Supreme Court affirms “clear and convincing” standard in  i4i-Microsoft  case

The legal battle that began some 8 years ago between i4i and Microsoft ended Monday, June 6th at the Supreme Court.  In 2003 a federal jury awarded $290 million to i4i, finding that Microsoft’s versions of Word (its word processing application) had infringed i4i's patent (Patent No. 5,787,449) relating to text manipulation software.

i4i’s claim was that it developed and patented its customized software.  It sued Microsoft for incorporating the utility in Microsoft Word, alleging Microsoft willfully (at trial, it came out Microsoft knew of ‘449) violated i4i’s patent.  Microsoft however, argued that i4i’s patent was invalid, which, as most know, is a fairly common opposition strategy.

Under the Patent Act of 1952, it was Microsoft’s burden to demonstrate invalidity. In this case, Microsoft wanted to prove the utility represented in ‘449 had been sold previously by i4i, as S4. Under patent law, if the patented software feature had been “sold” before, it is not patentable. Obviously, Microsoft wanted the provability bar set as low as possible, using a “preponderance of the evidence” standard.

i4i had argued that Microsoft should have to provide “clear and convincing evidence” that their patent was invalid. The trial court in this instance applied the customary higher standard; Microsoft lost and appealed.

As we have come to know, “presumed valid” is a common-law term.  When Congress uses common-law terms (absent evidence to the contrary), the courts are bound to apply the “settled meaning” of those terms.  Patents are presumed valid, and evidence must be presented to prove them invalid.

The USSC unanimously (with Chief Justice Roberts recused) explained that a simple “preponderance of the evidence” standard would be too easy to meet and that Congress intended to adopt the tougher “clear and convincing” evidentiary standard when it enacted the Patent Act in 1952.

How to select a method for valuing early stage technologies

IPVW attended an excellent presentation by Mike Pellegrino earlier this month.  He gave a group of high-level, early-stage IP managers the benefit of his experience in choosing the proper valuation method.

Pellegrino is the author of BVR’s Guide to Intellectual Property Valuation. The Guide is available now, and will be updated again next month.

Google outlines legal strategy in Oracle expert challenge

IPVW has blogged a couple of times about Oracle America, Inc. v. Google Inc., on the Java code allegedly found in Android software and on Google strategy. Oracle hired Boston University professor Iain Cockburn—the extensively published academic—to calculate and prove the alleged damages.

Our reading of Google’s pre-Daubert challenge filing indicates that they will attack his credentials. For one, Cockburn lacks valuation credentials: no ASA, ABV, CFA, CVA, AVA, etc. We haven’t done the math, but a quick review of the cases in BVLaw shows courts tend to trust trained valuators, analysts bound by uniform standards and required to earn continuing education credits to maintain their status. He’s not in BVR’s Expert Directory. Though he is well-published, few articles are related to damages theory.

Professor Cockburn has argued in the damages report that Oracle is entitled to 50% of Google’s ad revenues on the Android mobile platform.  If the credentials attack isn’t enough, they’ll also stress that Cockburn:

1. Fails to tie the royalty rate to the infringement issue and ignores new “total market” law as defined in Uniloc and Lucent;
2. Fails to provide any meaningful analysis of the 15 Goergia Pacific factors critical in determining a reasonable royalty;
3. Includes Oracle’s “lost profits and opportunities” in his royalty base, in a realization Oracle could not meet the “recovery of lost profits” standard;
4. Imputes in his royalty base theoretical downstream harm to a wholly different Oracle product;
5. Uses improper methodology to develop an unprecedented royalty rate;
6. Confuses patents and copyrights;
7. Asserts that a finding of infringement of a single claim of a single patent should result in a finding of infringement for all claims;
8. Dismisses evidentiary value of current Java licenses, previous Oracle/Google negotiations, and market value of (and Oracle’s own valuation of) the Java platform.

Righthaven faces its own legal challenges after suing 274 websites and blogs

Righthaven entered into an agreement with newspapers, e.g., Las Vegas Review Journal, Denver Post, etc., to (allegedly) purchase copyrights to particular articles, photo’s, etc. After acquiring the copyrights, Righthaven would then scour the Internet looking for their copyrighted articles, and, when (if) their content was found, they would sue infringers without notification and ask internet service provider to transfer control of the website’s domain name to Righthaven. In practice, the offending articles may well have been located first, and then the corresponding copyrights purchased.

Now Righthaven is facing counterclaims.  In their first rebuke, a claim against the Democratic Underground has been dismissed.  In fact, U.S. District Court Judge Roger Hunt wrote a 16-page indictment of their practices. And similar claims are being reviewed elsewhere.

Righthaven had to disclose its contracts due to a challenge by the Electronic Frontier Association.  It turns out that while the contracts gave Righthaven the right to bring infringement actions against the news blogs and websites, they may not provide the legal standing under the Copyright Act—which would take the stuffing out of Righthaven’s other 274+ lawsuits.

One web site owner who counterclaimed is Law Med Consulting LLC. And, the AP has launched a news licensing group, the intent of which, according to AP President Tom Curley is to "create an independent rights clearinghouse for news publishers to manage the distribution and use of their content beyond their own Web site.”  Commercial and legal responses will continue.