IP Market Updates
February 24, 2017
A lot happened this past week in the wonderful world of IP! First, we witnessed two large patent transactions in the US. In both cases, a Non-Practicing Entity (NPE) acquired a large-sized portfolio that will now be put to work generating revenues. On Feb 20, Longhorn IP announced that “its wholly-owned subsidiary, Ox Mobile Technologies LLC, has acquired a portfolio of patents from a major Chinese telecom equipment and smartphone manufacturer. The portfolio includes assets related to 4G/LTE with worldwide coverage, as well as Chinese assets related to smartphone implementation.” We can imagine that most of the monetization activities for these patents will now take place in China, confirming once more that the US patent system, no doubt through self-inflicted wounds, is becoming less relevant.
Additionally, a few days prior, Dominion Harbor Enterprises (DHE) announced the acquisition of over 1,000 patent families from Kodak’s portfolio of patented technologies. “This extensive portfolio was acquired from Intellectual Ventures (IV) and will be commercialized by DHE’s subsidiary Monument Peak Ventures.” It is quite rare that you see an NPE sell patents to another NPE… If I were to guess, it looks like IV is throwing in the towel on their efforts to monetize these patents; patents that were only acquired a few years ago, from Kodak.
Microsoft also made an interesting announcement recently regarding a new IP indemnification program called Azure IP Advantage, which it is touting as a way to protect users against "intellectual property risks in the cloud." The company plans to make 10,000 Microsoft patents available to Azure customers to help them defend themselves against "baseless patent lawsuits," in Microsoft officials' words. And if the company ever transfers a patent to a non-practicing entity, that patent cannot be asserted against the customer (i.e. what we refer to as a "springing license”). This is similar to the old “IP of Defense” that IV set up years ago, although here it appears to be offered at no additional costs if the company is already a regular (Min $1000/month) Azure customer. This is a smart and competitive move from Microsoft to win hearts and minds in the crowded cloud space, by leveraging its vast IP war chest.
On the judicial side of things, the US Supreme Court will soon be hearing the case (Hartland v. Kraft) that could possibly make it harder to file a patent lawsuit in a district of the plaintiff’s choice (often referred to as “forum shopping”) by changing the test for triggering proper venue when suing a defendant outside the district where they are headquartered. While this may sound like a minor issue to most, it would have huge implications to patent owners (and litigators) who in the past decade have made the Eastern District of Texas the venue of choice where they feel a patentee can get still a “fair trial” and NPEs are not discriminated against. Regardless of the outcome, US Senator Hatch just came out publicly that he would push for legislation to end such “forum shopping” if the Supreme Court does not change the current situation. Thus, it sounds like either way, patent litigators who made Longview, Texas their second home these past years might be looking for real estate elsewhere very soon.
The US Supreme Court also issued an important patent-related decision a few days ago, when it reversed the Federal Circuit Court of Appeals in Life Tech v. Promega. SCOTUS decided, in a largely-unanimous opinion, that the “supply of a single component of a multicomponent invention for manufacture abroad does not give rise to patent infringement.” In other words, if you ship one component that will be integrated into an infringing device, you will no longer be liable. This essentially gives rise to several ways by which one can now split production of infringing products between two or more geographies and ship components that it knows will infringe a third-party patent in total impunity. The Court also left open the question that shipping several components combined could still fall short of the test as to what constitutes a “substantial component” under the law.
Finally, in Europe, Spain made some noise regarding the upcoming Unitary Patent Court (UPC) system. The Spaniards, which have been perennial UPC doubters, introduced a parliamentary motion that calls on Spanish government to reconsider joining the unitary patent and UPC systems. This could become an IP “Spexit”… Meanwhile the rest of Europe is moving forward and Italy just deposited last week its own instrument of ratification of the UPC agreement. A total of 12 countries have now ratified the agreement, namely: Austria, Belgium, Bulgaria, Denmark, Finland, Luxembourg, Malta, the Netherlands, Portugal, Sweden, and France (one of the three mandatory ratifying countries).
These and other news below…
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