German EU Presidency ends with Patent Seminar

Today starts, in Munich, a two day Symposium: “The Future of European Patent Jurisdiction” organised by the German Federal Patent Court, in consultation with the Federal Ministry of Justice, The meeting is expected to bring together 200-250 participants from all over Europe who are actively engaged with this issue in their work as judges and lawyers, as members of the business or scientific communities, or as decision-makers in EU Member State governments and the European Commission. Federal Minister of Justice Brigitte Zypries will attend the symposium and deliver the opening speech.

If only Germany could be as effective in brokering a EU Treaty consensus as they can be on reaching a common view on EPLA, wouldn't that be what the European patent community is waiting for too long?

We hope to be able to get you news from the conference later today.

EPO is not eager to receive EU political oversight

Joff Wild reported on his blog (June 19) of an internal memo of the EPO (European Patent Office) reporting on the attitude of staff to the way in which the EPO is being run. Almost simultaneously, the head of legal affairs at the EPO stated that it is now too easy to obtain patents and there needs to be a shift towards fewer, but higher-quality, rights.
Joff wrote: “And to add a certain spice to the situation, as well as handing valuable ammunition to the EPO’s opponent’s, Wim Van der Eijk, Principal Director of the International Legal Affairs and Patent Law Department, was last week quoted as saying: “Patents are granted too easily … We need to have a more critical look, and steer policy in the direction of less, but stronger patents.” Now I don’t know in what context he was talking and if he was referring to the EPO or not, but it strikes me that at a time when the EPO is awarding more patents than it ever has before, this was not a particularly clever thing to say.”

Another view is possible. The criticism makes sense when one reads in the internal memo:

“There is a strong belief amongst staff that the financial benefits to the
Member States arising from the renewal fees motivate the Administrative
Council, and consequently the EPO administration, to focus on the quantity
rather than the quality of the granted patents.”

My guess is that Wim van der Eijk, assuming he is being quoted correctly, was adding to the criticism (which the internal memo signals is being shared internally at the EPO) that the national patent offices, by means of their representation in the Administrative Council of the EPO, have a natural tendency of promoting volume over quality of patents (more patents means more income for the member states). That policy, when adopted by the EPO Examiners, would result in more not better patents, which in turn would mean that quality will suffer. Put otherwise, we are not so sure that all EPO principals are really happy with the rise in patent numbers and are concerned that quality issues may soon result in additional political pressure by (e.g.) the European Parliament to force the EPO to be subject to some new Policy Review Oversight. We can see why no one in the EPO would be particularly happy with such a development.

Mobile, mobile, mobile

Tony Fish of AMF Ventures commented in his blog on Eric Schmidt, the CEO of Google, who spoke about “mobile, mobile, mobile” as the next opportunity at the O’Reilly Web2Expo in San Francisco last month.

It’s funny – you could pretty easily find the same types of things said about Web 1.0 during Bubble 1.0. For example, this is what the book Net Gain: Expanding Markets through Virtual Communities by two McKinsey guys in 1997 was about. Another book that discussed all this was Esther Dyson’s Release 2.0 from the same year. Plus ça change…..

There are two big problems: “Assuming privacy laws and big brother objections can be overcome” (see Tony' blog) is one. The other is how you can give average consumers control of that information in any meaningful way – it’s just way too complex and confusing. The issues are the same whether the device is a PC or a mobile whatchamacallit. We can see the latter problem being somewhat solved over a long period of time by increasing consumer comfort level with technology, but we don’t see how the former one goes away. By the way if you solve the “privacy police” problem, then DRM becomes a whole lot easier.

Bill Rosenblatt, New York

Time for a Reverse Patent Troll to seek invalidation of Sisvel mp3 patents?

Philips c.s. mp3 patent litigation by Sisvel has mostly come to an end in Europe and the US, as most bigger players in the electronics space have settled with Sisvel (on behalf of the patent holders Philips, France Telecom, IRT and TDF). When Sisvel settled with most vendors of mp3 consumer goods they did that after seizing goods at consumer fairs, starting patent infringement cases, using the European Border Detention Regulation 1383/2003 for blocking incoming mp3 enabled consumer goods from Hong Kong and China and other Asian countries. Many companies were basically forced into license deals, despite the fact that they had very good validity challenges to the patent. This blog has access to prior art that has been found that only a very limited number of companies have been able to get access to. The prior art is extremely powerful and valuable against anyone wanting to challenge the Philips mp3 patents being asserted by Sisvel.

Although many companies agreed to pay substantive royalties for the lifetime of the patent, no one is seeking invalidity. Why would any company not challenge the validity of the patent after signing the license thus saving substantial future royalty fees? The answer is quite simple. In the settlement agreement Sisvel included a clause giving them the right to terminate the license if the licensee challenges the validity of the patent. The clause reads:

“10.03 Audio MPEG and SISVEL shall have the right to jointly or independently terminate this Agreement forthwith or to revoke the license respectively granted under any of the US Patents and Non-US Patents in the event that LICENSEE or any of its Controlled Companies, directly or indirectly (e.g. via its customers and/or suppliers) brings a lawsuit or other proceeding to contest the validity or enforceability of any of the US Patents and/or Non-US Patents.”

Most US companies and those European companies with substantial US exposure refrain from even looking into the possibility of seeking invalidity as this could result in a termination of the license something they do not want to get into, endangering the continuous supply of phones, handheld or other consumer goods with their mp3 functionality. Most US attorneys advise their clients not to be part of any attempt, by whomever, to challenge the Philips/Sisvel patents, despite the very powerful prior art available, wary of the risk of termination and subsequent further business disruption. Besides who cares anymore when everyone pays the license which is in all cases been passed on to the end consumer?

Earlier we pointed out that a direct non-challenge clause is contrary to almost every antitrust legislation in the world. So how come Sisvel can get away with this quasi no-challenge clause? Strictly speaking clause 10.3 above is not a no-challenge clause. The licensee is still allowed to challenge the underlying patents in any court. However, doing so gives Sisvel under this challenge-clause (see above) the right to terminate the license agreement. Under previously held US law, a licensee cannot have it both ways: and getting patent peace by obtaining a license from the patent holder and at the same time challenging the patent’s invalidity while enjoying the license (as that would prevent the patent owner from seeking an injunction to use the patent pending the license) . However the US Supreme Court changed that in MedImmune vs. Genentech. According to the US Supreme Court, language promising to pay royalties on patents that have not been held invalid "does not amount to a promise not to seek a holding of their invalidity."

Although one would expect a challenge to the clause 10.3 in the Sisvel license (settlement) agreement, we do not know of any.

Reverse Patent Troll
Both the public in general as well as al the mp3 electronics consumers that now pay the price for the Sisvel licenses need to have a “Reverse Patent Troll” act against the Sisvel patents, seeking invalidation of the Philips c.s. patents. The Reverse Patent Troll can then use prior art that has only been used by two companies in their EU proceedings (which were subsequently withdrawn after settlement with Sisvel) which is very convincing, very powerful and not yet publicly known, so useful as it cannot be used by everyone to invalidate the Sisvel patents, making the Reverse Patent Troll a very attractive one.

Prior Art
Prior Art has been found that is unique and a powerful tool against the Sisvel patents. For further information, contact bonanza@ipeg.com.

IP as trade barrier

Interested in the use of Intellectual Property as a trade barrier? Listen to an interview on China Radio international with Jasper Helder, of Simmons & Simmons at http://english.cri.cn/4026/2007/06/06/1241@235394.htm