Tangible IP’s Latest IP Market Update

June 26, 2018 

Are we entering IP Market 2.0?

Two weeks ago, the who’s who of the Intellectual Property business community descended on San Francisco to attend the annual IPBC Global 2018. It is at this conference that decision makers from various entities that comprise the IP market convene with the hopes of reaching consensus about the direction of the market. This was my seventh year in a row participating in this event and this year’s tone was much more upbeat than in years past. You can read an excellent summary of the event here. It started with a forceful speech by newly appointed USPTO Director Andrei Iancu. This was the third time I heard him speak about the current patent environment since his appointment. Perhaps third time’s a charm because Director Iancu seems to have truly found his voice and was unrestrained in his call to action. He was unabashed in his desire to tackle the Patent Act section 101 beast with the goal of bringing back some certainty to what actually constitutes patentable subject matter.  It is clear that Iancu has now completed the diagnosis part of his initial days on the job and is ready to push an agenda which should reestablish a more balanced relationship between patent right holders and the legal system.

It was also surprising and certainly refreshing to hear representatives from large tech companies admit (in many cases for the first time publicly) that things have gone too far; that the pendulum needs to swing back closer to center. Specifically, most corporate buyers stated clearly that they expect to pay more for patents in the future as valuations continue to improve. Most people we talked to also agreed that in additional to the above, the combination of recent case law (SAS, Berkheimer, etc.) will make challenging patents more expensive, which directly impacts patent valuations, as infringers run out of cheap alternatives to taking a license.

Just a few days ago, the Supreme Court issued a decision that will further bolster this trend when it ruled that a patent owner can recover damages on the sale of infringing products sold outside of the US. In today’s world where US sales often account for less than 50% of the total, this is a major boost to damages claims.

Last week, the USPTO also celebrated with great fanfare the issuance of its 10 millionth patent (to Raytheon). This gave pro-patent organizations a great opportunity to march onto Capital Hill and reiterate their narrative that inventors need better protection. As a result, we saw a frenzy of activity on the Hill calling for the STRONGER Patents Act to be adopted. While we don’t expect this to happen anytime soon, especially on the eve of the mid-term elections, the mere fact that any legislative patent reform stands to actually strengthen patent rights, is enough to guarantee that it won’t do the opposite.

Meanwhile, last week, the Federal Circuit heard the St-Regis tribe case which challenged the PTAB decision to which refused to recognize its sovereign immunity to IPR proceedings. A lot of ink was spilled over the fact that large pharma Allergan sold its patents to the tribe hoping to shield them from the perceived bias of the PTAB toward invalidating most patents. As many denounced this as a “rent-a-tribe” scam, we are told that the Federal court was focused at the hearing on the real issue as to whether IPRs are operating like an adversarial tribunal or rather as a mere administrative forum, in which case the tribe argues it cannot be subject to the PTAB decisions under the US Constitution. This is one to watch closely as it would give an indirect way for patent owners to assert their rights without the risks of seeing those nixed by the PTAB. Ultimately, the fact that an established company like Allergan felt that is had to resort to this strategy to assert its patents should in and of itself make it abundantly clear that something needs to be fixed.

With all these moving parts in the background, the market keeps evolving, with some entrenched players disappearing or morphing into something else, some of the most visible like Acacia experiencing some serious pains and other giants like RPX being acquired. In parallel, it remains a buyers’ market and new entrants are emerging with new business models. Take new NPE iPEL (which brands itself the “Ethical NPE?”); it has discretely raised $100M and acquired over 1000 patent families in the past year and will announce today a new licensing program that will be free to startups and SMEs, and a no-haggle fee for larger companies.  While I believe we are still eons away from living in a no haggle IP licensing world, this certainly shows that we are slowly but surely transitioning to what I would call IP Market 2.0. No doubt, this promises to be an interesting summer!

 Buyers & Sellers:

The patent market continues its slow but steady rebound with a number of recent transactions. Of note, Longhorn has acquired portfolio # 5. Sold by Foxconn, the portfolio is composed mostly of semiconductor assets, previously held by Sharp. The new unit will be called Katana Silicon Technologies LLC, a reference to where the patents originate. Also in the semiconductor space, Wi-LAN Inc., the patent licensing unit of Quarterhill Inc said its wholly-owned subsidiary Atria Technologies Inc. has acquired a portfolio of more than 85 patents and applications from MagnaChip Semiconductor Corp., the maker of analog and mixed-signal semiconductor products.

In the biotech space, Tactile Medical, an at-home therapy company based in the US, acquired 31 patents previously held by Wright Therapy Products. The portfolio comprises technologies related to pneumatic compression therapy devices.

Brazil-based company BrPhotonics, a developer of high-speed optical communications, has sold 15 of its polymer technology patents to Lightwave Logic for the sum of $350,000. These assets further extend the IP coverage for Lightwave’s significant polymer portfolio.  

 Winners & Losers:

Samsung’s judicial woes continue…. Most of us are familiar with Samsung’s recent loss against Apple for the modest sum of $538M, well, they have lost yet another lawsuit, this time against a Korean University (KAIST IP US). The jury found that Samsung’s infringement of a mobile chipset was, to say the least, deliberate, which enables the judge to triple the $400M jury verdict. How many months like this can one have?

A jury awarded US-based, HouseCanary, a real estate predictive analytics company, a $700M judgment. While HouseCanary was the defendant in the suit filed by Title Source (a Quicken Loans affiliate), HouseCanary successfully turned the tables and established that Title Source had, indeed, used its data to build a competing product, infringing on the licensing agreements and patents owned by HouseCanary.

Ericsson won its appeal against Intellectual Ventures’ patentability claims of wireless communication technologies. The appellate court found that the PTABs determinations were incorrect due to expert testimony insufficiencies on the question of prior art. A dissent was filed.

Infringement of cell phone car-mount patents will be battled out in court between Belkin and Kenu Inc. A jury will need to make the ultimate decision as a question of material fact remained following both parties’ motions for summary judgment.

The USPTO has sided with Argentum Pharmaceuticals, finding that 2 patent claims held by Valeant’s Jublia were unpatentable. One of Argentum’s stated mission is to challenge patents validity in order to reduce pharmaceuticals pricing.

With a similar intention to reduce the pricing of pharmaceutical, a non-profit tried to invalidate Gilead’s patents covering Hepatitis C medication. The PTAB sided with Gilead, stating that the non-profit’s prior art argument failed.

Alice failed to claim its next victim when Apple tried to invalidate a series of patents previously owned by the likes of Sony, Nokia and others. Apple tried (and failed) to squash a lawsuit claiming the infringement of three patents related to the iPhone’s “silence and ignore feature” were invalid for being abstract.

 Handshakes:

Personalized Media Communications (PMC) increased its already considerable portfolio by adding strategic assets from Tsinghua Tongfang, a television manufacturer. The patent license includes a range of television-related technologies.

Following E3’s video games excitement, two of the biggest video games players have agreed to a beneficial cross-licensing agreements. While the details of the agreement remain unknown, we know that Flowplay will be able to utilize International Game Technology’s (IGT) portfolio features, which is impressive since IGT holds the biggest video game patent portfolio in the game. 

Qualcomm, France Brevets and IP Europe joined forces to create a new funding initiative for European SMEs through the creation of Patent Factory Europe (PFE), which was announced at the IP Europe Annual SME Summit, taking place in Brussels. It will be run by IP Europe and French sovereign fund France Brevets, with additional funding being provided by Qualcomm.

Immersion, a California-based software development company, has entered into a licensing agreement for its touch-feedback technology portfolio to Calsonic Kensei, a Japanese automotive components manufacturer. While the details of agreement were not disclosed, we do know that Calsonic is looking to integrate Immersion’s technology to enhance its automotive interface.

In other automotive related news, Hyundai Motor Group and Audi AG have agreed to a multi-year cross-licensing deal that targets the use of fuel cell electric vehicle components and technologies. The licensing agreement covers patents filed and those to be filed in the coming years and includes terms of collaborative research and development of fuel cell technology.

The leader of OLED technology, Universal Display, has entered into a licensing agreement with Visionox Technology (China-based). The agreement includes a material purchase provision enabling Universal Display to supply Visionox with OLED materials to be used in Visionox’s displays.

Coolpad is offering one last opportunity to its competitor Xiaomi to make amends, before bringing their dispute to court. Coolpad, the smartphone maker, has pressed Xiaomi to cease all infringement upon Coolpad’s patent, and sign a licensing agreement for the sake of fair play and healthy industrial progress.

Finally, China’s leader in artificial intelligence, Cambricon, has granted a license to NetSpeed Fabric IP for the use of SoCs, in other words, chips created for the specific use in AI applications. The performance required for such chips used in AI applications is so specific that NetSpeed Fabric chose to use Cambricon’s successfully-proven product rather than to invest on its own production.

I'll See You in Court:

LG is being sued by TVnGO over five smart television patents. The disputed technology includes the simultaneous display of videos and internet content on the television screen.

Wells Fargo has been accused of infringing patents related to mobile banking check deposits. The plaintiff, United Services Automobile Association (USAA), alleges that the multinational bank has been infringing on four patents all related to mobile financial services.  

The most important dispute this month involves Toyota Vehicles, who has been accused in no less than 337 complaints in relation with 6 automobile infotainment systems patents. The suit was instituted by Broadcom and brought by the International Trade Commission.

Blackberry is going after Facebook and Snap for the infringement of patented advertisement technologies, and instant messaging gaming features. Both Facebook and Snap have filed motions to dismiss, which have not been decided yet.

Whirlpool has sued Pricebreak, a company who is allegedly selling counterfeit water filters manufactured by the home appliances’ giant. The suit covers both patent and trademarks infringement, and is demanding a preliminary and permanent injunction against Pricebreak.

Jaguar Land Rover (JLR) is suing Bentley Motors for the infringement of patented of vehicle control systems. This suit comes after a two-year negotiation between the parties, after Bentley released the Bentayga, an SUV which offers the allegedly infringed technology.

VoIP-Pal is back again this week, with a lawsuit against Amazon’s Alexa. VoIP-Pal’s complaint targets Amazon’s use of direct voice and call patented technologies.

 From the Bench:

The SCOTUS, in a 7-2 decision, has decided that patent owners can recover foreign loss of profits (§ 271(f)(2)), as long as the relevant conduct occurred in the United States.

Two federal circuit court judges have pressed Congress to clarify the status of patent eligibility after the thread of uncertainty left by Alice and Mayo.

Around the world:

An important win for the Spanish socialist party (PSOE) will likely have an impact on the country’s IP landscape. The leader of the newly elected party has been quite vocal in the past on its intentions to set aside the nation’s reluctance to become a signature of the UPC agreement, due to the fact that Spanish language was not recognized as one of the official languages under the agreement.  

On the Legislative Front:

Members of congress, led by Senator Orrin Hatch, are advocating to safekeep pharmaceuticals challenged in IPRs. One of the effects of the amendment, or Hatch-Waxman Integrity Act of 2018, would limit the impact of an IPR/PRG proceeding.

Happy reading!