Patent Hoarding Firms Discover The ITC Loophole

Wed, Aug 20th 2008 2:11pm

Filed Under:
controllers, innovation, itc, patents, wii

Companies:
hillcrest, nintendo

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And Of Course: Nintendo Sued For Patent Infringement Over Wii Devices

from the only-a-matter-of-time dept

These days it's almost guaranteed: if you do something innovative in the tech world, bringing a new type of product to market successfully, get ready for that lawsuit. If anything, it's almost surprising that this lawsuit wasn't filed earlier, but research firm HillCrest Labs has sued Nintendo for patent infringement over its Wii controller. And, of course, HillCrest gets two cracks at it, since the company is using the popular loophole to both file a lawsuit in court and ask the International Trade Commission (ITC) for an injunction against Nintendo.

At this point, plenty of companies are recognizing that it's just too expensive to actually innovate. If you do something well, you're only going to get sued by someone else who hasn't been able to innovate as well as you. While we can point to the various examples of companies getting sued, it's also worth thinking about all the companies who don't even bother to innovate, recognizing it's just not worth the expense of these lawsuits. The patent system is functioning in exactly the opposite manner from its constitutional purpose. It's not promoting the progress, it's hindering it by making sure that "progress" has a toll booth attached to it.

Studies

Fri, Jul 11th 2008 1:21pm

Filed Under:
itc, loophole, patents

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Time To Close The ITC Patent Injunction Loophole

from the two-hacks-at-the-same-ball dept

For quite some time, we've been pointing out how patent holders have been using a bit of a loophole to get two separate shots at getting an injunction against other companies in patent disputes. This became even more popular after the Supreme Court ruled in the MercExchange case that injunctions banning the sale of goods often did not make sense. The loophole is that, rather than go through the court system, patent holders would go to the US International Trade Commission, claim that the goods they believed were infringing were an "unfair trade practice" and demand an injunction against importing them into the US -- effectively the same thing as a court injunction against sale (assuming the good was manufactured outside the US).

Since then, we see it's happening all the time that companies sue in the courts and use the ITC loophole as well. The ITC doesn't need to abide by the court's rules either, making it even easier to get an injunction this way. We found it quite problematic that patent holders were getting two hacks at the same ball -- especially when one of those hacks doesn't need to follow the Supreme Court's rules on when an injunction is and is not appropriate. Others disagreed with our assessment, claiming that it's not a loophole, but an important way to stop foreign companies from unfairly entering US markets.

Luckily, there's now some actual research looking into the details of how the ITC is used for these sorts of things. Eric Goldman points our attention to a law review article looking at data on how the ITC patent injunction process has been used over the past twelve years, and the results aren't pretty. It found that the ITC is used just as often between two American companies as it is used by an American company against a foreign company. Why the International Trade Commission gets involved in disputes between two domestic companies is not clear at all. It also found that many companies use both processes simultaneously, allowing them two separate attempts at getting the same injunction. Finally, the report finds that while there's only a slight increase in the likelihood of the ITC finding in favor of the patent holder, it's much more likely to grant an injunction barring the sale of a product.

As the report notes: "In the absence of coordination between the venues and with the high rate of parallel litigation, this two-track system may invite judicial waste and expose parties to the risk of duplicative litigation and potentially conflicting outcomes." Hopefully this will help Congress realize that the ITC loophole on patents needs to be closed.

Legal Issues

Mon, Mar 24th 2008 12:25am

Filed Under:
itc, lasers, lawsuits, leds, loophole, patents

Companies:
hitachi, lg, motorola, nokia, panasonic, pioneer, samsung, sony, toshiba

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Columbia Professor Latest To Go On The Patent Offensive

from the very-offensive dept

Over the last year or so, we've seen two disturbing trends in enforcing patents. The first, is seeing patent holders suing a bunch of companies at once rather than just one or two, as used to be standard. They do this because they fear that some type of patent reform is coming, either via Congress or the courts. So they want to get as many patent suits in as quickly as possible. The second trend is that, rather than taking patent infringement cases through the court system (which is bound by the recent precedents set by the Supreme Court that loosen patent rules), they use a loophole: taking patent infringement claims to the US International Trade Commission (ITC). The ITC has the authority, if it believes that infringement occurs, to block the import of infringing goods. The ITC doesn't need to pay attention to what the courts say, and doesn't need to wait for the USPTO to review a patent. It can simply decide infringement occurred and ban the import of the goods. This is, effectively, the equivalent of an injunction against the product (just the sort of thing the Supreme Court said should be used more cautiously).

A Columbia professor has now picked up on both of these trends, getting the ITC to investigate 30 companies for violating her patents on LED and laser technologies. Among the companies investigated: Sony, LG Electronics, Hitachi, Toshiba, Panasonic, Motorola, Nokia, Pioneer, and Samsung. Whether or not these patents turn out to be valid, it's a cheap tactic to use the ITC rather than going to the courts to fight this battle.

Wireless

Mon, Nov 26th 2007 12:23pm

Filed Under:
itc, patents

Companies:
broadcom, nokia, qualcomm

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Qualcomm's Small Patent Victories

from the it's-something dept

Qualcomm has always been a strong supporter of the patent system, as it was the basis for much of its revenue over the past decade. However, lately, the company has been getting hit left and right by patent lawsuits against it. Last week, though, the company ended up with a few minor (and perhaps temporary) victories against opponents. First, the International Trade Commission tossed out a complaint from Nokia asking the ITC to ban the import of Qualcomm chips. Nokia had simply taken a page from Broadcom, who had successfully used the ITC loophole to get a second shot at Qualcomm over its patents. Given how often companies have been starting to use this loophole, it's nice to see that the ITC doesn't always rollover for patent holders.

In the meantime, speaking of Broadcom, we had noted last month that thanks to a Supreme Court ruling that raised the bar for declaring "willful" infringement of a patent, the judge in the Qualcomm-Broadcom suit had given Broadcom a choice. Either retry the case under the new rules, or drop the "willful" part and get less money from Qualcomm. Broadcom has now chosen the latter option, and will accept a smaller payout from Qualcomm for infringement. Of course, it's not all good news for Qualcomm. Nokia still has lawsuits going against Qualcomm, with one getting underway in the UK this week. Broadcom is still seeking the courts to rule for an injunction blocking the import of certain Qualcomm chips as well (even as the ITC is already helping out on that front). Once again, no one seems willing to explain why Broadcom gets to take two whacks at Qualcomm over the same exact issue. In the meantime, while it would be nice to think that these recent messy lawsuits would give Qualcomm a chance to rethink some of its beliefs about the patent system, somehow that seems unlikely to happen any time soon.

(Mis)Uses of Technology

Mon, Aug 20th 2007 12:43am

Filed Under:
itc, loophole, patents

Companies:
broadcom, nokia, qualcomm