23 September 2007

Philips defeated on JPEG patent after non-disclosure to standard setting bodies

One of the "hot" issues in the electronics industry (and earlier on in the semiconductor business) is the relationship between standards and patents. Recent examples of clever standard setting policies and the enforcement of patents that come to mind are the way Sisvel enforced Philips’ mp3 patents, reading on an international audio compression standard. Here the comfortable position Philips was in to enforce patents that seem to read on that audio standard. It the reminds me of a saying by the English judge Mr Justice Pumfrey: “Nothing would be pleasanter for a patentee than to participate in the setting of a standard compliance with which would inevitably involve infringement of his patent.” That’s exactly what Philips made all the mp3 manufacturers as well as the Courts in Germany believe: simply comparing all mp3 products with the relevant standard, rather then the patent, by saying: “you - trader in mp3 players- are bringing to practice the specs the standard requires for any mp3 player to work and as it happens to be, I, Philips have those – “padding bits” - patent that exactly read on that standard, so there is my evidence of patent infringement”.

A carefully crafted strategy that worked well and made wonders to Philips and its co-owners of the mp3 patents at stake, making them hundreds of millions of licensing income. So why not using the same trick for compression of camera images on mobile phones, known as the “Baseline” method which is the subject of a JPEG standard discussed by study groups of the International Telegraph en Telephone Consultative Committee (CCITT), The International Standards Organization (ISO) en de British Standards Institution? O, Lucky Me, Philips must have thought as they are the owner of European patent EP 0 260 748, also knows as “Vogel” (named after the inventor).

So, Philips sued LG Electronics in the Netherlands over the use of its Vogel patent – covering the JPEG compression standard - in a large number of its mobile handsets. After the Sisvel miracle this sounded like a done deal. Apparently, that was exactly what happened, as the Dutch court impressed - as the German courts were at the time of the mp3 “padding bit” patent - by Philips’ thoughtful enforcement of the Vogel patent against LG who admitted to have used (no choice, remember, it’s a standard!) the Baseline method, covered by the JPEG standard for that method. LG’s attempts to invalidate the patent were doomed to fail (knowing Philips clever use of study group en engineers outcome of standard meetings to subsequently draft - and redraft if necessary - claims covering that standard setting meeting results).

No surprise then that LG lost its patent infringement case. Philips obtained an infringement injunction against LG in April 2007. The court found infringement on a valid Philips patent (be it a little bit helped by the court in redrafting the claims in a way that made it novel and inventive over the prior art). So far, so good, Philips must have thought.

However, LG had the feel that Philips must have played the standard setting procedure a little too clever, and alleged that Philips had taken part in the engineers and study group meetings and had failed to declare the Vogel patent to the relevant standard setting body (with the result that they could still sue under the patent which they would not have been entitled to do would the Vogel patent be declared prior or pending the standard setting meetings. In that case Philips could only claim licenses (monetary relief, no injunction) under the Standard Setting Rules to license against RAND conditions).

LG sued Philips for that same The Hague District Court, asking in preliminary proceedings (“kort geding”) to order Philips not to enforce the injunction it obtained in April against LG. It succeeded. LG was finally able to deliver evidence that Philips did participate in the Standard committee meetings. Philips tried to save its face by trying to convince the court that the “disclosure rules” are only for “proposers” (parties who provide technical proposals in the committees). It made the Court – in a humorous snub against Philips – say it should have been aware of the disclosure requirement “as a listener”. It added that, had the court known about the convincing evidence that Philips did participate (contrary to what Philips made the court belief in the earlier court case) it would not have rendered the infringement injunction against Philips in the first place.

Interesting to note that in a similar case in the US in 2003 - Rambus Inc. v. Infineon Technologies, 318 F.3d 1081 (Fed. Cir. 2003), the US Court of Appeal for the Federal Circuit (CAFC) said although the JEDEC policy itself (presumably the written policy) did not specify when to disclose patent that read on a standard it took from testimony of witnesses, that the actual practice required that disclosure be made at the time of “formal balloting” with respect to the standard. The question then arose whether JEDEC’s disclosure requirements applied to a member’s intentions or attempts to file patent applications covering the proposed standard? The CAFC found that a member’s subjective beliefs, hopes and desires are irrelevant. Philips beliefs –being not a “proposer” - would in CAFC’s view be irrelevant, the same result as the Dutch court, be it along different lines.

Philips must hope it will not be under the same scrutiny as Rambus has been - and still is – over its standard setting policies, but it will ring the alarm bells in Eindhoven, no doubt.


The following is a Korean translation of the above blog post: "Philips defeated on JPEG patent after non-disclosure to standard setting bodies"

규격 기준 기관에 비공개로 인해 JPEG 특허 건에서 패한 Philips

전자제품 업계(또한, 최근의 반도체 업계)내에서 “뜨거운” 이슈 중의 하나는 규격 기준과 특허간의 관계이다. 최근의 한 예로 Sisvel이 Philips의 mp3 특허를 국제 오디오 압축 규격에 적용하게 한 예가 기억에 남는다. 이 경우, Philips는 오디오 규격을 적용하는데 별 문제가 없었던 걸로 보인다. 영국의 판사, Mr. Pumfrey J가 말했듯이, “특허를 가진 사람에게는 별 문제 없이 규격기준을 적용하는 것이 어쩔 수 없이 특허권을 침해해야 하는 경우보다 더 좋은 것이 없을 것이다.” Mp3 제작자를 비롯한 독일의 법원도 Phillips에 의해 위의 글을 적용하여 mp3 플레이어들을 특허가 아닌, 적당한 규격과 비교하게 되었으며 또 말하길, “mp3 플레이어 거래인들은 mp3 플레이어 규격에 맞는 성능을 갖춘 기종을 업계에 소개 하는데, Philips가 그 규격에 꼭 맞는 특허를 가지고 있으므로 위의 mp3 플레이어들은 특허권 침해의 증거가 된다.”

심사 숙고해서 짜인 전략은 Philips와 mp3 특허 공동소유자에게 수억의 라이센스 수입을 가져다 주었다. 그렇다면, 연구 그룹 International Telegraph Telephone Consultative Committee (CCITT)와 The International Standards Organization (ISO) 그리고 British Standards Institution (BSI)의 JPEG 규격의 토론으로 떠올랐던 “Baseline”이라 불리는 휴대폰 카메라 이미지 압축 방법에 관해서도, 동일한 전략을 쓰면 되지 않는가? Philips는 자신들이 유럽 특허 EP 0 260 748, “Vogel”(발명가의 이름)의 소유권자라고 생각했던가.

그런 이유로, Philips는 네덜란드 LG 전자를 상대로 Vogel특허의 –JPEG 압축 규격 기준을 포함한–많은 휴대폰에 적용했다는 사실에 소송을 제기했다. Sisvel 기적 이 후, 충분히 가능한 일이라고 믿었다. 실제로 네덜란드 법정은 Baseline 방법을 사용했다고 인정한 (표준 규격이기 때문에!) LG를 상대로 Philips의 영리한 집행에 감명받았다. –독일 법정이 mp3 “padding bits” 특허의 소송시기에 그랬던 것처럼–. LG의 특허를 무효로 만들려는 시도는 실패로 돌아갈 것이 예상되었다. (Philips의 엔지니어들의 규격 기준의 영리한 연구에 따라서 소송내용을 수정하거나 보류할 것으로 알았기 때문이다.)

이변 없이 LG는 특허 침해 건을 지고 말았다. Philips는 LG를 상대로 2007년 4월에 침해 금지명령을 얻었다. 법정은 Philips의 유효한 특허에 대한 LG의 침해라고 결정했다. (이것은 소송내용을 수정 함으로 약간의 법정의 도움을 받은 것이라고도 할 수 있겠다). 여기까지 Philips는 모든 것이 잘 풀렸다고 믿었다.

그러나, LG는 Philips가 규격기준의 결정 행로를 자신들에게 유리한 쪽으로 몰아갔다고 믿어, Philips는 엔지니어들과 연구 그룹들의 미팅에 참여했고, Vegel 특허를 적절한 규격 기준 기관에 신고하지 않았다고 주장했다. (그 결과를 가지고 Vogel이 아닌 다른 특허에 한해서, Vogel특허가 규격 기준 미팅에 신고되기 전이나 보류되었을 경우 소송을 제기할 여지가 남아있었다. 그 경우엔 Philips는 RAND conditions에 대한 규격 지준 지정 법에 한해 라이센스만 요구할 수 있다. (금지 명령이 아닌 금전상의 보상)

LG는 같은 The Hague District Court에 Philips를 상대로 Philips가 4월에 얻은 금지명령을 이행하지 못하도록 preliminary proceedings 을 신청하였다. 그리고 성공하였다. LG는 Philips가 규격 기준 위원회 미팅에 참여했던 것을 밝혀내었다. 이에 Philips는 “disclosure rules”는 “proposers”(기술적인 제안을 위원회에게 제공한 쪽)에게만 적용됨을 법정에 납득시키려 했다. 법정은 공개 요구조건을 “청취자의 입장에서” 인식하고 있어야 했음을 표했다. 또, 법정이 Philips가 미팅에 참여했다는 확고한 증거를 알고 있었다면 (Philips가 전의 케이스에서 법정을 설득시킨 것과는 달리) 특허침해라는 결정은 처음부터 없었을 것임을 더했다.

흥미로운 부분은 2003년에 미국에서 비슷한 케이스 -Rambus Inc. v. Infineon Technologies, 318 F.3d 1081 (Fed. Cir. 2003) 의 경우, the US Court of Appeal for the Federal Circuit (CAFC)가 말하길 JEDEC 정책은 증인에 의해 언제 특허가 공개되었는지는 지정하지 않고 있고, 실제로 규격에 관련된 공개가 “formal balloting”의 시기에 행해지는 것이 요구된다고 밝혔다. 그렇다면 의문이 생기는 부분은 JEDEC의 공개 요구사항이 멤버의 의도, 또는 제시된 기준을 포함하는 특허 신청서를 제기하려는 시도에 적용되었는지 다. CAFC는 멤버의 신념, 바램, 그리고 욕구는 무관계 하다고 밝혔다. Philips의 신념 – “proposer”가 아닌 – 은 CAFC의 관점에서 무관계 한 것이었고, 네덜란드 법정에서도 동일하게 적용되었다.

Philips는 Rambus가 그랬던 것처럼 (아직도 그렇듯이) 기준 지정 정책으로 인한 엄격한 감시가 있지 않기를 바래야 할 것이다.

03 September 2007

Will US Patent Reform pass Congress in September?

Will the US Congress pass Patent Reform legislation this month?

IPO vs. Professor Crouch: In a rare attack on an academic’s view, IPO notes the pronouncement by Professor Dennis Crouch that the legislation will not be enacted by Congress, Congressional Patent Reform is Dead; Long Live Administrative Patent Reform, Patently O (August 30, 2007). Prof. Crouch reminded his readers that several months ago he had --
"declared that new patent legislation [to be] effectively blocked within Congress.…[L]egislative reform is, for the most part, a sideshow as the executive and judicial branches are still running with the ball."

IPO patronizingly notes that "a majority of lobbyists in Washington, who talk to members of Congress every day for and against the legislation, are convinced that some form of it will pass this year or next." (IPO Daily News).

It would be good to take a deep, deep breath, step back, and see just why there are entrenched interests that will be big losers if the current patent reform proposals are enacted, which is precisely why Professor Crouch will be vindicated at the end of the day as patent reform legislation ultimately stalls in the United States Senate.

Hal Wegner, Washington