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Patent trolls have started to target end-users, especially small companies, because they typically lack the expertise, experience and ability to fight questionable claims. Litigation costs can quickly mount up to $250,000 to $500,000, and reach millions if the case goes all the way through trial (not to mention appeals). End-users also have to deal with disruptions to their business from discovery requests and managing the litigation. Often companies are forced to divulge secret financial and technical information as well as divert key personnel from their work to participate in depositions and give testimony. Patent trolls, on the other hand, have few costs in pursuing a suit because they do not operate in any market. The lawsuit has no disruptive effect on the patent troll's business because it is the patent troll's business.

Motorola defends the value of its patents and then tells the Federal Circuit that RAND patent holders have to be able to seek injunctions against "intransigent" licensees like Apple. Otherwise, they'll take advantage, delaying by litigation any reckoning for years while benefiting from the technology without paying for it.

What exactly should happen to a company that refuses to pay and won't accept an offered rate or a court-set rate? The RAND patent holder *still* can't do a thing? No injunction? Nothing? Apple began its infringement, Motorola points out, in 2007. It's now 2013, and it still hasn't paid a dime. "Motorola should have the opportunity to seek an injunction to stop Apple's six years of ill-gotten gains from stretching into a decade or more," Motorola says.

Not I.

When I started, I thought I'd do a little fiddling around for a couple of months to learn how to blog. But then all you guys showed up and taught me some important things that I didn't know, and vice versa I hope, and here we are, on our 10th anniversary, still going strong, together on a very different path than I originally imagined. The important moment for me was when I realized the potential we had as a group and decided to try to surf this incredible wave all of you created by contributing your skills and time. I saw we could work as a group, explain technology to the legal world so lawyers and judges could make better decisions, and explain the legal process to techies, so they could avoid troubles and also could be enabled to work effectively to defend Free and Open Source Software from cynical "Intellectual Property" attacks from the proprietary world.

And it worked! That's the amazing part. It actually worked. So far, so good.

If I take three things away from our experience, it's this:

1.) Education is never a waste,
2.) All of us together are smarter and more powerful than any one of us alone, and
3) FUD withers in sunlight. It only works when people lack accurate information.

Groklaw was attacked with venom, of course. But here we are, ten years later, still standing.

It's a word that OpenBSD and Sun each came up with independently at the same time back in the '90s, for heavens sake, and it surely can't belong to any one company now that it's in the dictionary and everyone has freely used it for years now.

Anyway, as soon as I read about it, I wrote to the German equivalent of the USPTO, DPMA, the German Patent and Trademark Office, and I've learned some things that can still be done. I'll share them with you, so the community knows how to go forward if it proves necessary.

As described more fully below, we would affirm the district court's judgment in its entirety and hold that the method, computer-readable medium, and corresponding system claims before us recite patent-ineligible subject matter under 35 U.S.C. § 101.¹

_____
¹ While Chief Judge Rader is correct to note that no single opinion issued today commands a majority, seven of the ten members, a majority, of this en banc court have agreed that the method and computer-readable medium claims before us fail to recite patent-eligible subject matter. In addition, eight judges, a majority, have concluded that the particular method, medium, and system claims at issue in this case should rise or fall together in the § 101 analysis.

I knew you'd want to know *that* immediately. We can read and analyze it later in more detail, so stop back by. After I read it again, I'll be sure to post it and we can discuss.

I remember the first time we wrote on Groklaw that software and patents need to get a divorce. Remember? So long ago, and how everybody laughed at us. I remember that too. I am thinking about Apple and Microsoft and all the software patent bullies. Well, let's not get ahead of ourselves. I'll read it more carefully now.

But that is not how folks understood their rights back when they volunteered their patents for use in standards; it's a change in the rules midstream. And Blackberry tells the Federal Circuit exactly that. This is a change, and it isn't fair, or in the public interest. SEP owners might behave badly, but so can prospective licensees. Here's how attorney Matt Rizzolo at the Essential Patent Blog sums up the Blackberry argument:

Just as it has argued in prior submissions to agencies such as the Federal Trade Commission and the U.S. International Trade Commission, BlackBerry asserts here that a categorical rule against injunctions for FRAND-encumbered standard-essential patents is wrong - both as a matter of policy and as a matter of violating Supreme Court precedent. BlackBerry alleges that industry participants have "never understood FRAND to absolutely preclude a patent holder from seeking injunctions."

Amici are all innovative technology companies that develop and provide a variety of products and services that, like the mobile devices at issue in this appeal, incorporate a wide array of features. As such, an issue presented in this appeal - whether a court may enjoin the sale of innovative and technologically complex products based on the incorporation of trivial patented features without evidence that the accused features drive sales of the products - is a matter of great concern to amici.

The lead party on the brief, Google, Inc., admittedly has a direct interest in the outcome of this appeal. As the motion explains (ECF No. 55 at 4; ECF No. 60 at 4), Google is the developer of the Android operating system running on the Samsung smartphones that Apple seeks to enjoin in this case. That interest conflicts with the traditional role of an amicus as "an impartial friend of the court-not an adversary party in interest in the litigation." United States v. Michigan, 940 F.2d 143, 165 (6th Cir. 1991) (emphasis in original).

You knew they would:

SCO submits that reconsideration is appropriate because the Bankruptcy Court overseeing SCO's bankruptcy proceedings lifted the stay of IBM's counterclaims in February 2012 and IBM agreed to the reopening of the case should that stay be lifted. The Bankruptcy Court order lifting the stay was previously submitted to the Court with SCO's Request to Submit for Decision, on June 14, 2012. (Exs. A and B.) Accordingly, SCO respectfully asks the Court to reconsider its decision and grant the Motion to Reopen the Case forthwith.

To help you follow along, here are some resources:

• Novell's opening appeal brief
• Microsoft's brief
• Novell's reply
• Microsoft's renewed motion, asking the judge to rule as a matter of law
• Novell's opposition
• Microsoft's reply
• Judge Frederick Motz's Decision, the one being appealed
• Trial transcripts

His general impression is that Microsoft will prevail, as the judges seemed more positive toward its arguments. But keep in mind that you can't always tell what judges are thinking from their questions.

The Western District of Washington sits within the 9th Circuit Court of Appeals (which, as noted below, has already heard an interlocutory appeal in this case). But as you may know, in order to preserve uniformity in patent law, the U.S. Court of Appeals for Federal Circuit in Washington, DC is the court designated by Congress as the appeals court with exclusive jurisdiction for nearly all patent cases. The Microsoft-Motorola case (at least the part which has garnered the most attention) involves a breach of contract issue relating to patents, standard-setting, and patent licensing issues. So, which is it - the 9th Circuit or the Fed Circuit?

Brace yourselves - this will take a couple thousand words.

While the FTC's and DOJ's investigation refers to this class of NPEs as "patent assertion entities," I believe that the term "patent troll" is more appropriate. A "troll," as in the under-a-bridge fairy tale figure that blocks one's way across a bridge without some payment (or worse, a fight), is the perfect term for this class of NPEs.

Bridge trolls have one thing to offer-a right of way. The trolls have the ability to stop passers by unless they fight their way across or pay the fee demanded by the troll. It matters not to the troll why one requires passage, nor does the troll care that one's passage causes no actual harm to the troll or the bridge. All that matters to the troll is that this is their bridge and you should pay to cross it or prepare for a fight that could cost you dearly. So it is with patent trolls. A patent is essentially no more than a right of way. As a mere patent owner, a patent troll has nothing to offer or license except the right not to be sued under the patent.

Wait. It seems their feelings get hurt if you call them trolls. IPNav tells the FTC it's "pejorative". Barnes & Noble in its comments uses the word troll throughout, and Newegg in its comments [PDF] said the word is a perfect fit, absolutely descriptive of how they act (see next article). The FTC calls them PAEs. I'll stick with Barnes & Noble and Newegg on this one, if you don't mind.

We'll be reading the comments from IPNav [PDF], which claims to be a "white hat" troll, as well as a snip from MOSAID [PDF], which also claims to be one of the good guys. They feel they are misunderstood. It is in a deal with Nokia and Microsoft to go after people with their sorta donated patents, so you might wonder what Microsoft has to say. In a nutshell, it says [PDF] it wouldn't want the PAE business model shut down. *That's* not the problem. Noooo.

There is one proviso. If the USPTO does not reopen the reexaminations on the two Apple patents that so far it has found invalid, then Samsung can submit a new motion asking for a stay, but that's only meaningful if the USPTO acts faster than the trial. If not, the damages issues will include the currently invalided patents. No, I can't explain the logic. I'm like Alice in WonderLand watching this.

It's mostly tilting Apple's way at the moment, with a Hail Mary pass possible for Samsung, if certain milestones at the USPTO happen quickly enough. As I've told you many times, US patent law favors patent holders, not defendants. That's one reason trolls can do what they do, bully victims into paying up rather than risking the uncertain outcomes of expensive trials that can illogically go against you even when the trial centers on stupid patents that shouldn't have issued in the first place, because once issued there is a presumption the patent is valid. Even if you win at trial and the patent is invalidated or the jury decides you didn't infringe, nobody pays you back all the millions you've spent defending yourself. Your US patent law at work. How do you like it?

I'm getting the impression that the judge is just guessing at a rate in places, and from the wrong starting point too, and if you look at the footnotes, you'll see what I mean. Whenever he has insufficient evidence, instead of saying, "Well, I guess I can't figure that out on this record," he says, "I have insufficient evidence, so I'll just set the lowest rate." Here's just one example, footnote 24:

²⁴ Motorola contends that Microsoft products other than Windows and the Xbox use the H.264 Standard. Motorola lists at least the Windows Phone 7 and 7.5, Windows Embedded, Silverlight, the Zune, Lync, and Skype, as Microsoft products that use the H.264 Standard. (Motorola Pr. FC ¶ 535.) Motorola, however, did not provide sufficient evidence for the court to ascertain the functionality ofthese products, making it impossible for the court to determine the importance of Motorola's H.264 SEPs to these products. Indeed, the little trial evidence regarding functionality of these additional products demonstrates that Motorola's SEPs would have little value to them. (See 11/14/12 Tr. at 150 (Orchard Testimony).) Without such evidence, the court is left to conclude that the low bound of RAND is the appropriate royalty rate for all Microsoft products -- Windows, the Xbox, and all others.

I'm most of the way doing a text version for you of the order itself, but it's 207 pages, and I'm very interested in you guys quickly taking a look at the way the judge writes about the tech and also his math in figuring out the royalty. You'll find that mostly in the footnotes, which are done. I'll keep working on the grunt work of cleaning up the text version, which is still OCR-messy, while you do that part. You have the PDF, and the text is understandable at least, while I work to perfect it. So, let's each get to work.

Update 2: How great is this? Matt Rizzolo and David Long at The Essential Patent Blog have done an annotated version of the order [PDF].

One interesting thing about the findings is that while the ultimate RAND royalty appears to favor Microsoft, Judge Robart seems to have sided with Motorola as to the right approach to determine RAND royalties - simulating a hypothetical, bilateral negotiation between the parties (whereas Microsoft had suggested determining RAND on the basis of an ex ante, multilateral negotiation at the time of the standard's adoption).

The court has reviewed the parties' submissions and finds that SCO's claims and IBM's counterclaims are inextricably intertwined. Thus, proceeding in the piecemeal manner suggested by SCO would be an inefficient use of judicial and party resources, and potentially could result in inconsistent rulings. Accordingly, the court declines to reopen the case at this time. When the bankruptcy stay is lifted, either party may file a motion to reopen the case. Until then, the case shall remain administratively closed.

Surely SCO's "We Own Linux" scam must be in the top ten scams in history, not just in Utah.

What? You thought the law was dry and boring? Ha!

Its submission begins: "The patent system is broken," having "lost its true north", adding that the AIA did not fix the troll problem. And so it suggests five common-sense solutions to fix the problems. One suggestion is that trolls should not be allowed to file with the ITC at all, because that agency is about protecting trade, and trolls are not in business. And it points out that the Constitution requires a change. Yes. The Constitution:

The Patent and Copyright Clause grants Congress the power "[t]o...promote the Progress of Science and useful Arts," not science fiction and litigious arts. (Article 1, Section 8, Clause 8 (emphasis added)). But the current system allows trolls to pursue fantastic allegations-claims that would be laughed out of the room in actual scientific or technical circles-in endless litigation that taxes and taxes true innovators while making no meaningful contribution to society.

Even the most plainly baseless lawsuits are expensive and can take years to defeat. In at least four cases, Barnes & Noble has faced litigation by patentees asserting the same theories on which they previously lost. In one case, for example, Barnes & Noble is alleged to infringe patents because BN.com uses the HTML language and returns search results other than exact matches. The patentee asserted these allegations against Barnes & Noble despite having tried and lost a case against other ecommerce retailers based on the same functional allegations levied against their websites....Barnes & Noble and other technology companies see countless lawsuits in which the asserted patents purport to cover products and technologies common to the entire industry. We face repeated allegations that anyone using Wi-Fi, anyone using 3G, anyone using MP3, anyone with an e-commerce website, anyone using Ethernet, and, recently, anyone using InfiniBand technology, to name a few, is infringing and must pay a hefty price to license purportedly essential patents. The allegations sweep far beyond specific innovations to which a patent might legitimately lay claim.

Motorola's best option is an appeal down the road, from all I've seen. I'd call this a Teacher's Pet trial. And you know how it goes when you try to tell the teacher that its pet kicked you in the lunch room.

And you'll see in the docket that the judge, the Hon. James Robart, has decided the issue about how much Motorola's RAND rate should be, but we don't get to read it until the parties tell him if they want redactions. But personally, what are the odds he'll do anything but bonk Motorola on the head again? Still, if you noticed in the Apple v. Samsung litigation, post-trial action can be very effective, even when the trial itself is unfair and the result reflects mistakes or even favoritism, especially when Quinn Emanuel is representing you, because they never give up. It's not over 'til it's over. All of it.

There are now comments publicly available on the USPTO's website responding to a third question also, this one about improving patent applications. It has some suggestions for consideration regarding clarifying the scope of claims and the meanings of claim terms in specifications. I thought you'd like to see what Red Hat and Morrison & Foerster [PDFs] had to say. These days Morrison & Foerster seems to find its firm representing the old guard in the smartphone patent wars, and of course Red Hat reliably upholds the interests of the new guys on the block, Open Source. Red Hat points out to the PTO, quoting Tim O'Reilly, that were it not for Open Source, there'd be no Google, Twitter, Facebook, or Amazon:

As one seasoned observer has noted, many best-known brands (like Twitter, Facebook, Amazon, and Google) "were built on a foundation of open source software, and wouldn't exist without the ... [open standards and protocols of the] Internet and the world wide web, Linux, and the cornucopia of open source tools and languages that made the fertile soup from which today's tech innovation sprang."

Nonetheless, we see a clear nexus between the growing thicket of software patents and abusive patent litigation, so we support and encourage the PTO's Partnership, its systematic examination of the issues identified in the Federal Register Notice, and its efforts at improving quality. Indeed, we believe the agency should accelerate and expand these important initiatives.

Apple's response on the Seventh Amendment issue (Dkt. 2303 ("Opp.")) offers no answer to the constitutional problem presented by a damages-only new trial in the circumstances of this case, where a second jury would necessarily have to reexamine infringement findings determined by the first jury because the scope and extent of infringement as to the design patents and some utility patents are inextricably tied to the amount of damages. Samsung did not waive this argument because the proper scope of a new trial could not be addressed until a new trial was ordered.¹...

A waiver of a jury trial right can never be implied. Ostlund v. Bobb, 825 F.2d 1371, 1373 (9th Cir. 1987) ("A waiver of a constitutional right is not to be implied and is not lightly to be found."); see Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937) ("as the right of jury trial is fundamental, courts indulge every reasonable presumption against waiver."); California Scents v. Surco Prods., Inc., 406 F.3d 1102, 1108 (9th Cir. 2005) (same). In any event, Samsung did object to the scope of the new trial promptly as soon as the new trial Order issued and made clear that the ordered new trial would require the second jury to reexamine findings necessarily made by the first jury. Moreover, contrary to Apple's suggestion, Samsung did not request a new trial only on damages, but rather sought JMOL or a new trial "as to each and every claim and issue on which Apple prevailed before the jury," Dkt. 2013 at 1, and did not limit that broad request to particular errors, including damages errors.

Why? It means setting damages for at least one patent claim the USPTO just decided isn't valid in a final office action and another patent that has been ruled preliminarily invalid, but this is Apple. It indicates it will appeal until it gets what it feels is the outcome it wants.

But that's not the real game. The real game is to get the appeals over with before the reexaminations plus all its appeals are finished, because, as Apple itself states, if a final invalidity ruling arrives after the appeals process is over, it doesn't "disturb an earlier final court judgment awarding damages for past infringement of those claims." So that's Apple's game. Take the money and run. It wants the damages trial to happen right away, so that the appeals process can get going quickly, to try to beat the timeline on the USPTO findings of invalidity. That way, even if the patents are ultimately found to be indeed invalid, Samsung will still have to pay the damages the deluded earlier jury sets.

Do you admire Apple for angling for such an outcome? I don't either.

See what happens when a jury gets things so very wrong? They wanted to "send a message" but the message turns out to be that US patent law can be wildly unfair. Samsung can be forced to pay for invalid patents, because that's how patent law in the US works currently. How do you like it? Think some reform might be in order? Add on top that these are software patents, which some, including me, think are not properly patentable subject matter, and it's cringe-worthy to watch this case play out like this.

The program is Open Courseware, and it is brought to you by MIT, Yale, Harvard, Stanford, and the University of Michigan and many other nationally recognized universities. For those of you wanting to brush up on your computer science, there are more than 50 courses, including courses on how to build mobile phone apps for both Android and iOS. There are courses on information technology, web design, accounting, statistics, math, writing, and numerous other areas.

But the most important part of the Google et al. request, to me, hasn't yet been highlighted in the media reports I've seen. What they are asking for is not just an investigation into trolls, but into active companies outsourcing their patent enforcement *to* PAEs. And what they are asking for is whether such activities in some instances can rise to the level of antitrust violations.

That is something I've wondered about for a while -- why didn't regulatory bodies see what is happening to Android, for example, with all the old guard working apparently together to try to crush it? One thing that Microsoft and Nokia have done, for example, is outsource patent enforcement to MOSAID and other patent enforcement-style non-practicing entities. (If you recall, Google filed a compliant specifically about that with the EU Commission last summer.) The new comments call the new outsourcing to trolls patent privateering, which they say is designed for assymetric patent warfare -- meaning the defendant's business is at stake, but the outsourcing company's business isn't, and the troll has nothing to lose, because it has no business.

So, finally, the day I've been waiting for begins.

I've taken the time to do the comments as text for us, because the footnotes alone are a treasure trove of resources. So let's take a look at the antitrust issues and see if we can learn something about antitrust law that way.

QUESTION PRESENTED: Many patients seek genetic testing to see if they have mutations in their genes that are associated with a significantly increased risk of breast or ovarian cancer. Respondent Myriad Genetics obtained patents on two human genes that correlate to this risk, known as BRCA1 and BRCA2. These patents claim every naturally-occurring version of those genes, including mutations, on the theory that Myriad invented something patent--eligible simply by removing ("isolating") the genes from the body. Petitioners are primarily medical professionals who regularly use routine, conventional genetic testing methods to examine genes, but are prohibited from examining the human genes that Myriad claims to own. This case therefore presents the following questions:

1. Are human genes patentable?

2. Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court's ruling in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?

3. Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad's "active enforcement" of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally threatened with an infringement action?

Myriad is in effect arguing that it may obtain a patent on a product or law of nature itself if it finds a new use for it. Under this theory, Section 101 would not prohibit someone from obtaining a patent on gold if she found a new use for gold. As a matter of law, that argument is incorrect.

Here is a paper [PDF] on POBox by Professor Masui, "An Efficient Text Input Method for Pen-based Computers", published in Proceedings of the ACM Conference on Human Factors in Computing Systems (CHI'98) (April 1998). Here's another, "An Efficient Text Input Method for Handheld and Ubiquitous Computers" the following year [PDF]. Professor Masui was approached and expressed willingness to attend the deposition. The deposition is set for June 11 in Tokyo, in the US embassy there. The Declaration [PDF] attached to the motion asking for leave to depose Professor Masui explains how it all happened:

2. I first spoke with Professor Masui on or about February 5, 2013. I explained that we were interested in Professor Masui's work on the POBox software, which is relevant prior art in this litigation. On or about the morning of February 6, my colleague John McKee and I spoke to Professor Masui about POBox. During this call, Professor Masui expressed willingness to gather and provide information about POBox. Several days later, on or about February 12, 2013, Professor Masui verbally confirmed to me that he would be willing to sit for a deposition in this matter.

3. Over the last few months, I have spoken with Professor Masui several additional times. Professor Masui has declined to travel to the United States for a deposition, but has stated that he would be willing to appear for a deposition in Tokyo, Japan. On or about March 20, Professor Masui confirmed to me that he was available June 11 in Tokyo, and would be willing to sit for a deposition on that date. Samsung thereafter reserved space at the U.S. Embassy in Tokyo for Professor Masui's deposition.

Also the judge, the Hon. Lucy Koh, has filed her order [PDF] construing disputed patent claim terms. It's full of the usual infuriating spaghetti language about terms that describe elements of patents that in my view should never have issued in the first place. Don't read on if you don't want to know about one specific. But there is a link to Professor Masui's work.

To assist the Court in resolving the many pending disputes, the Court sets the following briefing schedule:

(1) On April 9, 2013, Apple shall file a response, not to exceed six pages, to Samsung's contention that a new trial on damages alone violates the Seventh Amendment. See Samsung Opposition to Apple's Motion Seeking an April 3 Case Management Conference, ECF No. 2286 at 5-10. On April 16, 2013, Samsung may file a reply, not to exceed five pages.

(2) On April 9, 2013, Samsung shall file a response, not to exceed five pages, to Apple's contention that immediate appeal of this Court's Order Re: Damages filed on March 1, 2013 is not viable. See Apple's Motion Seeking an April 3 Case Management Conference, ECF No. 2283, at 2. On April 16, 2013, Apple may file a reply, not to exceed four pages.

(3) On April 9, 2013, both parties shall file a statement, not to exceed four pages per party, regarding when their US PTO reexaminations of the opposing party's patents will conclude and what effect the concluded reexaminations will have on any new trial or appeal. On April 16, both parties may file a response, not to exceed two pages per party.

Those days are so over. Time to modernize, I'd suggest. Nowadays, most people use Apple or Android, on mobiles, to boot.

There's a new deadline for sending them comments, April 15. Groklaw already sent ours in, but if you have further thoughts, there's still time. And the comments already received are available now too.

And when someone files a complaint with the EU Commission, it has to consider it. So it will.

Here's what the new complaint is about, or says it's about:

FairSearch's complaint is that "Google uses deceptive conduct to lockout competition in mobile" - by, specifically, requiring OEMs that use Android to pre-load a suite of Google services and give them "prominent default placement" on the device in order to also get access to "must-have Google apps such as Maps, YouTube or Play". By doing this, FairSearch argues that Google "disadvantages other providers, and puts Google's Android in control of consumer data on a majority of smartphones shipped today", adding that this "predatory distribution of Android at below-cost makes it difficult for other providers of operating systems to recoup investments in competing with Google's dominant mobile platform"....

"Google is using its Android mobile operating system as a 'Trojan Horse' to deceive partners, monopolize the mobile marketplace, and control consumer data," said Thomas Vinje, Brussels-based counsel to the FairSearch coalition, in a statement. "We are asking the Commission to move quickly and decisively to protect competition and innovation in this critical market. Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google's Android operating system."

And if you are free to do so, why not look for any prior art on the patents involved? There are three, but once again, we have a continuation loop, so it's really just one with some variations on the theme and some doodads. Don't read on if you are not supposed to look at patents.