Apple wants Kodak
Blocked from borrowing against
Disputed patents

Apple has asked a US bankruptcy court to prevent Eastman Kodak from obtaining loans using patents that allegedly belong to Apple as collateral.

Kodak, founded in 1880, filed for Chapter 11 bankruptcy protection in January, 2012.  The company’s known for iconic film brands like Kodachrome, which it stopped producing in 2009.  Kodachrome was favored by many professional photographers during its 74-year history and was immortalized in song by Paul Simon.

Citigroup is providing Kodak with almost a billion dollars in financing to allow it to keep operating normally during the bankruptcy.  The loan is secured by all of Kodak’s assets, including its intellectual property.  Kodak is also raising cash by licensing over 1,000 patents related to digital imaging.

The company has struggled in recent years to adapt to the advent of digital photography.  Apple’s bankruptcy court claims involve what is believed to be the first digital camera:  the QuickTake 100, which Apple sold for $749 in 1994.  Time magazine ranked it among its “100 greatest and most influential gadgets from 1923 to the present.”

Apple partnered with Kodak to create the camera, which was manufactured by Chinon in Japan.  Apple built a series of digital cameras in conjunction with Fuji until 1997, when Steve Jobs returned to the company and discontinued the product line.

Apple claims that “through this collaboration, Apple disclosed the architecture for its confidential digital camera technology to Kodak subject to various non-disclosure agreements, which also provided that any improvements Kodak made to Apple’s disclosures remain the property of Apple.”

Apple says that it discovered in early 2010 that Kodak had misappropriated this Apple technology and patented it.  Apple sued Kodak over one of these patents in August 2010.

Apple says that it believes Kodak has earned $3 billion in licensing revenues from the disputed patent, and has sought “all or a substantial portion of” these revenues.

RealNetworks, Inc. sells a “significant number” of patents to Intel Corporation for $120,000,000 according to a deal announced this morning. ÆON Law is proud to have assisted in the creation of this important portfolio of intellectual property. For additional details, check out the GeekWire article.

MS tweets trash talk
After LG license deal
Adds to market share

Microsoft and LG Electronics have entered into an agreement that licenses Microsoft patents for use in LG’s Android- and Chrome-based smartphones, tablets, and other mobile devices.

The terms of the agreement were not disclosed, but it builds on a 2007 agreement between the companies involving “Linux-based embedded devices."  (Google’s Android operating system is related to the open-source Linux operating system.)

This new agreement is Microsoft’s 11th involving manufacturers of devices running Android and Chrome operating systems.  More than 70% of the Android smartphones sold in the United States are now covered by Microsoft’s licenses. 

Microsoft reportedly earns more from its licenses to Android device makers than from its own Windows Phone 7 operating system.  Android phones make up almost 50% of the US smartphone market

Motorola Mobility, which is in the process of being acquired by Google, may be the last major Android vendor to refuse to take a license from Microsoft.   

Microsoft executives taunted Google in a series of tweets after announcing the LG deal.

Frank Shaw, Microsoft’s head of communications, tweeted, “Hey Google – we are the 70% #anotherandroidlicense,” and linked to the press release about the LG agreement.  Later, he added, “Can we just agree to drop the patents-as-weapons meme? When effective licensing enables companies to share IP, the metaphor falls apart.”

The “weapons” comment refers to the smartphone-related intellectual property legal battles that have been raging on four continents for the past year.

Microsoft’s EVP and General Counsel, Brad Smith, tweeted, “It’s time to recognize that in #patent world, lawsuits are the 1%; license agreements are the 99%.  #anotherandroidlicense.”

And Horacio E. Gutiérrez, Microsoft’s Corporate VP and Deputy General Counsel, joined in with “How should the smartphone industry resolve IP disputes in the software stack? Let’s try licensing.”

Apple v. Android:
Judge finds for Motorola,
Denies import ban

The US International Trade Commission (ITC) has issued a preliminary ruling that Motorola Mobility does not infringe on three patents owned by Apple:

It is held that no violation of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, has occurred in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain mobile devices and related software by reason of infringement of one or more of Claims 1, 2, 10, 11, 24-26, and 29 U.S. Patent No. 7,812,828 ("the ’828 Patent"), claims 1-7 and 10 of U.S. Patent No. 7,663,607 ("the ’607 Patent"), and claims 1, 3, and 5 of the U.S. Patent No. 5,379,430 ("the ’430 Patent").

Motorola, which agreed last year to be bought by Google for $12.5 billion, is a leading manufacturer of smartphones and tablet computers running Google’s Android operating system. Although Apple is the world’s largest manufacturer of smartphones, with 29% of the market, Android (which is licensed for free) runs on more than half of the world’s smartphones.

After Apple sued HTC (which also makes Android-based devices) for patent infringement, Motorola filed a preemptive ITC complaint against Apple in October, 2010, claiming 18 violations of its own patents. Apple sued Motorola in return, claiming infringement of 24 Apple patents for multitouch technologies and user interfaces in Android phones, and seeking to block imports into the US of the allegedly infringing devices.

The case, In the Matter of Mobile Devices and Related Software, 337-750, will now go before a full six-judge ITC panel.

Chinese alliance
Aims to fight patent lawsuits
By smartphone makers

Chinese smartphone manufacturers, including Lenovo, Coolpad, Konka, TCL, and ZTE have reportedly teamed up to defend themselves against anticipated patent lawsuits from companies like Apple, Nokia, and Microsoft.

The foreign manufacturers plan to increase their share of China’s booming smartphone market, which grew 58% in the third quarter of 2011.  Over 24 million units were sold in China in the third quarter – more than in the US – making China the world’s largest smartphone market

The growth in Chinese demand for smartphones has been driven by the availability of low-cost Android-based models from Chinese brands like ZTE and Huawei.  Chinese internet companies like Alibaba and Baidu also sell Android-based phones.  Smartphones costing the equivalent of only $US 50 are expected to be available in China in 2012..

Earlier market expansions by foreign companies into Europe and Australia led to a series of patent skirmishes that are still being fought, and which have caused allegedly infringing phones to be removed from trade shows and retail shelves in some countries.

Microsoft has reportedly been in licensing negotiations with Chinese telecom company Huawei over products using Android software.  But Huawei, which has not been reported to be a member of the new alliance, has 65,000 worldwide patents of its own.

Microsoft claims that it has already entered into license agreements with more than half of all Android device manufacturers, including Samsung (the world’s leading smartphone maker), HTC, and Compal (which supplies Dell, HP, and Toshiba).  

It’s not clear exactly how the alliance intends to fight against lawsuits by foreign competitors, but efforts may include patent pooling and sharing legal expenses.

The original article is here.

USITC
Launches investigation
Re TV patents

The U.S. International Trade Commission (USITC) has announced an investigation of Certain Products Containing Interactive Program Guide And Parental Controls Technology.

The investigation is based on a complaint from Rovi Corporation and its subsidiaries  Rovi Guides, Gemstar, and Index Systems.  The complaint alleges violations of section 337 of the Tariff Act of 1930 by respondents Vizio, Inc., Haier Group, and Haier American Trading.  Vizio is a US company and the Haier companies are based in China.

The complainants allege that these companies, which make televisions and Blu-Ray players, are violating several of their patents, specifically U.S. Patent Nos. 7,493,643, RE41,993, 6,701,523, and 7,047,547.  The patents relate to interactive program guides and parental controls.

The ‘643 and ‘993 patents were the subject of litigation between Rovi and Sharp, which was settled.  The ‘523 patent was the subject of litigation with Toshiba, which was resolved by Toshiba taking a license.  Litigation with Amazon involving the ‘643 patent  is still pending.  The ‘523 patent is the subject of two pending examinations.

Vizio was a former licensee of Rovi’s patents, but the license expired earlier this year.  Rovi says it has attempted to negotiate licenses with all of the respondents.

The complainants seek an exclusion order and a cease-and-desist order barring import and sale of the accused devices.

The USITC will set a target date for completing its investigation within 45 days. If the complaint is approved, the ITC will ban the import of the products.

Chinese media have linked the investigation into the Chinese-made products to US “protectionism” related to the “sluggish economic recovery” and suggested that an import ban would hurt US-China trade relations.

The complaint can be found here.

Walker Digital
Asks US to block imports
Of Blu-Ray players

At the urging of Walker Digital, the US International Trade Commission (USITC) has launched an investigation into whether certain foreign-made Blu-ray Disc players infringe Walker’s US patents.

Walker, a “non-practicing entity” based in Stamford, Connecticut, filed a Section 337 complaint with the USITC, seeking to block imports of the allegedly-infringing players.

Walker alleges that the players infringe its U.S. Patent No. 6,263,505, a system and method for supplying supplemental information for video programs.  Walker says it licenses the ‘505 technology to California-based Oppo Digital Inc., among other companies.

The technology “allows someone who is watching a movie on Blu-ray disc to access ‘fun facts’ about an actor or a scene without pausing the movie to do a search on the Internet.”

In April, Walker sued LG, Panasonic, Pioneer, Samsung, Sharp, Sony, Toshiba and many other Blu-ray disc manufacturers in Delaware Federal Court for infringement of the ‘505 patent.  In June, an anonymous third party requested reexamination of five of the ‘505 patent’s 43 patent claims, and in September Sony requested reexamination of the remaining claims.  The defendants then moved to stay the Delaware action pending conclusion of these reexaminations.

The PTO granted the first reexamination and rejected all 43 claims as either anticipated by or obvious under the prior art.

However, the ITC, unlike the District Courts, does not stay investigations during reexamination proceedings.

Walker Digital, which launched Priceline.com in 1998, has sued hundreds of defendants for patent infringement in the past year.  Previous targets include Amazon, Dell, Google, and HP.  In 2010, Walker sued Facebook over “friending.”

The USITC notice can be found here.

Exhausted patents
Still yield fruit in the future

For those who use them.

In a key decision late last month, the U.S. Supreme Court declined to hear the Tessera v. ITC et al patent infringement case, where the issues in dispute included the validity of the patent for a semiconductor packaging method, the licensing of said method, and patent exhaustion in relation licenses of the method. In 2007, Tessera had brought claims accusing 10 respondents of infringing on its patents for several methods of packaging semiconductor chips.

Tessera’s patent infringement and patent rights claims were not much in dispute, although Tessera did argue in support of both.  The key issues before the Court were when Tessera’s patent rights would be exhausted, and against whom could Tessera bring a claim.  Although the majority of respondents had licenses to sell the products, the relevant licenses all included a clause that said "Licensee is licensed only to Licensed Products for which Licensee or a third party has satisfied a royalty obligation of Tessera." Tessera brought claims against product purchasers who had bought patented products from Tessera licensees.  The relevant licensees were not up-to-date on their royalties, and Tessera argued that during the time that royalties were unpaid, Tessera’s patent rights were not exhausted.

Tessera’s position that a licensee’s sale of a patented product was unauthorized if the licensor, in this case Tessera, had not received the royalties, was found to be "unpersuasive" by the Federal Circuit.  The court also said that Tessera should seek unpaid royalties from their licensees, not their licensees’ customers. The special provision in Tessera’s licenses, therefore, which requires licensees to pay royalties to avoid being held liable for patent infringement, did not create liability in either the licensees or subsequent users of the patented item. The Federal Circuit had held that permitting such clauses to stand would be "wholly inconsistent with the fundamental purpose of patent exhaustion—to prohibit post-sale restrictions on the use of a patented article." Slip op. at 23.

Therefore, it is likely that with the US Supreme Court declining to hear the case, such clauses will not be of much use going forward.

NOTE: Additional findings of the Federal Circuit included no infringement by the wBGA products.  The Court affirmed the finding that none of the offered references anticipate the asserted claims of the ’106 patent, which had been appealed by the respondents. The court further held that due to the ’977 and ’627 patents expiring, the related infringement claims were moot.

Patent assignment
Can waive attorney-client
Privilege, rules court

A District Court has ruled (in HTC Corporation v. IPCom GmbH & Co.) that a patent assignment can waive attorney-client privilege as to the prosecution files transferred as part of the assignment.

HTC sought a declaratory judgment that its products did not infringe US Patent No. 5,390,216, for a synchronization method for a mobile radiotelephone. The ‘216 patent had been acquired by IPCom from Robert Bosch GmbH.

IPCom counterclaimed that HTC’s products did infringe the ‘216 patent and also its Patent No. 7,043,751, for a method of allocating access rights to a telecommunications channel to subscriber stations of a telecommunications network and subscriber station.

HTC moved to compel production of documents related to the ‘216 patent, including prosecution documents. These documents had been transferred from Bosch to IPCom’s counsel, the Frohwitter law firm, pursuant to the patent assignment agreement.

HTC sought production of these documents by the Frohwitter firm and IPCom opposed the motion, claiming that the documents were protected by attorney-client privilege.

The district court disagreed and granted the motion, finding that the privilege had been waived as part of the acquisition of the documents by IPCom, and ordering IPCom to produce the documents. IPCom sought a write of mandamus from the Federal Circuit to reverse or vacate this order but the Federal Circuit denied the writ.

HTC then learned that the prosecution documents were also in the possession of Bosch’s former prosecution counsel, the Holtz firm, and brought another motion to compel production of those documents from Holtz. IPCom again opposed the motion on the grounds that it didn’t have control of these documents and had never had a relationship with Bosch’s law firm.

The court again granted HTC’s motion to compel, finding that because IPCom obtained the patent prosecution files as part of its acquisition of the ‘216 patent, it had the legal right to demand these documents from the Holtz firm. Further, the court found that any privilege belonged only to Bosch, and that Bosch waived that privilege when it transferred the documents to IPCom as part of the assignment of the ‘216 patent.

Microsoft patent
Lets employers monitor
If workers play nice

Microsoft has applied for a patent for a system to monitor employee workplace behavior.  The application was filed in May, 2010 but only recently came to light.

The application is entitled “Organizational Behavior Monitoring Analysis and Influence.” It describes a method by which:

Desired and undesired behaviors and applicable organizational contexts are defined and action plans developed. The behaviors are then monitored through communication sessions between members and analyzed for comparison to the action plans such that feedback may be provided at individual and/or organizational levels to influence the behaviors.

“Desired” behaviors include giving employees “positive affirmations,” which would be detected as follows:

Rules may be defined in an XML schema that includes following elements:

[0040] a. Rule Name–e.g. Positive Affirmations
…
[0043] d. Rule Description via Clauses. Examples: [0044] i. MESSAGE contains "thanks" [0045] ii. OR MESSAGE contains "great job!" [0046] iii. OR MESSAGE contains "nice job"

Undesired behaviors include “cutting off others during conversation [and] prolonged monologues,”  calling subordinates during lunch and after hours, “wearing dark glasses in a video conference,” and “wearing unacceptable clothing to a business meeting.”

The process could monitor and evaluate “communications between two members … or between multiple members,… for example video conferences, online presentations, [and] group instant messaging conversations.”

The process is designed to be employed “for a variety of goals including, but not limited to, increased efficiency, increased participation, awareness of cultural practices, increased empowerment and engagement of employees, career growth, and trust improvement.”

The trust produced by the invention is intended to enhance happiness and innovation within an organization:

[I]mprovement of trust within an organization, or in other words autonomy and empowerment of the members, relies on improving interactions, influencing positive behaviors, and discouraging negative behaviors in concrete ways, which in turn may lead to increased levels of innovation and member happiness.