Five Patent Stories To Start 2021
None of which portend the end of democracy
Well, this was a hell of a week to start a newsletter about… patent litigation.
Given the attack on the Capitol that took place this week, I really doubt patent disputes are at the front of anyone’s mind. They weren’t really top of mind for me, and I think about them pretty much every weekday.
I want to take a few paragraphs to just acknowledge this insane historical moment. It’s an odd time to start a new writing project, but it would also be a terrible time to stop one. The events of yesterday have made me more aware than ever that democratic rights are fragile and could be lost. That includes freedoms I’ve enjoyed and will exercise here, like the right to say what one likes about things that happen in our nation’s courts.
I don’t intend to make this a political newsletter, but it does seem that rule by con men and liars will continue to be a threat during my lifetime. In that context, even writing down simple facts strikes me as inescapably somewhat political. I can’t not notice that the mob that breached the Capitol on Wednesday scrawled “Murder the Media” on a doorway. It wasn’t an accident when they smashed AP cameras, made a noose out of a camera cord, and hung it from a tree. For years now Trump has called journalists the “Enemy of the People” while his enablers nodded, a perfectly knowing throw-back to a Stalinist phrase that was used to justify mass murder.
Things are bad, but they could be so much worse. Writers and journalists in this country only face physical threat in the most extreme and unusual situations. But none of this is a rule of history. It is only this way because so many people do the work to keep it this way.
Okay, let’s talk about the future. Going forward, my plan is to publish a Letters Patent newsletter each Tuesday morning; time permitting, I’ll see if I can publish occasional shorter pieces, like this one, on Friday or Saturday mornings.
So without further ado, here are five patent news stories from the end of the year that caught my eye.
Patent Stats for 2020
Litigation was up last year, with 3744 district court cases filed in 2020, versus 3347 in 2019. That’s still significantly down from 2015, a year in which 5838 patent lawsuits were filed. Of those cases, some 2291 of them (61%) can be classified as non-practicing entity (NPE) lawsuits. The most notable litigation trend is that West Texas seems to have become the new East Texas—that is, a hotspot for patent litigation, and NPE lawsuits in particular. The Western District of Texas had a 216% increase in patent cases, with 808 lawsuits filed. A full 83% of the West Texas suits were filed by NPEs. (Unified Patents)
Separately, Unified reports that discretionary denials were up 60% in 2020, compared to 2019. “Discretionary denial” is a phrase used by the U.S. Patent and Trademark Office when it refuses to institute a petition seeking to review a granted patent (an inter partes review, or IPR).
Finally, the U.S. Patent and Trademark Office issued 352,040 utility patents last year. IBM has been the top acquirer of patents for 27 years in a row; I haven’t seen the press release yet, but I doubt they lost that streak in 2020.
IBM v. Airbnb settlement
Just before Christmas, IBM settled its patent lawsuit against Airbnb for an undisclosed sum. This is one of several IBM lawsuits against Web 2.0 companies, which demand royalty payments based on early Internet patents (some from the Prodigy era). In my view, these IBM patents are only very marginally connected to what the Web companies are doing today, and I’ve long viewed IBM’s patent assertions as essentially legal bullying. IBM filed its lawsuit against Airbnb back in March [Complaint], and it’s the most recent of several high-profile conflicts with big Internet companies. A brief in the Triangle Business Journal (North Carolina) passes on Airbnb’s statement that “IBM has recognized this action was not fruitful for either company.”
IBM also threatened Twitter (2013), and sued Priceline (2015), Groupon (2016), Expedia (2017), and Zillow (2019). Of those cases, only the litigation against Zillow seems to be outstanding. IBM was able to wring a $36 million payment from Twitter in 2014; the case against Groupon went to a jury trial and resulted in a $83 million verdict, followed by a $57 million settlement.
VLSI v. Intel heading to trial
The first big patent trial of 2021 could happen as soon as Feb. 15, despite serious concerns about coronavirus. The case, VLSI v. Intel, is in the fast lane headed towards a jury trial in West Texas. VLSI is a non-practicing entity that’s backed by litigation funder Fortress Investment Group. The NPE acquired semiconductor patents from NXP Semiconductor is seeking billions in damages from Intel. The two sides are doing last-minute jockeying over venue, with Intel seeking an Austin trial, and VLSI holding out for an earlier trial in Waco. (Scott Graham / Law.com)
U.S. v. Arthrex at the High Court
The amicus briefs on both sides have now been filed in the U.S. v. Arthrex Supreme Court case, which is set for oral argument at the Supreme Court on March 1. Medical device maker Arthrex wants to throw out the USPTO’s entire review system for granted patents, inter partes review (IPR), basically because of a snafu in administrative law. The decently-functioning IPR system is a bulwark against some of the worst patents, so it’s important that Arthrex not succeed in trashing the system. EFF, Engine, Niskanen, Unified Patents, Coalition Against Patent Abuse, CCIA, Apple, and Intel, all filed briefs warning the Court how bad life without IPRs could be. On the other side, TiVo, Koch-backed Americans for Prosperity, U.S. Inventor, Pacific Legal Foundation, and the Cato Institute are rooting for Arthrex. (SCOTUSblog)
Apple v. VirnetX
Looking back a few weeks on this one, but I want to note that Apple continues to try to limit the damage from a brutal series of trial losses to VirnetX, a publicly traded NPE. VirnetX wants to tack on $116 million to the $503 million verdict it got from an East Texas jury in October, as well as get an 84-cents-per-unit royalty on infringing units. Apple says damages should be slashed by 75%, because the jury should have been told that VirnetX’s patents were knocked out in a USPTO review. (Bloomberg)
That’s it! Have a great weekend, take some time away from the news and enjoy the fact that we still have a functioning court system. If you enjoy the newsletter, please share it with a friend!
Chart: Unified Patents