The Markman Note: NOV Channels Bass, Taps IPR Well
May 5, 2015 (Mimesis Law) — Welcome to the sixth issue of the Markman Note, where we take a look at how the market reacts to patent litigation events and try to anticipate what the next catalysts will be. Hopefully you have had a chance to catch our video “Markman Minutes” (available at www.mimesiswebtv.com/intellectual-property) on what we consider the biggest current patent stories of interest to investors. Finally, we want your feedback and suggestions, so feel free to send it along to firstname.lastname@example.org or to @markmanadvisors on Twitter. You can also visit our website at www.markmanadvisors.com. Questions from the readership are always welcome as well; we will try to get you answers in future issues of the Markman Note.
The Big Story: Biogen Gets Another Serving of Bass…And Oil Companies Also Tapping the IPR Well
Bass and Spangenberg filed a second IPR attacking the patent protecting Biogen’s multiple sclerosis treatment Tecfidera, as they continue to shake up the bio-pharma industry. The challenge was filed against Biogen’s ‘514 Patent, which is a patent critical to about ten years of Tecfidera exclusivity. As such, this challenge is significant. Complicating matters is that the ‘514 Patent is involved in other USPTO-based challenges, meaning that this IPR will end up being just another proceeding to watch. As with all IPR’s, a key issue will be whether or not the Patent Trial and Appeal Board actually institutes the IPR six months from now. As we have mentioned before, Bass’ strategy appears to be a long-term one and its success will be measured down the road if and when these IPR’s are successful.
But the use of IPR’s is not limited to Bass and big tech firms like Google. In many ways, they have become a first-line of defense for companies sued for patent infringement as they often prove a headache for companies like Acacia (ACTG) which depend on getting licenses from alleged patent infringers. A recent filing by National Oilwell Varco (NOV) is a case in point. In April 2014, an ACTG entity sued NOV for patent infringement. Nothing much substantive has happened in that pending case yet, other than a venue dispute that will see the case moved from one court in Texas to another. Last week, conceivably near the one-year deadline to file an IPR, NOV filed an IPR against the asserted patent in the USPTO and will almost definitely ask for a stay of the pending lawsuit at the first opportunity. This is yet another demonstration of how IPR practice has disrupted patent litigation and made analyzing patent litigation events even more difficult for investors. For ACTG investors interested in this lawsuit there is now a need to monitor events in two different forums. And considering the IPR statistics, a chance that the asserted patent may not result in any revenue for ACTG. Interesting times in the patent world, indeed.
Recent Patent Litigation-Influenced Moves
Document Security Systems (DSS)
In a sign of shareholder discontent that could reverberate throughout the publicly-traded patent enforcement industry, DSS was sued in a shareholder derivative action. This will be a case to watch if it proceeds, as there is no doubt DSS has had a number of setbacks in its enforcement efforts since adding the patent enforcement component to its operating profile. Unsurprisingly, the stock price has been hit hard with each setback and this could indicate that the shareholder base wants things to turn around. Again, a situation to watch closely as it develops.
InterDigital won a favorable ITC ruling against Microsoft. As we mentioned last week, IDCC is a long-time player in the patent licensing game and has a broad portfolio of patents that it wisely asserts in parallel against different infringers. Even though the company had a setback last week in one of its pending Delaware District Court cases against ZTE, it was able to secure a favorable ruling on 4/27 in an International Trade Commission proceeding brought against Microsoft, based on its importation of Nokia-branded phones. In the ITC case, the Administrative Law Judge found that Microsoft is infringing two IDCC patents and recommended that an exclusion order barring importation of the accused phones be entered. Such orders are the only remedy available at the ITC, unlike District Court cases where money damages can be obtained. At the same time, if the full ITC agrees with the ALJ’s finding of infringement, then an exclusion order in IDCC’s favor could be a powerful bargaining chip as it looks to drive Microsoft towards a license. At minimum, this development demonstrates the importance for licensing companies to have multiple campaigns going at once, and utilize each of the different fora available to patent owners in order to maximize the effectiveness of their enforcement campaigns.
The Week(s) Ahead — Expected Events
Upcoming Federal Circuit argument in Parkervision v. Qualcomm — May 8, 2015.
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 email@example.com. All suggestions are welcome.
Main image via Flickr/Tim Evanson