PublishedJanuary 8, 2013

PAEs Ringing in New Year without Resolutions

Several outlets have reported on a bevy of lawsuits filed in Delaware by Steelhead Licensing LLC against operating entities concerning infringement of patent 5,491,834 entitled “Mobile Radio Handover Initiation Determination.”  Unfortunately for innovators, legitimate operating entities, and consumers this is yet another example in a seemingly endless litany of companies springing forward to extract consumer welfare from the high-tech industry by demanding payment for someone else’s work.  Like other patent assertion entities (PAEs), Steelhead manufactures nothing (so it is immune from countersuits), played no role in the development of the patent it wields, and has no intention of practicing the patent.

Even worse, there are rumors that Steelhead is aligned with BT, making this not only a consumer-welfare problem, but potentially an antitrust problem.  For its part, BT denies any involvement with Steelhead’s licensing activities.

Steelhead’s lawsuit is emblematic of many problems with patent policy that we have been covering on Patent Progress:

  • Lawsuit appears on the eve of expiration – This is a last-ditch effort to extract value from a potential asset before it loses any value.  The Filing Date on record with the USPTO is August 27, 1993 meaning that the patent is due to expire this summer.  It should also be noted that the last patent to cite to Steelhead’s was in 1997.  This is an old patent that likely has lost relevance in the high-tech space (assuming it ever was valid).  Its only real value anymore is as a lottery ticket in an infringement suit.
  • Steelhead is targeting any company that might conceivably infringe – The litigation strategy is neither delicate nor precise.  Steelhead has sued everyone it can think of, including Apple, HTC, LG, Kyocera, MetroPCS, Motorola Mobility, Casio, Pantech, RIM, Sony, T-Mobile, Verizon, and ZTE Corporation.  All complaints are substantially the same, though suits against network providers and suits against manufacturers allege different methods but substantively the same infringement.
  • Control of patent is opaque – Whether or not BT has an interest in Steelhead’s litigation, the point remains that neither the public nor those companies sued can determine this information easily.  BT is the original assignee of this patent 16 days before it was filed at the USPTO.  As we have posted on previously, the USPTO is considering regulations to increase transparency in patent ownership.  Steelhead’s case emphasizes why this regulatory action is a good and necessary step.
  • Steelhead seeks an injunction despite no evidence of eBay factors – Steelhead’s complaints call for all defendants to be “preliminarily and permanently restrained and enjoined from directly and/or indirectly infringing the ‘834 Patent.”  However, as the Supreme Court and CAFC have repeatedly held, an injunction is only appropriate when the patentee can demonstrate 1) irreparable injury; 2) inadequacy of monetary damages; 3) balance of hardships; and 4) public interest would not be disserved by a permanent injunction.  Steelhead fails each factor of the test.
  • Potentially avoiding FRAND commitments – The Appendix filed with the Delaware District Court reports that this patent has been published by the 38th and 40th IEEE Vehicular Technology Conferences.  Furthermore, the complaints allege that the many defendants’ products practice the UMTS and LTE standards, and alleges “the patented method recited in one or more claims of the ‘834 Patent is performed when a cell reselection is made by any Defendants’ UMTS/LTE Product when it is using either the UMTS or LTE standards to communicate.”  This is the foundation for finding that a particular patent is a SEP.  If it is the case that the patent is part of a FRAND commitment, then the lawsuit may very well grasp the attention of U.S. regulators.

Lest any commentators believe that the problem with PAEs will resolve itself, lawsuits such as this should remind them that PAE lawsuits are not going away.  Until Congress, the USPTO, and other interested regulatory bodies enact measures to deter these lawsuits, they will continue to appear on dockets of U.S. District Courts.

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Brendan Coffman

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