Letter from AmeriKat II: Good Day Sunshine (patents)

Google's $900 million bid for Nortel's patents

Last Monday Google announced a bid to buy almost 6000 patents and patent applications from Nortel, the bankrupt Canadian telecoms equipment manufacturer, for $900 million. The patents include patents for wireless, internet and social platform technologies. The bid comes as part of Google's strategy to shield itself from patent litigation. The thinking is that if you buy enough patents that cover a wide and diverse range of technologies and industries, you may have a patent in your legal arsenal that may have otherwise been used against you. Google currently possess a comparatively weak patent portfolio in comparison to their market share and expansion into mobile operating systems, especially in relation to android-related technology. Readers may recall that Oracle sued Google last fall for patent infringement of its Java patents by Google's open-source android operating system. (District Judge Alsup, who is presiding over the case, last week received a tutorial in Java. Also, for a fun trade secret case involving HP and Oracle see this recent news here)

Although it was reported that other tech companies were expected to make bids for Nortel's patents, there may be few that can beat Google's incredibly high bid. On Monday, Google's general counsel and Senior VP Kent Walker(picture, left) wrote on Google's blog that

"... one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.

So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid," which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate. In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners."

The planned sale of Nortel's patent portfolio must first beapproved by judges overseeing Nortel's bankruptcy cases in the US and in Canada. As reported by Bloomberg, anyone planning to beat Google's offer has to beat it by at least $25 million more than Google's initial offer, or at last count, $5 million more than the last offer. Anyone have $905 million to spare? The AmeriKat wonders what the return on investment is on purchasing a patent portfolio which with patents and/or applications that will have only about 20 or so years of life in them? Will Google ever make back theri $905 million on savings to legal fees or from patent damages? Or does that even matter as long as Google is sending a message to would-be plaintiffs that their patent portfolio is now robust, so sue at your peril? What do readers think?

US and UK unite for some more sweet patent harmony

David Kappos's UK harmonization tour last week not only yielded a Monday morning breakfast at UCL, but progress on the UK and US's joint action plan to combat the problem of patent backlogs and their effects. The joint announcement was made by Kappos and Baroness Wilcox, (compare the IP experience) Kappos stated that:

“The joint action plan highlights that while 21st century patent challenges are global in scope, so too are their solutions. Work sharing is a powerful tool that equips examiners to extract value from our skilled colleagues in other patent offices. By reducing redundant workloads and chipping away at the backlog, we can collaborate to unleash millions of jobs lying in wait and breathe life into our economies.”

The action plan is designed to allow an examiner in one office the ability to reuse work already done by an examiner in the other office on a corresponding applications, as much as possible to avoid duplication of work.

Kappos was also interviewed by The American Lawyer recently regarding the recent patent reforms (read interview here) and the America Invents Act (see recent AmeriKat posts here). When asked whether he thought it was that the House would pass a similar bill, Kappos replied:

I am off-the-charts optimistic.

The AmeriKat loves the enthusiasm.

Letter from AmeriKat I: Good Day Sunshine (TMs and ©)

The AmeriKat has been watching the English public embrace the change of the season this week. On Friday she slinked outside for her midday patrol and perched on a bench in Gray's Inn, with the new Vogue in paw. (picture, left - the AmeriKat taking a much needed lunchtime Kat nap) Like spring flowers, once the temperature rises above a certain level the English bloom onto any stretch of grass available to them. A sea of students, solicitors, lawyers and miscellaneous office workers were scattered about in the sections of Gray's Inn grass that was unspoilt by any appearance of shade. Once modest workwear suits, worn by males and females alike, were stripped of any sweaters, cufflinks and buttons to expose as much square footage of skin as possible, laughter was echoing off the Inn's buildings, people were chatting with their neighbors, and a general feeling of calm settled throughout. The AmeriKat even spied some IP barristers from 11 South Square joining in on the emergence of spring. There is something about warmer weather in England that makes the general public a little less guarded than normal, in both physical appearance and mentality, which can only ever be welcome.

Louboutin sees red with Yves Saint Laurent

Someone who has seemed to let their guard down, in least where trade mark infringement claims are concerned, is Yves Saint Laurent who last Thursday was sued in Manhattan federal court by the one and only Christian Louboutin. Louboutin is famous for his footwear recognizable by the casual observer by its trade mark red sole. The story goes that one of Louboutin's customers was wearing an amazing red nail polish on her nails which Louboutin adored. She had the coveted nail color in her bag, took it out and Louboutin painted his first sole with the red nail polish. The violent red-lacquered sole would later become his signature maker's mark and would be granted a US trade mark in 2008 (picture, right - Louboutin's famous heel).

Louboutin is now alleging that since January Yves Saint Laurent America, a subsidiary of the Gucci Group, is selling their shoes with the same red sole in store throughout Manhattan. Louboutin's complaint argues that Yves Saint Laurent's use of the red sole is "likely to cause and is causing confusion, mistake and deception among the relevant purchasing public." Louboutin is claiming for $1 million in damages and an injunction to stop Yves Saint Laurent (picture, left) from manufacturing the shoes. Interestingly, Louboutin apprenticed with Yves Saint Laurent in the late 1980s before setting up his own brand.

The AmeriKat is curious, as any Kat should be, to know what evidence of actual confusion (as stated by the complaint to be occurring) Louboutin has. Unlike in the UK, under section 1114 of the Lanham Act US trade mark owners have to prove that the defendant's use of their mark confused consumers. In the Second Circuit, which includes New York, the factors for the test for confusion is that as laid down in the Polaroid Corp v Polarad Elecs. Corp (1961) case. The AmeriKat sets out these factors below with some comments in the IPKat's signature comment red:

1. The strength of the mark, i.e. the red soles - It is somewhat undeniable that Louboutin's red soles have indeed become well-recognized as a trade mark for his shoes in the market.
2. The degree of similarity between the two marks - Identical - in so far as they are both red outersoles
3. The proximity of the products and services - Identical - they are both shoes, being sold in the same stores, probably right next to or near each other
4. The likelihood that the senior user will "bridge the gap" into the junior user's product service line - if there even is a 'gap' it is very likely because they are competitors
5. Evidence of actual confusion between the marks - Always hard to come by, but perhaps Louboutin has some faithful customers who will be able to attest to some initial interest confusion?
6. Whether the Yves Saint Laurent adopted the mark in good faith
7. The quality of the Yves Saint Laurent's products - the AmeriKat would love to see Louboutin allege that YSL's products are of a lesser quality, but the fact that they are not and are side-by-side competitors actually makes it more difficult for YSL to squirm out of this one because there is more chance of there being actual, likely or initial-interest confusion.
8. The sophistication of the parties customers -If someone is in the market for $400-$4,000 shoes, one would think you would pay particular attention in knowing what shoe and from whom you were buying, however again, initial interest confusion may be the savior in this confusion battle.

Confusion, as any trade mark lawyer knows in the US and the UK, is notoriously difficult to prove. However, in the US and now thanks to Arnold J in the UK, initial interest confusion is probably the saving grace for Louboutin. Given that the price points of parties' products are so high and the sophistication of the intended consumers is so developed, any confusion present regarding the origin of the shoes on behalf of the consumer is likely to be remedied prior to purchase. What do readers think? Is this an easy fight for Louboutin or does Yves Saint Laurent have it in the (Neiman Marcus) bag?

Need for Congress to address issues with Google Books lawsuit, Pallante says

The AmeriKat has been quiet about the Google Books Settlement, which some may find unusual considering how much she followed and wrote about the litigation (see previous reports here). In fact she even predicted when District Judge Denny Chin (picture, left) was going to issue his damning judgment (just ask @garethdickson). There is little she wishes to say right now about Judge Chin's judgment other than, in her opinion, it was the correct determination given that the revised settlement seemed even worse than the first and again did not adequately address the issue of orphan works, and Google could have saved itself a lot of bother had it been an "opt-in" class than an "opt-out" (albeit probably not as profitable). However, the issue spotlighted how important the issue of digitization of works is in copyright, be it literary or artistic.

Maria Pallante (picture, right), acting Register of Copyrights, feels the same. Last week she told an event hosted by the US Chamber of Commerce that lawmakers need to address the issue of whether the digitization of literary works should be a benefit for the public or become a profit-making endeavour. As reported by the Dow Jones Newswire, Pallante stated that

"The first issue is really, is mass digitization a national goal that Congress feels legislation is warranted for, and if so, for what beneficiaries."

She also stated that

"It isn't that universal libraries aren't important, but there's a difference between universal libraries and universal bookstores."

With orphan works are back where we started, says the AmeriKat, why can't the US government just once and for all pass a bill like the Shawn Bentley Bill? It would allow for digitization of orphan works, but if and when the owner came forward a reasonable royalty would be payable under statute provided the user undertook a reasonable search. Does it need to be more complicated than this? Of course, the problem encountered is that once that copy is digitized the person who digitized it can arguably exclude other digitized copies of the same book being made - thus some of the arguments against Google in the Google Books case. As long as it is clear that the mere digitization of a literary or artistic orphan work does not mean that the digitizer can exclude others from making their own digitized versions of the work, then such problems should not be encountered. But then again, how can this be done but by legislation?

More in Part II.

Letter from AmeriKat: It's Super Bowl Sunday!!!

This week marks the 100th AmeriKat post (although there have been several non-AmeriKat posts from this feline). There would be no more apt a day to publish her 100th Letter than on SUPER BOWL SUNDAY! FOOTBALL!!!!!!!! Readers will have to excuse the AmeriKat for her sudden burst of feline frenzy, but she does love a good American football game. This year it is the Pittsburgh Steelers and Green Bay Packers who are at loggerheads -- the AmeriKat is rooting for the Steelers, although this may change following half-time. For those who have been engrossed by the rugby this weekend on this side of the Atlantic, take a moment and enjoy the beauty that is American football, not just the sport but its impact on IP. Last year the Supreme Court ruled on an issue regarding NFL team trade marks and competition law issues in the American Needle case (AmeriKat reports here). Ahh ... the NFL, bringing together two American pastimes - Sunday night football and litigation. You can't really say that about rugby, can you?

The AmeriKat will be gone next weekend as she will be finishing off (or writing) a book chapter on the Viacom v YouTube litigation, but will be back the following week with news of Microsoft's Supreme Court filing in the i4i case.

Google's "Bing Sting" takes a punt at Microsoft, but is it really copying?

Another epic battle between two massive teams has also been launched when last week Google accused Microsoft and their Bing search engine of copying their search results. Google's engineers had created 100 "synthetic" search queries such as "hiybbprqag" to which predetermined real search results that had nothing to do with the original query would then appear. After a few weeks of implementing this 'sting', these same search results were also displayed on Bing. Google's Amit Singhai published a detailed blog post about the ins and outs of Google's sting and said that their experiment confirmed their suspicion that something strange was happening with Bing. Google suggests that individuals who are using some combination of Internet Explorer 8 - which can send data to Microsoft via its Suggested Sites feature and/or the Bing Toolbar which can do the same, are inadvertently sending data to Bing about what keywords they search for on Google and what results Google in turn displays. A sort of "search engine espionage" if you will. Singhai stated that

"At Google we strongly believe in innovation and are proud of our search quality. We’ve invested thousands of person-years into developing our search algorithms because we want our users to get the right answer every time they search, and that’s not easy. We look forward to competing with genuinely new search algorithms out there—algorithms built on core innovation, and not on recycled search results from a competitor. So to all the users out there looking for the most authentic, relevant search results, we encourage you to come directly to Google. And to those who have asked what we want out of all this, the answer is simple: we'd like for this practice to stop."

Microsoft denied copying Google and has instead accused them of conducting "spy-novelesque stunts". Vice President of Bing, Harry Shum, stated that

"We do not copy Google's search results. We use multiple signals and approaches in ranking search results. Opt-in programs like the toolbar help us with click stream data, one of many input signals we and other search engines use to help rank sites."

Click stream data basically tracks or maps how users are searching and using the web. So if you use the Bing toolbar or Internet Explorer to search something on Google then it can see the URL for that query and the resulting search results. It can also see when you search something on Amazon, or when you check out the latest YouTube clip or browse shoes on Nieman Marcus (picture, left - the AmeriKat asleep in one such shoe). There is no specific Google signal, just a general search signal for the whole gambit of websites. Some of these search signals are very weak (tails) and some are very strong (heads). Head signals are generic terms such as "movies" or "shoes" - terms that millions of people search every day and will thus be 'strong'. Tail searches are your more obscure searches, such as the nonsensical queries used in the sting operation. Because these tail searches are searched less frequently a search stream will thus have less data to go on and thus the results may appear to be that Bing is "copying"' Google's results, but really there is less data to go on and the data that is out there is from only a few sources including Google (if the AmeriKat is understanding this correctly!). According to Danny Sullivan, both Google and Bing agree that this replication of search results can occur in instances of weak signals.

According to Sullivan, Google's test proves that the surfstream is a weak signal because even where Google was providing the sole signal or sole data for the nonsensical terms, Bing used this signal (data) only about 9% of the time. So are Google's claims of being copied legitimate? Shum says that Bing is not copying Google, they are only watching how users search and use the web. Much, says the AmeriKat, like what Google does with Google Chrome and their own search and browse settings. Although she knows this is not an equitable issue, the maxim "one who comes into equity must come with clean hands" is chiming around the AmeriKat's head right now ...

So is this just a PR battle being waged by Google? Is there any copying taking place at law? Further, what protection does Google have in the search results? If algorithms are being copied (of which there does not appear to any evidence of direct taking), perhaps copyright infringement is taking place or, if there is some patent at work, is there patent infringement? In so far as results are displayed, is there another possible copyright claim in the layout or table of search results? The AmeriKat has to admit that the inner workings of search engines are a mystery to her, so identifying the intellectual property rights is also a stab in the dark. What do readers think?

If anything, the AmeriKat is sure that Viacom and their amici (which include Microsoft) in Viacom v YouTube are loving hearing Google whine about being copied and saying choice things such as

“I’ve got no problem with a competitor developing an innovative algorithm. But copying is not innovation, in my book."

The Amerikat would like to thank Dave Sant of the BBC for spurring her interest in this story.

US Officials score a touchdown in fight against online counterfeits

Last week, with the assistance of Immigration and Customs Enforcement (ICE), the US Attorney's Office of the Southern District of New York seized 10 websites that allegedly streamed live sporting and and pay-per-view events online - mere days before the big SUPER BOWL GAME! The Super Bowl game attracts about 100 million viewers a year and in recent years many viewers have been tuning in online, either legally or illegally. The websites that have apparently assisted in the illegal viewing of sports games that were subject to the seizure under Title 18 of the United States Code included channelsurfing.nehq-streams.com, firstrow.net, ilemi.com and rojadirecta.org. What makes the seizure of rojadirecta.org particularly controversial is because this Spanish site was held to be operating legally by a Spanish court last May. (picture, top left - the notice now displaying on the seized websites)

These websites were alleged to illegally provide links to sites that would show or stream professional sports organizations' content, including games from the NFL and the NBA (National Basketball Association). For anyone who has ever watched an NFL or Premier League game, you will know that the sports organizations will usually own the copyright in film and sound recording of the game/match, the trade marks of some of the teams' logos and/or uniform, the music, layout, etc. Thus, unauthorized streaming or use of this content is a violation of their copyright. With more and more fans turning to their laptops to watch their favorite game, sports organizations are now facing the age-old battle with sites that illegally provide this content.

US Attorney, Preet Bharara (photo, right) stated

“The illegal streaming of professional sporting events over the Internet deals a financial body blow to the leagues and broadcasters, who are forced to pass their losses off to fans by raising prices for tickets and pay-per-view events. With the Super Bowl just days away, the seizures of these infringing websites reaffirm our commitment to working with our law enforcement partners to protect copyrighted material and put the people who steal it out of business.”

But the efficacy of such seizures is under question and anyone who battles counterfeit websites online know what that is: as soon as one domain goes away, another one will soon swoop up in its place. However, ICE Director John Morton remains undeterred

“This swift action by our Homeland Security Investigations New York special agents and analysts sends a clear message to website operators who mistakenly believe it’s worth the risk to take copyrighted programming and portray it as their own. We will continue to aggressively investigate this type of crime with our law enforcement partners."

But how effective is this? Although it may not completely get rid of these types of sites, it does shove the domains back down in the Alexa ratings which means they are more difficult to find. The more difficult a site is to find, fewer users access it, which in turn results in any advertising revenue on the site drying up. It may not be perfect, but it has the desired effect of essentially making the commercial viability of counterfeit websites less attractive to their operators.

However, not everyone is happy about the seizures. A critic of these types of seizures and of an anti-piracy legislation that will probably be reintroduced this term,Senator Ron Wyden (D-Oregon, left) wrote to Attorney General Eric Holder and Morton expressing his concern. He called for greater transparency about the criteria on why these domain seizures were being allowed to proceed. He noted particular concern in that the 10 websites that were seized last week providing links to infringing content, not providing infringing content themselves, and an apparent lack of due process. Senator Wyden stated that

"These seizures represent a major shift in the way the U.S. government combats copyright infringement in the digital environment...I grow concerned when the methods used may not be effective and could stifle constitutionally protected speech, job-creating innovation and give license to foreign regimes to censor the internet."

Steven Tepp of the US Chamber of Commerce (a private lobbying institution) previously stated in an e-mail to the AmeriKat that the anti-priacy legislation Combating Online Infringement and Counterfeits Act (COICA), that has Senator Wyden concerned does provide for due process in that the legislation does require the Department of Justice to "simultaneously give notice to the accused domain so that they have an opportunity to come to court to defend themselves" and allows a party served with an order the opportunity to modify or vacate the order. To read the text of this bill click here.

At the same time the website seizures were taking place Deputy Director of the ICE Kumar Kibble announced another successful sting, which was cleverly dubbed in time for Super Bowl Sunday as "Operation Interception". The Operation saw $3.56 million in fake NFL merchandise seized. The Operation will continue throughout the weekend.

Now that the Digital Economy Bill's website blocking clause is being reviewed by the UK Government, what do IPKat' readers think about introducing similar enforcement procedures in the UK as those undertaken by the US ICE?

Many thanks to Oliver Weingarten of the Premier League for alerting the IPKat to the ICE seizure-story.