By Lawrence Hoffman
PATENTS IN THE NEWS
A Bit of Peace:
The smartphone wars are surely not over, but one potentially costly and bitter battle appears to have been avoided. On May 23, 2017, Apple and Nokia jointly announced a world-wide settlement of all their patent disputes. The terms were not made public, but the multi-year agreement appears to call for a substantial up-front payment by Apple (one estimate I’ve seen is up to €800 million) and continuing royalties, presumably at a FRAND rate for SEPs.
Reports say that a concurrent business collaboration agreement (or perhaps it’s all in one agreement), provides for Apple purchase of network infrastructure products and services from Nokia and resumption of sales of Nokia digital health products in Apple retail and online stores. Reportedly, Apple and Nokia are also exploring future collaboration in digital health initiatives.
Litigation-wise, we can expect termination of all pending litigation, presumably including the antitrust action filed by Apple in California against Nokia and several Patent Assertion Entities (PAEs) to which Nokia sold many of its patents when it left the handset business. Bear in mind that the agreements between Nokia and the PAEs called for revenue sharing so Nokia and the PAEs likely have entered into some sort of agreement as well (Or perhaps an agreement already existed to cover this contingency). But like the agreement between Apple and Nokia, the terms are not likely to be made public.
All in all, the deal seems mutually beneficial; neither party may be completely happy, but both parties are happy enough. And Nokia will still be getting a share of revenue generated from the PAEs’ litigation against the rest of the smartphone universe.
Is Inter Partes Review Constitutional?:
I don’t often write about the Inter Partes Review (IPR) process established by the America Invents Act (AIA), although there is much that can be said, good and bad, about it. As an administrative process, i.e., performed by the USPTO Patent Trial and Appeal Board (PTAB), it can be a cost-effective way to determine patent validity in relation to certain kinds of prior art. It is an adversarial process, and as such, it is governed by rather complex procedures, similar in some ways to the procedures followed in federal court litigation.
But the devil is in the details. The IPR process is very attractive to those seeking to invalidate patents. Patent owners and their advocates, on the other hand, generally regard the IPR process rules as grossly unfair and a blight on the entire patent system.
Similar procedures exist in other countries. In Germany, for example, it is the exclusive way to determine patent validity in the first instance. However, in the U.S., among the basic criticisms of the IPR process is that granted patents are private property. Consequently, patent validity can only be adjudicated by courts established pursuant to Article III of the U.S. Constitution (Art. III Courts) and that the Seventh Amendment guarantees the patent owner the right to trial by a jury. In other words, since the PTAB is part of the Executive Branch and not an Art. III Court, the entire IPR process is unconstitutional.
In an IPR, Greene’s Energy Group challenged the validity of a patent owned by Oil States Energy Services. The PTAB held the patent to be invalid and Oil States appealed to the CAFC which summarily affirmed the PTAB decision, without a written opinion. Oil States sought review by the Supreme Court. Several issues were presented, and on June 12, 2017, Oil State’s petition for certiorari was granted on the single issue of the constitutionality of the IPR process.
Those supporting the IPR system will argue that a patent is a public, not a private right and therefore that its validity can constitutionally be determined by an administrative body.
This case is important as it may result in the end of the IPR and the other post grant review processes established by the AIA. And it’s also of general interest as a matter of constitutional law.
Early reaction includes surprise that the Court took the case, and the feeling that patent owners will be no worse off than they are now if the Court upholds the IPR process. I tend to agree, and believe that if the decision below is reversed, it might not be that much better for patent owners. What’s really needed if a more patent friendly administrative process.
As the case proceeds, it will be watched closely and reported on endlessly in the patent law blogosphere. I, too, will be watching and reporting.
Intellectual Ventures v. Erie Indemnity Co. began as a run of the mill infringement action by Patent Assertion Entity IV. Much to IV’s surprise, however, a badly drafted assignment brought the case to a screeching halt – it turned out not to own the patent.
Three patents were involved. As to one of them, No. 6,519,581 (the “’581 patent”), the defendants moved to dismiss on the ground that IV did not own the patent and that all the patents were directed to ineligible subject matter. The District Court agreed and granted the motion and on appeal, the CAFC affirmed on the ownership issue.
The ’581 patent was a continuation of U.S. Patent No. 6,236,983 (the “’983 patent”). The pending application for the ‘581 patent and the ‘984 patent were assigned to an entity named AllAdvantage.com. This assignment expressly mentioned the ’983 patent and any continuation of that patent so there was no dispute as to AllAdvantage.com’s ownership of the application for ’581 patent.
AllAdvantage then assigned AllAdvantage.com assigned various patents to another entity, Alset. Listed in the Alset assignment were the ’983 patent and certain pending applications. Apparently by error, however, the still pending application for the ‘581 was not listed.
The Alset assignment included a general clause that granted Alset:
. . . all right, including common law rights, title and interest in the United States of America . . . in and to said patents together with the goodwill of the business symbolized by said patents and applications and registrations thereof.
The application for ’581 patent ultimately was granted, and was assigned several years later to an IV entity. Despite the broad assignment provision noted above, the District Court held that Alset never owned the ‘581 patent, and therefore its assignment to IV was not effective.
In its appeal to the CAFC, IV argued that the Alset assignment covered the ‘581 patent because it was intended to do so and therefore Alset’s assignment to IV likewise covered the ‘581 patent. Not so, said the CAFC, under California law which governed interpretation of the Alset assignment. End of story.
I’m sure Alset thought it owned the ‘581 patent and I would not want to be the lawyer who prepared the assignment. Still, it seems IV also has itself (or its lawyer) to blame as well. Sure, hindsight is 20-20, but with a succession of assignments as were present here, don’t you agree it would have been a good idea to look at the whole history with a magnifying glass?
Germany’s Ratification of the Unitary Patent Court Delayed:
In a second-hand report on the Patent Docs blog (here), and from our friends in the UK at ipKat (here), it appears that the German Constitutional Court has requested that ratification be held up pending consideration of a complaint lodged by an unnamed person. The ipKat post provides a bit more (but not much more) detail. This should be treated as still-breaking news, at this time. It is understood that consideration of the matter will be expedited, but again, a delay in the ETA of the Unitary System seems likely.
TRADEMARKS ALSO IN THE NEWS
Microsoft Has a Trademark Win In China:
Last month, we reported (here) that the U.S. Ninth Circuit Court of Appeals affirmed a decision holding that GOOGLE is not a generic name for search engines even though most people refer to searching the internet as “goggling”. Now we have a report from Beijing’s Wan Hui Da – Peksung IP Group that last December, the Beijing High People’s Court ruled that POWER POINT is not the generic name for presentation file formats. The court reversed contrary rulings by the China Trademark Office (CTMO), the Trademark Review and Adjudication Board, and the Beijing IP Court.
The case arose out of a national extension of a Madrid Protocol application. The CRMO rejected the application as being the generic name for a kind of software.
When the case reached the High Court, the Board argued that Microsoft’s long-term use of POWERPOINT had caused the relevant consumers to associate the term and presentation files generally.
The High Court rejected the Board’s argument, noting a 2000 registration of POWERPOINT for computer software etc. that is still valid. Thus, in 2000, “POWERPOINT” was not a generic name for presentation files software products. Awareness by the public since that time, of POWERPOINT, as a trademark for presentation files software strengthened, rather than diminished the relationship between the POWERPOINT software and the trademark owner Microsoft.
The Court further noted that there was no evidence proving that other competitors in the same industry have been using “POWERPOINT” as the product name or as a software format. Rather, others had their own trademarks for the same types of products. In sum, the High Court found that there was no evidence that POWERPOINT was, or had become generic.
The Trademarks NIMORAL and NEORAL Are Confusingly Similar:
Azanta A/S had applied to register NIMORAL as a European Union Trademark for pharmaceutical preparations applicable to cancer treatment. The application was opposed by Novartis AG on the basis of its earlier registration for NEORAL, apparently for similar products. The opposition was sustained and affirmed by the Trademark Board of Appeals.
On review by the EU General Court, the decision below was upheld. The court agreed with Azanta that the members of the relevant public (oncologists and cancer patients) would be particularly attentive to the goods at issue. Nevertheless, the court held that purchasers would not ordinarily have an opportunity to compare the marks and would therefore likely rely on imperfect recollection. Given that the goods were identical and the marks were similar “to an average degree”, the court deemed that confusion would be likely.
To me, the decision suggests an underlying suspicion by the court that by Azanta’s choice of its mark, it intended to come close to, but not too close to, the Novartis mark. I think a prescribing oncologist is almost certain to know what he or she is prescribing and that would not likely be confused. Nor do I think the patients are part of the relevant public.
Whether I am right or wrong about the court’s perception of the situation, and its possible role in the decision, I do agree that Azanta would have been well advised to pick a less similar mark.
MORE ON THE WAYMO – UBER TRADE SECRET SAGA
Still No Good News For Uber or Andrew Levandowski:
For those of you following my posts on the Waymo-Uber trade secret litigation and all the other news about Uber, I don’t have to tell you that things are not going well in Uberville. Along with the firing of over 20 employees in connection with an investigation of sexual harassment complaints, reports that an Uber executive had obtained medical records of a New Delhi woman who had filed rape charges against a Uber driver, there are now reports that Uber’s Board of Directors appears to have pressured Uber’s founder and C.E.O, Travis Kalanick, to take an indefinite leave of absence “amid questions about his leadership in as time of crisis”.
And, of course, there was the news that Uber’s star engineer, Anthony Levandowski, whom it enticed away from Waymo, had been fired, allegedly for failing to cooperate with Uber in connection with the Waymo litigation.
But Uber got some more bad news in court on June 7 when Judge Alsup refused to stay the trial pending appeal of his earlier order denying Uber’s bid to force the case to arbitration. At the same time, Judge Alsup denied Levandowski attempt to have Waymo’s preliminary injunction requirements as to him lifted.
Judge Alsup’s orders don’t say much. The order on Uber’s Motion to Stay reads “For the reasons stated on the record at the hearing today, defendants’ motion to stay. . . is DENIED”. Similarly, the order on Levandowski’s motion reads “For the reasons stated on the record at the hearing today, non-party Anthony Levandowski’s motion to intervene and modify the provisional relief order dated May 11, 2017 is DENIED.”
The transcript of the hearing will not be open for public inspection for some time. However, the hearing was open, and there appears to have been at one interested observer, Ryan Lawler, who reported on Techcrunch (here) on what the judge said.
The report doesn’t say much about why Uber’s Motion to Stay was denied, but it can be surmised that the judge didn’t think much of Uber’s chance on appeal. But the report does reveal Judge Alsup’s thinking on other aspects of the case.
As to the ongoing discovery squabbles, with the trial scheduled to begin on October 2, the judge “urged” the parties to limit the issues and further discovery and to resolve their discovery disputes. He also directed that no further discovery requests be made until further notice.
On the legal issues, Judge Alsup was surprisingly explicit. To Waymo, he suggested dropping the patent infringement claims, reportedly saying, “I think you’re going to lose on all these patent claims unless you pull a rabbit out of a hat”.
To Uber, he reportedly said something to the effect that its defense would depend on showing that the alleged trade secrets Waymo has accused Levandowski of stealing were not secrets after all, but part of the public domain and something that any good autonomous engineer would know. That cannot be happy news for Uber since he observed when granting the injunction that he considered at least some of the information taken by Levandowski to be legitimate trade secrets and as much as said that Uber had access to it.
Nor was he at all sympathetic to Levandowski, who had argued that his constitutional rights had been violated by the court having ordered Uber to fire him if necessary, to get his cooperation. This, his lawyers argued, amounted to the government forcing him to choose between his Fifth Amendment rights and continued employment.
As to this, Judge Alsup called the issue moot because “Uber had its own investigation going and for its own reasons found that Mr. Levandowski should be fired for not complying with that investigation.” To emphasize the point, he invited consideration of the “mischief [that] would arise if people working at private companies could claim the Fifth Amendment when party to any internal investigation and could remain employed while not complying with those investigations”.
In my mind, there is no question that Uber had an investigation going, but it was half-hearted until the preliminary injunction was granted. At that point, it likely became clear to Uber that the time for foot-dragging was over and that protecting itself was more important than protecting Levandowski. In short, I think the ruling on Levandowski’s motion would be upheld on appeal.
Then, the next day, Uber and Levandowski got additional bad news from Magistrate Judge Jacqueline Scott Corley (who, you will recall, had been assigned to supervise discovery in the litigation). At that time, she granted Waymo’s motion to compel Levandowski to produce the Stroz Friedman “due diligence report” commissioned by the lawyers for Uber and Ottomotto in connection with Uber’s planned purchase of Ottomotto.
Rulings by a Magistrate Judge are subject to review by the trial judge, and supporting papers for the views of the parties (including papers filed by Stroz Friedberg) on Corley’s recent discovery rulings have been submitted. We can expect further word from Judge Alsup shortly, I suspect.
About the author: Larry Hoffman has a B.S. in Electrical Engineering and Comp. Sci. from Massachusetts. Institute of Technology and a J.D. from the George Washington University School of Law. He has been a lawyer since 1965 specializing in IP law and product liability defense. He is registered to practice before the U.S. PTO, the U.S. Court of Appeals for the Federal Circuit and the state and federal courts in New York, Maryland, and the District of Columbia. His work has included preparation and prosecution of patents in countries throughout the world, and counseling on IP and product safety matters. He has been involved in the trial of close to 100 lawsuits of various kinds. You can reach him at Lawrence@ipatent.co.il.