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Google Takes on Lodsys Patents at USPTO

Posted On: Aug. 16, 2011   By: Scott A. McKeown
google-lodsysInter Partes Patent Reexamination Filings Pose Challenge to Lodsys

Late Friday, Google announced that it had filed inter partes patent reexamination requests against two of the now infamous Lodsys patents, 7,222,078, and 7,620,565. Over the past few months, Lodsys has been contacting iOS and Android application developers seeking license fees, and has begun suing others to enforce their patent rights (the patents are purportedly directed to application transactions among providers and users). An infringement suit was filed against 11 defendants in Texas, including EA, Take-Two Interactive, Atari and Rovio (of Angry Birds fame).

As a licensee, Apple has attempted to intervene in the ongoing litigation arguing that app developers are covered under the terms of their license. Google, perhaps unencumbered by the contractual obligations of Apple with respect to challenging validity, has opened up a new battle front for Lodsys at the the USPTO.

As explained this past Saturday at Wired.com, Google announced the filing stating that:

We’ve asked the US Patent Office to reexamine two Lodsys patents that we believe should never have been issued. . …Developers play a critical part in the Android ecosystem and Google will continue to support them. [quote attributed to Google Senior Vice President and General Counsel, Kent Walker]

So, now what?

The USPTO now has 90 days by statute to decide to order or deny patent reexamination. Roughly 95% of such requests are granted. (USPTO stats here)  So, one can expect that the reexaminations will very likely be ordered. Typically, an “office action” would be issued at the time of the Order rejecting (some or all) of the claims of the patent, and requiring a response from Lodsys within 2 months time. Thereafter, Google will be able to respond to any Lodsys submission to the USPTO.

Of course, in patent reexamination, the playing field is not nearly as favorable to patentees as a district court. For example, the USPTO applies much more liberal standards relative to that of the district courts with respect to validity and claim construction. Specifically, invalidity in a district court must be shown by “clear and convincing” evidence, whereas in the Office it is sufficient to show non-patentability by a “preponderance” of the evidence. Additionally, patents are presumed valid in court, not so at the USPTO. For these reasons, as well as for litigation strategy purposes, patent reexamination is an attractive option for litigation defendants.

What happens to ongoing litigation while patent reexamination is pending at the USPTO?

In some cases, ongoing litigation may be “stayed” pending the outcome of patent reexamination in the interests of judicial economy. However the decision to stay a case is highly dependent on the facts, and perhaps more importantly on the judge involved. In the Lodysys case (Texas case), Judge Ward of the Eastern District of Texas is presiding. Historically, Judge Ward has stayed cases 40% of the time (2008-2011) (see full stats in my prior post on this topic). So, the Google filing has the potential to completely shut down the present case. I would expect that the Texas defendants will seek a stay at some point, likely shortly after an Order (60-90 days from now).

However, even if a motion to stay is denied by Judge Ward, an advancing reexamination that includes adverse patentability findings makes later law suits more difficult to pursue. This is because one of the factors considered by a judge in staying a case is the stage of the USPTO proceeding…the closer to the end, the more attractive the stay option. So, later law suits become increasingly more difficult to pursue as a reexamination advances that includes adverse validity findings.

Needless to say, all of this assumes Google is sucessful at the USPTO. While there is no guarantee, historically, inter partes patent reexaminations have led to complete cancellations of all claims in roughly 44% of cases, and most proceedings include some claim amendments (which could potentially eliminate past damages for infringement).

Unfortunately, the reexamination proceeding will take some time. As I have discussed previously, the length of an inter partes patent reexamination, through appeal, is significant. Likewise, Lodsys has additional patents in their portfolio, and others pending. Clearly, the Lodsys threat is not going to be defeated overnight. Nevertheless, with Google funding the battle at the USPTO, a second front has opened on a much more favorable battlefield.

8 Responses to “Google Takes on Lodsys Patents at USPTO”

  1. Paul F. Morgan says:

    Scott, by “Google, perhaps unencumbered by the contractual obligations of Apple with respect to challenging validity..” did you mean assignor estoppel? Or just that completely invalidating a patent that Apple has a license to, but its competitors do not, is not in Apples best economic interests?
    [As far as I am aware no enforceable contractual provision or assignor estoppel can prevent a reexamination? Especially, an anonymous ex parte reexamination.]

  2. Paul,

    Apple is very quick to seek patent reexamination in most disputes. There may be some other aspects of their Lodsys license that make reexamination a less attractive option, but that is just conjecture on my part. Perhaps Apple just views their license argument as the cleanest way to protect all developers, including those sued.

  3. Paul F. Morgan says:

    Thanks Scott, your last sentance above seems very reasonable to me, because presumably Apple will rifle-shoot for S.J. on the basis of its license, and the last thing Apple or the app developers would want is a delay of a decision on that issue by a stay of the litigation for a reexamination.

  4. Agreed. Of course the Apple license would not protect Android developers, so Google has stepped in as best they can right now.

  5. saulgoode says:

    It does not appear to me that any Android application developers have been sued by Lodsys; or more precisely, no programmers have been sued by Lodsys for the programs they’ve written targeting the Android platform. Could you please verify this.

    Of the eleven defendants being sued, nine supply applications written solely for the iOS platform, while two provide programs written for both the iOS and Android platforms. It is entirely possible that those latter two defendants are only being sued over their iOS offerings, with the Android versions deemed non-infringing owing to Google being suitably licensed (according to Lodsys[1], anyway).

    [1] http://www.lodsys.com/1/post/2011/05/q-what-about-other-operating-systems-such-as-android.html

  6. Steve Jones says:

    It seems that Lodsys are being quite the vexatious litigant by these frequent “patent enforcements”. It’s trivial to bring the suits to third party developers, so it makes a lot of sense for Google to step in.

  7. There are 1000s of third party developers, a $100K or even a $50k settlement from each one makes for a very non-trivial business model.

  8. Abidul says:

    As many readers of this blog are likely aware, Lodsys has asserted that many application developers are infringing claims of its U.S. Patent Nos. 7,222,078 and/or 7,620,565 (I’ll refer to them as the Lodsys Patent Claims).

    While these patents seemingly expire August 6, 2012 (as a result of the priority claims and the terminal disclaimers that were filed in each patent), Google nonetheless continues its quest to invalidate the Lodsys Patent Claims. It is worth noting, that once a patent expires or is invalidated, it cannot then be infringed by anyone.

    In summary, Google initiated Reexamination proceedings with respect to U.S. Patent No. 7,620,565 (Reexamination Control No. 95/000,638) and U.S. Patent No. 7,222,078 (Reexamination Control No. 95/000,639) seeking to invalidate the Lodsys Patent Claims. The patent office adopted a majority of Google’s proposed rejections. In response, Lodsys submitted Declarations seeking to overcome the patent office rejections (and particularly U.S. Pat. 5,965,505).

    The Declarations submitted by Lodsys identified a number of reports authored by Daniel Abelow and Dr. Barbara Flagg. Interestingly, these reports were dated Spring 1991 — which is more than one year prior to the earliest filing dates of the Lodsys patents.

    Google, seizing upon this, now proposes a number of additional rejections and enforcement issues based on these reports. For example, Google now proposes that the Lodsys Patent Claims are invalid under 35 USC 102(b), because:

    1. one is not entitled to a patent if the invention was described in a printed publication more than one year prior to the date of the application for patent, and the reports predate Lodsys’s relevant patent application by more than a year;
    2. one is not entitled to a patent if the invention was in public use, more than one year prior to the date of the application for patent, and the Declaration/reports indicate such a system was pilot tested and open to a number of students; and
    3. one shall be entitled to a patent unless the invention was on sale in this country, more than one year prior to the date of the application for patent, and the Declaration/reports indicate Harvard accepted a proposal (arguably prior to Spring 1991) that was successfully completed.

    If Google is correct on any of these points, the Lodsys Patent Claims appear to be unpatentable or invalid.

    Google also notes that Lodsys never submitted the reports to the patent office despite its obligation to disclose information that may be material to patentability. A violation of this duty with respect to any claim could render all claims unpatentable or invalid.

    In sum, the Lodsys Patent Claims seem to expire this summer and Lodsys’s efforts to keep the Lodsys Patent Claims from being invalidated have seemingly opened up a lodestone of new arguments that may be used to mitigate their impact. Stay tuned.