Sunday, November 8, 2015

Internet of Things (IoT) Patent Disputes Risk Assessment

Alex G. Lee (alexglee@techipm.com)

As the smartphone market matured, many companies are looking for the post-smartphone market that can generate new revenues. Many market researchers expect that the interconnected IoT (Internet of Things) devices will create a new market that will result in more than $1 trillion in value added to the global economy within 10 years. In the short term, wearable computing devices are expected to form an early IoT market by interconnecting body-sensing devices and providing useful personal services including healthcare.

As we have seen in the smartphone market development, it is expected that the super-competition to preoccupy the leadership in the lucrative IoT market can lead to another round of patent wars. The post-smartphone patent wars, however, will be more extensive because of more extensive participation of players across several different industries. The post-smartphone patent wars will also be more complex because of the recent rapid change in legal environment and the learning curve from the smartphone patent wars.

To assess the potential patent disputes risk of the IoT, patent landscapes of three major IoT applications – smart home, connected cars, smart healthcare (including healthcare/fitness wearable devices) – and IoT platform connectivity are researched. Followings summarize the potential patent disputes risk for each subfield of the IoT.

Smart Home
To find the leading innovators in the IoT smart home applications, more than 1000 published patent applications and issued patents in the USPTO as of Oct. 20, 2015 that are related to the smart home applications are reviewed. Nearly 400 patent applications are selected as the key patents for the IoT smart home applications. In number of patent applications, Google (including Nest Lab) is the leader followed by Samsung Electronics, General Electric, LG Electronics, Allure Energy, Honeywell and Ecofactor. One interesting point in the smart home patent land scape is a large number of patents owned by two startups - Allure Energy (9 %) and Ecofactor (5 %) - that are not successful in the IoT smart home market compare to their marker leader competitors such as Nest Lab and Ecobee.
A large number of patents owned by commercially unsuccessful companies can be the potential patent disputes risk to the smart home companies.

Allure Energy is a smart home energy management company based in Austin, Texas. Allure Energy develops leading-edge smart energy management solutions for many IoT applications. Allure Energy has developed 22 US family patents for the smart energy management up to now. Significant number of forward citations shows the high quality of the family patents. Especially, many patents of most key industry players including Google (Nest Lab), GE and Honeywell in the smart energy management heavily cited Allure Energy patents. A huge number of claims of the family patents make it very difficult to invalidate the family patents through PTAB IPR process. Allure Energy already sued Honeywell in Texas Western District Court (Case No. 1:15-cv-00079; January 29, 2015) and Nest Lab in Texas Eastern District Court (Case No. 9:13-cv-00102; May 14, 2013).

Connected Cars
To find the leading innovators in the connected cars, more than 1000 published patent applications and issued patents in the USPTO as of Oct. 25, 2015 that are related to the connected cars are reviewed. More than 600 patent applications are selected as the key patents for the connected cars. In number of patent applications, Nissan is the leader followed by AutoConnect Holdings, Toyota, Ford, GM, Omega Patents, American Vehicular Sciences and Honda. One interesting point of the connected cars patent landscape is the large number of patents owned by two active patent monetizing entities - Omega Patents and American Vehicular Sciences and a suspected entity - AutoConnect Holdings.  The large number of patents owned by the patent monetizing entities is a potential patent disputes risk for the connected cars industry.

Omega Patents and American Vehicular Sciences have involved in 15 and 52 patent litigations respectively. American Vehicular Sciences is a subsidiary of Acacia Research. Flextronics AP LLC, which is a strategic patent development subsidiary of a connected vehicle platform solution company Flextronics International, transferred the ownership of patents to AutoConnect Holdings.

Smart Connected Healthcare
To find the leading innovators in the connected healthcare, more than 1000 published patent applications and issued patents in the USPTO as of Oct. 30, 2015 that are related to the connected healthcare are reviewed. More than 700 patent applications are selected as the key patents for the connected healthcare. In number of patent applications, Health Hero Network is the leader followed by Medtronics, Cardiac Pacemakers, Empire IP LLC, Trage Wireless, Medapps, Philips, University of Washington, Bodyscience LLC and GE. One interesting point of the connected healthcare patent landscape is the large number of patents owned by the active patent monetizing entitiy - Empire IP LLC, which is a potential patent disputes risk for the smart healthcare companies. Empire IP LLC has involved in 413 patent litigations up to now.

To find the leading innovators in the personal fitness/health care devices, more than 1000 published patent applications and issued patents in the USPTO as of Oct. 20, 2015 that are related to the personal fitness/health care devices are reviewed. Nearly 600 patent applications are selected as the key patents for the personal fitness/health care devices. In number of patent applications, Fitbit is the leader followed by Nike, Adidas, Apple, Samsung Electronics, BlackRock Advisors (Jawbone), Tanita Co, Garmin Switzrand and Impect Sports Technology.

One interesting point of the personal fitness/health care devices patent landscape is the large number of patents owned by many commercially unsuccessful companies and NPEs. Another interesting point is the small number of patents owned by commercially successful companies (e.g., Under Armour).

Jawbone already sued Fitbit using the patents of AliphCom and Bodymedia in California Northern District Court
(Case No. 3:15-cv-2579; June 10, 2015). Sarvint Technologies (NPE) sued Adidas in Georgia Northern District Court (Case No. 1:15-cv-00069 - 74; January 9, 2015). Adidas sued Under Armour in Delaware District Court (Case No.1:14-cv-00130; Feb. 4, 2014).

IoT Platform Connectivity
To find the leading innovators in the IoT platform connectivity, more than 5000 issued patents in the USPTO as of 3Q 2015 that are related to the IoT platform connectivity (LTE, WLAN, Zigbee, Bluetooth, Bluetooth Low Energy) are reviewed. More than 2800 patents are selected as the key patents for the IoT platform connectivity. In number of patents, Samsung Electronics is the leader followed by Qualcomm, LG Electronics, Google, Intel, Nokia, Ericsson, InterDigital, Apple, BlackBerry, Texas Instruments, Marvell, Avago Technologies (Broadcom), Sony and Panasonic.

One interesting point of the IoT platform connectivity is the large number of patents owned by many active patent monetizing entities - InterDigital, Optis Cellular Technology, Intellectual Ventures, Innovatio IP Ventures, Adaptix (Acacia), Evolved Wireless LLC, Wi-Fi One and WiLAN. The large number of patents owned by many patent monetizing entities is a potential patent disputes risk.

To find a specific patent litigation risk, individual patent with high litigation potential is further researched. One interesting fact is that there were the increasing ownership transfers of patents with high litigation potential to several NPEs for the purpose of monetization. For example, US6519223 (Ericsson: System and method for implementing a semi reliable retransmission protocol) that is a patent used in litigation (Case 6:10-cv-00473, Texas Eastern District Court) transferred to Wi-Fi ONE, LLC. Other examples are: US8457022 (Nokia: Method and apparatus for providing signaling of redundancy versions) that was transferred to Cellular Communications Equipment LLC is exploited in litigation (Case 2:15-cv-00581, Texas Eastern District Court); US8411557 (Panasonic: Mobile station apparatus and random access method) that was transferred to Optis Cellular Technology, LLC is exploited in litigation (Case 2:15-cv-00300, Texas Eastern District Court); US8935587 (LG Electronics: Method for effectively transmitting control signal in wireless communication system) that is identified as the LTE SEP (Standard Essential Patent) was transferred to Optis Cellular Technology, LLC. Optis Wireless Technology sued ZTE exploiting the LTE patents acquired from Panasonic. Evolved Wireless has filed patent infringement lawsuits against Apple, Samsung, Microsoft, HTC and Lenovo (Evolved Wireless v. Samsung) exploiting five LG’s LTE standard related patents (7,746,916, 7,768,965, 7,809,373, 7,881,236, and 8,218,481).


An interesting NPE activity involving high patent litigation potential is the assignment to and from Cluster LLC. Cluster LLC involved in nearly 50 assignment activities as an assignor (assignee: UPIP, WI-FI ONE, Optis Cellular Technology) and as an assignee (assignor: Ericsson, UPIP).

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