Immersion shares closed 4.6 percent lower Friday at $14.27 despite the company reporting stronger results for Q2 than a year ago. Revenue jumped 58 percent to $10.2 million, with royalty and license revenue soaring 68 percent to $10 million. It also had a $776,000, or 3 cents a share, profit, versus a loss of $2.2 million, or 8 cents a share. Immersion’s legal expenses to protect its patents continued to pile up. The litigation-related expense for Q2 was $470,000, Chief Financial Officer Paul Norris said on an earnings call Thursday. As its lawsuit against HTC proceeds in U.S. District Court in Wilmington, Del., Immersion estimated its expense for that litigation will be in the $1-1.5 million range over the remaining six months of the year, he said. Immersion had terminated an International Trade Commission investigation into the claimed infringement of certain Immersion patents by HTC and opted to focus on its patent infringement suit against HTC in the Delaware court. The only remedy available to Immersion via the ITC would have been an exclusion order against HTC preventing the import of infringing devices into the U.S., Immersion said then. But the remedy available in U.S. District Court would include damages, attorneys’ fees and potentially injunctive relief, said Immersion. Judge Richard Andrews denied HTC’s request to stay the case July 11, according to court documents. A trial will begin “as early as next year,” Immersion CEO Vic Viegas said Thursday. Immersion saw “renewed enthusiasm” for haptics technology in the game market with the announcement of new consoles from Sony and Microsoft, as well as new peripherals coming out of last month’s E3, he said. “In addition to representing a new peripheral opportunity” for Immersion, the PS4 may also provide an additional “revenue opportunity for us” if the console is released with haptics technology as “contemplated under our existing agreement” with Sony, he said. Immersion is also “optimistic” that Microsoft will offer haptics in the Xbox One, he said. “We will know more” about the Microsoft and Sony-related opportunity as the consoles ship later this year, he said. Meanwhile, PowerA, another licensing partner of Immersion’s, will ship a new Moga Pro mobile game controller that will feature Immersion haptics, he said. Gaming accounted for 22 percent of Immersion Q2 revenue, said Norris. That was down from 27 percent in Q2 last year. The gaming revenue included ongoing licensing fees and revenue secured through its royalty licensing compliance program, said Norris. Mobility remained Immersion’s largest segment, accounting for 65 percent of revenue, up from 47 percent. Auto revenue dipped to 6 percent from 7 percent of revenue, while medical fell to 7 percent from 13 percent.
Court of International Trade activity
Straight Path Communications subsidiary Straight Path IP Group (SPIPG) said Thursday it has filed patent protection claims with the U.S. International Trade Commission (ITC) against major electronics companies LG, Panasonic, Sony, Toshiba and Vizio. SPIPG wants the ITC to bar the importation and sale of allegedly infringing products the companies manufacture. Those products include smartphones, tablets, e-readers, smart TVs, gaming consoles, Blu-ray players and set-top boxes, SPIPG said. SPIPG also filed a lawsuit against “substantially the same parties” in the U.S. District Court for the Eastern District of Virginia (http://bit.ly/18UjddA). SPIPG also filed a separate lawsuit against VoIP providers Bandwidth.com, Telesphere Networks and Vocalocity. SPIPG claims the three companies infringed its patents by selling and authorizing “certain Voice over Internet Protocol (VoIP) products and/or services” (http://bit.ly/16J4HzO). “We intend to vigorously and tenaciously defend our IP across industry verticals, wherever our technology is being used without license,” said SPIPG CEO David Jonas in a statement. “We owe it to our stockholders to prevent infringement of our IP.” An LG spokesman said the company “does not generally comment on pending legal matters.” Bandwidth.com’s “products and services do not infringe any patents issued to Straight Path Communications,” a spokeswoman said. “We nonetheless will review the allegations. We intend to vigorously defend the suit and anticipate a favorable outcome.” The other companies involved did not respond to requests for comment.
Senate Antitrust Subcommittee Chairwoman Amy Klobuchar, D-Minn., said Tuesday she plans to introduce legislation to address “competition issues in the patent world.” Witnesses at a subcommittee hearing Tuesday had made it evident that some standard-setting organizations (SSOs) are taking antitrust concerns related to standard-essential patents (SEPs) “seriously” by voluntarily adopting best practices and updating their intellectual property rights policies, Klobuchar said. However, it may now be time for Congress to get involved or “we need to up the role of enforcement agencies and have that complementary to the work of the SSOs,” she said. Klobuchar said she’s considering legislation that would “clarify” the standards for issuing injunctions and U.S. International Trade Commission (ITC) exclusion orders related to SEPs, along with legislation to address the FTC’s role in the “patent troll” debate and its impact on competition and consumers. Klobuchar told us after the hearing that she plans to introduce that legislation in the fall.
The Prism program could change people’s perceptions on how their data is used, said Joshua Meltzer, Brookings Institution fellow. “Surveillance relies on the free flow of information and the perception issue seen in terms of branding and trust,” said Meltzer. “People might start switching to non-U.S. search engines.” The way the media reported the surveillance leaks will have some impact on U.S. businesses and trade in the short term, said Jake Colvin, National Foreign Trade Council vice president. “If you read what the companies directly associated with Prism have maintained, they have complied with lawful demands subject to search warrant or court order in the United States and elsewhere,” said Colvin. “They do not provide backdoors or provide encryption keys or otherwise permit direct access to their services. There has been a heavy suggestion that this program is limited, certainly more than initial reports have suggested.”
July 21-24 NARUC summer meetings, Sheraton Denver Downtown -- http://bit.ly/123Joc5
The intellectual property enforcement coordinator is beginning a review of Customs and Border Protection enforcement of International Trade Commission exclusion orders. The initiative was announced June 4 by President Barack Obama, as part of a broader effort toward reducing frivolous “patent trolling” in intellectual property litigation (CD June 5 p12). The interagency review by IPEC will evaluate procedures CBP and the ITC use to determine the scope of exclusion orders, which are issued by the ITC in Section 337 cases to bar imports of intellectual property-infringing merchandise, said a Federal Register notice. Comments on several issues related to the review are due July 21. The interagency group will come out with recommendations from its review within six months, IPEC said. Violations of Section 337 of the Tariff Act of 1930 occur when foreign goods that infringe intellectual property rights -- like patents, copyrights and trademarks -- are being sold in the U.S., and a viable domestic industry exists that is using the protected technology. If the ITC finds violations of Section 337 in an investigation, it may issue cease and desist orders and exclusion orders. Exclusion orders bar imports that infringe the intellectual property rights at issue, and may be either limited (applying to one company) or general (applying to all infringing products). CBP is tasked with enforcing the exclusion orders. Because exclusion orders don’t cover all imports of a given product -- they only bar infringing imports -- CBP must determine whether a particular product infringes the intellectual property rights and should be barred. CBP enforcement of exclusion orders was recently at issue in a Court of International Trade case on CBP’s refusal of entry to a Corning Gilbert coaxial cable connector based on an ITC exclusion order. Despite CBP’s argument that it can’t undertake detailed patent infringement analyses for every product potentially subject to ITC exclusion orders, the court said CBP should have done more, and reversed the agency’s decision to refuse entry. The government subsequently withdrew an appeal of the decision. IPEC said the interagency review of CBP exclusion order enforcement will be chaired by that office, a division of the Office of Management and Budget, and will include representatives from the ITC, U.S. Trade Representative, and the departments of Homeland Security, Treasury and Justice. The group will evaluate procedures used to determine the scope of exclusion orders, and ensure such procedures are “transparent, effective, and efficient,” IPEC said. One focus will be whether CBP uses transparent procedures when determining whether an article is subject to an ITC exclusion order. The group will also look at ways to improve ITC enforcement instructions to CBP. IPEC seeks comment in connection with its review on recommendations for changes to agency policies, practices, guidance and regulation.
A three-judge U.S. Court of Appeals for the Federal Circuit panel ruled Friday that the U.S. International Trade Commission (ITC) must hear a patent case pitting InterDigital Communications against LG Electronics; the ruling overturned the ITC’s earlier decision that the companies enter into arbitration over the dispute, which the Federal Circuit’s majority opinion called “wholly groundless.” InterDigital had filed a complaint with the ITC in 2011 claiming multiple companies, including LG, were infringing its patents on 3G wireless technology; the ITC agreed with LG’s argument that an expired patent licensing agreement between InterDigital and LG required the companies to use an arbitrator. The Federal Circuit ruled that since the licensing agreement between the companies had expired, LG no longer held a license for the 3G technology and therefore could not use the agreement to justify the ITC’s decision. The ITC and LG claimed the Federal Circuit did not have jurisdiction because it could only decide cases involving the ITC where there was a final determination. That was an “overly restrictive” description of the court’s jurisdiction, Judge Sharon Prost wrote in her majority opinion. Judge William Bryson joined the majority opinion. Judge Alan Lourie said in a dissenting opinion that while he agreed with the majority that LG’s argument for arbitration lacked merit, he did not feel the court had jurisdiction (http://1.usa.gov/195P4H6). An ITC spokeswoman declined comment, noting that the agency doesn’t discuss matters under litigation. An InterDigital spokesman also declined to comment. LG did not respond to a request for comment.
A group opposed to some patent litigation applauded the push for harmonizing International Trade Commission patent injunction standards on patent assertion entities (PAEs) from the White House (CD June 5 p12). “A more equitable standard for obtaining an injunction, as called for by the White House, would make it far harder for PAEs to use the ITC process as a means to extort licensing fees from legitimate businesses,” said Director Matt Tanielian of the ITC Working Group, which described itself as having more than a dozen members, in a news release. It cited an FTC statement on the “dangerous discrepancy” between injunction standards at the ITC and federal courts that said “the ITC may attract suits by patentees that are less likely to obtain injunctions in district court, potentially leading to a hold-up and the resulting consumer harm."
A group opposed to some patent litigation applauded the push for harmonizing International Trade Commission patent injunction standards on patent enforcement entities (PAEs) from the White House (CD June 5 p12). “A more equitable standard for obtaining an injunction, as called for by the White House, would make it far harder for PAEs to use the ITC process as a means to extort licensing fees from legitimate businesses,” said Director Matt Tanielian of the ITC Working Group, which described itself as having more than a dozen members, in a news release. It cited an FTC statement on the “dangerous discrepancy” between injunction standards at the ITC and federal courts that said “the ITC may attract suits by patentees that are less likely to obtain injunctions in district court, potentially leading to a hold-up and the resulting consumer harm."
President Barack Obama directed the U.S. Patent and Trademark Office (PTO) to begin creating rules to require patent applicants and patent owners to “regularly” update the ownership information on file at PTO when they are involved in PTO proceedings. The rules are targeted at making “real party in interest” (RPI) disclosure a default action. Obama also directed PTO to develop strategies over the next six months to improve patent claim clarity, particularly in software-related patent applications, and train patent examiners on scrutinizing functional claims. The White House said it will build on the roundtables and workshops that PTO, the Department of Justice and the FTC held last year, announcing it would hold a series of “high-profile events” over the next six months aimed at outreach on patent-related issues and policy updates. PTO will also expand its Edison Scholars Program, which brings in scholars to work at the agency for six-month periods, to develop additional research on patent litigation abuse. PTO also unveiled a set of new education and outreach materials aimed at answering questions from the targets of abusive patent litigation (http://1.usa.gov/15yx9EC).