Regarding Intellectual Venture’s Purchase of Transmeta’s Patent Assets

I was just reading the “Secretive IP Holder Funds Tech Acquisition” article where it mentions that Intellectual Ventures (IV) had a stake in the recent purchase of the Transmeta assets. My opinion about their interest is below.

First of all, and this is off the top of my head, there are those who claimed that Transmeta Corp. was a troll in that their goal was to patent around Intel’s patents. Obviously I have no backup for this other than word of mouth. However, when Transmets did sue Intel, Intel settled because the Transmeta claims did read on products Intel created and was in the process of creating.

Thus, IV purchasing Transmeta’s many patent assets would be nothing more than one IP holding company purchasing the assets of an IP holding company. I suppose it all relates to intent. So far, their intent appears to be to acquire assets and assert them against companies who are infringing their patents to force them to take a license on those patents. I don’t have anything wrong with this because IV rightfully purchased those assets, and as patents currently stand, they are PROPERTY which is transferrable. (Whether I believe the right to assert should belong to big companies or to the inventor is a different topic.)

But in sum, Intellectual Ventures is doing nothing wrong by purchasing Transmeta’s assets. All you can hope for is that IV will use them in a more productive and “friendlier” way than Transmeta has.
Remember, the goal in patent law should always be “to promote innovation” rather than to promote corporate profits.

Patent Reform, Patent Trolls, Non-Practicing Entities (NPEs).

Being proactive regarding patent reform, on the issue of trolls and non-practicing entities (NPEs).

I thought the conversation in the comments section of the Techdirt article about Bill Gates working with Nathan Myhrvold was a good one. I wanted to paste a copy here.

Peter,

I agree that forums such as these are good for voicing concerns about those who are benefiting from the patent law system in its present form. However, it does nobody any good until someone on the federal level *who has legislative power* gets interested in the subject matter and takes action on it. My experience is that this almost never happens until people like YOU, ME, and OTHERS start writing letters, sending e-mails, and making phone calls.

Those in power need to be EDUCATED on the issues we are discussing on this mini-forum, but they will likely not come to you or read this article and its many comments. HENCE, WE NEED TO BE PROACTIVE AND DO SOMETHING about issues we see that affect the integrity of our patent system.

Someone below referred to me as a “self-labeled troll.” I find that comment to be slightly ignorant. Rather, I’m an activist and I prefer to fix the problems at its source rather than fighting those who have figured out a way to benefit from the system as it is. While I am very against those who abuse the system with frivolous law suits, patent assertions, and litigation tactics, ESPECIALLY from NPEs (non-practicing entities), ***always remember that there would be no such thing as a patent troll if companies would be fair about taking licenses from little guys (individual inventors and/or small companies who cannot afford the patent enforcement process.)***

My opinion is that there should be stronger patent protection for inventors so that there would be no incentive to sell to a troll for pennies on the dollar.

As for the topic of NPEs, I don’t quite have a solution, nor do I know what to do about them, but I do see it as being an issue.

Aristocrat Technologies v. Int’l Game Technology (IGT) decision.

I just read the US Court of Appeals opinion for the Aristocrat v. International Game Technology (IGT) case, and I want to mention that I am unhappy with the decision and I feel that the judge played semantics with the availability of defenses for patent infringement suits, although I do believe he properly applied the law on its face. My opinion is that the law in its present form is broken and needs a bit of revision.

To summarize the lower court’s decision, in short, when Aristocrat was prosecuting their gaming patent, they paid a fee one day late. While this is a minor oversight, bottom line, according to the rules, this is enough to have the USPTO determine that the patent was abandoned and they did. Now according to the law, the applicants can only revive the abandoned application by stating that the lateness and its resulting abandonment was unavoidable. Yes, there are provisions regarding fees that state the cost of reviving an abandoned patent under the “unintentional” standard, but reading the statute on its face only allows an abandoned patent to be revived under the higher “unavoidable” standard. Whether this should be changed is a moot issue for now. The applicants claimed that the abandonment was “unintentional,” the USPTO said okay and revived the application, which later issued into US 7,056,215. Aristocrat later filed a continuation patent which also issued into US 7,108,603.

The lower court held that because the USPTO revived the abandoned application under the “unintentional” standard, because this type of revival is not supported by the statute on its face, the ‘215 patent is invalid (as is its child, the ‘603 patent).

Here in the US Court of Appeals decision, the judge reversed the lower court opinion stating that regardless of whether the patent is valid or not, “improper revival” of an abandoned patent is NOT a valid defense in an infringement action. What?!? He then goes ahead citing weak proofs as to why certain defenses are defenses and why others are not, and because improper revival was not one of those defenses that were explicitly listed as a defense, the judge precluded its availability completely ignoring the catch-all provision of 35 USC s.282(4) “Any other fact or act made a defense by this title.”

Now here is the pickle. Judge Jenkins appears to be technically correct in that improper revival is not explicitly stated as a defense to an infringement action so it’s not so clear whether section 282(4) applies to improper revivals of abandoned actions. However, the USPTO improperly revived the application and issued a patent which it should not have because it went beyond the powers granted to it.

So what do we do here? The patent should NOT have been issued, so technically, it SHOULD be invalid, as should its child. But, the appellate court interpreted the issue of availability of a certain defense, not the issue of invalidity based on a procedural and/or legal defect in the prosecution.

My opinion is that IGT will likely appeal to the Supreme Court, but regardless of whether they hear the case, their decision will spark some legislative controversy. If the Supreme Court hears the case and determines that 35 USC section 282(4) applies to the defense of improper revival, people will ask “what else constitutes a defense?” In my opinion, this is not a bad thing. I believe that if an examiner makes an error in the prosecution and a patent issues which should not have issued, there is nothing wrong with a patent litigation attorney later “combing the file-wrapper” looking for procedural and/or legal reasons why the patent being asserted is invalid. This is and should continue to be an available method of invalidating a patent. In short, if a patent should not have been issued, it should not have been issued, period! The problem with this alternative is that the Supreme Court by invalidating the patent will loosely interpret section 282(4) and strictly read the provision requiring the higher “unavoidable” standard, and this would be a contradiction.

Alternatively, if the Supreme Court hears the case and determines that the Court of Appeals was correct, it will essentially provide the rule that “notwithstanding certain exceptions which we will deal with on a case-by-case basis, regardless of what error the USPTO examiner committed during prosecution, if a patent issues, it is valid.” In its essence, the Supreme Court would give the USPTO full power to act outside its legislated powers awarding patents which should be invalid and vice versa. This is not an acceptable option. The USPTO is bound by the laws just as any federal agency should be. It has no rights to interpret the laws to mean something that is contra to powers explicitly granted. Thus, if the Supreme Court hears the case and affirms the Court of Appeals’ decision, who will control the USPTO and its examiners who make incorrect decisions?

In sum, this is one more case of where the law should have written something that it didn’t, and like many others, it needs a revision to clarify Congress’ position of 1) whether the unintentional standard is enough to revive an abandoned patent, and 2)whether 35 USC s.282(4) should include other defenses not explicitly stated as being a defense.

Troll-Evading Trust Formed To “Catch & Release” Patents

…Companies Band Together as the Allied Security Trust to Buy IP Before Any Trolls Can Take Them To Court
By: Maureen O’Gara
Jul. 9, 2008 02:45 AM

Source: http://wireless.sys-con.com/node/605480

“Verizon, Google, Cisco, HP, Motorola, Sun, Telefon AB and Ericsson have banded together as the Allied Security Trust to buy IP before any trolls can take them to court.

They’ve paid $250k to join and are each kicking it about $5 million in funding. They will then get non-exclusive licenses to the acquired technology and afterwards sell it on. The non-profit calls the concept “catch and release.” It currently has 11 members and is expecting 30-40.

It swears it won’t assert any of the acquired patents.

According to the new non-profit, It costs operating companies an average of $3.2 million through the end of discovery and $5.2 million through trial to defend infringement cases when there is more than $25 million at stake. It says “even a small claim is highly disruptive and requires significant time and legal costs to defend.”

It says companies often settle for a smaller amount than whatever is sought, even when the company knows that it would eventually win. “These lawsuits are not only a huge distraction for management, but they also draw R&D and other resources away from other projects.”

The place is being run by former IBM VP of IP and licensing Brian Hinman.”