Retail Patent Litigation

Illinois Patent Trial Attorney | R. David Donoghue

Hurricane Alice: The broad impact of the Supreme Court’s Software Patent Decision

Posted in Patent Litigation Tips, Patent Trolls

Reactions to the Supreme Court’s CLS Bank v. Alice decision were mixed on both sides of the debate.  Everyone seemed to agree that software patents were not dead, but whether the decision would change the software patent landscape was unclear.  Just three months later, however, there is good news for retailers.  Both the Federal Circuit and district courts across the country are holding many software patents unpatentable based upon Alice.  Fourteen decisions have invalidated software patents since July, including three Federal Circuit decisions, and critical district courts, including C.D. California, D. Delaware, M.D. Florida and E.D. Texas.  Timothy B. Lee at Vox (previously at the Washington Post) has continued his excellent reporting on software patent issues and looks at the decisions in his most recent article, along with links to each decision.

This is an important trend focused upon the patents most commonly asserted against retailers and the retail supply chain.  Anyone that becomes the target of a software patent should take a hard look at whether the asserted patent is susceptible to a Section 101 challenge.  This is especially true because district courts are frequently willing to decide Section 101 issues as Fed. R. Civ. P. 12(c) motions on the pleadings at the outset of a case.  That also can make a Section 101 challenge viable even where the troll makes a fairly low initial settlement demand.  It also should lower the initial demands in many software patent assertion programs, hoping to prevent targets from filing Section 102 motions.

JUDGES PANEL

Posted in Legal Seminars

In late January, I had the opportunity to attend Michigan’s 40th Annual Intellectual Property Law Summer Institute on Michigan’s Mackinac Island (a great location).  As with every time I have attended Michigan’s IP Summer Institute, it was an excellent conference.  One particularly interesting session was a judge’s panel including Hon. Robert Holmes Bell of the Western District of Michigan and Chief Judge Gerald E. Rosen of the Eastern District of Michigan.  The panel was moderated by Professor David C. Berry, of the Thomas M. Cooley Law School who asked probing questions about how the judges perceive patent litigation and pointers for patent litigators.  Here are my notes from the session:

1.         How can IP litigators advocate better?

Bell:  Get to know a personal injury lawyer and watch what they do in court; have them critique you.

Rosen:  Echoes Bell’s point, and adds that you should also look to criminal lawyers — prosecutors or defense lawyers.  They are universally good at organizing a trial around a story/theme.

Bell:  Tell a story in a brief (take four or five pages, if necessary) and in argument.  We are all used to stories and they help the court follow you “deep” into arguments.

Rosen:  Lawsuits are like jigsaw puzzles.  Evidence developed during discovery are the pieces of the puzzle and counsel’s job is to fit the evidence together to make a picture.  The only difference is that you do not have a box with the picture on it to match the pieces to.

Bell:  Abbreviations (particularly meaningless acronyms) are okay, but only if used sparingly.

Bell:  Use demonstratives.  Often seeing the device live can make a case gel as part of a tutorial or at other points in the case.

2.         How do litigators balance need for making the record for the Federal Circuit & telling the story?

Bell:  You should be able to do both.  The record should revolve around the story.

Bell:  One problem is the terminology of the patent, pointing to use of “hingedness” which is not a word in the claims of a patent before him.  Patents should use King’s english, not made up words.

Rosen:  The Federal Circuit is, more than any other court, a court of specialists.   Rosen respects the judges, but it is a uniquely difficult court for district judges because they engage in both legal analysis and factual analysis/review.  But if you are trying your case for appeal, more often than not you will be disappointed.  Try your case for the jury and make your record as you go.

3.         Seventh Circuit Judge Wood’s article arguing that the Federal Circuit is a failed experiment, good idea or bad?

Rosen:  It is a good idea.  Patent cases should be returned to the regional circuits.

Bell:  Bell is not as sure.  At least some patent cases should be heard by specialists.

4.         How can litigants better handle troll cases to resolve the problem?

Rosen:  About 60% of cases are said to be troll cases.  The judge has to be educated on that.  It is not unlike the class action arena where there are “bottom feeders” that are seeking to get quick settlements.  Courts are good at identifying those cases.

Bell:  A quick trial date is key — time is not on anyone’s side.  Bell gets to trial in 12-18 months.  He will give extensions, but only with good reasons, that are explained to the court.

5.         What about scheduling early Markman?

Bell:  Early Markman is valuable.

6.         How about heightened pleading standards (claim charts, specifically)?

Rosen:  Twombly/Iqbal should be the key to this.  He considers it Fed. R. Civ. P. 8.5 (between heightened Rule 9 pleading and Rule 8 notice pleadings).  The appellate courts should have held patent cases to Twombly/Iqbal standard, not form 18.  With removal of the Forms from the FRCP, Twiqbal will likely be held to apply to patent cases.

Rosen:  Sixth Circuit Judge Boggs wrote a unanimous decision last year that even where evidence is wholly within defendant’s control, plaintiff must still plead to the Twiqbal plausibility standards and you cannot meet that by amendment after receiving discovery.  So, patent filings should not be fishing expeditions.

7.         Any consideration of local patent rules?

Bell:  It is a “dead issue” in the W.D. Michigan.

Rosen:  The E.D. Michigan bench is pretty uniformly uninterested in specialized patent rules.

8.         Are post-issuance patent review proceedings valuable to the process 

Rosen:  He is not surprised that the overwhelming number of claims considered by the PTAB are overturned.

Bell:  District judges are best equipped to deal with infringement issues, but Bell is happy to leave the invalidity/prior art analysis with the Patent Office specialists.  Bell is concerned that the PTO is issuing so many patents that it subsequently overturns.

Rosen:  He thinks the PTAB overturning claims makes sense from the perspective of the PTAB being the technology experts, and because patent prosecution is not adversarial.  So, it makes sense that more patents get through that are later overturned.

9.         Should egregious NPE cases be penalized?

Rosen:  He would prefer to have more discretion to penalize egregious cases.

Bell:  Agrees that there should be more ability to penalize improperly filed or prosecuted suits.

Octane Fitness May Require a Summary Judgment Motion for an Exceptional Case Findings

Posted in Patent Litigation Tips

Federal Circuit Judge Dyk, sitting by designation in the E.D. Texas, recently denied a 35 USC Section 285 exceptional case motion in Stragent, LLC v. Intel Corp., No. 11 C 421, Slip Op. (E.D. Tex. Aug. 6, 2014) (Dyk, J.).  The opinion begins with a thorough and very useful explanation of the history of exceptional case law.  It will be a good place to start when you prepare your next exceptional case brief.  Judge Dyk draws the following “guidelines” based upon Octane Fitness:

1.  Attorney’s fees should only be awarded in “rare and unusual circumstances.”

2.  Courts must look to the totality of the circumstances in evaluating exceptional case motions.  The “predominant facts,” although not the exclusive factors, are laid out in Brooks Furniture.

3.  Merely losing does not make a case exceptional.  If it did, every case would be exceptional.  

4.  The conduct underlying an exceptional case need not be “independently sanctionable” to warrant a fees award.

5.  The case must be exceptional, not just individual actions or arguments.

6.  The winning party’s conduct is also relevant to an exceptional case determination.  This is especially true where the winning party made bad faith arguments or engaged in litigation misconduct.

After laying out the components of an exceptional case analysis, Dyk turns to what he decries as defendant’s “kitchen sink” approach to the motion.  In particular and of most interest to retailers, Dyk does not accept defendant’s argument that plaintiff Stragent’s infringement theory was “implausible” because defendant never sought summary judgment, as it allegedly should have had it believed the argument truly was implausible throughout the case, instead of simply in hindsight.  It was a “weak” argument, but had it truly been implausible, defendant have sought summary judgment to defeat the argument.  

This is an interesting and troubling position for retailers.  While there is a significant advantage in seeking summary judgment whenever possible, there are often “implausible arguments” that are not amenable to summary judgment because of potential questions of material fact, or even the timing of the motion and the Court’s time to decision relative to the trial date.  So, equating a lack of a summary judgment motion with a lack of confidence in a defendant’s arguments is an unfair link, even if it is sometimes true.  Hopefully, district judges will make this distinction and this will not become a standard view across district courts.

Disturbing Retail Patent Litigation Statistics Confirm What Retailers Already Know

Posted in Industry Issues, Patent Litigation Tips

The following is a post by my colleague Anthony J. Fuga.  Anthony and I regularly work together defending retailers against patent trolls.

MarketWatch’s recent blog post titled “Why retailers became a top target of patent trolls” contained a good, albeit short, rundown of some of the difficulties retailers are facing.  Unfortunately, much of the information contained in the blog post will not be news to you, as retailers routinely deal with trolls.  A few of the more interesting and/or troubling points from the post include:

  1. The retail sector is now the number 1 target of trolls;
  2. Trolls lose 92% of the cases that do not settle;
  3. 53% of the retailers sued had sales of less than $10 million; and
  4. Only about 2% of the 36,629 patent cases filed and terminated between 2000 and 2013 resulted in the awarding of compensatory damages.

 

 

 

February 2014 Retail Patent Litigation Report

Posted in Retail Litigation Report

February continued the trend of reduced trolling, with indications of an uptick toward the end of the month.  Repeat filers included Hawk Technology, Guardian Media Technologies, Data Carriers, Wolf Run Hollow, Marshall Feature Recognition, Clear With Computers, Qommerce.

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.

Hawk Technology Systems, LLC v. Ritz-Carlton Hotel Company, LLC, (D. Colo.; S.D. Fla.; W.D. Wis.; N.D. Ill.; C.D. Cal.; E.D. Mich.) (multiple cases).

Judge:             District Judge Jose E. Martinez; District Judge John Z. Lee; Magistrate Judge Alka Sagar; District Judge Otis D. Wright, II; Magistrate Judge Laurie J. Michelson; District Judge George Caram Steeh

Claim:             Infringement

Defendants:

  • The Ritz Carlton Hotel Company, LLC
  • NCL Corporation Ltd.
  • Woodman’s Food Market, Inc.
  • Loyola University of Chicago
  • Macerich Management Company
  • Old CF, Inc.

Plaintiff:         Hawk Technology Systems, LLC

Pls. Cnsl:        Uhrich Law Firm; Lipscomb Eisenberg & Baker; Schulz Law; Law Office of Mark I Shulman

Walgreen Co. v. CVS Caremark Corporation, (D. Del.) (multiple cases)

Claim:             Infringement

Defendants:

  • CVS Pharmacy, Inc.
  • Rite Aid Corporation
  • Rite Aid Hdqtrs. Corp.
  • mscripts, LLC
  • Shopko Stores Operating Co., LLC

Plaintiff:         Walgreen Co.

Pls. Cnsl:        McAndrews Held & Malloy; and Young Conaway Stargatt & Taylor

Patent:           8,626,530 (System and method for express refill).

Guardian Media Technologies, Ltd. v. Overstock.com, Inc., (C.D. Cal.) (multiple cases).

Judges:           District Judge Dean D. Pregerson; Magistrate Judge Ralph Zarefsky

Magistrate Judge Victor B. Kenton; District Judge George H. Wu; Magistrate Judge Jacqueline Chooljian; District Judge Christina A. Snyder; Magistrate Judge Margaret A. Nagle; District Judge S. James Otero; District Judge Gary A. Feess; Magistrate Judge Michael R. Wilner; Magistrate Judge Paul L. Abrams; District Judge Margaret M. Morrow; Magistrate Judge Margaret A. Nagle; District Judge Mariana R. Pfaelzer

Defendants:  

  • Overstock.com, Inc.
  • Best Buy Company, Inc.
  • Target Corporation
  • Costco Wholesale Corporation
  • Wal-Mart Stores, Inc.
  • Sears, Roebuck and Co.
  • RadioShack Corporation

Plaintiff:         Guardian Media Technologies, Ltd.

Pls. Cnsl:        Klinedinst

Interface IP Holdings LLC v. AllianceBernstein LP, (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:  

  • AllianceBernstein LP
  • Preferred Hotel Group Inc.

Plaintiff:         Interface IP Holdings LLC

Pls. Cnsl:        Black & Hamill; Farnan

Patent:           7,500,201 (Data input method and system with multi-sub-field matching of user entries into a graphical input device); and 7,406,663 (Graphical input device with dynamic field width adjustment for input of variable data via a browser-based display).

Catharon Intellectual Property, LLC v. FedEx Corporate Services, Incorporated, (E.D. Tex.).

Claim:             Infringement

Defendants:

  • Bed Bath & Beyond, Inc.
  • Flixster, Inc.
  • The Home Depot, Inc.
  • Photobucket.com, Inc.
  • United Parcel Service, Inc. 
  • Capital One Financial Corporation

Plaintiff:         Catharon Intellectual Property, LLC

Pls. Cnsl:        Ni Wang & Massand

Patent:           6,065,046 (Computerized system and associated method of optimally controlled storage and transfer of computer programs on a computer network).

Data Carriers, LLC v. Archos, Inc., (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:

  • Columbia Sportswear Company
  • Corsair Components, Inc.
  • General Motors Company
  • Harry and David
  • Harry & David Operations, Inc.
  • J&R Electronics Inc.
  • RNYK LLC
  • LMC Right Start, Inc.
  • Midnight Velvet, Inc.
  • Montgomery Ward, Inc.
  • Petco Animal Supplies, Inc.
  • Sally Beauty Supply LLC
  • SkyMall Interests, LLC
  • SkyMall, LLC
  • Tory Burch, LLC
  • Valve Corporation

Plaintiff:         Data Carriers, LLC

Pls. Cnsl:        Bayard; Gardere Wynne Sewell

Patent:           5,388,198 (Proactive presentation of automating features to a computer user).

Wolf Run Hollow, LLC v. Euromarket Designs, Inc. d/b/a Crate & Barrel, (E.D. Tex., N.D. Ill.)

Judge:             District Judge Andrea R. Wood

Claim:             Infringement

Defendants:

  • Target Corporation
  • Williams – Sonoma, Inc.
  • Best Buy Co., Inc.

Plaintiff:         Wolf Run Hollow, LLC

Pls. Cnsl:        Austin Hansley; Parikh Law Group

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

Marshall Feature Recognition, LLC v. Wendy’s International, Inc., (N.D. Ill.).

Judge:             District Judge Sharon Johnson Coleman

Claim:             Infringement

Defendant:     Wendy’s International, Inc.

Plaintiff:         Marshall Feature Recognition, LLC

Pls. Cnsl:        Parikh Law Group                                                   

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

MRL, LLC v. Hewlett-Packard Company, (N.D. Ill.).

Claim:             Infringement

Defendant:     Hewlett-Packard Company

Plaintiff:         MRL, LLC

Pls. Cnsl:        Flachsbart & Greenspoon

Patents:          5,854,985 (Adaptive omni-modal radio apparatus and methods); 6,134,453 (Adaptive omni-modal radio apparatus and methods); 6,934,558 (Adaptive omni-modal radio apparatus and methods); 6,961,584 (Tiered wireless, multi-modal access system and method); 7,343,173 (Tiered wireless, multi-modal access system and method); and 7,386,322 (Adaptive omni-modal radio apparatus and methods).

Clear With Computers, LLC v. Industrial Iron Works, Inc. d/b/a Adams Fertilizer Equipment Manufacturer, (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • AG Systems, Inc.
  • Altec Industries, Inc.
  • Backcountry.com, Inc.
  • Bad Boy, Inc.
  • Bad Boy Mowers, Inc.
  • Great Plains Manufacturing, Inc.
  • HARDI North America, Inc.
  • Lululemon Athletica, Inc.
  • The Men’s Wearhouse, Inc.
  • ValueVision Media, Inc.
  • Tesla Motors, Inc.
  • eTrek, LLC
  • Trek Bicycle Corporation
  • Volvo Construction Equipment North America, LLC
  • Wayfair, LLC

Plaintiff:         Clear With Computers, LLC

Pls. Cnsl:        Spangler Law; Stamoulis & Weinblatt

Patents:          5,625,776 (Electronic proposal preparation system for selling computer equipment and copy machines); and 7,606,739 (Electronic proposal preparation system).

Inventor Holdings LLC v. Kmart Corporation, (D. Del.) (multiple cases).

Claim:             Infringement

Defendants:

  • Kmart Corporation
  • Google Inc.

Plaintiff:         Inventor Holdings LLC

Pls. Cnsl:        Stamoulis & Weinblatt

Patent:           6,381,582 (Method and system for processing payments for remotely purchased goods); 8,558,921 (Systems and methods for suggesting meta-information to a camera user); and 8,550,019 (Slurry applicator for an agriculture machine).

EMG Technology, LLC v. Amica Mutual Insurance Company, (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • Branch Banking and Trust Company
  • Capital One Financial Corporation
  • Frost Bank
  • The Goldman Sachs Group, Inc.
  • IKEA North America Services LLC
  • The Northwestern Mutual Life Insurance Company
  • RE/MAX, LLC
  • The Western Union Company

Plaintiff:         EMG Technology, LLC

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

Patent:           7,441,196 (Apparatus and method of manipulating a region on a wireless device screen for viewing, zooming and scrolling internet content).

Qommerce Systems, LLC v. Amway Corp., (E.D. Tex.) (multiple cases).

Claim:             Infringement

Defendants:

  • Ancestry.com, Inc.
  • Buy.com Inc. d/b/a Rakuten.com Shopping
  • Cabela’s Incorporated
  • Estee Lauder, Inc.
  • Etsy, Inc.
  • Fanatics, Inc.
  • Footlocker.com, Inc.
  • Foot Locker, Inc.
  • Gilt Groupe, Inc
  • Groupon, Inc. 
  • J Crew Group, Inc.
  • Kohl’s Corporation
  • PC Connection, Inc.
  • PCM, Inc.
  • Peapod, LLC
  • Saks Direct, LLC
  • Shop MA, Inc.
  • Wayfair, LLC
  • Weight Watchers International, Inc.
  • 1-800-Flowers.com, Inc.

Plaintiff:         Qommerce Systems, LLC

Pls. Cnsl:        Tadlock Law Firm

Patent:           7,356,606 (Dynamic web storefront technology).

Execware, LLC v. AT&T, Inc.,

Claim:             Infringement

Defendants:

  • AT&T Mobility, LLC
  • AT&T Services, Inc.
  • Barneys New York, Inc.
  • Bed Bath & Beyond, Inc., d/b/a Bed Bath & Beyond
  • buybuy BABY
  • Cost Plus World Market
  • Harmon and Harmon Face Values
  • World Market
  • World Market Stores
  • Best Buy Company, Inc.
  • BJ’s Wholesale Club, Inc.
  • Blue Nile, Inc.
  • Buy.com Inc.
  • Dollar General Corporation
  • Bloomingdale’s By Mail, Ltd.
  • Macys.com, Inc.
  • Macy’s, Inc.
  • Media Market Group,
  • Nextag, Inc.
  • Nordstrom, Inc.
  • OfficeMax North America, Inc.
  • Orbitz, LLC
  • Orbitz Worldwide, Inc.
  • Target Brands, Inc.
  • Target.com
  • Target Corporation
  • Verizon Communications, Inc.
  • Verizon Wireless, Inc.
  • Yahoo! Inc.
  • Zappos IP, Inc.
  • Office Depot, Inc.

Plaintiff:         Execware, LLC

Pls. Cnsl:        Antonelli Harrington & Thompson; Bayard

Patent:           6,216,139 (Integrated dialog box for rapidly altering presentation of parametric text data objects on a computer display).

Pollin Patent Licensing, LLC et al v. Fifth Third Bank, (S.D. Ohio).

Judge:             District Judge Michael R. Barrett

Claim:             Infringement

Defendant:     Fifth Third Bank

Plaintiffs:

  • Autoscribe Corporation
  • Pollin Patent Licensing, LLC

Pls. Cnsl:        Niro Haller & Niro; Renner Otto Boisselle & Sklar

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

eDekka LLC v. Abercrombie & Fitch Co., (E.D. Tex.) (multiple cases).

Judge:             District Judge Rodney Gilstrap

Claim:             Infringement

Defendants:

  • Avon Products, Inc.
  • Belk, Inc.
  • Euromarket Designs, Inc.
  • LL Bean, Inc.
  • Lowe’s Home Centers, Inc.
  • MSC Industrial Direct Company Incorporated
  • Nordstrom, Inc.
  • Ralph Lauren Corporation
  • Restoration Hardware, Inc.
  • Sierra Trading Post, Inc.
  • Systemax, Inc.
  • The Home Depot U.S.A. Inc.
  • Toys “R” Us, Inc.
  • ValueVision Media, Inc.
  • Victoria’s Secret Direct Brand Management, LLC
  • Walgreen Co.
  • Walgreens.com, Inc.
  • Williams-Sonoma, Inc.

Plaintiff:         eDekka LLC

Pls. Cnsl:        Tadlock Law Firm

Patent:           6,266,674 (Random access information retrieval utilizing user-defined labels).

Celebrate International LLC v. LeapFrog Enterprises Inc. et al, (D. Del.).

Claim:             Infringement

Defendants:

  • Amazon.com, Inc.
  • LeapFrog Enterprises, Inc.
  • Target Corporation
  • Toys “R” Us, Inc.
  • Wal-Mart Stores, Inc.

Plaintiff:         Celebrate International LLC

Pls. Cnsl:        Munck Wilson Mandala; Young Conaway Stargatt & Taylor

Patents:          6,256,398 (Encoding and decoding a message within an image); and 6,819,776 (Encoding and decoding a message within an image).

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.  Additionally, while Shah’s discussion focuses largely upon creating a heightened pleading requirement for a subset of patent troll cases, using the same definition of a potential troll, other requirements could be added to the legislation, for example fee awards or discovery limitations, as Shah notes.  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.