Patent reform legislation efforts stalled after Senate Judiciary Committee Chairman Patrick Leahy announced that he was taking his patent reform bill off the committee’s calendar. But this does not mean an end to the necessary fight against patent trolls. Rather, for the time being it just shifts the ongoing battle to more incremental and potentially more effective approaches to reining in abusive litigants.

On May 21, just one day before the Judiciary Committee was scheduled to mark up the patent reform bill, Senator Leahy dropped the measure. He cited the lack of broad bipartisan support and serious concerns that many of the bill’s provisions would, as he put it, overly burden “companies and universities who rely on the patent system every day” and impose “severe unintended consequences on legitimate patent holders who employ thousands of Americans.”

We appreciate Senator Leahy’s concerns about pending proposals being burdensome and potentially causing unintended consequences, and we agree that dropping the current measure was the right move.  Earlier we wrote to Representative Bob Goodlatte, who sponsored the House’s patent reform bill, to express our concern that overreaching legislation could not only encroach on an independent judiciary and lead to unjust results in many cases, but it could unduly burden all patent owners, by making patent litigation more protracted, expensive, and burdensome regardless of the patentee’s identity and business model.

With litigation reform legislation on the back burner, there are still several avenues being taken on abusive patent litigation.  One targeted approach is being taken by a growing number of state legislatures and state attorneys general who have begun using consumer protection laws to clamp down on patent trolls who use demand letters to extort small businesses for nuisance “settlements.” A series of White House executive orders issued in February also promise to curb patent litigation abuse, boost patent quality, and strengthen the patent system without risking the harm to the innovation system that could arise from overly-aggressive changes to patent law itself. And an important part of improving patent quality in the US is fully funding the US Patent and Trademark Office, an initiative that we fully support.

The federal courts also addressed key patent litigation issues.  Related to the controversial fee-shifting legislative proposals, the district courts will begin applying the recent Octane and Highmark Supreme Court decisions, which granted greater leeway to judges in making abusive patent litigants pay attorneys’ fees.  Time will tell if the new fee-award judicial regime will lessen the pressure to implement legislation.  The Eastern District of Texas, the most popular venue for patent litigation in the US, has added a new Track B docket, which specifically addresses a number of proposals considered by Congress, including early disclosure of certain information, such as licensing information, as well as very early disclosure of both the damages sought and the method of calculating those damage.  All of these steps are being taken against the backdrop of the imminent FTC study, which aims to collect reliable empirical data about patent licensing that we expect will provide a truer picture of what’s really going on in our business.

Another positive development recently is the growing movement within the patent licensing industry itself to develop a voluntary code of conduct or standards of ethical behavior, just like responsible members of other industries do.  That’s why Conversant has committed itself publicly to a set of ethical guidelines for patent licensing. As I wrote in an op-ed in Washington’s The Hill newspaper May 14, “industries grow faster and create more jobs when they police themselves rather than wait for the often-heavy hands of legislation and regulation to deal with the bad actors that lurk in every field of economic activity.”

In my previous blog post, I mentioned the Linley Group’s 2014 Mobile Conference. In past years, the focus has been on the mobile processors (and other chips) found in smartphones, but this year another type of mobile product gained significant attention: wearables, such as the Fitbit Flex wristband and Google Glass. There was wide agreement that wearables will become an important product category, but virtually no consensus on the kind of product we’ll see over the next ten years.

Wearables are today where the smartphone market was in 2003; lots of exciting stuff is going on, but the category-defining product had not yet been introduced.  For example, some wearables today are designed as peripherals to a smartphone, simplifying both their communication needs and the kind of mobile processor required, while others have sophisticated processors, sensors, and displays.  No one really knows which design direction will dominate in the future.

Pankaj Kedia of Qualcomm observed that wearables are really a subset of the Internet of Things (IoT).  At their simplest, wearables consist of one or more sensors connected to “just enough” signal processing silicon and a method of communicating that processed data, such as Bluetooth or Wi-Fi.  I agree, and expect that on a volume basis, this kind of very simple, very low cost product will predominate.  In ten years, every shoe could easily contain a built-in pedometer.  Why not, if it adds less than 1% to the cost of the shoe, and everyone’s smartphone is running a health monitoring app which can accept this data?

But as we look at complex wearables, such as a smartwatch, the future is harder to predict.  At one level, it’s not clear if a smartwatch is meant to replace a smartphone, or simply be a peripheral for it.  The answer will determine the kind of computing and connectivity semiconductors that will be required.   And a vendor’s ability to correctly predict which kind of product to build will determine its marketplace success.  But at this stage, conference panelists admitted, it’s not really clear if a smartwatch is intended to replace a regular watch. (Personally, I wear a watch given to me by my father; the Samsung Galaxy Gear smartwatch is pretty slick, but it’s not going to push it off my wrist any time soon.) Figuring out how consumer electronics are going to intersect with the fashion world, as well as the public’s general concerns about these products from a privacy perspective, is much harder than comparing technical specs to predict which System on Chip (SoC) device is going to sell the best.

Chris Anderson, Wired’s Editor in Chief, called wearables “the peace dividend of the smartphone wars”.  The incredible competition to produce ever better handsets at ever lower prices has brought the price of many components (particularly sensors) down to commodity price points – so why not include them? For example, the price of a three-axis accelerometer has dropped from $4.50 to 20 cents.  Kurt Shuler of Arteris outlined some very compelling use cases for wearables in the medical and safety fields, such as glucose monitors for diabetics and temperature sensing clothing for fire fighters.  But there was general agreement with his observation that in the broader consumer market the “killer app” has yet to emerge.

It’s always interesting to hear tech savants speculate about the future. We all know that somewhere out there, some startup will combine these components in an unexpected way, create a product no one’s yet conceived, but which we’ll all clamour to own.  And this will be possible because the inventors had the value of their R&D protected by a strong patent system.  Furthermore, there’s a good chance that they’ll make use of licensed IP blocks, such as ARM processor cores or DSP cores.  And should this startup stumble and fail, their venture backers know that their investment is at least partially protected by their ability to sell or license any patents filed by the company.  A robust environment for protecting intellectual property is essential at every stage in the process of innovation.

As we noted last October, the United States Federal Trade Commission (FTC) asked for public comments on its proposed study of patent assertion entities.  The proposed study will “examine how PAEs do business and develop a better understanding of how they impact innovation and competition”.   The Commission now has come back with a revised proposal and is asking for additional comments. We expect that this revised proposal substantially will be the basis of the study.  The FTC will begin the study after it has had time to consider the additional comments, most likely in the next couple of months.

The revised proposal has several significant differences from the original proposal.

First, the revised proposal makes clear that “the study will consist of two parts. The primary focus of the study consists of a descriptive examination of the PAE business model. The second part is a narrowly focused comparative case study of PAE activity in the wireless communications sector. Consequently, the FTC separated the questions addressed to PAEs from the questions addressed to [the wireless communications] manufacturers and NPEs”.  For the most part the questions asked in each part are the same, with some additional categories of questions for the PAEs related to their acquired patent holdings.

Second, to reduce the burden on the respondents, the FTC narrowed its questions from asking for “all documents” in a category to “focus on agreements and on strategic documents provided to officers and directors or shared with persons outside the firm”.

Third, with respect to patents potentially subject to licensing commitment such as standards-setting declarations, the Commission has shifted from asking respondents to identify all such patents to asking respondents to describe their commitments.

Fourth, the FTC is working with the USPTO to directly collect publicly available patent information instead of asking respondents for that same information.

Finally, the start of the relevant period for the study has been moved up a year to the beginning of 2009.  This might reflect the fact that the study actually will begin almost a year since it was first announced.

Conversant welcomes the Commission’s study of the patent licensing business.  Much of the “information” that gets media attention is anecdotal, perhaps apocryphal, and from biased sources.  But there isn’t a lot of reliable empirical data about patent licensing.  Conversant expects the FTC study will provide a truer picture of what’s really going on in our business.

The Linley Group’s 2014 Mobile Conference in Santa Clara, California, is an annual event focused on mobile processors, one of the critical components in a wide range of consumer electronics and automotive products – think notebooks, smartphones and BMWs.

The speakers and panelists agreed that the world desperately needs innovative solutions to reduce power consumption in all types of mobile devices if industry is going to keep providing the ever-more sophisticated features and applications that users expect. The mantra is reducing power to prolong battery life: People are already frustrated with smartphones and tablets that need daily (at least) recharging, and this issue will be more pronounced as smartwatches and other wearables enter the market.

But the biggest culprit is heat: mobile processors work so hard (for example, to render a video game) that their increased power consumption leads unavoidably to massive heat production. If a mobile processor were allowed to run full tilt for more than a few seconds, it would overheat and destroy itself. Thus, while advancements in battery technology are always welcome, the power management problem is in fact the more important technical challenge.

Engineers throughout the industry are approaching this problem from several directions. ARM’s big.LITTLE architecture combines slower, low-power processor cores with more powerful and power-hungry ones. Most of the time, the lower power core is used, with the big core brought online for brief sprints of intense processing. System-on-Chip (SOC) designers are experimenting with various combinations (four big, four little; two big, four little, one big, one little, etc.) optimized for particular applications.

More recently, this approach is expanding into so-called heterogeneous multiprocessor architectures, where besides large and small general purpose processor cores, the SoC can include graphics processing (GPU) cores and digital signal processing (DSP) cores as well. These cores have a fundamentally different architecture, each better suited to certain types of processing tasks. It’s nothing that a regular core couldn’t do, but the GPU and DSP cores can do it with greater power efficiency.

On a different front, moving to a smaller “process geometry” (that is, how tightly packed the transistors are in the integrated circuit) is another way chip designers are reducing power consumption. Smaller geometries mean more circuits per square millimeter, which means faster speeds and greater power efficiency. This relentless improvement of manufacturing process underpins the famous Moore’s Law, and companies such as Intel, IBM, and TSMC are continuously innovating to be the first to advance the state of the art.

Meanwhile, the DRAM market is increasingly being dominated by mobile (i.e., lower power) DRAM. At the conference, Rambus presented on the advantages of their R+LPDDR3 architecture compared to regular LPDDR3.

All these companies are succeeding through innovation, rather than a grim “race to the bottom” of cost reduction. Their innovation is protected by patents, giving them the ability to license their designs to other companies, or manufacture their own products, as they see fit. In the end, everyone benefits, including everyone with a cellphone in his pocket.