• The Department of State’s annual Human Rights Report turns the spotlight on internet freedom in China and Iran, from ZDNet Government.

• The US District Court in Delaware stays the patent litigations between Apple and Nokia, pending decisions by the International Trade Commission, says The Register.

• A California appeals court rules that cyberbullying threats are not protected free speech, reports Wired.

• Also from Wired, the Supreme Court agrees to review a Ninth Circuit decision on privacy rights in the context of background checks on government workers.

• The FCC announces that it will recommend the sale of 500 megahertz of spectrum to meet the needs of mobile broadband users, from the Washington Post.

• Programmers in trouble over financial misdeeds: two programmers who developed code for Madoff are charged with fraud (The New York Times, The Register) and the Securities Exchange Commission files a complaint against a one-man Russian investment company for hacking into online portfolios to “pump and dump” stocks (Switched, Wired).

• From E-Commerce Times: TiVo wins its long running patent infringement case against digital video recorder rivals.

• Spicy IP reports that Brazil seems set to invoke WTO intellectual property cross-retaliation provisions for the first time, against the US.

• The European Parliament threatens to bring a legal challenge against the European Commission if it fails to disclose details of the Anti-Counterfeiting Trade Agreement (ACTA), writes Outlaw (see our post on the controversial treaty here).

• Also from Outlaw: Net Neutrality in the UK: Ofcom to probe broadband providers’ management of web traffic.

• As it launches its cloud computing platform, Azure, Microsoft calls for federal regulation to clarify many of the open legal questions surrounding cloud computing, says the MTTLR Blog.

• Ten years after it applies, TiVo is granted patent for season pass subscriptions, writes Gizmodo (see our recent post on TiVo’s patent battle with Microsoft here).

• INFO/LAW recommends a Paul Ohm paper arguing that statistical techniques are eroding the effectiveness of anonymization of data, with great implications for privacy law.

• The Third Circuit revives the hopes of Mr. and Mrs. Boring, who sued Google in trespass after a Google Street View car drove down their private driveway, writes Eric Goldman.

• Ephemerallaw reports on the looming compliance deadline for the Massachusetts Data Security Law.

• Rob Tiller of Red Hat argues for calling a troll a troll at Opensource.com’s law channel.

• Mashable reports that the U.S. Department of Justice and the European Commission have given the go-ahead to the Microsoft-Yahoo deal that will see Yahoo’s search engine powered by Bing technology.

• The controversy surrounding Google’s Buzz is not confined to the U.S. (see our post): the Canadian Office of the Privacy Commissioner is also taking a look, says CBC News.

• Further afield, Indian IP blog Spicy IP considers whether the Indian Reprographic Rights Organisation (IRRO) might challenge the Google Books settlement, on the basis on India’s stricter “fair use” standard.

• It’s not just China: European security and rights watchdog, the Organization for Security and Co-Operation in Europe, calls on Turkey to reform or abolish its restrictive internet law.

• And also in Europe, Out-Law gives a round-up of just-decided and upcoming litigation involving trademarks and keywords.

As Core Business Fades, TiVo is Turning to IP Licensing

People love their DVRs.  More specifically, they love their TiVo DVRs.  TiVo was one of the first DVR providers (RIP Replay TV and one-click commercial skipping) and holds broad pioneer patents.  It’s a practicing plaintiff, not a naked patent troll.  And despite some gripes, its products have consistently won accolades for usability, especially compared to competitors’ DVRs.

TiVo was the first company to deliver on the promise of easy-to-use time-shifted television.  But TiVo has been a victim of the success of its own technology.  It has languished for the last decade as cable and satellite companies deployed their own (usually mediocre, occasionally execrable) set-top box DVR recorders to a captive customer base.  TiVo’s subscriber base is way off its highs.  Its third quarter 2009 revenues were an anemic $56.9 million.  And TiVo’s share price has been flat for a decade, hovering around $1 billion market cap.

But while TiVo’s own products and services founder, its IP posture is increasingly puissant.  TiVo has partnerships with DirecTV, Comcast, Cox, and Virgin Media, and has patent licensing agreements with Pioneer, Sony, and Toshiba.  In its second incarnation as an IP holding company, TiVo wants to get patent licensing rents from all of the players in the DVR/set-top box market.  However, those revenue streams aren’t as profitable as having a larger base of customers: TiVo averages 93¢ a month from licensed subscribers and $7.65 from its own customers.  To survive, it needs to bend the DVR market to its will and get all of the major players to join its harem of captive patent licensees.

TiVo Does Patent Trolling Right

TiVo is in a uniquely sympathetic position as a practicing pioneer facing seemingly undeserved losses at the hands of patent infringers.  As a result, TiVo has been spectacularly successful in a grueling six-year patent fight with EchoStar and Dish Network.

TiVo’s legal Death Star is U.S Patent No. 6,233,389 (“Multimedia time warping system”), issued on May 15, 2001.  The ‘389 patent covers fundamental DVR technologies for recording video from TV.  TiVo scored an initial $73.9 million win and permanent injunction against EchoStar for infringement of the ‘389 patent by EchoStar’s Dish Network DVR.  On appeal at the Federal Circuit, the case was argued by appellate heavyweights Seth Waxman and Donald Dunner, and the lower court verdict was upheld.  Then, TiVo got $200 million more in damages, contempt sanctions, and attorney fees for violation of the injunction when EchoStar unsuccessfully attempted to design around the patent.  TiVo pegs the total litigation revenues from EchoStar at $400 million plus attorney fees.

The ‘389 patent has also been upheld on ex parte re-examination by the PTO, and is now on its second re-examination.  Although the PTO has preliminarily rejected two important claims in an office action, TiVo characterizes the rejection as simply a procedural matter pending full re-examination; indeed, in the prior reexamination, claims were initially held invalid and then ultimately upheld.

If TiVo comes out of the second reexamination with the ‘389 patent mostly intact, it will have a gold-plated patent that has been repeatedly validated in District Court, the Federal Circuit, and the PTO.  The patent will be a license for TiVo to print money, and will form the keystone of TiVo’s strategy to extract licensing revenues from the entire DVR industry.

A Challenger Appears

Perhaps sensing blood, TiVo opened a new litigation front by suing AT&T and Verizon in the Eastern District of Texas on August 26, 2009, alleging that AT&T’s U-verse service infringed on TiVo’s DVR patents.  This dragged Microsoft into the DVR wars: AT&T uses Microsoft’s Mediaroom system in its U-Verse TV service.  If TiVo were able to crush AT&T like it whelmed EchoStar, the U-Verse venture could be in jeopardy – a permanent injunction is still a normal remedy in patent litigation for practicing plaintiffs, even post-eBay v. MercExchange.

Microsoft intervened in the case and separately sued TiVo on January 19, 2010, for infringing a different set of DVR patents.  Microsoft’s complaint alleges infringement of U.S. Patents No. 6,008,803 (“System for displaying programming information”) and 6,055,314 (“System and method for secure purchase and delivery of video content programs”).  Microsoft admits it is asserting these two patents to force a settlement with a cross-licensing agreement: “We remain open to resolving this situation through an intellectual property licensing agreement, and we have initiated discussions to engage TiVo in negotiations”.

Should TiVo be concerned about Microsoft’s patents?  Are they enough to force TiVo to the table?

From an admittedly cursory look, they are about as threatening as a limp noodle.  Neither of the patents has been tested in court.  The PTO patent application system is ex parte; patents issue without being tested adversarially.  Although there is a presumption of patent validity once issued, the presumption may be overcome in court in a variety of ways.

The ’803 Patent

The ‘803 patent (“System for displaying programming information”) was filed on August 7, 1998 and issued December 28, 1999.

It immediately loses brownie points for mentioning the “information superhighway” in a non-ironic manner in the specification.  It also misspells “information” “informaton” in Claim 1.  We’re not off to a very good start!

Claims 1-21, 23, and 25-32 cover sundry variations on two- or three-pane information displays, all clearly anticipated in the prior art by myriad computer displays dating from the dawn of windowing systems (or even from text displays).

Claims 22 and 24 are where the meat is.  Claim 22 claims a “system” with an “information display” and a “category display.”    Claim 24 claims “[t]he system recited in claim 22, wherein each of the information tiles comprises at least a program name, program date and start time, and program channel.”  Claim 24 is the only claim mentioning TV programming data.  As there are innumerable prior art information displays with generic data in a format that would anticipate the other claims, Claim 24 is the only claim that could realistically be asserted against TiVo.

Even if there is no prior art with TV programming data displayed in a format like Claim 24 (doubtful), the ‘803 patent faces other enforcement obstacles.  An exact prior art reference will invalidate a patent for lack of novelty.  But even if there is no exact single prior art reference that practices the claim, two or more prior art references may be combined to void a patent for obviousness.  Here, a prior art reference teaching the compilation and organization of TV programming data (e.g. TV Guide magazine) can be combined with the prior art screen data formats to show that Claim 24 was obvious and therefore not patentable.

Even if the ‘803 patent survives what will surely be a searching obviousness inquiry, it may encounter an issue of patentable subject matter under the currently-valid (pending a Supreme Court decision expected in Spring 2010) machine-or-transformation test articulated by the Federal Circuit in In re Bilski.

§ 101 of the Patent Act enumerates four types of statutory (that is, eligible) subject matter: processes, machines, manufactures, and compositions of matter.  Claims are supposed to indicate in their preamble what category they fall under.  Generally, “system” is susceptible to interpretation as a machine or as a process.  If the claimed system doesn’t clearly describe a machine or apparatus, then it may be interpreted as a process claim.  A process must be implemented with a particular machine or transform an article from one thing or state to another.  Clearly, there is no transformation happening in Claim 24.  Is there a particular machine?  The claim language may be too vague – there is no context for “category display” or “information display.”  Furthermore, reference to a generic computer or set-top box may be insufficient.

The ‘314 Patent

The ‘314 patent (“System and method for secure purchase and delivery of video content programs”) was filed on March 22, 1996, and issued April 25, 2000.

On its face, the ‘314 patent appears to be on much more solid ground than the ‘803 patent.  It’s bigger: 74 claims.  It actually appears to deal with technology!  There are method, device, and several varieties of system claims: “video content delivery system,” “interactive entertainment network system,” “system for purchasing video content programs,” etc.  Overall, the patent covers video decryption technologies for set-top boxes.  It has a bit tacked on at the end concerning the use of the encrypted network to purchase video-on-demand.  Without having more technical knowledge of TiVo’s encryption setup it’s hard to get a feel for how well the claims map to TiVo’s devices.  The analysis is on shakier ground here due to the increased complexity of the ‘314 patent.  However, a few issues do stand out.

Claims 27-33, covering an “integrated circuit card for use in decryption of video content programs” or “a video decryption device” arguably cover the now-standard cable TV decryption standard CableCARD.  The CableCARD decryption approach for digital cable was a product of the Telecommunications Act of 1996, and has been blessed by the FCC.  TiVo DVRs use it.  To the extent that TiVo infringes because it implements support for CableCARD, it may have a claim that the CableCARD system pre-empts the ‘314 patent – not because CableCARD is prior art, but because it is a specific technological industry mandate from a regulatory agency and should therefore not become a vector for a patent infringement suit.

Claims 34-41 are method (process) claims.  Claim 34 is the only independent claim.  The rest are dependent on 34.  Unfortunately for Microsoft, Claim 34 (“method for delivering video content programs”) appears to violate the rule of BMC v. Paymentech: a single entity must directly or vicariously (i.e. by ordering a minion) carry out all of the steps of a process claim in order to infringe.  Claim 34 describes a series of operations involving encrypted video streams, including 1) encrypting and decrypting a program key, 2) encrypting and decrypting the video stream, and 3) transmission of an encrypted video stream.  But TiVo doesn’t transmit video from the cable company: the cable company does.  And consumers typically lease their CableCARD from the cable company; any decryption that the card performed couldn’t be attributed to TiVo.  On the other hand, if TiVo stores data encrypted on hard disk and uses a non-CableCARD means of decrypting it prior to viewing, it may arguably infringe.

Claims 43-53, covering the purchase of  video streams, again run into the Paymentech issue because the claim steps purport to cover both the actions of the video purchaser (i.e. the viewer) and the “video merchant” (e.g. Amazon, Netflix, etc.).

A few, more broadly written claims (e.g. Claim 42 and 54-58) appear to recognize this limitation.  These claims only cover decryption of a video data stream.  However, their extremely wide claim scope may run into prior art novelty anticipation from other TV decryption technologies – of which there are many.

Is Microsoft’s Suit Credible?

The ‘803 patent is clearly a non-starter, but it’s much harder to evaluate the ‘314 patent.  Neither patent has been tested in court, so they’ll initially have discounted bargaining weight compared to the battle-tested, blood-spattered ‘389 patent.  If the ‘314 patent proves valid, it may be enough to parry TiVo’s attack on U-Verse, which, with barely 2 million subscribers, is nowhere near the mother lode that EchoStar was.  This wouldn’t affect TiVo’s ability to take on other targets (Time Warner may be especially tempting), but it may blunt the strong momentum that TiVo has built up with its string of EchoStar victories.

• U.S. says butt out: U.S. Senators criticize EU Commission over delay of Oracle-Sun deal.  (See our deal cheat sheet here.)

• Verizon stakes its claim as the nation’s most ironic network: A week after a court called its “There’s a Map For That” advertisements “sneaky,” but not misleading (catch up here), Verizon has pushed the National Advertising Division of the Council of Better Business to ask Sprint to drop its claim that it is the “most dependable 3G network.”

• Not to be outdone by Verizon, AT&T, and Sprint, Canadian telcos are suing each other over false advertising too.

• A boutique Texas IP firm is reaching out to owners of Xbox 360 owners whose consoles have been banned from Microsoft’s Xbox Live service with hopes of filing a class action suit against the tech giant.

• News Corp’s Ruport Murdoch may make a deal to make the media conglomerate’s content exclusively searchable by Microsoft’s Bing search engine, but antitrust concerns loom.

• The new Google-TiVo deal probably won’t violate your privacy, says PC World.

• The “Godfather of Spam” has been sentenced to 51 months in prison.

• A Kentucky man’s claim that the government has been spying on his every living moment is “patently unsubstantial,” according to the D.C. Circuit.  Wired’s Threat Level reports and links the full decision, in which the court likens “the particular combination of sloth, fanaticism, inanity and technical genius alleged” to stories of “little green men.”