Patent License

February 28, 2013, by Mandour & Associates, APC

San Diego – Qualcomm, Inc. and Microsoft Corp. told the Federal Trade Commission that Google is seeking injunctions to prevent competitors from selling goods that infringe its stand-essential patents, even though Google made an agreement with the FTC that it would not seek injunctions against companies that are willing to license the patented technology.

Qualcomm, Microsoft, Ericsson and  Apple all made public comments last week saying that Google is not living up to the promises it made in its deal with the FTC regarding how it handles the standard-essential patents it obtained when it bought Motorola Mobility Inc.

Google’s settlement with the FTC included a provision that prohibits Google from pursuing injunctions against companies that are willing to license the patents.  Apple and Microsoft, both of which have been in patent licensing wars with Google, said that Google is still seeking injunctions against them and using the threat of injunctions as a tool in negotiating past licensing fees.

“Google continues to pursue injunctive relief against Apple in federal court and seeks to exploit the injunction it obtained and enforced against Apple in Germany,” Apple said.

Microsoft requested the FTC clarify the pending consent decree to demand Google to abandon all injunctive relief actions that have already been filed.

“We assume that Google’s refusal to withdraw its pending claims for injunctive relief means that it interprets the proposed order to permit it to continue its existing claims for injunctive relief, notwithstanding the commission’s public statement to the contrary,” Microsoft said.  “Clarification of the decree in this regard would be appropriate.”

The companies expressed concern that if the consent decree were to be adopted for all standard-essential patent owners there would be far-reaching consequences and the companies urged the FTC to limit the proposed consent decree just to Google’s case.

“Ericsson believes that the specific procedures described in the order, if widely adopted, may cause unintended and undesirable consequences,” Ericsson said.  “Unnecessary restrictions on the availability of injunctive relief against unwilling licensees may discourage companies such as Ericsson from contributing to open standards.”

Trade groups such as the American Intellectual Property Law Association and the Intellectual Property Owners Association also opposed the consent decree.  The groups expressed concern that the consent decree limits the patent owners’ First Amendment right to seek injunctive relief from the courts in the case of infringement.

November 13, 2012, by Mandour & Associates, APC

San Diego – For the first time, a federal judge will determine what constitutes a reasonable royalty rate for patents that have become an industry standard.  The case, which begins Tuesday in the U.S. District Court in Seattle, started when Microsoft filed a lawsuit against Motorola in November 2012 claiming that Motorola breached its contract to provide use of its patents at a reasonable rate.  The technology relates to online-video viewing and wireless usage.

Private companies that hold industry-standard patents may be required to license them under FRAND or “fair, reasonable, and nondiscriminatory” terms as part of joining international-standards groups.  Microsoft claims that Motorola Mobility, a subsidiary of Google, demanded excessive royalties for the use of its industry-standard patented technologies.  Microsoft claims that Motorola required 2.25 percent of the sale price of every Xbox and Windows sale, which it claims would amount to Microsoft paying Motorola $4 billion annually.

Motorola disputes the $4 billion figure and claims that the 2.25 percent royalty rate was simply an opening figure for negotiations.  Judge Robart is expected to give an opinion about what constitutes a reasonable royalty fee for all industry-specific patents.  A jury trial, planned for the spring, will then compare the reasonable rate determined by Judge Robart with Motorola’s rate.

The decision will have an impact on other cases between the two companies in Washington, D.C. and in Germany.  Motorola is currently seeking an import ban on Xbox consoles from the U.S. International Trade Commission (ITC), as they contain some of the industry-standard patents being disputed in the Seattle trial.  Motorola has already won an injunction from a German court that bans the sale of certain Windows and Xbox products in those countries.  Judge Robart has barred Motorola from enforcing the injunction until the Seattle case is settled.

Microsoft has already said that it will pay Motorola whatever the court decides is a reasonable royalty rate.  If Motorola agrees, the cases before the ITC and the injunction in Germany will likely go away.


October 25, 2012, by Mandour & Associates, APC

Musical instrument and equipment makers Korg Inc. and Yamaha Corp. and retailers such as Guitar Center Inc., Sam Ash Music Corp. and Best Buy Co. are infringing the San Diego, Calif.-based e.Digital Corp.’s patents for recording device technology, e.Digital said in a series of new complaints in the Southern District of California on Monday.

Korg, Yamaha and Diasonic Technology Co. are manufacturing musical recording devices and samplers that infringe U.S. Patent Numbers 5,839,108, 5,842,170, 5,742,737, and 5,491,774, while the retailers are selling those same devices, e.Digital alleges. The patents cover the use of flash memory technology in recording devices.

The accused products include Yamaha’s Pocketrak CX, C24, W24 and 2G portable recorders; Korg’s MR-2 and SOS portable recorders, KAOSS Pads and Kaossilator samplers; and Diasonic’s DDR series of products.

Other companies targeted in the lawsuits include J & R Electronics Inc., Sweetwater Sound Inc., Kraft Music Ltd. and Sec Tech Enterprises LLC.

“e.Digital’s inventions have opened the door to the widespread use of flash memory in many of today’s popular electronic products,” e.Digital President and CEO Fred Falk said in a statement Tuesday. “The strength of our fundamental intellectual property has been validated through licensing and settlement agreements and through reexamination by the U.S. Patent and Trademark Office.”

e.Digital claims its strategy is to leverage the knowledge and experience it has gained from prior enforcement actions to streamline, accelerate and maximize patent licensing efforts. The company devised a number of forward-looking flash memory technologies from the early 1990s onward.

“Our patents are essential to many consumer electronic products and their use is growing in importance with the proliferation of flash memory,” Falk said. “We consider our intellectual property valuable company assets and we are committed to protecting and enforcing them.”

e.Digital has previously sued a number of companies over its recording technology patents including Samsung Electronics Co., Avid Technology Inc. and Casio America Inc, many of which chose to settle and license the technology.

October 24, 2012, by Mandour & Associates, APC

San Diego – The U.S. Department of Justice is investigating Samsung Electronics Co. for antitrust violations related to its licensing of standard-essential patents, Apple Inc. revealed in a Monday filing with the U.S. International Trade Commission.

The ITC administrative law judge overseeing a Section 337 patent case over the companies’ tablet and smartphone products was right to find to find that Samsung’s claims in the case failed on the patent merits, Apple said. The ALJ should have found, though, that Samsung was barred from even asserting its claims in the ITC due to its commitments to license its standard-essential patents on fair, reasonable and nondiscriminatory terms, according to Apple.

The ITC’s issuance of exclusion or cease and desist orders in matters involving FRAND-encumbered patents like those Samsung is asserting can cause substantial harm to competition, and Congress and the executive branch have taken notice, Apple says.

“Regulators likewise have continued to scrutinize these problems, including in the specific context of Samsung’s conduct: the Department of Justice has opened an investigation into the manner in which Samsung has used—or misused—its declared-essential patents, as has the European Commission,” Apple says.

The EC has been probing Samsung’s possibly anti-competitive use of standard-essential patents since January.

Apple also pointed to a June statement by the U.S. Federal Trade Commission noting the potential for competitive harm. It additionally highlighted a statement that same month by several members of Congress saying that allowing companies to commit license patents on FRAND terms and then seek an exclusion order despite a breach of that commitment would raise serious policy concerns.

At the hearing before the ALJ, Apple introduced extensive evidence that Samsung’s assertion of declared-essential patents was incompatible with Samsung’s FRAND commitments and the public interest.

“Allowing Samsung to renege on its FRAND commitments through the issuance of an exclusion order would have consequences extending beyond this case, and the harm to the public interest would be severe,” Apple says.

If the ITC decides to review the initial determination of non-infringement in the case, it should also address the statutory public interest factors that preclude issuance of an exclusionary remedy for “these FRAND-committed, untimely disclosed, exhausted patents,” Apple says.

September 25, 2012, by Mandour & Associates, APC

San Diego – SK Hynix Inc. on Monday settled Intellectual Ventures Inc.’s litigation against it over semiconductor patents, after winning a court ruling Friday in the Northern District of California that will cap the royalties it owes Rambus Inc. for infringing other patents for memory devices.

Hynix and Elpida Memory Inc., which also settled with IV Monday, were named as defendants in IV’s patent infringement action filed in December 2010 in the District of Delaware.

Both companies and some of their customers were also named as respondents in an investigation by the United States International Trade Commission of certain memory device manufacturers based upon an IV complaint filed in July 2011, and in a related action in the Western District of Washington filed the same month.

“IV has built a world-class portfolio of semiconductor patents, and our preference is to sign license agreements and form productive, long-standing relationships with innovative companies rather than to litigate,” IV vice president and chief litigation counsel Melissa Finocchio said Monday.

The Friday ruling in the Rambus case, meanwhile, came in large part due to the district court’s finding that Rambus spoiled evidence in bad faith or at least willfully.

The court concluded that the sanction most commensurate with Rambus’s conduct is to strike from the record evidence supporting a royalty in excess of a “reasonable, non-discriminatory” royalty.

“Such a remedy recognizes that Rambus’s patents have been determined to be valid while at the same time recognizing that Rambus’s spoliation of evidence should preclude it from entitlement to a royalty that places Hynix at a competitive disadvantage,” Judge Ronald M. Whyte said.

The evidence does not support a conclusion that Rambus deliberately shredded documents it knew to be damaging, but Rambus did willfully destroy records when litigation was reasonably foreseeable, the judge said.

“That destruction was part of a litigation plan,” he said. “The destruction involved the shredding of large volumes of documents on multiple occasions. And finally, Rambus made no effort to log or record what was destroyed.”

Rambus itself welcomed the decision, despite the limit on the royalty rate, for confirming that it does indeed deserve royalty payments for the use of its patented technology

“This is a positive result as it is consistent with what we’ve been seeking all along — reasonable compensation for the use of our patented inventions,” Rambus senior vice president and general counsel Thomas Lavelle said Sunday. “We appreciate the court’s extensive efforts in working through years of complex arguments. While this decision does not provide SK Hynix with a going-forward license, we are hopeful it will lead to putting this matter behind us completely and allow us to reach reasonable agreements.”

September 18, 2012, by Mandour & Associates, APC

San Diego – Microsoft Inc. and Research in Motion Ltd. have entered into a patent licensing agreement giving the Blackberry maker unfettered access to its latest file allocation system for flash memory storage, Microsoft said Tuesday.

Microsoft’s Extended File Allocation Table, known as exFAT, is a modern file system that facilitates large files for audiovisual media and enables seamless data portability and an easy interchange between desktop PCs and other electronic devices, according to the tech giant.

The system improves on its predecessor, the FAT system, and greatly expands the size of files that flash memory devices can handle by five times over previous FAT technology. It also increases the speed with which those files can be accessed.

“Today’s smartphones and tablets require the capacity to display richer images and data than traditional cellular phones,” Microsoft general manager of intellectual property licensing David Kaefer said.

“This agreement with RIM highlights how a modern file system such as exFAT can help directly address the specific needs of customers in the mobile industry,” he said.

Since Microsoft launched its IP licensing program in December 2003, the company has entered into more than 1100 licensing agreements and continues to develop programs that make it possible for customers, partners and competitors to access its IP portfolio, the company claims. The program was developed to open access to Microsoft’s R&D investments and its patent portfolio.

Microsoft has entered into similar licensing agreements with several leading consumer electronics manufacturers through its IP licensing program, including Panasonic Corp., Sanyo Electric Company Ltd., Sony Corp. and Canon Inc.

Last year Microsoft and RIM entered another patent deal, as part of a consortium including Apple Inc. and others that paid $4.5 billion for the patent portfolio of Nortel Networks Inc.

Posted in: Patent License
August 24, 2012, by Mandour & Associates, APC

Eastman Kodak Co. plans to sell off its personal imaging and document imaging businesses, which include consumer film and scanners, as part of its efforts to emerge from Chapter 11 bankruptcy while iconic photo company’s attempts to auction off its digital imaging patent portfolio remain ongoing, the company said Thursday.

Kodak is seeking to shift its primary focus to commercial, packaging and functional printing solutions and enterprise services, the company said.

The sale of the imaging businesses will work in concert with continued cost-reduction initiatives, curtailment of Kodak’s legacy liabilities, and the monetization of the company’s digital imaging patent portfolio to hasten the company’s exit from bankruptcy, Kodak said.

“The initiation of a process to sell the personalized imaging and document imaging businesses is an important step in our company’s reorganization to focus our business on the commercial markets and enable Kodak to accelerate its momentum toward emergence,” Kodak Chairman and Chief Executive Officer Antonio M. Perez said. “In addition, we continue our initiatives to reduce our cost structure and streamline our operating models in an effort to return the company to profitability.”

“We are reshaping Kodak,” he said. “We continue to rebalance our company toward commercial, packaging and functional printing – in which we have the broadest portfolio solutions – and enterprise services. These businesses have substantial long-term growth prospects worldwide and are core to the future of Kodak.”

Kodak’s efforts to auction off the digital imaging patents have yet to produce a sale. The auction is most notable for bringing together unlikely allies like Google Inc., Apple Inc., Samsung Electronics Co., LG Electronics Inc. and HTC Corp., as the Wall Street Journal reported Wednesday.

“In accordance with its prior announcement, the company is continuing discussions with parties with respect to the potential sale of its digital imaging patent portfolio,” Kodak said Thursday. “The company reiterates that it has made no decision to sell the portfolio and Kodak may, in consultation with creditors, retain the portfolio as an alternative source of recovery for creditors.”

Posted in: Patent License
June 26, 2012, by Mandour & Associates, APC

San Diego – Intel recently acquired 1,700 patents from InterDigital’s wireless technology intellectual property portfolio. The purchase essentially saved InterDigital as it had been rumored to closing its doors altogether. In February InterDigital had stated that it was eager to sell the bulk of its patents and it was on the lookout for a buyer.

While many electronics companies have jumped on the bandwagon of creating smartphones and tablets, Intel has watched from afar. Until this year that is when it introduced the first Intel-based smartphone to the market in India which has been widely successful. According to reports, with the acquisition of InterDigital’s patents and patent applications Intel may now begin to transition into the U.S. smartphone market.

Doug Melamed, Intel senior vice president and general counsel, recently made a statement regarding the patent purchase stating, “These patents will support Intel’s strategic investments in the mobile segment. The addition of these patents expands our already large, strong and diverse portfolio of intellectual property.”

As Melamed stated, Intel is continuing its success in making successful transitions as it is preparing for the release of the new Microsoft operating system, Windows 8. Just as Intel’s intellectual property portfolio has continued to expand so has its relationship with Windows. We can expect to see more of ‘Wintel’ as the new Windows 8 operating system is expected to be released later this year.

As for InterDigital, its senior executive vice president of strategy and finance Scott McQuilkin stated of the purchase, “the acquisition of this portfolio of InterDigital’s technologies by a global technology leader like Intel affirms the efforts of our research and development team which actively shares our innovations with the worldwide standards bodies, defining technologies that are central to the world’s major wireless systems and devices” and “this transaction, which involves a small portion of our overall patent portfolio, marks an important milestone of InterDigital’s stated strategy of expanding the monetization of its large and growing intellectual property portfolio. By executing on our business plan, which has been broadened to include patent sales, licensing partnerships and other possibilities, we see tremendous potential to expand revenue and build shareholder value.”

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.

December 12, 2011, by Mandour & Associates, APC

San Diego – Watson, the IBM computer famous for winning a game of Jeopardy against Ken Jennings, may now have its supercomputer capabilities put to use in the patent world.

IBM has implemented new software into the computer called the Strategic IP Insight Platform (SSIP) that allows Watson to search through peer reviewed medical articles and pharmaceutical patents. The SSIP software enables Watson to identify the chemical compounds in this vast array of information and generate a chemical compound database. Further, Watson also catalogs the chemical compounds in the database to include other relevant information such as the inventors, the patent term, and the companies or assignees who own the chemical compound and their finances.

As an example of Watson’s capabilities, it searched through 4.7 million patents and 11 million articles dated from 1976 to 2000, and created a database of 2.5 million chemical compounds. IBM has since donated this database to the National Institutes of Health to allow scientists to access information that would otherwise be very costly and time consuming to get.

From this great potential with Watson also comes an ethical dilemma. On one side, Watson could identify potential drug targets that could lead to improved research and development for new pharmaceutical drugs. On the flip side, Watson could target vulnerable companies who own lucrative patents and pass this information onto “patent trolls” leading to increased litigation and restrictive licensing practices.

IBM has yet to state how they will utilize Watson. But how IBM utilizes Watson for its own benefit may give an indication. By re-tooling Watson’s software, IBM could search through the vast amount of computer-related patents and articles available. IBM owns 50,000 patents and filed for 6,000 in 2010 alone. They stand to benefit immensely from Watson if they so choose.

Even national patent offices may stand to benefit from Watson in the long run. Watson has the potential to search through prior art patents and articles faster and more efficiently than human examiners, resulting in decreased laime for obtaining a patent.

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