Latest awards in infringement cases are good news for some companies, and for patent valuations
Although critics argue patents stifle innovation, these rulings show businesses must fiercely protect proprietary breakthroughs.
BY LOUIS CARBONNEAU
As our readers know, one of Tangible IP’s criteria for assessing the health of the patent market is tied to large verdict awards that tend to make headlines and grab attention in the boardrooms. The past couple months provided its share of those, which should help long term in maintaining—if not increasing—patent valuations.
In the semiconductor space, Netlist scored a massive $445 million win against Micron Technology for willfully infringing memory module patents. This follows Netlist previously securing over $300 million from Samsung for violating its AI computing memory patents.
These awards validate the IP of Netlist—a smaller player—and provide a lucrative revenue stream.
The pharmaceutical industry also has patent disputes, with Pfizer winning $107.5 million after an AstraZeneca cancer drug infringed patents covering methods used in Pfizer’s treatment Nerlynx. Although the award was smaller than in the tech cases, any violation can severely affect drugmakers’ costly research investments.
In the tech world, Microsoft was stunned by a $242 million verdict for infringing a voice assistant patent now owned by Wi-LAN’s subsidiary after acquiring it from the company Apple bought to create Siri. And video game titan Activision Blizzard also faces a $23.4 million judgment for violating broadcasting patents in titles such as World of Warcraft.
The defendants have denied wrongdoing and can pursue appeals, but they potentially owe massive payouts.
Plaintiffs often view litigation as a vital revenue source for their patents. Although critics argue patents stifle innovation, these rulings show businesses must fiercely protect proprietary breakthroughs.
In sectors where the next big idea is worth billions, guarding IP is as crucial as developing it. The heated courtroom clashes over intellectual property seem poised to intensify.
On a related note, after reaching settlements with Apple, Broadcom, Microsoft and Samsung, the California Institute of Technology finally ended its campaign by entering into a settlement with Dell. No financial information has been disclosed so far.
Goodbye, U.S. Courts?
I have discussed on numerous occasions how the weakening of the U.S. patent system has gradually moved the epicenter of global patent battles to other, more predictable, jurisdictions. Although we are now accustomed to seeing these lawsuits filed in Germany or with the Unified Patent Court directly, other countries are emerging as strategic bases for asserting patents.
The latest example of this phenomenon was on clear display when Sun Patent Trust sued Chinese manufacturer Xiaomi in France and India to seek proper remedy of the alleged infringement of some of its Standard Essential Patents (SEP).
This would have been impossible to fathom just a few years ago, but here we are. You can’t kill a court system by a thousand cuts and expect people to keep using it.
IPR Losers Don’t Have to Pay
Since the U.S. Supreme Court decision a few years ago in the Octane Fitness case, the prevailing party in a patent case can ask the court to force the losing party to pay the entirety of its legal fees, which can often amount to millions of dollars after a full trial. The court will grant such a request only in “exceptional cases,” which the courts have interpretated many ways.
Needless to say, this has had a chilling effect on some small plaintiffs who can only sue with a contingency arrangement and who do not have the resources to face any payment to the other side should they lose a case.
As a result, defendants in patent cases have systematically used this tactic aggressively to deter more lawsuits—with a certain degree of success. One defendant recently tried to extend the rationale in the Octane case to inter partes reviews (IPRs) before the Patent Trial and Appeal Board in the case of Dragon IP vs. Dish Network.
The irony is that such a request came from Dish itself, the party challenging the validity of a given patent—which, it is worth reminding, benefits from a legal presumption of validity. After it succeeded (no big feat, because the PTAB invalidates more than 75 percent of patents it reviews), Dish asked the court to award its legal fees on the basis arguably that the patent should never have been issued in the first place or its validity defended by its owner.
Fortunately, this rather twisted view of loser/payer did not sway the U.S. Court of Appeals for the Federal Circuit, which ruled that such a doctrine did not apply to IPRs.
What Excessive Litigation?
A recent U.S. study established that, contrary to claims of excessive patent litigation, patent cases are declining and patent owners struggle to enforce rights against infringers.
Key findings: Overall patent suits are down, injunctions granted are very low—averaging just seven per year recently—and litigation by non-practicing entities is not pervasive at only 23 percent of remedies awarded.
The real issue highlighted is the inability of patent owners to effectively stop infringement due to challenges obtaining injunctions and enhanced damages, incentivizing “predatory infringement.”
Key Design Patents Ruling
In a recent decision (LKQ Corp. v. GM Global Tech. Operations LLC), the federal circuit’s decision replaced the rigid Rosen-Durling test for assessing design patent obviousness with a more flexible standard. (Editor’s note: The test requires that first, courts identify a prior art reference “the design characteristics of which are basically the same as the claimed design.” The other step is to determine whether the claimed design would have been obvious to a designer of ordinary skill in the art, in view of the first provision.)
This change may lead to more challenges against design patents, questioning their validity and potentially benefiting competitors.
However, it also risks weakening the protection design patents offer to brands. The new approach aligns with the Supreme Court’s test for utility patents and will evolve through future cases.
Patently … Funny?
Here’s a joke I recently heard at a patent-related conference:
Why did the patent application have to go into therapy?
Because it was always afraid of being rejected.
If you have a better one, please send it to me. I’ll publish the best one next time with full attribution (unless the author wants to remain anonymous).