Tsera, LLC v. Apple Inc. et al. Patent troll?

Here’s a little fairy-tale about what might have happened: Chuang Li took an idea to his boss at Actiontec who determined that it wasn’t of interest to the company and told him the idea was all his if he wanted to pursue it. Chuang ultimately refined the idea into the user interface that would become ubiquitous on MP3 players. The Patent Office rejected his application on a technicality. Chuang labored for years patiently jumping through hoops for the patent examiner while educating him on the validity of his claims. When the patent was finally issued, Chuang took it to Apple and requested a reasonable compensation for his idea. Unable to reach agreement with Apple after five years of effort, Chuang found a reputable firm of New York lawyers who were willing to take the case on a contingency basis.

Now here are some facts: the slashdotscape is alive with outrage about another patent lawsuit, this time filed by a company called Tsera LLC against Apple and 18 other companies over a touchpad interface to personal media player type devices (iPods).

Tsera was formed a couple of weeks ago on July 10th, and has filed no ownership or officer information with the Texas Secretary of State. Its registered agent is National Registered Agents, Inc. of New Jersey. Five days after the company was formed, Chuang Li, the inventor of US patent number 6,639,584 assigned that patent to Tsera. That same day Tsera filed suit in the notorious U.S. District Court for the Eastern District of Texas. Tsera’s attorneys are Kaye Scholer LLP of New York (specifically James S. Blank, Patricia A. Carson, Leora Ben-Ami, Oliver C. Bennett and Tsung-Lin Fu.) Tsera’s local counsel are Jack Wesley Hill and Otis W. Carroll of Ireland, Carroll and Kelley, P.C. of Tyler Texas.

The complaint reveals that Tsera has no parent corporation, and that no public company owns 10% or more of its stock.

The original application for patent 6,639,584 was made exactly ten years ago, on July 29, 1999. At that time (and still) the inventor, Chuang Li was apparently working for Actiontec Electronics, Inc. of Sunnyvale, CA. Chuang Li did not assign the patent to Actiontec, although other patents he applied for around that time were assigned to Actiontec. Companies like Actiontec normally require their workers to assign all the intellectual property they generate, especially when it is relevant to their business. Actiontec makes an MP3 player called the PocketRave.

Chuang Li’s application was rejected on October 9, 2001, just two weeks before Apple launched the first iPod (which did not have a touch-sensitive interface.) Three months later, on 28th January 2002, Chuang Li submitted an amended application, which was again rejected, in November 2002. In May of 2003 Chuang Li appealed the rejection and submitted another amendment. The appeal was ultimately successful, and the patent was issued on the 9th of October, 2003.

Looking at this chronology, you can see that the patent application was amended after the July 2002 launch of the touch-wheel iPod. Numerous rejections and resubmissions are common in the patent process, but they can be symptomatic of a “submarine patent,” where an inventor (famously Jerome H. Lemelson) files a vague patent and tweaks it over the course of several years to make it apply to some successful product that has appeared in the interim. The most egregious type of patent trolling is when the patent at issue is meritless, but the troll demands a settlement that the defending company determines is cheaper to pay than to go to court over.

The Tsera patent doesn’t cite as prior art Xerox’s US Patent 5596656, filed in 1995 and issued in January 1997. The basic idea of the Xerox patent is to replace a keyboard by forming strokes on a touch-pad, while the basic idea of the Tsera patent is to replace buttons and knobs on a portable electronic device by forming strokes on a touch-pad. The Xerox patent has a system of “unistrokes” on a touch-sensitive surface that can be performed “eyes free” and in which unistroke symbols can “correlate with user invokeable control functions.” The Tsera patent has a “device controlled by a user tracing a command pattern on the touch-sensitive surface with a finger,” “without requiring the user to view the portable electronic device,” with each of the “patterns corresponding to a predefined function of the portable electronic device.”

These descriptions actually apply better to the iPhone and the iPod Touch than they do to the canonical iPod touch-wheel, where the annular touch sensitive surface doesn’t really accommodate free-form strokes.

The Xerox patent was the subject of extensively reported litigation running from 1997 to 2006.

The Xerox patent, which is prior art to the Tsera patent, includes free-form touchpad strokes used as control functions. I am not a lawyer, but it seems to me that application of this same idea to portable devices would have to be non-obvious or the term “control functions” would have to be narrowly defined in order for the Tsera patent to be valid.

Is Tsera acting as a patent troll? You be the judge.