1. The Anatomy of a Patent Understanding the legal vs. technical significance of claims, specifications and drawings in different contexts DUANE R. VALZ ~ Guest Lecture ~ U.C. Berkeley (CET) - IEOR 190G February 20, 2008

2. 2 Copyright © 2008 Duane R Valz. All Rights Reserved Topics ► Basic Overview of IP Law ► Basic Overview of Patentability Requirements ► Anatomy of a Patent ► Patents in action: The Burst Litigations ► Follow-on Reading ► Q and A

3. 3 Copyright © 2008 Duane R Valz. All Rights Reserved What is Intellectual Property? ► "Intellectual property" ("IP") is a catch-all term that includes patents, trademarks, copyrights, and trade secrets. ► In the most general terms, IP is any product of the human mind which the law protects against unauthorized use by others. ► "Congress shall have power...to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Article I, Section 8 U.S. Constitution.

4. 4 Copyright © 2008 Duane R Valz. All Rights Reserved Why is IP Important? ► Fend off Aggression from Competitors ► Higher Value Products ► Negotiation Leverage with Suppliers & Customers ► Deal Leverage for Acquisitions or Spinouts ► Stronger Market Position ► Better Access to Capital ► Prestige for Company & Its Employees

5. 5 Copyright © 2008 Duane R Valz. All Rights Reserved Key Areas of IP for Engineering ► PATENTS  Broad Protection for Technology that must be shared with public and, as a result, could easily be learned and duplicated ► TRADE SECRETS  Variable Levels of Protection for Information, Techniques and Know-How that must be kept confidential in order to be valuable

6. 6 Copyright © 2008 Duane R Valz. All Rights Reserved Reasons for Understanding Patents ► Understand state of art in field ► Ascertain room for innovation in field ► Obtain better understanding of competitors’ products – what legally protected features to avoid ► Avoid infringement of other companies’ patents when designing one’s products and services ► Conduct prior art searching to ‘reality check’ novelty of an invention ► Make informed licensing, joint development and other corporate transactional decisions ► Obtain better understanding of strategic business options

7. 7 Copyright © 2008 Duane R Valz. All Rights Reserved Patents – Subject Matter ► Any person who “invents or discovers any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent,” subject to the conditions and requirements of the federal patent laws ► Interpretations of the statutory requirement by the courts have more carefully defined the limits of patentable subject matter; thus it has been held that laws of nature, physical phenomena, and abstract ideas are *not* patentable

8. 8 Copyright © 2008 Duane R Valz. All Rights Reserved Patents – Standards for Obtaining ► An invention must be “novel” and “non- obvious” in order to be patentable ► NOVELTY:  an invention cannot be patented if: “(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent,” or “(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country more than one year prior to the application for patent in the United States...”

9. 9 Copyright © 2008 Duane R Valz. All Rights Reserved Patents – Standards for Obtaining ► An invention must be “novel” and “non- obvious” in order to be patentable ► NON-OBVIOUSNESS:  Even if the subject matter sought to be patented is not exactly shown by the prior art, and involves one or more differences over a known invention or idea, a patent can still be refused if such differences would be obvious  An invention is not patentable if it would have been “obvious to a person having ordinary skill in the art” (i.e., the area of technology related to the invention)

10. 10 Copyright © 2008 Duane R Valz. All Rights Reserved The Issued Patent ► Takes 1½ to 5+ years for a patent to issue from time of original application filing ► Is effective as a property right from date of issuance ► Confers exclusive right to owner to make, have made, use, sell, offer for sale or import patented invention or products/services incorporating invention (i.e., right to exclude others from doing such things) ► Typically, patents endure for 20 years from the date of earliest application filing

11. 11 Copyright © 2008 Duane R Valz. All Rights Reserved Focus of Original Burst Patent An improved video recorder/transmitter with expanded functionality including a capability for editing and/or copying from one video tape to another using only a single tape deck. The increased functionality is realized through the use of analog to digital conversion, signal compression and intermediate storage in an integrated circuit, random access memory. The recorder/transmitter has capabilities to transmit and receive program information in either a compressed or decompressed format over fiber optic lines. U.S. No. 4,963,995 Filed 12-27-1988 Issued 10-16-1990

12. 12 Copyright © 2008 Duane R Valz. All Rights Reserved Focus of later Burst Patent An improved video recorder/transceiver with expanded functionality ("VCR-ET") including a capability for storing video and video programs in digital format, editing such programs, transferring such programs onto a hard copy magnetic media, and transmitting such programs to a remote location using a second VCR-ET. The increased functionality is realized through the use of analog to digital conversion, signal compression and intermediate storage in an integrated circuit, random access memory. The recorder/transmitter has capabilities to transmit and receive program information in either a compressed or decompressed format over fiber optic lines, conventional phone lines or microwaves. U.S. No. 5,995,705 Filed 7-18-1997 Issued 11-30-1999

13. 13 Copyright © 2008 Duane R Valz. All Rights Reserved Litigation target of Burst Patents: Internet audio/video streaming Faster than real time transmission of compressed content? Real time playback of transmitted content

14. 14 Copyright © 2008 Duane R Valz. All Rights Reserved Key Questions ► From a technology perspective, how relevant is (1) a late ’80s VCR with ICs allowing for digitization and compression of analog content for more efficient handling, to (2) late ’90s technology for streaming digital content via the Internet to PCs in a manner that allows for efficient playback? ► In the context of the Burst litigations, how can patents initially directed to this late ’80s technology be made legally relevant to late ’90s streaming technology? ► Herein lies the crux of the rest of our discussion!

15. 15 Copyright © 2008 Duane R Valz. All Rights Reserved Goal of our session: understanding how we get from Point A to Point B ?

16. 16 Copyright © 2008 Duane R Valz. All Rights Reserved Front Page Basics ► U.S. No. 5,164,839 ► “Method for Handling Audio/Video Source Information” ► Filing Date vs. Issue Date ► Assignee = Owner ► Related Application Data ► Technology Class Codes ► Prior Art References Cited ► Abstract ► Front Page Illustration

17. 17 Copyright © 2008 Duane R Valz. All Rights Reserved What is the Patent’s Specification? ► The specification must set forth the precise invention for which a patent is solicited, in such manner as to distinguish it from other inventions and from what is old ► It literally must “teach” one skilled in the art how to practice, make or recreate the invention ► Includes statements re field of the invention, problem addressed or solved by the invention, and detail regarding the solution comprising the invention

18. 18 Copyright © 2008 Duane R Valz. All Rights Reserved What is the Patent’s Specification? ► It must describe completely a specific embodiment of the process, machine, manufacture, composition of matter or improvement invented, and must explain the mode of operation or functional principle whenever applicable ► Detailed written description typically corresponds to illustration(s) of invention and/or prior art through numerical annotations ► It must set forth the best mode contemplated by the inventor for carrying out the invention

19. 19 Copyright © 2008 Duane R Valz. All Rights Reserved Specification - The Drawings Column 3 5,164,839

20. 20 Copyright © 2008 Duane R Valz. All Rights Reserved Specification – Preferred Embodiment Column 3 5,164,839

21. 21 Copyright © 2008 Duane R Valz. All Rights Reserved Specification – Other Embodiments The embodiments described include means for receiving, storing and transmitting both audio and video signals. However, the invention encompasses apparatus which can store and transmit video signals only and apparatus which can store and transmit audio signals only. An embodiment designed to store and compress audio signals is illustrated in FIG. 4. Referring to FIG. 4, an audio signal source 70 (a tape recorder, microphone, record player, etc.) is coupled to a digitizer and compressor circuit 72, which converts the analog signal to a digital signal and compresses the digital signal in a manner similar to VCU 12 described above. The digital compressed signal can then be stored in a memory 74. Of importance, data from memory 74 can be transmitted by a fiber optic transceiver 76, or by a microwave transceiver 78 at an accelerated rate. … * * * In the embodiment of FIG. 4, data can also be loaded from memory 74, via a modem 79 over a conventional phone line 80. Data can also be received from phone line 80, fiber optic transceiver 76 or microwave transceiver 78, loaded into memory 74, and converted to an analog signal by circuit 72, to be listened to via an audio monitor 82, or to be stored on an audio tape cassette 84 or other storage media. 5,164,839 Column 12, lines 12-45

22. 22 Copyright © 2008 Duane R Valz. All Rights Reserved What are the Patent’s Claims? ► The specification must conclude with a claim or claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as the invention ► The portion of the patent setting forth the claim or claims is an important part of the patent, as it is the claims that define the scope of the legal protection afforded by the patent and around which questions of infringement are judged by the courts 5,164,839Column 13

23. 23 Copyright © 2008 Duane R Valz. All Rights Reserved What are Patent Claim Types? 4,963,995Columns 10-11 5,164,839Column 13

24. 24 Copyright © 2008 Duane R Valz. All Rights Reserved Dependent Claims ► More than one claim may be presented provided they differ substantially from each other and are not unduly multiplied. One or more claims may be presented in dependent form, referring back to and further limiting another claim or claims in the same application. Any dependent claim which refers back to more than one other claim is considered a “multiple dependent claim.” ► The claim or claims must conform to the invention as set forth in the remainder of the specification and the terms and phrases used in the claims must find clear support or antecedent basis in the description so that the meaning of the terms in the claims may be ascertainable by reference to the description. 5,164,839Column 13

25. 25 Copyright © 2008 Duane R Valz. All Rights Reserved Published Applications vs. Issued Patents ► Most patent applications published 18 months from filing date ► Published applications contain information (specification, claims, diagrams) as initially filed  Subject to alteration during examination process ► Constitute most up-to-date and often relevant prior art

26. 26 Copyright © 2008 Duane R Valz. All Rights Reserved Patents & Offensive Litigation ► The Claims of a patent are the most significant for assessing whether a 3 rd party’s services, product designs, systems, functionality, components or improvements may infringe the patent holder’s legal rights ► Even if the Defendant’s service/product features have been taught by the patent’s specification, what matters is whether any valid claims of the patent “read on” such service/product features so as to raise infringement concerns ► In patent enforcement litigation, the technology disclosed by a patent need not be as sophisticated as, or even enabling of, the defendant’s technology; as long as each element of any valid claim of the patent reads on the accused technology, an infringement case may be successful!

27. 27 Copyright © 2008 Duane R Valz. All Rights Reserved The $Multi-Million Crux for Burst ► Anyone streaming compressed rich content to remote users would be in danger of infringing broad claims like these … ► Doesn’t matter whether the disclosed Burst technology is outdated and irrelevant to the Internet! 5,164,839Claim 1

28. 28 Copyright © 2008 Duane R Valz. All Rights Reserved Patents & Litigation Defenses ► Broad patent claims cover more possible implementations of a new invention (including those never envisioned at the time of the original invention), thereby maximizing chances of 3 rd party infringement ► However, the broader an asserted patent’s claims, the more susceptible it becomes to invalidity challenges ► The Specifications of prior art patents (including published applications) are the most significant for assessing the validity of an asserted patent claim ► Can indicate whether an invention lacks novelty, or is “anticipated” ► Can indicate (either alone or in combination with other prior art) whether an invention is “obvious” ► Operative Question: Have key features of invention as claimed already been taught by prior art patent(s)?

29. 29 Copyright © 2008 Duane R Valz. All Rights Reserved The $Multi-Million Crux for MSFT, Apple & Real ► Are claims such as these, dating back to an invention developed in 1987 and a patent filed in 1988, novel and non-obvious relative to what was already known at the time? ► What does the prior art reveal about the inventiveness of the Burst patents in the late ’80s? 5,164,839Claim 1

30. 30 Copyright © 2008 Duane R Valz. All Rights Reserved Prior Art – U.S. No. 4,506,387 ► “Programming-On-Demand Cable System and Method” ► Issued March 19, 1985 to Howard F. Walter ► “A programming-on-demand cable system is provided [in] which … [e]ach program is preprogrammed in a memory device selectable by a host computer at a central data station … The host computer in conjunction with other electronics transmits the video program at a high non-real-time rate over a fiber optic line network to a data receiving station at the user's location. The data receiving station then converts the received optical data back to electrical data and stores it for subsequent real- time transmission to the user's television set.”

31. 31 Copyright © 2008 Duane R Valz. All Rights Reserved Prior Art – U.S. No. 4,790,003 ► “Message Service System Network” ► Issued December 6, 1988 to Gary D. Kepley, et al. ► “This invention relates to business communication systems and, in particular, to a message service system network that interconnects a plurality of message service systems and provides a voice mail message transfer capability between voice mail message service systems. The voice mail message transfer is performed as a computer-to-computer data file transfer operation over high speed data lines. The data file consists of the digitally encoded and compressed voice mail message to which is appended the message sender's name and telephone number as well as the message recipient's telephone number. ”

32. 32 Copyright © 2008 Duane R Valz. All Rights Reserved The ‘839 Patent in light of the ‘003 (Kepley) Patent 5,164,839Claim 1 3:7-17 8:26-32 13:29-37

33. 33 Copyright © 2008 Duane R Valz. All Rights Reserved Follow-on Reading ► Summary Judgment Ruling: Burst v. Apple  http://www.burst.com/new/newsevents/20071108_SJ_Ord.pdf http://www.burst.com/new/newsevents/20071108_SJ_Ord.pdf ► Complaint for Declaratory Relief: Real v. Burst  http://www.burst.com/new/newsevents/2008-01- 03_RN_Complaint_for_Declaratory_Judgment.pdf http://www.burst.com/new/newsevents/2008-01- 03_RN_Complaint_for_Declaratory_Judgment.pdf http://www.burst.com/new/newsevents/2008-01- 03_RN_Complaint_for_Declaratory_Judgment.pdf

34. 34 Copyright © 2008 Duane R Valz. All Rights Reserved Wrap-Up ► Questions? ► Discussion …