Tuesday, March 07, 2006

RIM settlement to foster patent reform?

From RedHerring:

Industry watchers said March 6, 2006 that the hefty settlement of a patent lawsuit between Research In Motion [RIM] and NTP will lead to increased patent litigation, which could win supporters for proposed U.S. patent reforms.

Wireless email device maker RIM said on March 3, 2006 it would pay NTP $612.5 million to end the long-running dispute between the two firms. NTP, which does not manufacture competing devices, had nearly convinced a federal judge to impose an injunction on RIM’s popular BlackBerry devices (see ‘CrackBerry’ Patent Suit Settled). [IPBiz note: the issue of injunctions for patentees who don't make the patented product will come up in eBay v. MercExchange, when the Supreme Court reviews the 1908 precedent of Continental Paper, which says that patentees who don't make the patented product can get injunctions.]

Analysts said the pressure that Annandale, Virginia-based NTP was able to exert and the money it received will promote the phenomenon of “patent trolls,” a derogatory term often applied to patent holding companies that subsist on such settlements. [IPBiz: there are many different definitions of trolls, some of which capture small inventors, who typically might have a patent but are not making product.]

“Companies in the same boat as NTP, who invented a technology but failed to build a market in that technology, are saying, what’s in it for me?” said Carmi Levy, senior research analyst at Info-Tech Research Group in Ontario, Canada. “With a $613-million payoff sitting out there, it tilts the balance towards smaller companies who would sue.” [IPBiz: each case is decided on its own merits. The patentee still has to fight issues of invalidity and unenforceability, AND prove infringement. The NTP case does not change the underlying realities. Individually, I think the bigger message from the NTP v. RIM case is to people in RIM's shoes, to take these things more seriously and to deal with charges of infringement sooner and more effectively.]

Mr. Levy, pointing to Judge James R. Spencer’s refusal to address last-minute NTP patent rejections, said the case is a glaring example of the need for patent reform. [IPBiz: the case is a glaring example of the need for companies to take patents seriously, and for businessmen to be more effective at cutting deals.]

While he faulted Judge Spencer for “refusing to take the blinkers off,” Mr. Levy said the under-resourced Patent Office is more the problem.

“The USPTO admits it can’t do the job. They don’t have the resources to do appropriate due diligence to see what patents are on file and vet them and prevent this type of conflict in the future,” he said. “If we’re looking for a case that exemplifies the ridiculousness of the patent system as it stands, it’s this one.”
[The prior art used by RIM in re-exam were some fairly obscure documents from Norway.]

Patent Reform Act

While legislation to reform the U.S. patent system was proposed in Congress last year, it’s not clear that the RIM-NTP case will be enough to drive it forward. The bill put forth by Representative Lamar Smith (R-Texas) would address injunctions and damages calculations [The bill is HR 2795. See for example "Patent reform 2005: Sound and Fury Signifying What?", New Jersey Law Journal, July 18, 2005.]

The proposal mostly favors large companies, though not uniformly. It could be a significant change to the business of intellectual property on the level of Sarbanes-Oxley financial reforms, said patent lawyers.

The bill is opposed by the Professional Inventors Alliance, whose president Ronald J. Riley called it “a set of tools that will create a host of new litigation opportunities and otherwise raise the cost of entry to use the patent system by about two orders of magnitude.”

Mr. Riley vigorously disputes the version of events put forth by RIM and people like Mr. Levy, saying Ontario, Canada-based RIM bullied the late NTP inventor Thomas Campagna and used public pressure to drive its agenda through the Patent Office. He points to another American inventor, Howard Gutowitz of Eatoni Ergonomics, who also claims to own a patent that RIM infringes.

From Information Week :

BlackBerry maker Research In Motion’s decision to settle with NTP for $615 million [sic : 612.5 million] in an infringement case involving wireless E-mail patents is good news for the likes of Tom Woolston, Dick Snyder, and Neil Balthaser. All three hold patents on IT that others contend they don’t deserve.

Woolston, CEO of MercExchange, is in a patent fight with eBay over the online auction house’s “Buy It Now” feature. Snyder heads Forgent Networks, the holder of a JPEG compression technology patent and plaintiff in dozens of lawsuits contending some major corporations owe it licensing fees. And last month, the government granted Balthaser a patent on a process involving the use of rich media over the Internet.

**Notice that Eric Chabrow didn't mention the Eolas patent, which survived re-examination intact. He also didn't mention the questionable assertions in the eBay brief to the Supreme Court or that eBay's re-exam as to the patent at issue in the permanent injunction is based on the same prior art rejected by the district court and by the CAFC. It is sometimes what isn't said that is most revealing.


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