M·CAM Featured in The European IPR Helpdesk Bulletin

The European IPR Helpdesk Bulletin, Issue No. 12 (January-March) 2014, features M·CAM's CAPP(tm) program. Martin Brassel, CEO of Inngot writes, "In October 2013, the UK Intellectual Property Office published the first detailed examination of the relationship between IP and business funding in Great Britain. It is currently in consultation with financiers and industry bodies to formulate its response and determine how to take forward the recommendations of the Banking on IP? report." See the entire article on page 6.

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Kashef Labs in the AUC Venture Lab News!

"The American University in Cairo celebrated the graduation of the AUC Venture Lab’s first cycle entrepreneurs on Thursday. The Venture Lab programme, sponsored by the Arab African International Bank and real estate development company SODIC, gives seven teams of entrepreneurs EGP 20,000 grants, working space at AUC and four months of business training." Read the Full Daily News Egypt Article: HERE

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Daniel Goldstein, db5's Chief Strategy Officer and M•CAM M•USE Partner, Interviewed on Bloomberg

Daniel Goldstein, db5's Chief Strategy Officer and M•CAM M•USE partner is interviewed on Bloomberg's advertising industry review titled, "Advertising's Century of Flat-Line Growth."

"The advertising industry has always held a special fascination because of its impact on our culture and our desires, a reality dramatized to great effect by such television series as thirtysomething and Mad Men. In the business world, the future of ad spending is an endlessly debated topic.

Daniel Goldstein, db5′s chief strategy officer, suggests two possible reasons for the flat line: Unlike manufacturing or financial services, companies cannot export or import advertising expenditures—by definition, it’s all domestic spending. Another reason: “Advertisers have failed to convince the client community of the value of advertising as an investment.” The ratio of sales to ad spending has remained stubbornly flat at 3.5 percent for a century. While other components of company spending—such as human resources, working capital, information technology—have fluctuated, ad spending has not."

Read the full article: HERE

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WSJ Reports on the Patent Trial and Appeal Board

"The Patent Trial and Appeal Board is a little known but powerful authority that often allows a company embroiled in a lawsuit to skip the question of whether it infringed a patent—and challenge whether the patent should have been issued in the first place...James Myers, a patent lawyer at Ropes & Gray LLP in Washington and counsel for Liberty Mutual, said that appearing before the board's judges was like "getting CAT-scanned, MRI-ed, and X-rayed, all within a three-hour period." To read the entire article, visit: HERE

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M•CAM Joins Charlottesville Better Business Challenge

M•CAM has joined the Charlottesville Better Business Challenge hosted by Better World Betty to reduce our environmental impact, find cost savings through green innovation, and become a more responsible community business in the Charlottesville area. M•CAM will be working with the BBC to reduce our energy and water usage, and engage with our community to help build a more ecologically minded Charlottesville.

Learn more: HERE

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TheLip.TV - Sean Stone's Buzzsaw Interview with Dr. David Martin

Debt Illusion and Free Market Manipulation with Dr. David E. Martin

Corruption of capitalism and the free market tailspin is discussed with special attention paid to currency manipulation, debt traps and how to subvert the status quo–here with Dr. David E. Martin. Raw materials, the root of the debt illusion, and buying influence in the modern system of finance are all explored, along with the possibility of reform and redirection of the economy, in this Buzzsaw interview hosted by Sean Stone.

You can read the full page:HERE

You can watch the full interview:HERE

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O’Neill gives green light for repeal of Bougainville Copper Agreement Act

After YEARS of working for the cause of our dear brothers and sisters in Papua New Guinea and recognizing the immense loss of life in Bougainville, we are quietly grateful for the courage of Lawrence Daveona and the response from Prime Minister Peter O'Neil! One voice in a chorus of "impossibles" can still be heard!

You can read the full story:HERE.

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La organización M-CAM de Virginia reacciona ante la Carta Abierta de FLOK Society

ECUADOR, CHARLOTTESVILLE, VA - M·CAM and the FLOK Society begin collaboration on the Heritable Innovation Trust, an alternative to the current intellectual property paradigm.

El interés por el proyecto FLOK Society empieza a evidenciarse. Entre las varias reacciones a la Carta Abierta, la respuesta de la organización M-CAM y su programa HIT (Heritable Innovation Trust), con sede en Virginia (EEUU), mostraron su interés en el proceso que lidera FLOK Society, que busca desarrollar un plan de transición y políticas de estado hacia una sociedad basada en el conocimiento común y abierto.

You can read the full story:HERE.

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A.G. Schneiderman Announces Groundbreaking Settlement With Abusive “Patent Troll”

"NEW YORK – Attorney General Eric T. Schneiderman today announced a groundbreaking settlement with MPHJ Technology Investments, LLC, a so-called “patent troll.” The Attorney General’s investigation focused on MPHJ’s use of deceptive and abusive tactics when it contacted hundreds of small and medium-sized New York businesses in an effort to strong-arm them into paying MPHJ for patent licenses of dubious value." Source:

You can read the full story:HERE.

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Dr. Y K Hamied Honored as one of "India's 25 Greatest Global Living Legends"

In mid-December, longtime friend of M•CAM and Chairman of Cipla, Dr. Y K Hamied was honored by NDTV Inia as one of “India’s 25 Greatest Global Living Legends”. The award ceremony was organized by NDTV at Rashtrapati Bhawan, New Delhi. All the Awardees were acknowledged by the President of India, Shri Pranab Mukherjee. Dr. Hamied's work to bring equivalent access to medication and knowledge is an inspiration to India and the globe. We congratulate Dr. Hamied on this achievement and his lifetime of impactful work.

You can read the full story and try the interactive documents:HERE.

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M·CAM's President David Pratt featured in the New York Times article, "Has Patent, Will Sue: An Alert to Corporate America"

CHARLOTTESVILLE, VA & NEW YORK, NY - M·CAM President David Pratt is featured in Saturday's New York Times article written by David Segal titled “Has Patent, Will Sue: An Alert to Corporate America”.

An excerpt from the article:

"So, the key question: Does the Hadoop Distributed File System infringe Parallel Iron’s patents?

David Pratt, the president of a company called M·CAM, agreed to weigh in. M·CAM is based in Charlottesville, Va., and performs what it calls “stress tests” on patents on behalf of banks that are making loans to companies with intellectual property. Mr. Pratt described himself as “patent-agnostic,” which is to say he came to this task without any particular bias.

His conclusion was that Parallel Iron has a very weak case.

“The problem is, these patents are severely challenged by what we call precedent innovation,” he said, using a fancy term for ideas that are in the public domain before a patent is granted. “What’s described in Patent No. 7197662,” referring to Parallel Iron’s patent, “has been done a thousand times. I.B.M. has been doing it since the beginning of computers.”

Mr. Pratt followed up by e-mailing a patent that predates Parallel Iron’s and which, he suggested, was quite similar. As Mr. Pratt put it, “There’s virtually no chance that ’662 and its family could survive a full-scale re-examination by the Patent Office, because there are a lot of things that could disable or destroy it.”

See more here: Has Patent, Will Sue: An Alert to Corporate America

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Dan Ravicher and the Public Patent Foundation filed a brief (No. 12-1324) as Amicus Curiae in support of petitioners. "Issuing an injunction against patent infringement is economically irrational and conflicts with the framers intent for the patent system by placing the private right of a patent holder above the public right to access patented technology."

Read the full brief: HERE

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M•CAM's David Pratt featured in today's Austin Statesman article by Dan Zehr entitled, "In Austin, Cornyn pushes patent-abuse bill"

As Reprinted from the Austin Statesman, AUSTIN, TX – May 30, 2013 Article:HERE.

"Sen. John Cornyn, R-Texas, met with a group of Austin’s high-tech officials Thursday to collect feedback on a new bill designed to reduce the number of frivolous patents lawsuits brought by “patent trolls.”
The Patent Abuse Reduction Act, which Cornyn filed last week, would heighten requirements and, potentially, costs for plaintiffs in patent lawsuits with little or no merit...Full Article:HERE"

M•CAM President, David Pratt had several comments in the article: “Such cases are often brought by entities “that make nothing and sell nothing,” said David Pratt, president of M-CAM Inc., a patent advisory firm based in Charlottesville, Va. “The patents in many cases are extraordinarily vague.” Because discovery costs can easily run into the millions of dollars, mostly on the defendant’s tab, Pratt said, “patent trolls” typically file vague claims and offer settlements to drop the suit before discovery.”

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"Giving Pharma its Prescription" India's Supreme Court Verdict on Novartis's Glivec.

As reprinted from the Hindu Times Editorial Section, Wednesday, April 3rd:

The Supreme Court’s (SC’s) verdict on Swiss multinational Novartis AG’s blockbuster anti-cancer drug, Glivec, is almost a classic East versus West story and it seems never the twain shall meet over the contentious issues of drug pricing and patenting rules.

On Monday, the SC dismissed the MNC’s efforts to push through a patent on Glivec after the company challenged the Indian Patent Act that prevents “evergreening” — a way of extending the patent period by marginally altering a drug without any significant change in therapeutic value.

This is a landmark judgement and the court has rightly upheld the progressive Section 3(d) that deals with “evergreening” of drugs. Under Section 3(d), incremental inventions can be patented, provided they entail demonstrable novelty and improved usefulness. But as the SC said in its ruling, Glivec is not a new medicine but an amended version of a known compound, which “did not satisfy the test of novelty or inventiveness”.

A month’s dose of Glivec costs around Rs. 1.2 lakh, while India-manufactured generics are priced at Rs. 8,000. Novartis as well as other pharma majors claim that rulings like these will have two major impacts on India: there will be a dip in research and development and foreign investment in the sector.

However, available literature shows that this claim may not be true. When it comes to drug discoveries, only 12-13% drugs are breakthrough drugs, less than 40% are moderately therapeutic breakthrough drugs and 50% are ‘Me-too’ drugs. The last category of drugs is structurally similar to already known drugs, with only minor differences.

Glivec falls in this category. Then as far as foreign investment in research and development is concerned, foreign companies really don’t invest in India; in fact, many don’t even manufacture their drugs here. They either import medicines or contract out to small-scale pharma companies.

According to the Public Health Foundation of India, the global pharma companies’ claim that they spend at least $1 billion on developing a new drug is not correct, it could be one-fifth of that amount.

They earn much more from a single market like the US. In fact, many experts argue that in the backdrop of a strong patent regime, rulings like this will spur innovation because only breakthrough drugs will give companies the opportunity to recoup their investments.

As far as foreign investments are concerned, in the last four to five years, pharma investments in India have been more ‘brownfield’ than ‘greenfield’.

The ruling has confirmed that India has a high bar for approving patents on medicines and is a clear signal for patent offices of the country that the law should be strictly applied, and frivolous patent applications should be rejected."

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Supreme Court to Hear Case Challenging Patents on Breast and Ovarian Cancer Genes

WASHINGTON – The U.S. Supreme Court announced today that it will hear arguments in a case seeking to invalidate patents for two genes associated with hereditary breast and ovarian cancer.

The original lawsuit was filed by the Public Patent Foundation (PUBPAT) and the American Civil Liberties Union (ACLU) on behalf of researchers, genetic counselors, patients, breast cancer and women's health groups, and medical professional associations representing 150,000 geneticists, pathologists and laboratory professionals. The patents allow a Utah company to control access to crucial genetic information used to make important medical decisions.

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The Bitter Apple -- Apple Grudgingly Admits Samsung did NOT Copy the iPad

Apple lost an appeal against Samsung in an ongoing U.K. case over the design patents relating to the iPad. A U.K. High Court appeals judge ruled in favor of Samsung at a hearing on October 18, 2012 finding that the Samsung Galaxy Tab 10.0 had not infringed on Apple's design patents. As a result, Apple was directed by the ruling judge to publish a notice on its U.K. website stating the court has ruled Samsung did not copy the iPad while designing the Galaxy tablet. This notice must be on display for six months in order to "correct the damaging impression" left by Apple following the legal dispute. While Apple did comply with the Court's demands, Apple's notice is bitterly communicated.

To read the notice, visit

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ACLU and PUBPAT Ask Supreme Court to Rule that Patents on Breast Cancer Genes Are Invalid

September 25, 2012

WASHINGTON – The American Civil Liberties Union and the Public Patent
Foundation today asked the U.S. Supreme Court to invalidate patents
for two genes associated with hereditary breast and ovarian cancer
that allow a Utah company to control access to crucial genetic tests
that could lead to life-saving treatment.

A federal district court previously had invalidated all of the
challenged patents. In August, a federal appeals court ruled for the
second time that companies can obtain patents on the genes. Its 2-1
ruling followed a Supreme Court order directing the appeals court to
reconsider its initial decision in light of a related patent case
decided by the court last spring.

The lawsuit against Myriad Genetics and the University of Utah
Research Foundation, which hold the patents on the genes, charges that
the challenged patents are illegal and restrict both scientific
research and patients’ access to medical care. Under well-established
law, patents cannot be obtained on either “laws of nature” or
“products of nature.” For example, neither the law of gravity nor
minerals, like iron, can be patented. The lawsuit contends that
patents on human genes violate this core principle of patent law and
the Constitution.

“In our view, the court of appeals did not fully consider or correctly
apply the Supreme Court’s most recent and relevant patent law
decisions, said Chris Hansen, staff attorney with the ACLU Speech,
Privacy and Technology Project. “DNA occurs naturally in the human
body and cannot be patented by a single company that can then use its
patents to limit scientific research and the free exchange of ideas.”

The patents granted to Myriad give the company the exclusive right to
perform tests on the BRCA1 and BRCA2 genes and thus to control the
diagnostic care provided to hereditary breast and ovarian cancer
patients and people at high risk for these diseases. Myriad's monopoly
on the BRCA genes allows it to set the terms and cost of testing and
makes it impossible for women to access tests that provide more
comprehensive information about their genes or get a second opinion
about their results. It also allows Myriad to prevent researchers from
even looking at the genes without first getting permission from

“Our genes were given to us by our creator, and not inventions created
by Myriad,” said Daniel B. Ravicher, executive director of PUBPAT and
co-counsel in the lawsuit. “The patenting of human genes, even in
isolated form, has the effect of giving ownership over human genes to
corporations, allowing them to decide who is allowed to know what they
have inside their own body.”

The restrictions on examining the BRCA genes can have devastating
results. Kathleen Maxian of Buffalo, N.Y. is suffering from late-stage
ovarian cancer that she believes could have been prevented. Her
sister, who is a breastcancer survivor, obtained a test from Myriad
that did not look for all known genetic mutations associated with
cancer and was told she was negative for mutations. Years later, her
sister learned through a more comprehensive set of tests that she did,
in fact, have a BRCA genetic mutation -- information that Maxian could
have relied on to seek preventive surgery. Numerous labs across the
country have stated they are capable of providing this comprehensive
screening and would do so were it not for the patents.

“We are asking the Supreme Court to rule in favor of women who are
counting on access to the best possible medical care and research,”
said Sandra Park, staff attorney with the ACLU Women’s Rights Project.
“No single company should be able to stop the brightest scientific
minds from advancing what we know about two genes that are connected
to devastating diseases.”

Lisbeth Ceriani, a breast cancer survivor and plaintiff in the case,
was faced with having to pay $4,000 for Myriad’s test to determine if
she carried a genetic mutation associated with hereditary ovarian
cancer because Myriad had refused to enter into a contract with her
insurance company. She was forced to wait 18 months before she was
able to obtain the test through a grant, at which point she learned
she does indeed carry a mutation that would not have been detected had
she opted for Myriad’s standard and less expensive test. .

"I became a plaintiff in this case because I don't want other women to
face the obstacles I did in obtaining personal genetic information in
order to make life-and-death medical decisions,” Ceriani said. “My
genes are my own. No corporation should be allowed to deny me the
right to look at a piece of my body."

The lawsuit was brought by researchers, genetic counselors, patients,
breast cancer and women's health groups, and medical professional
associations representing 150,000 geneticists, pathologists and
laboratory professionals. Attorneys on the case include Hansen, Park,
Aden Fine, Lenora Lapidus and Steven R. Shapiro of the ACLU; and
Ravicher and Sabrina Hassan of PUBPAT.

For more information on this case, please visit

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The Economic Cost of Blinded “Justice”- Apple v. Samsung Patent Wars

We may realize that, as egregiously demonstrated this week, the media-hyped Apple v. Samsung case was not a “win” for Apple or a “loss” for Samsung, but rather a huge loss for society all around. Apple didn’t invent the tablet and its “winning” patents, which were declared invalid when first submitted to the USPTO, do not represent the Constitutional intent from which they spring. Article I, Section VIII of the United States Constitution states that Congress shall have the power “to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the excusive Right to their respective writing and discoveries”.

Neither “Progress of sciences” nor the “useful arts” were served by the abuse of a Constitutional right perpetrated by both Apple and Samsung with their “rounded edge rectangles”, their “rubber-banding screen displays” and their perpetually moving finger slide-to-unlock” devices.

Read more from Dr. David Martin on the Apple Samsung case here:

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Lawmakers Blast UN for Handling U.S. Technology to North Korea, Iran

Yesterday The New American reported that U.S. members of Congress were speaking out against WIPO after they provided potentially dangerous technology to regimes ruling in Iran and North Korea. Mr. Gurry you have some explaining to do!

The text and a link to the article is provided below.

Outraged U.S. members of Congress on both sides of the aisle are speaking out against the United Nations “World Intellectual Property Organization” (WIPO) after it was caught providing potentially dangerous American technology to the regimes ruling Iran and North Korea. The UN agency reluctantly promised to “review” the issue, but GOP and Democrat lawmakers on Capitol Hill say that is simply not enough.

“We have written to WIPO demanding an independent, external investigation of how WIPO could have provided sophisticated U.S.-origin technology to rogue regimes like North Korea and Iran,” explained Rep. Ileana Ros-Lehtinen (R-Fla.) and Rep. Howard L. Berman (D-Calif.), the top Republican and Democrat on the House Foreign Affairs Committee. “Instead, the WIPO leadership has announced that it will institute a mere ‘review,’ which falls far short.”

“What’s needed is an immediate and credible investigation,” the lawmakers said in the joint statement.

The latest UN scandal began as far back as 2010 when, over the course of at least a year, WIPO offered computers, servers, firewalls, equipment, and other technology to the two dictatorships — both of which are currently under international sanctions by the UN itself. Details first began to surface earlier this year.

The global organization’s decision sparked an outcry, especially after it originally refused a U.S. State Department demand for an investigation. However, following the growing public scandal, WIPO agreed to take a few tepid measures including a change in some internal policies and a “review” of its activities.

WIPO Director General Francis Gurry “reiterated that the Secretariat is treating concerns relating to the Organization’s technical assistance programs to countries that are the subject of UN sanctions with the utmost seriousness,” the global intellectual-property outfit claimed in a press release. The statement also alleged that WIPO had received legal advice approving the technology transfers despite international sanctions.

Among the measures announced by the entity following the uproar were new measures to verify the legality of proposed deals with regimes under UN sanctions, referral of the recent transfers to international “committees” for “guidance,” and initial steps toward an “independent review” of the controversial programs. WIPO will also stop offering IT hardware to governments, it said in the statement.

But for concerned U.S. lawmakers on both sides of the aisle, that is not nearly enough. “We will accept nothing less than an independent investigation, full cooperation, and complete accountability,” said Rep. Ros-Lehtinen and Rep. Berman after the WIPO announcement.

Instead of the UN’s half-hearted measures and alleged probes, the two lawmakers apparently plan to get to the bottom of the scandal themselves. “WIPO also must fully cooperate with investigations by the Department of State and by our Committee, including by providing immediate, unfettered access to all documents and personnel,” they added.

And somebody needs to be held to account. “Those responsible for this outrageous misuse of U.S. technology and U.S. taxpayer dollars must be held fully accountable, and meaningful safeguards must be put in place to prevent these kinds of technology transfers in the future,” the House Foreign Affairs Committee leaders said.

The lawmakers also reiterated previous concerns that the UN outfit might try to punish the individuals who exposed WIPO wrongdoings in the first place. “We remain deeply concerned that WIPO may retaliate against the whistleblowers who helped bring these allegations to light,” they said in the statement.

Last week, the two lawmakers sent a letter to WIPO boss Gurry expressing serious concerns that suggested a cover-up might even be underway. “Even more troubling are allegations that your primary focus on this issue has not been full disclosure of all relevant information on these projects in Iran and North Korea, but rather discovering and punishing whistleblowers who initially alerted outside bodies about these transactions,” they wrote.

The letter also blasted WIPO’s refusal to cooperate with State Department requests. “There is no rational basis for this refusal,” the letter stated, adding that if Gurry had nothing to hide, he should be happy to work with investigators on the matter.

Officials at the U.S. State Department said they were concerned about the UN programs as well. However, a spokesperson told Fox News that even though they share lawmakers’ concerns, WIPO’s recently announced changes were a “positive” development.

Even analysts in the intellectual-property field seemed alarmed by recent developments and acknowledged that the UN would probably have to do more to clear the cloud of scandal. “The United Nations seems to coddle dictators, tyrants and oppressive (and genocidal) regimes of various types,” wrote President Gene Quinn of IPWatchdog, which focuses on issues related to intellectual property. “It was, however, a shock to learn that WIPO was at the center of the controversy.”

While he thought WIPO’s recent response was a “good first step,” Quinn suggested that the global outfit probably did violate UN sanctions by transferring the technology. “The lawyer in me understands why WIPO is saying that they don’t believe it violated UN sanctions, but the human in me just wishes they could step up and acknowledge that they screwed up, there were good but severely misguided intentions and promise that it will never happen again,” he added.

One of the main concerns about the controversial WIPO program is that it provided what lawmakers said was potentially “dual use” technology — it could be used for military purposes — to the rogue regimes in charge of North Korea and Iran. It was also not clear how the effort helped advance WIPO’s mission either, which is described on its website as promoting “innovation and creativity for the economic, social and cultural development of all countries, through a balanced and effective international intellectual property system.”

The beginnings of the scandal first surfaced months ago when Fox News reported in April that the UN, working through China, may have offered the communist dictatorship enslaving the North Korean people technology that was being used by the tyrant’s armed forces. According to the news agency’s findings, WIPO used a complicated scheme that seemed designed to bypass the UN sanctions.

Rather than seeking yet another investigation and apology, American critics of the UN have seized on the latest scandal to renew their calls to defund and oust the controversial institution from the United States altogether. Earlier this month, lawmakers also slammed the UN for using U.S. tax dollars for forced abortions in China. Sex scandals and allegations of fraud — not to mention its attempts to foist assorted schemes on the world — have plagued the UN for decades, too.

Opponents of the global outfit have long believed that the U.S. government should completely withdraw from the UN, known to critics as a “dictators club.” But in the wake of seemingly never-ending scandals surrounding the UN and its increasingly brazen power grabs, American opposition to the global entity and its scheming continues to build.

Whether the mounting outrage will actually deal with the problems or even end the UN altogether remains to be seen. With so many scandals in the headlines, however, critics of the UN seem increasingly optimistic.

You can read the article in its originality:

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Supreme Court to Decide Whether Patent Bullies Can Hit and Run

Dan Ravicher, Executive Director of the Public Patent Foundation writes about the Supreme Court agreeing to hear a case that could greatly expand the right of the public to defend itself from bogus patents.

Below is the article in its entirety.

I've written before on the sad state of patent quality in our country. Today I'm writing about a beacon of hope. Earlier this week, the Supreme Court agreed to hear a case that could greatly expand the right of the public to defend itself from bogus patents.

Remember, the granting of a patent is an intrusive act of government telling you, me and every other American we cannot do something. Jefferson called them "embarrasments", and he was right, they are, especially when they are completely undeserved, as a great many of the 4,500 patents issued every week are.

Unfortunately, as unbelievable as it may sound, there is absolutely nothing you, me or any other American can do to stop the government from taking our freedom away willy nilly by granting meritless patents in the first place. In fact, the government makes a lot of money doing so (it makes ten times as much money when it grants a patent as when it denies one; which would you prefer if you were a fat cat bureaucrat?). This is why it is so important to have ways to take our freedom back after the government has stolen it from us. As of now, that's very hard to do, because the government knows it has to make it as hard as possible for us Americans to take back our freedom in order to "protect the value of IP" (that's how the Director of the Patent Office spins the situation), else the Patent Office won't make as much money giving our freedom away.

In the Supreme Court case accepted this week, Nike (yes, that Nike, the famous sportswear company) sued a much smaller shoe company called Already, which does business under the name YUMS, for allegedly infringing one of its trademarks relating to the design of a shoe. Already looked at the trademark and quite quickly realized that it was completely invalid. (If you want to know how it's possible for our government to give out invalid trademarks and patents, see my talk on the Patent Pollution Problem. The same government agency, the United States Patent and Trademark Office, grants both)

Knowing it was going to lose, Nike decided to quit and walk off the field before time expired. In legal terms, what that means is Nike promised never to sue Already again for infringing that trademark "for similar shoes." After making the "promise" and giving up on its dead loser of a case, Nike asked the court to dismiss Already's request that the trademark be declared invalid. In other words, Nike picked a fight with a much smaller competitor, realized it was going to get its butt kicked once the little guy decided to defend itself, became a total chicken, and tried to run the other way, all the while retaining its trademark to assert against the same little guy again in the future (because surely Nike will argue new shoes by Already are not "similar" and therefore fall outside the "promise" they made).

Nike is not alone in using this hit-and-run tactic. There are numerous examples of overly aggressive patent owners doing exactly the same thing, threatening innocent people with completely false claims of infringement, suing them in court hoping the burden of defense alone will make them crumble, but then seeking to drop the entire case by making a meaningless promise not to sue once they realize the jig is up because their patent is completely bogus and the defendant is seeking to have it invalidated by the court. These patent bullies want to concede the case in order to avoid permanently losing the right to threaten and sue again in the future for infringing the same worthless patent. It's absolutely disgusting and the people who do this should be ashamed of themselves. If you want to start a fight, that's your prerogative, but you better be ready for the other guy to finish it. You can't just call time out when you're on the brink of losing so you can start over later on when you've got your chutzpah back. No sir, that's not how we roll here in America.

Not surprisingly, innocently accused parties are as outraged as I am at this ploy. They don't want to get sued at all, much less for infringing invalid trademarks and patents that would get shredded if they ever truly had their day in court. Already fought Nike in both the district court and the court of appeals for its right to have Nike's trademark declared invalid, but both courts let Nike off the hook. So, Already appealed to the Supreme Court, which, as I say above, on Monday decided to hear the case. Thank heavens. At least someone in our judicial system has some sense and backbone.

There are at least two huge reasons to celebrate the fact that the Supreme Court may direct lower courts to permit challenges to trademarks and patents being used to hit-and-run the American people.

First, as previously mentioned, American patent quality is poor, so poor, the Patent Office should be even more "embarrassed" than Jefferson was back when he was in charge of deciding what applications should be granted or denied. The American people desperately need ways to challenge and eliminate worthless patents that take away their freedom. Allowing accused infringers to maintain challenges against patent holders who sue for infringement will not only help fix the patent pollution problem, it will also make patent holders think twice about the true strength of their patents before even asserting them against others. It will thus greatly reduce anti-competitive over-litigious and just plain cowardly behavior.

Second, allowing validity challenges is consistent with general American principles relating to protecting freedom from improper government restraint. Like criminal statutes, patents are government-issued ways of taking away rights of the American people to do something, and the Supreme Court has repeatedly allowed parties to challenge criminal statutes even when there was no threat of those statutes ever being enforced, much less when they had been used to hit-and-run. And in the last Supreme Court case on the right of parties to challenge patents, the Supreme Court relied on those other cases challenging criminal statutes to find that the patent challenge could proceed even though the potential infringers were not even likely to be sued by the patent holder. It's only logical that a party that has been previously accused of infringing a patent should be able to challenge it. Further still, the right to bring a challenge should stem from the fact that the existence of the bogus patent is a threat to freedom in and of itself, especially when the patent holder has been brandishing it in an aggressive and threatening way.

We'll now have to wait several months before we get a decision from the Supreme Court in the case, but it would be strange indeed for them to have taken it merely to uphold the lower courts' decisions to dismiss the challenges. Hopefully, the Already v Nike case will open up new doors for the American people to take back their freedom by challenging invalid patents. I'm going to go buy some YUMS products right now to show my support. One of my favorite little cousins is heading to college this fall and could use some new kicks.

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O’Hara Close To Launching Major New Insurance Product

The following article discusses Former XL CEO Brian O'Hara's work on the creation of a new line of business for the Bermuda insurance market.

Former XL CEO Brian O’Hara is close to opening the door to what he believes could be a significant new line of business for the Bermuda insurance market.

Through a Bermuda company called Front Street Advisors Ltd, Mr O’Hara and his partners have been working on creating a form of insurance that would allow banks to count the intangible assets of their borrowers, such as intellectual property, as collateral, thereby easing their capital requirements.

Speaking at the Insurance Day Summit in Hamilton yesterday, Mr O’Hara said partners involved in the initiative had been working on a model based on the idea for two decades. The group has been in talks with underwriters on the Island in a series of meetings over the past year, he revealed.

Bermuda was the one place with the concentration of talent and capital necessary to bring the idea to fruition, he said.

The Financial Times reported this week that some banks have been exploring whether they can use intellectual property assets to reduce their estimated losses in the case of a loan default.

The difficulty of putting a dollar value on trademarks and patents, for example, has always been an obstacle. An insurance contract through which the insurer agreed to buy the intangible assets for a fixed price in the event of a loan default could help to apply a value to them.

The advantage for banks is that it could help them reduce the risk weight of the loans in question and thus reduce the amount of capital to be allocated.

Such an insurance product could gain traction in an increasingly knowledge-based economy, in which an ever larger proportion of the assets of companies are in the form of ideas rather than tangible assets like buildings and hardware. This is particularly true of technology and biotech firms.

Also, banks would welcome the chance to ease capital requirements at a time when regulators are requiring them to hold more capital.

The FT reported that one such deal was close to being submitted to the US Federal Reserve for regulatory approval.

Front Street Advisors Ltd was incorporated on March 3 last year, according to the Registrar of Companies.

Mr O’Hara retired four years ago after 14 years as CEO of XL, having been the insurer’s first employee 26 years ago. He told delegates that his new company was dedicated to innovative ideas for the insurance industry.

“One idea is that insurers can insure intangible assets on the bank loan portfolio that can provide collateral credit that heretofore does not exist and then lighten up the capital expense on the banks,” Mr O’Hara said.

“When I looked at it a year ago, it’s complicated, had never been done before, very daunting. But I thought if ever this can come together, there’s only one place it could happen — and that’s Bermuda.

“What we’re talking about with this product is that if you don’t have at least $1 billion or $2 billion of capacity, then there’s no point even beginning.

“There is nowhere else that you can get a variety of companies with that kind of capital and that kind of expertise and the collaborative DNA that could get their minds around the complexity and challenges of investing something new like this.

“So I started rounding up groups of underwriters last year and had three or four meetings. My partners have been developing this model for 20 years. We’ve socialised and educated a group of underwriters here on the Island to the point that we’ve developed a lead. We’ve done thousands of hours of due diligence.

“On the other side we have a bank — I can’t go into names because of confidentiality agreements.”

He hinted that the product envisioned was close to becoming a reality, saying “in American football parlance, we’re in the red zone”.

“If we get over the goal line, we might have developed a large, significant line of business for the Bermuda market and, at the same time, helping out the economy and the banks, who have a high cost of capital,” he said.

“There’s nowhere else in the world that you can walk around in one square mile and talk to billions of dollars of capacity and develop something of this nature and size.”

He added that he was also looking at a new model for run-off of discontinued lines of business, revolving around a new legal approach to run-off.

“To make it work, a special purpose vehicle would be ideal to post collateral to give comfort to the run-off company that it would work and with reinsurance behind it, if it doesn’t work,” Mr O’Hara said.

Bermuda introduced a new classification of ‘special purpose insurer’ in late 2009, which has been used primarily for the formation of sidecars and catastrophe bonds, but Mr O’Hara saw possibilities for a wider range of uses.

Mr O’Hara touched on the growing convergence between the capital markets and the insurance industry.

“There’s a new arm developing in the Bermuda market that we call ‘Hedge Re’, where you have a merger of the capital investment market and the underwriting market. It’s something we’ve talked about for decades but it’s taking place right in front of our eyes now, big time.

“That’s where the action is taking place. It’s unlikely we’re going to see another class like 2001 or 2005, because there is ample capacity of underwriting platform and talent embedded in Bermuda already. It’s all about capital.

“Even after last year with the huge losses in the market, it didn’t hit the capital. We have plenty of capital for the normal challenges but to meet the peak risk challenges, we need capital that can come and go and that’s what the beauty of the sidecar is.”

Asked what were the biggest threats to Bermuda, Mr O’Hara said: “As Pogo [a comic strip character] said, ‘We have met the enemy and they are us’.”

He said he had attended a dinner with Premier Paula Cox at Camden on Tuesday evening with many other business leaders. There had been some “missteps” over the past year, he said, but he was pleased to see the Government was taking account of the business view.

“We have to be careful that we don’t kill the goose,” he said.

The new Solvency II rules being introduced by the European Union, which will bring enhanced capital and corporate governance requirements, had been seen by some as “an opportunity to put Bermuda out of business”, he said.

That was not the way it had turned out, thanks to the efforts of the Bermuda Monetary Authority and its collaboration with the industry on enhancing insurance regulation moving the Island towards equivalence.

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The Downgrading Of Banks

“To stay in business, rating agencies, who only exist at the pleasure of their sovereign authorizers, have to preemptively make government debt appear more desirable relative to other investment products. Lest you think this is our commentary, make sure you read all rating agency disclaimers which explicitly state that they’re ratings are of relative risk - not quantitative. However, this short-term fix is a long-term madness. By undermining the investment quality of the financial sector, the financial sector, in the short term will be forced by regulatory capital mandates to become bigger consumers of (you guessed it) government debt.

Moody's, S&P, and Fitch - the arbiters of independent risk rating - actually had a proclivity to see their risk ratings actually correlate to the world's 60 largest banks' need for government bailouts in 2008. The better you scored in risk, the more unsound you were. The point is that the 15 bank downgrade of this past week actually had very little - if anything - to do with the banks. Rather it had to do with a recursive error built into the rating process itself - an error that was wired in from day one.

By downgrading banks, the ratings agencies simultaneously:

a. Decreased the appetite for investors to support bank equity;
b. Increased the demand by banks to buy government-issued debt;
c. Created the illusion that government debt was 'better' than other options (the same phenomenon that has propped up the U.S. Treasuries for the past several months as a relatively safe alternative to Europe because we're deferring addressing our problems until the election which thankfully happens in November);
d. Failed to measure quantitative risk; and,
e. Failed to restore credibility in themselves or their models.

What's the point? The bank downgrade was not about bank risk but rather an impending down-grade in government confidence. It wasn’t an accident that the bank rating cuts punctuated a week when several governments were debating a unified European debt issuance. After all, what better a time to have the few productive economies of the EU prop up the majority who are illiquid? By forcing fixed income buyers and reserve managers into a debt demand for which there is no quality supply, suddenly what is economically suicidal appears to have momentary expediency.”

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Jimmy Smith Discusses Intellectual Property On Bloomberg

On May 25, Jimmy Smith, chief executive officer of Amusement Park Entertainment, talks about intellectual property, advertising and the technology industry.

He speaks with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

The discussion looks at how Amusement Park is not a traditional advertising agency but instead an entertainment agency that looks to not only create marketing ideas but instead also create the Intellectual Property behind the great ideas.

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A Basic Analysis of Financial Structures Effecting Asset Development in PNG and Autonomous Bougainville

Coordinated by Mr. Lawrence Daveona and other landowners in Bougainville, a six week stakeholder awareness program has completed with a final gathering of concerned citizens at the Gateway Hotel in Port Moresby on Thursday night, May 31, 2012.

This program was established to educate members of the public of the global financial and business consequences of resource development in Papua New Guinea and the Autonomous Region of Bougainville. Recognizing the urgency of creating an informed dialogue for the consideration of the Bougainville Copper and related lease areas, an international collaboration between Bougainville stakeholders and M.CAM - a finance corporation based in the U.S. with operations throughout the world - created a presentation entitled "Global Financial Literacy: A Basic Analysis of Financial Structures Effecting Asset Development in PNG and Autonomous Bougainville (AB)".

On Friday, May 25, 2012 the final information sessions began at the Panguna mine site with several local landowners in attendance. During this information session, M.CAM Chairman, Dr. David Martin, provided detailed information with respect to the corporate structure of Bougainville Copper Limited and a review of the supra-constitutional nature of the Bougainville Copper Agreement drafted during Australian administration prior to independence. Showing the complex corporate structure designed to enrich foreign investors while providing minimal economic or social value to the country and the region, this presentation highlighted the need for landowners to be fully aware of all economics of resource development including financing corporations, asset holding and leasing corporations, and other developer-related companies. Many of these Operator-affiliated companies shield financial and physical assets from legal liabilities and damages within Papua New Guinea.

On Saturday, May 26, 2012, a large community session was coordinated at the Sharps Memorial Youth Center in Arawa. Approximately 60 landowners and interested community members came for a three hour information session which included a thorough review of the Bougainville Copper Limited operating history and the anomalous benefits afforded BCL under the BCA. This session was led by Mr. Lawrence Daveona and as followed by Dr. Martin's detailed legal and financial analysis of the complex legal and financial structures which allow international investors to benefit in over 1,100% of the GDP of all of Papua New Guinea with no domestic benefit in these financial instruments.

On Sunday, May 27, 2012, the delegation met with Mr. Chris Uma, leader of the Mekamui Defense Force. During this meeting, the delegation discussed the material facts regarding the BCL and BCA which have not been disclosed by the Company or the government with respect the nature of agreements, operations, and economic and social benefit. In the evening, Dr. Martin was escorted to Buka where an evening session in Haku village was attended by approximately 40 stakeholders, youth and women.

The gathering Thursday evening was the concluding event in this extensive initial community awareness project and was attended by approximately 40 students from University of Papua New Guinea and numerous other interested parties. An entire curriculum package with supporting legal and financial data has been provided to members of the government and stakeholders. The organizers are currently working on establishing an expanded awareness program for deployment throughout all of Bougainville and to stakeholders throughout the country.

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Kodak IP- There's Rust In The Engine But The Rest Of The Car Still Has Salvage Value

As we see in the case of Kodak yesterday, the weakness of the digital imaging components of their IP “engine” have rusted through. Yesterday’s US International Trade Commission action against Kodak should therefore squarely re-focus investors on the importance of asset quality, especially since the DIP lenders specifically carved-out the cashflows of the digital imaging portfolio. As previous M·CAM™ analysis has shown, a crown jewel of Kodak’s digital imaging portfolio (Patent 6292218) demonstrates significant impairment (by Ampex and others) while the Kodak portfolio as a whole also shows significant quality and impairment gaps. See the report:

While the markets have only been focusing on the value of the digital imaging portfolio, investors should be informed about portions of Kodak’s IP portfolio which have the possibility of realizing value opaque to the markets. Sectors such as LCD/LED technology, Polyethylene Terephthalate (PET) and Ink Printing have been completely overlooked by the marketplace. These technologies have many potential licensing opportunities into consumer product areas, or in the case of bankruptcy, could fetch a decent liquidation value.

If you would like to learn more about this case from our analyst team please feel free to email us a

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The Hype Around Facebook

Is Facebook's IPO hype poised for another drubbing with the patent problem?

Lets take a look into Facebook's IP.

The Social Network: Intellectual Property Analysis of Facebook, Inc.

Dr. David Martin discusses a possible Amazon/Facebook Patent Battle

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Apple and Samsung Begin Settlement Talks

The following is an article written by Chris Nuttall of the Financial Times. The article was also cited on CNN Business.


Financial Times) -- "It's very important that Apple not become the developer for the world," Tim Cook, Apple chief executive, told analysts last month. "We need people to invent their own stuff."

On Monday, he is due to express those same feelings face-to-face with Choi Gee-Sung, chief executive of Samsung -- the Korean company that Apple alleges is the chief culprit in copying its iPhone and iPad inventions.

Their two days of judge-ordered settlement talks in a San Francisco courthouse will attempt to find a resolution to their rival patent claims, before a full-blown jury trial gets under way, scheduled for July.

This is the key dispute among more than 50 cases that have developed between the two companies over the past year in 10 different countries. Any agreement hammered out here could bring others round the world to a swift conclusion.

"I don't know if the parties will settle; this case is just one part of a very complex ecosystem, and putting CEOs in the room together is always a roll of the dice," says Mark Lemley, a professor at Stanford Law School.

"But both parties need to settle the larger war and get on with innovating. Fighting all the patent battles to the end will leave no one the victor."

Apple seems to be the one more eager for a resolution at present, and not just because of Tim Cook's feelings. "I've always hated litigation and I continue to hate it ... I would highly prefer to settle versus battle," he said in April.

The urgency for Apple and its lawyers is that Samsung has overtaken it in smartphone sales on the back of Apple's leadership in innovation. It shipped 45m smartphones in the first quarter, according to Strategy Analytics, compared with Apple's 35m.

"Samsung has vaulted into first place in worldwide sales of smartphones, with massive sales of its copycat products," alleged a recent Apple filing. "Samsung's infringement of Apple's intellectual property has already resulted in damages that reach billions of dollars."

Apple has pursued injunctions and import bans to try to keep not just Samsung out of its markets, but HTC and Motorola as well, all three Samsungbeing users of Google's rival Android operating system.

HTC's latest Evo 4G LTE phone was impounded by US Customs last week following an International Trade Commission decision in Apple's favour. Apple filed on Friday for an injunction to ban Samsung's Galaxy Tab 10.1 tablet.

The battle with Samsung began in Northern California in April 2011, with Apple filing a 373-page complaint of patent and trademark infringement. Other skirmishes have since broken out in France, Germany, Italy, Spain, the UK, Netherlands, Australia, Japan and South Korea.

Apple's original complaint includes allegations that Samsung infringed on elements of the iPhone's look -- its rectangular shape, rounded corners, silver edges, black face and display of icons. It also alleges Samsung copied features such as the way instant messaging was displayed and even mimicked Apple's trademarked touch-icons for applications such as Phone, Contacts, Photos and iTunes.

Samsung hit back with its own list of alleged patent infringements by Apple -- backed by its 6,000-strong US telecoms patent portfolio and its claim to have first introduced a smartphone as far back as 1999. The key patents Samsung relied on all relate to the inner workings of phones and how they connect to 3G networks.

Florian Mueller, an independent patent analyst, says that Samsung could land itself in more trouble by going to war with patents that are essential to standards such as 3G. Antitrust authorities are already investigating whether these should be "Frand" patents -- available for anyone to use under "fair, reasonable and non-discriminatory" terms.

For its part, Apple is fighting over design elements that are already disappearing in newer models as companies figure out workarounds to possible infringements. For example, Android phones and tablets are "unlocked" by swiping from inside a circle on their touchscreens now, rather than swiping along a bar, as on the iPhone.

David Martin, chairman of M-Cam, a US patent analysis company, says there is so much "prior art" -- earlier innovations covering similar ground -- that Apple and Samsung are inviting subsequent third-party litigation by airing the strengths and weaknesses of their patents in public.

"Third-party patent holders, of which there are literally thousands in this space, are salivating over the fact that you are going to have this ongoing acrimony, allowing people essentially to learn where constructive claims of infringement can be made," he says.

Apple did not respond to a request for comment on its litigation. Samsung declined to comment.

However, for Apple at least, it is about far more than banning rival products, winning damages or earning royalties in any future licensing agreements, according to Mr Mueller.

"It's critical that its products continue to be able to distinguish themselves with unique features," he says.

"That's what drives consumers to buy them, that's what sustain its margins and make this all worth tens even hundreds of billions of dollars to Apple."

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Apple v. Samsung: iPad Patent Triumphs Over 'Knight Ridder' Prior Art in Appeal

"Apple is moving right along with several other patents in its case against Samsung, so we will just have to see if today's ruling changes the complexion of the dispute in any meaningful way". For more analysis on some of those Apple patents, including US 7,469,381, heck out our December 2011 Patently Obvious Report.

The following article was written on May 14, 2012 by Matt Macari. For more analysis of the patnts discussed in the article, check out our December 2011 report
The Appeals Court for the Federal Circuit, which handles all patent-related appeals in the US, has just revived one of Apple's patent claims that could block sales of Samsung's Galaxy Tab 10.1. While upholding the lower court's other rulings in favor of Samsung, the appellate court did reverse a portion the district court's decision from December, which held that a prototype 1990s Knight Ridder device invalidated Apple's design patent — D504,889 — on the iPad. The lower court had denied Apple's request for a preliminary injunction against the Samsung Galaxy Tab 10.1 based on this perceived invalidity, and Samsung was able to continue selling the tablet in the US. With today's decision by the appeals court, Apple's infringement claims against the Galaxy Tab 10.1 are certainly strengthened, but it's unclear just how much value that will really add to its case in the end.


In comparing the Knight Ridder device to the iPad design patent, the appeals court noted "substantial differences in the overall visual appearance" of the devices, including the fact that the Ridder tablet had a wider and asymmetrical bezel design, and a screen that failed to match the iPad's look of an "unbroken slab of glass extending from edge to edge on the front side of the tablet." The court provided the following visual comparison (the Knight Ridder tablet is referred to as the "1994 Fidler," after the inventor's name):

While it's significant for Apple to get a formal appellate ruling that the Knight Ridder device can't be used to invalidate the 'D889 patent, it may turn out to be a limited victory at this stage of its litigation with Samsung. Apple's preliminary injunction motion was filed last year and was therefore limited to the Galaxy Tab 10.1. That particular tablet never posed a real market threat to the iPad in the first place, and Samsung has recently replaced it with the Galaxy Tab 2 10.1. Because the new tablet wasn't in play back when the preliminary injunction motion was filed, today's appeals court ruling won't provide Apple with any immediate ammunition against the next-generation device. Besides, the Galaxy Tab 2 10.1 looks just like the Galaxy Tab 10.1N model that started popping up around the world last November, and we've already seen Samsung successfully convince other courts that the new design features sufficiently differ from Apple's design rights on the iPad. Of course, Apple is moving right along with several other patents in its case against Samsung, so we'll just have to see if today's ruling changes the complexion of the dispute in any meaningful way. And there's always the chance that the mediation scheduled for next week between executives of the two companies will result in a settlement that could render all of this moot — stay tuned.

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The Beastie Boys Lawsuit: An Existential Question About Intellectual Property

The following is an article written by Kal Raustiala and Chris Sprigman from Freakonomics about the copyright of songs from the 80. As the battle around patents heats up in the tech sector it is interesting to look at how our society of litigation around other intellectual property is growing in other sectors.


The day before Beastie Boy Adam Yauch’s untimely death from cancer, a lawsuit was filed in New York accusing him and his bandmates of illegal sampling. What’s unusual about this case is that the samples in question supposedly appeared on the 1989 album Paul’s Boutique. An obvious question is why almost 25 years went by before anyone decided to sue.

The reason? The alleged samples can’t actually be heard by the ordinary listener. Which raises a kind of existential question about intellectual property. If no one can tell that something is copied, is it still illegal to copy it? And if so, why?
Let’s assume for the sake of argument that the samples in question exist. They are snippets of songs by Trouble Funk, a 80s era go-go band. Trouble Funk’s complaint declares that the way the Beastie Boys sampled the tracks “effectively concealed to the casual listener” the fact that they are samples at all. And it was “only after conducting a careful audio analysis” that Trouble Funk even knew for sure that they had been sampled.

Trouble Funk does not seem to think this matters. But our legal system restrains copying for a very specific economic reason: because copying is thought to undercut the market for the original and, as a result, destroy the incentive to create. Concern for the originator’s incentive to create is the justification both for copyright law’s ban on unauthorized exact copying and its prohibition on unauthorized inexact copies made in the production of what copyright refers to as “derivative works” – that is, works that use bits and pieces of a copyrighted work in some way, but often don’t copy it wholesale. A lot of sampling falls into this second category.

You might question whether any brief sample incorporated into a very different song could have this economic effect. But that is a broader question for another post. For the moment, let’s assume that samples are generally harmful to originators, and therefore require a license to use. But can the same be said about samples that no one can hear? No. If it took Trouble Funk 23 years and a sophisticated analysis to even figure out that they were copied, then it is hard to see how that copy in any way caused them economic harm.

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Technology: Mired in a legal morass

The following is an article written by Richard Waters on the escalating courtroom battles over intellectual property and how they are placing a mounting burden on the sector.


Judith Masthoff, a Dutch researcher in artificial intelligence, was a doctoral student in the mid-1990s when she came up with her first invention.

The outline of the idea – a way of “enabling a user to fetch a specific information item from a set of information items” – hardly hinted at the starring role her brainwave would play in the legal battles sweeping through the technology industry.

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Ms Masthoff still remembers the excitement she felt writing her patent application, one of the first in the software field for Philips, the Dutch electronics company to which she assigned the work. Providing a form of personalisation, it was an early attempt to help users make sense of the flood of online information, a critical issue for many websites. But she lost track of it as her career moved on, and only recently discovered that her application had eventually been approved in 2001.

The idea – now known as US patent number 6,216,133 – has been on a long journey since then. It was sold to the subsidiary of an American company that deals in intellectual property before finding its way, late last year, to its current owner: Facebook.

It is now playing a prominent role in the social network’s first big legal fight. It is the oldest of 10 patents the company used last month to mount a legal action against Yahoo – a counterstroke against a patent infringement suit brought by the internet search and media company this year.

“I wouldn’t be so happy if they had used it offensively,” Ms Masthoff says of Facebook’s use of her idea to protect itself ahead of next week’s initial public offering. But the provocation, she adds, deserved retaliation: for Yahoo to mount its legal attack “just before Facebook floats its shares could be regarded as blackmail”.

Depending on your point of view, Facebook’s ability to co-opt old ideas such as this to defend itself against an assault on the legal foundations of its business could be a sign that, in an economy increasingly based on ideas, an efficient market in intellectual property is at work. Alternatively, it indicates that the system is running amok, threatening to suffocate the innovation that makes breakthrough ideas such as Facebook’s social network possible in the first place.

With suits flying among some of the best-known tech names, companies such as Facebook, Apple, Google and Microsoft have been forced to spend heavily in the past year or so to arm themselves legally, in turn pushing up prices for patents such as Ms Masthoff’s as they change hands. In the smartphone business alone – centre of much of the action – $15bn-$20bn has been spent buying patents, with legal bills reaching $500m on a “conservative estimate”, says Professor Mark Lemley of Stanford Law School.

It is hard to find anyone in the industry or in legal circles prepared to argue this is anything other than a colossal waste of money. “It’s highly inefficient and antithetical to what patents are meant to achieve,” says David Martin, chairman of M-Cam, a US patent analysis company. Lawsuits such as those brought by Yahoo are “a de facto utility charge on someone else’s business success”, he adds.

Worse, the rising costs faced by companies arming themselves against legal attack could hamper innovation. Those that cannot pay this new “tax” risk being in effect barred from competing in the most promising new areas, such as smartphones.

Patent battles in tech – and the costs of building a strong intellectual property position – are not new. In recent years, executives have compla-ined about the emergence of “trolls”, companies set up specifically to buy patents and mount opportunistic lawsuits against successful groups.

But proof of dramatic new forces at work came nearly a year ago, when patents owned by Nortel Networks, a bankrupt Canadian telecoms equipment maker, were auctioned for $4.5bn. The price, five times higher than initial estimates, showed Nortel was worth more dead than alive.

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Having lost out in this case – and been left in a weak patent position compared to Apple and Microsoft, which were among the auction’s winners – Google agreed six weeks later to pay $12.5bn for Motorola Mobility, mainly to get its hands on the telecoms group’s intellectual property.

Behind these deals lay a rash of suits over smartphones, as Apple, Samsung, Microsoft and others angled for advantage in the sector’s biggest new market since the advent of the personal computer. Along with a spate of other transactions leading to Microsoft’s $1.1bn purchase of patents from AOL last month, they reflect “a perfect storm” in tech patent circles, says Ron Laurie of Inflexion Point, which advises on patent sales.

On one side are cash-rich companies, including Apple, Google and Microsoft, with the wherewithal and incentive to pay large amounts for legal protection. On the other is a group of former stars forced to turn prized intangible assets into cash. They include bankrupt companies such as Nortel and Eastman Kodak, whose digital imaging patents are expected to end up being among its most valuable holdings, as well as struggling concerns such as Motorola and AOL, both of which came under pressure from activist shareholders to jump on the patent-sale bandwagon.

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Companies in decline could yet shed their reluctance to take legal action against those once considered potential partners. Yahoo went as far as preparing a lawsuit against Google in 2006 over its core search technology, according to someone familiar with the initiative, but called it off after senior managers shrank from the business risks. Now, as Yahoo’s position in the search market falls further, a new management group with little to lose has landed a blow against Facebook in the Masthoff case.

According to this view, the more active market for patents is bringing much-needed liquidity to intellectual property, helping it find its way to those best able to extract value. When Microsoft immediately resold part of its new AOL patent holding to Facebook last month for $550m, recycling dotcom-era ideas into the hands of the latest internet company to transfix Wall Street, it seemed a fitting confirmation of how industry leadership has been transferred.

Supporters of this view argue that aggressive legal actions and high prices are often symptoms of a market – albeit an imperfect one – at work.

A wave of start-ups has been launched on the idea that the “ideas economy” needs a stronger infrastructure and new approaches to make the market work better. It includes Intellectual Ventures, which aims to foster invention by separating the creation and patenting of ideas from their commercialisation; and RPX, which buys patents for defensive purposes on behalf of its customers. Critics, however, claim such businesses lubricate a system that encourages litigation and forces companies to buy protection against opportunistic lawsuits.

A second view holds that the outbreak of legal hostilities simply reflects the inevitable upheaval from the emergence of big new markets. The smartphone patent wars have become the clearest example of this, pitting companies from the computing and mobile communications worlds against each other for the first time. More than 250,000 patents, often overlapping, are potentially brought into play by smartphones drawing on technologies from several parts of the industry, according to RPX.

Such legal battles were seen with the emergence of the telegraph and the radio – and even mechanical farm equipment – as companies stake claims to the new markets. Eventually a stalemate is reached, and rivals conclude there is more to be gained from cross-licensing their ideas.

Whether that pattern will hold in smartphones – or in areas such as social networking and online advertising – has yet to be seen. “Maybe this time it isn’t a usual cycle,” says Prof Doug Lichtman of University of California, Los Angeles. “Patents are much more front and centre: people realise they can be sold and traded, they are much more visible.” The higher incidence of lawsuits – and rising patent values – could continue for much longer, he suggests.

Another sign that a deeper change is occurring has been the rise in patent litigation in industries far removed from the latest hot tech markets, says Prof Meurer. Even relatively stable businesses such as food, cars and mining seem to be facing a secular increase in lawsuits, he adds.

That leads to a third explanation for the change in the patent world: that a systemic shift has taken place. The sheer number of lawsuits being filed, and the large amounts of money being thrown around to buy protection, suggest “there is something fundamentally broken here”, says Prof Lemley.

According to this view, long-running weaknesses in the approval process – making it too easy to obtain recognition for marginal or unoriginal ideas – lie at the heart of the problem, along with court decisions that have handed the advantage to plaintiffs. If so, it could take years to fix: the US’s first legislation in this area in more than half a century, enacted last year, was widely seen as having brought only marginal improvement. It brought US filing procedures more into line with international practice, but limited the ability to bring nuisance lawsuits only modestly.

The cycle of lawsuits, meanwhile, is unlikely to abate: rather, it shows every sign of being about to spill from the smartphone industry into the broader online world.

If Yahoo succeeds in extracting patent royalties from Facebook, for instance, it would almost certainly make similar claims against other internet companies, particularly newcomers such as Twitter that lack significant patent holdings, according to one experienced litigator.

Others warn Facebook could soon face bigger legal challenges of its own. Amazon’s ownership of a seminal social networking patent predating Facebook’s own intellectual property in the area could leave the social network facing a lawsuit over its core business, says Mr Martin. Amazon itself has risked a legal morass by branching beyond ereaders into mobile devices, such as the Kindle Fire, with a broader range of uses, another legal expert says. Lawyers will be rubbing their hands at the prospect.

For the inventors whose ideas set the whole system in motion, meanwhile, all of this conjures up a certain air of unreality.

“I’m interested in people using my ideas,” says Ms Masthoff, echoing the age-old cry of inventors everywhere – before adding, with resignation: “But then, of course, companies also have to protect their businesses.”

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