Showing posts with label Dell. Show all posts
Showing posts with label Dell. Show all posts

Wednesday, March 30, 2022

Neo Wireless expanding patent enforcement campaign to automotive: actions filed against Ford, Honda, VW, Nissan, GM, Tesla, Toyota with five U.S. district courts

This is the third standard-essential patent (SEP) post in a row. The previous ones discussed patent assertions by some unnamed MPEG LA licensors against their former partner Samsung and some rather interesting developments surrounding Nokia v. OPPO/OPPO v. Nokia.

Non-practicing entity Neo Wireless LLC put itself on the map of U.S. patent litigation through its mid-January filings against Apple, LG, and Dell. As Apple Insider reported, the infringement allegations in the complaint against Apple alleged that Neo Wireless held patents essential to the 4G/LTE and NR/5G cellular telecommunications standards.

Neo has now filed a slew of lawsuits against car makers:

  • Eastern District of Texas

    • General Motors Company

    • Tesla

    • Toyota

  • Eastern District of Tennessee: Volkswagen Group

  • Middle District of Tennessee: Nissan

  • Southern District of Ohio: Honda

  • Western District of Missouri: Ford Motor Company

The Eastern District of Texas has tremendous expertise in adjudicating patent disputes; the other districts--with the greatest respect--don't. It will be interesting to see whether any venue transfer motions will succeed and/or whether any of those cases will get consolidated.

Neo is not an Avanci licensor, and will likely seek damages that on a per-patent basis dwarf the cost of Avanci license. Some automakers already have that problem with Intellectual Ventures, which is asserting a mix of standard-essential and non-standard-essential patents (1, 2).

Only one of the defendants is a publicly-known Avanci licensee: Volkswagen. Tesla has been rumored to be one ever since multiple enforcement actions by Avanci licensors were withdrawn near-simultaneously in different jurisdictions. The other defendants are presumably among the companies Member of the European Parliament Alfred Sant had in mind when he asked the European Commission three questions concerning the distortion of competition because of some car makers having taken an Avanci license while their competitors from outside of Europe largely haven't.

The asserted patents largely overlap between the different cases, but are not always the same. For example, four of the six patents-in-suit against Toyota are also among the five patents asserted against Apple, but two are not.

The claimed inventions were apparently made by Chinese individuals, but Neo Wireless is a U.S. entity. There was or is another company named Neocific that temporarily owned some or all of those patents.

Finally, here are two sample complaints: the E.D. Tex. one against Toyota and the W.D. Mo. lawsuit against Ford.

22-03-29 Neo Wireless LLC v... by Florian Mueller

22-03-29 Neo Wireless LLC v... by Florian Mueller

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Wednesday, March 26, 2014

Microsoft announces license agreement with Dell, its 23rd known Android patent deal (29 in total)

Earlier today I blogged about the Licensing Executives Society, which wants to "make the world better through [patent] licensing". Now I have three new Android-related patent license agreements to add to my list, and the most significant one of the three was just announced today: Microsoft and Dell signed a patent licensing agreement under which "they agreed on royalties for Dell’s products running the Android or Chrome platforms and on consideration to Dell for a license from Microsoft for Xbox gaming consoles".

On February 20, Microsoft also announced an Android- and Chrome-related patent license deal with Hop-on. I missed that announcement and found out about it (via Twitter) a week or two later. The announcement said that "Microsoft will receive royalties from Hop-on under the agreement".

Hop-on was Microsoft's 22nd known Android patent licensee, and Dell is now the 23rd.

And the third addition to the list of royalty-bearing Android patent license agreements is a settlement between Samsung and Vertical Computer Systems. On March 21, the parties filed the following information with the United States District Court for the Eastern District of Texas:

"Pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii) and 41(c), Plaintiff Vertical Computer Systems, Inc. ('Vertical') and Defendant s Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. (the 'Samsung Defendants') hereby stipulate to dismiss with prejudice: all claims by Vertical against the Samsung Defendants; and all counterclaims by the Samsung Defendants against Vertical. Each party shall bear its own costs of suit and attorneys' fees."

LG already settled the same litigation in October. Just like in the LG case, it's a safe assumption that Vertical received some kind of payment, though it's another question whether any presumed payment is significant relative to Samsung's huge volume of Android devices (it's probably not a big deal for Samsung, but I'm just guessing; I'm sure it benefits Vertical, and Vertical may now, after the settlements it obtained, be encouraged to go after other Android device makers).

Here's an updated list of all known deals:

  1. April 27, 2010: Microsoft Announces Patent Agreement With HTC

  2. June 27, 2011: Microsoft and General Dynamics Itronix Sign Patent Agreement ("Agreement will cover General Dynamics Itronix devices running the Android platform.") (FOSS Patents coverage)

  3. June 29, 2011: Microsoft and Velocity Micro, Inc., Sign Patent Agreement Covering Android-Based Devices (FOSS Patents coverage)

  4. June 30, 2011: Microsoft and Onkyo Corp. Sign Patent Agreement Covering Android-Based Tablets (FOSS Patents coverage)

  5. July 5, 2011: Microsoft and Wistron Sign Patent Agreement ("Agreement will cover Wistron's Android tablets, smartphones and e-readers.") (FOSS Patents coverage)

  6. September 8, 2011: Microsoft and Acer Sign Patent License Agreement ("Agreement will cover Acer's Android tablets and smartphones.") (FOSS Patents coverage)

  7. September 8, 2011: Microsoft and ViewSonic Sign Patent Agreement ("Agreement will cover ViewSonic's Android Tablets and smartphones.") (FOSS Patents coverage)

  8. September 28, 2011: Microsoft and Samsung Broaden Smartphone Partnership ("Under the terms of the agreement, Microsoft will receive royalties for Samsung's mobile phones and tablets running the Android mobile platform.") (FOSS Patents coverage)

  9. October 23, 2011: Microsoft and Compal Electronics Sign Patent Agreement Covering Android and Chrome Based Devices

  10. January 12, 2012: Microsoft and LG Sign Patent Agreement Covering Android and Chrome OS Based Devices (FOSS Patents coverage)

  11. April 25, 2012: Microsoft and Pegatron Corp. Sign Patent Agreement Covering Android- and Chrome-Based Devices

  12. April 30, 2012: Barnes & Noble and Microsoft Form Strategic Partnership to Advance World-Class Digital Reading Experiences for Consumers" ("Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft's patents for its NOOK eReader and Tablet products.") (FOSS Patents coverage)

  13. July 9, 2012: Microsoft and Aluratek Inc. Sign Patent Agreement Covering Android and Chrome Based Devices

  14. July 9, 2012: Microsoft and Coby Electronics Sign Patent Agreement Covering Android and Chrome Based Devices ("Although the contents of the agreement have not been disclosed, the parties indicate that Microsoft will receive royalties from Coby under the agreement.")

  15. November 7, 2012: Microsoft Signs Licensing Agreements for exFAT With Sharp, Sigma, NextoDi, Black Magic and Atomos Global ("The agreements cover Sharp Android tablets, Sigma and NextoDi high-end cameras and accessories, and Black Magic and Atomos Global broadcast-quality video-recording devices.")

  16. November 11, 2012: HTC and Apple Settle Patent Dispute (FOSS Patents coverage)

  17. December 11, 2012: Microsoft and EINS Sign Android Patent Agreement ("EINS manufactures Android tablets under the Cat brand in Germany.") (FOSS Patents coverage)

  18. December 11, 2012: Microsoft and Hoeft & Wessel AG Sign Patent Agreement ("Agreement will cover Hoeft & Wessel devices running the Android platform.") (FOSS Patents coverage)
  19. February 21, 2013: Microsoft and Nikon Sign Android Patent Agreement ("Agreement covers certain Nikon cameras running the Android platform.") (FOSS Patents coverage)

  20. April 16 (U.S.)/17 (Asia/Europe), 2013: Microsoft and Foxconn Parent Hon Hai Sign Patent Agreement For Android and Chrome Devices ("Agreement provides broad coverage under Microsoft's patent portfolio to manufacturer of more than 40 percent of the world's consumer electronics.") (FOSS Patents coverage)

  21. April 23 (U.S.)/24 (Asia/Europe), 2013: With ZTE, Most Major Android Makers Choose Licensing ("Under the agreement, Microsoft grants ZTE a license to Microsoft’s worldwide patent portfolio for ZTE phones, tablets, computers and other devices running Android and Chrome OS") (FOSS Patents coverage)

  22. October 24, 2013: LG agrees to pay Vertical Computer Systems for another Android patent license (FOSS Patents coverage)

  23. January 21, 2014: Huawei settles with Rockstar Consortium, will pay for Android's infringement of ex-Nortel patents (FOSS Patents coverage)

  24. January 27, 2014: Ericsson and Samsung reach agreement on licensing terms (FOSS Patents coverage)

  25. February 7, 2014: Nokia and HTC signed a patent and technology collaboration agreement (FOSS Patents coverage)

  26. February 13, 2014: Microsoft and Voxx Electronics sign patent agreement for Android devices

  27. February 20, 2014: Microsoft and Hop-on sign patent agreement for Android and Chrome devices ("[T]he parties indicate that Microsoft will receive royalties from Hop-on under the agreement")

  28. March 21, 2014: Samsung settles with Vertical Computer Systems

  29. March 26, 2014: Microsoft and Dell sign patent licensing agreement ("Under the terms of the agreement, they agreed on royalties for Dell’s products running the Android or Chrome platforms and on consideration to Dell for a license from Microsoft for Xbox gaming consoles.")

This list is inevitably non-exhaustive: most deals are never announced. Also, one could make an argument that Intellectual Ventures' license agreements with the likes of Samsung and HTC should be added to the list. IV is claiming in its dispute with Motorola Mobility (where a mistrial lately occurred in Delaware, but that's not the end of the story) that Android infringes some of its countless patents. It's rather conservative not to list those IV deals here, but the moment IV proves any infringement of an Android patent in court or announces a license deal that involves Android or settles litigation that targets Android, I'll add those deals to the list.

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Tuesday, February 25, 2014

Growing industry coalition urges the EU (again) not to turn Europe into a patent trolls' paradise

While Apple and Samsung still haven't been able to settle their global patent dispute, they do agree that patent assertion entities (PAEs), or "patent trolls", cause serious "problems that continue to plague innovators". In September the world's two largest smartphone makers were already among an impressive group of signatories of an open letter to European policy-makers that warned against an increasing patent troll problem in Europe and, especially, the ways in which the problem could exacerbate as a result of shortcomings in the rules of procedure of the Unified Patent Court system that is at the preparatory stage.

Apple and Samsung's concerns were already shared back then by other major players such as (a non-exhaustive list in alphabetical order) adidas, Cisco, Deutsche Post DHL, Google, HP, and Microsoft. This morning the UPC Industry Coalition released another open letter addressing the issue, and notable new members include Broadcom, Dell, Huawei, and Vodafone. Here's the letter (this post continues below the document):

25 February 2014 - UPC Industry Coalition - Open Letter by Florian Mueller

Once again, these companies -- mostly but not exclusively tech giants -- stress their support of "an effective and balanced unified patent system", but they apparently think that more work still needs to be done on the rules of procedure in order for Europe to "achieve the stated purpose of the UPC to defend 'against unfounded claims and patents,' 'enhance legal certainty,' strike 'a fair balance between the interests of right holders and other parties,' and allow for 'proportionality and flexibility.'"

The signatories have read with concern "[r]ecent press reports suggesting that some PAEs welcome bifurcation within the UPC further show that a system with perceived loopholes has the potential to open the floodgates to a detrimental form of patent litigation", pointing to an IAM (Intellectual Asset Management magazine) article entitled "Why the US's most litigious NPE is a huge fan of the German patent system".

The two primary issues that have tech-producing and tech-using companies concerned are that without clarity in the procedural rules, the UPC might grant injunctions too readily, and especially do so over patents that shouldn't have been granted in the first place. The second problem, which exacerbates the first one dramatically, is also called "bifurcation": validity and infringement remedies are addressed on separate tracks, with validity often taking considerably longer and even a short window of opportunity to enforce an actually-invalid patent giving a patentee enough leverage to obtain a settlement (which then includes the withdrawal of the bogus patent, so it remains a threat to everyone else).

Programmers of multi-threaded software call this a "race condition": a system will work properly only if the worked performed by one thread (here, the invalidation proceedings) is indeed concluded before a certain critical stage of a second thread (here, the infringement proceedings that can result in a sales ban) is completed -- but the system will fail if, for whatever reason, the second thread gets ahead of the first one because, which is simply a flaw, there is nothing in the system that makes the second thread wait for the first if necessary.

I'd like to say something here about my personal experience in discussing patent policy matters with the European Commission years ago (and based on what I hear, things haven't really changed in this regard). There are some great people working for the Commission who perfectly understand the economic dimension of these legal issues and are committed to balance and reasonableness. But there are also some people who are very dogmatic about IP enforcement and, unlike most researchers, have not yet understood how serious certain problems caused by the excesses of the patent system (too many invalid patent, overly powerful enforcement) are -- or maybe they don't even want to understand because they have a strong interest in growing the patent (including patent litigation) industry, not so much the real economy. The ultimate, high-level decision makers will hopefully listen to those who have a strategic and economic perspective, not to the ones whose dogmatic approach is that if there's any problem about the patent system, the system itself will solve it anyway.

There are also some who deny that Europe faces a PAE problem and that things may get a whole lot worse. I will talk about this in more detail on another occasion. I'd just like to say that PAEs are definitely not a US-only phenomenon. Case in point, on Friday the Mannheim Regional Court will rule on three cases brought by patent licensing firm IPCom, two against Apple (including a case in which a "partial" damages claim of EUR 1.57 billion ($2.2 billion) has been brought) and one against HTC. I attended the combined trial in the two Apple cases and I believe the complaints will be rejected. The court was noticeably unconvinced of there being an infringement of the patent in its narrowed form, if properly construed, after a recent decision in an opposition proceeding before the EPO. IPCom is not seeking an injunction against Apple anyway. But if IPCom had done so, and if the case had not been stayed to await the outcome of the opposition proceeding, it could have won, due to the way patent litigation works in Germany, a sales ban against the iPhone and all 3G-capable iPads in Germany.

With the Unified Patent Court, unless sufficiently clear rules of procedure are put in place, such lawsuits could result in Europe-wide injunctions on a premature basis (i.e., before the validity of a patent-in-suit has truly been ascertained). This would make Europe a patent trolls' paradise, and the policy-makers who can rein in the extremists now should so so, lest they will be responsible for massive damage to the European economy that will also affect European consumers.

[Update] I just saw this post on Google's EU policy blog by Catherine Lacavera, Google's litigation director, on "Curbing patent trolling in Europe", and also wish to recommend strongly this Technet blog post by Microsoft's deputy general counsel and corporate vice president Horacio Gutierrez who says very clearly that "[m]ore work [is] needed to protect [the] European Union from patent trolls" . [/Update]

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Wednesday, November 6, 2013

Dell, Ford, Google and HP file submissions to up the ante for patent trolls at the ITC

Google, HP, Ford and Dell have filed statements (which are not themselves publicly accessible, but which are referenced by a public filing by Nokia, Huawei and ZTE) in connection with an ITC investigation of a complaint by non-practicing entity InterDigital.

In parallel to a political debate and legislative process on U.S. patent reform, some companies are also trying to achieve fundamental change through amicus curiae briefs. As a general rule, you really need to change the law for major change. On key issues, limited progress -- moving the goalposts just a little bit in your preferred direction -- is all you can realistically hope to achieve if you raise a policy argument with a court.

One of the topics in the patent reform debate is the ITC's immense popularity with patent trolls. In the headline of a Wall Street Journal op-ed, a former ITC commissioner even referred to the U.S. trade agency as the "International Trolling Commission". Without a doubt, the ITC is under pressure and may see its jurisdiction over patent infringement cases restricted.

There are three ways in which lawmakers or the ITC itself could make it harder, or even impossible, for patent trolls to obtain ITC exclusion orders (import bans). Some argue that an eBay v. MercExchange type of equitable standard should be imported into the ITC's governing law. I don't consider this a promising approach because the ITC has only one remedy, which is a form of injunctive relief, but eBay is all about deciding whether legal remedies (monetary compensation) are sufficient or an injunction is warranted. Also, I believe that ITC exclusion orders are a special kind of remedy. The second approach would be centered around public interest considerations. I can see how this works for certain issues, such as FRAND-pledged standard-essential patents (SEPs), but doubt that it's an answer to the problem of rampant, increasingly industrialized patent trolling. The third approach is the ITC's domestic industry requirement (DIR): you don't have access to an exclusion order without proving that a domestic industry exists or is in the process of being created in the U.S. with respect to the asserted patent(s). And that's the one I'm going to focus on for the remainder of this post.

Just like Congress liberalized the DIR in 1988 by enabling complainants to satisfy it through the proof of licensing activities (as opposed to the manufacturing of products implementing the patents in question), it could again narrow it. It's like "Congress giveth, Congress taketh away". But at this point there doesn't seem to be momentum behind legislative change in that regard (for as much as I would prefer a stricter DIR over an attempt to make eBay work for the ITC). So some of the companies who are generally critical of the ITC, and particularly of the many ITC investigations instituted at the request of patent trolls, hope that ITC rulings and, especially, appellate opinions can result in a more exacting DIR. Unfortunately for them, this is a steep challenge because Section 337, the statute governing the ITC's unfair import investigations, defines the DIR very inclusively.

In January 2013, Dennis Crouch wrote on his PatentlyO blog that "NPEs [Non-Practicing Entities] Solidify Enforcement Jurisdiction at USITC". That post discussed the Federal Circuit's order denying a petition by Nokia for a rehearing of a decision relating to InterDigital's first ITC complaint against Nokia, holding that InterDigital satisfied the DIR. The following passage from the Federal Circuit's opinion supports PatentlyO's assessment:

"Under the clear intent of Congress and the most natural reading of the 1988 amendment, section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing. It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article. As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337."

Let's take a quick look at the relevant part of the statute:

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

I'll further enhance legibility now by replacing "patent, copyright, trademark, mask work, or design" with "IPR" (for "intellectual property right"):

(2) Subparagraphs [regarding import bans against infringing products] apply only if an industry in the United States, relating to the articles protected by the [IPR] concerned, exists or is in the process of being established.

(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the [IPR] concerned --

(A) significant investment in plant and equipment;

(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, including engineering, research and development, or licensing.

Item (C) is the one that patent trolls invoke -- in particular, the last item ("licensing"). For example, litigation expenses can constitute a substantial investment in licensing. Without litigation it's probably hard to satisfy the DIR on a licensing basis.

The structure of the statute has a major flaw. It lumps together all the criteria for satisfying the DIR through a product business with those that apply to a licensing business. It would have been better to have a clear set of criteria for product-based DIR arguments, and another set for licensing-based DIR theories. But the statute is what it is, and various companies are now arguing that even a non-practicing entity like InterDigital, which relies on licensing, must show "articles protected by the [asserted IPR(s)]". In the case of an NPE, such articles would be products made by licensees.

For product-based business, the DIR has an economic prong (investment, employment) and a technical prong (a showing that the products the investment and/or employment relate to actually implement an asserted patent). The statutory basis for the technical prong is the term "articles protected by the [IPR] concerned". Does this even make sense for licensing firms? Or should there be no technical prong at all in their case? That's the question the ITC recently asked parties and third-party stakeholders in connection with its ongoing review (which does not, at least not yet, involve FRAND issues) of a preliminary ruling clearing Nokia, Huawei and ZTE of infringement of various InterDigital patents. This is the Commission's request for input in its September 4, 2013 review notice:

"Please discuss, in light of the statutory language, legislative history, the Commission's prior decisions, and relevant court decisions, including InterDigital Commc'ns, LLC v. Int'l Trade Comm'n, 690 F.3d 1318 (Fed. Cir. 2012), and 707 F.3d 1295 (Fed. Cir. 2013), whether establishing a domestic industry based on licensing under 19 U.S.C. § 1337 (a)(3)(C) requires proof of 'articles protected by the patent' (i.e., a technical prong). If so, please identify and describe the evidence in the record that establishes articles protected by the asserted patents."

This question about whether there is any technical prong of the DIR for licensing-based businesses was interesting enough all by itself. But those advocating a strict, NPE-unfriendly DIR saw another invitation to make submissions to the ITC in last month's Federal Circuit opinion on Microsoft's appeal of certain unfavorable parts of the ITC ruling on its complaint against Motorola. On page 11 of that opinion, there's the following passage that stresses the need to show articles protected by an asserted IPR (and that these must be the ones that a domestic industry is established for):

There is no question about the substantiality of Microsoft's investment in its operating system or about the importance of that operating system to mobile phones on which it runs. But that is not enough under the statute. Section 337, though not requiring that an article protected by the patent be produced in the United States, unmistakably requires that the domestic company's substantial investments relate to actual 'articles protected by the patent.' 19 U.S.C. §§ 1337(a)(2), (3). A company seeking section 337 protection must therefore provide evidence that its substantial domestic investment—e.g.,in research and development—relates to an actual article that practices the patent, regardless of whether or not that article is manufactured domestically or abroad. InterDigital Commc'ns v. Int'l Trade Comm'n, 707 F.3d 1295, 1299, 1304 (Fed. Cir. 2013).

So there's the above passage, building on and citing to the earlier decision in the InterDigital case, and it emphasizes the reuqirement to show articles protected by an asserted patent. The respondents in the InterDigital investigation that is at the review stage -- Nokia, Huawei, and ZTE -- have tried to capitalize on this in their reply briefs. But I don't agree with them (not because I don't like what they want to achieve, but because I don't think they provide a compelling logic) that the Microsoft decision clarifies/modifies the InterDigital opinion to the effect that a licensing firm needs to show actual products. In the InterDigital opinion, the Federal Circuit actually declines to go into much detail on decisions relating to product-based DIR cases. I'm sure the reference in Microsoft to InterDigital is only about the part that clarified once again a domestic industry article doesn't have to be manufactured domestically but can also be imported.

Still, some companies now hope to up the ante for patent trolls by requiring them to show DIR products (and, even though InterDigital appears to suggest the opposite, those would obviously have to be other products than the accused devices). Nokia (which is in the future going to be more of a patent licensing firm than a product business), Huawei and ZTE try to defeat InterDigital's ITC complaint, in the event any of the preliminary findings on (non-)liability is reversed, just on the basis of the DIR.

In a reply brief (the public redacted version of which just became available this week) they also point to positions taken by third-party stakeholders that are allegedly consistent with their own opening brief on domestic industry:

"Respondents [Nokia, Huawei and ZTE] were also served with filings from non-parties Hewlett Packard, Dell, Ford and Google that address the domestic industry issue identified in the September 4 Notice. These submissions largely are consistent with the positions taken by Respondents in their initial brief."

Those submissions have actually not appeared on the ITC document system yet.

Now that briefing on the Commission's DIR-related review question is complete, it's clear that there are basically three positions: InterDigital argues that there is no technical prong and it also wants to have an extremely low hurdle as far as the economic prong is concerned. Respondents and third-party stakeholders opposing patent trolls' access to ITC exclusion orders want there to be a technical prong, which would not make it impossible for NPEs to win ITC cases, but it would be too late for InterDigital in this case and it might discourage some other NPEs from bringing ITC complaints. The Office of Unfair Import Investigations (commonly referred to as the "ITC staff"), which is participating in this investigation with respect to only two of the patents-in-suit and overall FRAND issues, has stated a position that is closer to InterDigital's -- no technical prong -- but still comes down to a more exacting standard: the ITC staff would like to see proof that a substantial investment in licensing relates to the asserted patents. The ITC staff says that InterDigital failed to provide such proof. Presumably InterDigital just argued based on licensing activities relating to its overall portfolio. The ITC staff wants a more granular showing of substantial investments relating to particular patents out of a large portfolio. It's not clear to me how this would work in practice.

My guess is that if the Commission, the six-member decision-making body at the top of the ITC, reaches the domestic industry question at all instead of just throwing out InterDigital's complaint for failure to prove infringements of valid patents, it will rule more or less consistently with InterDigital's position. Maybe it will agree with the staff that the economic prong, which would be the only relevant prong for NPEs, must be satisfied on a patent-by-patent basis. But I doubt that it will agree with the likes of Google. Companies like Google will, however, continue to lobby Congress for a reform of overall patent law and also the statute governing the ITC.

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Wednesday, April 20, 2011

Hybrid Audio LLC now also sues Motorola, Nokia, RIM, Samsung in addition to Apple, HTC, Dell (already sued in December)

After Apple's patent infringement lawsuit against Samsung, there are already a couple of other developments on the Android-related patent litigation front.

For the sake of a complete record, let me mention that the ITC announced yesterday that it is investigating Microsoft's complaint against Barnes & Noble, FoxConn and Inventec. The investigation number is 337-TA-769. I will follow the process. This vote comes as little surprise. The previous smartphone-related ITC complaints I saw also resulted in formal investigations.

In December I reported on Hybrid Audio LLC's patent infringement lawsuit against HTC, Apple and Dell over U.S. Patent No. RE 40,281 on "signal processing utilizing a tree-structured array". Yesterday, Hybrid Audio LLC basically expanded its suit by naming additional defendants. In order to do so,

  • Hybrid Audio LLC filed for voluntary dismissal without prejudice of its original suit (case no. 6:10-cv-00677, Eastern District of Texas; at that point, the defendants had not yet responded to the complaint or moved to dismiss or transfer it), and

  • filed a new suit (case no. 6:11-cv-00195, same federal court) over the same patent but with a longer list of defendants and, consequently, infringement accusations.

These are the additional defendants and the products named as examples of allegedly infringing devices:

  • Motorola Mobility:
    "Xoom, Atrix, Droid 2, and Droix X"
    (all of those are Android-based)

  • Nokia (two legal entities):
    "5610 XpressMusic, 6650, 6133, 5310 XpressMusic, E7, and 6275i"

  • Research in Motion (two legal entities):
    "the BlackBerry smartphones"

  • Samsung (three legal entities):
    "R0, R1, P3, U5, S3, S5, and Q2 MP3 Players, Messager Cell Phone, JetSet Cell Phone, t249 Cell Phone, DVD Players, and Digital Photo Frames"
    (while those aren't Android-based, a settlement with Samsung would most likely also include any infringing Android-based Samsung products, and if Hybrid Audio proved infringement by Android-based devices in connection with HTC and/or Motorola, even a ruling may effectively affect Samsung's Android devices; otherwise, it would be easy for Hybrid Audio to launch a follow-on suit if necessary)

So Hybrid Audio LLC decided to take on some additional behemoths. I in my post on Hybrid Audio's original suit back in December I discussed that company's background and the patent in more detail than in this post, which is intended to be just a little update.

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Wednesday, December 22, 2010

Hybrid Audio LLC sues Apple, HTC and Dell over allegedly MP3-related patent

Yesterday I just reported on a patent infringement suit filed by Multimedia Patent Trust, an Alcatel-Lucent subsidiary, against Apple, LG, Canon and TiVo. The four patents-in-suit are related to video codecs. And here's an audio patent suit: Hybrid Audio LLC of Tyler, Texas, filed a suit yesterday with the US District Court for the Eastern District of Texas against Apple, HTC and Dell over US. Patent No. RE40,281 on "Signal processing utilizing a tree-structured array". The patent-in-suit is a reissue of a patent that was applied for in 1997: US Patent No. 6,252,909 on a "multi-carrier transmission system utilizing channels of different bandwidth".

Allegedly, the defendants infringe that patent with various products "that contain or use hardware and/or software for processing audio information in accordance with the MPEG-1 Layer III (MP3) standard."

I've tried to find out more about that company and will add new information here as it becomes available. Hybrid Audio LLC of Tyler, Texas, isn't necessarily -- and at first sight not too likely to be -- related to Hybrid Audio Technologies of Atlanta, Georgia.

Instead, I found out that the reissue patent (application filed on 23 November 2004) and the original patent (application filed on 25 February 1997) were assigned to Aware, Inc. of Bedford, Massachussetts, a company trading on NASDAQ under the AWRE ticker symbol.

That company claims to have focused at least for a certain period of time on "wavelet mathematics applications, digital compression, and telecommunications and channel modulation and coding".

It's not surprising if a company like that obtained an allegedly MP3-related patent. What's unclear for now is whether Aware is behind Hybrid Audio LLC or sold its patent to that entity (directly or indirectly) some time ago. Aware did sell off some assets in the past, and this patent may or may not have been part of such transactions. In the USPTO database, Aware is still listed as the assignee of the patent, but that information may be outdated. There could have been one or more transactions that haven't been reflected in the USPTO database, at least not yet.

[Update] There was a press release earlier this year according to which Aware planned to spin off its IP licensing operations. That could be the answer (not verified yet). Thanks to Patrick Anderson of Gametime IP for the information. [/Update]

Hybrid Audio LLC's complaint looks like the company doesn't believe there are any commitsment in place concerning that patent and the MP3 standard. There's a request for an injunction and no reference to reasonable and non-discriminatory licensing commitments.

The MP3-related infringement allegation I quoted is very broad. The complaint, however, focuses on a smaller number of specifically accused products: the Android-based HTC Evo 4G smartphone; Apple's iPod nano, iPhone 4, iPad, MacBook Pro, and iTunes; and Dell's Inspiron desktops, Studio desktops, Alienware desktops, Inspiron laptops, Adamo laptops, XPS laptops, Alienware laptops, Streak pocket tablet, and Android-based Aero smartphone.

The video codec suit I analyzed yesterday also targeted, besides Apple's iPhone, some Android-based devices. And again, smartphones based on Windows Phone 7 are not affected.

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Tuesday, December 21, 2010

Alcatel-Lucent subsidiary Multimedia Patent Trust sues Apple, LG, Canon and TiVo: AT&T video codec patents rear their ugly head again

Certain patent portfolios give rise to litigation again and again over the years. An Alcatel-Lucent subsidiary named Multimedia Patent Trust has previously litigated against Microsoft, Gateway, Dell and a long list of consumer electronics manufacturers and broadcasters over patents originally obtained by AT&T (Lucent was an AT&T subsidiary, while it is now part of Alcatel-Lucent). It was also at the center of litigation instigated by the MPEG LA licensing organization that claimed some patents held by the Multimedia Patent Trust had actually been committed by its corporate parent to MPEG patent pools (more on that further below).

Yesterday, Multimedia Patent Trust filed a new complaint against Apple, LG, Canon and TiVo with the US District Court for the Southern District of California, alleging the infringement of four different patents. All of those patents related to video codecs (encoding/decoding technologies). Canon is alleged to infringe all four of those patents; Apple and TiVo, three of them; and LG, two of them.

The accused products include pretty much the whole range of Apple's offerings, Canon's VIXIA camcorders and video processing software (such as Roxio MyDVD), no less than 64 different LG mobile phones (apparently, however, not including its LG Optimus 7 Windows-based phone), and several TiVo digital video recorders as well as its Desktop Plus software.

For Apple and LG, it's only about money: injunctions against them are highly unlikely

Two of the four asserted patents have already expired, another one will expire within less than a year, and the fourth patent in the spring of 2014. Multimedia Patent Trust seeks an injunction concerning whichever patents will not have expired by the time of the ruling, which will realistically be only the fourth one -- which is, however, asserted only against Canon and TiVo but not against Apple and LG -- or maybe none at all. So at least for Apple and LG, the risk of an injunction is next to nil, and for Canon and TiVo it's connected to only one of the patents. But even after expiration of a patent, its owner can collect damages for past infringement, and that's what Alcatel-Lucent really seems to be going after.

In the following paragraphs I'll take a closer look at the patents-in-suit, the accused products, Multimedia Patent Trust's litigation history, and its choice of forum.

As a side note, the suit was filed by the law firm of Quinn Emanuel Urquhart & Sullivan, which specializes in litigation, is representing Motorola against Apple on multiple fronts, and is known for its closeness to Google and long-standing relationship with IBM. However, it appears that the Quinn Emanuel attorneys working on this matter are all based in Los Angeles and not involved with any of the litigation between Apple and Motorola (I will double-check on this).

Priorsmart newsletter invitation

Before I go into more detail, let me tell you that I became aware of this new suit through Priorsmart's daily newsletter that lists new patent suits. If you're also interested in subscribing to it, here's an invitation. I find it really useful.

The four patents-in-suit

US Patent No. 4,958,226: Conditional motion compensated interpolation of digital motion video; application filed on 27 September 1989, expired last year; asserted against Apple, Canon and TiVo, but not against LG

US Patent No. 5,136,377: Adaptive non-linear quantizer; application filed on 11 December 1990, just expired; asserted against all four defendants and previously against Microsoft and others

US Patent No. 5,227,878: Adaptive coding and decoding of frames and fields of video; application filed on 15 November 1991, will expire in November 2011; asserted against all four defendants

US Patent No. 5,500,678: Optimized scanning of transform coefficients in video coding; application filed on 18 March 1994, will expire in March 2014; as I mentioned, this one is not asserted against Apple and LG; it is asserted against Canon and TiVo, and it was previously asserted against Microsoft and others

Accused products

I previously gave a rough overview of the products that allegedly infringe the asserted patents. Let's take a closer look at the accused Apple and LG products.

Three of the patents (all but the fourth one) are asserted in some way against Apple. The list of accused products for each of those three patents have many products in common: a range of computers (MacBook, MacBook Pro, MacBook Air, iMac, Mac Mini, Mac Pro), a range of video processing software (Final Cut Studio, Final Cut Express, Final Cut Pro, Final Cut Server), Apple's iLife software suite, Apple's QuickTime X and QuickTime Pro codecs, the iPhone 4, and the iPod touch (4th generation).

The '226 and '878 patents allegedly also read on the QuickTime Player, iTunes, the iPad, and AppleTV. The '337 and '878 patents are allegedly also infringed by the iPhone 3GS (the '878 also by the iPhone 3G) and the 5th generation iPod nano, whereas the '878 patent is furthermore asserted against the 6th generation iPod and additional generations of the iPod nano (3rd through 5th) and iPod touch (1st through 4th).

The assertions against LG appear to relate to different operating systems. They include some Android phones such as the Ally or Optimus M but I didn't find any LG products based on Windows Phone 7 at first sight (I specifically looked for the LG Optimus 7). Given that the same patent holder previously settled litigation with Microsoft, there may be arrangements in place that take care of that.

Here's the complete list of accused LG phones: Ally (V5740), Apex (US740), Axis (LGAS740), Banter Touch (UN510), Bliss (UX700), Chocolate (VX8500), Chocolate (VX8550), Chocolate 3 (VX8560), Chocolate Touch (VX8575), Dare (VX9700), Decoy (VX8610), Encore (GT550), EnV (VX9900), enV Touch (VX11000), EnV2 (VX9100), EnV3 (VX9200), eXpo (GW820), Fathom (VS750), Force (LX370), Glimmer (AX830), Incite (CT810), Invision (CB630), Lotus (LX600), Muziq (LX570), Neon (GT365), Neon II (GW370), Octane (VN530), Optimus (P509), Optimus M (MS690), Optimus S (LS670, Quantum (C900), Prime (GS390), Rhythm (AX585), Rhythm (UX585), Rumor (LX260), Scoop (AX260), Shine (CU720), Spyder (LG830), Spyder II (LG840), Swift (AX500), Trax (CU575), Tritan (AX840), Tritan (UX840), Venus (VX8800), Versa (VX9600), Vortex (VS660), Voyager (VX10000), Vu (CU915), Vu (CU920), Wave (AX380), Xenon (GR500), AX565, AX8600, CF360, CU500v, CU515, LG260, LG380, LX400, UX380, VX8350, VX8360, VX8700, VX9400.

In my reporting on smartphone disputes, I will increasingly discuss the accused products. You can find information on accused products in some other -- actually even more important -- cases in my new one-page chart covering major ITC investigations related to smartphones as well as in the reference part (after the diagrams) of my Apple v. Android visualization.

Litigation history

I said before that Multimedia Patent Trust has a history of litigation, and I mentioned a controversy with the MPEG LA patent pool company.

A few years ago, Multimedia Patent Trust obtained a $1.53 billion jury verdict against Microsoft, which was and probably still is the record amount of patent infringement damages ever awarded by a jury in a US court -- in fact, a jury of the same court in which it filed this new suit. However, the Alcatel-Lucent subsidiary never received the full amount. On 6 August 2007, the judge tossed out the jury verdict after a second review. Observers attributed that decision to standards previously established by the US Supreme Court.

I found an SEC filing by Microsoft that summarizes this litigation (Microsoft refers to Alcatel-Lucent, the parent company of Multimedia Patent Trust) and the outcome:

"In 2003 we filed an action in U.S. District Court in California seeking a declaratory judgment that we do not infringe certain Alcatel-Lucent patents (although this action began before the merger of Alcatel and Lucent in 2006, for simplicity we refer to the post-merger entity of Alcatel-Lucent). In April 2008, a jury returned a verdict in Alcatel-Lucent’s favor in a trial on a consolidated group of one video and three user interface patents. The jury concluded that we had infringed two user interface patents and awarded $367 million in damages. In June 2008, the trial judge increased the amount of damages to $512 million to include $145 million of interest. We have appealed. In December 2008, we entered into a settlement agreement resolving all of the litigation pending between Microsoft and Alcatel-Lucent, except one of the two patents the jury concluded we had infringed in the April 2008 verdict. Approximately $500 million remains in dispute in the remaining matter. In April 2009, the U.S. Patent and Trademark Office, after a reexamination of the remaining patent in dispute, determined that the patent was invalid."

So while the exact amount isn't mentioned, it's clear that it was nowhere near the original $1.53 billion, given that the last damage award appealed by Microsoft amounted to about a third of that amount, and if it was settled, it was presumably settled for less.

Wikipedia has an article dedicated to Alcatel-Lucent v. Microsoft.

Two of the four patents asserted against Apple, LG, Canon and TiVo were also used against Microsoft, but it appears that Microsoft never accepted those patents as valid, nor admitted an infringement. I venture to guess that the defendants in this new case will also contest the validity and the alleged infringement of the patents-in-suit.

MPEG LA sued Alcatel-Lucent over some patents considered essential to standards

In November 2007 -- even before the aforementioned litigation was settled -- MPEG LA sued Alcatel-Lucent in Delaware, claiming that Alcatel-Lucent as a member of the MPEG LA patent pool had an obligation to license certain patents on reasonable and non-discriminatory (RAND) terms but set up Multimedia Patent Trust as a formally separate entity only in order to circumvent those obligations. Bloomberg quoted a lawyer for MPEG LA as saying that "preventing the patents from being swept into the MPEG LA portfolio was the one and only reason for the transfer of the patents to the trust". Betanews quoted an MPEG LA statement:

"The only purpose of the transfer was to avoid Alcatel's contractual commitment in order to extract additional royalties from MPEG-2 patent pool licensees."

There's a term for that kind of alleged behavior: patent ambush.

On 29 March 2010 MPEG LA proudly announced a settlement of the case, following two days of trial that didn't appear to have gone too well for Alcatel-Lucent. MPEG LA said:

"As part of the settlement, in addition to other consideration, the Multimedia Patent Trust will submit the patents that were diverted to it in conjunction with the 2006 merger between Lucent and Alcatel for a determination of essentiality in accordance with MPEG LA’s normal procedures. If it is determined that one or more of the patents are MPEG-2 Essential Patents or MPEG-2 Systems Essential Patents, the Multimedia Patent Trust will join the MPEG-2 Patent Portfolio License and/or the MPEG-2 Systems Patent Portfolio License as a Licensor and all such patents will be included."

So the key question that still had to be resolved after the settlement was whether any of those patents were considered essential to the MPEG-2 standard. The latest list of MPEG-2 patents (as of 01 October 2010) indeed contains several Alcatel-Lucent patents. However, none of those are asserted in this new suit against Apple, LG, Canon and TiVo.

By asking for a straightforward injunction (concerning those patents that haven't expired), Multimedia Patent Trust indirectly asserts in its new complaint that the patents-in-suit are not essential to an industry standard.

It remains to be seen whether the defendants are going to claim that those patents belong to either MPEG-2 or some other industry standards concerning which Alcatel-Lucent made commitments in the past. In some other ongoing patent infringement disputes, such RAND commitments play a key role: Myriad Group [Google ally] v. Oracle, Microsoft v. Motorola, and Apple v. Nokia.

I will keep an eye on what happens in this case since it involves major players, but like I said before, at least from a smartphone point of view it's only about money, not about possible injunctions.

Apple can probably handle the cost of this easily: if it can't win the case, it can just write a check. If LG loses, it may have to add yet another company to a long list of patent holders seeking royalties on Android-based devices. However, it's nothing new that Google's mobile operating system isn't truly "free" because of patent licensing (and litigation) costs.

This case can have certain effects on the high tech industry, and it might raise interesting legal questions. But if you're primarily interested in disputes that may result in products potentially becoming unavailable within a year or two, I recommend focusing particularly on certain ITC investigations.

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Friday, September 3, 2010

A gold rush for big iron?

The European Commission's recent decision to launch two parallel antitrust probes of IBM's suspected abuse of the mainframe monopoly raises hopes that this huge market may open up in the not too distant future.

The mainframe business is a gigantic opportunity. For now, no one in that area can compete effectively with IBM, which leverages its mainframe monopoly to sell not only hardware but especially software and services.

The numbers and the strategic implications

IBM owns about 40% of the $24.5 billion market for mainframe software, which is roughly twice the size of the market for Linux-based software. In the total of hardware, software and services, IBM generates approximately 25% of its revenues and more than 40% of its corporate-wide profits in the "big iron" business. That's a profit figure somewhere north of $5 billion (easily), and it's anything but a business in decline.

Companies formerly foreclosed by IBM’s conduct will now want a piece of the action.

Those numbers reflect merely a part of the overall opportunity. Just the largest 10% of mainframe customers have collective annual revenues of $21 trillion, exceeding the GDP of the European Union and the United States.

Mainframes are only a part of their IT budgets. Those top 10% of mainframe customers have an estimated total annual IT budget between $800 billion and $1 trillion based on typical percentages in the relevant industries. If only half of that goes to external vendors and service providers (now or in the "cloudy" future), that's a $400-500 billion opportunity for the industry, or roughly 30% of global IT spending.

IBM does a lot of cross-selling (of Power CPU and Intel-based systems) to many of those customers, benefiting from the privilege position it owes to the mainframe monopoly. If and when the market opens up, IBM will lose its exclusive mainframe gatekeeper status and other vendors will compete more effectively for those accounts.

I've seen the slides of an IBM-internal presentation. "Account control" (in terms of controlling customers) is central to IBM's strategy, and the mainframe monopoly is the key to it. The 40%+ figure of IBM's corporate-wide profits doesn't even include the effects of that. That percentage relates just to sales of mainframe hardware, software and services, irrespective of upselling.

This is all the more important as the IT sector is undergoing a major transformation toward the cloud computing model. There hasn't been a similar need and (especially) opportunity to stake the claims in IT for quite some time.
In this recent posting I described how IBM's new mainframe generation -- the zEnterprise -- is designed from the ground up to "assimilate" (as a journalist put it) Intel-based platforms in the corporate data center. So what I previously called "upselling" (of non-mainframe offerings) is now about to become part of the "data center in a box", or "system of systems", that IBM calls its new mainframe.

Potential strategic investors

It's a given that various IT industry giants will rush to secure a piece of the action, if they think that IBM’s abusive conduct to protect its monopoly will come to an end. They need the regulators to open up the market, but they won't wait until the end of the process. In anticipation of positive things to happen, everyone will try to secure the pole position through strategic investments.

The fact that the regulatory process has only just begun will, of course, be factored in when determining company valuations.

These types of situations and processes aren't unfamiliar to me. I co-founded one of the first online gaming startups in Europe, and we had strategic partnering inquiries from different telecommunications and media companies. One of those talks resulted in the acquisition of our company by Telefónica in early 2000. Subsequently I became involved with MySQL AB as an adviser to the CEO and early-stage shareholder in the company, and later saw the likes of Intel and SAP come in -- and finally, MySQL's acquisition by Sun.

I'd just like to describe from my vantage point after 25 years in the IT industry which players I would imagine to consider investment opportunities in connection with a future competitive mainframe market. The list below is ordered alphabetically. I'd like to clarify that at the time of publication of this posting, I do not own stock (or related derivatives) of any of the companies mentioned.

BMC: This $2 billion company does a large part of its business on the mainframe. When the cards get reshuffled, it won't want to be left behind.

Dell: This computer maker is more diversified than most people know and recently experienced an increase in profitability due to strong sales of enterprise hardware (server, storage and networking products).

Intel: Previously invested in mainframe emulation company Platform Solutions, Inc. (PSI). Can supply high-performance CPUs to power software emulators and could also play a role in hardware emulation.

HP: A natural IBM competitor with a strong foothold in the enterprise market.

Micro Focus: This company is also publicly traded and offers Visual COBOL, a .NET-based implementation of the programming language in which most mainframe legacy software is written. Emulators could run legacy programs on the same servers as Visual COBOL programs, making a gradual migration of workloads a more viable option for customers than it is today.

Microsoft: Invested in PSI (like Intel) and in T3 Technologies. For Microsoft's enterprise software division, improved interoperability with mainframe legacy workloads is essential. I'm not worried for free and open source software: if Linux couldn't compete in such a server-based context, it would never be able to compete with Windows. Customers should have all options. Compared to IBM's monopoly, competitive pressure from Microsoft and its partners would definitely be an improvement. By definition, there can never be two monopolies in the same markets.

Oracle: In its core business (relational database management systems), Oracle misses most of the mainframe opportunity due to IBM's stranglehold on the market. The standard mainframe database is IBM DB2. In a more competitive market, Oracle would be able to sell 11g and its enterprise software to a larger number of IBM's customers. Furthermore, Oracle's hardware division (formerly named Sun Microsystems) could play a key role in connection with emulation (similar to what I wrote above about Intel).

SAP: While not nearly as disadvantaged by IBM's practices as Oracle and others, SAP would also benefit from an open market. Its recent acquisition of Sybase is a cornerstone of its enterprise cloud computing strategy. The integration of mainframe legacy workloads with mobile and other cloud-related technologies will create new opportunities for SAP.

Obvious economic motivations

All of the companies I mentioned, and presumably a number I didn't even think of in this context, know that there is a lot of pent-up demand in the market for more competitively priced solutions for the execution of mainframe legacy workloads.

I wouldn't be surprised to see significant activity in the wake of the launch of antitrust probes. In my experience, such deals are often negotiated in a matter of weeks. Some take longer. But I can't see how the industry would forgo such an opportunity.

It's unhelpful that IBM always tries to use actual or suspected activities of other companies to deflect attention from the serious issues that need to be addressed in the course of the regulatory process. There's no denying the jugular importance of the mainframe to the world economy. IBM maintains its absolute control over this strategic platform with threats, intimidation, FUD and generally anticompetitive behavior, all of which stifles innovation.

Those are the problems. More competition is the solution.

So when the deals happen, let's let IBM cry. Its customers -- who are locked in and get overcharged -- have suffered long enough.

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