IP Market Updates

December 4, 2017

It has only been 3 weeks since my last column and I already feel like we live in a slightly different world than the one I described previously. So much has taken place in such a short period and the IP community is now holding its breath speculating as to how the US Supreme Court will come down on the seminal Oil States case it heard on November 27th. More on this below, but let’s approach this chronologically.

A few weeks ago, two very interesting events took place almost back to back. The first one was IAM’s 3rd Patent Law and Policy Summit, held in Washington D.C. This was the perfect forum for airing grievances with the current state of affairs in the US patent system, with one difference being that this year the pro-patent side felt a bit more emboldened than in the past. We are finally seeing a more balanced narrative emerge in Congress. This event fell on the heels of a string of recent articles supporting a stronger patent system by well-respected Financial Times’ Rana Foroohar and on The Hill by former Republican Senator Jon Kyl of Arizona. Along with US Senators Coons and Cotton who sponsored the STRONGER Patent Act, others in Congress have finally come to terms with the fact that there has been structural damage done to the US innovation engine as a result of the patent “reform” (mostly IPRs) and Court decisions (mostly Alice). To save US innovation, something must be done before it is too late. You can read a good -and somewhat humorous in tone- summary of that event here.

A few days later, I had the pleasure of again attending this year’s 4th IP Dealmakers Forum held in NYC, which focuses less on policy and more on the business side of the IP market, with participants coming from the corporate world, legal community, investment banking and patent litigation financing. While the tone was definitely more business-like, the overall consensus was remarkably consistent with the previous event. But the various panels were also more focused on how to make things work in the current environment and many discussions touched on the recent tactical moves to use  Native American Tribes’ sovereign immunity as a way to obviate the much maligned PTAB, the same way a heart surgeon would use a bypass procedure. While the so-called “rent-a-tribe” tactic was denounced by some and immediately spurred a proposed bill to kill this new move in the womb, US universities appear to be on a stronger legal footing and it would not be surprising to see similar deals being reported soon, starting with one rumored to involve the University of Kentucky.

Compared to last year’s event, the overall tone was more upbeat this time (despite a consensus that patent valuations are still in the doldrums) and various panelists emphasized the need for more diversification in their portfolio (what else do you expect investment specialists to say?) between US and foreign assets. Chinese patents still are on the rise, but German patents may lose some of their steam since the famous “bifurcated” system that let German courts to address infringement (and potentially issue an injunction) before even considering the patent’s validity, appears to be changing. In some recent decisions, the German courts have preferred to stay a case until their colleagues could hear the validity challenges. If you combine this with the fact that there has been no recent movement with the European Unitary Patent Courts (UPC) system (Europe seems to be busy with this thing called Brexit lately), the “German” premium buyers were willing to pay in a patent portfolio might not be as high as before.

Other panelists repeated the oft heard advice to keep patent families opened so that the patent owner maintains the ability to amend claims, something we always tell our clients, which is especially important in the current environment. Finally, some mentioned the appeal of a larger portfolio that may by itself convince companies to take a license without first litigation, as there are too many targets they’d have to attack at once.

 As great as these exchanges were, what really stole the show was the looming presence of the upcoming oral arguments that took place before the US Supreme Court on November 27th in the Oil States case. For those who still need to ramp up on what was at stake (i.e. the very constitutionality of the PTAB’s Inter Partes Review proceedings), here is an excellent backgrounder. Patent cases rarely ignite emotions, but this was different; there were even protesters outside of the Supreme Court building wielding signs that read: “The PTAB killed my startup”. In other words, not your typical patent case… Before the case was heard, most pundits predicted that SCOTUS would maintain the status quo and we’d see another of those unanimous decisions. The oral arguments turned out to be a lot more heated that expected, with Chief Justice Roberts and newly appointed Justice Gorsuch leading the charge to call in due process and property rights arguments. After the hearing, IP Watchdog asked several of us to make new predictions and it was surprisingly close, with most experts still predicting that IPRs will remain constitutional, but expecting a much more divided bench (5-4 or 6-3). For other good predictions, see here and here. Although a closer than expected decision would not per se change the outcome of the case, a series of strong dissents could send a powerful message to Congress that they now need to fix the monster they created. However, putting one’s faith on the US Congress to help patent owners may feel a lot like a fool’s errand. They just released tax plan that was voted in by both the House a few weeks ago and the Senate on Saturday actually introduced a new provision that would now tax patent transactions as income, whereas they have historically been taxed -at a much lower rate- as capital gain. It is too early to say if this provision will survive the reconciliation process that starts this week, but this latest twist should keep everyone on high alert as the last thing the IP market needs at this stage is another reason not to do deals.

Who had a good/bad Thanksgiving (PIPCOs):

After a pretty good 2016 and beginning of 2017, some of the most visible public IP companies (PIPCOs) had a rough Q3, with Parker Vision announcing a wider than expected loss due to its launch of its new Milo Wi-Fi product. Acacia, the granddaddy of NPEs, posted a net profit of roughly $160 million while InterDigital fared much worse with a drop of 66% in Q3 compared to the previous quarter.

Who is being nice (deals):

Blackberry, after losing most of its top licensing executives in the past few months, announced that it would essentially outsource its IP monetization efforts to newly created Teletry (which sits under the Marconi Group along with NPE PanOptis). This is an interesting new chapter for the Canadian device manufacturer and its CEO is on record for saying that he would like to bring in at least $100 million this coming year in new licensing revenues.

In other news, Philips announced a settlement (and licensing deal) around its patent defibrillators with US based Zoll Medical.

Meanwhile, Canadian based, Quarterhill (parent of NPE WiLAN) announced a licensing deal with ISSI around DRAM patents, while Blackbird Technologies settled a case with Black & Decker around cordless power technology.

Finally, we saw another deal in the hot, battery space as UltraCharge Limited has acquired new lithium-ion battery patents from US-based Coorstek Specialty Chemicals.

Who is being naughty (lawsuits)

NPE Finjan, which has had a nice string of court successes in the recent years was on the receiving end of a rare Federal Court decision invaliding a patent that the PTAB had actually NOT invalidated. Let’s hope this is not a new trend as we are just starting to see the IPR kill rate decrease a little.

Kiwi inventors ZURU of the Bunch O Balloons who have been a regular poster child for the way the US patent system emboldened infringers finally received some vindication from the courts with a favorable decision awarding them $12.5 million that they will now try to increase through enhanced damages.

Finally, Blackberry conceded defeat against Nokia and accepted the ITC arbitration that awarded Nokia $137 million in damages for patent infringement.

Who is on the move:

Publicly traded NPE Immersion fired its CEO, causing its shares to surge (never a good sign for the guy who got the boot!). Others seem to hang onto their jobs as the end of the year looms.

On the legislative front:

USPTO Director nominee Andrei Iancu had his day on Capitol Hill for his confirmation process, with the goal of determining where his allegiances lie. Turns out the seasoned litigator kept things close to his vest and those hoping for a quick change of tone at the USPTO were left waiting. Nevertheless, he acknowledged the current malaise with the PTAB and that inventors had been hurt by the current system, which is encouraging. This was echoed by US Senator Coons who was quoted as “having serious concerns about where the patent system is heading”. Meanwhile, the US antitrust chief gave a speech signaling a departure from the Obama years and a more pro-innovator shift in DOJ policy. Finally, entities from the US, Canada and China announced a new blockchain patent sharing alliance that will be seated in California.

Around the world:

Elsewhere, Japan backed off a controversial ADR proposal that would have forced parties involved in Standard Essential Patent (SEP) negotiations out of the courts. The Singapore Patent Office Singapore announced that it would expands its Global Innovation Alliance to Beijing to help Singapore tech companies access opportunities in China. Lastly, top of China’s legislative agenda was IP rights. 

In Europe, the European Commission released its long-awaited communication on the licensing of standards essential patents and patent owners should be relatively pleased however, in Germany, recent decisions signaled the possibility of more compulsory licensing, definitely an interesting albeit concerning development.

What to read:

It is customary in the holiday season to leave with some suggested books to read. IP Closeup published by good friend Bruce Berman has a great list. Also, other books of interests include Patents Demystified, Bold Ideas: the Inventor’s Guide to Patents and, for those who have the goods but need help cutting deals, Confessions of a Global Negotiator, by my former colleague at Microsoft Nick Psyhogeos.

Happy reading and Happy Holidays all!

 

 

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NEWS

BlackBerry loses payment dispute with Nokia, to pay $137 million  

Reuters

BlackBerry has previously said it is looking to generate more revenue from its portfolio of some 40,000 patents by licensing them to other technology companies, and in November said that U.S.-based Marconi Group would help it license out a broad range of its patents. It is often difficult for investors to ... (more….)

 

From Google to Samsung: here's what the biggest tech companies patented in 2017

YourStory.com

Patents and licenses have given exclusive rights to innovators and creators since early 500 BCE. Ancient Greece was one of the first civilizations to recognize that if an individual invents or further refines any aspect of luxury, a patent will protect his/her sole right to the revenue it generates. Since then ... (more…)

 

Controversial Strategy: Selling Patents to a Native American Tribe

Law.com

Restasis is patented, and those patents received significant attention last month when they were sold to a Native American tribe—as a litigation strategy. The sale created a significant backlash both in court and from the U.S. Congress. This controversy began as a litigation under the Hatch-Waxman Act ... (more…)

 

Tech firms tell patent court to ignore Allergan deal with tribe

Reuters

Over 30 technology companies including Alphabet Inc (GOOGL.O), Amazon.com Inc (AMZN.O) and Facebook Inc. (FB.O) on Friday urged a U.S. patent court to disregard drug maker Allergan Plc's (AGN.N) contention that its transfer of some of its patents to a Native American tribe shields them ...(more…)

 

Tax Reform will Harm Inventors, High Tech Start-ups

IPWatchdog.com

Within HR 1 is a provision to change 26 U.S.C. 1221(a), 26 U.S.C.1231(b)(1) and 26 U.S. Code § 1235,), which address the way patents are treated ... (more…)

 

American innovation depends on strengthening patents

The Hill

The American patent system is the lifeblood of the U.S. innovation economy. Businesses that secure patents innovate at higher rates than those that lack intellectual property; startups and new businesses that hold patents attract capital more easily than those that do not; and startups that obtain a patent  … (more…)

 

The Supreme Court's Blockbuster Patent Case: What You Need to Know

Yahoo News

The Supreme Court has heard some big intellectual property cases in recent years, but nothing like this. On Monday, the court is hearing a constitutional challenge that could topple a major pillar of the current patent system, and send economic ripples through the tech and retail sectors. The case, known ... (more…)

 

NPEs armed with former Huawei and Sisvel patents attack Samsung in China, in possible ...

Lexology

An article published in China this week has turned up two previously unreported patent infringement suits against Samsung in the country's courts, both filed this year. In one case, an apparent Chinese NPE is asserting a patent formerly owned by Huawei against the South Korean company. In the other … (more...)

 

Stop Taking Business Advice From Your Patent Attorney

Forbes

When I shared my first 'big' idea with my Silicon Valley patent attorneys, they absolutely loved it. I would never be able to count all the income it would ... (more…)

 

Patents and Property at the Supremes

Wall Street Journal

That's the question the Supreme Court will consider on Monday in what could become a landmark patent case, Oil States Energy v. Greene's Energy… (more…)

 

"Alice" Era Patent Litigation tames the Casino Gaming Industry, according to CEO of Scrappy ...

PR Newswire (press release)

LAS VEGAS, Nov. 25, 2017 /PRNewswire/ -- Patent infringement cases, in the casino gaming space, have dropped nearly 65% since the Alice decision in 2014. Prior to Alice, millions of dollars were squandered by slot… (more…)

 

Shortened Limitation Periods for Patent Infringement in Canada

Lexology

It has been suggested recently that a limitation period of less than six years could apply to a cause of action for patent infringement in Canada if all the elements of that action occur in a single province with a shorter than six year provincial limitation period. While it is true that a shorter than six year… (more…)

 

How BlackBerry Is Looking To Better Monetize Its Patents

Forbes

Last week, BlackBerry said that it had entered into an agreement with Teletry, a unit of patent licensing company Marconi Group, to sub-license its patents to global smartphone vendors. While BlackBerry says that it would own its patents, while continuing to operate its own licensing program outside of ... (more…)

 

TiVo Wins Patent Case Against Comcast at US Trade Agency

Bloomberg

TiVo Corp. won a key patent-infringement case against Comcast Corp. as the digital-recording pioneer strives for legal advantage in a prolonged ... (more…)

 

Will Any Software Patents Survive?

Law.com

In his Patent and Trademark Law column, Robert L. Maier writes: In recent weeks, the Federal Circuit has continued to affirm district court decisions ... (more…)

 

Waymo Takes Big Lead In Self-Driving Car Patents; GM, Ford Follow

MediaPost Communications

While Uber and Volvo made noise with their joint deal on self-driving cars this week, neither is tearing up the track when it comes to patents for ...(more…)

 

When Universities Patent Their Research

IPWatchdog.com

A few months ago, a judge ordered Apple to pay the University of Wisconsin $506 million for infringing one of its tech patents. Last year, Carnegie-Mellon University won $750 million in a patent infringement lawsuit against Marvell Technology Group. With such big-money patent cases in the news, you ... (more…)

 

Big Pharma is taking advantage of patent law to keep OxyContin from ever dying

Quartz

But, according to a recently published draft report, at least some of the blame should be attributed to the way pharmaceutical companies have manipulated patent extensions over the past decade. In the 1970s and 80s, doctors were looking for better ways to control pain, and many believed opioids a ... (more…)

 

Uber and IBM Counsel Sound Off on Patent Trial and Appeal Board

Law.com

With the enactment of the America Invents Act in 2011, came the creation of the Patent Trial and Appeal Board and new administrative avenues for ... (more…)

 

A simple way to make America even greater is fixing our patent system

The Hill

A relatively simple way to boost the economy and make America even greater is to fix a patent system gone awry. In recent years, major changes to … (more…)

 

BlackBerry shifts patent strategy through outsourcing deal

Moneycontrol.com

Canada's BlackBerry Ltd announced the outsourcing of a significant part of its patent licensing efforts on Wednesday to a unit of the U.S.-based ... (more…)

 

Four key points to understand the Unified Patent Court

Lexology

Currently, national courts of the contracting states of the European Patent Convention (EPC) are competent to decide on the infringement and validity ...(more…)

 

CRISPR Patents Must Be 'Reined In,' Experts Say 

GenomeWeb

In the battle for the patent rights to CRISPR-Cas9 technology, just about the only thing the two sides seem to agree on is ... (more…)

 

Patent Markets Outside US More Attractive, Investors Say  

Bloomberg Big Law Business

Patent investments overseas are more attractive than striking deals in the U.S, where court rulings and patent validity challenges have undercut patent ... (more…)