Inventors who get excited by big patent awards should realize the rarity of such cases
BY LOUIS CARBONNEAU
We at Tangible IP get bombarded every day by inventors who want us to help them sell their one or two patents and expects to receive “several millions” (sometimes even billions) from their worthy invention, based primarily on reading some headline about a large patent verdict and thinking, naturally, “Why not me?”
I love large patent awards—mostly because I like to delude myself into thinking that these will get a boardroom’s attention and, just maybe, next time they infringe a portfolio, will reason that it is better to take a much cheaper license than to roll the dice in court.
Dream on, Louis!
We also witnessed two such recent verdicts that will no doubt fuel the “inventor’s greed” of those who forget how rare these cases really are, or how often they get reduced or simply overturned.
So, here we go: On April 11, Amazon was slapped with a half-billion-dollar verdict in a case filed by Kove IO over some cloud software patents. Amazon has already indicated that it will appeal. So, no reason to get excited just yet.
Also reported were a few other—smaller—verdicts against Samsung for $142 million and another one for $18 million, which took 11 years to conclude.
On this topic, IP Watchdog recently published a good article from Elizabeth Manno of Venable IP summarizing recent developments in patent damages that show some promise.
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What non-compete? The U.S. Federal Trade Commission approved a final rule banning employers from using non-compete clauses for most workers. Existing non-competes for senior executives remain valid, but new ones are prohibited for all workers.
The ban aims to increase wages and stimulate business innovation. The FTC maintains that the rule is necessary to prevent anti-competitive practices.
Commissioners cite the rule’s potential to boost entrepreneurship and patent filings. Opponents, including the U.S. Chamber of Commerce, argue that non-competes protect investments and promote workforce training. Concerns about trade secret protection and legislative overreach were raised by dissenting commissioners and industry experts.
The rule’s legality is expected to be challenged in court, with potential implications for trade secret litigation and future regulations.
My take: I have been teaching startups for years about the fact that most IP leaks and trade secret theft comes from ex-employees who join a competitor or become one themselves. Until now, many were prevented (or delayed) from doing so due to their non-compete (California being the main exception).
This new rule, should it remain, will force companies to be a lot more disciplined about documenting, partitioning, and granting access to trade secrets, or they will likely regret it. It may also lead to more patent filings as they may be needed as a replacement for enforcing the non-compete, though patents may still be pending (thus unenforceable) in the short term.
SCOTUS pocus: We witnessed another disappearing act from the U.S. Supreme Court when it rejected a petition by Vanda Pharmaceuticals seeking clarity on the standard for showing obviousness in patent
cases.
Vanda’s petition stemmed from a decision by the U.S. Court of Appeals for the Federal Circuit invalidating its patent. The CAFC cited evidence from clinical trials as indicating a reasonable expectation of success, a standard Vanda argued was too low compared to established precedent.
Vanda’s petition was supported by amicus briefs from Salix Pharmaceuticals and advocacy groups representing visually
impaired individuals, highlighting concerns about the impact on pharmaceutical innovation and patient access to treatments.
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Apple won’t give up: I commented extensively in previous columns on the Apple vs. Massimo situation and how this represents the worst example of “predatory infringement” from some Big Tech companies, Apple being Exhibit A.
After having lost at every stage in court and failing to convince the Biden Administration to give it a free pass, Apple is now trying—via its appeal and intense lobbying—to demolish the International Trade Commission rules that made it accountable in the first place.
This rather brazen assault is the last of many attempts to get away with serial copying of innovative technologies developed by much smaller technology outfits.
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Hope PREVAILs: With the help of some lobbying from the Medical Device Manufacturers Association and the Alliance of U.S. Startups and Inventors for Jobs, it looks like Congress might finally move the Promoting and Respecting Economically Vital American
Innovation Leadership Act (PREVAIL) out of committee for a full vote.
Meanwhile, the USPTO has issued a Notice of Proposed Rulemaking relating to several changes to the Code of
Federal Regulations as they pertain to patent challenges at the Patent Trial and Appeal Board that appear at first sight to be more friendly to patent owners.
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Are laches back? There was a time where you had to be quite diligent before filing a lawsuit against an alleged patent Infringer, as you risked seeing your case dismissed based on the equitable doctrine of “laches.” (Editor’s note: This is a legal defense that may be claimed in a civil matter, which asserts there has been an unreasonable delay in pursuing the claim—i.e., filing the lawsuit—which has prejudiced the defendant or prevents the defendant from a defense.)
Then, in 2017 in the SCA Hygiene Products case, the U.S. Supreme Court held that laches is no longer an available defense to patent infringement damages, even if a patentee “lies in wait” for more than six years before bringing suit.
However, in a case opposing wireless speaker system company Sonos and Google last year, Senior District Judge William Alsup, sitting in the Northern District of California, breathed new life into the prosecution laches doctrine. This took a lot of people by surprise, given the foregoing background.
This case is now on appeal. Pundits on both sides are tracking it very closely. This could directly affect many current and future assertion plays and how patent owners prosecute their cases and file (or not) continuations in the United States.
AI and IP: We have been drowning lately in a flurry of reports about how AI will bring human civilization to its knees. Though many of these scenarios are extreme, there is no doubt that AI is already having an
impact on many facets of society, and the world of IP is not exempt.
Here are a few examples of where we need to remain vigilant as AI tools and creations become more ubiquitous.
Protection of algorithmic assets: Companies must secure patents and trade secrets to safeguard proprietary algorithms animating AI avatars.
Digital likeness and personality rights: Obtaining licenses and defining their scope, duration and territoriality is crucial when AI avatars mirror real individuals.
Challenges of deepfake technology: Establishing protocols and investing in technologies like digital watermarking can deter misuse and preserve content integrity.
Global IP rights management: Managing IP across different legal jurisdictions requires strategic planning and adherence to international treaties.
Collaborative efforts and licensing: Comprehensive licensing agreements are essential for managing collaborative frameworks involved in AI avatar development.
Copyright ownership of AI-created content: Determining copyright ownership of AI-generated works necessitates legislative amendments and engagement in policy-making processes.
Evolving IP laws: Proactive advocacy and adaptation of IP legislation are crucial to address the unique challenges posed by AI technologies.
Companies that proactively address these IP challenges can navigate the AI-centric landscape effectively, shaping the evolution of IP norms and regulations in the digital age.