PAYD Won’t Get Paid By EBAY on Patent Claims
Sept. 21, 2015 (Mimesis Law) — The PTAB continues to ruin the dreams of investors in patent assertion entities, with the microcaps bearing the brunt of the bad news. In the latest development, four patents owned by patent assertion entity PAID, Inc. were declared ineligible by a PTAB panel in multiple Covered Business Method (CBM) reviews initiated by EBAY. Sending the stock tumbling down the “PTAB cliff” of course, and leaving investors fuming. The frustration of investors was such that one Yahoo! Finance commenter accused the PTO of perpetrated “”securities fraud” as follows:
“This is securities fraud perpetrated by the USPTO. How can you take a public company’s money to issue patents (multiple patents) that people invest in because of these issued patents, and then claim later that these devices were non-patentable? “
It is hard not to feel some sympathy for investors who invested based on the idea that issued patents carry with them a presumption of validity. What makes Alice/eligibility such a game changing issue, however, is the fact that tribunals have consistently used the new doctrine to erase patents with nary a consideration of validity presumptions. Importantly, unlike IPR’s, which are limited to validity determinations based on prior art submitted with the IPR, Alice/eligibility issues can be raised in a CBM proceeding. At a minimum, investors in stocks which could be affected by CBM proceedings need to make sure to do a full analysis of whether or not the patents could be declared ineligible.
With respect to PAYD, it was not too much a surprise to see the PTAB declare the patents — which were directed to calculation of shipping costs in ecommerce transactions — ineligible. What is clear is that the assertion campaign, which started when PAYD sued EBAY for infringement in 2013, is now at a standstill, and perhaps effectively over. While the articulation of the Yahoo! commenter may not have been perfect from a patent law perspective, the frustration is real. More importantly, this situation once again proves that patent owners and investors ignore the PTAB at their own peril.
The Week(s) Ahead — Expected Events
Marathon trial against TRW Automotive continues Delaware. Expected institution decisions in Bass’ Shire and Celgene petitions.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at firstname.lastname@example.org. All suggestions are welcome.