Research-In-Motion Settles With Motorola

In late February, Motorola filed an ITC Section 337 action against Blackberry maker Research-In-Motion.  On Friday, Research-In-Motion announced that it has ended all worldwide patent disputes with Motorola

According to the announcement,

Under the Agreement, Motorola and RIM will benefit from a long-term, intellectual property cross-licensing arrangement involving the parties receiving crosslicenses of various patent rights, including patent rights relating to certain industry standards and certain technologies, such as 2G, 3G, 4G, 802.11 and wireless email . In addition, the parties will transfer certain patents to each other.

The ITC complaint identified filed in February identified U.S. Patent Nos.  5,319,712; 5,359,317; 5,569,550; 6,232,970; and 6,272,333. 

  • 5,319,712 is directed to cryptographic protection of data streams using packet sequence numbers;
  • 5,359,317 is directed to storing selected portions of received messages in selected memory elements;
  • 5,569,550 is directed to a battery pack;
  • 6,232,970 is directed to a user interface supporting "light" data entry (e.g., fewer keystrokes); and
  • 6,272,333 is directed to sending data to a wireless device only after checking that the wireless device has an installed application that can access the data.

The '970 patent looks like it was written to cover the old Rolodex "Rex" credit-card sized personal digital assistant (PDA).  I had a version 1 of this product in the '90s, but quickly switched to a full-sized PDA despite the larger form factor.

Triggering Declaratory Judgment Actions

Whenever a patent holder sends a communication to a potential defendant before filing an infringement action, the patent holder risks a declaratory judgment (DJ) action.  A common question is what language must be in the communication?  Must the communication threaten an infringement lawsuit?  The Federal Circuit's decision yesterday in Hewlett-Packard v. Acceleron says no and provides an example of a sequence of communications between the parties.

Accleron wrote to Hewlett-Packard (HP):

I am writing to call your attention to the referenced patent. . . . This patent was recently acquired by Acceleron, and relates to Blade Servers.

We would like an opportunity to discuss this patent with you. In order to provide a productive atmosphere in which we can do so, we ask that you agree that all information exchanged between the parties will not be used for any litigation purposes whatsoever, including but not limited to any claim that Acceleron has asserted any rights against any of your ongoing or planned activities, or otherwise created any actual case or controversy regarding the enclosed patent.

Should you wish to engage in discussions regarding this patent with us, please return an executed copy of this letter to me in the enclosed stamped, self-addressed envelope. When we receive your acknowledgement, we will send you a package of information relating to this patent. I will look for your response by September 28, 2007, and if I do not hear from you by that time, I will assume you have no interest in discussing this patent.

A couple of weeks later, HP replied:

I have been evaluating the patent you sent and am interested to learn any further information you have so that I am able to conduct a complete and accurate assessment. HP shares your interest in creating a productive atmosphere for us to discuss the ’021 patent. Accordingly, in response to your request that HP not file a declaratory judgment action, HP would be willing to agree not to file such an action for a period of 120 days if Acceleron similarly will agree not to file an action against HP during the same 120 day period. If such a mutual standstill agreement is acceptable, please let me know and I will send you an agreement to that effect directly.

A few days later, Acceleron wrote back:

I do not believe that HP has any basis for filing a declaratory judgment action, and I think that my letter provides both parties appropriate protections to create a productive atmosphere in which to discuss the ’021 patent.

So, if you are interested in discussing this patent with us, please send me a signed copy of my previous letter to you by no later than October 19, 2007. If I do not receive [one] by then, I will understand that you are not interested in discussing this patent, and you do not have anything to say about the merits of this patent, or its relevance to your Blade Server products.

HP responded by filing a declaratory judgment action.  The district court found that the litigation was "too speculative" to support a declaratory judgment.  HP appealed to the Federal Circuit.

According to the Federal Circuit, "a communication from a patent owner to another party, merely identifying its patent and the other party's product line, without more, cannot establish adverse legal interests between the parties, let alone the existence of a 'definite and concrete' dispute" sufficient to support DJ jurisdiction. However, a "strategem of correspondence that avoids the magic words such as 'litigation' or 'infringement'" cannot avoid a DJ action. 

The Federal Circuit found these facts persuasive:

  • Acceleron identified its patent and indicated that the patent is "relevant" to HP's product
  • Acceleron imposed deadlines for responding to its letters
  • Acceleron failed to propose a confidentiality agreement
  • Acceleron failed to accept HP's proposed standstill agreement

The Federal Circuit stated that "conduct that can be reasonably inferred as demonstrating intent to enforce a patent can create declaratory judgment jurisdiction."  Moreover, the Federal Circuit seems to have considered Acceleron's status as "solely a licensing entity" that "receives no [other] benefits from its patents."  

The Federal Circuit reversed and remanded the action.

[Edit: More analysis at Patently O.  12/7/2009.]

Broad Patents Can Be Both Lucrative and Expensive

Patent attorneys often attempt to get the broadest possible coverage for a client's invention because that can usually make the patent quite lucrative.  Patenting broad claims can be expensive during the patent procurement process because patent examiners are reluctant to let broad claims issue and so there may be multiple back-and-forth communications between the patent examiners and patent attorneys.  However, patents with overbroad claims can be expensive to keep enforceable, e.g., when a third party requests the U.S. Patent & Trademark Office (USPTO) to reexamine an issued patent in view of prior art. 

For example, the Electronic Frontier Foundation (EFF) has apparently requested the USPTO to reexamine U.S. Patent No. 7,568,213.  According to the EFF, this patent is purportedly directed to "podcasting."  When a patent is under reexamination, the patent holder must expend resources (e.g., patent attorney fees) to work with the USPTO to define the appropriate scope of the patent's claims in view of the newly identified asserted prior art.

During prosecution, patent attorneys, inventors, and anyone involved in a patent application have a duty to cite all pertinent prior art they are aware of.  However, it is nearly impossible in most fields of human endeavor for the patent attorney, patent examiner, or even the inventor to be aware of all pertinent prior art.  Thus, it is quite easy for overbroad patent claims to issue.  Sometimes, the best prior art is not even found until the patent is asserted in an infringement lawsuit because the alleged infringer is motivated to prove that it is not infringing a valid patent. 

Thus, smart patent attorneys attempt to patent claims of varying scope -- from broadly encompassing the subject matter of the invention without crossing into the known prior art down to narrowly encompassing a specific implementation that is reflective of the client's commercializable product.

Inoculating Against Patent Value Depreciation

In an en banc ruling yesterday in Cardiac Pacemaker v. St. Jude, the Federal Circuit decided that method claims do not have extraterritorial reach under 35 USC 271(f). In earlier cases, courts have ruled that some claim types (e.g., system claims reciting one or more components) have some extraterritorial reach, such as when patented components are separately exported and combined abroad to produce the infringing system or device.

When a patent applicant files a patent application, the minimum government fees cover three independent claims and twenty total claims. Patent attorneys sometimes recommend paying "excess claims fees" to file additional claims. Some clients, however, prefer not to pay the excess claims fees and decide to limit their claim coverage. Cardiac Pacemaker serves as another example that having different claim types can be useful.

The law evolves and it can be difficult to predict which claim types will be valuable (or lose value) in the future. Good patent attorneys draft multiple claim types to inoculate their clients' assets against future depreciation. 

What Is A Patent Worth?

Entities sometimes need to determine what a patent or a portfolio of patents is worth.  Valuation of a portfolio may be useful when, among other things, an entity desires to:

  • determine whether to pursue a patent application;
  • evaluate a company's value (e.g., for merger, acquisition, or stock price); or
  • estimate damages.

The value of a patent can depend on a multitude of factors including but not limited to: 

  • breadth of a patent claim;
  • scope of the patent claim given up during prosecution;
  • validity of the patent given changes in patent laws;
  • price customers would be willing to pay for a product embodying the claimed invention;
  • license fees paid for similarly important components; and
  • costs to substitute the claimed technology with an alternative.

Often, the value of a patent is not publicly known because parties often settle matters out of court.  Other times, the value of a patent becomes abundantly clear after a blockbuster court case.  For example, a jury yesterday awarded nearly $1.7 billion to Johnson & Johnson, whose patent the jury determined was infringed by Abbott Laboratories' drug, Humira.  Abbott Labs plans to appeal the verdict.

Valuing a patent can thus require the skills of someone who understands both legal as well as business issues, or at least an interdisciplinary approach.

Small Can Be Big in Patent Law

Most people who are familiar with patents know that the fewer words a claim has, the broader its scope.   New clients who are not familiar with patents sometimes mistakenly think that the more features a patent's claim recites, the "broader" the claim is.  They quickly learn the truth.

Even when they have few words in their claims, many patents have quite long specifications.  For example, a patent a client is thinking of asserting is huge by any stretch of the imagination.  Its specification is scores of pages long.  An advantage to a long specification is that it probably describes multiple "embodiments" of the claimed inventions.  That can become important during licensing negotiations.

On the other hand, I've also seen some very short patents asserted.  For example, CNET reports that a company called Tune Hunter is asserting a patent that is 6 1/2 pages long (including 3 figures, about 3/4 page for 2 claims, the cover bibliographic page, and a short description) against some huge companies:  Samsung, Apple, Motorola, Amazon, Verizon Wireless, LG Electronics, AT&T Mobility, and others.  The patented technology "provides the listener with convenient means to record a segment of the music in which he/she is interested. The recorded music segment is played back into an apparatus which can identify the song based on the play back and provide the user with information on the identified song such as title, singer or artist, composer, producer, etc., and provide related purchasing information. "  (U.S. Patent No. 6,941,275, Abstract.)  Apparently Tune Hunter's iPhone application is quite popular.