Wednesday, July 18, 2007

Rationality in patent litigation? Probably not...

Further to an earlier IPBiz post on the July 2007 decision in the Festo saga (The July 2007 installment of Festo v. SMC), one commenter at Patently-O had noted:

If $4 million is what was really at issue here, I'll bet that each side has spent a lot more than that over the course of 20 years of patent litigation.

IPBiz notes that the idea that patent litigants behave in a rational matter as to the value of litigation may be questioned. One can certainly question decisions in the course of the Festo saga. HOWEVER, an even more interesting story is that of Exxon v. U.S., involving a Fischer-Tropsch catalyst and method (with Fischer-Tropsch not being a commercially-viable process at the time of the litigation, and, notwithstanding comments of the current Montana governor (Schweitzer) likely not commercially-viable at present; however, many people peg the "break-even" point at $30/barrel, which has been exceeded.)

One can find a basic discussion of Fischer-Tropsch at wikipedia. When talking about COAL as a Fischer-Tropsch source, one has to note that the source has an H/C ratio below 1, but the products have a much higher H/C ratio, above 2 for alkanes. That means there is a lot of CARBON that does NOT end up in the produced fuel.

As background, the CAFC wrote in 265 F.3d 1371 (describing the conversion of natural gas (not coal) to liquid hydrocarbons:

The '705 and '982 patents relate to improvements in what is known
as the Fischer-Tropsch process for converting natural gas to liquid
hydrocarbon products. As the process is described in the patents, natural gas is
first broken down to produce synthesis gas (carbon monoxide and hydrogen).
The synthesis gas is then introduced into a slurry bubble column where it
undergoes the Fischer-Tropsch reaction. In the slurry bubble column, catalytic
particles are suspended in liquid hydrocarbons. Gas phase reactants,
including the synthesis gas, are then bubbled through the reactor. As the gas bubbles rise, the reactants are absorbed into the liquid and diffuse to the catalyst
where they are converted to liquid hydrocarbon products.

In Festo Briefs: Which Future for 21st Century Patent Law?, (IPT, p. 20 (Nov. 2001)), LBE wrote about the case Exxon Research and Engineering Co. v. United States 54 USPQ2d 1519, 1530 (Ct. Cl. 2000).

In Johnson & Johnston: Disclosed, Never Claimed, Public Domain, (IPT, p. 44 (May 2002)), LBE wrote

On April 11, [2002] the Associated Press reported that the federal
government has admitted infringing an Exxon Mobil Corp. petroleum patent and agreed to pay the oil company $ 2,583. The AP report noted that Justice Department spokesman Charles Miller said Exxon Mobil had claimed that the patent was worth hundreds of millions of dollars and quoted Miller that the settlement amount, which was disclosed by the government but not by Exxon Mobil, "speaks for itself." The litigation was reported at 54 USPQ2d 1519 (Ct. Cl. 2000), reversed by the Federal Circuit at 265 F.3d 1371, 60 USPQ2d 1272 (CAFC 2001). n7

In the Exxon case, one notes BOTH the disparity between settlement value and litigation costs AND the disparity between settlement value ($2,583) and asserted value (hundreds of millions).

A different Patently-O commenter wrote:

There are VERY few actual individual inventors that invented something of value without the R&D of the evil "big business." Those that garage inventors are proudest of are not good inventors, but wise investors. Lemelson, Katz, Ballard, and whoever Ray Niro is financially backing these days are people who decided to sink their money into patents, rather than R&D. Lemelson sunk more money into patent prosecution over the years than R&D, a move that was doubtlessly a wise investment. But you are fooling yourself to think that these people are "inventors" of products; if anything they invented a novel way to make money. Perhaps respect is due for this reason alone, and the purpose of this post is not to kick the beehive of Lemelson supporters who think that he walked on water and healed the sick.

Make no mistake, however, the days of Edison and Ford are long gone. Much of this is due to where the real progress is being made; it's damned hard to do pharma work or semiconductor wafer processing in your garage. True mechanical innovation, which is by far the easiest for an unfunded inventor, is dwindling.

As noted before, Edison's light bulb/electrical system work was backed by J.P. Morgan and the Vanderbilts BEFORE Edison has discovered the filament made from carbonized bamboo. Ford opposed patents and was victimized by the Selden patent AND borrowed the assembly line idea from Olds (with the assembly line idea in any event borrowed from meat packing plants). What days of Edison and Ford?

As a different point, the CAFC decision in Exxon informs one of the state of the law in indefiniteness. IPBiz is willing to bet that Bessen did not cover this in his upcoming book by Princeton University Press.

As a separate point, IPBiz found the following text from MN1 staff writer Andrew Weinman of some interest:

[Peter] Michaels [CEO of Hop-on] was confident about pursuing these patents to the full extent of the law.

"I have unlimited resources to fight it," Michaels said. "We could take on any major company, any major corporation. I have the best litigators in the country. We have guys signed on who don't lose [cases.]"

However, Michaels wanted to make it clear that he wasn't intent on focusing on his lawsuits or patents alone.

"We're not patent trolls," Michaels said. "But I have to protect our shareholders and I'll go after folks or companies that are violating our patents."

In fact, Michaels mentioned that his companies [sic] new text-to-win cell phone campaign - where users would text in to win up to $100,000 in a phone-only contest - was slated to start soon, and that Hop-On would soon introduce a phone to the U.S. market.


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