Thursday, April 09, 2015

Colleen Chien and "patent assertion entities"

In a guest post on PatentlyO, Ron Katznelson wrote of the Patent Assertion Entities [PAE] Report, prepared by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy:

I also show (including through FOIA revelations) that the PAE Report’s secret author, a patent law professor, dominated its content by her own works, and those substantially reflecting her views.  The White House omitted some in-text citations to the professor’s works from the bibliographic reference list and falsely attributed her survey results to a news reporter.  Together, these errors had the effect of concealing the dominance of this professor’s works in the PAE Report.  But where the professor’s own publications elsewhere strike a balance by at least acknowledging and crediting references with views opposing her own (see Petition, Sec. 5.5.1), it appears that the White House overruled her approach, as the PAE Report generally fails the objectivity requirement of the IQA.  It lacks objectivity both on presentation and substance, because it focuses only on the ostensible negative aspects of NPEs or PAEs.

The professor in question is Colleen Chien.

As an academic exercise, I searched LexisNexis for law review articles by Chien with the word "Eolas" and found none.

Chien has a paper on Patent Assertion Entities on file with SSRN [e.g.,]  The abstract notes:

The DOJ and FTC held a hearing on patent assertion entities (PAE, defined as an entity that uses patent primarily to obtain license fees, rather than to support the transfer or commercialization of technology) on Dec 10. This talk gives an overview of the economics, policy of patent assertion entities drawing upon previous and new empirical work. Using pathbreaking, disruptive techniques and capturing economies of scale, PAEs drive down the cost of patent enforcement. So far in 2012, PAEs have brought 61% of all patent litigations against fewer defendants than in 2011, due largely to changes in the law through the America Invents Act. 76% of PAE defendants were sued by a PAE that sued more than 15 defendants, and 61% were sued by a PAE that had brought 8 or more cases. These and other details about their business model, practices, and policy concerns are discussed in this powerpoint presentation.

By this definition, the University of Rochester was a "patent assertion entity" in its lawsuit against Searle over COX-2 inhibitors, and MIT, Harvard, and Whitehead were "patent assertion entities" in the lawsuit against Lilly  concerning Nuclear factor-kappa B (NF-kappaB) [US 6,410,516].  One recalls both of these patents were found invalid by the CAFC [e.g., Of the MIT/Harvard/Whitehead patent, the Federal Circuit ruled en banc to invalidate the patent for a lack of sufficient description of the invention.]   UC/Berkeley/Eolas sued Microsoft over US  5,838,906 and the case settled in 2007 with UC/Berkeley obtaining $30.4 million.  The validity of the patent was sustained in a director-ordered re-exam.  As to history, within the decision 457 F.3d 1279 (CAFC 2006) , one finds the text:

 In 1999, Eolas Technologies Incorporated and The Regents of the University of California (collectively, Eolas) sued Microsoft, alleging that Microsoft's Internet Explorer infringed claims of U.S. Patent No. 5,838,906 (the '906 patent). After the district court construed the claims, a jury found that Microsoft infringed claims 1 and 6 of the '906 patent and actively induced others to infringe claim 1 of that patent. Eolas I, 399 F.3d at 1328. Invoking 35 U.S.C. § 271(f), the district court determined that the royalty awarded to Eolas should reflect the foreign   sales of Internet Explorer. Id. The district court further ruled in Eolas' favor on Microsoft's defenses, granting judgment as a matter of law (JMOL) against Microsoft's invalidity defenses of anticipation and obviousness, and against its inequitable conduct defense. Id. On appeal, this court affirmed the district court's claim construction and its damages analysis with respect to section 271(f). Id. at 1341.

From within 2012 U.S. Dist. LEXIS 75975:

the court takes judicial notice that in February of this year [2012], a Texas jury declared the patent invalid, and that Eolas's post-trial motions are pending.

There is a post in the Toronto Star on Friday, 10 February 2012:

The Internet was saved in a Texas courtroom Thursday after a protracted three-year legal battle.

A $600 million patent infringement lawsuit launched by a tiny tech company against eight of the world's biggest corporations, including Google, Yahoo, Amazon and YouTube, ended after a three-day trial in sleepy Tyler, Texas.

Patents on "the interactive web" belonging to Eolas Technologies were declared invalid by a jury. And with that, the threat to the future of online innovation, as feared by Tim Berners-Lee, one of the so-called fathers of the Internet, is over.
"We are pleased that the court found the patents invalid, as it affirms our assertion that the claims are without merit," Google spokesperson said Thursday.
Eolas had asserted it holds two valid patents on the method that allows web browsers to be interactive. Dr. Michael Doyle, chairman of Eolas, allegedly developed the software in 1993 with two colleagues at the University of California.
As Wired magazine explains, this technology is what allows you to watch videos on YouTube, have search suggestions pop up in Google's search bar or even rotate the image of a sweater on an online shopping site.

The defence claimed the Eolas software was predated by another plugin-enabled browser called Viola.

The lawsuit, launched in 2009, targeted two dozen companies for royalties but only eight companies remained into the trial.

The others including Apple, eBay, Playboy, Frito-Lay, Texas Instruments, JPMorganChase and Citigroup all settled. Several - including Playboy and JPMorgan Chase have entered licensing agreements with the company.

Eolas famously sued Microsoft in 1998 claiming Internet Explorer infringed their first patent - known as "patent 906." They won $561 million in a 2003 federal judgment. That was overturned in appeal, but Microsoft later settled the case in 2007 for more than $100 million according to Wired's estimation.

In 2004, Berners-Lee, who now heads the W3C web standards body, urged the U.S. Patent and Trademark Office in a letter to declare the patent invalid because it would "impair the functionality" of the web causing "substantial economic and technical damage to (its) operation."

Instead, after some flip-flopping, the U.S. Patent Office allowed Eolas to obtain a second patent that is an extension of the first in 2010.

Berners-Lee continued to object to the patents.

In November 2010, he underlined in Scientific American how royalties could strangle innovation and e-commerce: "The basic web technologies that individuals and companies need to develop powerful services must be available free, with no royalties., for example, grew into a huge online bookstore, then music store, then store for all kinds of goods because it had open, free access to the technical standards on which the web operates."
It's unknown whether Eolas will appeal the court decision. This trial, dealing solely with the validity of the patents, would have been followed by three more focused on patent infringement and damages. If Eolas had won, it could have opened the doors to several more lawsuits.

Of some relevance to fee-shifting:  891 F. Supp. 2d 803

** Note also Colleen V. Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents, 87 N.C. L. Rev. 1571, 1582, 1607 (2009), which mentions --   I thank Josh Walker, Mark Lemley, and the underwriters of the Stanford IP Litigation Clearinghouse for making this research possible-- but does not mention Eolas or Ariad.  The Rochester case is obliquely mentioned related to the text --Finally, some suits involve university patentees suing various defendants. n116 While scholars have carried out a number of studies on university patenting, n117 less academic attention has been paid to university patent litigation. The important university patents seem to be in biotechnology areas. n118 Though universities are generally large entities, like NPEs, they have limited exposure because they do not make products. In addition, public universities can assert a sovereign immunity defense. n119   --

Chien has co-authored with Mark Lemley (e.g. Colleen V. Chien & Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell L. Rev. 1 (2012)   )

** From within the law review article by Jacob H. Rooksby, WHEN TIGERS BARE TEETH: A QUALITATIVE STUDY OF UNIVERSITY PATENT ENFORCEMENT  ,  46 Akron L. Rev. 169 (2013) :

n36 See, e.g., Todd Bishop, Microsoft's Eolas Settlement: UC Gets $ 30.4M, THE MICROSOFT BLOG (Oct. 10, 2007, 5:02 PM), http://blog.seattlepi.corn/microsoft/2007/10/10/microsofts-eolas-settlement-uc-gets-30-4m/ (reporting that University of California received $ 30.4 million in a settlement of a patent infringement lawsuit it brought with its licensee against Microsoft Corp.); Susan Kelley, Hewlett-Packard, Cornell Reach Settlement in Patent Case, CORNELL CHRON. ONLINE (June 9, 2010), (reporting that Cornell University settled on confidential terms a patent infringement lawsuit it brought against Hewlett-Packard after court reduced university's damages award to $ 71.3 million); Katherine Lymn, U Heads for "Patent Cliff," THE MINN. DAILY (Oct. 6, 2011),'patent-cliff (reporting that University of Minnesota received more than $ 350 million in running royalties from GlaxoSmithKline since 1999 as a result of settling a patent infringement lawsuit university brought in 1998); Tom Fontaine, Pitt Awarded $ 73.6 Million in Patent Case, PITTSBURGH TRIBUNE-REVIEW (April 25, 2012, 2:14 PM), (reporting that judge ordered medical device company to pay University of Pittsburgh $ 73.6 million for infringing university's patent, doubling the jury's award after finding willful infringement); Rich Lord, Carnegie Mellon Wins $ 1.17 Billion in Patent Case, PITTSBURGH POST-GAZETTE (Dec. 27, 2012 12:26 AM), (reporting that jury found company knowingly infringed university-owned patents directed toward hard-disk drive circuit technology and awarded university over $ 1 billion in damages).

n37 See, e.g., Univ. of Rochester v. G.D. Searle & Co., Inc., 358 F.3d 916 (Fed. Cir. 2004) (invalidating on appeal patents owned by the University of Rochester in patent infringement lawsuit against pharmaceutical companies); Goldie Blumenstyk, Taking on Goliath: U. of Rochester Risks Millions in Patent Fight with Pharmaceutical Giants, CHRON. HIGHER EDUC., Sept. 20, 2002, at A27 (reporting that University of Rochester had established an eight-figure legal fund to pursue the aforementioned case); Centocor Ortho Biotech, Inc. v. Abbott Labs., 636 F.3d 1341 (Fed. Cir. 2011) (invalidating on appeal patents co-owned by New York University and vacating and reversing record-setting SI.67 billion jury award in patent infringement lawsuit brought by university and its exclusive licensee).

**From within a law review article by   Jacob H. Rooksby,  INNOVATION AND LITIGATION: TENSIONS BETWEEN UNIVERSITIES AND PATENTS AND HOW TO FIX THEM,   15 Yale J. L. & Tech. 312 (2012-3):

Some universities have scored decisive victories from their past involvements as plaintiffs in patent infringement lawsuits. For example, in 2008 a jury awarded Cornell University $ 184 million in damages in a patent infringement lawsuit it brought against Hewlett-Packard. n76 The trial judge later reduced the damages award to $ 71.3 million, and the parties subsequently settled the case on confidential terms while appeals were pending. n77 In 2007, the University of California received $ 30.4 million as part of a settlement of a lawsuit it brought with its licensee, Eolas  [*334]  Technologies, in 1999 against Microsoft. n78 The plaintiffs had won a $ 521 million jury verdict earlier in the case in 2003. n79 The case settled while on appeal.
More recently, in spring of 2012, a judge awarded the University of Pittsburgh $ 73.6 million in a case against Varian Medical Systems, Inc. n80 Later that year, Pitt's cross-town competitor, Carnegie Mellon University, scored a $ 1.17 billion damages award--one of the top three largest damages awards ever in a patent infringement case--in a lawsuit it brought against Marvell Technology Group Ltd. n81 Both lawsuits are currently on appeal to the CAFC.
Another notable outcome for a university in a patent infringement lawsuit dates back to 1998, when the University of Minnesota filed suit against a predecessor to the pharmaceutical company GlaxoSmithKline. The university claimed it owned patents that covered a blockbuster HIV drug that GlaxoSmithKline eventually marketed as Ziagen(R). The parties subsequently settled the dispute on financial terms quite favorable to the university after a year of intense litigation. As part of a license deal, the university eventually received more than $ 350 million in running royalties from GlaxoSmithKline's sales of the drug. These royalties represented as much as 90% of the university's revenue from technology transfer. n82
Of course, not all patent infringement lawsuits end favorably for the universities that bring them. For example, in a patent infringement lawsuit brought by the University of Rochester in 2000, the CAFC upheld a district court decision that a patent, claimed by the university as covering a blockbuster arthritis drug,  [p. 335]  was invalid. n83 The university allegedly had established an eight-figure legal fund to support its lawsuit against the company it believed was infringing. n84 In a different case, the CAFC overturned a $ 1.67 billion jury award in a patent infringement lawsuit brought by New York University and its licensee over patents co-owned by the university. n85 The significant damages award is still the largest ever achieved in a patent infringement case. n86
More recently, in February 2012, a jury in the Eastern District of Texas invalidated a patent owned by the University of California in a subsequent lawsuit with its licensee Eolas Technologies against twenty-three different companies, including Apple, Google,, and Sun Microsystems. n87 The university's patent was described as covering the interactive Web, particularly as it relates to plug-ins for Web browsers. n88 World Wide Web inventor Tim Berners-Lee, who testified at trial in favor of the defendants, tweeted that the verdict was a "good thing." n89

Earlier IPBiz post on petition by Ron Katznelson:

As a footnote on 11th Amendment issues, see
Baum v. UMass, 503 F.3d 1367

Separately of PatCon2015 (Kansas University)

Abstract of Chien, (Santa Clara and former senior advisor to White House Office of Science and Technology Policy):

The patent system is built on the premise that exclusion leads to innovation. But a mounting body of evidence refutes that “innovation by exclusion” is the only, or even primary, way innovation happens today: nearly 50% of manufacturers got the idea for their most important new product from an external source that shared it with them, 45-60% of patentees acquire patents to access others’ technology, and over 1,300 companies, including five of the ten top holders of patents, have pledged to share some of their patents. But because of its default to exclusion, the patent system’s role in spurring innovation through such diffusionary mechanisms is underdeveloped. Addressing this gap, this paper articulates, then applies a diffusion framework to patent law. Focusing on three mechanisms of diffusion: disclosure, transfer, and the pursuit of freedom to operate, it describes a number of overlooked levers for the patent system to encourage innovation. Removing barriers to reading patents, enabling inventions to be placed into the public domain through defensive publication, fixing the marking requirement, and permitting early publication of utility and provisional patent applications would enhance patent disclosure. Improving reporting and discovery of patent information could boost markets for technology. Making it easier to waive patent rights and creating a “defensive-only” option for patents would increase freedom to operate. As innovation increasingly takes place in open and closed modes, and often both, the patent system should give innovators more ways to diffuse, not just exclude, broadening its support for all forms of innovation.


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