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Vringo, a provider of software platforms for mobile social and video services, entered into a merger agreement with I/P Engine Inc.
Earlier this year I/P Engine purchased a portfolio of patents from Lycos (now owned by a firm in India), which had obtained them when it bought WiseWire in May 1998 for $39.75 million. Two of these patents (6314420 and 6775664) became patents in suit, as on Sept. 15, 2011, I/P Engine filed a complaint in the U.S. District Court for the Eastern District of Virginia, alleging that Google and several other large-company defendants infringe two of I/P Engine’s patents on several websites that generate advertising and search-related revenue services (e.g., Google AdWords).
6314420, Collaborative/Adaptive Search Engine: A search engine system is provided for a portal site on the internet. The search engine system employs a regular search engine to make one-shot or demand searches for information entities which provide at least threshold matches to user queries. The search engine system also employs a collaborative/content-based filter to make continuing searches for information entities which match existing wire queries and are ranked and stored over time in user-accessible, system wires corresponding to the respective queries. A user feedback system provides collaborative feedback data for integration with content profile data in the operation of the collaborative/content-based filter. A query processor determines whether a demand search or a wire search is made for an input query.
6775664, Information Filter System and Method for Integrated Content-Based and Collaborative Adaptive Feedback Queries: A search engine system is provided for a portal site on the internet. The search engine system employs a regular search engine to make one-shot or demand searches for information entities which provide at least threshold matches to user queries. The search engine system also employs a collaborative/content-based filter to make continuing searches for information entities which match existing wire queries and are ranked and stored over time in user-accessible, system wires corresponding to the respective queries. A user feedback system provides collaborative feedback data for integration with content profile data in the operation of the collaborative/content-based filter. A query processor determines whether a demand search or a wire search is made for an input query.
To help knit this together, it’s helpful to note that the patents originated in 2001 with Andrew (Ken) Lang, and Ken Lang now works for Vringo.
Indicative of things to come, in June of this year, Vringo received four positive construction Markman rulings (out of six) in its cases against the tech giants. (A Markman ruling results from a pretrial hearing in a U.S. district court after a judge examines evidence from all parties on the meanings of key words and terms used in a patent claim.)
Seeking Alpha reported last week that, in a unanimous verdict, the two Vringo patents described were, in effect, “validated” by a federal court jury. The jury awarded Vringo $32 million in “past damages” from defendants Google, AOL, Target, Gannett, and IAC/InterActive. More significant for valuation analysts and financial experts, the jury granted as “reasonable” a 3.5% running royalty rate until the patents expire in 2016. (A quick look at licenses in the ktMINE database alluding to “search engines” indicates 3.5% is on the low side.) One estimate put the value of the awarded royalty stream in excess of $500 million.
Unlike U.S. patent law, Canadian intellectual property law calls for full disclosure of a drug’s active ingredient for a patent to be valid. Last week, the Supreme Court of Canada stated“sufficiency of disclosure lies at the very heart of the patent system” and invalidated Pfizer’s patent on the popular erectile-dysfunction drug Viagra for failing to openly disclose the drug’s active ingredient.
In a suit brought by Israeli firm Teva Pharmaceuticals, the court said Pfizer failed to adequately disclose that sildenafil was the active compound, while other listed compounds in the patent were not effective in treating erectile dysfunction:
P holds Patent 2,163,446 for the use of a “compound of formula (I)” or a “salt thereof” as a medicament for the treatment of erectile dysfunction (“ED”). The patent’s specification ends with seven cascading claims for successively smaller ranges of compounds, with Claims 6 and 7 relating to a single compound each. Only sildenafil, the subject of Claim 7 and the active compound in Viagra, had been shown to be effective in treating ED at the time of the patent application. Although the patent includes the statement that “one of the especially preferred compounds induces penile erection in impotent males,” the patent application does not disclose that the compound that works is sildenafil, that it is found in Claim 7, or that the remaining compounds had not been found to be effective in treating ED.
The decision effectively opens up competition in Canada for Viagra substitutes well ahead of what would have been the 2014 patent expiration date.
The Federal Circuit’s recent Whitserve decision didn’t just sound the death knell for the 25% rule of thumb in patent litigation. It also “turned the Georgia-Pacific analysis on its head,” said Dan Jackson (AlixPartners) in a session on IP damages at the AICPA FVS conference in Orlando. In particular, experts may not simply recite each of the factors in a “cursory” or “conclusory” manner, the court ruled, but must fully analyze each factor and its impact on the damages calculation.
The decision may signal a turn toward fulfilling the prophecy by Chief Judge Randall Rader that the court will eventually “shoot down” the Georgia-Pacific framework entirely, Jackson said.
Judge Rader candidly admits he “bristles a bit” whenever he hears the words “Georgia-Pacific.” The factors are “just a laundry list to be considered,” he said, during an online interview with analysts from Stout Risius Ross; they “were never meant to be a test or a formula for resolving damages issues.” And yet:
Somehow it gets blown out of context—I see it time after time after time. […] The expert … is sitting on the stand and he or she will testify: Well, there are 15 Georgia-Pacific factors and six of them favor us and the other nine are neutral. Well, that is an attempt to convert this laundry list into some kind of a methodology. However, many of those 15 factors may be overlapping or irrelevant to a particular case. Yet some will try to make their case seem more reasonable by stacking up so many Georgia-Pacific factors in their favor and the rest are against their opponent or neutral. And that’s not what the Georgia-Pacific case was ever about and it’s a flawed methodology.
In his 30 years of practice, Jackson has “never seen as much change as I have in the past three years,” and the courts—particularly the Federal Circuit—are “changing the rules of the game that we have lived by for a long time.”
Part of any company’s patent strategy is heading off competitors’ patent filings before issuance by bringing to the attention of USPTO the existence of prior art. The America Invents Act (AIA) has made this process easier.
Steve Hanson of Hanson IP Law PLLC, describes what things used to be like before AIA. Though challengers were allowed to submit evidence of prior art to help in the examination process, “under pre-AIA law, any submitted prior art was merely placed in the patent file and would not necessarily be considered by the examiner.”
AIA created a new process for “pre-issuance submissions” under which the patent examiners “must consider references submitted by third parties if they satisfy specific requirements.” The new system went into effect mid-September and is relatively inexpensive to use.
Valuation analysts who deal with the complexities of personal goodwill in divorce cases and who have not yet downloaded a copy of Walsh v. Walsh should do so now (it’s free, available at BVR). At stake was a family court’s determination that the husband’s share of his law firm was limited to the value established in a partnership share redemption agreement.
The wife’s expert reviewed the husband’s tax returns to determine historical income performance and estimate earning sustainability. He looked at the husband’s reputation and client loyalty (customer relationships)* and, using a “capitalization of earnings approach,” valued the husband’s professional practice at nearly 10 times the amount specified in the redemption agreement.
The appeals court confirmed its belief that future earnings capacity is not goodwill. “However, when that future earning capacity has been enhanced because reputation leads to probable future patronage from existing and potential clients, goodwill may exist and have value.”
By looking at the stock redemption agreement as “just one factor,” the court also looked at other considerations as determinative in examining the existence of goodwill: “the practitioner’s age, health, past earning power, reputation in the community for judgment, skill and knowledge, and his or her comparative professional success.” In so doing, the appeals court reversed the family court with respect to the husband’s personal goodwill.
*In 2007, the husband considered leaving his firm to join another law firm, and he completed an attorney employment questionnaire which included a list of current clients, all but one of which would follow him to a new firm.
According to Variety, “The Big Bang Theory,” a sitcom shown domestically on CBS, is expected to generate $50 million from the sale of retail merchandise this year. That amount is expected to grow as Warner Brothers Consumer Products rolls out a new line of licensed products tied to foreign viewership.
“WBCP has inked deals with more than 70 licensing partners to produce games, apparel, plush figures and accessories, home goods, and niche products designed for ‘Big Bang fans,’” with merchandise available at Walmart, Target, and other major retailers, says Variety.
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The Law of Superheroes addresses some ‘critical’ IP issues
Dennis Crouch of Patently-O reviewed The Law of Superheroes, by James Dailey and Ryan Davidson. Fittingly published by Gotham Books, one chapter takes a look at IP issues as they relate to our favorite comic book characters, answering such questions as:
- Does Batman’s use of Wayne Enterprises’ advanced technologies to stop crimes (at night) negate patentability?
- Does Spiderman infringe any genetic engineering patents?
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‘Tebowing’ is now a trademark
A devout Christian, Tim Tebow, the 2007 Heisman Trophy holder and current back-up quarterback for the New York Jets professional football team, often drops to one knee (with fist to forehead) to honor God during football games. This act has become known as “Tebowing,” and now Tim Tebow owns the trademark.
As reported in the Washington Times, “apparently the trademark is not solely on the term, to Tebow, but on the pose as well. You don’t have to call it “Tebowing” to be subject to Tim’s approval.”
- NCAA sued by former players for antitrust violations
Former football and basketball players are seeking damages from the National Collegiate Athletic Association (NCAA), videogame maker Electronic Arts, and Collegiate Licensing Co., saying their names, images, and likenesses were used illegally.
USA Today reports plaintiffs allege that the “defendants violated anti-trust law by conspiring to fix at zero the amount of compensation athletes can receive for the use of their names, images, and likenesses in products or media while they are in school.
Roger Noll, an economics professor emeritus at Stanford and an expert witness for the plaintiffs, calculates football and men’s basketball players from two of the major college conferences could be entitled to share more than $160 million from live broadcast revenue from 2009-10 alone.
- Apple has a design patent for its glass staircases
Apple’s patent strategy is not confined to innovative smartphone design and technology. Apple’s 2003 patent D478,999 S is a design patent for its glass staircase, which appears at a number of its stores from New York to Paris.
- CBS News tries to balance the coverage on tech patent wars
A CBS News article lists five myths perpetrated by news coverage of the technology patent wars:
- Is this a new phenomenon? No, numerous infringement lawsuits were filed by famous inventors Eli Whitney, Thomas Edison, and others.
- Does Apple hold all of the patent cards? As discussed often in IP Value Wire, Apple has a relatively weak position with respect to utility patents, which may explain its prominent role in the Nortel patent auction.
- Are patent claims unassailable fortresses? If litigated, there is a higher probability a claim will be invalidated than upheld.
- Are so-called patent trolls the cause of most of the patent litigation today? In 2011, an estimated 40% of the patent infringement litigation can be sourced to patent trolls.
- Does the current system stifle innovation? If the number of patent filings is any indication, the answer is no.
- Undercapitalized inventors still have a chance to get patent protection
To date, the USPTO has successfully helped create four pro bono programs across the nation and is partnering with other IP law associations to help an additional 10 get started by the end of 2013. Individuals and businesses interested in applying for pro bono patent assistance should visit the FCBA’s pro bono website, which includes request forms for applicants and patent attorneys interested in volunteering for pro bono patent assistance.
- WSJ reviews Double Entry, by Jane Gleeson-White
In 1494, Franciscan friar Pacioli published a 600-page encyclopedia titled “Summa de Arithmetica.” Toward the end of the first volume there is a brief section called “Particulars of Reckonings and Writings,” which includes the first treatise on double-entry bookkeeping.
As reported in the Wall Street Journal, according to the author, what might seem unimaginable now, double-entry bookkeeping was “greeted by the kind of ecstatic commentary normally reserved for scientific discoveries. Goethe referred to it as ‘among the finest inventions of mankind.’”
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