Patent Innovations and Strategy for Engineers and Entrepreneurs IEOR 190G

1. Patent Innovations and Strategy for Engineers and Entrepreneurs IEOR 190G CET: Center for Entrepreneurship &Technology 3rd Week Dr. Tal Lavian (408) 209-9112 Tlavian@cs.berkeley.edu 225A Bechtel Mondays 4:00-5:45 3rd week

2. Students Presentations • Students’ presentations • Topics on patent engineering in litigated cases • Some examples from last semester:http://www.cs.berkeley.edu/~tlavian/spring2008/patentEngineering.html 3rd week

3. Students Presentations • Present in 10-15 min a patent litigation case • Case summary • Parties, dates, history, issue in dispute, results • Engineering aspects of the dispute • The patent(s), technology, product • Engineering aspects of the infringement • The engineering view vs. the legal view • Any proposed design around • The iPod touch screen patent • Need 4 volunteers 3rd week

4. Recent Patent Verdicts & SettlementsOr – Why it is really important? • Alcatel/ Lucent v. Microsoft. -(2007) - $1.5 Billion • NTP – Settled with RIM for $612M (plus $53M litigation plus verdict) • Intergraph – over $880M in settlement from patent litigation with Intel, HP and others • Eolas v. Microsoft(2003). $506M Jury verdict • Immersion v. Sony(2004).$82M jury verdict plus royalties • increased (2007) to $150M • vibration game controller - Microsoftsettlement on $26 • Freedom Wireless v. BCGI (2005)$128 jury verdict • Finisar v DirectTV (2006).103M (79+24)Jury verdict plus injunction • Tivo v. EchoStar (2006).$74M jury verdict plus injunction • Acacia- $60M in licensing revenue (2004-2—6) • Forgent- $100M in licensing revenue 2004-2006 3rd week

5. V. Bell Labs Case - The Technology Advantage- Data compression – Same or similar signal can be represented with less data • Late 1980’s, Inventors James Johnston and Joseph Hall (Bell Labs, division of AT&T) • Quantizing noise – approximation of continuous range by values by relatively small set of discrete values. • Invented method and apparatus to produce quantized audio signal using interpolated scale factor.

6. Bell Labs Patents Filed: Dec 1988 Assignee: Bell Laboratories U.S. Patent No. 5,341,457, Perceptual Coding of Audio Signals, to Joseph L. Hall and James D. Johnston (Dec 1988) U.S. Reissue Patent No. RE39,080, Rate loop processor for perceptual encoder/decoder, to James D. Johnston (Dec 1988, Reissued Sep 1994)

7. Bell Labs MS Case In 2003, Lucent files suit against Gateway, Dell, and eventually Microsoft in U.S. District Court, San Diego, CA. Claim: Infringed two patents developed by Bell Labs in MP3 compression and playback within Microsoft Windows Media Player Sought 0.5% royalty of total Windows computers sold

8. . The Case • Microsoft claims: • Received license for MP3 technology from Fraunhofer Institute (Bell Lab’s parent research organization) for flat $17 million. • Loop processor not applicable for WMP application. • 0.5% rate exorbitant! “Only one of 10,000 features” • The Proportioned Doctrine

9. . The Results Ruling agreed that patents were developed by Bell Labs before joining with Fraunhofer to create MP3 Rights to patents exceeded value of $17 million paid for license February 22, 2007, Alcatel-Lucent awarded record $1.5 billion in damages from Microsoft. Jury unable to find ‘willful’ infringement for $4.5 billion damages. August 6, 2007, Microsoft granted retrial. Verdict overturned based on insufficient evidence by Judge Rudi Brewster.

10. Patent History • Created by Congress in 1790 • “…to promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” • Article 1, Section 8 • July 31, 1790 – 1st Patent • Samuel Hopkins patents potash • Cost : $4.00 • Reviewed by Cabinet Members • Thomas Jefferson – Secretary of State • Henry Knox – Secretary of War • Edmund Randolph – Attorney General • George Washington – President www.uspto.gov, www.ipo.org 3rd week

11. More Patent History • 3 Patents Awarded in 1790 • First patent law enacted • 1802 – US Patent and Trademark Office Created • Responsibility of granting patents/registering trademarks • Atomic Energy Act of 1954 • Excludes nuclear purposes/atomic weapons • American Inventors Protection Act (1999) • Most recent revision of patent laws • New Legislation debate – 2008-9 www.uspto.gov, www.ipo.org 3rd week

12. US Constitution • Rights are derived directly from US constitution, Article 1, section 8 • granting congress the power to promote the progress of science and useful arts by securing for a limited time to authors and inventors the exclusive rights to their respective writings and discoveries 3rd week

13. What is a Patent? • A form of intellectual property • A grant of property right to an inventor by the government • Prevents the invention from others for the duration of the patent • In return, the inventor must fully disclose the details of the invention to the public 3rd week

14. What is a Patent? (Cont.) • Right to Exclude the Making, Using, Selling , Offering for Sale or Importation of a Specified Invention • Limited Time (Typically 20 Years from date of filing with USPTO) • Limited Geographic Territory (issuing country) • Monopoly awarded by the Government forsharing the Invention with the public 3rd week

15. Protecting the Idea • Protecting the idea, not the embodiment • Allowed to claim broader than the physical embodiment • Protection: • Limited rights during the life of the patent • Filing to end • Issue to end 3rd week

16. What can be patented? • “Everything under the sun made by man.” • Products: things • Processes: ways to make things • Methods: ways to do things • Improvements: better things • Defined Classes • Article of Manufacture • Machine • Composition • Process • Some more: • Business Methods • Services • Software 3rd week

17. Criteria – Legal Standards • Novelty • Does not exist in the prior art • Not previously disclosed to public • OK if Modification/Improvement of an existing product/process, or use of something “old” in new/different way • Usefulness - Utility - Performs a useful function • Non-obviousness • Non-trivial - It would not have been obvious to one skilled in the art to combine multiple items in the public domain to arrive at or show the invention • Not Engineer’s normal sense of “obviousness”! • Enabled 3rd week

18. What Is Not Patentable • Laws of nature (wind, gravity) • Physical phenomena (sand, water) • Abstract ideas (mathematics, a philosophy) • Algorithms per se • Anything not useful, Novel and Non-Obvious (perpetual motion machine) • Inventions which are offensive to public morality or designed for an illegal activity 3rd week

19. Statutory Bars • Patent rights to an invention will be lost if: • The invention is used publicly • The invention is sold or offered for sale • The invention is published in a printed publication or a patent • Before the filing of a patent application • (more than one year in U.S.) 3rd week

20. Prior Art • Information prior to the date of a patent application • Existing relevant technology • Can be your own technology or acts 3rd week

21. Foreign Standards for Prior Art • “Absolute novelty” • The invention must not have been disclosed or available to the public at any time before the filing of the application 3rd week

22. Utility Patents • What is patentable? • New and useful… • Process • Machine • Manufacture • Composition of matter • Improvements • What is unpatentable? • Prior existing technology 3rd week

23. Utility Patent Types • Two types of US Utility Patents • Provisional application • Non-Provisional application • Continuation • Divisional • CIP • PCT International 3rd week

24. Other Types of Patents • Design Patents: are issued for • Novel, non-obvious • Ornamental design in an article of manufacture • In other words, for its appearance • The term of a design patent is 14 years from the date of grant • Plant Patent • new or discovered asexually reproduced plant 3rd week

25. Types of Patents 3rd week