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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.

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Wideband codecs and IPR

Wideband codecs are a good thing. They have been slow to enter the mainstream, but there are several reasons why this is about to change.

Voice codecs are benefiting from the usual good effects of Moore’s law. Each year higher-complexity (higher computation load) codecs become feasible on low-cost hardware, and each year it is cheaper to fit multiple codecs into a ROM (adding multiple codecs increases the chance that two endpoints will have one in common).

Voice codecs are often burdened by claims of intellectual property rights (IPR) by multiple players. This can make it difficult for software and equipment vendors to use codecs in their products without fear of litigation. The industry response has been to create “patent pools” where the patent owners agree to let a single party negotiate a blanket license on their behalf:

Prior to establishment of the Pool, the complexity of negotiating IPRs with each intellectual property owner discouraged potential integrators.

Unfortunately there is still no pool for the standard wideband codec ratified by the 3GPP for use in cell phones, AMR-WB (G.722.2). Even where there is a pool, getting a license from it doesn’t mean that a use of the codec doesn’t infringe some yet-to-be-revealed patent not in the pool, and it doesn’t indemnify the licensee from such a claim.

There are several royalty-free wideband codecs available. I mentioned a couple of them (from Microsoft and from Skype) in an Internet Telephony Column.

Microsoft and Skype have got around the royalty issue to some extent by creating proprietary codecs. They have researched their algorithms and have either concluded that they don’t infringe or have bought licenses for the patents they use.

G.722 (note that G.722, G.722.1 and G.722.2 are independent of each other, both technically and from the point of view of IPR) is so old that its patent restrictions have expired, making it an attractive choice of common baseline wideband codec for all devices. Unfortunately its antiquity also means that it is relatively inefficient in its use of bandwidth.

Polycom did a major good thing for the industry when it made G.722.1 (Siren7) available on a royalty-free basis. G.721.1 is considerably better than G.722, though it is not as efficient as G.722.2.

The open-source Speex codec is efficient and royalty free, but being open source it bears a little more fear of infringement than the other codecs mentioned here. There are three reasons why this fear may be misplaced. First, the coders claim to have based it on old (1980’s) technology. Second, it has now been available for some years, and has been shipped by large companies and no claims of infringement have surfaced. Third, while it is possible in these times of outrageous patent trolling that somebody will pop up with some claim against Speex, a similar risk exists for all the other codecs, including the ones with patent pools.

So we now have three royalty-free wideband codecs (G.722, G.722.1 and Speex); we have hardware capable of running them cheaply; we have broad deployment of VoIP and growing implementation of VoIP trunking. We have increasing data bandwidth to homes and businesses, to the point where the bandwidth demands of voice are trivial compared to other uses like streaming video and music downloads. Plus there’s a wild card. By 2010 over 300 million people will have mobile smartphones capable of running software that will give them wideband phone conversations over a Wi-Fi connection.

Perhaps the time for wideband telephony is at hand.

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Verizon’s basic VoIP patents ruled invalid

Back in 2007, Verizon sued Vonage over three basic VoIP patents, and Vonage ended up settling for $120 million. It was a complicated story. Three US patents were involved: 6,104,711, 6,282,574 and 6,359,880. Verizon won that case, and was awarded $58 million plus a 5.5% royalty on Vonage’s future business. Vonage appealed, and the appeals court vacated the $58 million damages award and the 5.5% royalty. But it was on a minor point:

We hold that the district court did not err in its construction of disputed claim terms of the ’574 and ’711 patents. Therefore, we affirm the judgment of infringement with respect to those claims. However, we hold that the district court improperly construed one of the disputed terms in the ’880 patent, and accordingly vacate the judgment of infringement with respect to the ’880 patent and remand for a new trial… We vacate in its entirety the award of $58,000,000 in damages and the 5.5% royalty and remand to the district court for further proceedings.

But the case never went back to the district court! Verizon and Vonage had settled before the verdict, and under the terms of the settlement the verdict triggered a $120 million payment from Vonage to Verizon. Vonage went on to settle similar patent issues with AT&T for $39 million and Sprint for $80 million.

This year Verizon sued Cox on similar issues in the same court, Judge Claude Hilton’s court in the Eastern Virginia Federal District. This time Verizon lost. The jury found the claims of the ‘711 and ‘574 patents to be invalid, and Cox not guilty of infringing the others. Here is my summary of the claims that were found to be invalid:

US patent 6,104,711:
Claim 1 – A DNS (or similar) server translating an address based on a condition
Claim 3 – Like claim 1, where the condition is the status of an endpoint
Claim 11 – Like claim 1, where the condition is a query of an endpoint

US patent 6,282,574:
Claim 5 – Like 711.1, where the server returns a phone number (but no condition is involved)
Claim 6 – Like 574.5, where the server returns a phone number plus an IP (or similar) address

Presumably Verizon will appeal, but to this layman they seem unlikely to win. Their previous victory over Vonage was pyrrhic; the definitions returned by the Markman hearing in that case and the reasoning of the appeal court ruling broadened the scope of the patents to the extent that they encompassed a ton of prior art, as you probably expected when you saw the claim summaries above.

There are numerous patents covering VoIP, and numerous patent holders wanting a slice of the pie. James Surowiecki wrote a characteristically good piece on this type of situation in the New Yorker in August.

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Sauce for the gander

Qualcomm has a massive number of patents in cellular technology, including most (all?) of the fundamental CDMA patents. Qualcomm owns a substantial number of the patents used in your cellphone, and gleans enormous revenues from licensing them. This is as it should be. Inventors should be rewarded for their creativity. But Qualcomm is notorious for going one step further, claiming that its intellectual property is even more valuable than it actually is, and using its patent portfolio aggressively.

So Qualcomm’s competitors are undoubtedly chuckling over Qualcomm’s comeuppance this week at the hands of Broadcom.

I don’t know the details of this case; for all I know it may be another travesty like the NTP/RIM case, where RIM was forced to pay hundreds of millions of dollars to a patent troll with patents that the USPTO apparently found to be invalid. The huge difference here is that Broadcom doesn’t just own the patents that Qualcomm was found to be breaching, but unlike NTP Broadcom uses those patents in its own products that compete against Qualcomm’s.