Navigating Through Today’s High-Tech IP Thicket

Friday, January 18, 2013 - 12:30

The Editor interviews Robert F. Perry, Member of the Intellectual Property Practice Group and Managing Partner of King & Spalding LLP’s New York office.

Editor: Please describe your role in your firm and your practice area.

Perry: I wear different hats. I am the managing partner of the New York office. I also sit on the firm’s policy committee, which is what some people call a management committee. It’s the committee that runs the firm day to day. As of January 2013, I became the leader of the firm’s IP Area of Focus. It is one of the six focus areas the firm has picked to move ahead faster than it normally grows its practices.

Editor: Why did you decide to practice patent law?

Perry: When I graduated from undergraduate engineering school in 1979, I knew I wanted to go to law school, but I just couldn’t afford it at that time. After leaving a job as an engineer, I went into technical marketing at a Swedish company called Alfa Laval. That company told me they would pay for a night program at Seton Hall Law School if I continued to work for them during the day. This was perfect: there is a natural progression from engineering to patent law because the latter combines both engineering and the law.

Editor: You noted that IP is a focal point for your firm. Can you share some of the group’s recent activity and successes?

Perry: We had some big wins for the IP group in 2012. We represented Google in Oracle v. Google, which started out as a seven-patent case, with copyrights being one of the components of the case as well. Five of the seven Oracle patents were taken out in reexam procedures that were initiated by King & Spalding. The case went to trial last year. It was a lengthy trial that focused mostly on copyrights and the two patents left in the case. Scott Weingartner, our relationship partner for Google, put together our winning team, which included Bruce Baber, who did a lot of the copyright work. The team drew on the talents of people from our offices in Silicon Valley, Austin, Atlanta and New York. Google couldn’t have had a better result.

Another winning case that we took over from another firm dealt with a fabric used for military apparel. This was the Brookwood case, headed by Ethan Horwitz in our New York office. Katie McCarthy, a partner in our New York office, had a big copyright win, also in the Eastern District of New York. The past year has been very positive for the firm, and these are just some of the recent wins that we have helped get for clients.

Editor: Please tell us about the ongoing implementation of the America Invents Act (the Act).

Perry: The America Invents Act has at least two major focuses. One relates to the prosecution side, which involves the mechanics of getting a patent. I will cover the litigation side. On the litigation side, the intent of the Act was to avoid cases where you had as many as 50 and sometimes even more than 150 defendants. This not only put a great burden on the court, but it also made it very difficult for the defendants to coordinate among themselves. Now, plaintiffs still sue multiple defendants but usually not in the same case unless the cases are related somehow. Rather than having 15 defendants in the same case, you file 15 suits.

Editor: Are the intellectual property wars having a detrimental effect on innovation and the interests of consumers?

Perry: I have not seen any data that proves that the wars are having a real impact on research and development in the United States.

Editor: What factors govern the particular type of protection that should be selected?

Perry: The big question is whether your intellectual property is best protected by copyright, patent or maybe as a trade secret. You have to take a good hard look at what you’re giving up by making what you do public, which is of course what you have to do as a patentee. As a copyright filer, you don’t necessarily have to make everything you do public because you can file first and last pages when dealing with source code.

The type of protection you select depends on the product or service, the country or countries in which it will be offered and how likely it is that people are going to be taking what you’re doing, reverse engineering it, knocking it off in some foreign country and sending it back to the U.S. as something that’s theirs. You need to remember that patent protection is territorial, so you need to get patents in each jurisdiction in which sales, or other infringing acts, will take place.

It becomes even more challenging when you’re talking about electronic information that can be shipped over telephone lines from one country to the other. The price of filing patent applications everywhere in the world is astronomical.

Editor: How is a case that involves the U.S. and other countries typically handled?

Perry: Usually what happens is that, as the biggest market, the U.S. is the dog, and the other countries are the tail – hopefully not wagging the dog. Therefore, a U.S. firm is usually selected as lead counsel. If it’s King & Spalding and I’m running that case, I need to make sure that nothing is happening in other jurisdictions, such as the UK or Germany, that would adversely impact what we are doing in the United States. Unless you have an office or a lawyer in those jurisdictions, you need to engage other firms with that particular territorial expertise.

Editor: What are the business and legal concepts that underlie the tension between legitimate patent protection, on the one hand, and the benefits of a rich and accessible public domain, on the other?

Perry: It boils down to whether you want the system that our Constitution provides for to promote the progress of the science and useful arts, or something else. Large companies invest lots of money in software and other technological developments. Why shouldn’t they be able to get patent or other protection for their efforts? The idea of having an open, rich and accessible public domain is also great. There is still a fairly large availability on the Internet and elsewhere of technology that’s outside of the patent area that you can freely use. I think there’s a healthy balance at this point.

Editor: Why should a software program be patentable?

Perry: If, in fact, your program does something novel that is not obvious, there really isn’t any reason why you shouldn’t be able to get patent protection on that invention. If people seek to patent computer programs to do what other people did in their head or with a pencil and paper for years, or to implement an algorithm that is well known, these things should come under much more scrutiny. But there are lots of very valuable software inventions that should be protected.

Editor: Please describe FRAND and RAND.

Perry: The terms FRAND and RAND have been around for a long time. They are used interchangeably to describe “fair, reasonable and nondiscriminatory” or “reasonable and nondiscriminatory” patent licensing terms. They reflect an agreement by parties looking to implement a standard that they will agree to allow anyone to implement the standard to use whatever patent protection they were seeking either on a royalty-free basis, a low fixed-payment basis or on some other FRAND basis, which is just some fair and reasonable number.

I’ve never seen a case that actually said that a specific number was fair, reasonable and nondiscriminatory. That’s really the rub here because what one person thinks is fair, reasonable and nondiscriminatory, another may not. The reason for these kinds of agreements that come up in the context of standards organizations is that a group of companies might, in the course of developing a mobile handset standard, for instance, develop thousands of patentable inventions to cover the technology in that phone.

If you had to pay a percentage royalty to every owner of a patent used in that phone, no one would be able to sell a phone in the United States. The industry realized that and said that, okay, if you want to participate in the interchangeability that comes with standards, then you have to agree that you’re going to basically license your stuff on a fair, reasonable and nondiscriminatory basis. But what that involves has not been worked out. There are forces on all sides of this discussion with legitimate arguments – but the question is, who is going to win in the end.

Editor: Say I’m a manufacturer and I decide that I want to get into the smartphone business. Do I have a reasonable assurance that I can get the necessary licenses to manufacture a smartphone?

Perry: You can certainly talk to the people who have these basic patents, and you probably can get licenses from most of them. The question is, can you afford it? If you’re starting from scratch without patents to use as bargaining chips, you have to go to the big companies that have lots of patents in this area, and the cost might be prohibitive. There’s no single organization that you can go to. There are all kinds of standards groups. There are different manufacturers with different strengths in each one of these various standards. Having said that, there must be a path through these issues because there are many smartphone providers selling a significant amount of phones in the United States.

Editor: Are there many cases growing out of the complications that you mentioned?

Perry: As one handset manufacturer grows and becomes popular, you may see a lot of suits filed against that manufacturer. Also, some manufacturers believe that they have differentiating features and file patents on those features. If people try to knock those features off, the manufacturers go after them. However, the bulk of the lawsuits are still filed by the non-practicing entities – but you have seen the Apple or Samsung people go at it with each other and you have seen other handset providers go at it with others. It’s just the nature of the beast until they settle into their respective competitive positions.

Editor: So the role of the lawyer becomes very important in these controversies.

Perry: No question. In the smartphone industry, there are some folks who have substantial footholds in the standards organizations. Others are new to the industry and are either working out agreements with the big manufacturers or fighting with them in court to see whether they can knock out some of their patents. Most companies in this industry have thousands of patents and seem to be pretty determined to fight to improve their competitive position.

Editor: How about attempts to limit the role of non-practicing entities? They don’t seem to be adding much to the equation in terms of assuring a rich and accessible public domain.

Perry: That’s another dispute that has been around for a while. One camp says that the non-practicing entities – sometimes referred to as “trolls” – don’t do anything but add a tax on consumer goods. On the other hand, some will argue that the inventors involved are typically small inventors who deserve their day in court.

Despite the differing views, there have been some attempts to limit the number and impact of these types of lawsuits. Congress has acted, as we saw with the America Invents Act, and decisions coming out of the Court of Appeals for the Federal Circuit are having an impact as well, especially in terms of the scope of damages.

Please email the interviewee at rperry@kslaw.com with questions about this interview.