A Large Lump of Coal in Mission Abstract Data's Stocking

USPTO rejects validity of most of MAD’s patentability claims, undermining MAD’s assertions that many radio broadcasters may be liable for patent infringement.

Holiday cheer came a little early for many radio broadcasters this year: Santa Claus (disguised as patent examiners at the U.S. Patent and Trademark Office (USPTO)) issued two “Detailed Actions” with respect to challenges that had been directed to the two patents held – and vigorously brandished – by Mission Abstract Data (MAD). Both of those “Detailed Actions” (one related to Patent No. 5,629,867, the other to Patent No. 5,809,246) rejected multiple claims to the patentability of MAD’s technology.

As a result, the likelihood that MAD (or its successor, Digimedia, or its licensing agent, IPMG AG) might receive a significant damage award in any patent infringement litigation which it has broadly hinted at has been reduced substantially.

Regular CommLawBlog readers should be familiar with the MADness that has afflicted the radio industry since 2011. (New to the subject? Get a refresher course by checking out our archives on the subject here.)

In a nutshell, MAD, a patent troll, acquired a couple of patents that had been issued back in the 1990s with respect to using computers to store and retrieve music files for broadcast. MAD then commenced a full-court press against much, if not most, of the radio industry. It claimed (often, it seemed, without any solid factual support) that broadcasters were using gear that relied on MAD’s patents. MAD generously offered to overlook any possible infringement that might have occurred . . . if, that is, the broadcaster would enter into a pricey licensing agreement with MAD.

Litigation ensued, as a number of the targeted broadcasters sued MAD in federal court in Delaware. They claimed that MAD’s patents were invalid. Meanwhile, at least one equipment manufacturer pressed the USPTO, which had issued the original patents, to take another look. The USPTO agreed to do so, at which point the court in Delaware stayed further proceedings in the broadcasters’ suit pending further USPTO action.

The USPTO initially appeared to rule against MAD in the fall of 2011, but MAD sought further review.  Last summer MAD seemed to be claiming victory when the USPTO appeared to un-toss some of MAD’s patent claims that had appeared to have been tossed in the 2011 action. With that new USPTO ruling in hand, MAD launched another round of FedEx-borne licensing offers (along with follow-up telephone sales pitches) to many radio licensees; it also asked the Delaware court to lift the stay.

Not so fast, said the broadcasters. Further USPTO proceedings were going to be sought, so let’s not be acting prematurely. And sure enough, such further proceedings were sought. The end result (at least as of now): the USPTO’s latest “Detailed Actions”, which appear to reject all of MAD’s claims. It seems that the patent examiners identified a number of technologies similar to MAD’s that had been in existence prior to the issuance of the patents MAD holds. In the examiner’s view, many aspects (possibly all) of MAD’s technology were simply obvious extensions of the earlier technology, and were therefore not properly patentable.

This, of course, is what the radio industry has been arguing from Day One. Not surprisingly, MAD has disagreed, claiming in a June, 2012 blog post of its own that its patents were valid. In that post, MAD also pooh-poohed its initial USPTO set-back (in fall, 2011), saying that such reexamination and reissuance of the patents was statistically normal and of little bearing on the patents’ ultimate validity and value.   (Personal note: in its blog post MAD even went out of its way to take issue with statements I had made in earlier posts here on CommLawBlog; I stood by my statements then and I stand by them even more now.) Whether MAD will continue to stick with this story in the wake of the USPTO’s latest action remains to be seen.

Is this the end of the line? Don’t bet on that. For one thing, we understand that MAD has until January 19 to respond to the USPTO’s latest decision. Following that date, the USPTO could either issue a “final action” formally rejecting MAD’s patent claims, or it could once again re-issue the patents. In the latter case, though, any reissued patents would likely be narrower in scope than they are today (which – and this is disputed by MAD in its blog post – are narrower than the original patents). No matter what, the reexamination procedure is likely to go on for some time – this is something no one disputes.  (Another thing that no one disputes -- we here at FHH are not patent lawyers.  We strongly encourage any radio broadcaster to consult with competent patent counsel before doing anything based on the USPTO's latest actions.)

Still, there’s no doubt that the latest development at the USPTO favors the broadcasters more than MAD. The passage of time and likely narrowing of the MAD patents will limit any eventual damage recovery MAD might get via court order or licensing agreement. So while the saga may not yet have come to its final end point, broadcasters can and should enjoy the end-of-2012 holiday season thanks to the early treat left under everyone’s tree by the USPTO – everyone, that is, except MAD.

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