Supreme Court Sounds Skeptical About Suing Up And Down The Supply Chain For Patent Infringement

from the fingers-crossed dept

Last fall, we mentioned that the Supreme Court had agreed to hear yet another interesting patent case, looking at whether companies could sue up and down the supply chain for patent infringement. If you're familiar with the concept of the "first sale doctrine" in copyright law, this case looks at whether or not the same concept applies to patents as well. Basically, if Company A legitimately licenses a patent from Company B and then sells a product based on that product to Company C, who turns around and resells it (perhaps as a component of a larger product), can Company B sue Company C for patent infringement? Or, did Company B "exhaust" the right to control Company A's products once it licensed the patent? That's what happened in the case. LG licensed a patent to Intel, who used the patent to make some chips. Intel turned around and sold those chips to computer makers, such as Quanta, who put them in laptops, which they then sold. LG claims that all those laptop makers also need to license the patents, even though they bought the chips from someone who had already licensed them. Basically, it's LG trying to get paid multiple times for the same patent.

On Wednesday, the Supreme Court actually heard the case, and most of the mainstream press coverage suggests that the Justices were extremely skeptical of LG's position, though others note that Supreme Court Justice tea leaves aren't so easy to read. It does sound like the Justices did focus in on the key issues, though, and were concerned about the absurdity of a situation where a company is still controlling the sale of a product after it's been sold. While we wait for a decision, expect to see a few more patent hoarders try to rush through infringement lawsuits where they sue up and down the supply chain. In the meantime, we're still curious to know why Yahoo sided with LG, while most tech firms sided with Quanta on the other side.

Filed Under: patents, supply chain, supreme court
Companies: lg, quanta

Things To Like And Dislike In The Plan To Build Netflix Directly Into Your TV

from the good-for-netflix,-but-for-everyone-else? dept

Various authorized movie download sites have been flopping lately due to various reasons -- but one of the big ones is the continued difficulty in actually being able to watch the downloaded movies on your television. In many cases, part of the problem is the DRM that many movie download sites use, but an even more fundamental problem is that there still isn't a decent link between most household computers and household televisions. Apparently, Netflix is trying to solve this. Late Wednesday, the company announced plans to get various consumer electronics firms, starting with LG, to build technology directly into TVs or other set-top boxes that will allow Netflix subscribers to download and watch movies directly on the TV. Netflix had considered building its own branded set-top boxes, but wisely reconsidered. Given the proliferation of set-top boxes, and the dismal failure of other companies that have tried to go that route, it makes sense to get consumer electronics makers to build the tech directly into their own offerings.

Initially, from Netflix's perspective, this plan makes a lot of sense. It's already been experimenting with streaming movies to subscribers on their computers (at no extra cost) for about a year. Netflix also has the name recognition and clout to get consumer electronics firms to go along with this plan (and it wouldn't be surprising to see a few other CE companies fall into line quickly behind LG). However, that doesn't mean this is the best result for consumers (or even for Netflix in the long run). By building in a proprietary solution that effectively only works with Netflix, buyers won't have much of a choice. They won't be able to compare other movie streaming/downloading services via their TVs and will have to effectively make a choice and stick with it for the life of their TV. What would have been a lot more interesting and better for everyone (perhaps other than Netflix) would have been for the CE companies to agree to a standard by which various movie distribution firms could have streamed movies directly to TVs, and then allowed those companies to offer competing services. I don't want to buy a DVD player that only plays movies from Netflix, so why should my TV only play streaming videos from Netflix?

While it may initially seem like a win for Netflix to lock out the competition this way, that may not be the case. If Blockbuster is smart (a big "if") it's currently running around trying to get CE companies to align with it, instead. Then we have another standards battle situation, where people decide not to buy any such solution until everyone agrees to play nice (witness the HD DVD standards battle that has greatly slowed the growth in next generation DVDs). If there were a standard that others could plug into, then it would encourage more people to upgrade. However, if the competition is between a "Netflix" device and some other device, it may make people wait to see how the market really shakes out.

Filed Under: internet, movie rentals, streaming video, tv
Companies: lg, netflix

Why Is Yahoo Siding With Patent Hoarders?

from the something-yahoo-wants-to-share-with-us? dept

Back in September, we noted that the Supreme Court was going to hear a rather important case concerning patents, determining whether or not it's possible for a patent holder to "double dip" and get license fees up and down the supply chain. The anonymous Patent Troll Tracker alerts us to the fact that a ton of organizations and companies have now filed amicus briefs in support of one side or the other (or neither, in a few cases). While the Troll Tracker's post focuses on the fact that most of the briefs filed in support of LG's position appear to come from patent hoarding firms (and their attorneys), at the end he does mention in passing that Yahoo! sided with LG as well. While he doesn't name them, the Troll Tracker notes that most of the firms filing against LG's position come from the tech industry. This is the usual breakdown. Companies that rely on patents to make a living tend to want stronger patents (no surprise there). Companies that tend to focus on business models that don't require intellectual monopolies tend to favor weaker patent laws. That said, it seems quite odd that Yahoo! falls in with the former, rather than the latter. While it has been involved with some patent lawsuits (most notably, the dispute with Google over paid search patents), Yahoo tends to be more focused on providing useful services rather than focusing on its patent portfolio. Hopefully, this isn't a sign of things to come. We've certainly seen other formerly successful companies turn to patent lawsuits after they failed in the marketplace. Perhaps Yahoo is signaling to the world where its future lies.

Filed Under: patent reform, patents, supply chain, supreme court
Companies: lg, yahoo

Yes, Calling A Phone The Black Cherry May Confuse People Into Thinking It's Related To The BlackBerry

from the no-argument-here dept

While we're often quite critical of frivolous trademark lawsuits that are clearly designed to to shut someone up or to try to squeeze money out of someone, there are times when trademark lawsuits are quite well justified. As we've said repeatedly, the real purpose of trademark law isn't about "intellectual property" at all -- but rather, it should be viewed as a consumer protection law. That is, it's really designed to keep Bob's Cola from packaging its bottles up so that people are tricked into thinking they're buying Coca Cola. So, with that in mind, it would seem that RIM has a pretty strong trademark case against handset maker LG, who has been trying to sell new phones with names like Black Label, Strawberry and Black Cherry. The "Black Label" one is more borderline -- as it's hard to see that RIM should be able to control the use of the word "Black" as it relates to any mobile device. However, it's not hard to see people hearing names like Strawberry and Black Cherry on a mobile device and simply assuming that they're somehow related to RIM's BlackBerry. Even worse, LG had apparently wanted to call one of its new devices the BlackPearl -- which is really sketchy, seeing as RIM is offering a device called the BlackBerry Pearl. On this one, we'd say that even the moron in a hurry test suggests that people would be confused into thinking that some of these LG phones were from RIM.

Filed Under: black cherry, blackberry
Companies: lg, rim