Tuesday, October 27, 2015

Apple motion against Ericsson could result in devaluation of wireless patent portfolios: protocols patent-ineligible under Alice

The Apple v. Ericsson docket in the Northern District of California was worth taking another look (after quite a while): two weeks ago, Apple brought a motion for summary judgment of invalidity of two patents asserted by Ericsson in its counterclaims to Apple's declaratory judgment complaint, and the motion is entirely based on 35. U.S.C. § 101 in light of last year's famous (or infamous in the eyes of patent attorneys) Alice ruling by the Supreme Court on patent-ineligible subject matter (this post continues below the document):

15-10-14 Apple Motion for Summary Judgment Against Ericsson by Florian Mueller

The introductory part must have all owners of wireless patent portfolios--not just Ericsson, but also the likes of Nokia and InterDigital--profoundly concerned:

"Ericsson's '917 and '990 patents, two of the seven patents in suit, claim abstract concepts in the context of cellular systems. The '917 patent is directed to the concept of generating and sending a report upon the occurrence of an event. The '990 patent is directed to the concept of following commands to an individual while ignoring commands broadcast to a group. None of the asserted claims purports to claim any inventive hardware or method for carrying out the claimed abstract concepts. The asserted claims are directed to patent-ineligible subject matter and fail the two-step framework articulated in Alice Corp. Pty. Ltd. v. CLS Bank Int'l [...], and therefore they are invalid under 35 U.S.C. § 101."

If this motion succeeds, and if a ruling in Apple's favor is upheld on appeal, the CFOs of various companies that have wireless communications patents in their books have to contemplate write-offs.

As my loyal readers know, I've watched countless wireless (especially standard-essential) patent lawsuits over the course of the last five years. Those have not all been equally weak, but I found most of them very unimpressive from a technical invention point of view. One can easily be misled to think that there is great innovation involved--but only if one turns a blind eye to the fact that a patent is only worth the delta it claims over the prior art, and that delta is usually rather questionable.

What Apple says about patents that just relate to "generating and sending a report upon the occurrence of an event" or "following commands to an individual while ignoring commands broadcast to a group" being patent-ineligible if they fail to "to claim any inventive hardware or method for carrying out the claimed abstract concepts" would apply, directly or indirectly (by applying the same standard and building, mutatis mutandis, the same kind of argument for other types of wireless patents) to most of the wireless patents-in-suit I've seen. For example, patents that cover handovers between cells (meaning that your phone connects to a different base station when you are walking or driving) could also be described as abstract concepts implemented with standard hardware.

A full-text search in Apple's filing for the word "protocol" (with Adobe Reader) didn't find a single occurrence. Maybe that's because the word "protocol" would sound too technical for Apple's purposes. But the way I see it, those patents are protocol patents. Protocols--conventions to do certain things in a certain order in certain situations--exist in the non-digital world as well. A handshake, for example, is a protocol--and the term "handshake" is also used to describe a technical concept in telecommunications.

I agree with Apple all the way: protocols per se, unless there's really some new, serious technology involved, should not be patent-eligible. I also believe that the way the Supreme Court's Alice ruling is increasingly interpreted supports Apple's case.

I admit that I underestimated the impact of Alice before and shortly after the ruling came down. Over time I realized that those who predicted from the start that this was going to kill many software patent claims--and those Ericsson wireless patents here are just software patents--had been right all along. I predicted lots of decisions in high-profile cases right, especially appellate decisions, but I've also been wrong a few times. Alice is the most important context. And with respect to Apple, I once thought--after listening to the official recording of an appellate hearing--that Apple was going to be granted injunctive relief, but it did not happen, and the next time I interpreted a recording as indicating that the court was going to uphold the denial of an injunction, and the opposite happened, though the Chief Judge of the Federal Circuit, in her dissent, took the kind of position I thought a majority or a unanimous panel was going to take (Chief Judge Prost wrote that this was not even a close case), though I'm optimistic that Samsung's pending petition for a rehearing (Apple has been asked to respond on or before November 5) will lead to a full-court review. Well, if Apple brings any new appeal of a denial of injunctive relief, you may be able to set your watch by in terms of betting on the opposite of the outcome I predict.

Back to abstract subject matter and invalid patents. The impact of Alice is really huge, and I view that as a very, very good thing. A few days ago, the thought leader of those who got Alice right from the beginning, Stanford professor Mark Lemley, pointed to a legal website that had no content to offer in a section entitled "Advice for Applicants Trying to Avoid Alice Pitfalls":

Yesterday, Forbes contributor Oliver Herzfeld, the Beanstalk agency's chief legal officer, gave "five reasons to copyright register your software now," and the fifth one of them is the "reduced availability" of software patents as a result of Alice.

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