What Would Joe Do?
Peggy Aycinena is a freelance journalist and Editor of EDA Confidential at www.aycinena.com. She can be reached at peggy at aycinena dot com.
Patent Law 103: Litigation a way of life in EDA
August 23rd, 2012 by Peggy Aycinena
There are at least 4 ways to learn about Patent Law:
1) Go to law school.
2) Follow the ginormously expensive shoot-out between Samsung & Apple.
3) Read my articles on Patent Law.
4) Read recent Press Releases out of EDA.
* Mentor Graphics announces filing of suit against EVE for patent infringement
Clearly options 1 & 2 would take way too much time, so let’s go with a combo of options 3 and 4: First revisit several highlights of my articles on Patent Law, and then review the recent press releases regarding EDA-related litigations.
Patent Law 101: Patent Prosecution
Here’s a brief summary of my 2003 interview with Steve Beyer, an intellectual property attorney based in Silicon Valley:
Per Beyer, the patent process starts with an idea – and you can try to patent anything. However, in order to successfully defend a patent to the U.S. Patent Office you need to prove:
* The idea is a novel one.
According to Beyer, it’s actually devilishly difficult to prove that an idea meets these requirements. Whether you’re trying to get a patent on a user interface, an operating system, a driver, or an optimization algorithm, to prove that your concept warrants a patent is very, very challenging and can take anywhere from 10 months to 4 or 5 years from the initial filing of an application to the final awarding of the patent itself.
In addition, 95-to-99 percent of all patent applications are turned down the first time around. That rejection usually triggers several iterative rounds of additional documentation and communication between the applicant and the Patent Office. That process that can last upwards of 5 years and is termed “patent prosecution.”
Adding to the labyrinthine world of patents, according to Beyer, are various strategies behind suit and counter-suit: “In the semiconductor industry, everybody’s infringing a bit on everybody else’s patent.”
Beyer says the conversation between patent holders and their competitors goes something like this: “If you sue me, I’ll sue you. I’ve got my pile of patents and you’ve got your pile of patents. I could sue you for patent infringement on X number of my patents, but I know you’d then turn around and sue me for patent infringement on Y number of your patents. So we’ll just split the difference.
“I’ll pay you some money for my infringements and then you pay me some money for yours. Our lawyers and your lawyers will talk – they’ll figure out the appropriate amounts, and then we can continue to co-exist.”
Beyer says that ultimately all of this to-doing over patents – applications, legal fees, prosecutions, infringements, litigations – helps to promote “mutual respect” between fierce combatants vying for commercial dominance on the battlefield of high-tech competition.
And he says there are two industries widely known for their litigious business practices: The medical devices industry, where there are lots of small companies and it’s fairly easy to tweak a minor feature on a device and prove that the result isn’t infringing on someone else’s patent.
The other industry notorious for litigation is EDA, where it’s fairly easy to tweak an algorithm just a tad, one that’s buried deep in code, and then prove that the “new” algorithm is sufficiently different from the “old” algorithm to disallow claims of patent infringement.
For anybody familiar with the EDA industry, this is not news.
Patent Law 102: Patent Litigation
When I interviewed David Miclean in 2004, he was lead partner in the Silicon Valley offices of Fish & Richardson, one of the busiest locations of one of the largest intellectual property law firms in the U.S.
Miclean’s expertise included trade secrets litigation, trademark & copyright litigation, and patent litigation. I asked him to distinguish between patent prosecution and patent litigation.
Miclean said, “The way I look at those distinctions may differ somewhat from others. On the prosecution side, you’re working with a company to protect the inventions of that company by creating the intellectual property asset – a patent.
“The protection of intellectual property through the patent process is intended to prevent others from using your IP without paying fees. Hopefully, the patent prosecutors were capable in writing the patent claims, which define the invention.
“Primarily, the role of the prosecutor is to help a company protect its IP by creating the protection tool – the patent. The patent litigator can then use that tool to stop others from infringing the patent, or as leverage to obtain royalties for its use. Analogizing a patent to a tool – something like a hammer – the prosecutor puts the hammer together and the litigator uses it.
“The patent litigation side of the equation is ultimately the place where patent validity is tested. The Patent & Trademark Office [PTO] does a good job, but they don’t always have the ability to access and evaluate all the ‘prior art’ in the area of technology to test a patent’s validity.
“It’s through litigation where a patent’s validity can really be tested. Ultimately, a patent claim is tested in court. Using the hammer analogy, you can tell a lot about a hammer by looking at it. For example, is it warped or otherwise compromised? But there might be hidden cracks in the wood – you can’t be sure it works until you use it.”
I asked Miclean if a patent means little until challenged and validated in court. He said,”Yes and no. Sorry, I know that sounds like a lawyer.
“Certain patents are considered strong because they protect truly novel areas of technology, but the test of that strength is in the courts. That’s where you’re going to get ultimate determination as to whether a patent is valid or not.
“The issuance of a patent by the PTO gives the patentee a presumption of validity, but a presumption of validity is not necessarily adequate until you’ve explored the prior art. A patent infringement litigation will help define what the patent’s claim of invention means – that’s the crux of the thing, what do the claims cover.
“So the patent process starts at the PTO, but the true test of what a patent covers and whether it’s valid takes place in a legal forum. And the question of what the patent claims mean is a decision for the judge.
“Clients need to know that going forward with litigating a patent can be a very time consuming and expensive venture – one that will impact the time and energies of top management and other employees throughout the company. That’s the principal downside of pursuing an infringement action.
“The upside is, if you’re trying to enter a market or protect an existing market, and if others are using your patent-protected IP to drive down the market and reduce your market share, then you have to do something to protect your product from unfair competition. If your company is facing an infringer who’s driving margins so low they’re making licensing of the technology an impossibility, sometimes your company may have no choice.
“Frequently, by way of a patent litigation, the client is able to obtain a licensing agreement that will create a revenue stream, recover lost profits or royalties and/or stop illegal competition [and restore the company’s position in the market]. If you can develop a licensing stream for your portfolio or your patented technology via that strategy, that could be the optimal arrangement and a large asset of your company.
“It strengthens a patent when there are a lot of people out there licensing it. However, a company – particularly a technology company – sometimes faces a matter of life or death for that business and must pursue litigation to remain a viable company or to protect its valuable IP assets.
“Most cases, including patent cases, settle before trial. Patent cases are expensive because they have their own rules and procedures and require specialized knowledge to litigate them well. If you’re taking a case from complaint all the way through to trial, a case may cost several million dollars. Of course, it depends on the number of patents involved as well – does the case involve just one patent, or multiple patents.
“These days, a vast majority of patent cases get settled before trial, often after the Markman ruling by the judge. The Markman ruling is the judge’s decision on what the claims of the patent mean. Both sides in the case then know how the claims will be defined, which oftentimes provides the parties an opportunity to find a resolution to the case.
“We typically talk with clients, and potential clients, who have previously tried to work out agreements with competitors over their patents. We try to evaluate their overall situation before proceeding with a litigation. We often try to work with a company to seek a business solution to achieve their goals. If the company can suggest a resolution that works for the other party, it’s a win-win arrangement for both – particularly if you go for a licensing or cross-licensing agreement.”
“We always encourage clients to explore resolving a business conflict outside of court – a lawsuit should generally be your last alternative. Sometimes there is no other reasonable course, or there is a practical strategic reason why a lawsuit makes more sense”
“Of course, I’m not talking here about dealing with an outright counterfeiter, in which case you might be able to initiate a criminal investigation and enforcement in addition to a lawsuit. I’m talking about those businesses that have a lot of inter-linked customers with their competitors, and therefore multiple overlapping relationships.
“In Silicon Valley, people move around a lot. We know it’s a big valley, but it’s actually a small place in terms of people interacting with each other. If you can resolve things without litigation, it makes for better business relations and opportunities for continued business relationships. If a business resolution is not possible, then go forward with the litigation.”
I asked Miclean if he counsels clients to avoid letting a litigation get personal.
He said, “I do see it as my role to help people resolve a problem. Oftentimes bitterness or enmity gets in the way of good business decisions. I try very hard to resolve problems in a smart way for the company – and that usually requires a cool head. So I try to calm, not ignite the situation.
“Perhaps I try to get the heads of the two companies to sit down together, with or without their lawyers. We might be able to see an early resolution to the conflict in some cases. But if you’ve got a group of people who are bitter from the very beginning of the process, it’s going to be very difficult to have resolution at the front end.
“Sometimes, in fact, there has to be a certain amount of ‘bloodletting’ before either side is ready to explore alternative solutions to resolve a dispute. Bitterness and acrimony often lead to a prolonged process, and a period during which good business resolutions often get ignored.
“I tell clients that anger is a reality, and that we may need time for anger to subside. I often suggest that they take time, sit back, and wait for the anger to cool. We all need a clear presence of mind to move forward to a positive resolution to the problems that crop up in patent disputes.
“You don’t have to like the other side to get a deal done, but you – or at least your lawyers – normally have to be civil.”
Patent Law 103: Litigation haunts EDA
The presence of patent infringement lawsuits continues to be a way of life in EDA.
* Mentor Graphics announces filing of suit against EVE for patent infringement
August 17, 2012 – Mentor Graphics announced it had filed another patent infringement suit against EVE in the U.S. Federal District Court for the District of Oregon. The suit alleges that EVE products violate Mentor Graphics’ patent rights under United States Patent No. 6,947,882, entitled “Regionally Time Multiplexed System” issued September 20, 2005, and seeks to recover damages and to bar the manufacture and sale of the infringing products.
“As we continue to learn more about EVE’s products, and discover infringement of our intellectual property,” said Tom Evans, corporate intellectual property counsel for Mentor Graphics, “we will continue to aggressively protect that intellectual property.”
* EVE Will Continue to Defend Itself Against Mentor Graphics’ Patent Infringement Suits: Denies Any Wrongdoing, Contends Patent Infringement Suits Are Unfounded
August 20, 2012 – EVE denied any wrongdoing and reaffirmed that it will continue to defend itself against Mentor Graphics’ patent infringement suits. EVE believes these litigations are unfounded will defend itself through the United States and Japanese court systems until the truth is established.
“Mentor Graphics’ behavior is predictable,” said Luc Burgun, president and chief executive officer of EVE. “In 2006, Mentor Graphics tried to use the legal system to stifle competition when it was struggling to deliver Veloce and had concerns about EVE accelerating deployment through a line of successful products. This is yet another groundless litigation and we will vigorously defend ourselves.”
* Sidense wins patent infringement case against Kilopass
August 17, 2012 – Sidense Corp. announced today that the United States District Court for the Northern District of California granted Sidense’s motion for summary judgment of non-infringement of all three Kilopass patents asserted in the lawsuit. The Court determined that no reasonable jury could find that Sidense infringed any claim of Kilopass’ asserted patents. This is a resounding victory for Sidense and Kilopass will not be permitted to present its patent infringement claims to a jury.
The Court provided three separate reasons that Sidense’s technology does not infringe any of Kilopass’ asserted patents.
First, the Court found that Sidense does not have a “row wordline segment coupled to the second doped semiconductor region.” The Court found that Kilopass had taken contradictory positions before the Court and the United States Patent Office and, as a result, had disavowed this claim scope.
Second, the Court determined that Sidense’s accused technology did not have the required “first doped semiconductor region,” rejecting Kilopass’ argument that a shallow trench isolation in Sidense’s design was equivalent to the claimed “doped semiconductor region.”
Finally, the Court determined that Sidense’s design did not have a first and second doped semiconductor region in a “spaced apart relationship” as required by the claims. While any one of these reasons would have been sufficient for Sidense to prevail, the Court’s opinion finding three separate reasons that Sidense does not infringe bodes well for Sidense should Kilopass decide to appeal the Court’s decision.
* Kilopass Plans to Appeal the Summary Judgment Ruling in its Patent Infringement Case Against Sidense
August 18, 2012 – Kilopass Technology announced that it plans to appeal the summary judgment ruling recently issued in its patent infringement suit against Sidense. Kilopass’ decision to appeal rests in its conviction that Sidense’s products are infringing on Kilopass’ patents. The summary judgment order in this case relies on issues that are under dispute and should be decided by a jury as a matter of right.
“The patent litigation is a long and complex process, and we are blessed to be in America where eventually, justice shall prevail,” said Charlie Cheng, Kilopass chief executive officer. “We believe the judge ruled in error and prematurely, and we intend to take the issues to the appellate court and other venues to seek the correct ruling.”
Indeed, this somewhat surprising early decision seems to rest upon preliminary proceedings at the USPTO that are still ongoing. The expediency of the decision overshadows the important rationale for the legal process, which is summary judgment can only be issued when there is no dispute whatsoever with the facts, just the law.