Maximize Your Company's Intellectual Property Value With Steve Gruber

Maximize Your Company's Intellectual Property Value With Steve Gruber

I always had science questions, and that has just never gone away. The nickname my dad gave me growing up was Photon Man. I would have long conversations with an uncle of mine who worked at the NIST labs here in Boulder. He was a physicist, and we used to have wonderfully-long discussions about everything from the color of the sky to quantum mechanics. And not quick discussions like the ones that we’re all so used to today.  When you asked him a question, you had to have patience. You had to be ready to sit and listen to the sound of breathing, yours, his, nothing else. Often for minutes at a time. Then, when you weren’t sure you could stand the silence anymore, he’d break the silence with a “well…” and off he’d go.

I never got tired of asking those questions. In college, teammates called me “questions,” which was partially pejorative, but I couldn’t help myself. There are a lot of interesting people with a lot of interesting thoughts and knowledge out there. I couldn’t focus on just one subject, so I studied both physics/engineering and history. I spent many nights in the physics labs, forming microscopic sensors, in software labs, writing code, watching scopes, and analyzing measurements. But there was often no one to talk to or ask questions of in all that lab time. The love for science was definitely there, but I couldn’t see myself hunched over oscilloscopes and lines of Matlab for the rest of my days.

I wanted to be out there talking to people. And to this day my best hours are spent with innovators and founders picking their brains and pulling out those nuggets of the innovation story that make a broad and defensible patent sail through the Patent Office.

Back in college, when someone mentioned patent law to me, my curiosity piqued. Maybe there was a way to marry my love for optics and subatomic particles with the chance to craft business strategies and work directly with the people that turn innovations into thriving businesses.  

Marrying Science With the Law

After undergrad, my wheels were spinning about patent law, but I knew I wasn't ready just yet to pivot away from science and head down the costly and time-consuming path through law school. Before I took that leap, I got my Master's in electrical engineering with a focus on optics and microfabrication and spent a lot more time in the NIST Boulder labs building microscopic single-photon detectors.

Mutual connections brought me to Craig, Sean, and Shane and the early Neugeboren O'Dowd team. And just over 10 years later at the only firm that I’ve been with since law school, it’s clear that it’s been a great marriage between science and law and well worth the leap from my engineering career.

It’s very challenging. Helping companies grow can seem like a battleship board of sorts. You always have to be thinking about what is hidden on the other side of the board. How will technology change? Can an invention have applications outside the purview of the inventors? Will an incredible technology be manufacturable — will it be profitable — is the market ready yet? Which ideas and what types of patents should a company invest its IP budget and engineer’s time in?   

The Battleship Board of Patent Litigation

My favorite part of the day is reading up on a new technology or learning about the evolution of a technology that I used to be on the cutting edge of. For instance, I did a lot of semiconductor fabrication in grad school, but a decade later the cutting edge of chip fab has drastically changed as have the key players in the industry.  Getting up to speed with a new client or invention involves not only the technical side but also figuring out the marketplace.

My other favorite aspect of the day is using that new knowledge to work with inventors, often in person, to see past the marketing focus that many engineers and especially founders see their inventions with, and get to the heart of the challenge that inventors overcame. That’s when an invention’s true value really blossoms. Often, without understanding that backstory, and understanding it from an insider’s standpoint, many inventions can seem rather obvious.  

After those initial discussions, the strategizing begins. How are we going to protect a concept? What types of patents does the company need to protect its intellectual property? How can I achieve strong coverage while staying within a startup’s budget?

It's very easy to just go out and have a rote set of procedures for turning an invention disclosure into a patent application. But I like to find more nuanced approaches that are tailored to a given client.  

And we need to think about what the product is going to look like five years from now. It’s easy for some attorneys to get sucked in by the inventor’s narrow perspective on use cases and lose sight of the long-term implications of a concept.  

We have to try and foresee everything, like the way you do when you play battleship. What's on the other side of the board? We have to make those educated guesses.  

Getting the big picture of things is the foundation of science, and also of patent law. We have to be able to see into the future and how a variety of different people are going to look at an invention. 

I create patents with the goal of them never needing to be litigated — a strong settlement position backed by strong patents is often the most valuable position for a client to be in. And for many clients, more valuable than the rare chance that they will take a claim all the way to a trial’s conclusion. If litigation is required, Carolyn Juarez, our firm’s lead litigator, is a masterful lawyer to have on one’s side. And for larger cases, we have a number of local litigation-specializing firms that we work closely with. 

Related: Keeping Competitors Away From Your Game-Changing Product

The Process of Patent Prosecution

I have a different perspective than someone who is in court litigating a patent. The term patent prosecution is not what the layperson might think it is.

When you hear the word prosecution, you think the system is seeking to throw someone in jail. It's not like that. 

It's called patent prosecution because after I draft the patent it is submitted to the Patent Office and I fight like a criminal prosecutor might, to see that document clear the Patent Office with as much value as possible, despite the Patent Examiners’ attempts to do the opposite — widdle a patent down to as small and weak of a document as possible. 

People think about patents as being something you use in court to block other people from performing or using a product. But that doesn't happen too often. In fact, I’ve only had a couple of my patents even make it to litigation.

And I can’t fault them — one of their jobs is to issue patents that won’t inadvertently grant protection over ideas that are already in the public domain or that have been previously patented. And that is a tough task given the limited time that Examiners can commit to any one of the hundreds of cases that they examine every year, and given the fact that the detailed legal language of a patent doesn’t really have absolute bounds until it’s litigated.  It’s easy for an Examiner to unintentionally allow overly-broad patents, so they tend to be very conservative.  Unfortunately, that conservatism hurts our clients, so patent prosecution is largely a negotiation. We try to obtain as broad of protection as possible while working to reassure the Examiner that the patent won’t cover existing technology. 

Empowering Business

There's a certain amount of creativity that goes into connecting science and the law. Many times, we are doing the jobs of scientists, lawyers, and storytellers. It's our job to show why every invention is more than a trivial advance, and at the same time to look beyond today’s market and technology and say, "What if you apply this over here? What if you tweak this thing, what would happen?"

I get to work with some of the most creative and gutsy people around — founders are a rare breed. And there's nothing dull about empowering their efforts to change the world one patent at a time.

Trump's TikTok Ban: Is America's International Compliance Reputation at Risk?

Is America's international reputation as a leader of law and order at risk because of Trump’s ban on TikTok? The short answer: yes and no. The long answer highlights the story behind the problem and shows that Tik Tok isn't that innocent of a player here. At the same time, the executive orders on TikTok and WeChat aren't doing well in the courts either.

How Will This Ban Work? 

On August 6, 2020, President Trump signed an executive order banning United States business with TikTok and WeChat. He cited the International Emergency Economic Powers Act (IEPA) and the National Emergencies Act (NEA).

The changes laid out in the executive order were expected to roll out on September 20. By August 16, a new executive order amended the deadline from 45 days to 90 days, with the changes now expected to roll out by November 12, after the general election. 

TikTok hit back in an August blog post saying the executive order risked America's standing as a nation that complies with the law, and that the order did not undergo due process. 

It is estimated that approximately 80 million Americans who use TikTok could be impacted by this. 

What Does it Mean? 

The International Emergency Economic Powers Act (IEPA) gives the President the right to ban transactions, which typically target financial accounts and transfers by terrorists, international criminals, and human rights abusers, and is used around 1.5 times a year. Someone funneling money to family members in Bahrain, for example, may see some IEPA enforcement.

While somewhat dissimilar to previous uses of the IEPA, even seemingly-harmless TikTok and WeChat activity is constantly associated with financial transactions from advertisers and paying users and thus legally falls under the scope of the transactions mentioned in the IEPA. Whether Congress envisioned these types of transactions falling under the IEPA is another question.  

TikTok is Not That Innocent

I think a lot of people start out by saying, Trump likes to curb people’s speech and go after big tech companies, and this is just another example of the same.

But it's important for people to know that TikTok isn't just an unlucky innocent Trump target. Chinese law requires a certain level of symbiosis and between Chinese companies and Communist security and intelligence forces. 

That doesn’t mean that they are necessarily handing over confidential American data to the Chinese government, but it does mean that if the Chinese government ever wants access to that data, there’s nothing stopping them from requiring access to it.  And while TikTok tries to paint a picture of independence from the government, t is somewhat telling that TikTok has previously targeted and taken down videos from the Hong Kong protests, videos showing mistreatment of Muslims in China's Xinjiang Region, and videos of standoffs at the India/China border — all things that the Chinese government has sought to censor.

At the same time, there is a history of TikTok misusing information, including those of minor children. The FCC has actually settled a dispute with TikTok and imposed a significant fine. The FCC has also extracted a written promise from TikTok over the misuse of children's personal information. And there is currently an ongoing FCC investigation regarding that breach of the agreement.

China’s History of IP Theft

China has also long been caught committing IP theft and espionage in the United States and hacking US citizen profiles — activities that would become even more effective with access to even some of the data offered in TikTok and WeChat’s servers. Chinese nationals have often been caught taking trade secrets back to China after working for or with companies like Apple, T-Mobile, and GE. For instance, there's evidence that 20% of Chinese wind turbines are running on stolen US software, And the FBI currently has around 1,000 ongoing cases on perceived Chinese trade secret theft.

With access to confidential personal data on US citizens, Chinese security forces can more effectively generate and target phishing campaigns at US citizens and thereby gain access to more valuable information through the weakest chink in American cybersecurity armor — human error.  Sometimes those odd e-mails seemingly coming from someone you know, but with a very odd and long e-mail address aren’t just criminals trying to scam money from unsuspecting grandmothers.  Sometimes foreign government security officers are behind those phishing attempts.   

With China’s history of IP theft, and the value that confidential personal data can pose to Chinese security forces, the US government has at least a significant interest in preventing the Chinese government from accessing US citizen confidential data through WeChat and TikTok--an interest that may or may not outweigh first amendment rights to free speech.

Related: China Seeks Patent on US Covid-19 Drug

The Constitutionality of the TikTok Ban

The courts are currently asking whether that interest is great enough and whether the Executive Order is narrowly-tailored enough to that interest, to survive Constitutional scrutiny. Two Federal Appeals courts have already weighed in against the Trump administration, though only one of the two on Constitutional grounds.

A Washington D.C. judge, nominated by Trump, struck down the Executive Order saying that the administration is breaching the very IEPA rules that it relies on, because of a 1988 amendment that sought to exclude most forms of communication from the reaches of the IEPA. Since films, records, photographs, and art were excluded from the scope of the IEPA, the DC judge ruled that communications on TikTok should similarly be excluded from the types of transactions that the IEPA could go after.

The judge also noted that while the government's overarching national security interest is significant, the government didn't show enough evidence that banning TikTok or WeChat would address these concerns (i.e., the law wasn’t narrowly tailored enough to the government interest). In other words, there are both legal and constitutional issues with the ban. At the same time, the judge agreed that the Administration had shown ample evidence that China presents a significant national security threat.

What About Due Process?

TikTok has had almost a year to deal with this situation, and there's little evidence that it has made efforts to appease the administration’s security concerns. Any suggestion that due process has not been afforded ignores this long timeline given to TikTok. At the same time, even a shorter period of response than given here would not be at odds with previous IEPA norms. 

In 2015, President Obama used IEPA to go after cybercriminals without any prior notice being afforded. In that instance, there was a specific provision stating that no prior notice need be given before the assets of those individuals were received.

Trump’s order has been seen as breaching IEPA. That could put a ding on America's compliance reputation. But to suggest that TikTok is completely innocent here isn't aligned with reality. It's not just a constitutional matter, it's a national security matter, and one we should give some serious thought to.

With the rise of social media, more and more we give away our personal information and intellectual property. But where do we draw the line? If you have any questions about IEPA or intellectual property protections in the age of social media, give us a call.

Keep Reading: TikTok Tick Tock — Can You Claim Copyright on a Dance Move?

Is Embedding Content Copyright Infringement? Mashable vs. Creators Everywhere

Mashable is back in court, battling a copyright law case that began in 2016.

In 2016, Mashable asked Stephanie Sinclair, a well-known female social rights photojournalist, to feature her photograph of a Guatemalan mother and child in an upcoming article. The article was titled 10 Female Photojournalists With Their Lenses On Social Justice and highlighted Sinclair’s work alongside nine other highly respected female photojournalists.

But here’s the catch: Mashable only offered Sinclair $50 to license the image they wanted to use. Even one of my amateur photographer friends selling on Etsy would not accept $50 for one of his photos.

Mashable lowballed Sinclair and never expected her to accept the offer.   

Sinclair declined the offer. So, Mashable embedded her Instagram post with her photo into their article without her permission. She sued them for copyright infringement. The critical part of this case comes down to what is called the “server test.”

What is the Server Test? Perfect 10 vs. Google

The courts that utilize the server test reason that you have only committed copyright infringement if you use another’s photo and store a copy on your servers. But if you display the image, yet store it on someone else’s servers (e.g., Instagram’s), then you are not liable.

The Ninth Circuit first developed this case law in an early 2000’s copyright case where a nudie website, Perfect 10, sued Google for copyright infringement. This was before social media and Google was in the early days of providing image search results. Perfect 10 was actually going indirectly after websites that were improperly reposting its images, Google just happened to be showing thumbnails of those copied images in its search results. 

But Google didn’t store the actual copied images on its servers. While it did show thumbnails of the copyrighted images, the images themselves resided on third-party servers hosting the sites that were showing up in Google search results. Google merely provided an embedded link along with the thumbnails in its search results.

The Ninth Circuit essentially said that they do not believe that the actual copy of that image ever resided on Google's servers. It only resided on the servers of the owner of the copyright, which was Perfect 10. Because of that, the Ninth Circuit held that Google had not committed copyright infringement by merely embedding links to the actual image locations on third-party servers.

For the next decade or so, people in the digital media industries – social media included – generally abided by and relied on the server test.

Everybody seemed to be happy – until 2016. 

The Tom Brady Viral Photo

In 2016, a photographer named Justin Goldman took a photo of Tom Brady with the Boston Celtics coach at a tumultuous time. Rumors spread and it went viral.

The photographer Snapchatted the photo. Twitter users retweeted the Snapchat. Major news outlets embedded those retweets into articles, just like they always had – relying on the safety of the server test. 

But in this case, the photographer sued. 

Goldman took on nine large media entities – including Vox, Time, Yahoo, and Breitbart, but not in the Ninth Circuit – Goldman brought this suit in the Second Circuit, specifically, the Southern District of New York. 

And he won. 

The Second Circuit basically said that the reasons they do not follow the server test include that they do not believe in getting into the technicalities of where the copy of the image lives when, in reality, the copyright law focuses on the appearance to the user. If a site is the one showing that image, it appears that it is the one committing copyright infringement. The viewer does not care whose server it sits on.

Additionally the Court reasoned that in the Google vs. Perfect 10 case, you had to click the image to get to Perfect 10’s website. In the Tom Brady case, the news media outlets embedded the photo onto their websites directly. The user did not have to click a thumbnail to get to the actual image, as in Google vs. Perfect 10, as soon as they reached the new media outlets’ sites, they were presented with the actual image--no clicking necessary. Which brings us to the “click test.”  

RELATED: Taylor Swift, Big Machine and Audible: The Battle over Copyright Control

The Click Test

The click test is an alternative to the Ninth Circuit’s server test, and looks at whether a user voluntarily clicks through to the original image or not as a threshold question for infringement. The Second Circuit in New York decided to reference this test instead of the server test. I think their reasoning was that the Perfect 10 vs. Google case was wrongly decided because it focused on technicalities of image storage, behind the scenes facts that are unknown to viewers, rather than how the image appeared to the user. 

These disparate tests lead us back to the Sinclair vs. Mashable case, where the judge used the server test, the click test, and also considered the contract language and terms and conditions of Instagram.

In April 2020, the judge seemingly put a stake in many photographer’s business models by ruling that the photographer gave away her copyright by posting the image on Instagram and that Instagram had given a sub-license to Mashable to embed photos in their articles (all this she allegedly found in the small print of Instagram’s terms and conditions). 

The case was tossed. They never even got into the facts. No witnesses were called. The judge simply said, “If you look at the contract language on Instagram, the photographer loses the case. There is no question.”

Is Embedding the Same as Copying?

Have you ever read Instagram’s terms and conditions? It is confusing to say the least!  Judges can’t even figure out what it all means. 

In April, the judge claimed that the terms and conditions were clear. Every photographer gives up their rights as long as the downstream media entity embeds the photo. The judge decided that she was not even going to have a trial about it.

Two months later, a similar case was tried in the Southern District of New York in front of a different judge. Facebook, the owners of Instagram, states in court “Our terms and conditions do not grant a sub-license to downstream media entities merely because they embed the photo. They still need to get copyright authorization from the original photographer.”  Typically, entities don’t tell courts what their terms and conditions mean--it’s up to courts to interpret contract language.  

RELATED:  Yes, You Need a Registered Copyright

Case Reopened

Sinclair turned around and presented these statements to the judge as new evidence needing consideration and urged the judge to reopen her case. Miraculously, the judge did so. This time, she looked more closely at the terms and conditions, and was probably somewhat guided by Facebook's own statements about what the terms and conditions said, and admitted that she might have been wrong (did I mention that even judges can’t make sense of Facebook/Instagram’s terms and conditions) and reopened the case. 

That is where we stand; the case is still pending. Currently, no one knows what those terms and conditions mean and how they will be interpreted. Which unfortunately leaves photographers in a tough position, since even judges can’t decide what actions on social media platforms will give away copyrights and which ones won’t.  

Tips for Content Creators to Protect Copyright

  • Watermarks. Your most reliable option to protect your copyright is to watermark your images, bearing in mind that there is also software able to remove those watermarks.
  • New York Headquarters. If you sue, you’ll have a much better chance of avoiding the server test if you bring a suit in New York.
  • Private Account. It’s a clear-cut copyright violation if someone steals an image from a private account, according to Instagram’s contract.
  • Ditch Social Media. Although tough to build a following without social media, know that when you upload a photo to social media, it’s stripped of the copyright metadata you assigned in your editing software. Read this article for more information.

My Judgement

Mashable knew what they were doing was ethically wrong. 

Embedding a link to a photo stored on someone else’s servers is still copyright infringement. There is no question. 

The Ninth and Seventh Circuits in California and Chicago do not think embedding is infringement. Many disagree with them. So do I.

Copyright should not get into the technicalities of what server the photo resides on. Infringement liability should fall upon whoever is posting the photo. 

To me, it is a clear cut case.

The Clash of the Patent Ogres: Intel and Apple vs Fortress

By: Steve Gruber

Small tech businesses have had a tough time making patent infringement cases against billion-dollar tech giants, such as Apple, and Intel, that can outspend, outsue, and outlast any small company. Conversely, those tech giants have no problem suing small companies into oblivion (even when they are the ones in the wrong!)

But, now they are losing. Why?

Fortress Investment Group and other investment firms have started to get into the patent aggregation and patent litigation business. They are bank-rolling dozens of litigations for patents previously owned by different entities, some small, some large, and are going after big players such as Apple and Intel.

These tech behemoths are used to fending off a few lawsuits on patents owned by one small company that can barely afford to spend half a million dollars in patent litigation. These giants can inundate smaller patent holders with endless discovery and pre-trial motions, or subject the smaller entity to long and costly IPR challenges, leaving them little chance of even seeing a verdict, let alone a successful one. 

Not any more. These large investment firms are now sinking millions into multiple parallel litigations over many different patents in their agglomerated portfolios, making it far harder and costlier for the Apple and Intels of the world to fend off these attacks.

It's a Patent War

This strategy by Fortress and others has been so effective that Apple and Intel are trying a new approach to defending against these agglomerated attacks. Instead of attacking the validity of those patents, or arguing that they don't infringe, they're now complaining that these big financial companies are engaged in 'anti-competitive practices.'

These corporate giants are pulling the 'It's not fair' card. 

It's somewhat ironic that these tech giants have long used their size to squash small patent enforcement attacks, but are now trying to claim anti-competitive behavior when those same companies band together under the financial umbrella of large financial backers. 

Now, in defense of those large entities, it is a tough place to be, continually seeing patent lawsuit after patent lawsuit brought against you by an aggregation entity, when the individual owners may not have asserted those patents without aggregation.  Does it mean that these patents are valid or strong?  Not necessarily.  So, there's no guarantee that the companies banding together in these aggregation groups are all good guys or that their patents should carry the day.  And we might have more sympathy for the large entities who are crying foul, if not for the fact that they long wielded their size in anti-competitive fashions that were unrelated to the strength or validity of patents asserted against them.

RELATED: Google v. Oracle Case

Are Patent Aggregators Good or Bad?

If you Google ‘patent trolls,’ there is article after article stating that patent trolls harmed innovation by making companies spend R&D money defending patents, while not producing anything themselves. 

There are always two sides to every story. 

It turns out that patent trolls and other non-practicing entities add value to all patents by enhancing the liquidity of patents when a company goes under.  Patent trolls often acquire their IP when other companies go belly up, which makes risk-averse investors more likely to put money into an IP portfolio.  Thus, every patent portfolio has an increased value because investors can rest assured that someone, even if it's a patent troll, will likely buy up the IP if the venture fails. 

Things have evolved over the past ten years, and we don’t hear about patent trolls as much. 

Congress and the Courts have made patent trolling more difficult.  But, in their place, we're starting to see patent aggregation entities pop up, such as Fortress Investment Group. These entities are doing similar things to patent trolls. The aggregating company itself isn't producing anything. However, the companies that they represent, or that they've purchased patents from, are still producing products and value their patents.  That's the big difference between today's patent aggregation entities and patent trolls. 

Unlike patent trolls, the patent holders selling to patent aggregators are not going under. These patents are not purchased out of bankruptcy by the aggregator. Instead, entities are trying to monetize their R&D by joining the aggregation groups.  And if this new business model is working, and helping companies see ROI on their R & D spending, it's going to be tough for large established (possibly monopolistic) companies like Apple and Intel to argue that aggregation is anti-competitive. 

If licensing or selling your patents to a giant financial company to go out and litigate those patents on your behalf is the best way to profit from your R&D, so be it! If you can further monetize R&D, you are encouraging R&D. From that standpoint, these aggregation entities are perfect for innovation. 

Now, the Bad.

The downside is that these aggregators are also going after the small companies. In that sense, they act a lot like the patent trolls of yesteryear, and small companies can't defend against a substantial entity enforcing patents, let alone enforcing lots of different patents. 

Related: Fortress Investment Group: Bad Actor, Bad Timing, or Both?

My Judgement

Firstly, in the Intel-Apple brief, they indirectly admit to 'efficient infringement.' In a nutshell, this is where a company's lawyers decide that the risk/cost of infringing as compared to trying a legitimate design around or licensing, is less than the design around or license, and to some extent move forward with intentional infringement (though you'll likely never see a paper trail to prove this).  It may also involve choosing to infringe patents of those less likely to enforce or be able to enforce their patents while avoiding the patents of larger entities who could cause trouble were they to bring a patent lawsuit.

There are places in the Apple and Intel vs. Fortress summary where the Apple/Intel lawyers note that 'it's complicated to ascertain the risks of moving forward because of this aggregation problem.' 

Everybody deals with risks when analyzing patents and whether to move forward with a product or not. This is nothing new that aggregation has brought to the table, and if your company is not assessing the difficult question of infringement on every new product, then you are taking a huge risk.  In most cases, when you see a risk that's higher than 50-50, a company will decide it is not worth that risk and design around those patents.

But no, Apple and Intel said, 'Don't worry about it. Even if we infringe, it won't be an expensive problem. Let's just plow ahead.' 

Now that they've been caught with their pants down, they're complaining risk assessment is difficult because of aggregation companies. However, their attorneys have to do the same risk analysis that everyone else does. They're just whining about it in court. Complaining about the difficulty of risk analysis does not suggest that the other side is engaged in unfair competition.

Secondly, Apple and Intel are talking about the increased cost of doing business in their lawsuit when they have to design around ten different patents (possibly owned by ten different companies).  In the past, they would just plow ahead rather than design around, but now since those ten companies may aggregate those patents and bring a lawsuit in aggregate that Apple/Intel can't just brush aside with big-money defensive tactics, they have to engage in design around attempts.  This so-called anti-competitive legal argument is nothing more than saying that they often move forward without trying to design around existing patents. Still, now that aggregation has become a threat, they have to engage in design around practices--oh darn!  When Apple/Intel are forced to do the same analysis and design around as the rest of their smaller competitors suddenly, that extra expenditure is evidence that someone else is acting anti-competitively?

Thirdly, Intel itself is part of aggregation entities! They're defensive aggregation entities, but they're participating in aggregating patents nonetheless. There's nothing in any contract anywhere that says they won't someday litigate those patents.

Fourthly, Intel and Apple use the word "meritless" many times in their briefs to refer to the patents that Fortress is enforcing. Yet, they provide no evidence that the patents are meritless. If you look at the 1,000 patents being enforced by Fortress, some may be invalid. But Apple/Intel are extrapolating from that, the conclusion that the entire portfolio is meritless. 

In America, we have a very high presumption of validity on patents.

Just like when somebody allegedly commits murder, they have not committed murder until 12 jurists agree unanimously that they've committed murder. It's a high bar. We give people the benefit of the doubt. It is the same for patents. Until you prove that patent is invalid, it's valid. 

Apple and Intel go against the essence of the patent system, suggesting that all lawsuits against them are meritless because a handful of the patents in the entire portfolio have been deemed invalid. It's basically like saying someone is guilty before they'd been proven guilty.

Finally, Intel and Apple are claiming 'harm' in the case, but have not shown the harm. The Department of Justice pointed this out in its brief. While Apple/Intel has argued academically that patent aggregation could lead to higher costs and that these costs might be passed on to consumers, there’s no evidence that this is the case.  

Apple and Intel are just talking a big game. They're being bullies, or in the words of Soryn IP Group - patent ogres. 

Patent Ogres?

I read an interesting article recently that references patent ogres, back in 2015. 

Soryn IP Group defined a patent ogre in their article Who Is Uglier? Patent Trolls or Patent Ogres?. 'A patent ogre is a large company that has a significant market position in a product or service category and protects its economic interests by suppressing, bullying and, or simply grinding into the ground smaller, more innovative competitors that have patented technologies. Faced with a small innovator with patents that potentially read on its products or services, the patent ogre may refuse to license the technology at market rates, create publicity campaigns to label the inventors as trolls, and drag them through endless legal maneuvers until they run out of money. Then the patent ogre continues to derive economic benefit from the technology that someone else invented or perfected.' 

That is another way of describing efficient infringement. It is also an excellent way to describe what Apple and Intel are doing today, now that they are the giants and no longer the small garage startups that they once were.

What happens in this case may change the landscape for small tech companies forever. Keep your eyes on the outcome.

Google v. Oracle Case

The code underlying Google’s Android operating system includes 11,000 lines of code copied directly from Java, an Oracle software platform that helps developers’ software run on multiple operating systems.  This Fall, the Supreme Court will determine if such seemingly blatant copying is Copyright infringement.  The question gets more interesting when one considers that this code is actually less than 0.5% of the entire Java code and, according to Google and a large portion of the software community, purely functional.  If the Court sides with Oracle, this new view of copyright protection for software could upend an entire industry.

Java is a programming language initially developed by Sun Microsystems and later purchased by Oracle, and is at the center of a decade-long lawsuit between Google and Oracle that some say will have far-reaching consequences for the future of software innovation. Java is, in simplistic terms, a programming language that allows a developer’s code to be executable across platforms, and operating systems, such as Apple or Microsoft. This unique functionality has made it incredibly popular among software developers as a foundation for starting their code.

Java has always been freely available to developers writing apps. However, if a company wanted to use it in a platform or a new device, then a license was required. If the developer did not want to pay the licensing fee, they had to develop their own set of interoperable code. This is the route that Apple and Microsoft chose back in the early 2000s.

Around the same time, Google also avoided these licensing fees and developed its own operating system, Android.  Yet, Android based its code on Java--it wanted developers to be able to utilize the cross-platform benefits of Java, but without paying the licensing fees that Sun demanded.

Unlike Apple and Microsoft, Google did not start completely from scratch. Instead, it made use of a small but essential portion of Java, API’s to be precise, to develop the Android OS and ensure that developers of Android apps could make use of Java.

Where It All Went Wrong

While Oracle was victorious at the Federal Circuit, successfully arguing that Copyright protection could apply when a mere 0.5% of the Java code was copied, when Google first approached Sun Microsystems over a decade ago, Sun saw Google’s use of Java as a business opportunity rather than a Copyright risk. 

According to a 2012 article in WIRED, Jonathan Schwartz – the former CEO of Sun Microsystems said that Java had always been free to use and that although Sun Microsystems did not necessarily like the way Android used Java, it had no intention of stopping it. 

However, times change. In 2010, Sun Microsystems was purchased by Oracle. Oracle saw how useful Java was and started monetizing it, clamping down and enforcing copyrights. Oracle realized that Google should have taken a license for Java when it began developing the Android platform and brought a lawsuit for copyright infringement and patent infringement against the software giant. The patent side of the lawsuit failed when the trial kicked off in 2012, and that should have been the end of the battle on the functional side of protecting Java.  Yet the copyright side of the lawsuit focused on Java APIs, something that Google has long argued are also functional and thus shouldn’t be subject to Copyright protection.

Google won at the trial court, the Federal Circuit then overturned the judgment and ruled in favor of Oracle, and sent it back down to the trial court, who again ruled in favor of Google on a subsidiary point. I thought it interesting that the district judge that initially ruled Google's favor had been a coder--if ever a trial judge was well-qualified to digest the facts of a complex case, this was it.  And yet, the Federal Circuit overturned the trial court twice! But I digress. 

That ruling then went back up to the appellate court, and the appellate court again reversed and held in favor of Oracle. The lawsuit is now at the Supreme Court with Google appealing that decision and arguing that the Federal Circuit was incorrect.

At the moment, most industry players and academics are on Google's side. There are only a handful of entities, including the government, who are pushing Oracle's side. Which brings us to the question of what the Supreme Court is looking for?

Related: Software Patents - “That’s Where All The Action Is”

So, What is So Complicated About This Question?

Patents cover the utilitarian aspects of software; copyrights focus on artistic expression, i.e., what is free speech, what is an expression, what is creative? If we look to the Court generally, not just in IP cases, we see that expression reaches pretty far--look at Citizens United, where the Supreme Court found that even financial contributions of a company to a political campaign are considered expressive and thus afforded greater protections.  The boundaries of what is considered speech or expression or creativity are pretty broad.

Given that context, is it unreasonable to consider software APIs to be expressive?  When we look at software, there is a fascinating question: Where do expression, creativity, and art end in something so functional? Every line of code is accomplishing a purpose. You are not painting a picture. It is not art in the traditional sense so, is code an expression? Is there creativity involved? 

Absolutely, yes.

Just as photographers can take the same picture of the Eiffel Tower in different ways, there are various ways to achieve the same goal in coding, and even in creating the APIs. There are a hundred different ways to perform a lookup of an image in a database, some of those are more elegant than others, some are faster than others, some are more accurate than others. So, there is creativity involved. The broad legal definition of creativity or expression that the courts have created seems to cover any instance where a person chooses one option from among many to achieve a goal in art or software.

That leads us back to the Supreme Court’s question about whether certain types of software are not to be afforded copyright protection. What happens when you have only one way to write code? Does that mean that copyright law does not apply? The courts generally say yes. Copyright should only apply if you have options and if there is creativity in the development of the code. This whole case all comes down to whether this 0.5% of the entire code, these 11,000 lines that Google copied - involved expression or functionality. Were there different ways to write this code?

Copyrighting APIs

If the Supreme Court decides that companies can copyright APIs, there could be a knock-on effect on innovation. If developers can start protecting and monopolizing the ways that different computer systems talk to each other (i.e., APIs), popular opinion is that innovation will be stifled.  The software industry may have to pay for previously free APIs and all the legal hoops that a developer would have to jump through would greatly impede the speed of coding.

Yet, these fears are a bit theoretical.  Just about every other technical field has long been weighed down by the ‘oppressive’ patent system and its granting of monopolies to companies left and right.  Yet, we have seen incredible innovation across the board in the past four decades despite a very strong and litigious patent system.   Even software developers have had to deal with patent licensing regimes.  But they simply look at a patent, and either decide to pay a small licensing fee and pass that cost along to the buyer, or they design their own code. That is innovation. 

Given the innovations that many fields, including software, have seen despite the burdens of patent protection, there is little evidence that the Supreme Court’s decision to allow Copyright protection of APIs would have any significant stifling effect on software innovation.  Even if fees began to be charged by copyright holders, those fees would likely be relatively small--the market won’t allow excessive licensing fees--developers would just choose to innovate and go in another direction rather than pay to copy existing code. Cross-licensing will also take place, where the Oracles of the world are saying, ‘well, we'll give you 100 licenses Google if you give us 100 of your licenses’, and in the end, no money is exchanged. Licensing and payments do not significantly stymie innovation, and our experience with patent protection shows that they do not prevent innovators from creating the functionality they need. The market won't allow it.

My Judgment

If I were judging this case, I would side with Oracle because of the way that we have defined copyright as protecting expressions, as compared to underlying functionality. The Java API that Google made use of was not solely an overarching idea; it was one of many ways to implement an overarching idea. That makes it creative and expressive. Therefore if that is the way we have decided to define copyright protection, then this should be protectable. 

Policy discussions are not supposed to factor into Supreme Court decisions, and too often, people, and even some of the justices, go down that route. Policy is dictated by Congress and the laws they pass.  The Supremes merely interpret those laws. So, the Supremes will hopefully not be influenced by the policy-driven arguments of Google and its ilk, and instead focus on interpretation of the law, which I think falls squarely in Oracle’s favor.  If that result leads to negative ramifications for innovation, then Google, Amazon, Microsoft, etc. should turn to Congress, not the courts, to whittle away at copyright protections.  

Related: Taylor Swift, Big Machine and Audible: The Battle over Copyright Control

China Seeks Patent on US COVID-19 Drug

China Seeks Patent on US COVID-19 Drug

Gilead's vaccine against the Ebola virus, Remdesivir, is proving effective in combating COVID-19, according to news reports and clinical trials. Many of the COVID patients treated with the vaccine are recovering from the virus. Although remdesivir has not yet completed trials here in the U.S., there is promise that it will help keep patients alive. Gilead's severe COVID-19 study currently includes 2,400 participants from 152 different clinical trial sites all over the world. Its moderate COVID-19 study consists of 1,600 patients in 169 centers, also across the globe, according to STAT News. However, there is not a control group, which will make interpretation of the results more challenging. 

The Patent Problem

Since the drug had promising results in trials, Gilead gave China samples of Remdesivir in February to use in clinical trials. The Wuhan Institute filed a patent on the use of Remdesivir in combination with a well-known malaria fighting drug, hydroxychloroquine, on January 21, 2020. According to the Institute, the combination of those two drugs is a potential cure for COVID-19. The Wuhan Institute is a Biosafety level 4 (BSL-4) lab, which is the most secure, dangerous, high-level type virus facility in all of China. It is also the target of many unsupported accusations that it leaked COVID-19 out of its secure laboratory.

The Wuhan Institute filed the Remdesivir patent in conjunction with the Military Medicine Institute of the People's Liberation Army Academy of Military Science through the Patent Cooperation Treaty (PCT). The PCT is designed to assist applicants in seeking patent protection internationally for their IP, as well as help patent offices with their patent granting decisions, and facilitate public access to a wealth of technical information relating to those inventions. By filing under the PCT, the applicant is able to quickly and inexpensively get a toehold in many countries. 

It is a provocative move. The concern amongst the legal community is that the basis of the Wuhan Institute's patent is on a product they were given freely to help the global community during this pandemic, and one that is extensively covered by Gilead’s own patent arsenal. Is it IP theft? Is there a legitimate reason behind the patent? It is hard to know, especially since we cannot access the PCT filing yet.

The only way this patent application could be valid is if Remdesivir, along with the addition of chloroquine, is more effective in treating COVID-19. For example, if Remdesivir is 80% effective without chloroquine, and 90% effective with the chloroquine additive. That could be a patentable idea. They would not be blocking anyone from using Remdesivir. In that case, the Wuhan Institute would only be able to prevent somebody from using the combination of those two drugs.

However, the more cynical part of me thinks that if the USA gave the Institute 500 free doses, how easy is it to reverse engineer and for China to start producing a copy on their own, just adding a tiny percentage of chloroquine and calling it a new and protected cure? It is similar to a race to the moon.  This could be like the USA versus the Russians, and China wants to appear to be the first one to get to the vaccine.

Related: A New Plaintiff on the Patent Front: The U.S. Government vs. Gilead

Why Did They File a Patent?

The Wuhan Institute, along with the Chinese Military Academy have publicly stated that enforcement of this patent will not occur against those who ‘willingly’ assist China in fighting the virus.  This could be a veiled threat to enforce against anyone who does not hand over technology at below-market prices.  On the other hand, it could merely be a defensive strategy looking to force a cross-licensing regime with Gilead and to avoid having to pay excessive prices for access to a successful COVID-19 vaccine.   

China has a rough track record of violating IP, though they have made strides in recent years; anyone who has shopped on can see millions of examples. This move may be an attempt by China to improve on its history of global IP theft and show the world that they can develop their own ideas and IP. They have laws that would authorize a taking of the drug in return for a compulsory license, but pursuing patent protection instead could make for a better international image.

Related: Update on China’s Amended Trademark Laws

What About Gilead?

Gilead has a plethora of patents on this drug, so their ability to stop China from selling or using Remdesivir in other countries would be substantial. Even if China could patent a combination of Remdesivir and an additional ingredient, Gilead would still own the rights to the primary compound and thus China would still infringe.

Yet, this pandemic has led many countries to turn to rarely-used laws that subvert intellectual property rights or call for compulsory licenses to the governments, which could make it very difficult for Gilead to pursue its rights against China during the pandemic.  Even if China does copy the drug for unlicensed use, there may not be any countries willing to hear the case during this emergency, thus giving China free reign to make and use the drug under the guise of its own patent filing (which may not even be examined for many months or years). 

The questions being faced now are; will the Wuhan Institute’s combination of hydroxychloroquine and Redesivir be a successful COVID19 treatment? Will we see countries around the world pumping vast amounts of money into China’s drug combination, and not Gilead’s?  

If Gilead cannot enforce its rights on Remdesivir, and scrape back some of the millions it spent on R&D, it makes for a very poor incentive to continue drug development.


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Howard Head: The Need to Innovate

Howard Head: The Need to Innovate

Inventors are fascinating people.

Every week we have these brilliant people in our offices, and one of the best parts of this job is hearing their stories. Not just about how they've created a business, but how they've innovated and solved a problem.

Howard Head wasn't one of our clients, but his story echoes many of the same stories we hear weekly from our clients. 

A failed Harvard-educated writer turned engineering phenom; Head invented both the revolutionary composite ski (Head) and the modern large-sweet-spot tennis racket (Prince). What drove him was not just the desire to make money, but the need to help himself.  

The need to invent, Head claimed, has to be something you really want; it has to grow in your gut. 

From Failure to Phenom

Howard Head didn't start with a crushing desire to invent things. He wanted to write. Even after his shaky English grades forced him to change his major to engineering, he didn't give up on his dream. After graduating in 1936, he took a position as a scriptwriter but lost it nine months later when he failed to produce anything. 

His next job as a news writer ended after a mere six weeks when he spent more time repairing the film slicers than writing. He kept trying, but his poker-playing skills were supporting him more than his $20-a-week job as a copy boy at the Philadelphia Public Record. 

Desperate, Head took an aptitude test, which revealed some of the lowest possible scores for creative writing and one of the highest ratings ever recorded for structural visualization. As Head would later describe it, he didn't just see a structure. He felt its compression and tension in the same way the rest of us can feel our muscles tense. 

Head gave up writing, took a job as a riveter in an airplane factory, and was eventually promoted to the engineering department.  

It's the Tools, Not the Carpenter 

When Head first tried out downhill skiing, he was awful at it. Like many of us, he blamed his equipment, particularly his flimsy hickory skis. Unlike many of us, though, he didn't quit the sport. With typical bravado, he bragged to an army officer sitting next to him that he could make a better ski out of aircraft aluminum. 

He sketched out ideas for a metal ski with a plastic honeycomb center sandwiched between layers of aluminum with plywood sidewalls. Unable to let go of the concept (or the embarrassment of his lack of skills on the slopes), he scavenged some aluminum scraps from the plant and set up a shop in a converted stable near his one-room apartment. 

Related: Design Arounds Could Be a Lifesaver for Your Next Product and Patent

The Mother of Invention

A lack of equipment did not slow Head down. To get the heat he needed to perform his envisioned lamination, he welded an iron tank, filled it with motor oil drained from automobile crankcases, and used old camp burners to brew it to 350 degrees. To get the 15 pounds per square inch of pressure he needed to fuse the materials, he put his ski mold into a rubber bag and pumped the air out using a refrigerator compressor hooked up backward. Then he dumped the bag into the boiling oil. 

In 1948, Head quit his job at the airplane factory and used $6000 in poker winnings to focus on his skis. Three years and forty pairs of failed prototypes later, he had it. The new skis had steel edges, a plywood core for strength, and a plasticized bottom for a smoother run. 

Head skis were more durable, easier to turn, and much more resistant to twisting than traditional wooden skis. While some professionals were reluctant to try what they considered to be "cheater" skis, he persisted. By the 1964 Olympics, most of the U.S. and Swiss ski teams used Head skis. 

Related: Keeping Competitors Away From Your Game-changing Product

As his interest waned in skiing, Head sold to AMF for $16 million in 1969 and decided to take up tennis. 

Unfortunately, he wasn't any better at tennis, and even $5000 in tennis lessons didn't help. He bought a Prince ball machine but still couldn't hit the ball and blamed the machine. He started tinkering with it and took his ideas to Prince management. Within two years, he was both Chief Design Engineer and Chairman of the Board at Prince and owned 25% of the company.  

Don't Ignore the Obvious

Despite this success, Head was still unable to hit the ball. The sweet spot on a traditional racket is tiny, and Head soon realized that increasing the racket's width would decrease the racket's tendency to torque when the ball didn't hit dead center. 

It was something no one else had tried because enlarging wood rackets either caused them to break or be too heavy. Even though rackets were now being made of lighter weight metals, no one had thought to change the size. 

Head understood that users would not want the racket to feel differently. So rather than make it 2" wider in all directions, he kept the total racket length the same but extended the head down the shaft toward the user's hand--shortening the shaft. Despite a drastically larger hitting area and sweet spot, if you closed your eyes, you could not feel the difference. 

It was both obvious and ingenious, but the U.S. Patent and Trademark Office was unimpressed. They turned down his patent application three times. The racket was, in the eyes of the USPTO, an obvious extension of a state of the art tennis racket design. 

Look for the Unexpected Results 

Head was determined, and to convince them he set up a test to demonstrate how much faster the balls would rebound from his sweet spot versus the much smaller one on traditional rackets. He was stunned when his experiments proved that his racket performed worse than existing rackets. 

However, when probing the rackets away from the so-called sweet spot, his racket suddenly showed improved rebound speed. His design had not only increased the size of the sweet spot but, unexpectedly, moved it away from the center--closer to the user's hand. This was the type of unexpected result that the Examiner was looking for, and he finally granted Head's patent in 1976.  

Head's daughter had an explanation for her father's determination. "If he gets annoyed with something, he changes it. Most people never get that annoyed, or they get frustrated and give up'"

Head himself saw it a little differently. "Visionaries don't get things done," he once said. "The idea for an invention is only 5% of the job. Making it practical is 95%. You have to have a perfectionist streak, and you have to let that streak run until the product works."

This sounds like a lot of the people we get the privilege of working with here. They've got original and incredibly interesting ideas that should be awarded patents without question, but often need a little help to find and highlight that unique feature that grabs a Patent Examiner's attention.


Having Disrupted Online Shopping, Amazon Turns Its Sights to IP

Having Disrupted Online Shopping, Amazon Turns Its Sights to IP

In terms of trademark protections, Amazon built a great fortress with its Brand Registry. However, the company's latest foray into the IP process, IP Accelerator, may just have blown a hole in its walls. 

Brand Registry requires sellers to produce evidence that they are the legitimate owners of a brand. As evidence, Amazon usually accepts a federal trademark registration. It is a simple black and white means for Amazon to gauge who is a legitimate seller and who isn't. Once on the Registry, companies have an easier time taking down illegitimate copycats. With its Registry, Amazon has created an effective, quick process for vetting brand owners and enabling takedowns without sellers having to go through the courts. 

This is all good. If you've successfully passed through the Federal trademark registration process, you've submitted the required specimens showing use in commerce, and the Federal government agrees that you have an exclusive right to this trademark. That's a pretty rigorous process to prove that you're not a copycat. It has some holes in it, but it's pretty good, and a pretty solid gauge that Amazon can rely on to quickly assess trademark rights. 


Then Along Came IP Accelerator

Federal registrations can take a year or two to issue, however, so Amazon introduced the IP Accelerator to help valid trademark users reach its Brand Registry more quickly.  The trouble with the IP Accelerator is that it seemingly also greatly lowers the bar to the Brand Registry, leaving it ripe for abuse. 

All that sounds good. Except when you start thinking about how people could abuse the system.

The IP Accelerator speeds up the path to the Brand Registry by allowing companies to merely file a trademark application, using one of a handful of Amazon-approved law firms.  So, the old requirement of the USPTO granting a trademark is no longer the bar--merely filing, as long as one does so through an Amazon-approved law firm.  Yet, there is nothing stopping copycats from filing a trademark.  In fact, the Trademark Office is currently inundated with falsified trademark applications from foreign applicants, mostly from China.  Now these same entities can gain access to the Brand Registry even if there’s little to no chance of them ever obtaining a Federal Registration from the USPTO, and once there, these copycats can begin ordering take downs of the legitimate trademark owners.  What is worse is that access to the Brand Registry does not even require the filing of a use-based application, one accompanied by evidence of use of a trademark in commerce. Instead, even intent-to-use applications qualify--those where an applicant merely alleges an intent to use the mark in the future. 


RELATED: What Tom Brady, LeBron James & Ohio State University Can Teach You About Advanced Trademark Laws


Setting the Bar

Amazon has some very compelling reasons to try to beef up its Registry. A Wall Street Journal article, for example, found thousands of fraudulent, banned or unsafe products for sale on Amazon. At least one provided a distinct health hazard that resulted in the death of a toddler. 

Certainly for Amazon, the ability to track down copycats is a big deal from a financial, legitimacy, and even a safety standpoint. To accomplish that, Amazon first launched the Brand Registry. Now it has the IP accelerator to help people get onto the Registry more quickly to fight off the copycats effectively. 

The problem is while Amazon set the trademark bar quite high with its Brand Registry, the bar for IP Accelerator has been set extremely low. And in fact, it might be non-existent. 

That could prove to be a much bigger problem for many legitimate trademark holders selling their products on Amazon. 


The Crack in the Armour

So, this accelerator seems like it may have opened a pretty big crack in the Brand Registry armor, though it has yet to be seen if anyone takes advantage of that crack. The hope is that Amazon has established protocols with its law firms to take steps to vet potential clients. For instance, the law firms could perform thorough prior user searches with each filing and refuse to file applications for applicants that were not clearly the senior user.  Even if such searching was performed, weighing the evidence to determine who is a senior user is often a job left to the courts and months of discovery, not a quick task handled by firms dealing with low margin fixed fee work.

We don't know if Amazon is providing a kickback or subsidizing them to take on that extra work. But the reported fixed cap per trademark is very low. These firms will be depending on volume to make money. They will need to maximize efficiency to stay below that cap, so there isn't much incentive to vet clients unless Amazon has offered something behind the scenes. 

The other issue is that copycats can be relatively sophisticated, and it could be challenging for these law firms to ferret out suspicious activity. For instance, even a low-grade artist can doctor a specimen to the point that an attorney won’t be able to see it as a fake.  

It can be a fairly intensive process to expose these fakes. And if the law firms aren’t being required to spot them, or are failing to do so, it will be really easy for copycats to get onto the Brand Registry either in parallel or before the real user gets on. That could cause some very real problems for legitimate mark holders before the USPTO filing is settled.


A Parallel Trademark Enforcement System

With IP Accelerator, Amazon has created a trademark enforcement regime that's outside the court systems, and given the import of the Amazon marketplace, this regime could even be more important in the first year or two of a product’s life. 

If you can kick a competitor off Amazon, it might be more valuable than getting an injunction in court. A U.S. injunction is only helpful for infringement happening in the U.S., but with a company operating out of China, that injunction may not help much. If you can get Amazon to boot the competitor, however, that might be more valuable. 

So, Amazon has created a legal regime with the potential to be very beneficial to rightful trademark holders, but could also have opened a sizable chink in its own armor.


RELATED: Design Arounds Could Be a Lifesaver for Your Next Product and Patent