The Dolcera Blog

Can we patent the business methods? The federal court is divided on this.

Though the machine or transformation test from “In re Bilski” brought some clarity, this very issue has just not stopped short of capturing the limelight. We in 2009 did some observation from the US PAIR information to understand the potential impact resulting out of the In re bilski decision.

We conducted an analysis of hundreds of USPTO examination reports for method patents in three areas:

a. Software,

b. Medical device and diagnostic, and

c. Pharmaceutical.

As of 2009, we could establish that

• Rejection rates for software method patents are significantly higher since the Bilski decision in October 2008
• Medical diagnostic method patents are also affected
• Pharmaceutical method patents have been impacted, but to a much lesser degree

Click here to read the blog post.

In fact, we co-presented the same with Medtronic in the PIUG Annual Conference 2009. Think this would be an interesting read at this point of time when once again the federal court is divided on the business method patentability.

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The Tech world is buzzing in 2011. Apple, Android, and Patents seems to the most recurring themes conversations converge too. Apple is a great success story, and literally becoming the apple of everyone’s eye by becoming one of the most valuable companies in the world, consistently innovating and generating higher and higher revenues. They recently posted one of their best quarters ever.

Many see Apple’s rise as a challenger to the Open Innovation theories, and positing that in technology a closed system offers you much more strength and sustainable innovation coming up with products which have completely re-shaped markets.

Of course Apple had a visionary in the form of Steve Jobs, but technologies don’t just develop “magically” and systems don’t just fall into “amazing” perfect tandem on their own. So, we at Dolcera decided to look into what exactly are the sources of Apple’s innovation.

Apple being a very secretive company, it was hard to find a lot of inside information. But one of the best sources of “innovation” data is the legal document which one gets for innovating - a patents. We decided to look at the patents of Apple and get an idea of the true sources of Apple’s innovation.

In our opinion, the key sources of Apple’s innovation are :
1. Expenditure on research,
2. Acquisitions, and
3. Patent Deals
Apple definitely has a strong in-house research. But every time Steve Jobs wished to make one of his “visions” a reality, it often required Apple to go out and spot “sources” which can be acquired, or taken the technology from. Some prime examples are acquisition of Fingerworks which developed the Multi-Touch for iPhone, and technology licensing from LiquidMetal which gave Apple products their great aesthetics among many others.

We have tried to provide a basic story flow in the visual below.

We are also conducting web seminars to detail on the findings of our research, and how you too can do the same. For details contact us at - info@dolcera.com

 Author: Pramath Malik

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Google Inc., the Internet giant, has signed a $12.5 billion agreement to acquire Motorola Mobility, the legendary mobile phone and set-top box manufacturer. As per the agreement, Google will pay $40 per share in cash, which was a 63% premium to the closing price of Motorola Mobility shares on August 12, 2011.

But what is impressive about the deal is the purpose behind it. After all, Google generates its revenue from searches i.e. it auctions off search words to clients that want to advertise alongside the responses. On the other hand, Motorola Mobility manufactures handsets and set-top boxes that carry TV channels to homes. Interestingly, Motorola Mobility is the No.2 provider of set-top boxes after Cisco.

So why an Internet mogul be interested in acquiring a hardware company?

The key to the story is Android, Google’s OS for mobile devices. At present, Android has surpassed Apple and Nokia smart phones and already has signed deals with 39 handset manufacturers such as Samsung, HTC, LG Electronics, Sony Ericsson, etc. As we can see from this, Google is not just an Internet-based company but is part of the mobile business in full swing. Although Google offers the Android OS for free to handset manufacturers, it is a cynosure when it comes to patent infringement lawsuits. Companies from the likes of Microsoft, Oracle, and Apple have filed multiple lawsuits against Android.

As a result, in a bid to strengthen its patent portfolio, Google has acquired Motorola’s 17,000 patents (Click here for information on Motorola Mobility’s patent portfolio). The acquisition not only eliminates Motorola from being a potential threat in terms of filing a lawsuit but also arms Google so that it can defend itself in lawsuits as well as launch suits of its own.

In a latest turn of events, just last week HTC, the Chinese handset manufacturer, filed a patent infringement lawsuit against Apple. As per the appeal, HTC stated that Apple was infringing nine US patents related to wireless communications and mobile phone displays. The interesting bit is that Google had assigned those patents to HTC and some of those patents it had acquired from Motorola Mobility.

The ownership pathway for the nine patents is shown below.

The first five patents were used to strengthen HTC’s Delaware suit against Apply while the other four have been used for a new lawsuit against apple.

Clearly, Google is out to avenge the lawsuits against its adopted child Android and defend itself in any way.

In addition, the other side of the story is the set-top box business, the acquisition of which will facilitate Google becoming a significant supplier of Internet-borne TV content on Android-equipped mobile devices and also generate revenues from TV advertising, which is worth $70 billion.

In all, Google’s deal with Motorola Mobility is not just a defensive action against infringement lawsuits but also a smart move in terms of boosting its ad revenues from Internet-borne TV content.

Author: Charanjeet Singh

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Broadcom plans to acquire chipmaker Netlogic Microsystem, a maker of networking equipment. At USD 50 per share, Broadcom has agreed to invest 3.7 Bn USD in the deal. This is the biggest acquisition by Broadcom hence has many scratching their heads to understand the motivations of Broadcom, and their future plans as Broadcom has agreed to pay a 57% premium over the closing price on September 9th, 69% premium over average trading price for last 20 days.

Strategically, CEO Scott McGregor stated that the deal will double Broadcom’s market in networking equipment, which takes a substantial 23% share of their sales.

Financially it seems to make sense, as Netlogic has higher gross margin (55%) than Broadcom (52%), and the deal is expected to increase EPS (earning per share) by 10 cents as claimed by Broadcom.

Netlogic is known for it’s processors which help transfer multimedia (video), and other data over the internet efficiently. With a surge in consumption of data due to smartphones, and requirements of these has been on a rise.

This in effect is thus one of the three biggest deals caused by “smartphone phenomenon” with the other two being
1. Nortel patent portfolio sale for 4.5 Bn USD
2. Google’s acquisition of Motorola Mobility for 12.5 Bn USD

The exorbitant price tags associated with all of these deals have shocked many. So while Nortel, and MMI had patents being the primary asset, we decided to dig into Netlogic’s patent portfolio.

Netlogic though not a giant portfolio like Nortel, has been slowly chugging about and innovating in the areas of :
1. Accessing, addressing or allocating withing memory systems or architectures
2. Associative or content-addressed stores
3. Transmission of digital information
4. Methods for processing data
5. Digital computing or data processing equipment for specific functions

These are closely related to the knowledge-based processors, multi-core embedded processors, and digital front-end processors which Netlogic will bring to Broadcom.

Some of the key patents of Netlogic too are in these areas. The 5 most cited documents of Netlogic are as following :
1. US6154384 - Ternary content addressable memory cell -  119 patent citations
2. US6237061 - Method for longest prefix matching in a content addressable memory - 117 patent citations
3. US6137707 - Method and apparatus for simultaneously performing a plurality of compare operations in content addressable memory device - 105 patent citations
4. US6317350 - Hierarchical depth cascading of content addressable memory devices - 64 patent citations
5. US6240485 - Method and apparatus for implementing a learn instruction in a depth cascaded content addressable memory system - 52 patent citations

Broadcom has 214 patent families in IPC classes G06F 12, and G11C 15. And it gains 106 patent families from Netlogic. These two are the key technology areas in which the patents of NetLogic fall.

But besides the intellectual assets, Broadcom is also gaining the employee, among whom will be prolific inventors :

Given the trend of increasing data consumption, the move makes perfect sense from Broadcom’s perspective. Wether 3.7 Bn USD is a fair price, only time will tell

Author: Pramath Malik

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“Patent Cliff” is a term used when a number of lucrative pharmaceutical patents are all on the verge of expiry at the same time. What it results in is a huge drop in revenue, due to both, decrease in sales volumes as well as a price erosion of up to 70% within months resulting from the generic intrusion. The patent cliff is going to brunt major Pharma companies big-time in the near future. IMS Health Midas estimates revenues of about $89.5 billion USD from drugs whose patents are about to expire over the period of 2010-15, the majority of them being small molecules. While, according to a report by Datamonitor, the impending patent cliff will mean that global branded pharmaceutical companies are estimated to lose $82bn in sales by the end of 2014.

The year 2011 alone will see $30 billion in sales face generic competition for the first time in the major developed markets. The world’s biggest selling drug, Lipitor by Pfizer, will go off protection in 2011. Other major drugs that would be experiencing Patent Expiry in 2011 are Plavix, used to inhibit blood clots; Leavquin, used to treat a variety of different infections; and Zyprexa, used to treat bipolar disorder. These four major drugs contributed $17 billion in the US alone. Revenues lost by patent cliffs can only be partially compensated by newly launched products, e.g. in indications such as osteoporosis, respiratory illnesses, thrombosis, multiple sclerosis and cancer.

Although, the patent cliff is a challenge that the Global Pharmaceutical Industry can’t do without facing in the coming, there are other drivers also that one has to see to see the complete picture. The much-talked about concern eases in two years. The cliff is steepest in early years, with an estimated $58.6 billion in expirations through 2010-12. The year 2012 alone is estimated to cause the industry a loss of $28.7 billion due to impending patent expiry. The cliff moderates over the following years and it estimated to reach as low as $1.3 billion in the year 2017.

While so much of furor has been created of the imminent “Patent Cliff” and about $81 billion loss that the industry is going to face due to Patent Expiry during 2011-2015, in actuality the Pharmaceutical Industry is not facing an unprecedented patent expiration, but rather a continuation of a trend that has been in place for a decade. In the five-year period from 2005-2009, this value was $90.5 billion US for sales exposed to generic competition according to the same data source. There has been no mention of the patent cliff of 2005-2010, whereas the Patent Cliff of the near future has been widely publicized, in spite of it being about 11% less than the previous period in terms of value.

The problem might be big, but the solution is simple for the major Pharmaceutical companies - fully exploit their intellectual properties and kick-start their drug pipelines with innovative new drug candidates.

References

1.       The patent cliff is set to drive global generic uptake despite tougher market conditions - Datamonitor

2.       A View from a Cliff – Frankel Group

3.       Pharmaceuticals & Biotech Industry Global Report — 2011, IMAP

Written by:

Aditi Agarwala

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Media tablets, private cloud computing, and 3D flat-panel TVs and displays are some of the technologies that have moved into the Peak of Inflated Expectations, according to the 2010 Emerging Technologies Hype Cycle by Gartner, Inc.

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Full text patent searching helps in identifying the relevant patent records that would have otherwise eluded a non full text patent search. Let’s say that in a specific non full text patent search we obtain a certain number of relevant patent records. And if the same search were to be conducted considering the full text, it is likely to yield more relevant patent records than what was obtained without the full text. The comprehensiveness of the patent search is enhanced when the scope includes the full text of the patents searched.

On the contrary, if we were to consider the above search scenario from a data relevancy ratio perspective, then it is only obvious to expect a lower relevancy rate in latter’s scope than in the former. Due to the low data relevancy prevailing in a full text patent search, it can be assumed that the associated time taken to analyze increases significantly. Subsequently, the cost associated with a full text search is significantly more than a search without it. We believe that the choice between the two is completely determined from the business implication of the search and with the legal considerations with which the search is conducted. In other words, if there is strong business value in finding relevant un-licensed IP belonging to well known patent holders, then an exhaustive analysis involving the full text in the scope of search is warranted. However, if the goal is to conduct simple state of art search or validity search, where the principle of first-past-the-pole principle applies, then the marginal value of incremental hits with full text search is justified only if the search result set searched without the full text does not provide sufficient evidence. Hence, the future of full text patent searching relies totally on the primary driving force i.e cost benefit analysis of the patent search. The cost benefit analysis has to be done in context of improved search tools and increasing sophistication of text mining tools available today.

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Professors Mark Lemley, Chris Cotropia, and Bhaven Sampat recently released a draft of their new article titled “Do Applicant Patent Citations Matter? Implications for the Presumption of Validity.” [Download Here.]

For the article, the trio analyzed the file histories of 1,500+ utility patents issued in 2007 and compared references used in office action rejections with the list of references cited on the patent cover-pages.  The objective was to figure-out the role of applicant-cited prior-art in the examination process.

Findings: Patent examiners rarely rely on applicant-submitted prior-art when making rejections.  Only 13% of the prior art used in office action rejections was applicant-submitted (despite the fact that 74% of cited references are applicant-submitted). Generally, the study found that examiners “effectively ignored” applicant-submitted prior art regardless of how few or how many references were cited; regardless of the timing of the IDS filing; and regardless of whether the submission included an EPO search reports identifying the references as “X-references.”

Implications: The authors suggest several implications of their findings: (1) That it likely does not make sense to find inequitable conduct when an applicant withholds prior art (since the art would not have been used in a rejection anyway); (2) That the presumption of validity associated with patents may be too strong; and (3) That studies based on patent citations likely lack merit.
There are several rational reasons for examiners to cite their own prior art. Because of the backlog, PCTs, and provisional applications, US examination often begins several years after the application was originally filed.  During that interim, many references become available that were not known at filing.  Thus, it is not surprising that applicants rarely cite 102(e) prior art, but examiners cite loads of it.  There is some reason to think that this “newer” prior art is probably better because of technological developments.  It may also be true that the applicant and examiner references are cited for different purposes — namely, applicants cite references that are generally relevant to the invention while examiners are looking for references that teach each particular element in the filed claims.  A third issue is that applicants tend to modify their claims during prosecution. That modification may make their originally cited art less relevant.

Conclusion: Most of the applicant cited references are ignored by the examiners. So, dont really trust on the citations.

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