April 2012

April 25, 2012, by Mandour & Associates, APC

San Diego – Just a few weeks after acquiring a large number of patents from a floundering America Online (AOL), Microsoft has announced that it will be transferring off most of those patents to Facebook.

Of the 925 patents Microsoft purchased from AOL for a reported $1.06 billion cash deal, it will be selling off or licensing 650 of those patents to social networking giant Facebook for $550 million in cash. Although through the purchase Facebook will have rights to use many of the patents it didn’t purchase outright, Microsoft will retain the rights to many of the patents for offensive or defensive purposes.

Many companies look to purchase patents from flailing companies as a way to bolster their own patent portfolios for development purposes as well as for ammunition in patent infringement situations. This practice has become increasingly common in the high tech industry especially with many of these companies taking advantage of the high-revenue licensing deals these patents bring as well.

Shortly before the company is scheduled to go public, Facebook has been on somewhat of a spending spree, having reportedly purchased 750 patents from IBM. According to the company’s S-1 filing, as of the end of last year, Facebook was the owner of 56 USPTO issued patents, 503 U.S. patent applications, and 149 patent applications filed in foreign countries, relating to social networking, web technologies and infrastructure, and related technologies.

The acquisition of these patents has helped Facebook tremendously in last month’s patent attack by Yahoo. Facebook has managed to protect itself by counter-suing with a patent for every patent that Yahoo claims it has infringed. Rather than give up valuable shares just before its IPO, Facebook has refused to lay down and pay up like Google did in 2004. This would have indicated weakness and made investors nervous just before it goes public.

“Today’s agreement with Microsoft represents a major acquisition for Facebook,” stated a spokesperson for Facebook. “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

Under the agreement, Microsoft will keep a license to every one of the patents it originally purchased from AOL: the 650 it sold to Facebook, ownership of the 275 patents it retained, and additionally the 350 patents AOL never sold. The Facebook transaction will allow Microsoft to recoup some of its costs from the AOL patent purchase, and also allow it to retain rights to the technology.

April 19, 2012, by Mandour & Associates, APC

San Diego – Sequenom, a San Diego manufacturer of a variety of genetic tests, has acquired two pending patents from Helicos Biosciences Corp. The two companies reportedly entered into an Asset Purchase Agreement in which Sequenom purchased all rights, title and interest in Helicos’ pending patents for Methods for Detecting Fetal Nucleic Acids and Diagnosing Fetal Abnormalities.

Sequenom paid Helicos $1.3 million for the acquisition of the purchased assets.

Helicos president and CEO Ivan Trifunovich, explained that the technology behind the patents is for sequencing applications in prenatal molecular diagnostics. Helicos is not currently competing in that market, however Sequenom is a market leader. The purchase of the pending patents will help strengthen Sequenom’s foothold in arena for fetal abnormality testing.

“The Helicos patent estate continues to dominate several aspects of the next-generation sequencing field, and the company intends to continue vigorously defending its IP rights through licensing and patent enforcement strategies, including the ongoing lawsuit with Illumina, Life Technologies, and Pacific Biosciences,” Trifunovich said in a statement.

Proceeds from the sale of the Helicos’ pending patents will go towards funding its ongoing operations.

In recent years, Helicos has downsized its Cambridge, Massachusetts corporate office to under 7,000 square feet as of last September from 54,000 square feet the previous year. After failing to meet the minimum $50 million market value requirement, the company was taken off of the Nasdaq stock exchange in November 2010. Helicos has focused much of the blame for poor sales of its gene sequencing machines on the infringement of its patented technologies by competitors, leading to several legal battles.

Helicos reported a revenue loss of $1.2 million in 2011, from the previous year’s revenue of $4.4 million.

Sequenom, however, has had a recent run of success, with much of that attributed to its new Materni T21 laboratory blood test to detect the fetal abnormality Down Syndrome as early as ten weeks into gestation. For the first quarter of 2012, the company reported it had billed for approximately 5,000 Materni T21 tests, and has subsequently increased its year-end goal to 40,000 billed tests, up from its original forecast of 25,000 billed tests. The test is not yet FDA-approved and has an out-of-pocket cost of $235 for the patient.

April 11, 2012, by Mandour & Associates, APC

San Diego – The ongoing patent infringement battle between Yahoo! and Facebook continues to heat up. A couple of weeks ago, Yahoo filed a lawsuit against Facebook accusing the world’s largest social media website of infringing on ten of its technology patents which include online advertising technology.

In a counterclaim filed just this week with the U.S. District Court, Northern District of California, Facebook is claiming that Yahoo is infringing on ten of its patents. The social media giant claims that Yahoo is infringing on its patents related to social networking, advertising, and privacy controls. As of recently, Facebook has been in many headlines including having just recently acquired 750 of IBM’s patents and adding them to its expanding intellectual property portfolio.

When Facebook was hit with Yahoo’s patent infringement lawsuit last month, a representative of Yahoo made a statement regarding the lawsuit saying, “As we have made clear from the outset, the unauthorized use of our patented technology is unacceptable and must be resolved appropriately,” and “other leading companies license these technologies, and Facebook must do the same or change the way it operates.” In light of Facebook’s counterclaim, Yahoo stated that the complaint against it was “”without merit and nothing more than a cynical attempt to distract from the weakness of its defense.” In recent week’s Yahoo has seen its revenue decline and its shares fell 2.4 percent on Tuesday afternoon when the counterclaim was filed.

Yahoo and Facebook join a growing list of patent infringement related lawsuits including giants in the technology field such as Motorola Mobility Holdings Inc., Apple Inc., and Microsoft Corp. Facebook has claimed to be “irreparably harmed” by Yahoo’s lawsuit and in the counterclaim filed this week it is seeking unspecified damages and a jury trial as well as the dismissal of Yahoo’s lawsuit. A member of Facebook’s general counsel stated, “While we are asserting patent claims of our own, we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation.”

April 2, 2012, by Mandour & Associates, APC

San Diego – In a unanimous decision by the United States Supreme Court, two medical patents for a test that could help doctors set drug doses for autoimmune afflictions like Crohn’s disease, was thrown out, which could likely affect the profitability of personalized medicine. The patents were developed by San Diego-based Prometheus Laboratories, which was acquired last year by Switzerland’s Nestle.

The Supreme Court judges made its decision that the medical tests were not available for patent protection because they determined that the patents were based on the laws of nature, which are unpatentable.

The patents at issue involve a method for monitoring a patient’s blood to determine the best dosage for a drug, thiopurine, for doctors to treat gastrointestinal and non-gastrointestinal autoimmune illnesses. The test covered by the patent would determine the levels of the thiopurine or its metabolites (what is left after the liver metabolizes the drug) in the patient’s red blood cells. Doctor’s would then be able to use the data from the test to make adjustments to the amount of medicine needed for that patient.

Mayo Medical Laboratories, a unit of the Mayo Clinic, had originally used the test from Prometheus, however announced in 2004 that it was developing a similar test for the healthcare market. Prometheus sued Mayo Labs for patent infringement, but a federal judge invalidated the original patent. According to the federal judge, natural phenomenon cannot be patented, but that decision was overturned by the U.S. Court of Appeals for the Federal Circuit. Mayo Labs appealed that decision to the Supreme Court.

“The question before us is whether the claims do significantly more than simply describe these natural relations,” wrote Justice Stephen Breyer in his opinion. “To put the matter more precisely, do the patent claims add enough to their statements of their correlations to allow the processes they describe to qualify as patent-eligible processes that apply natural law? We believe the answer to this question is no,” he added.

With advances from stem cell research, the field of personalized medicine has become quite promising in the United States, with biotech companies racing to find the best way to use a patient’s genetic makeup to customize their healthcare and discover the most effective individualized treatments for cancer and other diseases. The High Court’s recent decision has sent a chilling effect across the biotech industry, with its concern being that courts could misapply the decision as a broad requirement to invalidate any patent that uses the laws of nature as one of its bases.