Axis Beats Patent Troll

By Carlton Purvis, Published Jun 05, 2013, 12:00am EDT

Axis has beaten one of the biggest and most powerful patent trolls, landing an important victory for the surveillance industry. Two years ago, Walker Digital filed suits against Axis and other security manufacturers. Now, the key 1998 patent that provided the foundation for the suit has been overturned by the US government, according to the decision obtained by IPVM and the case has been dismissed.

This helps all manufacturers (and by extension integrators and users) as entities like Digital Walker seek to extract licenses across industries for fundamental functions.

Much of Walker Digital's case hinged on the 1998 patent (6720990) as it was the predecessor to the other patents in the case. Unfortunately, most parties being sued settled with the company before the patent office determination was made. 

Here is a breakdown of what happened with the manufacturers sued:

Tyco 

Court records show that the case against Tyco was dismissed in 2012. Counsel for Tyco says there was an agreement between the two parties. “There was a licensing agreement, but beyond that it’s confidential,” a company lawyer said by phone.

OnSSI

OnSSI entered into a licensing agreement with Walker Digital, according to court documents and confirmed by its lawyers.

Axis

Axis was the only company in this suit to leave the case without any kind of a settlement with Walker Digital. The two parties agreed to dismiss the case in February after Axis challenged the patents at the U.S. Patent and Trademark office.

"The case was dismissed with prejudice," Axis says. "While that usually means a settlement, the plaintiff (Walker Digital) had major setbacks in that two of the patents have been declared invalid by USPTO after a reexamination requested by Axis." Axis originally filed the request last April. 

Note: The entire record of the reexamination can be found on the USPTO's Patent Application Information Retrieval system using the case's control number: 90/020,001. 

Other Companies

In 2011, Walker Digital also sued ADT, Westec and Iveda Solutions over several remote monitoring patents.  

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  • Claims against ADT and Westec were voluntarily dismissed by both parties. 
  • According to financial documents from Iveda, it paid a one time legal fee to settle the case [link no longer available] and entered into a licensing agreement with Walker Digital. The company would not disclose the terms of the agreement.

Major Patent Overturned 

Patent 6720990: According to patent office documents dated May 29, 2013, all 44 claims of this patent were rejected, and the patent was declared invalid. 

Patent 7593033: All 18 of the claims in this patent were reexamined and all were rejected, according to USPTO documents from March.

Patent 7817182: Walker Digital requested a reexamination of this patent and the request was denied for failure to meet certain requirements.

Patent 7605840: Last October, this patent was reexamined by the USPTO and was upheld. 

White House Actions 

The US government is now taking action against what many are calling the 'patent crisis' - a threat impacting a broad range of technologies. We recommend reading the full White House June 2013 Report on Patents and Innovation [link no longer available] for the government's extensive analysis and proposed actions.

There are 2 key elements involved that can impact surveillance:

  • Stopping patent trolls from 'hiding'
  • Stopping patents are that overly broad / vague

The Canatelo case is an excellent example of a mysterious company suing many surveillance manufacturers. Even after our investigation, the best we can tell is the company is based in a non-existent unit in a beachfront residential condominium in Puerto Rico.

However, even more important is the efforts to cut down on overly broad / vague patent claims, which repeatedly are the cause of ridiculous issues - whether its patents that cover all of remote video monitoring or sending emails on motion detection or tripwires or any type of calibration, etc.

The White House explicitly calls out this risk:

 "Functional claiming involves claiming exclusive rights over any device that performs a given function, regardless of how that function is performed. Functional language can therefore lead to very broad and/or vague claims. These problems are especially acute for software patents."

That's exactly the issue that patent lawsuit after lawsuit in surveillance rests on - claims so broad (and typically obvious even at the time of 'invention') that everyone falls under it.

They draw out an important distinction:

"PAEs take advantage of uncertainty about the scope or validity of patent claims, especially in software related patents because of the relative novelty of the technology and because it has been difficult to separate the “function” of the software (e.g. to produce a medical image) from the “means” by which that function is accomplished."

Object Video's position on calibration - that their patent covers all calibration - manual and automatic - is an excellent example here of this problem.

Finally, and importantly, the White House notes the overall lose to society referencing a study:

"During the years they were being sued for patent infringement ... companies ceased all innovation in that technology, causing sales to fall by one-third compared ... the financial reward received by winning PAEs amounted to less than 10% of the share value lost by defendant firms, suggesting that the suits result in considerable lost value to society from forgone technology transfer and commercialization of patented technology"

Technologies like video analytics certainly had enough problems, even before the OV lawsuits, but innovation and new entrants have nearly ground to a halt. Add this to the need now to pay OV a couple of dollars per analytics enabled camera for the next decade or two, and it gets even worse.

What's Next

It's great to see that Axis used their muscle to fight back against this but the evidence of the case shows that defendant manufacturers did not effectively coordinate.

The good news is that finally the US government may be getting serious about helping real manufacturers fight back against patent trolls. Nonetheless, the manufacturers really need to join forces against a very serious and common threat. 

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