Ericsson seeks US iPad, iPhone ban as it sues Apple over patents

Last month Apple and Ericsson went to war over the fees Ericsson is trying to charge Apple for the use of its mobile broadband patents. Apple sued Ericsson in an attempt to have the patents declared non-standard-essential (meaning they don’t automatically command royalties) or, if they are found standard-essential, to have Ericsson’s fees declared unreasonably high.

At the time, Ericsson merely went to the Eastern District of Texas district court in search of a judgement saying the patents are indeed essential to 4G standards. Now, however, it’s stepped up its campaign in a big way.

On Thursday Ericsson filed two complaints with the International Trade Commission, asking the ITC to hit Apple’s iPhone and iPads with an exclusion order for “infringing Ericsson patents that are essential to the 2G and 4G/LTE standards.” It also filed multiple complaints with the Eastern District of Texas court, looking for damages and injunctions over the infringement of 41 patents.

These patents cover many things, according to an Ericsson statement:

The patents include standard essential patents related to the 2G and 4G/LTE standards as well as other patents that are critical to features and functionality of Apple devices such as the design of semiconductor components, user interface software, location services and applications, as well as the iOS operating system.

According to Ericsson intellectual property chief Kasim Alfahali, the networking technology firm has “acted in good faith to find a fair solution [but] Apple currently uses our technology without a license and therefore we are seeking help from the court and the ITC.”

Apple has previously said it had “always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products [but had] not been able to agree with Ericsson on a fair rate for their patents” and was therefore asking the courts for help. I’ve sought fresh Apple comment on Ericsson’s suits and will add it in as and when I receive it.

Study shows patent licenses don’t lead to tech transfer

It’s been another bad week for America’s benighted patent system: a Texas jury ordered Samsung to pay a patent troll $16 million for using Bluetooth — even though the “inventor” admitted Bluetooth had been on the market for years before he patented it. The system is a mockery.

Still, its defenders say, the system is working because it facilitates “tech transfer” and the passing of critical knowledge from inventors to companies. But now even that justification is collapsing in light of a new study that suggests patent licensing often does nothing at all to promote research or new products.

The study, titled “Does Patent Licensing Promote Innovation?,” is by Mark Lemley of Stanford and Robin Feldman of UC Hastings, and is based on a survey of 188 people whose job involves negotiating patent licenses at major companies and elsewhere.

The results, to put it mildly, are depressing. The screenshot below relates to patent trolls, and shows how often the survey respondents say that deals with the trolls result in technology transfer (top graph) and in personnel transfer (bottom graph):


In other words, those who paid patent trolls (which are responsible for the lion’s share of legal activity around patents these days) for a license say they received virtually zero benefit from doing so.

This is significant because the patent troll industry — which consists of a coterie of law firms, investors, judges, insurance fixers and so on — likes to claim that patents induce inventors to share knowledge that they would otherwise keep to themselves. But as the survey suggests, the licenses do no more than force companies to pay a tax for old technology, or for products they’re making anyways. Here is how two respondents, quoted in the survey, expressed it:

“Virtually every license my company has taken has been to ensure freedom of action for products or services we already offer. We have never received any value from a patent license other than to avoid litigation.”

“[Trolls] do not have any of the details worked out and they do not put any capital at risk developing any product, service or market. NPE’s simply exact a tax . . .”

The paper also notes that the same phenomenon, in which licensees pay money for nothing, is also pervasive when universities are the ones wielding the patents. Instead, as with the trolls, university patent deals rarely lead to meaningful tech transfer or innovation. The findings could have important implications at a time when more universities, including MIT and Boston University, are using decades-old patents to demand money from Apple and other big companies.

While the study doesn’t offer specific prescriptions for reform, it does repeatedly raise the fact that many of the (apparently useless) patents at issue are being asserted at the end of their life-cycle. This points to a solution in the form of shorter patent terms or, as Professor Brian Love has suggested, the President could order the Patent Office to change its fee structure so as to discourage trolls from hoarding patents on obsolete technologies.

The paper notes that its sample size is small, and that more study is needed, but the survey could still gain attention in light of the provenance of the authors.

Feldman has been instrumental in revealing the massive trolling operation, involving hundreds of shell companies, carried out by Intellectual Ventures, the standard bearer for the patent trolling business. Lemley, meanwhile, is one the country’s most prominent antitrust and intellectual property scholars, whose work has shown how patents and innovation are not one and the same, and that many of the conventional justifications for awarding patent monopolies are false.

The study also comes at a time when Congress is trying for a third time to pass a bipartisan bill to reform the patent system.

MIT uses patent from 1997 to sue Apple over chips

The Massachusetts Institute of Technology filed a patent lawsuit against Apple and its suppliers this week, claiming that semiconductor wafers found in the company’s computers and mobile devices infringe on a patent obtained by two academics more than 15 years ago.

The lawsuit, filed Thursday in Boston federal court, claims that Idaho-based Micron Technology knew about a laser-cutting method described in the patent, but used it all the same when supplying DRAM semiconductor devices for products like iPhones, iPads and MacBook Airs.

The patent itself was issued to Joseph Bernstein, who is now an engineering professor in Israel, and a co-inventor, Zhihui Duan. MIT claims it controls the right to the patent, which has a 1997 filing date and was issued in 2000. The school says it’s entitled to damages and to royalties on all Apple products that contain chips using the laser method in question.

I’m not qualified to pronounce on the technology but, for those of you who can, here’s what the patent claims:

a method for cutting a link between interconnected circuits comprising the following steps:Screen Shot 2015-02-13 at 12.51.08 PM

directing a laser upon an electrically-conductive cut-link pad conductively bonded between a first electrically-conductive line and a second electrically-conductive line on a substrate,
the cut-link pad having substantially less thermal resistance per unit length than each of the first and second lines, wherein the width of the cut-link pad is at least ten percent greater than the width of each of the first and second electrically-conductive lines; and maintaining the laser upon the cut-link pad until the laser infuses sufficient energy into the cut-link pad to break the conductive link across the cut-link pad between the pair of electrically-conductive lines.

Apple did not immediately respond to a request for comment.

This is not the first time that a Massachusetts university has come calling on Apple with demands over patents from long ago. In 2013, Boston University used a patent from 1997 that covered blue LED lights to team up with a contingency-based law firm from Texas to seek an order banning the sale of the iPhone 5, and then moved on to make similar demands of dozens of other tech firms.

Such tactics by universities are unpopular with many in Silicon Valley, and raise the question of whether the lawsuits based on old patents are really promoting innovation, or are instead just an attempt by lawyer and technology transfer offices to rustle up more cash.

Here’s the filing:

MIT v Apple

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Engineers, tech firms battle patent trolls on standard setting

A big showdown is taking place at the Institute of Electrical and Electronics Engineers, an important standard-setting body, about rules for patents that cover basic building blocks of tech, such as chips or Wi-Fi protocols.

The outcome of the fight is significant since the new rules for so-called “standard essential patents” will affect what consumers ultimately pay for everyday devices like phones and routers.

On Monday, executives from high-profile tech companies, including [company]Apple[/company] and [company]Microsoft[/company], put their names to a public letter that sought to safeguard an upcoming IEEE decision from “smoke and mirrors” tactics by patent assertion entities (commonly known as patent trolls).

“[A] 21-member group of chipmakers, OEMs, former regulators, and law professors have written a letter to the IEEE to express their support for the proposed clarifications, and to urge them to stand strong in face of those misleading arguments,” stated Cisco, one of the group members, in a press release announcing the letter.

To make its case for implementing new IEEE rules on how to pay for standards patents, the letter points to the recent example of a patent troll that has been brandishing a standards essential patent to demand thousands of dollars per Wi-Fi chip from hotels and small businesses.

The new rules are supposed to be up for a vote next week. If they go into effect, the group says they will result in a more streamlined process for determining reasonable payments for patent holders, while also reducing the sort of high-stakes litigation tactics that adds expense and uncertainty for everyone in tech.

The troll industry, meanwhile, is pushing back with blog posts warning that the new rules will mean the end of innovation.

All of these subjects at stake — like standards setting, RAND patents and the IEEE — amount to inside baseball, even for those familiar with the world of the patent bar.

But the outcome will likely have a direct outcome on issues like royalty stacking and patent hold-ups that hit consumers in their pocketbooks, so it’s worth paying attention — if only for the high-profile names at the bottom of the letter. These also include execs from the likes of Verizon, HP, and Samsung, as well as prominent IP and antitrust academics like Mark Lemley.

You can read the letter for yourself below:

Jan. 30 Letter to IEEE Board (Rev)

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As Uber, Lyft, and Sidecar count patents, warning signs ahead

Government regulators and the taxi industry can’t stop Uber — but maybe a patent can. At least that’s the hope of Sidecar, a small rival of Uber whose founder obtained a patent related to mobile ride hailing way in 2002, and who claims he thought up today’s version of the industry way back in the 1990s.

Meanwhile, Uber itself has been busy on the intellectual property front. The company has filed more than a dozen patent applications that seek a monopoly on not just Uber’s hated “surge pricing,” but also on other basic aspects of the car hire business such as dispatching and calculating tolls.

All this raises the question of whether a patent battle, like the epic one between Apple and Google that roiled the smartphone industry, could break out among the car companies.

Meet the patents

At first glance, Sidecar’s patent looks like it could bring Uber’s cars to a screeching halt. Titled “System and method for determining an efficient transportation route,” the patent describes the use of GPS-tracking to plot routes and connect drivers with passenger pick-up locations.

The patent, which confers on Sidecar the right to exclude others from using the invention until 2020, includes a drawing that shows a wireless network linking a car and passenger via satellite:

Sidecar patent

As for Uber, it doesn’t own any patents yet, but a Google search reveals it has filed more than a dozen applications since 2010 for car-related patents that list the company or CEO Travis Kalanick as the inventor. (It’s likely that Uber has filed even more applications since, under Patent Office procedures, an application typically remains secret months for 18 months before it is laid open – meaning any applications filed in 2014 have yet to come to light.)

Uber’s earliest patent application, filed in 2010, is titled “System and method for operating a service to arrange transport amongst parties through use of mobile devices,” while others refer to more specific features of the company’s operations, which are based on consumers using an app to summon nearby drivers.

The later patent applications include the infamous one for surge-pricing or, in Uber’s words, a method for “a user to verify a price change for an on-demand service.” It includes this diagram:

Uber surge pricing screenshot

Other applications include one published in 2013 that describes a system for rating Uber drivers through a star-system, and one that turned up late last year that describes the use of location data points to include tolls in a passenger’s final fare, and that refers to this diagram:

patent for tolls

All of these claims — related to tolls, driver-rating, services to “arrange transport” and so on — are for now just applications. But if the Patent Office grants Uber even some of these patents, the company could be in position to threaten its competitors, including Lyft and Sidecar, with the prospect of injunctions or multimillion dollar jury awards.

A spokesperson for Uber declined to state how the company plans to use any patents that the Patent Office might bestow.

As for Sidecar, the company simply replied “Yes” in response to an question as to whether it would exercise its 2002 patent.

Owning the ideas of Adam Smith

While patents in theory confer powerful 20-year monopolies, the reality can be different, especially when it comes to claiming abstract ideas.

“This application is really seeking to claim the basic idea of pricing and service, which is a concept Adam Smith discussed 200 years ago. The notion that’s a new idea in this day and age is far-fetched,” said Michael Strapp, a patent lawyer with Goodwin Procter, in a recent phone interview.

His comment was addressed specifically to the surge-pricing patent application, but Strapp is also skeptical that Sidecar’s patent or any of Uber’s proposed patents would stand up to scrutiny. His doubts stem in large part from recent rulings from the Supreme Court that have set stricter standards for the Patent Office.

Alice said tying a well-known idea to a computer or smartphone is ineligible,” said Strapp, referring to Alice v. CLS Bank, a seminal decision from last year that called into doubt the validity of thousands of computer-related patents.

This means that Sidecar’s swagger with its 2002 patent could be a bluff, given that Uber or another defendant may have a good chance to invalidate it under the patent law doctrines of “obviousness” or “ineligible subject matter.” And likewise, the Patent Office may point to the stricter standards in order to deny Uber’s applications altogether.

But despite what looks like a weak hand, Sidecar or another ride-booking service could try to start a patent war anyways.

Doing it on the cheap

While patents can invoke images of “eureka” moments and grand invention, in practice they’re typically just another tactic — like talent raids or squeezing suppliers — by which businesses try to get the upper hand on competitors. And while the legal costs of a full-blown patent case can reach tens of millions of dollars, a company can also wield patents on the cheap.

“If Sidecar was going to decide as a business matter that they were going to raise investment or look like a more viable competitor, they could [file a patent lawsuit] and take initial steps without a lot of costs, especially if they find a lawyer willing to operate on contingency,” according to Strapp, the lawyer.

In this context, a Sidecar lawsuit could amount to leverage against Uber, either to encourage acquisition talks, or else to further founder Sunil Paul’s narrative that Sidecar is the real, original ride-booking company. The risk of course is that Uber or Lyft might respond with an aggressive legal approach of their own, perhaps by buying patents to launch a countersuit (Facebook used this approach successfully when Yahoo sued it in 2010 over the rights to social networking).

And in the event Uber, which is known for bare-knuckle business tactics, succeeds in obtaining patents (or buys Sidecar), it has the deep pockets to hire as many lawyers as it thinks would help it to wipe every other car service off the map.

For consumers, this would be a bad thing since the costs of a patent war in the ride-booking industry would be passed on to them. But for now, it’s too soon to fear the worst. Not only are patents in this area still few and far between, changing attitudes to patents among courts and entrepreneurs (remember what Tesla’s Elon Musk did last year) mean that war is less likely in the first place.

Apple and Ericsson go to court over LTE patents

Thought Apple and Samsung’s truce meant the patent wars were dying down? Think again: now Apple and Ericsson have launched a new legal battle.

After a license agreement for [company]Apple[/company]’s use of [company]Ericsson[/company] cellular technology expired, and two years of negotiations failed, Apple sued Ericsson on Monday in the United States District Court for the Northern District of California.

The iPhone maker seems to be taking two approaches. On the one hand, according to reports, it’s claiming that Ericsson is wrong to say the relevant LTE patents (covering things like bandwidth efficiency and signal management) are “standards-essential” — something that would mean Apple is automatically infringing by including LTE/4G functionality in its devices. On the other, Apple is saying that if these are standards-essential patents (SEPs), Ericsson is demanding too much because SEPs are supposed to be licensed on “fair, reasonable and non-discriminatory” (FRAND) terms.

Apple said in its complaint that Ericsson is trying to calculate royalties based on the total phone price, rather than the price of the LTE chip. An Apple spokeswoman told the Wall Street Journal:

We’ve always been willing to pay a fair price to secure the rights to standards essential patents covering technology in our products. Unfortunately, we have not been able to agree with Ericsson on a fair rate for their patents so, as a last resort, we are asking the courts for help.

Sweden’s Ericsson said on Wednesday that it launched a complaint with the District Court for the Eastern District of Texas, asking the court to determine whether the royalties Ericsson wants to levy in its “global license offer” comply with its FRAND commitments.

Here’s what Ericsson chief intellectual property office Kasim Alfalahi said in a statement:

Our goal is to reach a mutually beneficial resolution with Apple. They have been a valued partner for years and we hope to continue that partnership. Global sharing of technology has created the success of the mobile industry and allowed new entrants to quickly build successful businesses. We believe it is reasonable to get fair compensation from companies benefitting from the development we have made over the course of the last 30 years.

Here’s Ericsson’s filing:

Ericsson v Apple

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This article was updated at 3.30am PT to include more detail about Apple’s complaint and again at 5.15am PT to include Ericsson’s filing.

Apple-backed patent troll Rockstar signs $900M peace deal

A long-running war over smartphone patents came to an end this week as a consortium of Google rivals, led by Apple, announced they have a sold key portfolio of patents in a complicated $900 million licensing deal.

The deal, as reported by the Wall Street Journal, involves Apple and its allies selling 4,000 patents to RPX, a patent broker, which in turn will issue licenses to Google, a variety of Android phone manufacturers and a group of other companies, including Cisco.

The details of the arrangement come after news of a settlement in November that appeared to signify the end of Apple’s patent war against Android.

This week’s news also represents a quiet denouement to an era of smartphone patent wars, which peaked in 2011 when Apple, Microsoft, Sony, Blackberry and Ericsson paid $4.5 billion to obtain 6,000 patents held by the bankrupt Canadian telecom firm Nortel.

The companies then assigned most of the patents to a new shell company Rockstar, which served as a roving patent troll to attack Google and its Android allies in court, and also filed lawsuits against communications giants like Time Warner Cable.

That strategy, however, does not appear to have paid off given that the patent fights have not really affected the market for Android smartphones, nor produced any obvious financial gains for Rockstar’s backers.

Indeed, on its face, the $900 million price that Apple and the other companies will receive through the RPX-Rockstar deal suggests that they overpaid for the Nortel patents, especially in light of the high costs associated with patent litigation and licensing. (It should be noted too that the companies only gave 4,000 of the 6,000 patents to Rockstar, and divided the others among themselves).

As the Journal reports:

Whether the Rockstar companies recouped its $4.5 billion investment is an open question. In the minds of some experts, the $4.5 billion figure reflected the high point of a frothy market that developed for patents in the earlier days of the smartphone industry.

The Rockstar companies squeezed more than three years of use out of the 4,000 patents, and will keep licenses going forward. The 2,000 patents they held back from Rockstar—and aren’t part of the sale to RPX—were among some of the most valuable in the Nortel portfolio.

Assessing the deal is also difficult given the role of RPX, which describes itself as a patent clearinghouse that helps companies minimize their exposure to patent litigation. (Critics of the company complain that RPX is more like a protection racket).

According to a source familiar with the deal, the upshot of the transaction is that Google and 30 other companies will pay $900 million, with most of that flowing through to Apple and the other Rockstar owners. More broadly, it will serve to produce a broad-based cross-licensing arrangement that will limit future patent fights.

The source, who did not want to be identified, added that growing government scrutiny of patent trolling operations, like the one run by Rockstar, also made Apple and its allies more inclined to seek a settlement rather than pursue litigation.

Meanwhile, America’s troubled patent system continues to receive attention from the U.S. Supreme Court and from Congress, which is expected to undertake renewed efforts at patent reform early in 2015.

Intellectual Ventures founder steps down: “market is tough right now”

Peter Detkin, a lawyer and former Intel executive, is standing down as vice chairman from the notorious patent trolling venture he co-founded alongside three others, including one-time Microsoft exec Nathan Myhrvold, in 2000.

As IAM Magazine reports, Detkin will quit his post at Intellectual Ventures as of January 1, 2015, but will stay involved in the company’s decision making process. Detkin also denied the existence of rifts within IV following a rough year for the company:

However, Detkin stated categorically that his decision was not prompted by a falling out with the other IV founders or any worries about the firm’s future. “I am in it for the long term and have complete faith in our business model – which is needed and promotes investment in innovation. The market is tough right now, but I believe that the pendulum will swing back,” he said.

Detkin’s departure comes after a year in which IV had to lay off a significant portion of its workforce, and after the company struggled to raise money for its newest patent fund, in part because Apple and other one-time investors refused to participate in the fund.

More broadly, Intellectual Ventures and Detkin himself remain unpopular due to the company’s controversial business model, which entails arming thousands of shell companies with old patents in order to demand licensing payments from productive businesses.

While Intellectual Ventures initially earned buzz over the prospect of using patents to crowdsource genius, the company’s tactics quickly came to be perceived by many as a form of legal extortion that harmed innovation. Detkin himself figured prominently in a widely-publicized This American Life documentary called “When Patents Attack” that helped bring the problem of patent trolls to mainstream attention.

In response to a request for details about Detkin’s departure, an Intellectual Ventures spokesperson said the company had nothing to add.

In recent months, Intellectual Ventures has set its sites on emerging tech areas like wearable computers, even as Republicans in Congress vow to revive a patent reform bill that nearly passed in the spring, but was derailed by Sen. Harry Reid (D-Nv) at the behest of patent trolls and trial lawyers.

Notorious patent troll dings Nebraska taxpayers for $750,000

It’s no secret the U.S. patent system is dysfunctional but, still, this one’s a doozy: a Texas patent troll that sent thousands of shakedown letters to small businesses, and has been sanctioned by the federal government, will collect big time courtesy of Nebraska taxpayers — all because state officials tried to shut down their hustle.

This latest twist in the sorry situation can be seen in recent court documents that show Nebraska has agreed to pay $750,000 to resolve claims that the state’s Attorney General violated the patent troll’s civil rights when it ordered the troll to stop sending so-called demand letters.

Those letters demanded that small businesses pay a fee for infringing on patents related to scanning or digital signage, or else face an expensive lawsuit. The patents in question are controlled by lawyers who have made a business of demanding $1,000 per employee from small companies that lack the money or sophistication to push back against highly questionable legal claims.

The antics of these lawyers, who operate through shell companies known as MPHJ and Activision TV, have been the subject of damning journalistic features and led them to be called “bottom feeders” by a U.S. Senator. In response, state governments in Vermont and Nebraska turned to consumer protection laws in an effort to protect their businesses from the shakedown.

But while Vermont was largely successful in driving the trolls from the state, the outcome unfolded differently in Nebraska where a federal judge ruled in September that the Attorney General’s attempt to crack down on the shakedown letters violated the troll’s First Amendment rights. The judge also ruled that Nebraska’s attempt to restrict the activities of law firm Farney Daniels — the same firm under fire from the FTC — violated the rights of the trolls to seek legal counsel of their choosing.

So to sum up: a patent trolling outfit, that relies on shell companies acting as an alter-ego for a notorious law firm, expanded to Nebraska in order to shake down legitimate businesses. When the state tried to protect its own businesses from the shakedown, a judge ordered its taxpayers to pay $750,000 to the patent troll, which can presumably use the money to fund new legal campaigns.

Somehow this is what passes for innovation under America’s current patent system.

Here’s a court filing showing the payment arrangement which reports will cost the Nebraska Attorney General’s office about 10 percent of its annual budget.

Nebraska Troll Settlement

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