September 2011

September 27, 2011, by Mandour & Associates, APC

Los Angeles – On Friday September 23, the U.S. Court of Appeals for the Federal Circuit reinstated a jury verdict in favor of Amazon regarding the Seattle based retailer’s “one-click” shopping system. The federal jury found that Amazon had infringed one of Cordance Corp’s patents, but that the patent was invalid to begin with. This ruling was set aside by the trial judge. Last Friday, the Federal Circuit overturned the ruling of the District Court judge in Delaware and reinstated the jury verdict finding that Cordance Corp’s patent infringement claims against Amazon were invalid. (Cordance Corp. v. Inc., 10-1502, 1545, U.S. Court of Appeals for the Federal Circuit).

Cordance originally filed the action in 2006 alleging that it held valid patents for certain features of Amazon’s “one-click” purchase system and customer feedback procedures. Cordance sought $84 million in damages alleging infringement of three patents. The jury determined that while one of the three Cordance patents had been infringed, Cordance did not have a valid patent to begin with, precluding them from recovering.

Upon review, the trial judge reversed the jury verdict and found that the patent was indeed infringed. Amazon appealed the case to the Court of Appeals for the Federal Circuit, which has unique subject matter jurisdiction to hear national patent and trademark cases. The three judge panel handed down the verdict on Friday, upholding the jury’s verdict that Amazon had not infringed a valid Cordance patent.

At issue in the case was Amazon’s “one-click” shopping system, which securely stores customer, shipping, and billing information allowing for online purchase in one click. The “one-click” system allows customers to bypass the shopping cart feature and to purchase the item immediately. In September of 1999, Amazon was granted patent number US 5960411 by the USPTO for the “one-click” system.

Amazon’s “one-click” system had come under attack previously in 2006, when Peter Calveley filed a request to the USPTO to re-examine the patent, citing prior art. Calveley’s request was granted and the patent was re-examined. While some of the claims were upheld, several were determined to be too broad for patent protection. Amazon later amended the claims, restricting them to shopping cart type online transactions.

September 27, 2011, by Mandour & Associates, APC

Los Angeles – The America Invents Act, passed by the United States Senate 89-9 on Thursday September 22, 2011 and shortly after signed into law by President Barack Obama, has been described as a significant overhaul of the patent process. The Act is, in part, an effort to reduce the ever-increasing length of time between the initial filing of a patent application and the issuance of a patent by the USPTO. Signing the bill into law, President Obama noted that while Thomas Edison’s patent application for the phonograph was granted in seven weeks, the average application process today lasts three years.

Furthermore, since the year 2000, the amount of patent applications submitted to the USPTO annually has almost tripled, with more than 500,000 applications submitted in 2010. The USPTO is now faced with a backlog of over one million patent applications. The increasing amount of patent applications and flaws in the current system prompted the bill, which is designed to simplify the process, increase innovation, and decrease the prevalence of lengthy and expensive litigation in the patent process.

Perhaps the most significant change is the section of the Act that now gives priority to the first party to file a patent application. Previously, the first to invent and reduce an invention to practice was given priority in the patent process, regardless of whether he or she was the first to file. Under the new legislation, the first to file the patent application will be given preference.

Currently the majority approach internationally, the first to file system reduces the need for contesting patent applicants based on who was the first to invent or reduce an invention to practice. Instead, the first to file the application for patent protection will be given preference for that particular invention or discovery.

Critics of the Act express concern that the first to file system will favor large companies with the resources to file numerous patent applications over individual inventors with less resources. Individual inventors are often forced to carefully weigh their chances of successfully marketing the invention against the cost of filing the application. Individual inventors may find assistance at the USPTO’s 84 Patent and Trademark Depository Libraries located throughout the United States which provide inventors and entrepreneurs with information and resources regarding the patent process.

September 27, 2011, by Mandour & Associates, APC

Los Angeles – On September 26, 2011, the USPTO began accepting requests for prioritized examination of patent applications as a result of the enactment of the Leahy-Smith America Invents Act.

The goal of the prioritized examination program is to provide a final disposition on a patent application within twelve months of prioritized status being granted. A final disposition is considered: (1) mailing of a notice of allowance; (2) mailing of a final Office action; (3) filing of a notice of appeal; (4) completion of examination as defined in 37 CFR 41.102; (5) filing of a request for continued examination; or (6) abandonment of the application.

Under section 11(h), a $4,800 fee may be paid to establish prioritized examination of a nonprovisional application for an original utility or plant patent. This fee is in addition to the filing, search, examination, processing, and publication fees as well as any excess claim or application size fees.

This program is one of the ways in which the PTO plans on reducing the application backlog. However, there are limitations to the number and types of applications eligible for prioritized examination. The application may not contain more than four independent claims or more than thirty total claims. Additionally the PTO is currently limited to accepting only 10,000 applications per year for prioritized examination.

An applicant may lose prioritized examination status in several ways during the patent process, in which case the application is then placed in the examiner’s regular docket. The applicant may lose his/her status by filing a petition for extension of time to file a reply or a request for a suspension of action. Moreover, the applicant will lose his/her status when filing an amendment to the application that results in more than four independent claims, more than thirty total claims, or a multiple dependent claim. Additionally, it should come as no surprise that a loss of prioritized examination status would not entitle the applicant to a refund of the prioritized examination fee.

It will be interesting to see how many and which types of applicants will elect for prioritized examination. It is questionable whether the PTO will be able to live up to the twelve-month final disposition goal. The PTO initially wanted to implement a prioritized examination track earlier this year under a three-track program, but indefinitely postponed the plan due to budget cuts affecting examiner hiring. The PTO has already started accepting prioritized examination requests, but has yet to revamp hiring.

September 27, 2011, by Mandour & Associates, APC

Los Angeles – A long-running patent infringement lawsuit between Oracle and Google is slated to go to trial in October, however the two parties have been ordered by a judge to come to an agreement beforehand.

The original complaint, filed in a U.S. district court in San Francisco, had Oracle accusing Google of infringing on Sun Microsystems’ Java technology related to the design of the Android technology. Oracle is particularly interested in the alleged infringement since it purchased Sun Microsystems last year. Google has denied any patent infringement and maintains that makers of mobile phones and other users of the open-sourced Android operating system should be entitled to use the Java technology at issue. Furthermore, Google insists that before Sun Microsystems was acquired by Oracle, it had declared that Java would be open-sourced, allowing any software developer to use it.

While it was reported that a week of talks between Google CEO Larry Page and Oracle CEO Larry Ellison hadn’t produced much breakthrough, it is interesting that Oracle agreed that it would reduce the amount of damages it would seek at a trial from $6.1 billion, an amount rejected by the judge, to $1.2 billion. That would be a much easier pill to swallow for Google, even though it denies the infringement.

Oracle argues that a key piece of Android technology, the Dalvik virtual machine, copied features from the Java patent. Oracle is seeking damages and royalties related to Google’s use of the technology, which Google argues is not covered by the patents at issue. If it hopes to avoid the claims, Google will have to prove that it didn’t need a license to Java before deciding to proceed with its Android project.

Another dark cloud hanging over Google is an email exchange between company engineers, reading:

“What we have actually been asked to do by Larry [Page] and Sergey [Brin] is to investigate what technical alternatives exist to Java for Android and Chrome. We’ve been over a bunch of these and think they all suck. We conclude that we need to negotiate a license for Java under the terms we need.”

With patent trials being long, expensive, and sometimes damaging to a company’s reputation, it might be wise for Google to settle with Oracle before the jury gets a hold of it. It’s clear that Google ignored the recommendations from its engineers to obtain a license for Java. The email is not quite a smoking gun, but it definitely makes Google look bad and would likely color a trial against Google.

September 27, 2011, by Mandour & Associates, APC

Los Angeles – Casio, an international electronic devices manufacturer, has signed a patent-licensing deal with Microsoft that will allow the company to continue selling products with the computer operating system Linux.

“We’re pleased to reach an agreement and to see continued recognition of the value of our patent portfolio, particularly as it relates to our operating systems,” stated Horacio Gutierrez, corporate vice president and deputy general counsel of Microsoft’s intellectual property division.

The financial terms of the agreement were not available, but Casio has reportedly agreed to pay Microsoft licensing fees for patents that are specifically related to the use of Linux. Information regarding the products that are covered in the deal was not disclosed. The relationship between Microsoft and Casio has existed for years with Casio currently utilizing Microsoft software in its industrial handheld terminals and business information systems.

The Redmond, Washington-based Microsoft has been negotiating licensing deals with electronics manufacturers since 2003, with an impressive portfolio of more than 700 deals in place. Many of those deals involve the licensing of the Linux operating system. Although Microsoft does not own Linux, the software giant claims that the unauthorized use of the operating systems violates its patents, thus forcing the issue of the licensing deals to avoid litigation.

The Casio agreement is just the latest in a slew of licensing deals for Microsoft. The deals have even involved mobile communications companies with Microsoft announcing that it had entered into an agreement with Acer Mobile earlier this month. In that particular multi-year deal, Microsoft will collect licensing fees from Acer, which will allow the mobile phone and media device company to sell tablets and smartphones running the Android technology. Microsoft has also acquired deals with ViewSonic and HTC and other Android vendors.

However, not all companies have been quick to sign on the dotted line. Both Barnes & Noble and Motorola Mobility have refused to sign agreements over their use of Android. The companies are currently embroiled in separate patent infringement lawsuits with Microsoft.

Posted in: Patent License