Software IP: The Good, The Bad & The Ugly - PowerPoint Presentation

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Software IP: The Good, The Bad & The Ugly - PPT Presentation

Christian D Ehret John W McIlvaine Craig M Waller Table of Contents The Good SoftwareIP Assets a Innovation Identification b Vetting New Innovations c ID: 648799

patent threats assets software threats patent software assets dtsa infringement 2016 patents entities business company trade assertion issues claims

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Slide1

Software IP: The Good, The Bad & The Ugly

Christian D.

Ehret

John W.

McIlvaine

Craig M. WallerSlide2

Table of ContentsThe Good: Software/IP

Assetsa. Innovation Identificationb. Vetting New Innovationsc. Strategic Protections

d. Managing IP Assetse. Software IP IssuesThe Not So Good (sometimes): Software/IP Threatsa. Intake of IP Threatsb. Patent Assertion Entities (PAEs

) /

NPEs

c. Copyright Assertion Entitiesd. Identifying Relevant Resourcese. Responding to IP Threatsf. Litigating IP Threats g. Defend Trade Secrets Act (DTSA)Slide3

The Webb Law FirmSlide4

HIGH-LEVEL OVERVIEW IP ASSETS

We have heard from in-house counsel that many of their companies simply view legal department as cost-centers, although sometimes more of a cost-savings centerAcquiring Intellectual Property rights is one of the few areas where in-house counsel can direct their attention to generating assets

for their organization, and sometimes enforcing/licensing those Intellectual Property rights can help recoup lost revenuesIP strategy that aligns with business objectives is key to: 1) value extraction of innovations,

2) using relevant and targeted filing processes to accomplish, and

3) understanding key competitor innovation activities

IP ASSETSSlide5

INNOVATION IDENTIFICATION

Documenting Innovation and Aggregation of DisclosuresMust communicate goals of innovation and how it aligns with goals of the company for buy-inEncourage and assist in getting invention disclosures without unnecessary frictionTrack invention disclosures and organize by technology groupings/business

unitsPatent Investigations/Searching State of the art searches (external innovation)Comprehensive IP reviews/activities of competitors (external innovation)

Areas

of patent density and/or areas of open

space (external innovation)IP ASSETSSlide6

VETTING NEW INNOVATIONS

Innovation Assessment and Commercial Interestensure alignment between patent protections sought, and strategic commercialization goals for the business objectivesPatent Investigations/Searching

Patentabiltiy searches (internal innovations)Freedom-to-operate searches (external threats)

IP ASSETSSlide7

STRATEGIC PROTECTIONS

Assessment/DraftingMeet with inventor(s), IP counsel and business unit managerDiscuss the invention, claiming strategies, and filing strategiesDraft claim set Prepare and review with inventors

Scope/direction approvedApplication drafted for inventor review/comment in view of commercial interests of business

IP ASSETSSlide8

STRATEGIC PROTECTIONS

IP ASSETS

Defensive protection of technological advancements

Minimizing costs to obtain

desired protections

Using key patents/technological advancements for profit Integrating protection and proprietary awareness within organization to maximize monetization opportunitiesUsing all intellectual assets and industry knowledge and competitive intelligence to select and secure profit centers in industriesSlide9

STRATEGIC PROTECTIONS

IP ASSETS

Varied levels of awareness and perceived usefulness/value of IP (questions below may be used to help reorient the importance of

investing

IP as a company asset)When is innovation not required to maintain competitive advantage in meeting your customer’s unique needs and/or yet unrealized needs?How does your company encourage innovative activity and how is it transformed into meaningful value/processes for the financial benefit of the company?How do you make sophisticated and strategic decisions about intellectual property (IP) to secure and protect shareholder investment that are strategic assets to be owned?Slide10

STRATEGIC PROTECTIONS

IP ASSETS

Varied levels of awareness and perceived usefulness/value of IP (questions below may be used to help reorient the importance of investing in IP as a company asset)

selling mature products, are you thinking about what is going to replace your products

?If all your competitors paid to implement Six Sigma, Lean Manufacturing, Branding initiatives, etc., what fundamentally would separate you from your competition?How often does the management of your organization meet to strategically address competitor disruptive technology, strategic barriers and innovation initiatives to ensure longevity & market share for your organization?Slide11

STRATEGIC PROTECTIONS

IP ASSETS

Varied levels of awareness and perceived usefulness/value of IP (questions below may be used to help reorient the importance of investing in IP as a company asset)Do

you think anyone else is thinking about being the replacement for your products

Who do you have informing your organization that thinks differently than the organization, speaks outside your box, and isn’t worried about the corporate ladder when they speak up?If customers left your product and the business suffered, although it served a well documented market need, how would the owners of the company then view its handling of its IP with regards to how it was secured to substantiate what is left of the value for liquidating that primary asset remaining at the company?Slide12

MANAGING IP ASSETS

IP ASSETS

Setting up and facilitation of Technology Strategy Meetings, organized by business unit/function

Strong docket management system with adequate staff paying attention to key dates and budgets

Must have point person for each business unit/function to report internally and direct outside counselSlide13

MANAGING IP ASSETS

IP ASSETS

Create space semi-annually for Technology Advancements cross-pollenization among divisions and/or business units/functions

IP Policies and Awards

useful

to motivating innovatorsMonitoring costs / ROI / value globally and by business unitSlide14

Software IP ISSUES

Software patentsHow the law of patent-eligibility has developed over the last yearA shift back to patent holdersAkamaiEnfishTroll litigation

A decrease in patent troll filings in E.D. TexasBut more copyright trolls…Addressing a cease-and-desist letter

IP ASSETSSlide15

SOFTWARE PATENT ISSUES

IP ASSETS

Based upon many patents granted in the late 90s through early 2000’s, the courts have been reining-in what is and is not patentable

The courts have not killed software patents, although they have muddied the waters in narrowing the scope of what is patentable

Here is a quick lighthearted illustration of how we like to describe how we got here in the software IP space…

https

://

youtu.be/smU6mpS3jpkSlide16
Slide17

Software PATENT ISSUES

Recent cases emphasize ever-changing role of software patentsFrom an in-house perspective, three main concerns:What is still patentable?What is still enforceable?How can we defend from cases brought against us?Issues:

Subject-matter eligibilityJoint infringement concernsFunctional claiming and indefiniteness

IP ASSETSSlide18

Software PATENT ISSUES

Considerations for New Patent Applications Is this the type of subject matter that is at least possible to obtain a patent on?Business processes that are simply implemented on a computer are the closest examples to a categorical exclusion, but even these should be analyzed to see if there is a possibility

Claiming strategy is more important than usualInclude numerous detailed dependent claimsIdentify the particular locations and relations between system componentsEmphasis the role of the computer in performing automatic functionsInclude specific algorithmsSpecifications should be drafted to contemplate rejections, challenges, and changes in the law

IP ASSETSSlide19

Software PATENT ISSUESConsiderations for

Existing Patent ApplicationsJust because it gets through the Patent Office does not mean it will withstand a post-issuance challengeConsider adding detailed dependent claims and/or filing a continuation with claims taking into accountConsiderations for Issued PatentsReviewing to determine how enforceable the claims are

Consider re-issue applications for any particularly important IP

IP ASSETSSlide20

Software PATENT ISSUESDefending Lawsuits with Section 101 Challenges

District CourtEarly Section 101 challenges based on Alice are becoming a powerful tool in disposing of cases at the 12(b) stageConsider adding factual support for a Section 101 challenge in an Answer, if a 12(b) is not filed, so that a 12(c) motion for judgment on the pleadings remains an option

IP ASSETSSlide21

Software PATENT ISSUESDefending Lawsuits with Section 101 Challenges

Patent OfficeCovered Business Method challenges are limited to financial-based patents, although the Board has been broadly interpreting this requirementPost-Grant Review is available for patents filed after the America Invents ActNo way to challenge Section 101 at the Patent Office for non-financial software patents that claim priority earlier than March 15, 2013.

Motions to stay in view of a pending CBM (or IPR) are frequently granted if the petition can be determinative of all patents-in-suit

IP ASSETSSlide22

Software PATENT ISSUES

A shift back to patenteesEnfish, LLC v. Microsoft Corp. (Fed. Cir. May 12, 2016)Only the second post-Alice

case to find a patent valid under Section 101 Concerns a method and system for storing data in a relational manner, without using separate logic tablesFederal Circuit held that the claims were directed to an improvement in computer technology, not an abstract ideaDistinguishing point is that the patent was clear that the “invention” was a new way of storing data in a relational way, which improved the functionality of the computerCompare to abstract ideas that are implemented with generic computers, but do not affect how the computer actually operates

IP ASSETSSlide23

Software PATENT ISSUES

Joint InfringementAffects many issued patentsFor patent holders, analyze method claims to determine any limitationsConsider reissue patents for valuable IPFile continuations if an application is still pending

This is purely an issue of claim drafting techniqueFor patent defendants, another powerful tool to challenge software patentsControl and direction cannot be met by simply instructing someone at arms-length to do something

Client/server claims can go either way—if client-side actions necessarily happen in response to a server-initiated trigger, not likely to be joint (

TQP

Dev. v. Intuit)Non-infringement position – no single entity is performing all the stepsClient/serverUser/userApplies to many early internet and networking patentsLaw was not clear for years, at least until Muniauction (local case) in 2008

IP ASSETSSlide24

Divided Infringement

Limelight Networks v. Akamai Techs. (2014)Methods of delivering content over internet

Limelight’s customers, not Limelight, perform certain “tagging” and “serving” stepsCustomers tag the content to be hosted and delivered, Limelight’s servers do the restSupreme Court examined the law of induced infringement when steps are not being performed by the same entity (joint infringement)Holding

: a single entity must perform each and every step of a method claim

SCOTUS cited Federal Circuit authority and implicitly invited the Circuit to overturn its prior decisions in

Muniauction and BMC if it wanted toInitially, on remand, a panel of the Federal Circuit declined to overrule its previous cases requiring a “single entity” to directly infringe, even if relying on inducementNo infringementSoftware PATENT ISSUES

IP ASSETSSlide25

Divided Infringement

Limelight Networks v. Akamai Techs. (Fed. Cir. 2015)

en banc Federal Circuit on remandReverses and finds infringement. Really?Opinion finds infringement under the facts of the case, but then goes on to define joint enterprise liability

“We conclude, on the facts of this case, that liability under § 271(a) can also be found when an alleged infringer

conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method

and establishes the manner or timing of that performance. Cf. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005)”Software PATENT ISSUES

IP ASSETSSlide26

Divided Infringement

Limelight Networks v. Akamai Techs. (Fed. Cir. 2015)

Terms of service agreements could be sufficient “control or direction” under new articulation of the testAvoid liability by limiting ToS?Only applies to direct infringement under Section 271(a)But indirect infringement is harder to

prove

when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance

“Limelight requires all of its customers to sign a standard contract. The contract delineates the steps customers must perform if they use the Limelight service. These steps include tagging and serving content.”Software PATENT ISSUES

IP ASSETSSlide27

Divided Infringement

Limelight Networks v. Akamai Techs. (Fed. Cir. 2015)

The Federal Circuit didnot stop there…A joint enterprise requires proof of four elements:(1) an agreement, express or implied, among the members of the group;(2) a common purpose to be carried out by the group;(3) a community of pecuniary interest in that purpose, among the members; and

(4) an equal right to a voice in the direction of the enterprise, which gives an equal right of control.

Software PATENT ISSUES

IP ASSETSSlide28

Software PATENT ISSUES

Consider other forms of protectionGraphical User Interface (GUI) design patents are becoming popularGUI designs protect the look and feel of an interface, and can even protect certain animated interfacesApple, Microsoft, Google, and Facebook are all filing GUI design patents in large volumesAbout 3 years to be examined due to popularity

Consider numerous embodiments

IP ASSETSSlide29

Patent Assertion

Entities / NPEs

IP THREATS

Non-competitive patent litigation

Targets end-users of technology

Seeking nuisance value settlements

Often in the form of:

Holding company that buys the patents from the open market

Spin-off of existing company involving the transfer of patent rights

Company that once practiced the patent but now focuses on licensing and monetization

Company that developed, but never practiced, the patentSlide30

Patent Assertion

Entities / NPEs

IP THREATS

Different types of entities

Practicing

Non-practicing “innovation” entities

Non-practicing, non-innovating entities

Non-practicing, but used to practice the patentSlide31

Patent Assertion

Entities / NPEs

IP THREATS

U.S.C

. § 271

whoever

without authority makes,

uses

, offers to sell, or sells any patented inventionSlide32

Patent Assertion

Entities / NPEs

IP THREATS

U.S.C

. § 274

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement,

but in no event less than a reasonable royalty for the use

made of the invention by the infringerSlide33

Patent Assertion

Entities / NPEs

IP THREATS

Often software-based patents

Credit card processing – many encryption patents from 1990s

Web search functionality – database structure and traversal methods

Navigation menus

Store finder / map interfaces

Mobile apps – many PDA/GPS-based patents from era of

PalmPilots

and early feature phonesSlide34

Patent Assertion

Entities / NPEs

IP THREATS

Context-based advertising

Wi-Fi

Using

a scan-to-network

printer

Online shopping

cartSlide35

IP THREATS

As patent troll filings decrease, many are seeing a rise in nuisance-value copyright assertion

Many brought by practicing companies

Feels like a “

gotcha

”

Strict liability and the availability of statutory damages makes this an attractive business model for plaintiffs

Often software-related, taking advantage of uncertainties in the law concerning infringement in the digital worldSlide36

IP THREATS

Monotype

Font files

People usually associate fonts with trademarks

Fonts are typically not subject to copyright protection

BUT…font files are protectable as software

Leads to an absurd result – static images OK but not dynamic text?

Webpages and mobile appsSlide37

IP THREATS

Freeplay

Music licensing company that advertises “royalty free” music

Free is not always free, even from a company with “Free” in its name…

Skip notice-and-takedown procedures, not shy of litigating

Easy to use robots to find musicSlide38

IP THREATS

Live Face on Web

Dealing with past actions of vendors

Does in-line linking constitute “distribution” of a file?

Vicarious infringement for actions taken by independent contractors?

Focusing on small businesses with advertising liability coverage Slide39

IP THREATS

Getty Images

The classic – Getty is everywhere

Typically a vendor issue

Searches go so deep as to find images used in

powerpoint

presentations linked to from a minor webpage

Takeaway – if you’re not sure about something, strip images from

powerpoints

before making them publicly availableSlide40

IDENTIFYING RELEVANT RESOURCES

IP THREATS

Off-the-shelf products

Cleanest indemnity claim

Uniform Commercial Code

Licensed products

No sale of goods – UCC implied warranties do not apply

Typically software and/or hardware provided as part of a service by the manufacturer

Custom developed products

Most difficult indemnity issue

Typically must determine if accused functionality was requested (part of the customization) or a routine underlying function that would be present in many different customized products from that providerSlide41

IDENTIFYING RELEVANT RESOURCES

IP THREATS

Licensed products

Must examine indemnity provisions in license

These provisions are becoming more and more limited as PAE/NPE litigation increases

Must examine indemnity provision in view of the patent claims

Many indemnity provisions exclude situations in which the licensed technology is

combined

with other technology

They often appear innocuous, but are typically a vehicle for denying indemnity claimsSlide42

IDENTIFYING RELEVANT RESOURCES

IP THREATS

Examining indemnity provisions

Does the provision limit liability to functionality that is “out of the box”?

Does the provision exclude claims that involve the licensed technology being “combined” with third-party systems and/or devices?

Examine the patent claim:

Does it recite limitations for internal infrastructure? E.g., a local area network, a database, etc.

Does it recite limitations for hardware components? E.g., a server computer, a mobile device, memory, etc.Slide43

IDENTIFYING RELEVANT RESOURCES

IP THREATS

Examining indemnity provisions

Examine the patent claim:

Does

a spreadsheet program require that you use it with financial data?

Does

the software vendor provide a database, or does that already exist?

Does

the software vendor provide a processor

NOTE: Indemnity claim could be denied by

vendors

that

make

and

sell

spreadsheet softwareSlide44

IDENTIFYING RELEVANT RESOURCES

IP THREATS

Claims brought by copyright assertion entities

More likely to be covered by insurance than patent claims

Often in the context of an independent contractor rendering services

May have common law claim absent a written indemnity provision

May already be licensed by a previous ownerSlide45

RESPONDING TO IP THREATS

IP THREATS

Licensing Demand Letters

Often vague, ambiguous

Sometimes detailed, with infringement charts

Direct filing of complaint

Notice pleading allows for vague and ambiguous averments – not difficult to survive 12(b)(6)

Plaintiff-friendly or “rocket docket” venues – E.D. Texas, C.D. Cal., D. Del.Slide46

RESPONDING TO IP THREATS

IP THREATS

Licensing Demand Letters

Allows

entity to establish knowledge of the patent

Can later file a complaint and aver willful infringement and indirect infringement

Often asking for nuisance value license demands that are often less expensive than a thorough investigation

Many letters are vague to avoid declaratory

judgments

Some entities have more bark than bite – see if they are likely to follow throughSlide47

RESPONDING TO IP THREATS

IP THREATS

Reviewing a License Demand

What technology is implicated?

What vendors (if any) provide the technology?

Hardware and/or software vendors

Service providers (developers)

Manufacturers (off-the-shelf products like routers)

How litigious is the entity?Slide48

RESPONDING TO IP THREATS

IP THREATS

Reviewing a License Demand

For patents:

Have the claims been challenged in court or in front of the Patent Office?

When do the patents expire (or are they expired)?

Have related patents been challenged or litigated?

For copyrights:

Are statutory damages available?

Ownership issues?Slide49

RESPONDING TO IP THREATS

IP THREATS

Reviewing a License Demand

Action items

(1) Make formal indemnity request to vendor/service provider implicated by claims

Beware: many agreements may have time limits and specified procedures for instituting notice

(2) Check insurance coverage

(3) Investigate entity and litigation history

(4) Investigate merits/scope of asserted claims in demand

(5) Choose response

Counteroffer

Request for more specific information

Present reasons of license / non-infringement

File Declaratory Judgment

Nothing???Slide50

RESPONDING TO IP THREATS

IP THREATS

One recent real-world example of a (non-lawyer) response*

as reported in:

http://arstechnica.com/tech-policy/2015/03/how-life360-won-its-patent-war

/Slide51

LITIGATING IP THREATS

Litigate to Trial/Litigate to License/Litigate to SettleSelecting the “test case”Building a reputationEconomies of joint defense groupsOpinions (negate willfulness, inducement issues, etc.)Motion to dismiss (101)PTAB

Petitions (IPR, CBM, PGR)ADR

IP THREATSSlide52

LITIGATING IP THREATS

IP THREATS

Direct to litigationNotice pleading allows for vague and ambiguous averments – not difficult for plaintiffs to survive 12(b)(6)

Other defendants can be a useful resource – get in touch with a joint defense group

Weigh cost of litigation against cost of settlement

If there is a good non-infringement position, may be beneficial to stay in the case and keep negotiatingConsider risk of becoming a target Joint defense group shares workloadSlide53

LITIGATING IP THREATS

IP THREATS

Direct to litigationMove to dismiss

For patents, 101 or indirect

For copyrights, if alleged acts do not amount to infringement

PTAB petitionsSlide54

CHANGING IP Litigation LANDSCAPE

Many different bills have been drafted and proposedMain issue: very difficult to draft a bill that is evenhanded and does not hinder incentives for technological development

Concerns:Fee shiftingSpecific pleading requirements

Protecting end-users

Excluding licensing entities from ITC litigation

Transparency in patent ownershipProviding FTC with ability to stop bad faith demand lettersTrade Secrets

IP THREATSSlide55

DTSA of 2016

IP THREATS

“(1) In General.—An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”

Extension of the

Economic Espionage Act of 1996Slide56

DTSA of 2016

IP THREATS

DTSA

definition of a trade secret:

Information

Reasonable measures taken to protect the information

Derives independent economic value from not being generally known

Information

includes: formula, pattern, compilation, program, device, method, technique, or process

Examples

: Plans, designs, negatives, computer software, customer lists, non-public financial information, cost and pricing information, manufacturing information, business opportunities, certain personnel info, etc.Slide57

DTSA of 2016

IP THREATS

Acquisition by a person with knowledge (or who should know) that it was acquired by

improper means

Disclosure / use by a person without consent who:

Used

improper means

to acquire the trade secret

Knew or had reason to know that it was:

Derived from / through

improper means

Acquired under circumstance of secrecy or limited scope