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Some Really Good News for Barnes & Noble; and Microsoft Withdraws Another Patent ~pj
Tuesday, February 07 2012 @ 12:04 AM EST

The big news being reported by Bloomberg is that Jeff Hsu, a staff attorney at the ITC, said in an interview he will be recommending that ITC Judge Theodore Essex find Barnes & Noble has not infringed three Microsoft patents. Essex rules in April on that.

If I were a FUDster, I'd write that this means Barnes & Noble has prevailed, but I just tell you the truth, which is that this is one step in a longer process. It is, undeniably, however, fabulously good news for Barnes & Noble.

It is also not a total surprise, in that the quality of Microsoft's patents is pitiful. It may also explain why Microsoft keeps dropping patents from the case. Microsoft says it's doing it to "streamline the investigation":

Pursuant to 19 C.F.R. § 210.21(a)(1), in order to streamline the investigation, Complainant Microsoft Corporation hereby moves for partial termination of the investigation as to U.S. Patent No. 5,889,522 ("the '522 patent"), based on partial withdrawal of the Amended Complaint as to the '522 patent. The investigation will continue as to U.S. Patent Nos. 5,778,372, 6,891,551, and 6,957,233.
And you can believe that explanation if you want to. Or, you can take another quick look at all the prior art Barnes & Noble presented to the ITC regarding Microsoft's patents, including the '522 patent.

There were 80+ examples of prior art for the '522 patent listed by Barnes & Noble, including 35 patents that issued before Microsoft applied for the '522 patent and even a Microsoft guide to programming from 1992 published by Microsoft Press *itself*. One would have thought the Microsoft lawyers would have done some simple searching before suing people, no? But then think of all the companies that have signed up for a license rather than get sued over Microsoft's stupid patents. I'm looking at you, Amazon.

That's exactly what's wrong with the current patent system, by the way, among many other things, that a patent holder can bully other companies into paying for thin air.

Buh-bye ridiculous '522 patent.

It could resurface later. Microsoft typically does not allow cases to reach a final decision if it thinks it might lose. That way, the claims live to fight against the next victim, I guess. So what I believe is that it is dropping the '522 patent because it's a stupid patent that won't survive a close examination, but it might come in handy in private negotiations over a license if folks aren't paying close attention or who'd just rather pay than be sued.

It really offends me that Microsoft filed this case at all, given the quality of the patents asserted, or the lack thereof. They have patent lawyers. So I think they have to know. And Barnes & Noble is the last large paper bookseller in the US and it is already struggling. The Nook is a winner for them. Yet, in this context, Microsoft didn't mind thrusting its sword into Barnes & Noble's heart anyway.

Some things never change.

Here are the latest filings:

02/01/2012 - 470773 - Notice of Change of Address

02/01/2012 - 470798 - Agreement to be Bound by the Protective Order of Steve Jenkins, Matthew Simmons and Peter Lawson

02/02/2012 - 470842 - Complainant Microsoft Corporation's Unopposed Motion for Leave and Memorandum in Support to File Responses to Respondents' High Priority Objections Out of Time

02/02/2012 - 470926 - Unopposed Motion of Complainant Microsoft Corporation for Partial Termination of the Investigation as to U.S. Patent No. 5,889,522

02/03/2012 - 471041 - Agreement to be Bound by the Protective Order of Nicholas Bronson and Alan Ruffier

02/06/2012 - 471076 - Initial Determination Granting Microsoft's Motion for Summary Determination that It Has Satisfied the Economic Prong of the Domestic Industry Requirement

As usual, lots of sealed documents. That last one, about Microsoft satisfying the economic prong of the domestic industry requirement doesn't mean much, just that Microsoft is in business in the US. Here's a better explanation, from the law firm of Steptoe & Johnson:
To prevail in a Section 337 proceeding, a complainant must establish that an industry “relating to the articles protected by the patent... exists or is in the process of being established” in the United States. 19 U.S.C. § 1337(a)(2). This domestic industry requirement consists of two prongs: an economic prong and a technical prong. The relationship between the two prongs was recently reaffirmed in an order issued by Judge Rogers of the US International Trade Commission (“ITC”) in Certain Printing and Imaging Devices and Components Thereof (Inv. No. 337-TA-690, Order No. 26, April 22, 2010). The order is available online.

To satisfy the economic prong of the domestic industry requirement, a complainant must show that one of the economic activities set forth in subsection 19 U.S.C. § 1337(a)(3) has taken place or is taking place with respect to articles protected by the asserted patents. The relevant economic activities are (A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in exploitation, including engineering, research and development, or licensing. 19 U.S.C. § 1337(a)(3). The first two categories of economic activity generally require the complainant to show that significant manufacturing-related activities are taking place in the United States, while the third addresses other activities that may be considered in situations where there usually is no US manufacture of articles covered by the patents in suit.

Generally, to satisfy the technical prong of the domestic industry requirement, a complainant must establish that it has a domestic product that practices at least one claim of each asserted patent. "The test for satisfying the 'technical prong'... is essentially [the] same as that for infringement, i.e., a comparison of domestic products to the asserted claims." Alloc, Inc. v. Intl Trade Comm'n, 342 F.3d 1361, 1375 (Fed. Cir. 2003). However, the ITC's jurisprudence long ago clarified that the claim used to establish a domestic industry need not be one of those alleged to be infringed. Certain Microsphere Adhesives, Process for Making Same and Products Containing Same Including Self-Stick Repositionable Notes, Inv. No. 337-TA-366, USITC Pub. 2949 (Jan. 1996). That concordance between the domestic product and the asserted claims is not required is supported both by the statutory language of Section 337, which refers only to patents, not patent claims, that have been violated, as well as by the legislative history, which made clear that “Congress intended the 1988 amendments to liberalize the domestic industry requirements.” Id.

Finally, #470842 is a little bit funny and a little bit sad. Microsoft had "technical difficulties" filing on time, so now it's asking for permission to let its late filing count, in essence. It seems the ITC didn't accept a filing with live hyperlinks, so they missed the deadline due to laboriously searching for and fixing 340 pages to get rid of the hyperlinks. Dear me, I have a suggestion. Microsoft should try GNU/Linux. It can do such things without having to do it by hand. Five minutes, and poof! Done.

I know. Somebody somewhere will pop up and tell me Microsoft has some tool that is just as good or better. OK. Why, then, would it be an excuse to miss a deadline because of fixing by hand, instead of using the tools available? Just asking.

Seriously though, you lawyers out there would do yourselves a real favor if you learn to use a GNU/Linux system and especially the command line. If I can do it, you surely can too. It's not hard. They have books, videos, and online courses at O'Reilly, so you don't even have to memorize complicated things. Just look it up if you can't remember. You'll save yourself soooo much heartache, and you won't have to ask judges for permission to file after you miss a deadline, which is always nerve-wracking.

Update: ars technica's Jon Brodkin has an analysis, including this from a patent lawyer:

While Barnes & Noble denies violating Microsoft's intellectual property, the company's main argument seems to be that the "the patents themselves are invalid," IP attorney Patrick Patras of Hinshaw & Culbertson LLP in Chicago, who has represented Hitachi and others in patent lawsuits, tells Ars.

Patents carry a presumption of validity making them difficult to overturn. But there are factors seemingly going in Barnes & Noble's favor. The ITC staff attorney's recommendation that Barnes & Noble get a favorable ruling is not binding, but it is a good sign, Patras said.

"The staff attorney is really acting as an independent third party in the litigation whose job is to protect the public interest," Patras said. "The fact you've got this independent third party who is sophisticated in patent matters, who has apparently reached the conclusion that Barnes & Noble should win, I think that speaks volumes."

While the article posits that a win by Barnes & Noble will make it harder for Microsoft to force licenses on new patent victims, I think that leaves out the Nokia-MOSAID partnership:
While the Barnes & Noble case is being decided long after most Android-using device makers settled with Microsoft, a decision in Barnes & Noble's favor could make it harder for Microsoft to obtain licensing fees from other vendors going forward. Microsoft is, presumably, putting some of its best patents forward in the case. This case may not be representative of all other Android litigations, because many patents are specific to smartphones, but a ruling that the patents are invalid would be a blow for Microsoft nonetheless.

"I think other parties that were approached by Microsoft would probably feel a little bit more confident in standing up to Microsoft in fighting for a better deal," if Barnes & Noble were to win, Patras said. "If they're found to be invalid or not infringed by Android, in a sense Microsoft then is going to have to rely on what they themselves view as less good patents."

It is Barnes & Noble, however, that is calling out Microsoft, Nokia and MOSAID, alleging that the partnership has as its goal being able to go after licensing money in the smart phone space. According to Barnes & Noble, the target is Android, and discovery is currently ongoing on that very issue.

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