Posted: August 24, 2015

Contributed by John Sullivan

While actively analyzing patents used in litigations in U.S. district courts and the ITC, Chipworks, identified an interesting trend:

75% of the patents analyzed are considered systems patents or patents that combine several separated blocks or tasks to create higher level improvements.

This percentage is not surprising in itself as the majority of litigants are systems companies. For example, in the case in the U.S. Western District of Texas docket number 2:15cv287 Ericsson Inc. v Apple Inc., 42 patents are in play. The majority of these are system patents; however, there are six circuit patents, i.e., patents that claim the implementation of electronic and microelectronic technology.

Using circuit patents against what are traditionally considered system targets can be a challenge, however circuit patents typically are some of the most valuable assets one has in asserting its Intellectual Property rights. Defendants faced with the prospect of infringing on a circuit patent are in a difficult position. In general, they have three options: 

  1. attempt to design around the invention,
  2. take a license, or
  3. try to defend themselves during litigation.

All of these options are less than ideal.

Option 1: Designing around the invention

Designing around an infringing circuit is not a trivial task. Re-spinning a circuit design involves redesign, new production masks, and requalification of a new revised part. The mask set alone could cost millions of dollars, not to mention the disruption in production that occurs with such an undertaking. 

Option 2: Taking a license

Faced with the prospect of an expensive and disruptive design around, puts a defendant into a weaker negotiating position right from the offset. Demonstrating that an infringing patent covers a large portion of a target’s revenue dramatically improves one’s negotiating position and, if it comes to litigation, could result in a very high damages award. As such, circuit patents are ideally suited for this purpose. 

Proliferation through design reuse will allow a circuit patent owner to maximize the revenue coverage of a potential target’s products.

Consider the cell phone, which has an average life span of six months to one year, yet the RF transceiver used in the cell phone has a considerably longer life span than the phone. As a concrete example, let's examine the Qualcomm WTR1605 RF Transceiver chip. This chip has been a fabulous winner for Qualcomm. It has been used in at least three different families of Qualcomm components. These components have in turn been found in a total of 89 different products from 24 different manufacturers (some are highlighted in the image below). This type of component/product information is tracked in Chipworks' Inside Technology. A single source for technical data, Inside Technology speeds a company’s ability to find valuable patent and competitive intelligence, learn more here.

This concept can be taken a step further if you consider IP blocks within the chip itself. Nowadays it is more cost effective to buy IP than to design from scratch. Similar IP blocks appear in many chips from many different manufacturers. These IP blocks can range from simple circuits to the more complex physical interface blocks. Hitting these types of circuit blocks allows one to effectively hit all the chips that these blocks appear in. This approach is both cost effective in terms of finding evidence of use and very effective at maximizing the target revenue covered. 

Option 3: Trying to defend yourself during litigation

The typical defense options in a patent litigation are invalidity of the patent in question or non-infringement. Invalidating circuit patents is inherently difficult as the amount of public information available for prior art or use is limited. Manufacturers rarely, if ever, publish detailed schematics of their products, and while technical papers are a good source, they usually do not include complete schematics and only show portions of key claim elements. Prior use is an option albeit a difficult one to use. Identifying old products, documenting when they were publically available for purchace, finding examples of vintage products for analysis, and then reverse engineering and documenting the patented circuitry can be a very expensive and time intensive undertaking. Arguing non-infringement is also a difficult proposition. If the circuit matches, the argument will have to focus on difficult operational features that may or may not be provable. If these defenses fail, there is a potential for very large damage claims.

The circuit patents in your portfolio may be your most valuable assets

Considering the options available when faced with an infringement claim, it is evident that the circuit patents in your portfolio may be some of the most valuable assets at your disposal when deciding on what patents to leverage in a particular situation. Learn more about how Chipworks can help you identify your most valuable patents.