Vintage Filings Legal Blog

We talk about quite a few patent cases on this blog, since patent law is one of the most discussed legal issues for technology driven publicly traded companies.  However I’ve found that very few people truly know the actual law. A patent is not a right to practice or use the invention. Rather, a patent provides the right to exclude others from making, using, selling, offering for sale, or importing the patented invention for the term of the patent, which is usually 20 years from the filing date. A patent is, in effect, a limited property right that the government offers to inventors in exchange for their agreement to share the details of their inventions with the public. Like any other property right, it may be sold, licensed, mortgaged, assigned or transferred, given away, or simply abandoned.

The rights conveyed by a patent vary country-by-country. For example, in the United States, a patent covers research, except “purely philosophical” inquiry. A U.S. patent is infringed by any “making” of the invention, even a making that goes toward development of a new invention — which may itself become subject of a patent. In contrast, Australian law permits others to build on top of a patented invention, by carving out exceptions from infringement for those who conduct research (e.g. for academic purposes) on the invention.

A patent being an exclusionary right does not, however, necessarily give the owner of the patent the right to exploit the patent. For example, many inventions are improvements of prior inventions which may still be covered by someone else’s patent. If an inventor takes an existing, patented mouse trap design, adds a new feature to make an improved mouse trap, and obtains a patent on the improvement, he or she can only legally build his or her improved mouse trap with permission from the patent holder of the original mouse trap, assuming the original patent is still in force. On the other hand, the owner of the improved mouse trap can exclude the original patent owner from using the improvement.

Some countries have “working provisions” which require that the invention be exploited in the jurisdiction it covers. Consequences of not working an invention vary from one country to another, ranging from revocation of the patent rights to the awarding of a compulsory license awarded by the courts to a party wishing to exploit a patented invention. The patentee has the opportunity to challenge the revocation or license, but is usually required to provide evidence that the reasonable requirements of the public have been met by the working of invention.

So what happens when you go to battle with Visa?  Well, if you’re Cryptography Research it’s just a regular day at the office.  When you have strong patent protection, you will always have a solid position in the marketplace.  A great illustration of this happened this week when Cryptography Research signed a definitive agreement settling its litigation against Visa, under which Visa will become a licensee of Cryptography Research’s patent portfolio covering countermeasures to Differential Power Analysis (DPA). The license fee and other settlement terms are confidential per the agreement.

So what is DPA?  Differential power analysis is a side-channel attack which involves statistically analyzing power consumption measurements from a cryptosystem. The attack exploits biases varying power consumption of microprocessors or other hardware while performing operations using secret keys. DPA attacks have signal processing and error correction properties which can extract secrets from measurements which contain too much noise to be analyzed using simple power analysis. Using DPA, an adversary can obtain secret keys by analyzing power consumption measurements from multiple cryptographic operations performed by a vulnerable smart card or other device.[1]

“We are happy to add the world’s largest payment system to our growing list of DPA licensees,” said Paul Kocher, president and chief scientist at Cryptography Research. “Following the recent announcements of signed agreements with Infineon and Renesas, it is clear that the major players at all levels of the smart card industry are recognizing the value and importance of CRI’s DPA technology and the strength of our intellectual property in the area of tamper-resistant semiconductors.”

As your partners in the EDGAR filing industry, we feel a strong obligation to keep you informed on all of the breaking news events that occur in the market as they happen.  And with that in mind, it’s very important to note that on September 18th the U.S. Securities and Exchange Commission announced an order mandating that hedge funds will now be required to report all short selling through EDGAR. As of September 22nd, 2008, certain institutional investment managers will be required to file a report on new Form SH with the SEC on the first business day of every week following a week which resulted short sales. The first SH form will be required to be filed on September 29th, 2008.

Let Vintage Help You
Vintage Filings is prepared to assist you in this new matter. As the fastest growing EDGAR and financial printing company in the nation, we continue to be at the forefront with respect to regulatory developments. We look forward to continuing to manage your disclosure needs for you. Please feel free to contact us anytime.

For more information, read the release or contact Shai or Seth directly.

Chapter 11 bankruptcy situations are tricky by nature, however when several parties begin positioning themselves to hinder creditors, the courts have to get involved.  And that is what happened, on August 30, U.S. District Judge Andrew Hanen of Brownsville, Texas issued a 190-page opinion holding that Americas Mining Corporation (AMC), a subsidiary of Grupo Mexico S.A. de C.V., had perpetrated a fraudulent transfer to itself of ASARCO LLC’s controlling interest in Southern Peru Copper Corporation (SPCC). The judge ruled that “AMC closed the SPCC transaction with actual intent to hinder or delay some of ASARCO’s creditors.”

Judge Hanen also found that AMC had an agreement with ASARCO’s directors “to abandon their duties to ASARCO and ASARCO’s creditors and instead act to structure and accomplish the SPCC transfer, knowing that the transaction as contemplated would constitute a transfer in fraud of ASARCO’s creditors.” Judge Hanen further ruled that “the damages suffered by ASARCO’s creditors are a proximate result of this conspiracy between AMC and ASARCO’s directors.”

Judge Hanen has requested the parties in the suit to submit briefs on an appropriate remedy by September 15, 2008, and has promised an expeditious ruling.

ASARCO is seeking disgorgement of the SPCC interest that AMC transferred to itself in 2003 and $1.85 billion in dividends that would have been paid to ASARCO since 2003 if the transfer had not taken place. The total relief sought exceeds $8 billion.

ASARCO filed for chapter 11 bankruptcy protection on August 9, 2005. Its parent, ASARCO Incorporated, a wholly owned subsidiary of AMC, lost control of ASARCO in December 2005, when the bankruptcy court appointed an independent board of directors to manage the company.