Saturday, October 24, 2015

The concept of “efficient infringing”

In a piece in the NYT titled The Patent Troll Smokescreen , Joe Nocera mentions the concept of “efficient infringing.”

As it happens, thanks to the 2011 America Invents Act and those rulings, big companies can now largely ignore legitimate patent holders.

Of course, they don’t call it stealing. But according to Robert Taylor, a patent lawyer who has represented the National Venture Capital Association, a new phrase has emerged in Silicon Valley: “efficient infringing.” That’s the relatively new practice of using a technology that infringes on someone’s patent, while ignoring the patent holder entirely. And when the patent holder discovers the infringement and seeks recompense, the infringer responds by challenging the patent’s validity.

Should a lawsuit ensue, the infringer, often a big tech company, has top-notch patent lawyers at the ready.

Of some interest in the Nocera piece:

What got me thinking about this was, in fact, a recent lawsuit between Apple and WARF over a University of Wisconsin innovation that Apple uses to help speed the processing time of several versions of the iPhone and iPad. Apple not only couldn’t be bothered to license the patent; it wouldn’t even let WARF in the door to negotiate. Instead, Apple sent the foundation a link to a page on the Apple website, which says that the company can lay claim to any unsolicited idea. So WARF sued. What choice did it have?

Of course, when one presents an "unsolicited" idea to any third party, one had better be sure that patent protection is in place.
Then, the third party cannot "lay claim" to the idea.

**Elsewhere, Forbes discusses Kyle Bass and the short sell/IPR strategy in an article

Are Short-Sellers Really Making Money Off New Patent-Review Law? Not Yet.

Bass’s traders would have to have had nerves of steel to make money on Acorda, however, covering their short as it made a one-day downward spike on Sept. 29. Since then Acorda has rallied above $36, erasing nearly all the gains from shorting the stock in the belief the IPR challenges would drive it down. It won two challenges in August, and then on Thursday it reported earnings and revenue that beat forecasts.

Hayman’s other early targets have either failed or generated returns for reasons other than IPR challenges. Celgene is up since Hayman filed IPR challenges against in April and May. Jazz is down 30% since August, but analysts attribute that mostly to concerns about the Clinton proposal and Jazz’s reliance on a single drug, Xyrem, for narcolepsy. Shire is down significantly, but mainly since the Food and Drug Administration rejected its dry-eye drug lifitegrast. The stock has actually risen 6% since Hayman scored its first victory before the Patent Trial and Review Board on Oct. 8, winning review of Shire’s patents covering Lialda, a colitis drug. Biogen is also down since Hayman filed its first challenge in April, but most of the decline came after the company’s top researcher resigned and an analyst downgraded the stock in July. The PTAB rejected Hayman’s challenges in September.


One notes Bass's problems have been denials of petitions to institute an IPR, and he apparently has been re-filing updated petitions. There has been NO substantive ruling on a granted IPR filed by Bass.


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