IP News

Patent Awarded for Updating Software on the Internet

On Oct. 21, 2003, the USPTO granted U.S. Patent 6,636,857 for managing technology assets via the Web to Bluecurrent, a Texas company specializing in management services for technology assets. Bluecurrent claims that the patent covers the installation and updating of computer software and settings, and has indicated that it intends to seek royalties of $10 to $25 each time a new computer has software or settings updated over the Internet. One embodiment described in the specification allows a technician to store a user's old profile and settings to a remote storage medium using the Internet. The old profile and settings could then be downloaded via the Internet to the user's new computer. Though the patent has a recent filing date, Dec. 18, 2000, Bluecurrent has stated that it believes its patent is valid and intends to aggressively pursue all infringers.

Third Circuit Holds Webcasting Not Exempt from Performance Payments under DMCA

The Third Circuit held in Bonneville Int'l Corp. v. Peters, 2003 U.S. App. LEXIS 21079 (3d Cir. 2003) that an AM/FM webcast streamed over the Internet does not fall within the exemption in the Digital Millennium Copyright Act (DMCA), which excludes noninteractive, nonsubscription broadcast transmissions from the statutory licensing scheme. As a result, webcasters will be required to pay royalties for streaming music on the Internet.

In Bonneville, plaintiffs brought suit after the Copyright Office issued a rule that stated that webcasts were not exempt from the DMCA. Plaintiffs argued that the rule was an incorrect interpretation of the DMCA and that the Copyright Office did not have the authority to make such a ruling. The Third Circuit held that the Copyright Office's interpretation was permissible.

The court held that while a webcast was noninteractive and nonsubscriptive, it was not a broadcast transmission and, therefore, could not qualify for the exemption. Using the DMCA and the Federal Communications Act of 1934, the court defined a broadcast transmission as “a radio transmission by a radio station facility operating subject to a FCC license.” Plaintiffs argued that a broadcast transmission should be defined as coming from a broadcast station, and that a broadcast station referred to the broadcasting corporate entity and not the physical transmitting facility. The court refuted this argument by pointing out that the plaintiffs' definition would give carte blanche to broadcasting companies to perform recordings through any transmission medium. The court concluded that only actual over-the-air broadcasts were exempt from licensing under the DMCA, and that webcasted versions of those same broadcasts were not exempt.

FTC Report Recommends Balancing Innovation with Competition

The Federal Trade Commission (FTC) voted to approve a report that made recommendations on how best to balance promoting innovation through patents and increasing competition. First in a series of two reports, the report proposed legislative and regulatory changes to the patent system. The proposals in the FTC report were summarized into 10 recommendations that focused on weeding out questionable patents, making sure the USPTO was adequately equipped to handle patent quality issues, and other patent procedures that raised competitive issues. Those recommendations included:

• Creating post-grant opposition proceedings that would make it easier to challenge a patent's validity in the USPTO, instead of incurring the expense to challenge the patent in federal court;
• Limiting awards of treble damages for willful infringement to those instances where there is actual notice or deliberate copying;
• Creating prior user rights to protect against a patentee using continuing applications to extend the period of patent prosecution and amending claims to ensnare a competitor's products; and
• Increasing the communication between the USPTO and antitrust agencies like the FTC.

The full report as well as the executive summary can be found at http://www.ftc.gov/reports/index.htm. The forthcoming second report will focus on recommended changes to antitrust law.

Federal Courts have Jurisdiction to Determine Successor Liability for Underlying Patent Case

In Cygnus Telecomm. Tech. LLC v. TotalAxcess.com, Inc., 345 F.3d 1372 (Fed. Cir. 2003), the Federal Circuit held that a federal court would have ancillary jurisdiction to decide the liability of a patent infringer's successor, even if the liability issue did not arise under the patent laws. In the underlying patent case, plaintiff accused defendant of infringement and the parties entered into a settlement agreement in which the patent was considered valid and enforceable and wherein the defendant agreed to pay damages. Subsequently, defendant and its successor refused to pay the judgment and the plaintiff brought suit seeking payment. The federal district court held that even though the underlying case arose under patent laws, the present action did not and, therefore, could not be brought before a federal court. On appeal, the Federal Circuit reversed.

The Federal Circuit held that since the terms of the settlement agreement were included in the court's judgment, ancillary jurisdiction would be proper because a court is entitled to enforce its decrees. Defendant's successor argued that since it was a successor and not a party to the original litigation, ancillary jurisdiction was improper. However, the Federal Circuit held that since plaintiff was not raising new theories of liability and just seeking to enforce the judgment, jurisdiction was proper.

Microsoft Hit with Another Large Jury Award

On Nov. 14, 2003, a jury determined that Microsoft willfully infringed a patent owned by Imagexpo and awarded the patentee $62.3 million in damages. The technology at issue involved Microsoft's NetMeeting Whiteboard, which allows users in different locations to view and make notes on a common screen. Microsoft has not announced whether it will appeal the decision, but indicated that it intended to phase out NetMeeting in favor of its Live Meeting Web conferencing service. This is the second large jury award against Microsoft this year. The first was for $521 million, awarded in August to Eolas Technologies, which claimed that Microsoft's Internet Explorer infringed its patent for sending interactive software applications over the Internet.

Patent Awarded for Updating Software on the Internet

On Oct. 21, 2003, the USPTO granted U.S. Patent 6,636,857 for managing technology assets via the Web to Bluecurrent, a Texas company specializing in management services for technology assets. Bluecurrent claims that the patent covers the installation and updating of computer software and settings, and has indicated that it intends to seek royalties of $10 to $25 each time a new computer has software or settings updated over the Internet. One embodiment described in the specification allows a technician to store a user's old profile and settings to a remote storage medium using the Internet. The old profile and settings could then be downloaded via the Internet to the user's new computer. Though the patent has a recent filing date, Dec. 18, 2000, Bluecurrent has stated that it believes its patent is valid and intends to aggressively pursue all infringers.

Third Circuit Holds Webcasting Not Exempt from Performance Payments under DMCA

The Third Circuit held in Bonneville Int'l Corp. v. Peters, 2003 U.S. App. LEXIS 21079 (3d Cir. 2003) that an AM/FM webcast streamed over the Internet does not fall within the exemption in the Digital Millennium Copyright Act (DMCA), which excludes noninteractive, nonsubscription broadcast transmissions from the statutory licensing scheme. As a result, webcasters will be required to pay royalties for streaming music on the Internet.

In Bonneville, plaintiffs brought suit after the Copyright Office issued a rule that stated that webcasts were not exempt from the DMCA. Plaintiffs argued that the rule was an incorrect interpretation of the DMCA and that the Copyright Office did not have the authority to make such a ruling. The Third Circuit held that the Copyright Office's interpretation was permissible.

The court held that while a webcast was noninteractive and nonsubscriptive, it was not a broadcast transmission and, therefore, could not qualify for the exemption. Using the DMCA and the Federal Communications Act of 1934, the court defined a broadcast transmission as “a radio transmission by a radio station facility operating subject to a FCC license.” Plaintiffs argued that a broadcast transmission should be defined as coming from a broadcast station, and that a broadcast station referred to the broadcasting corporate entity and not the physical transmitting facility. The court refuted this argument by pointing out that the plaintiffs' definition would give carte blanche to broadcasting companies to perform recordings through any transmission medium. The court concluded that only actual over-the-air broadcasts were exempt from licensing under the DMCA, and that webcasted versions of those same broadcasts were not exempt.

FTC Report Recommends Balancing Innovation with Competition

The Federal Trade Commission (FTC) voted to approve a report that made recommendations on how best to balance promoting innovation through patents and increasing competition. First in a series of two reports, the report proposed legislative and regulatory changes to the patent system. The proposals in the FTC report were summarized into 10 recommendations that focused on weeding out questionable patents, making sure the USPTO was adequately equipped to handle patent quality issues, and other patent procedures that raised competitive issues. Those recommendations included:

• Creating post-grant opposition proceedings that would make it easier to challenge a patent's validity in the USPTO, instead of incurring the expense to challenge the patent in federal court;
• Limiting awards of treble damages for willful infringement to those instances where there is actual notice or deliberate copying;
• Creating prior user rights to protect against a patentee using continuing applications to extend the period of patent prosecution and amending claims to ensnare a competitor's products; and
• Increasing the communication between the USPTO and antitrust agencies like the FTC.

The full report as well as the executive summary can be found at http://www.ftc.gov/reports/index.htm. The forthcoming second report will focus on recommended changes to antitrust law.

Federal Courts have Jurisdiction to Determine Successor Liability for Underlying Patent Case

In Cygnus Telecomm. Tech. LLC v. TotalAxcess.com, Inc., 345 F.3d 1372 (Fed. Cir. 2003), the Federal Circuit held that a federal court would have ancillary jurisdiction to decide the liability of a patent infringer's successor, even if the liability issue did not arise under the patent laws. In the underlying patent case, plaintiff accused defendant of infringement and the parties entered into a settlement agreement in which the patent was considered valid and enforceable and wherein the defendant agreed to pay damages. Subsequently, defendant and its successor refused to pay the judgment and the plaintiff brought suit seeking payment. The federal district court held that even though the underlying case arose under patent laws, the present action did not and, therefore, could not be brought before a federal court. On appeal, the Federal Circuit reversed.

The Federal Circuit held that since the terms of the settlement agreement were included in the court's judgment, ancillary jurisdiction would be proper because a court is entitled to enforce its decrees. Defendant's successor argued that since it was a successor and not a party to the original litigation, ancillary jurisdiction was improper. However, the Federal Circuit held that since plaintiff was not raising new theories of liability and just seeking to enforce the judgment, jurisdiction was proper.

Microsoft Hit with Another Large Jury Award

On Nov. 14, 2003, a jury determined that Microsoft willfully infringed a patent owned by Imagexpo and awarded the patentee $62.3 million in damages. The technology at issue involved Microsoft's NetMeeting Whiteboard, which allows users in different locations to view and make notes on a common screen. Microsoft has not announced whether it will appeal the decision, but indicated that it intended to phase out NetMeeting in favor of its Live Meeting Web conferencing service. This is the second large jury award against Microsoft this year. The first was for $521 million, awarded in August to Eolas Technologies, which claimed that Microsoft's Internet Explorer infringed its patent for sending interactive software applications over the Internet.