According to Dan Lipinski’s article, transit agencies are being sued by two notorious off-shore patent trolls — ArrivalStar S.A. and Melvino Technologies — over their use of GPS software that allows them to monitor the location of their trains/buses and to notify commuters when they will be arriving at  specific stops.  These companies have filed over 250 lawsuits against companies and agencies in the transportation industry.  According to Lipinski’s report, because of the millions of dollars it could cost to defend a patent suit, these companies and agencies prefer not to litigate the case in court and instead “opt to quickly settle, agreeing to purchase licenses for fees reportedly ranging from $30,000 to $100,000”.  Patent Trolls have brought suits against transit agencies in California, Florida, Illinois, Maryland, New Jersey, New York, North Carolina, Ohio, Oregon, Texas, and Washington.

“The United States Patent and Trademark Office (USPTO) has drastically narrowed the patent owned by ArrivalStar after Electronic Frontier Foundation (EFF) filed a formal request to reexamine the patent’s legitimacy” was announced on Thursday in a ruling that will help to hopefully curb patent troll abuse in the future.

Denys Emmert is the Public Policy intern at SIIA. He has a degree in marketing and political science from Florida State University.

Steve Jobs and the Patents that Changed Our Lives (Washington Post)
Steve Jobs is listed by the U.S. Patent Office as having more than 300 patents, many of which are basic concepts that have changed the way we listen to, watch, read and share content.

Couple Accused of Reselling Counterfeit Software, Other Items Through Internet (Delaware Online)
A Wilmington couple was charged with copyright infringement, trafficking counterfeit goods and conspiracy after a search of their home uncovered a widespread operation in which authorities believe the defendants purchase counterfeit goods from Chinese websites and resell them on Craigslist.

New Players Join Battle Over Scanning Orphan Books (paidContent)
Writers’ groups from UK, Canada and Sweden as well as more individual authors are joining the fight against universities over the scanning of orphan works.

Why Cutting a Deal With Oracle Should Be Google’s Top Android Priority (paidContent)
While settlement discussions have not progressed very far, Oracle has lowered its damages request, and the author argues Google should reach a deal with Oracle since it has more to lose than Oracle at trial.

Amazon Wins ‘One-Click’ Purchasing Patent Appeal (Reuters)
The U.S. Court of Appeals for the Federal Circuit ruled that Amazon did not infringe technology patented by Cordance Corp.

$10 Settlement Offers: The Entertainment Industry’s New Copyright Tactic (paidContent)
Content owners are using Digital Rights Corp to monitor file-sharing sites and send $10 settlement offers in a new copyright enforcement tactic based on a massive scale and low dollar amounts.

ICE’s Morton Aims to Pull the Plug on Piracy (The Hill)
U.S. Immigration and Customs Enforcement Director John Morton talks about the importance and his focus on fighting intellectual property violations.

NYC Cracking Down on Counterfeit Merchandise to Protect Image, Money (AMNewYork)
New York City officials are taking extraordinary steps to protect the iconic and profitable “NYC” name and other city trademarks, including “NYPD” and “FDNY.”

Apple Gains Ground in China Piracy Battle with New Patents (Mac Daily News)
Apple was granted 40 patents in China, giving it new ammunition to fight the rampant piracy of its products there.

Report incidents of digital piracy to the SIIA here.

While there is no question that the new law is a substantial improvement over the status quo, many fear it might not bring an end to abusive patent litigation that stifles innovation and hinders job growth.

A new study by James Bessen and Mike Meurer on the social costs of patent trolls in the years 2000-2010 sheds some light on the magnitude of the patent troll problem.

They conclude that patent lawsuits from entities that hold patents but do not produce goods or services “are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.”

The idea that patent litigation is creating disincentives for innovation is not new. Bessen and Meurer’s 2008 book, Patent Failure, summarized here, came to a similar conclusion that during the 1990s the net benefits of patents were negative for public companies outside the pharmaceutical and chemical industries. The news is that things did not improve in the first decade of the 21st century.

Abusive patent litigation has been a staple of recent press coverage. An August report by NPR highlighted the problem of unproductive litigation by non-practicing entities. A piece by Timothy B. Lee in the current National Review underscored the same problem. Tech entrepreneur Mark Cuban pointed out in his August blog post that patent litigation risk from non-practicing entities is “unlimited,” which forces companies to set aside resources for patent litigation that would otherwise be used for further investment and job creation. Companies within SIIA report that infringement suits are on the rise, significantly, within the last year. This problem is especially severe for mobile app developers and platforms, leading some offshore app developers to shun the U.S. market for fear of patent infringement suits. Major companies such as Apple, Google and Microsoft are amassing large portfolios of patents to improve their strategic position in the coming patent litigation wars.

The new law will make some improvements. It will allow the U.S. Patent and Trademark Office to keep more of revenue it collects, thereby reducing the problem of bad patents, and it will make it easier to challenge bad patents after they have been granted.

But the new law applies only to new patents, and it does nothing to limit the risk of patent litigation by limiting damages from non-practicing entities. So the problem of abusive patent litigation will likely be with us for some time – along with the social costs outlined in the new Bessen and Meurer study.

The bill can be found here. SIIA issued a press release last night applauding passage of the bill.

In passing the House version of the bill as is, the Senate rejected amendments by (1) Sen. Sessions, which would have removed a special interest provision restoring Medco’s patent on the Angiomax drug, which had lapsed due to alleged malpractice by its law firm; (2) Sen. Cantwell, which would have eliminated the business method patent “transitional program,” and (3) Sen. Coburn, which would have restored the Senate’s language prohibiting fee diversion, in lieu of the House’s version which creates a special fund for the U.S. Patent & Trademark Office (USPTO) which is still subject to the Congressional budget approval process.

While a detailed summary is beyond the scope of this communication, some of the key provisions of the Act include:

* Harmonization of the U.S. system with most of the rest of the world, by granting priority to the “first inventor to file” rather than “first to invent,” which often triggered complicated and expensive interference proceedings, and sometimes permitted patent owners to overcome would-be prior art in litigation. The new provision will, for example, make it more difficult in some cases for inventors to overcome the novelty and nonobviousness requirements, because there will be no more “swearing back” to establish an earlier date of invention (i.e., to get around prior art dated before the patent application filing date).

* Along with “first inventor to file,” establishing a prior user defense (with some exceptions for universities).

* As mentioned above, ending of the diversion of USPTO fees by Congress for other purposes. The USPTO still must submit an annual budget to be approved by Congress, but this provision seemingly grants the USPTO latitude to establish a larger budget based on the fees it collects. The eventual outcome hopefully will be shorter patent pendency times, and higher quality patents (e.g., due to better trained and perhaps better paid examiners, better resources, and more attention to questionable applications).

* Permitting third party submission of prior art during patent examination.

* Deeming “tax strategies” within the prior art and thus unpatentable. This provision has a key exception, however, covering a wide range of computer programs on tax and financial management inventions.

* Establishing a post-grant review process of any patent by the USPTO that can be triggered by third parties.

* Establishing a supplemental examination process for the benefit of patent owners, to “correct” possible inequitable conduct.

* Heightening the requirements for joinder of patent infringement defendants.

* Amending the false marking provision to require a showing of “competitive injury,” which is intended curtail the flood of false marking claims being filed by private parties that are not competitors of the patent owner (and often not in any related business) simply seeking a profit from the false marking statute.

* Eliminating the best mode defense in litigation.

* Establishing an eight-year “transitional program” for post-grant review of certain business method patents (including a provision that increases likelihood of a stay of litigation involving such patents).

The effective dates of these provisions vary. Some will be effective on the date of enactment. Others will be effective one year later, and still others (namely, some of the USPTO procedures) will be phased in.

Last week, SIIA joined the Future of Privacy Forum’s (FPF) Application Privacy Working Group and became a sponsor of the FPF project, ApplicationPrivacy.org, an effort to help develop voluntary privacy principles and best practices for mobile software applications.  SIIA joined the project out of the conviction that the industry does not need government regulation, but rather to help focus the industry’s voluntary adoption of transparent practices regarding collection, use and protection of consumer data.  SIIA strongly believes that a trusted environment for users is critical to ensure continued growth and innovation in the mobile marketplace.

Also last week, SIIA submitted comments to the European Commission’s (EC) cloud computing consultation, a public inquiry to develop a European cloud computing strategy that the Commission will present in 2012.  While this is a laudable objective to stimulate a European cloud industry, SIIA’s comments highlighted the challenges associated with trans-border data flows and urged caution regarding the development of harmful approaches like cloud-specific policies and localization requirements.

For SIIA policy updates including upcoming events, news and analysis, subscribe to SIIA’s weekly policy email newsletter, Digital Policy Roundup.

Judge Rules “Locker” Site is Not Direct Copyright Infringer (Ars Technica)
A federal judge in Miami has dismissed direct copyright infringement charges against online locker service Hotfile, but is allowing the case to proceed over the secondary liability charge to determine whether Hotfile is guilty of inducing its users to infringe copyrights.

Entertainment Companies Create New Website to Promote Anti-Piracy Effort (Los Angeles Times)
A coalition of major media companies and entertainment labor unions has launched a new website called Creative America to educate the public about content theft and promote anti-piracy legislation.

SAP to Argue for New Trial in Oracle Lawsuit (Computerworld)
SAP is seeking a new trial and a reduction of the $1.3 billion jury award it was ordered to pay.

2.) Another Judge Threatens to Dismiss Righthaven Copyright Suits (Vegas Inc)
U.S. District Judge Larry Hicks in Reno is the fifth judge dismissing or threatening to dismiss Righthaven copyright suits, giving Righthaven ten days to show cause why ten lawsuits he is handling should not be dismissed for lack of standing.

3.) New Attacks Launched on Righthaven Litigation Campaign (Vegas Inc)
Three more defendants are fighting back against Righthaven’s litigation campaign, each filing new or updated motions to dismiss.

4.) Alki David Drops CNET Lawsuit; Vows to Bring ‘Expanded’ Action (paidcontent.org)
FilmOn founder Alki David dropped his copyright infringement lawsuit against CBS and its CNET division after it could only produce six works it says was infringed by CNET, but David says other artists and copyright owners will be joining him in an expanded lawsuit.

5.) Apple Receives Mised Ruling on S3 Patent Violation (San Francisco Chronicle)
U.S. International Trade Commission Judge James Gildea said Apple violates two S3 patents, and was found to not have violated two others. The judge’s ruling is subject to review by the ITC, which will decide within 60 days whether or not to review the decision.

2.) Top ISPs Poised to Adopt Graduated Response to Piracy (CNET)
Top ISPs, including AT&T, Comcast and Verizon, are close to striking a deal with media and entertainment companies that would require the ISPs to take a tougher stance against customers who refuse to stop using the network to infringe on others’ intellectual property.

3.) Academic Publisher Steps Up Efforts to Stop Piracy of Its Online Products (The Chronicle)
After finding cheap, illegal access being sold to its online databases, academic publisher SciFinder is focusing its anti-piracy efforts on higher education, given a majority of the stolen or leaked SciFinder passwords are from accounts of college students and professors.

4.) Viacom Files Another iPad Streaming Lawsuit, This Time Against Cablevision (paidContent.org)
Similar to the dispute Viacom is having with TimeWarner, Viacom is now pursuing a claim against Cablevision over iPad streaming.

5.) Clark County Man Sentenced for Counterfeit Software Scheme (The Seattle Times)
Wayne Chih-Wei Shu of Clark County was sentenced to three years in prison and ordered to pay $687,633 in restitution for selling counterfeit Microsoft software and failing to file income tax returns.

On the cybersecurity front, last week House Speaker John Boehner appointed a 12-member Republican task force to assess the state of cybersecurity, including the Administration’s proposal, and provide recommendations by October. Rep. Mac Thornberry (R-TX), who was appointed to lead on this issue earlier this year, will lead the task force, joined by Reps. Aderholt (R-AL), Chaffetz (R-UT), Coffman (R-CO), Goodlatte (R-VA), Hurt (R-VA), Latta (R-OH), Lungren (R-CA), McCaul (R-TX), Murphy (R-PA), Stivers (R-OH) and Terry (R-NE).

Also last week, the Supreme Court decided a case that looks to be a major victory for data publishers. In the case Sorrell vs. IMS Health the Court confirmed an appeals court decision that a Vermont law prohibiting the use of physician prescribing data for marketing purposes. While Justice Kennedy’s majority opinion expressed concerns about the “serious and unresolved” issues with respect to personal privacy, the ruling confirmed that the law unfairly imposed a first Amendment burden “based on the content of speech and the identity” of pharmaceutical manufacturing companies. In short, the ruling holds that such commercial speech is equally entitled to the protections of the First Amendment.

For SIIA policy updates including upcoming events, news and analysis, subscribe to SIIA’s weekly policy email newsletter, Digital Policy Roundup.