The characterization of a patent's coverage in a Complaint is not always representative of the final reality of the issued patent.

As I mentioned in an update to my previous post, the complaint in the NDTX H-W v. Apple (+ 31 others) case is a bit loose in its description of the invention covered by the '955 patent.

The complaint:

The ‘955 Patent is generally directed to novel, unique and non-obvious systems and methods of using a multi-convergence device, including phones commonly referred to as “smartphones”, which are able to converge voice and data within a single terminal, and which allow users of such devices via domain specific applications to receive information and offers from merchants and to complete a transaction with one of said merchants without having to generate a voice call.

Setting aside whether smartphones were contemplated or are covered, that leaves out some very important claim limitations that were added by Examiner's amendment after an interview with prosecuting attorney Ruben DeLeon on 9/8/2008.

The actual published method claim, like the other independent claims, is far narrower, with the last amendments shown in bold:

9. A method for performing contextual searches on an Internet Phone (IP) phone comprising the steps of:

• receiving a command to perform a contextual search;

• receiving search criteria from a user of said IP phone;

• submitting said search criteria to a server coupled to said IP phone; and

• receiving from said server a list of merchants matching said search criteria and information regarding each of said merchants in said list;

• wherein said information received by said user comprises a variety of offers, wherein said user selects one of said variety of offers associated with said one of said merchants listed, wherein said selected offer is transmitted to said one of said merchants listed electronically; and

• wherein said user's contact and payment information is not transmitted to said one of said merchants listed, wherein said user's contact and payment information is available to said one of said merchants listed.

This is far different than simply completing a transaction without a phone call.

Always read the claims.

 

Note: The clause "wherein said user completes a transaction with at least one of said merchants listed without the need to generate a voice call," strangely enough, appears to have been lost in a clerical error in between the Examiner's amendment of prosecution claim 12 and its publication as published claim 9.

 

Source: 11/082/361 File History and Interview Summary of 08 September 2008.

 

A key dispute in the Kodak ITC investigation is over the meaning of "at least three different colors" in element "b" of claim 15:

(b) a motion processor for generating from the captured images, a second number of color pixel values provided in a second color pattern having at least three different colors and representative of a series of motion images to be previewed, the second number of color pixel values being less than the first number of color pixel values, and the second color pattern being different from the first color pattern;

In essence, the claim describes capturing images with a high resolution pixel mosaic, a Bayer pattern with four sensors per pixel, half being green, for instance, and producing a motion stream of lower resolution images where each pixel is represented by three color values, such as red, green, and blue intensities ("RGB").

The filings imply strongly that Apple captures high resolution images with an RGB sensor, then produces lower resolution JPEG images for preview display.  A common first step in converting uncompressed RGB images to compressed JPEG images is to convert the color space of the image to YCbCr (or "YCC" as used in the filings).  This allows a lower compression ratio to be used on the very important luminance channel, and higher compression ratios to be used on the two chroma channels.

Do pixels represented in YCC color space have "three different colors"?  That's a key issue in this case.

From a imaging or color science perspective, the replacement of the claim phrase "having at least three different colors" with "each represented by at least three color coordinates" or "said pixels represented using at least three color channels," would have better encompassed the use of YCC or other luminance-chrominance color coordinate spaces.

With the use of the phrase "at least three different colors," the administrative law judge understandably gravitated toward an interpretation where each of the three "colors" is a "color" in layman's terms, namely "red," "green," or "blue."  It is this interpretation that Kodak is now trying to change when the case is reviewed.


Sources:

• Final Initial and Recommended Determinations, ITC 337-703, Official Receive Date 3/08/2011
• US ITC Filing, COMPLAINANT EASTMAN KODAK COMPANY'S PETITION FOR REVIEW OF THE FINAL INITIAL AND RECOMMENDED DETERMINATIONS, Filed February 17, 2011 by Eric C. Rusnak of K&L Gates, representing Eastman Kodak.
• US Patent 6,292,218

 

As mentioned in the previous post, inconsistencies in Administrative Law Judge rulings regarding the same patent in different cases likely contributed to today's grant of full commission review of Kodak's case against Apple.

In a nutshell, in a previous ITC investigation, 337-TA-663, claim 15 of Kodak's US6,292,218 patent was found valid and infringed by certain Samsung phones.  In the 337-TA-703 investigation involving Apple, claim 15 was found invalid under 35 USC 103 and none of the accused products was found to infringe.

Kodak argues, among other points, that the same body reviewing the same patent again within a very short timeframe should have a consistent view of the validity of that patent.  In particular, Kodak took issue with the Markman ruling regarding claim 15, and purportedly erroneous construction of the phrase "at least three different colors" in element "b."  Kodak argues that Apple does not contest that elements "a," "c," or "f," are satisfied under any construction, that "b" and "e" would not be contested under a "proper" construction, and that Apple phones initiate capture of a still image while previewing motion images, as required by element "d".

The claim is reproduced below:

15. An electronic still camera for initiating capture of a still image while previewing motion images on a display, comprising:

(a) an image sensor having a two-dimensional array of photosites covered by a mosaic pattern of color filters including at least three different colors for capturing images of a scene, each captured image having a first number of color pixel values provided in a first color pattern;

(b) a motion processor for generating from the captured images, a second number of color pixel values provided in a second color pattern having at least three different colors and representative of a series of motion images to be previewed, the second number of color pixel values being less than the first number of color pixel values, and the second color pattern being different from the first color pattern;

(c) a color display for presenting at least some of the motion images of the series of motion images corresponding to the captured images of the scene, the color display having an arrangement of color display pixels including at least three different colors in a pattern different from the first color pattern;

(d) a capture button for initiating capture of a still image while previewing the motion images presented on the color display;

(e) a still processor for generating a third number of color pixel values including at least three different colors representative of a captured still image; and

(f) a digital memory for storing the processed captured still image.

Sources:

• US ITC Filing, COMPLAINANT EASTMAN KODAK COMPANY'S PETITION FOR REVIEW OF THE FINAL INITIAL AND RECOMMENDED DETERMINATIONS, Filed February 17, 2011 by Eric C. Rusnak of K&L Gates, representing Eastman Kodak.
• US Patent 6,292,218

 

While it was perhaps inconsistencies in rulings between Administrative Law Judges that tipped the scales in Kodak's favor for review of its case, Kodak also enlisted the help of those in the political sphere.  Over the past few weeks, letters from various New York State lawmakers were submitted to the International Trade Commission urging review of the case by the full commission.  Andrew Cuomo, Chuck Schumer, Louise Slaughter, Kirstin Gillibrand and others weighed in with similar-sounding letters also touting the importance of Kodak to New York.

From Governor Cuomo's letter of March 18, 2011:

Dear Madame Chairman, Mr. Vice Chairman, and Commissioners:

I write to share my perspective on the current ITC claim brought by Eastman Kodak Company against Apple and Research In Motion (RIM). I believe that it is in the best interest of sound trade policy and the fair protection of intellectual property for this claim to be reviewed by the full Commission.

Digital innovation at Eastman Kodak - which includes invention of the digital camera and other breakthrough technologies - has had a significant benefit for the economy in upstate New York, as well as for 7,100 Kodak employees and Kodak's 20,000 retirees who call New York home.

It is my understanding that the Administrative Law Judge (ALJ) in Kodak's ITC case against Apple and RIM issued a preliminary decision that contradicts a decision made less than a year ago by another ALJ concerning the exact same Kodak patent.

Given the value of Kodak innovation to the region's economy and the national economy, as well as this discrepancy in ALJ decisions, I believe that it is of fundamental importance for Kodak's claim to be heard promptly and before the full Commission.

Thank you for your consideration of my perspective on this matter.

Sincerely, Andrew M. Cuomo

Source: US ITC filings

 

A mixed day for Apple at the ITC.  From the WSJ:

The U.S. International Trade Commission elected Friday to review a patent-infringement complaint by Eastman Kodak Co. against Apple Inc. and Research in Motion Ltd., reversing a January recommendation from an ITC judge.

The ITC said it would review the initial patent ruling in its entirety. The complaint tries to determine whether Apple's iPhone and Research in Motion's BlackBerry violated Kodak's patents on technology to preview images.

The agency originally found Kodak's patents were invalid and hadn't been infringed. The Commission said Friday that one or more cease-and-desist orders may be issued upon further review of the case.

Such orders could keep Apple and RIM from importing or selling mobile devices with digital cameras in the U.S. A final decision is expected by May 23.

The news prompted shares of Kodak to surge 20% in after-hours trading to $4.07, adding on to Friday's 8.6% gain in the regular trading session.

[...]

Even with today's 20% "surge," EK is still ~20% below its January 24 price of $5.22.

A settlement or licensing agreement before May 23 would not surprise me.

From Bloomberg:

Kodak used the ITC to gain $550 million from Samsung and $414 million from LG for allegedly infringing the same patent as in the Apple and RIM cases.

and:

Kodak, a 131-year-old company that popularized photography with the Brownie and Instamatic cameras, generated $838 million from patents last year. The company has told investors it expects to average $250 million to $350 million in annual revenue from intellectual property licensing through 2013. That figure doesn’t include potential Apple and RIM royalties.

EK's current market cap is only ~ $842M.  During the financial crisis, it dropped to barely above $600M.  The $683M operating loss for 2010 and negative $1B book value make an overall acquisition far less attractive, but at some point, I won't be surprised to see the IP hit the market to cover the wind down of the rest of the failing business.

While this could be make or break for Kodak, Apple generated $9.8B in cash flow from operations last quarter alone.