1. Patent Engineering Berkeley-Lavian Week 1 1 Patent Engineering IEOR 190G CET: Center for Entrepreneurship &Technology Dr. Tal Lavian (408) 209-9112 Tlavian@cs.berkeley.edu 45 Evans (may change) Mondays 4:00-6:00

2. Patent Engineering- Berkeley-Lavian Week 1 2 Today’s Agenda – Introductions Introduction to the course Course administration Schedule Some info about yourself Introduction to Intellectual Property Introduction to Patents

3. Patent Engineering- Berkeley-Lavian Week 1 3 Patent Engineering Course This is an engineering class not a law class The course broadly covers patents as a business tool The use of intellectual capital for competitive advantage Protection and commercialization of engineering and scientific intellectual assets Examination of several patent litigation case studies focus on invention, innovation, patent, and strategy

4. Patent Innovations- Berkeley-Lavian Week 1 4 What we will do in this course? Mondays 4:00pm - 6:00pm Please be on time Starts today - ends on May 11th Patent – innovations, engineering, and strategy Industry lectures Few classes with the Law School Students “experts witnesses” Field trip – court visit SF or Oakland

5. Patent Engineering- Berkeley-Lavian Week 1 5 What we Will Cover? Overview of the Patent System Publication, Public Use, and On-Sale Limitations Enablement and Best Mode Requirements Utility, Provisional, and PCT Application Novelty and Unobviousness Requirements Avoiding Patent Infringement Patentability and Infringement Comparison Strategies for Engineers who are Witnesses or Experts in Patent Lawsuits

6. Patent Innovations- Berkeley-Lavian Week 1 6 Invited Lectures Duane Valz, VP & Associate General Counsel for Global Patent Strategy at Yahoo! Joe Beyer, VP Licensing at HP Professor Randy Katz, UC Berkeley EECS Ron Laurie, Managing Director - Inflexion Point Rob Aronoff – Managing Director Pluritas Professor Lawrence J. Udell, California Invention Center Lowell Mead, Partner, Cooley, Godward, Kronish LLP

7. Patent Engineering- Berkeley-Lavian Week 1 7 Students Presentations Students’ presentations Topics on patent engineering in litigated cases Some examples from last year: http://www.cs.berkeley.edu/~tlavian/spring2008/patentEngineering.html http://www.cs.berkeley.edu/~tlavian/spring2008/patentEngineering.html

8. Patent Engineering- Berkeley-Lavian Week 1 8 Students Presentations Present in 10-15 min a patent litigation case Case summary Parties, dates, history, issue in dispute, results Engineering aspects of the dispute The patent(s), technology, product Engineering aspects of the infringement The engineering view vs. the legal view Any proposed design around Volunteers to start next week

9. Patent Engineering- Berkeley-Lavian Week 1 9 Grading - Attendance 2 units credit course – (no 1,3,4) You will be fine - Pass/Fail (it would be very hard to fail) Passing grade – requires attendance at all lectures (with one allowed unavoidable absence) Sign in for the class Patent blogs and mailing lists Students presentations – 15 min Prior Art search

10. Patent Engineering- Berkeley-Lavian Week 1 10 Web Site(s) http://cet.berkeley.edu/ Http://cs.berkeley.edu/~tlavian bSpace

11. Patent Engineering- Berkeley-Lavian Week 1 11 Who are you? Tell us about yourself: In about 60 seconds Your name, education, experience Goals for future What should we know about you Your patent, invention, background, experience What do you know about patents? How many patents have you read? Why are you here? What you would like to accomplish? Send me email with this info

12. Patent Engineering- Berkeley-Lavian Week 1 12 Intro to Patent Engineering

13. Patent Engineering- Berkeley-Lavian Week 1 13 Types of Intellectual Property Patents –protect ideas Copyrights –provide the author the right to reproduce, display, perform Trade Secrets –information kept secret and has economic value Trademarks & Service Marks –marks used in commerce identifying origin of goods

14. Patent Engineering- Berkeley-Lavian Week 1 14 Innovation: long-term health Healthy Root System Innovation! Patents Software Ideas Knowledge Work Processes Creativity Skills Trade Secrets Inventions Secret sauce For the tree to flourish Concepts

15. Patent Engineering- Berkeley-Lavian Week 1 15 Patents as a Critical Business Tool Good patents are the cornerstone of almost any technology business Patent protection can provide significant incentive and motivation for further research expenditures An understanding of patents is critical to the successful commercialization of most technologies

16. Patent Engineering- Berkeley-Lavian Week 1 16 Some facts Microsoft assets: IP: 95% Working capital: 4% Fixed assets 1% Other: 1%

17. Patent Innovations- Berkeley-Lavian 2nd week 17 Recent Patent Verdicts & Settlements Or – Why it is really important? Alcatel/ Lucent v. Microsoft. - (2007) - $1.5 Billion NTP – Settled with RIM for $612M (plus $53M litigation plus verdict) Intergraph – over $880M in settlement from patent litigation with Intel, HP and others Eolas v. Microsoft (2003). $506M Jury verdict Immersion v. Sony (2004). $82M jury verdict plus royalties –increased (2007) to $150M –vibration game controller - Microsoft settlement on $26 Freedom Wireless v. BCGI (2005) $128 jury verdict Finisar v DirectTV (2006). 103M (79+24)Jury verdict plus injunction Tivo v. EchoStar (2006). $74M jury verdict plus injunction Acacia - $60M in licensing revenue (2004-2—6) Forgent - $100M in licensing revenue 2004-2006

18.  Patent Troll: A company with no products and little infrastructure that amass patents with the intention of prosecuting offending companies  NTP is considered by many to be a patent troll  Co-founded by a Chicago Engineer and his patent attorney in 1990 to protect his inventions.  Main attraction was a system to send emails between computers and wireless devices NTP

19.  Late 90’s, RIM hit the market with the BlackBerry  Had around $850 worth of sales that was considered to infringe upon NTP’s patents  NTP contacted RIM and offered to license their patent, RIM didn’t respond  NTP and RIM at first agreed to settle for around $450 million, but the agreement disintegrates over the summer The NTP Case

20.  US Patent Trade Office decides to reexamine the patents that NTP held after RIM presents evidence of prior art.  After dragging their feet in court, RIM agrees to a settlement of around $650 million, and to license the technology from NTP.  Agreement is that the money will not be returned even if the US PTO finds the patents held by NTP to be invalid  RIM was losing customers and companies and law firms were delaying Blackberry upgrades until the case was resolved, so it was in their best interest to resolve it quickly. The Case

21. Bell Labs Case - The Technology  Late 1980’s, Inventors James Johnston and Joseph Hall (Bell Labs, division of AT&T)  Quantizing noise – approximation of continuous range by values by relatively small set of discrete values.  Invented method and apparatus to produce quantized audio signal using interpolated scale factor. V. Advantage - Data compression – Same or similar signal can be represented with less data

22. Bell Labs Patents Filed: Dec 1988 Assignee: Bell Laboratories U.S. Patent No. 5,341,457, Perceptual Coding of Audio Signals, to Joseph L. Hall and James D. Johnston (Dec 1988) U.S. Reissue Patent No. RE39,080, Rate loop processor for perceptual encoder/decoder, to James D. Johnston (Dec 1988, Reissued Sep 1994)

23. Bell Labs MS Case In 2003, Lucent files suit against Gateway, Dell, and eventually Microsoft in U.S. District Court, San Diego, CA. Claim: Infringed two patents developed by Bell Labs in MP3 compression and playback within Microsoft Windows Media Player Sought 0.5% royalty of total Windows computers sold

24. The Case Microsoft claims: Received license for MP3 technology from Fraunhofer Institute (Bell Lab’s parent research organization) for flat $17 million. Loop processor not applicable for WMP application. 0.5% rate exorbitant! “Only one of 10,000 features”.

25. The Results Ruling agreed that patents were developed by Bell Labs before joining with Fraunhofer to create MP3 Rights to patents exceeded value of $17 million paid for license February 22, 2007, Alcatel-Lucent awarded record $1.5 billion in damages from Microsoft. Jury unable to find ‘willful’ infringement for $4.5 billion damages. August 6, 2007, Microsoft granted retrial. Verdict overturned based on insufficient evidence by Judge Rudi Brewster..