Paul Allen Lawsuit Put On Hold As Patents Are Questioned

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Credit: NBA

The lawyers in Paul Allen’s new lawsuit find themselves this week exactly where they didn’t want to end up–facing a big delay in their effort to sue the world’s biggest internet companies for patent infringement.

U.S. District Judge Marsha Pechman, who is overseeing the case, ruled last month that Allen and his legal team are going to have to wait for the U.S. Patent and Trademark Office to reexamine the patents in the lawsuit before they move ahead. After that, Allen’s lawyers filed a last-ditch motion in an attempt to get Pechman to reconsider her decision, but this week she rejected it.

It’s become a common defense tactic in patent litigation for defendants to ask for the patent office to do a “reexamination” on the patents-in-suit. Basically asking for a reexam is a formal request for the patent office to take another look at whether a patent should have been granted in the first place. Most patents that go through reexam come out at least narrowed in their scope, and occasionally are canceled altogether.

One thing about patent reexams: they tend to take a long time–in fact, they can drag on for years. That makes them attractive to defendants, who can delay lawsuits against them for a relatively low cost, and can sometimes use the delay as leverage to wrest a lower settlement figure from their opponents. But the patent office’s delay in dealing with reexams has caused judges to be skeptical of the process, and fewer judges today are willing to delay trials while the parties wait for reexams to finish.

In this case, Pechman thought that waiting for the results would simplify the issues in this case, and so she has issued the stay.

An additional headache for Allen: Groklaw notes that he has had to switch out the lawyers who were representing him in the reexam, because the firm was also doing some work for one of the defendant companies that Allen is suing.

Given that this lawsuit is what it is–it’s Paul Allen, the patents originated in a well-known research institution, and Allen is likely going to be seeking big damages–the reexam delay probably won’t lead to a settlement in and of itself. But this is a win for the defendants; it’s clear that there isn’t going to be any quick payday for Allen on this one.

Allen, who co-founded Microsoft (NSDQ: MSFT) with Bill Gates, first sued eleven big companies back in August. The list includes internet giants like Google (NSDQ: GOOG), Apple (NSDQ: AAPL), eBay (NSDQ: EBAY), and Facebook, as well as some online retailers. The patents he’s using have been criticized because they appear to cover basic strategies for online publishing, such as the use of related links. But Allen has said that Interval (NSDQ: IILG) Research, the lab he founded in the 1990s but closed in 2000, was “early–and right–on key pieces of the internet,” and he has a right to “protect that investment.”

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Jim Winski

Interesting and funny that Paul Allen’s OTHER company, Microsoft, was one of the last tech companies to join the internet party. Bill Gates was at the helm at the time, and he didn’t see the need to have anything to do with the internet and the WWW. As a result, they have always been way behind the curve as other companies embraced it and developed for it. And so Paul Allen now (in retrospect) claims to be the great prognosticator of what was to be in terms of the ‘net? I don’t think so Paul.

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