Last year, B.E. Technology LLC filed several suits for patent infringement against a host of companies whose business model depends on advertising. The patents in suit, U.S. Patent 6,628,314 and U.S. Patent 6,771,290, date back to 1998 and are alleged to protect software that serves advertisements based on personal characteristics and behaviors, i.e., targeted advertising. Martin D. Hoyle, the CEO of B.E. Technology LLC, is the sole inventor listed on the patents. On October 8, 2013, Microsoft and Facebook challenged the validity of the patents by requesting “inter partes review” of the patents in the U.S. Patent Office. Clearly, the outcome of this case could have significant ramifications for the Internet advertising community.
Inter partes review is a new procedure, created by the America Invents Act, for challenging patents in the U.S. Patent Office. Inter partes review is less expensive and faster than typical civil litigations, and provides the challenger with the opportunity to demonstrate that a patent should not have been issued because invention protected by the patent was not novel, or would have been obvious, at the critical date – 1998, in the case of the patents in this case. The inter partes review will take about 18 months to complete and, at the discretion of the judge in each case, the civil litigations may be stayed, i.e., put on hold, pending resolution of the inter partes review.
B.E. Technology LLC is alleging that, among other activities, the targeted advertising on the Facebook website and mobile app, and the targeted advertising in Microsoft’s Xbox video console, infringe the patents. Microsoft and Facebook have submitted evidence including earlier patents for delivering demographically targeted advertising. The Patent Office will review the request for inter partes review and will decide if the Requestors – Microsoft and Facebook – are likely to prevail. If so, the Patent Office will grant the request, and the review of the patent will be undertaken by a panel of judges at the Patent Office. Both the Requestors and the patent owner will be given the opportunity to argue their position to the judges. If the Requestors prevail, the patents will be declared invalid and unenforceable, and the civil cases will be dismissed. If the Requestors do not prevail, their position in the civil litigation will be more difficult.