Monthly Archives: January 2015

Supreme Court to Consider Whether A Party’s Good-Faith Belief of Patent Invalidity Should Have Been Heard at Trial

On December 5, 2014, the United States Supreme Court granted certiorari in Commil USA, LLC v. Cisco Systems, Inc. to determine whether the U.S. Court of Appeals for the Federal Circuit erred in holding that a defendant’s “good-faith” belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).  Section 271(b) states that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. 271(b).

Commil USA, LLC (“Commil”) developed and patented technology that allows wireless devices to move through a communication network, for example, between wifi spots or base stations, without signal interruption. Commil filed suit against Cisco alleging that Cisco’s wifi products directly infringed its patent, and that Cisco had induced others to infringe its patent. The trial court found that Cisco had directly infringed the patent, but did not find Cisco liable for inducing third parties to infringe.

Commil filed and won a motion for new trial on the issue of induced infringement.  In the second trial, the jury ruled in favor of Commil on the issue of induced infringement.  During the second trial, Cisco was prevented from introducing evidence related to Cisco’s good-faith belief that the Commil patent was invalid.  Cisco appealed, and the Federal Circuit found that Cisco should have been allowed to introduce evidence of its good-faith belief that the Commil patent was invalid.  Both parties appealed to the United States Supreme Court, which ultimately granted certiorari on the sole issue of whether a party’s good-faith belief that a patent is invalid will operate as a defense to a finding of inducement, thereby relieving that party of liability for infringement.  Click here for source.

The resolution of this issue by the Supreme Court is important in that it could eliminate liability of a party that encourages third parties to act in a manner that infringes a patent, even in instances where the actions of the third parties infringe the patent.  However, until this case is decided, it is unclear whether even an opinion of counsel that a patent is invalid would protect a party against a finding of inducing infringement in instances where the patent is found to be valid.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues.  As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation.  Anna can also assist your company in all manner of intellectual property protection.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

Advertisements

European Governments Seek to Tax Search Engines Under Copyright Law

Various governments in the European Union have enacted copyright laws intended to restrict search engines, such as Google, from displaying links to news organizations’ content, alleging that it constitutes copyright infringement.

In 2013, Germany was the first to enact such a law, the Leistungsschutzrecht für Presseverleger, alleging that the search engines benefitted from the free use of news organizations’ content. The final version of the law, however, did not require search engines to pay for using ‘snippets’ of content. Several media groups filed suit against Google, contending that it should be required to pay.

Google responded to the lawsuit by refusing to display the content of the media groups involved in the lawsuit. This action apparently led to disastrous consequences for the media groups resulting in a dramatic decrease in web traffic to those news outlets’ sites. Apparently, Google’s strategy worked, as the complaining news outlets reconsidered and granted Google “consent” to use their snippets without compensation, due to the “overwhelming market power of Google”.  http://techcrunch.com/2014/10/23/kapitulation/

A year later, Spain enacted similar legislation, known as the “Google tax,” which requires search engine aggregators to pay a monthly fee to the organization representing Spanish newspapers, the Association of Editors of Spanish Dailies, or face a fine up to 600,000 Euros. Spain’s legislation reaches further than Germany’s, however, subjecting any website to the fine regardless of whether they profit from the links to the news organizations’ content.

The news organizations contend that the search engines profit from their content without actually doing any news gathering. Google, on the other hand, counters that it brings millions of visitors to the news websites. The German reaction after Google removed the content seems to bear out Google’s position.  Ultimately, Google opted to shutter its Google News outlet in Spain prior to the January 1, 2015, enforcement date of the legislation. http://www.theguardian.com/technology/2014/oct/31/spain-newspaper-google-tax

Weighing in on the matter is incoming European Union Digital Commissioner, Günther Oettinger, who has recently said that an EU-wide tax on Google and other similar companies, similar to that enacted in Germany, is definitely on the table.  http://www.euractiv.com/sections/innovation-enterprise/oettinger-floats-proposal-eu-wide-google-tax-309568  This news comes on the heels of the EU Parliament voting, in an antitrust action, to effectively break up Google, dividing the monolith into a search engine entity and the remainder of its products, after a finding that Google favored its own products in its search engine results. The vote is a paper tiger, in that it has no effect. However, most believe that Parliament was sending a signal to the European Commission, which does have that power. The United States has opposed such a move. http://www.neowin.net/news/european-parliament-votes-to-break-up-google

The EU’s rationale became clear as Oettinger indicated that the ultimate goal is to create a single digital market across the Union in order to create a level playing field. Oettinger said, “if they are playing in our European market then we have some instruments to come to a guarantee that they are acting on the basis of our rules.” A decision as to how the EU will proceed is expected by May of 2015. http://www.wsj.com/articles/eu-considers-taxing-google-other-u-s-internet-firms-1421699055

If you have questions about copyright laws, you need an experienced attorney.  Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues.  Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation.  Anna can also assist your company in all manner of intellectual property protection.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.

FTC Settles Patent Troll Case

Over the last decade an increasing number of businesses have been plagued by the activities of patent assertion entities, commonly known as “patent trolls.”  Simply put, a patent troll is an entity that exploits patent rights it has acquired, not by practicing the patent (e.g., by actually using the patented technology), but instead by collecting licensing fees from parties the patent troll alleges has infringed the patent.   Indeed, hundreds, if not thousands of companies have encountered patent trolls, such as, Acacia Research Corporation, in recent years.

Recently, the activities of one such patent troll, MPHJ Technology Investments, resulted in an action by the Federal Trade Commission (FTC).  Through investigation of MPHJ, the FTC determined that MPHJ had sent more than 15,000 cease and desist letters to small businesses around the country alleging the infringement of patents that involved scanned documents that were then emailed.  The letters demanded a hefty licensing fee of $1,000-$1,200 per employee, and further warned that if the business did not comply with MPHJ’s demands, it would face a lawsuit.  The letters further represented that there had already been substantial licensing of the patents, in some instances, referencing specific amounts of the licensing fees that were allegedly paid.

The FTC order was directed to the sole executive of MPHJ, Jay Mac Rust, and a local Georgetown, Texas law firm Farney Daniels.  The FTC contends that Farney Daniels stood to profit from a percentage of any license fees paid.  Rust allegedly purchased a handful of patents from the prior owner, another “patent troll”, and began asserting the patents by demanding licensing fees.  After state consumer protection regulators in New York, Vermont, and elsewhere began responding to complaints about the company, the FTC began an investigation into MPHJ’s activities.  The result was the FTC’s disclosure that it intended to file an administrative complaint against MPHJ alleging deceptive trade practices under Section 5 of the FTC Act.

The basis of the FTC’s allegations of deceptive trade practices originates from the cease and desist letters sent by MPHJ.  The FTC alleged that MPHJ had no intention of actually suing the companies, and that MPHJ did not enter into prior patent licensing agreements as it represented in the letters.  Accordingly, the FTC alleged that MPHJ was engaged in deceptive business practices in violation of the FTC Act.  In response, in January 2014, MPHJ filed a suit against the FTC in the U.S. District Court for the Western District of Texas alleging, inter alia, that under the First Amendment, it had the Constitutional right to assert its patents on the grounds of free speech, and was obligated to do so to protect its patent rights.

Last month, the FTC announced that it had reached an undisclosed settlement with MPHJ.  The proposed consent order sets forth an agreement by MPHJ, Farney Daniels, and MPHJ’s owner, Jay Mac Rust, to refrain from making deceptive representations when asserting patent rights, including the making of “false or unsubstantiated representations that a patent has been licensed in substantial numbers or has been licensed at particular prices.”  The proposed order further prohibits misrepresentations regarding the initiation and imminence of a lawsuit.    According to a New York Times article, MPHJ contends that “Under the agreement, MPHJ continues to have the right to enforce its patents by contacting companies suspected of infringement, and there is no restriction impairing MPHJ’s right to enforce its patents.”

To date, only two companies have reportedly paid MPHJ’s licensing fees.  And perhaps that fact best demonstrates why businesses contacted by a patent troll are well advised not assume the worst, but instead, should calmly seek the advice of experienced intellectual property counsel.

Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues.  As a patent attorney licensed to practice before the United States Patent and Trademark Office, Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation.  Anna can also assist your company in all manner of intellectual property protection.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.