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Tuesday, July 23, 2013
Worlds Responds to Motion for Summary Judgement
Worlds (WDDD.OB) investors saw a rather substantial decrease in share price drop over the last few weeks. The main events that occurred were a motion for invalidity filed by Activision (ATVI), as well as a press release announcing that a crucial markman hearing has been postponed through the fault of neither party. Neither of these issues are material in affecting World's chances to prevail in its lawsuit.
The Drop in Price
The aforementioned motion helped to cause a substantial drop in share price, as investors began to panic over the possibility that the judge would dismiss the patent suit outright. This motion mentioned the problem that the priority date of the parent patent do not extend to all of the patents in suit due to the fact that the patents in suit did not contain a specific reference to the earlier filed application. This is a problem due to the fact that World's own inventions would have then counted as prior art and subsequently served as a basis to invalidate the rest of the patents. The priority date, November 13, 1995, of the parent patent helps to invalidate these concerns as its priority date is within a year of the inventions being available to the public.
If it were found by the court that these patents did not have the required specification, it was possible that the court would essentially destroy Worlds case. The court would have been able to declare the patents invalid. However, I do not believe that this will be the case and I believe that the court will deny Activision's motion.
Worlds (WDDD) attorneys come out firing in regards to Activision Blizzard's motion. Obviously, Worlds does not see the issue in nearly the same way and declares that the omission was a scriveners error, and therefore is an error that should be overlooked by and corrected by the court. There are a few very important points raised by Worlds in their response. These points can be broken down as follows: 1. The scriveners' error should be overlooked by the court, and should be corrected by the court. 2. The US Patent and Trademark Office (USPTO) in their public system recognizes the priority date of November 13, 1995. 3. Worlds is seeking a certification of the mistake from the USPTO and is asking the USPTO to correct the error. 4. Activision Blizzard misstates the legal precedent and the legal provisions surrounding the scenario.
It is important to note that in a motion for summary judgment the burden will lie with Activision to prove through clear and convincing evidence that the patents are invalid. The evidence must be viewed in a light that is most favorable to the plaintiff in this scenario. Therefore, Activision would have to surpass a significant hurdle in order to actually have their motion granted. So now without further ado we will look at each of the afforementioned defenses.
1. Scriveners' error
From page 6 of the motion:
"First, the patents-in-suit are entitled to a November 13, 1995 priority date because Worlds properly claimed entitlement to that effective filng date during prosecution of the '045 and '690 patents, Under 35 U.S.C. $$ 119(e) andl20,and37 C.F.R. $ 1.78, apatentee may claim priority to an earlier-filed application by including priorityinformation in its patent application. See E.I. du Pont de Nemours & Co. v. MacDermidPrinting, 525 F.3d 1353 (Fed. Cir. 2008). By referring to Worlds' 1995 provisionalapplication in data sheets filed during prosecution of the '045 and '690 patents, Worldssatisfied this requirement and is entitled to the November 13,1995 effective filing date."
Essentially, Worlds did everything right in regards to the data sheet when it was filing for the subsequent patents. Worlds argues that it should not be harmed by a scriveners' error at the USPTO. This argument is rather convincing, and there is a large amount of caselaw to support the position that Worlds did nothing wrong in regards to the patents.
Another interesting quote from the response was:
"Under Federal Circuit law, "[a]bsent evidence of culpability or intent to deceiveby delaying formal correction, a patent should not be invalidated based on an obviousadministrative error." Hoffer v, Microsoft Corp.,405 F.3d 1326,1331 (Fed. Cir. 2005).Indeed, "[w]hen a harmless error in apatent is not subject to reasonable debate, it can becorrected by the court . . . ." Id. Here, there can be no dispute that (1) any effors in the'045 and '690 patents were harmless and administrative; (2) setting aside any administrative error, the correct effective priority date of the patents-in-suit is November13, 1995; (3) the PTO has already recognized the correct November 13, 1995 effectivefiling date on its PAIR database and website; and (4) there is no evidence of culpabilityor intent on the part of Worlds to delay formal correction. Accordingly, the Court has nobasis to invalidate any of Worlds' patents.:
In the motion filed by Activision, they failed to assert any wrongdoing by Worlds that would prove the intent to decive. The fact that Actavision failed to make an allegation that Worlds intended to deceive also points to the fact that it was a harmless administrative error that is causing the holdup. Interestingly, the court has the opportunity to even correct the error and dismiss Activision's motion. I expect for the court to decide to just correct what is very clearly an administrative error. Worlds was correct in the way it filed for the patent, because the USPTO messed up when they issued the patent that is not the fault of Worlds and Worlds should not be liable.
2. The USPTO recognizes the effective date of November 13,1995
Activision's argument loses even more steam when we come to the fact that even the USPTO recognizes the effective date of November 13, 1995. The USPTO, according to Worlds, accepts this on both their PAIR database and website. The fact that even the USPTO recognizes Worlds claim will help Worlds in its argument that there was simply an administrative error in regards to the patents in suit.
3. Worlds is in the process of seeking an acknowledgment of the mistake
On July 5th of this year, Worlds filed for a Certificate of Correction in regards to the '045 patent and the '690 patent. This would of course constitute a formal acknowledgement by the USPTO that the effective date should be November 13, 1995 as Worlds claims. This would of course render Activision's argument moot before the court as the issue will have been deemed for all intents and purposes to be corrected. Note that this is an extra step for Worlds, they have the judge who has the possibility to rectify the mistake and now the USPTO who could simply issue the Certificate of Correction which would render the argument moot.
4. Activision Blizzard misstates the law
Even more compelling in its argument is the fact that Activision Blizzard relied on an old interpretation which has recently been updated. In its argument, Activision Blizzard asserted that the 1996 version of 37 C.F.R. 1.7 applied. This is, as Worlds points out, simply wrong and contrary to the policies in place at the USPTO. Activision Blizzard needed to rely upon the 2000 updated version of the policy. Although the patent had an effective date of November 13, 1995 the USPTO regulations for applications filed before November 29, 2000 the 2000 revision is the one that should be used. In the case of both of the patents in question, the dates that the applications were filed precedes the November 29, 2000 cutoff date and as such Activision Blizzard even used the wrong version of the procedures as a focal point of its memorandum.
This motion should help to ease investor concerns that the patents will end up being invalidated. It appears as though Activision's motion will be denied by the judge. Worlds raised many good points that Activision will have to disprove through clear and convincing evidence. In this instance, Worlds has the evidence on its side. As such Worlds should easily win this motion, and investors should see an increase in share price due to the fact that the patents are not even close to being invalidated before the Markman hearing. The next important catalyst to watch for Worlds will be the Markman hearing, in which the court will rule on a few claim construction issues.