • Newell Rubbermaid, Inc.
  • Nutrisystem, Inc.
  • The Children’s Place Retail Stores, Inc.
  • Union Pacific Corp.

Plaintiff:         Landmark Technology, LLC

Pls. Cnsl:        Jeffer Mangels Butler & Mitchell; Parker Bunt & Ainsworth

Patents:          5,576,951 (Automated sales and services system); and 7,010,508 (Automated multimedia data processing network).

Online News Link LLC v. Backcountry.com, Inc., (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:

  • Bodybuilding.com, LLC
  • Evite, Inc
  • Provide Commerce, Inc.

Plaintiff:         Online News Link LLC

Pls. Cnsl:        DiNovo Price Ellwanger & Hardy; Farnan

Patents:          7,181,758 (Information distribution and processing system); 7,508,789 (Information distribution and processing system); and 8,457,545 (Information distribution and processing system).

Joao Bock Transaction Systems, LLC v. MasterCard Inc., (D. Del.).

Claim:             Infringement

Defendant:     MasterCard Inc.

Plaintiff:         Joao Bock Transaction Systems, LLC

Pls. Cnsl:        Heninger Garrison Davis; Stamoulis & Weinblatt

Patent:           7,096,003 (Transaction security apparatus).

Lone Star WiFi LLC v. Omni Hotel Corporation et al, (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • Omni Hotels Corporation
  • Omni Hotels Management Corporation
  • Marriott International, Inc.

Plaintiff:         Lone Star WiFi LLC

Pls. Cnsl:        Nelson Bumgardner Casto; Ward & Smith Law Firm

Patents:          7,490,348 (Wireless network having multiple communication allowances); 8,312,286 (Wireless network having multiple communication allowances); an 8,583,935 (Wireless network having multiple communication allowances).

E2E Processing, Inc. v. Cabela’s Incorporated, (E.D. Tex.) (multiple cases).

Judges:           District Judge Rodney Gilstrap; Magistrate Judge Roy S. Payne

Claim:             Infringement

Defendants:

  •  Crocs, Inc.
  • Crocs Retail LLC
  • Hallmark Cards Incorporated
  • Hallmark.com, LLC
  • Hallmark Interactive LLC
  • Nordstrom, Inc.

Plaintiff:         E2E Processing, Inc.

Pls. Cnsl:        Liner; Spangler Law

Patent:           6,981,222 (End-to-end transaction processing and statusing system and method).

Pollin Patent Licensing, LLC et al v. CNA Financial Corporation, (N.D. Ill.).

Judge:             District Judge Marvin E. Aspen

Claim:             Infringement

Defendant:     CNA Financial Corporation

Plaintiffs:

  • Autoscribe Corporation
  • Pollin Patent Licensing, LLC

Pls. Cnsl:        Niro Haller & Niro

Patent:           7,117,171 (System and method for making a payment from a financial account).

Trends in Patent Litigation

Posted in Patent Litigation Tips

Professors John Allison (University of Texas at Austin McCombs business school), Mark Lemley (Stanford), and David Schwartz (Chicago-Kent) have published an interesting article looking at empirical patent litigation data for cases filed in 2008 or 2009 as compared to similar data for cases filed in 1998-99 — Understanding the Realities of Modern Patent Litigation.  It is not a perfect data set because, as the article notes, it does not include the most recent cases, those filed in or after 2010.  But it does track decisions in the 2008-09 cases through 2013 which makes the data set more recent than it could be.  And regardless of whether it includes the most recent data, it is valuable for retailers to show macro trends in patent litigation.  Here are some highlights and related takeaways for retailers:

Anticipation is King.  In 1998-99, decided invalidity challenges (won or lost) were “overwhelmingly” based upon obviousness, to the point that although obviousness had a very low win rate, the largest number of invalidations were still based upon obviousness.  For the 2008-09 data set, there were as many anticipation challenges as obviousness challenges (154 v. 149).  This suggests that defendants have become more sophisticated and more cost conscious.  Knowing that obviousness challenges have a low win rate, defendants are focusing their prior art challenges on anticipation.  And anticipation challenges are likely to continue rising as obviousness challenges drop based upon: 1) the low win rate for obviousness; and 2) the fact that the PTAB is a far better trier of fact for obviousness arguments.  The Patent Office is accustomed to complex, multi-reference obviousness challenges and is willing to invalidate based upon obviousness, making the PTAB the faster, cheaper and most successful route for obviousness challenges.

The King is Dead.  Long Live the King.  Indefiniteness challenges, virtually non-existent in the 1998-99 data set, have overtaken anticipation and obviousness challenges with 176 motions.  And that is before the Nautilus, Inc. v. Biosig Instr., Inc., No. 13-369, __ S.Ct. __ (2014), decision replacing the “insolubly ambiguous” standard with the arguably higher standard that the patent must inform one of ordinary skill as to the scope of the term with reasonable certainty.  There is some dispute about whether the standard will result in increased indefiniteness, but whether or not it does it should at least generate more indefiniteness defenses and summary judgment motions while the district courts and eventually the Federal Circuit flesh out what the “reasonable certainty” standard means.

Invalidity SJ is a Long Shot.  Or at least, the motions have low success rates.  20% success for anticipation motions, 20% for obviousness, and 17% for indefiniteness.  The clear winner was 54% for Section 101 patentable subject matter motions.  One of the reasons for the low success rates is likely over-filing of invalidity motions.  I suspect defendants who file invalidity motions sparingly only when there really is no question of fact in a necessarily fact-intensive analysis have a much higher win percentage.  As patentable subject matter motions become more widespread (as they already are), we will likely see a large increase in the number of motions and some drop off in the win rate.

Invalidity Is Also a Long Shot at Trial.  Invalidity win rates at trial do improve, but not drastically:  31% for anticipation; 28% for obviousness; 17% for indefiniteness.  This is not surprising because the patentee enjoys the presumption of validity and jurors tend to see the Patent Office as beyond reproach, which collectively requires a very strong invalidity case and presentation to overcome.  These statistics are another indication that retailers should strongly consider Patent Office proceedings to challenge patent validity.

Patentees Lose Most of the Time.  While invalidity decisions have relatively low success rates (at least for now), patentees only win 26% of rulings on the merits.  This is because defendants win 54% of noninfringement motions, and if you include noninfringement stipulations after claim construction, the percentage raises to 57%.  And of course, the patentee has to win every issue to succeed.  So, the noninfringement and invalidity rulings are largely additive, with some limited overlap when a court decides motions together on multiple issues.

Forum Matters.  The article analyzed win rates which suggest that, patentees fair best in E.D. Texas and D. Delaware (the two biggest patent districts), as well as S.D. New York.  Conversely, patent defendants are most successful in C.D. California, N.D. California and N.D. Illinois.

December 2013 Retail Patent Litigation Report

Posted in Retail Litigation Report

The trolls ended the year quietly, as they often do.  Repeat filers included ArrivalStar, Eclipse IP, GPNE and Wolf Run Hollow.

As usual, I prepared the report in partnership with and using Docket Navigator and its powerful database.  Docket Navigator is a valuable resource, and the place to go if you want to keep track of new patent litigation filings or want to know what is happening in particular cases, how your judge has historically handled a particular type of motion, or a particular plaintiff’s litigation history.

Finally, please let me know if you have thoughts about the report or changes you would like to see.  I am preparing it as a service for retailers and their supply chain who may want an overview of the patent litigation landscape.  So, I am very open to ways to improve the report for you.

Patent:            5,872,589 (Interactive TV system for mass media distribution).

Eclipse IP LLC v. Dolls Kill, Inc., (C.D. Cal.) (multiple cases).

Judges:           Magistrate Judge Douglas F. McCormick; District Judge Fernando M. Olguin; District Judge George H. Wu; District Judge Gary A. Feess; District Judge Christina A. Snyder; District Judge Dale S. Fischer; Magistrate Judge Jean P. Rosenbluth; Magistrate Judge Paul L. Abrams; District Judge Otis D. Wright, II

Claim:             Infringement

Defendants:

  • Dolls Kill, Inc.
  • PC Connection, Inc.
  • Lulu’s Fashion Lounge, Inc.
  • Gilt Groupe, Inc.
  • Google Inc.
  • Waze, Inc.

Plaintiff:         Eclipse IP LLC

Pls. Cnsl:        Newport Trial Group; and Olavi Dunne

Patents:          7,119,716 (Response systems and methods for notification systems for modifying future notifications); 7,319,414 (Secure notification messaging systems and methods using authentication indicia); 7,876,239 (Secure notification messaging systems and methods using authentication indicia); 7,479,899 (Notification systems and methods enabling a response to cause connection between a notified PCD and a delivery or pickup representative); and 8,068,037 (Advertisement systems and methods for notification systems).

Phoenix Licensing, LLC et al v. AAA Life Insurance Company, (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • AAA Life Insurance Company
  • American Airlines, Inc.
  • AT&T, Inc.
  • AT&T Mobility, LLC
  • Carnival Corporation & PLC
  • Princess Cruise Lines, Ltd.
  • Chrysler Group LLC
  • Fidelity Brokerage Services, LLC
  • Fidelity Investments, Inc.
  • FMR LLC
  • General Motors Company

Plaintiffs:

  • LPL Licensing, LLC
  • Phoenix Licensing, LLC
  • Physicians Life Insurance Company
  • Physicians Mutual Insurance Company
  • Sallie Mae, Inc.
  • Upromise Inc.
  • United Airlines, Inc.

Pls. Cnsl:        Russ August & Kabat

Patents:          5,987,434 (Apparatus and method for transacting marketing and sales of financial products); 7,856,375 (Customized communication document creation system and method); 8,234,184 (Automated reply generation direct marketing system); 7,860,744 (System and method for automatically providing personalized notices concerning financial products and/or services); 8,352,317 (System for facilitating production of variable offer communications); 7,890,366 (Personalized communication documents, system and method for preparing same); 8,606,632 (System, method, and computer program product for selecting and presenting financial products and services); and 8,445,524 (Solid forms of bendamustine hydrochloride).

LPL Licensing, LLC et al v., (E.D. Tex. (multiple cases).

Claim:             Infringement

Defendants:

  • Comcast Cable Communications, LLC
  • Comcast Corporation
  • DirecTV, Inc.
  • DirecTV LLC
  • Sprint Corporation
  • Verizon Communications, Inc.
  • Verizon Wireless, Inc.
  • Dell Inc.
  • Toyota Financial Savings Bank
  • Toyota Motor North America, Inc.
  • Toyota Motor Sales USA, Inc.
  • Delta Air Lines, Inc.
  • Ford Motor Company
  • Royal Caribbean Cruises Ltd.
  • Wells Fargo Bank, National Association
  • Wells Fargo & Co.
  • Wells Fargo Insurance, Inc.

Plaintiffs:

  • LPL Licensing, LLC
  • Phoenix Licensing, LLC

Pls. Cnsl:        Russ August & Kabat

Patents:          5,987,434 (Apparatus and method for transacting marketing and sales of financial products); 7,860,744 (System and method for automatically providing personalized notices concerning financial products and/or services); 7,890,366 (Personalized communication documents, system and method for preparing same); 8,234,184 (Automated reply generation direct marketing system); 8,352,317 (System for facilitating production of variable offer communications); 8,606,632 (System, method, and computer program product for selecting and presenting financial products and services); and 7,856,375 (Customized communication document creation system and method).

MyMedicalRecords, Inc. v. Walgreen Co., (C.D. Cal.).

Claim:             Infringement

Defendant:     Walgreen Co.

Plaintiff:         MyMedicalRecords, Inc.

Pls. Cnsl:        Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor

Patent:            8,498,883 (Method for providing a user with a service for accessing and collecting prescriptions).

GPNE Corp. v. Rollins, Inc., (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:

  • Cadec Global, Inc.
  • Pilgrim’s Pride Corporation
  • FleetMatics USA, LLC
  • Amerigas Partners, LP

Plaintiff:         GPNE Corp.

Pls. Cnsl:        Niro Haller & Niro; O’Kelly Ernst & Bielli

Patents:          7,555,267 (Network communication system wherein a node obtains resources for transmitting data by transmitting two reservation requests); and 8,086,240 (Data communication system using a reserve request and four frequencies to enable transmitting data packets which can include a count value and termination indication information).

Paid, Inc. v. eBay Inc., (D. Mass.).

Claim:             Infringement

Defendant:     eBay Inc.

Plaintiff:         Paid, Inc.

Pls. Cnsl:        Hunton & Williams

Patents:          7,930,237 (Method and system for improved online auction); 8,352,357 (Method and system for improved online auction); and 8,521,642 (Method and system for improved online auction).

Appistry, Inc. v. Amazon.com, Inc. et al, (E.D. Mo.).

Judge:             District Judge Henry E. Autrey

Claim:             Infringement

Defendants:

  • Amazon.com, Inc.
  • Amazon Web Services, Inc.

Plaintiff:         Appistry, Inc.

Pls. Cnsl:        Haar and Woods; The Simon Law Firm

Patents:          8,200,746 (System and method for territory-based processing of information); and 8,341,209 (System and method for processing information via networked computers including request handlers, process handlers, and task handlers).

ArrivalStar SA et al v. Peter Wittwer Global Logistics, (M.D. Fla.).

Judges:           Magistrate Judge Thomas B. McCoun, III; District Judge Steven D. Merryday

Claim:             Infringement

Defendant:     Peter Wittwer Global Logistics

Plaintiffs:

  • ArrivalStar SA
  • Melvino Technologies Limited

Pls. Cnsl:        Leslie Robert Evans & Associates

Patents:          6,904,359 (Notification systems and methods with user-definable notifications based upon occurance of events); 6,952,645 (System and method for activation of an advance notification system for monitoring and reporting status of vehicle travel); and 7,400,970 (System and method for an advance notification system for monitoring and reporting proximity of a vehicle).

Wolf Run Hollow, LLC v. Sports Authority, Inc., (N.D. Ill.) (multiple cases).

Judge:             District Judge Ronald A. Guzman; District Judge Sara L. Ellis

Claim:             Infringement

Defendants:

  • Sports Authority, Inc.
  • Meijer Inc.

Plaintiff:         Wolf Run Hollow, LLC

Pls. Cnsl:        Parikh Law Group

Patent:           6,115,817 (Methods and systems for facilitating transmission of secure messages across insecure networks).

Sonic Industry, LLC v. Public Storage, Inc., (E.D. Tex.; N.D. Ill.) (multiple cases)

Judge:             District Judge Rodney Gilstrap; District Judge Sara L. Ellis; District Judge John W. Darrah; District Judge James B. Zagel; District Judge Milton I. Shadur

Claim:             Infringement

Defendants:

  • Public Storage, Inc.
  • RadioShack Corporation
  • Sally Beauty Holdings, Inc.  
  • Travelocity.com LP
  • United Parcel Service of America, Inc.
  • Carter’s, Inc.
  • The Coca-Cola Company
  • American Airlines, Inc.
  • iRobot Corporation
  • RMG Networks, Inc.

Plaintiff:         Sonic Industry, LLC

Pls. Cnsl:        Austin Hansley PLLC; and Parikh Law Group

Patent:           5,954,793 (Remote limit-setting information distribution system).

Benefits Of Parallel District Court Litigation and Patent Office Review

Posted in Patent Litigation Tips

I wrote this article for IP Law360.  I am cross-posting it here with permission — thank you Law360 — because inter partes review (“IPR”) is increasingly a valuable strategy for retailers, just like all patent litigation defendants.

Inter partes review has become a popular, powerful tool for patent defendants. In many cases, it allows the defendant to get the expensive district court litigation stayed in favor of the Patent Trial and Appeal Board’s more focused and more economical validity review. The IPR proceeding must be completed within 12 months of the PTAB instituting the IPR, with a possible six-month extension for cause. That is half, or less, the lifespan of a typical district court litigation, and the cost is far less than half of defending a patent litigation.

The statistics show that most, but not all, district courts stay related litigation in the face of an IPR, particularly after an IPR is instituted. District courts have granted stays approximately 72 percent of the times they are sought. So, most litigants will get a stay, but 28 percent will be left with parallel district court and PTAB proceedings.

You can often confidently predict whether your stay will be granted based upon your judge’s history with stay motions. But even if your judge typically grants a stay pending an IPR, there is always some risk that the judge denies the stay in your case because of the particular facts of your case or a changing philosophy. So, when considering an IPR, it is important to consider whether the advantages from parallel PTAB and district court proceedings outweigh the risks, typically the added cost. Here are several benefits to adding a parallel IPR to your district court litigation:

1. Early Claim Construction

The PTAB’s decision instituting an IPR comes with an initial claim construction ruling. It is not the PTAB’s final claim construction, and it is not controlling on the district court. In fact, even the final PTAB claim construction is not binding upon the district, at least, because the PTAB’s claim construction standard — the broadest reasonable construction — is broader than the district court’s ordinary and customary meaning standard. But a noncontrolling claim construction is still powerful.

Additionally, the PTAB’s administrative law judges have uniformly excellent credentials and experience. That generally has led to claim constructions that evidence a deep understanding of the technology and the relevant case law. So, even if they may be broader than the appropriate district court construction, they are likely to be clear and true to the technology. So, if you are confident in your claim construction positions, particularly where you have two or three potentially dispositive arguments that are well supported by the intrinsic and extrinsic evidence, the PTAB’s initial claim construction may be exceptionally valuable.

Of course, the PTAB’s constructions do not bind the district court, but any litigator who has been in a later filed patent case knows that it is very difficult to argue against a non-controlling, prior construction, even when a different court or judge issued the construction. So, both parties are forced to argue from the PTAB’s initial constructions as a starting point, as opposed to being able to argue for any position they want. That can be a powerful tool to focus the claim construction process. Finally, while you may likely get a broader construction than you would from the district court, that at least opens up invalidity arguments for you and in many cases it may not matter where you believe even a broad construction will prove that you do not infringe.

Finally, in many courts you may get to the conclusion of the IPR process and the PTAB’s final claim constructions, which still are not binding upon the district court, but necessarily carry more weight than the initial constructions.

2. Fees

Parallel proceedings necessarily add cost for both parties, but it can often be especially painful for plaintiffs being represented on contingent fee agreements. Generally, contingent fee counsel does not want to handle PTAB proceedings on a contingent fee because there is no direct monetary upside to IPRs. Of course, more and more plaintiff’s counsel are working possible IPRs into their fee arrangements, but it remains an added cost.

Furthermore, while the PTAB has been relatively liberal in granting nonpatent barred litigation counsel pro hac vice admission, the PTAB still requires that a party’s lead counsel be patent barred. So, if your opponent’s counsel does not have any registered patent attorneys, the IPR adds extra fees for the counsel that must be hired to lead the IPR. Regardless of the patent holder’s attorney’s fee arrangement, dual proceedings add time and complexity to the patent holder’s case. There is a cost to someone in the extra time, whether or not the plaintiff pays it directly.

3. Increased Risk

Most patent litigation is settled because of a combination of high costs and significant uncertainty in the outcome. When faced with more than $1 million in attorneys fees and a risk, even a small one, of losing a seven- or eight-figure sum at trial, it is often hard for an accused infringer to stay in a suit just because they are confident that they do not infringe and/or that the asserted patents are invalid. Typically, the plaintiff does not have a similar risk profile. There is certainly a cost to prosecuting a patent litigation, but it is often born by counsel in the form of a contingent fee. Especially in nonpracticing entity cases, defendants have very few opportunities to create counter-balancing risk for the plaintiff. Plaintiffs know that because invalidity and inequitable conduct are fact-intensive and generally battles of experts, they are hard to win on summary judgment.

That means the defendant often has to take those defenses to trial in order to win, along with all of the expense of litigating a case through trial. IPRs, however, are different. They are faster, as detailed above, promising a ruling within one year of the IPR’s institution. And the PTAB has routinely invalidated the challenged claims. As of early this year, approximately 84 percent of IPR petitions are being instituted. Of those cases, 264 out of 274 challenged claims that went to trial were invalidated — more than 95 percent.

Those are staggering numbers, which is likely what has led some in the plaintiff’s bar to call the PTAB judicial panels “roving patent death squads.” Of course, sophisticated plaintiffs are aware of these statistics and are resolving cases that include IPRs quickly. One indication of this is that, the 41 percent of IPRs settle before the PTAB issues a decision regarding institution of the proceedings, indicating that seeking an IPR is strong leverage for a patent defendant.

While virtually every patent defendant that seeks an IPR would prefer that their district court litigation be stayed pending the IPR, there is real value in adding an IPR proceeding to your district court litigation, even without a stay.

Potential Duty to Disclose Related Inter Partes Review to the District Court

Posted in Patent Litigation Tips

Along with Covered Business Method patent review (“CBM”) and Post-Grant Review (“PGR”) to a much lesser degree, Inter Partes Review (“IPR”) has become a powerful tool for retailers fighting patent trolls.  One of the key benefits of IPRs is that courts routinely, although not always, stay district court litigation pending the IPR’s outcome.  But earlier this month, the E.D. Virginia’s Judge Davis added an interesting duty of disclosure that retailers that use IPRs or CBMs should be aware of in Virginia Innovation Sciences, Inc. v. Samsung Electronics Co., Ltd., et. al., 2-12-cv-00548 (E.D. Va. May 2, 2014).  (Hat tip to Docket Navigator for identifying the case in its daily email.)

The Court granted Samsung summary judgment of invalidity, and the PTAB later held the patent claims not invalid.  The Court then denied plaintiff’s reconsideration motion, which argued that the Court should follow the PTAB’s reasoning.  The Court also held that the parties’ each breached their duty of candor by not informing the Court of the IPR for six months:

By failing to advise this Court of the existence of the IPR proceedings, [the parties] in effect had two bites at the apple regarding the validity of the disputed claims. Moreover, they deprived this Court of the opportunity to inquire of the parties and decide for itself whether to await a ruling from the PTAB on that issue. . . .

The Court did not formally reprimand the parties, but did suggest that future failures to disclose would be met with formal sanctions:

However, in light of the undeveloped state of the law on this relatively new PTO review procedure, this Court’s admonition of all counsel involved in this case falls short of a formal reprimand of any of the individual lawyers. That said, the issuance of this Opinion is more than sufficient to place all patent practitioners on notice that future failures to disclose to the Court any concurrent inter partes review proceedings will be met with far sharper consequences.

While  it would seem to be a rare set of circumstances which would lead a retailer not to seek a stay of district court litigation after filing an IPR and while Judge Davis’ E.D. Virginia decision is not controlling, retailers should take heed of Judge Davis’ warning and make sure they disclose IPRs to any court with a related case pending, at least after the IPR is instituted.

12th Annual Rocky Mountain Intellectual Property & Technology Institute

Posted in Legal Seminars, Patent Trolls

At the end of this month, I will be heading to the Colorado Rockies for the Annual Rocky Mountain IP & Technology Institute.  It will be my fourth year in a row attending and presenting at the Institute, which is consistently one of the two best CLE programs that I attend.  I will be speaking on a panel about “Understanding the Characters of ‘Troll Land’ for Non-Patent Attorneys.” My co-panelists are:

We will be discussing, among other things, software patents, indemnity and the anatomy of a claim.  I expect it to be a lively and interesting discussion.  And if that is not enough, come for the judges panel, which includes:

  • Judge Jimmie V. Reyna,  U.S. Court of Appeals for the Federal Circuit;
  • Judge Phillip A. Brimmer, U.S. District Court for the District of Colorado;
  • Judge Faith S. Hochberg, U.S. District Court for the District of New Jersey;
  • Judge Barbara M.G. Lynn, U.S. District Court for the Northern District of Texas;
  • Judge Leonard Davis, U.S. District Court for the Eastern District of Texas; and
  • Judge Andrew Hartman, 20th Judicial District Court, Colorado

The Institute is May 29-30 in Denver and features an outstanding faculty and agenda with four different program tracks. Check out the complete agenda on the Institute’s website, and register here. I look forward to seeing you there.

Patent Reform: The Storm Before the Calm

Posted in Industry Issues, Patent Trolls

Patent trolls, and patent plaintiffs generally, were active on Wednesday. April 23.  184 cases were filed on Wednesday, by numerous plaintiffs, including Signal IP, various Joao Bock entities, Interface IP, PanTaurus, Olivistar, TQP Development, eDekka, and c4cast.  Of course, it could just be a bizarre coincidence, but as Dennis Crouch points out at Patently-O, it appears to be a direct reaction to the status of patent reform in the Senate.  Over the weekend, an amendment was informally proposed  that would make the fee shifting provisions retroactive to cases filed on or after April 24, 2014, no matter when it is signed into law:

(c) RETROACTIVITY – the amendments made by this subsection shall take effect on April 24, 2014, and shall also apply to any action for which a complaint is filed on or after that effective date.

The flood of filings the day before the proposed retroactivity would kick in cannot be a coincidence.  And it is a clear indication for retailers of how patent trolls feel about fee shifting.