GLG News by Douglas Lichtman

Implications: The Federal Circuit today issued one of the most anticipated decisions of the year.  In it, the court adjusted the rules that govern what can, and what cannot, come into the patent system.

Analysis: A flood of press coverage has made clear that today's decision in In Re Bilski is important.   But why?

Put simply, Bilski alters the rules that define patent law's subject matter.  Through the years there have been a series of cases that struggle to decide exactly how broad patent law is.  Does it cover any invention so long as it is sufficiently novel?  Are some inventions too disconnected from physical consequence that they do not count as patent-eligible?  Bilski is the most recent case in that line, and it seems to exclude some categories of invention from the system.

Will this be an enormous change?  Likely not, because patent drafters have always been good at thinking of ways to recharacterize their inventions so as to meet the then-current subject matter test.  So if the court requires a physical transformation (say) as the touchstone for patent eligibility, the best patent drafters will find ways to redraft the relevant claim language so that it points to a suitable transformation.  Similarly, if the new rule requires that an invention have a physical embodiment, again patent drafters will rise to the challenge.

This is not to say that Bilski will not in the end cause some previously patent-eligible inventions to now be excluded.  It is only to say that the biggest impact is likely to be that the most skilled patent drafters -- the ones who can most completely imagine and reimagine a client's invention -- will once again be in particular demand, at least until new norms are established about how to talk about inventions in light of Bilski's new rules.

Implications: TiVo has picked up some money from EchoStar based on the old infringement finding, but TiVo is still waiting to hear if it will get the one thing it really wants: an injunction barring EchoStar from continuing to offer its DVR service.

Analysis: In September of this year, TiVo and EchoStar went to court to argue about whether TiVo is entitled to an injunction that would have immediately stopped EchoStar from offering its DVR service.  No injunction issued -- and I don't expect one -- and it is now almost two months later.

Yes, in the meantime, TiVo's old cash win was made official.  TiVo won a little over $100 million back years ago, and that was ordered to be paid.  But the real fight now is about what comes next.  Specifically, TiVo and EchoStar disagree about how much more EchoStar owes beyond that old sum, and the firms disagree about whether EchoStar should be quickly stopped from offering its DVR service.

My prediction?  I expect that, in November, the court will come back and schedule a next round of hearings where the court will look further at EchoStar's newest DVR products to determine whether they infringe.  In the interim, I doubt TiVo will get any sort of punishing injunction.  In short, TiVo's long wait continues.

Implications: BYI has finally succeeded in its defense against IGT's patents on wheel-based bonus games.  Now, the case is up for appeal, at least if the Federal Circuit decides to hear it.

Analysis: For years, I have been writing about BYI's litigation with IGT.  Now, finally, BYI has reached the milestone I wrote about: the court has ruled on summary judgment that BYI has not infringed any valid IGT patent related to wheel-based bonus games.

The case at this point could have moved forward to jury, with that jury hearing the remaining few issues (a small residiual patent charge against BYI, and an antitrust counterclaim against IGT).  Instead, however, the court has decided to send the case up on appeal, and deal with those remaining issues only after the appeal is done.

My take?  If the appeal is taken, then this buys both sides some time to either move their other conflicts forward (ie the Delaware litigation) or cut a broader settlement.  The appeal might not be taken, however, because the Federal Circuit typically frowns upon this sort of interim appeal.  The Fed Cir typically requires that lower courts finish all aspects of a case prior to appealing even the most important chunks.

Next up: Either some action in the Delaware case, or a sign from the Federal Circuit as to whether this appeal will be heard.

Implications: A tentative settlement was reached this week in the Google Book Search litigation, opening the door to great possibilities but also raising new questions about the emerging market for online book distribution.

Analysis: For years now, Google has been locked in a copyright dispute with book publishers and authors over the Google Book Search project.  Google had taken the position that it could, without permission, scan books into digital form, include them in a searchable database, and also deliver snippets of those books as search results.  Copyright holders had countered that the copying and excerpting ran afoul of copyright law and was not excused under fair use.

As an academic, I have written and commented often about the case as it percolated through the litigation process; but now a tentative settlement has mooted the legal fight and shifted the focus away from the "what does copyright allow" questions and toward the "what business model now" line of inquiry. 

On that, two thoughts:

First, I, like everyone else, continue to be excited by the now increasingly real possibility of a comprehensive, online Library of Alexandria.  Scanning all these books is a big first step toward that; and the settlement allows several opportunities for Google to show large excerpts of books, sell books, and so on.  Ten years from now, it seems likely that a huge percentage of all published books will be available for download and/or viewing.  That's an enormously positive development.

Second, I see the worries that people raise about Google perhaps becoming the only provider of this information.  Indeed, there are conversations underway about whether the court should adjust the settlement in ways that would make it more possible for other firms to enter this market and benefit from the deal.  It's not entirely clear how to evaluate this part of the fight -- there are other barriers to entry, after all, even aside from the copyright issues -- but, again, it's easy to see why some people have shifted from worrying about copyright to worrying about, instead, antitrust.

Next up: the court has its chance to approve of or modify the settlement. 

Implications: After falling short in its recent round of cases against Qualcomm. Broadcom has now filed a new complaint, this time alleging that QCOM's licensing practices are impermissible under a patent rule known as exhaustion.  The bad news for BRCM, however, is that exhaustion almost surely does not apply.

Analysis: Broadcom launched a new litigation effort against Qualcomm this month, but the new complaint has little chance of success.  The core allegation is that QCOM licenses its patents in an illegal pattern.  Basically, QCOM licenses some firms to use the patented technologies, and then QCOM licenses those firms' customers to use the same patented technologies.  BRCM argues that this pattern amounts to having customers pay twice for the same rights, thereby violating patent law's "exhaustion" rule.

The theory at first sounds plausible.  However, in patent law, patent holders are allowed to engage in these sorts of complicated licensing arrangements so long as their contracts are clear.  That is, if the first buyer has no idea that he is buying only part of what his customers need, then there might be a problem.  But if the arrangement is adequately documented -- if, say, the first buyers are told that they are licensed to make the patented products, but that they can sell those products only to customers who are also licensed -- then patent law has no objections.

QCOM's patent licensing follows this sort of permissible, clear contractual structure; and the Supreme Court recently has reaffirmed that these sorts of structures are permissible.  Thus, in my view, BRCM's complaint is unlikely to go far.  (Much as Hynix made a similar allegation against Rambus a bit ago, only to see the charge rejected for similar reasons.)

Implications: The coverage regarding this week's decision in the BRCM/QCOM patent litigation has stressed the surface facts: namely, that two BRCM patents were affirmed on appeal, and only one was rejected.  What the coverage misses, however, is that the patents are far from equal players.   The patent that was rejected was by far the most important patent in the lot.  The ones that remain might matter substantially to Sprint, but probably are of low consequence for QCOM or its business prospects.

Analysis: BRCM and QCOM have two substantial patent cases up and running.  Still pending is a case that comes out of the ITC and threatens to substantially harm QCOM's business.  That decision on appeal could come within the next two months, and I like QCOM's chances.  But the other case came to a significant milestone this week as the Federal Circuit affirmed the jury verdict with respect to two BRCM patents and rejected just one.

The press covered the story by counting.  Two patents won, one lost, somehow meant on balance a win for BRCM.  But that is not right.

The patent that was lost is a patent that had implications for WCDMA.  Anyone who follows QCOM knows that is important.  Yes, QCOM might have a workaround; but, either way, that patent posed a real risk to a substantial forward-looking part of QCOM's business.

The other two, however?  Not so important.  These two combine to have implications for CDMA2000, EV-DO, and QCHAT.  None of those technologies are irrelevant, admittedly, but none rise to the importance of WCDMA.  Moreover, Verizon already has a deal in place that covers everything Verizon does, so the bulk of the remaining value is basically just the value these patents have to Sprint.

Might Sprint itself, or QCOM on Sprint's behalf, try to strike a deal?  Sure.  But if we have to declare a winner and a loser, I would think the declaration would go exactly backwards to what the counters claim.  Two patents won, one lost, is not the analysis.  The analysis instead is that the central patent is gone, and some less valuable claims have now survived for further litigation or settlement.

Next up: the high-stakes ITC appeal, coupled with a hearing at the ITC about QCOM's claimed workaround.

Implications: The main patent case between BYI and IGT is now in its final weeks.  The parties this week sharpened the fight a bit more by filing a series of motions that attempt to have certain testimony and evidence excluded from trial.  Meanwhile, all eyes now turn to the decisions on summary judgment, which should issue imminently.

Analysis: BYI and IGT now face a late October trial date for their big case involving both wheel-based bonus games and player tracking technologies like the iView.  Before then, the court should rule on the several pending motions to dismiss, wherein each side has argued that certain issues are so clear that the judge should just rule on those issues rather than letting things slip to jury.

This week, some new motions caused a stir, as IGT and BYI both submitted motions where each side requests that certain evidence and testimony be excluded from trial.  Many of the motions struck me as unlikely to be granted.  IGT, for instance, went after several of BYI's experts, accusing them of fundamental flaws in their analysis or bias or the like.  The judge surely won't exclude all those experts, especially because IGT can always raise its objections through cross-examination.

Other motions, though, might pass muster.  IGT, for instance, wants to make sure that the case doesn't turn into an argument about patents that are not even relevant to the case, and has asked that various experts be told not to cross over into topics (like, say, things that they learned while under attorney-client privilege) that are clearly impermissible.  Those motions seem plausible, and they would end up accomplishing the normal work of these sorts of motions: cleaning up the evidence for a sharper, more comprehensible trial.

Next up: most likely some decisions on some or all of the summary judgment motions.

Implications: A few days ago, a District Court in Minnesota reversed course on its own prior holding and decided that, in copyright law, it is not actionable to "offer to distribute" a copyrighted file without permission, but instead only actionable if you actually distribute the file.  The opinion raises a number of interesting questions about how copyright law should and does work, perhaps most notably forcing the copyright community to think through the reasons why the law ever forbids "attempted" as opposed to fully consummated misdeeds.

Analysis: In a prior ruling, a district court in Minnesota had announced that a participant in a peer-to-peer file sharing system infringes copyright when he offers a song on the system.  The legal language was that this was an actionable "offer to distribute" and that it did not matter whether the song was in fact distributed.  That same court reversed course this week and said, instead, that there must be evidence of an actual distribution in order to find liability on facts like these.

That decision raises a number of interesting issues about the Copyright Act and copyright policy; but here I want to frame one: when in the law is it appropriate to forbid "attempts" at bad deeds, thus allowing the system to stop those deeds prior to consummation and/or without evidence of consummation?

One attractive scenario would be an instance where we are confident that attempts to do a misdeed will inevitably and naturally lead to the actual misdeed.  In those instances, stopping the attempt is basically the same as stopping the misdeed, and might have the advantage of avoiding some of the harm of the deed (by allowing earlier intervention) or being cheaper to detect/prove.  Another attractive scenario would be an instance where the actual misdeed is particularly horrific (ie murder) such that society wants to stop attempts because actually waiting for the bad act itself is just too costly.

Unattractive scenarios are the reverse: ie, cases where attempts will typically not lead to the actual bad act, or where the time lag between the attempt and the actual bad act is long enough that the relevant decision-maker might plausibly change his or her mind, or where the costs of detecting the actual bad act are low and the harm caused is fully reversible through after-the-fact court remedies.

Here, the above analysis makes me suspect that an "attempt" should be actionable, though my thoughts there are tentative given the freshness of the decision.  On first blush, though, it seems implausible to think that a person who offers a file on a peer-to-peer network isn't fully intending to actually distribute the file, isn't likely to actually distribute the file, or is likely to rethink the decision and pull the file prior to consummation.  Moreover, it seems like it would be cheaper to allow copyright holders to put forward evidence of the offer than it would be to require them to actually prove the distribution.

Curious what other readers think in terms of the logic of when the law should, and should not, recognize "attempted" crimes as actionable?

Implications: The September 4th hearing has now come and gone, and still TiVo commentators seem to think that TiVo is moments away from a final, decisive win.  The reality is considerably more bleak.  TiVo's contempt request is likely to be denied, and TiVo will not gain significant leverage unless and until the court hears the full work-around issue.

Analysis: Commentators on the TiVo / Echostar litigation have been optimistic for months, mistakenly predicting that TiVo would achieve a decisive victory with yesterday's contempt motion.  I have been a nay-sayer on that hypothesis for some time, and, after yesterday, the writing seems even more sharply on the wall.

1. Echostar will not be found to be in contempt.

TiVo has argued that Echostar is in contempt because, instead of fully disabling its DVR technology, Echostar downloaded new software to the old boxes and (according to Echostar) in that way changed the boxes from infringing to non-infringing.  TiVo thinks that this very act is impermissible.  Regardless of whether the resulting modified DVR is infringing, TiVo thinks Echostar violated the injunction because the boxes are not disabled.  Me?  Hogwash.   The TiVo patent is strong enough to stop infringing products; but if the Echostar boxes do not infringe, there is no problem.  Indeed, even TiVo concedes that, if Echostar were to build a new DVR and mail it to customers, those boxes would violate the injunction only if they turn out to also infringe the patent.  But what is the difference between the boxes at issue -- where the update was sent electronically -- and the boxes that everyone agrees would be okay (sent by mail)?  No way that the injunction will be read to differentiate between these two delivery mechanisms.  Patent law is supposed to encourage infringers to create non-infringing, competing products.  Echostar did exactly what it was supposed to do, assuming the new boxes really are non-infringing.

2. TiVo faces a long fight over the work-around.

If I am right about the injunction, then TiVo's next step will be to have to fight about whether the work-around is or is not infringing.  That will be a slow process.  Indeed, Echostar has already revealed its analysis about how its work-around differs from and avoids the problems with the old boxes.  Even if TiVo is right that the new box really does infringe (an issue I'll leave for another day), the conversation here will be technical and will require serious effort and time on all sides.

3. TiVo's damages numbers are aggressive.

In the September 4th hearing, TiVo also pushed for high damages, tossing out a $220M number.  Unlikely.  After all, at least some of the boxes in the field could be immune from any damages because they are the above-discussed work-around boxes.  Moreover, TiVo's numbers included a much higher royalty rate than the one the jury awarded.  The judge might be allowed to raise the rate, sure (and might require yet another hearing to do that) but to think that the rate would go up that much seems a little preposterous.

4. The judge is annoyed, but he is a good judge.

Lastly, TiVo commentators seem to think that the judge is angry at Echostar for the way it handled this case and, as such, will come down hard on the company.  Again, I disagree.  The judge did express displeasure at how Echostar has handled parts of this fight, and understandably so.  But this is a good, smart, responsible judge, and there is no reason to believe that his emotions will cloud his judgment.  Indeed, even at the hearing, after the judge expressed his displeasure, he went back to clean substance.  That's one of the many laudable things about good judges.  They can draw a line between the little emotional reactions to hard-fought cases, and the law.

Implications: This week, the Federal Trade Commission was denied a chance to have its case against Rambus reheard by the fuller panel of judges.  That clears the way for Rambus to go back on offense, pushing its patent claims in several cases already significantly underway.

Analysis: For a while, it looked like the Federal Trade Commisson was going to be one of the only legal decision-makers to hold Rambus accountable for its involvement the JEDEC standard-setting body.  The FTC had in fact ruled that Rambus' behavior at JEDEC was culpable, and indeed had imposed punishing licensing terms on Rambus as a result.

Then the wheels came off.  On appeal, the FTC decision was fully reversed.  Then, this week, the FTC's request to have its case reheard was itself denied.  True, the FTC now can in theory appeal to the Supreme Court or try a new legal theory in what would be basically a fresh case; but, odds are, the FTC will not make much headway on either of those approaches.  Rambus looks to have just fully ducked the FTC's authority.

That sets up what could be a great run for Rambus this summer.  With the FTC-related risk now very low, Rambus can focus on the patent trials underway in California -- in particular with Hynix and Samsung this summer, and a host of manufacturers in January.  And, while JEDEC might be an issue in some of that litigation, Rambus is unlikely to be too worried this time around.  After all, now that the FTC struck out, Rambus can point to two big decisions this year where its JEDEC behavior was studied and deemed fully permissible.

Next up: We are still waiting for a decision from the Delaware court on spoliation, and then likely a decision from California on the Hynix remedy.

Implications: The copyright community lost a significant court case this month when, on appeal, Cablevision was able to defend its new RS-DVR service.   The legal issues matter tremendously, in my view; but the puzzle for me is whether the RS-DVR service itself is really all that important.

Analysis: The copyright community lost a significant fight this month when an appellate panel ruled that Cablevision's RS-DVR service does not infringe copyright law.  The decision is a blow to be sure; it limits some important copyright doctrines and, if it sticks, might disrupt a number of other important legal cases.

For this post, though, I want to puzzle about whether the RS-DVR is itself important.  That is, I see why the legal rules at issue are important; but is this case mainly important because of its longer term implications for the law, or is there really something consequential about RS-DVRs themselves?

Me?  I'm skeptical.  The RS-DVR is, from a customer's perspective, just like a normal DVR.  The customer must decide what he wants to record and push the right button in time; the customer can then watch the programs he himself triggered.  Thus the threat to the industry from the RS-DVR seems to overlap the threat from a normal DVR (think TIVO) rather than being something entirely new.

Now, as a legal matter, there are important differences.  For instance, the RS-DVR is designed in a way that makes it easier for an entity like Cablevision to monitor, detect, and stop infringing behavior.  That might make the law treat the RS-DVR differently from a normal DVR.  With control, after all, rightly comes responsibility.

My point here, then, is not that the case is unimportant (far from it) and not that the case ought to come out the same way as would a pure DVR case (again, no).  My point is only that a loss here matters a lot for the law, but not a lot for any practical economic consideration.  The RS-DVR and the normal DVR pose a similar threat.  If the RS-DVR gets a clean bill of health, or if it ends up being shut down, the real world will still look roughly the same.  Normal DVRs will just pick up the slack, with very little economic difference for the cable companies, the viewers, or the content community.

Implications: Courts around the world are now begining to ask exactly what, if anything, sites like eBay should be required to do to discourage the sale of counterfeit goods.  The main options being considered are either to require eBay and its peers to freeze sales upon receiving a complaint from some legitimate seller, and/or to require eBay and its peers to pay cash damages for the illegal sales they facilitate.  I would add to that list a third approach: require eBay to slow its transactions down.

Analysis: In courts throughout the world, the question is being raised as to what exactly a site like eBay must do to discourage the sale of counterfeit goods.  Several jurisdictions have responded that eBay's obligation is responsive in nature: upon receiving an adequate complaint about a specific offer to sell, freeze that offer.  But that solution is unsatisfying because it puts enormous costs on legitimate sellers to monitor eBay's business, and interventions of that sort will often be too late to be effective.  Other jurisdications are in various ways requiring eBay to pay cash damages for the harm it causes, which works, but raises difficult questions about how much should be paid, and to whom, and on what showings.

My take would be different.  The best thing eBay can do is make it easier for legitimate sellers to identify and use legal process against the counterfeit sellers.  Making "direct enforcement" easier would then discourage the illegal act; why offer to sell a counterfeit good if you know with high odds that you will be caught and punished?

How, then, can eBay facilitate direct enforcement?  One way would be for eBay to slow down the process of paying its sellers.  Imagine, for instance, if sellers were not paid until seven days after their sale.  That lag would give injured parties time to engage the normal mechanisms of the law, and would in the meantime ensure that the illegal sellers stay put; after all, each seller wants his money, and so he has to keep alive his relationship to the relevant address, bank account, and so on. 

There are obviously some complexities here -- I'll leave the details to another time -- but the high-level intuition here is that the law's strategy in the eBay context probably should not be merely to focus on what eBay can do to itself police its sellers.  The focus should expand to think about how, at low cost and low disruption, a site like eBay could help other parties enforce the law themselves.

Implications: Two weeks ago, IGT and BYI were offered the chance to delay their litigaiton over IGT's wheel-based bonus gaming patents and instead embark on a court-facilitated mediation.  This week, the parties passed on that opportunity, thereby moving that much closer to a jury trial this coming October.

Analysis: Two weeks ago, BYI and IGT were offered what might have looked like an attractive deal: agree to court-facilitated mediation, and any jury trial regarding IGT's patents on wheel-based bonus gaming would be delayed from October to January.  The parties this week politely refused the offer.

This of course does not mean that there will be no settlement.  The parties in theory could be talking actively right now, and the parties could settle without court involvement as late as the eve of trial.  What it does mean, however, is that this fight is going to soon come to a conclusion.  Either we will see a settlement negotiated privately, we will hear back from the court on the now-unavoidable motions for summary judgment, and/or the jury will get its chance to speak to the validity and scope of the IGT patents.

On those issues, the scorecard so far:

VALIDITY.  The court has already made clear that, in its view, there is at least some reason to doubt that IGT's wheel-based bonus patents are valid.  Whether that doubt will be enough to cause the court to rule that way on summary judgment is unclear; but, regardless, it seems that this part of IGT's case is precarious at best.

INFRINGEMENT.  The court's interpretation of the patents leaves substantial room for BYI to argue that many of its competing games are not actually infringing.  Again, it is unclear how many of these issues the court will resolve by summary judgment.  But, at a minimum, BYI has strong arguments to present to the jury about how several of its more prominent games (e.g. the Monte Carlo games) are not in fact infringing even if the patents are valid.

ANTITRUST.  The judge two weeks ago refused IGT's motion to toss parts of BYI's antitrust case, which means that BYI will be able to talk to the jury about the possibility that IGT knowingly received and attempted to enforce invalid patents.  From BYI's perspective, BYI does not need to win these antitrust claims; just making these arguments in front of the jury is beneficial, because the story itself will (a) cast doubt on the validity of certain IGT patents and (b) possibly cause the jury to doubt IGT's overall veracity on other matters.

Of course, none of this is meant to imply smooth sailing for BYI.  A case like this always presents a real risk for the accused infringer; and, although BYI has done well so far on all the legal issues, that risk remains here for BYI.  That said, BYI clearly has done better thus far than IGT would have expected back when the case was originally filed; and that might be a key point that will ultimately drive to settlement right before trial.

Next up: rulings on the several possibly case-dispositive motions for summary judgment, then jury trial in October on whatever is left.

Implications: With the Nokia fight now resolved, QCOM's primary litigation issues all involve Broadcom.  The most pressing of those is QCOM's pending attempt to reverse its loss last year at the International Trade Commission.  On that, recent events bode well.

Analysis: Last year, Broadcom delivered a seeming knock-out blow when it convinced the ITC that a QCOM chip, when used in particular ways, violated BRCM's patent on energy conservation.  BRCM's win was significant largely because of the breadth of the remedy.  The ITC barred not only QCOM from importing the accused chipset, but also barred QCOM's downstream customers from importing it as (say) part of a manufactured handset.

Fast forward to this month, and that same breadth has become QCOM's most promising defense.  At oral arguments in early July, QCOM asked the Federal Circuit to strike down the importation ban on the ground that it was impermissibly broad.  The ITC has the power to bar QCOM from importing an infringing chip, sure; but the ITC does not, on this argument, have the power to bar firms that were not themselves explicitly accused in (and hence officially allowed to participate in) the case.

QCOM raised a number of other arguments in the hearing, but the breadth is their best.  If QCOM wins it, the case would likely be sent back to the ITC for further proceedings, but regardless the fight at that point would be toothless.  The patent is set to expire; so by the time BRCM would file a new case explicitly naming all of the relevant QCOM customers, the patent will no longer be in force.

The Federal Circuit will likely rule in roughly six months.

Implications: There are two big BRCM/QCOM cases rapidly moving toward their final scenes: the ITC case, which I discuss in a previous post; and the Santa Ana patent case, where BRCM asserts three patents.  Earlier this month, the Federal Circuit heard the appeal in the Santa Ana case; and if they heard the issues the way I did, QCOM gained considerable ground, in particular on the '686 patent.

Analysis: In addition to the ITC case, BRCM is also litigating a pure patent case against QCOM where BRCM alleges that QCOM infringes three separate patents.  BRCM won the case at jury, but QCOM is now appealing all three losses at the Federal Circuit.  Oral argument was heard in early July.

The most important patent is the '686, because that one would have implications for WCDMA chipsets.  QCOM thus used most of its firepower to attack that loss.  QCOM's primary point is a simple one: the patent, as written, has a significant mistake in it; and the lower court saw the mistake and generously corrected it, rather than forcing BRCM to live with the defect.  That, QCOM argues, is kind but impermissible.

My view aligns with QCOM's view.  The '686 is written in a way that might even render its core claim invalid.  And the lower court did come up with a way to fix the problem.  But the lower court is not allowed to do such a thing; patent holders have to live with the language they chose.  Thus the lower court's reading probably should be reversed; and, if it is, the patent would not be much of a threat to QCOM under the new (correct) reading.

The other two patents in the case are more dicey.  I worry less about those, however, because their implications are less sweeping.  One of them, for instance, seems to primarily impact only QCHAT.  That is unfortunate for Sprint and obviously disappointing to QCOM; but, as long as the '686 gets a clean bill of health, QCOM can live with the other losses and/or negotiate a settlement that would be of modest cost at most.

Expect a decision on the appeal in roughly four months.

Implications: A few years back, RIMM was the poster child for a firm whose procedural decisions cost it a fortune.  Back then, the problem was that RIMM challenged NTP's patents, but did so too late, such that RIMM lost its court case before the Patent Office had enough time to reevaluate and ultimately call into question the patents.  Fast forward to this summer, however, and RIMM has learned its lesson.  RIMM has succeeded in challenging Visto's patents early enough such that the Visto patent case has been stayed and thus the Patent Office can do a full and final review.

Analysis: As I have written here before, RIMM's response to the Visto patent litigation has been to try to get the Patent Office to revisit the Visto patents and ideally rescind them.  This is the same strategy that failed RIMM a few years back in its fight with NTP; but this time RIMM had started the process earlier, and (as I wrote last time) the timing seemed like it could ultimately work out.

This month, it did, earlier than expected and with flying colors.  The judge in charge of what was to be a jury trial this month decided instead to freeze the case and give the Patent Office whatever time it needs to finish its work.  RIMM will thus be able to run the full Patent Office process and likely invalidate substantial chunks of the Visto portfolio.  And, all the while, Visto simply has to wait it out, rather than getting to litigate the court case in parallel.

Expect a healthy information flow from the Patent Office over the next two years or so, but a final decision from the Patent Office could easily drag on three or even four years more.  The trial, meanwhile, is unlikely to resume for an even longer time period, either because Visto's patents will be invalidated (hence no trial) or because the patents will be revised, which will in turn lead to new work that would have to be done before a jury could hear the resulting case.

Implications: Earlier this month, Judge Whyte announced that he would hold a hearing in late August to evaluate whether the QUANTA decision out of the Supreme Court has any impact on the pending Hynix remedy.  Hynix's lawyers think it does.  I disagree.

Analysis: Just when everyone was ready to finally hear what the remedy will be in the long-running Hynix/Rambus patent litigation, a new delay came to the forefront: Judge Whyte decided that he would hold a hearing to learn more about the Supreme Court's QUANTA decision.  Hynix's lawyers had pressed for the hearing, urging Judge Whyte to alter his damages analysis and the scope of any injunction.  Rambus' team, by contrast, has tried to argue that QUANTA is not relevant.

My take is that the QUANTA fight will delay Judge Whyte from announcing his verdict, but will not otherwise matter.  The reason is simple.  QUANTA was a case about what happens when a patent holder sells his patent rights to firm A, and then firm A sells those rights to firm B.  The legal question is whether firm B has to get a license from the patent holder, or whether instead firm B benefits from the license already purchased by firm A.

Does that apply to Rambus?  I don't see how.  There isn't a transaction of the sort where Rambus sells to (say) Intel and then Intel sells to (say) Hynix.  Instead, Rambus works in a market where Intel and Hynix might both sell to some common customer, but Intel does not directly sell to Hynix.  Without that sort of direct-line relationship between a licensee and a potential infringer, there is no QUANTA issue.

Again, the QUANTA fight does end up mattering because it likely will delay the remedy in the Hynix case.  Instead of ruling in July, my suspicion is that Judge Whyte will now not rule until September.  On the merits, however, QUANTA looks to me like a non-starter.  Judge Whyte will likely see that, too, when the parties more fully brief the case in anticipation of the August hearing.

Implications: With the '419 patent now back for another few months of patent review, Tessera has a clean shot at two big legal events: resolution of the Amkor arbitration, and an initial decision from the ITC.  The scary part: almost everyone seems to expect that TSRA will win both.

Analysis: Tessera has been riding a rollercoaster of legal news the last many months, with headlines out of the ITC and the PTO both causing sharp movement in the stock and public perception as well.  This summer, two more big events loom: the end of the Amkor arbitration, and an initial decision from the ITC.

The Amkor arbitration has thus far been something of a black box.  Could Amkor be challenging TSRA's patents on grounds of validity?  Maybe.  And obviously similar challenges are working (for now) at the Patent Office.  But such a strategy seems unlikely because, to beat a patent in arbitration, Amkor would have to carry a heavy evidentiary burden -- much heavier than the one in play at the Patent Office.  That leads me to think that the real fight here is probably a fight about royalties (probably which products are covered by the contract, and which not) rather than about the patents per se.  Put differently, this is about how much Amkor owes, not whether Amkor owes.

The ITC hearing has similarly been a somewhat quiet affair.  This time, the reason is that almost all of the juicy arguments and documents remain under seal.  That said, we know that the ALJ in the fight originally thought that the case should be frozen until the PTO finishes its review; and now that the case is back, against his better judgment, one wonders how he will look at the patent validity issues in the case.  After all, although he is not allowed to defer to the Patent Office's views, he certainly will remember them as he does his work. If he found the analysis convincing enough last time to freeze the case, is it possible that he will hear similar arguments this time and again find them convincing -- this time enough to invalidate the patents as part of his own investigation?

Implications: The litigation between Starent and UTStarcom will take an important turn in the next four weeks, as the Court will likely definitively rule on whether UTStarcom's (admittedly vague) allegations suffice to keep the bulk of its trade secret case alive.

Analysis: UTStarcom has a mound of circumstantial evidence to support its allegation that Starent built its company by borrowing heavily from UTStarcom's prior work.  Starent, however, has forcefully argued that the circumstantial evidence -- roughly the fact that a large number of senior employees left UTStarcom and took look-alike jobs at Starent -- is not enough; Starent wants details, or wants the case dismissed.

The parties have been fighting over this issue for months now.  UTStarcom understandably explains that it simply does not have much more to say right now, because without discovery it cannot know details about who took what, when, and how.  Starent understandably responds that so vague an allegation is a fishing trip, something that would be hard for Starent to defend against and something that would open up too broad a discovery process.

My take?  This is the key fight in the entire case.  After all, if the case stays alive and moves into discovery, Starent will be under huge pressure to settle.  The reason is that this sort of case is a terrible distraction for Starent's key employees, in that they are being sued as individuals for (among other things) violating their employment contracts.  So, if the case survives this early hurdle, I would think Starent would have no choice but to come to the negotiating table with a generous hand.  A company simply cannot thrive when its employees are going home every night and talking with their spouses about whether a big case at work could cost the family its house, life savings, and so on.

Implications: The Internet has been abuzz this week with gossip and assertions about the likelihood that Rambus will get an injunction against Hynix.  That analysis misreads the fight.  On the merits of the patent dispute, Rambus will either get its injunction or get significant cash damages; either is a big win for the firm.  The real question is whether that order will stand up on appeal.

Analysis: Litigation is a significant part of Rambus' business, so it was no surprise that the hearing this week generated substantial attention.  The explicit issue being discussed was whether Hynix would suffer an injunction or be forced to pay substantial cash damages.  And, while everyone seems to have an opinion on that question, my own take is that it does not much matter.  Whether Rambus gets an injunction and then settles for a large royalty rate, or Rambus is denied its injunction and instead is awarded a substantial cash sum, Rambus records a win.  The big issue, then?  Will that win stand up on appeal.

Remember, the litigation out of which the current injunction emerges is the case where (a) Judge Whyte decided that Rambus had not destroyed evidence in a legally culpable way and (b) the Judge plus the jury combined to thus far excuse Rambus' JEDEC subterfuge.  If the appellate court wants to freeze the case and hear these two issues on appeal, any remedy awarded this summer gets converted into (at most) a requirement that Hynix put some money in escrow.  And, if on appeal the appellate court disagrees with either of those decisions, any remedy awarded this summer becomes entirely moot.

I'm not predicting any of that -- or anything -- for the purposes of this post.  Here, all I want to say is that the furor and excitement over the injunction hearing is entirely misplaced.  No matter what the outcome of this hearing, Rambus wins; and, no matter what the outcome of this hearing, the real event is the next event: the decision of whether the remedy is held aside for purposes of appeal.