Michael Geist has the early analysis.

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Last year I called the Vonage IPO a train wreck. Since then, the company has lost 80% of its value. The remaining 20% could be gone soon.

On Friday federal district court judge Claude Hilton issued an order prohibiting Vonage from signing new customers unless it stopped infringing on Verizon's patents. The order was issued one month after a jury found that Vonage had infringed Verizon's patents and set damages at $58 million plus a 5.5 percent royalty on future business. (Vonage's total market capitalization is only $522 million.)

Fortunately for Vonage, the appellate court stayed Judge Hilton's order, pending appeal of the case. Unfortunately for Vonage, the part of Judge Hilton's order requiring an appeal bond of more than $60 million was not removed by the appellate court. While a workaround may exist, Vonage looks to be in big trouble.

Silver lining: I won't have to remember to cancel my phone service before we move this summer.

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The "they" in that title is the United States Court of Appeals for the Federal Circuit. Adam Jaffe is an economist who criticizes the Federal Circuit for its role in "breaking" the patent system.

The Supreme Court heard oral arguments in KSR International v. Teleflex today, which will allow the Court to re-examine the current standard for evaluating the "obviousness" of an invention. Section 103 prevents a patent from being issued "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains."

According to the Federal Circuit, the "evidentiary component" of obviousness is a "showing of a suggestion, teaching, or motivation to combine the prior art." Brown & Williamson Tobacco Corp. v. Philip Morris, Inc., 229 F.3d 1120, 1124-25 (Fed. Cir. 2000). During the oral arguments today, Justice Scalia said of that standard, "This is gobbledygook!"

The W$J has some background on the case, but if you want the legal briefs, go to Findlaw.

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Things are happening in Austin. On Friday and Saturday, the UT Law School will host the First Annual Conference on Empirical Legal Studies, organized by Jennifer Arlen (NYU), Bernard Black (Texas), Theodore Eisenberg (Cornell), Michael Heise (Cornell) and Geoffrey Miller (NYU).

Two weeks later, Ronald Mann will be hosting the Frontiers of IP Conference, which has an amazing lineup of speakers. And when you have had your fill of IP, you can get a stuffed avocado from Trudy's!

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Trademark gone wild here in Badgerland. Mike Madison has some thoughts.

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For ten years of my misspent youth, I walked from my house to my piano teacher's house once a week where she guided me through various songs of increasing complexity from sheet music.  I was only allowed to play popular music in the summers, so most of the sheet music was quite dusty and came either from the music store a few blocks away or from the publishing company.  I didn't play by ear, and I was never taught to improvise, so my doorway to music was sheet music.  However, earlier this year I decided to take guitar lessons.  The method was quite different.  My teacher would either play something and say "copy me," or write out on staff paper the chords or fingering to a popular song that we both knew -- "Landslide" for example.  I even went shopping for sheet music, my old habit, but found that sheet music is fairly rare these days, and expensive.  Music stores don't carry a lot of sheet music any more.  My teacher told me that if I wanted the guitar tabs for a song, I should look on the Internet.

Apparently, my guitar teacher was a criminal, both for teaching me the chords of popular music, and for writing them down, and for frequenting Internet sites.  According to this NYT article today, music publishing companies are cracking down on both sites that offer free tabs and on musicians who swap guitar tabs on chat sites.  Who knew that my crazy friend who played piano by ear was really a hacker?  In the 1980s, his hacking benefitted only himself, but through the Internet he could have parlayed his talent into an industry.

One point made in the story is that these sites have filled a void -- the market for accessible, affordable sheet music.  I would have gladly paid iTunes or anyone $1 for the sheet music to Landslide (my guitar teacher's handwriting was less than perfect) if I could have.  We'll have to see how this controversy resolves itself; Jonathan Zittrain is quoted in the article as saying the case may not have much merit.

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"Our regressions on a random sample of 4,227 life scientists over a 30-year period show that women faculty members patent at about 40 percent of the rate of men."

This is from a recent paper by Waverly W. Ding, Fiona Murray, and Toby E. Stuart. What explains the difference? This is a very short paper, and the causation issue is not developed extensively, but here are some possibilities explored by the authors:

• Productivity, social networks, scientific field, and employer attributes all affect patenting levels, but even after controlling for all of these, the authors found that gender matters. A lot.

• Do men and women engage in qualitatively different kinds of research? The authors suggest, "if women are risk averse in their research choices, there may be a gender difference in research 'patentability'." The authors look at "scholarly impact" (measured by citation count) and find only a small gender effect, with women actually ahead of men.

• Based on interviews with scientists, the authors suggest two other explanations for the gender gap in patents: (1) female scientists had fewer industry contacts than their male counterparts, and (2) women more often expressed a concern that pursuing commercial opportunities might hinder their university careers.

• The authors observe a substantial generational gap. Their data go back 30 years, and senior female scientists were much less likely to engage in patenting than senior male scientists, but that gap has narrowed.

• This was interesting: "[r]egardless of gender, those [who] experienced patenting during training were undaunted by the challenges of combining academic and commercial science." So experience in training seems to wipe out the gender gap, but men are more inclined than women to patent in the absence of training experience.

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From the W$J. Any surprises for you?

The high representation of California cities is to be expected, but Boise is a mild surprise to me. I have visited Boise, and I know that it is more than just Micron, but its placement at #8 is a bit surprising.

The W$J also has an interesting podcast to go with the story, though the story's author says Bend, Oregon like it's an obscure Tibetan village. Bend is a widely known vacation spot, right?

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Last week, at the Harvard Conference on Case Studies, John Coates offered a fascinating and harsh critique of the lawyering in the Oracle-PeopleSoft takeover battle (described expertly in a case study by David Millstone and Guhan Subramanian). One of John's big-picture points was that deals lawyering generally suffers from the fact that quality is difficult to evaluate, even after the fact, and firms are not rewarded for innovation.

With respect to this last point, we all know (don't we?) that contracts can be copied freely in subsequent transactions, without fear of liability under copyright. The usual justification for such appropriations is "fair use," and an alert reader -- former student Chris Phillips -- noticed that the W$J Law Blog is blogging about the fair use of litigation documents and quoting from this article by Davida Isaacs, a professor at the Salmon P. Chase College of Law. From the abstract:

[C]ourts should permit attorneys’ unauthorized adaptation of copyrighted litigation documents as “fair use” for two reasons. First, penalizing attorneys would not advance copyright’s goal of providing incentives to create additional works, because subsequent unauthorized use does not diminish their market value. Second, because of the presence of market failures, the copyright owners do not license their documents, as one might otherwise expect: unfortunately, both a substantial number of hold-outs as well as transaction costs thwart frequent licensing; moreover, the marketplace is ill-equipped to permit the authors to capture the cumulative increase in value caused by the benefit to the public welfare from the dissemination of the documents.

Are you convinced?

P.S The article actually begins with a vignette about copyrighting contracts, not litigation documents.

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CKX acquired the rights to exploit Muhammad Ali's image, and formed a company called "G.O.A.T. LLC" to house the operations. Goat?

By the way, the price tag on the acquisition was $50 million. According to CKX's filing with the SEC, "This transaction is a continuation of CKX’s mission to partner with iconic content and to use its resources to preserve, protect and grow this content."

CKX also owns rights to the name, image and likeness of Elvis Presley and the IDOLS television brand, which includes "American Idol."

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As part of the continuing coverage of GMU's basketball successes, Peter Lattman announces that Prof. Kimberly Moore will be nominated to the Federal Circuit.  I only met Prof. Moore for the first time this Fall, so I'm glad I'll be able to say "I knew her when."  Lattman, who does not seem to have had the pleasure, seems conservative in extolling her virtues, so we will do so here at the Glom.  Congratulations on your well-deserved nomination!

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Bruce Sewell, the general counsel for Intel Corp., wrote a commentary in Monday's Wall Street Journal entitled "Troll Call."  He discusses the recent $612.5 million settlement that RIM, maker of the ever popular BlackBerry, agreed to pay NTP, a patent holding company that is said to consist of one inventor and one patent lawyer (talk about winning the lottery).  His commentary points out some problems with the ways NTP and other patent trolls use the patent system to force settlements from companies who might be faced with injunctions that would shut down their businesses.  The judge also seems to have played a role here in pushing the settlement.  This most recent settlement is also significantly more than the $450 million settlement that Judge Spencer invalidated in 2005.  RIM's stock price increased by close to 20% after the $612.5 million settlement was announced, showing that markets are at least happy that a major source of uncertainty about RIM's business has been removed.  This was also the biggest one-day increase on the Toronto Stock Exchange since March 16, 2005, when the subsequently invalidated $450 million RIM-NTP settlement was announced.  Sewell suggests that patent owners that have not commercialized inventions should not be able to block others from using such inventions and suggests that the injuction remedy not be applied so broadly for all patents.  He also points to the eBay v. MercExchange case, which the Supreme Court will hear, that will address (and from his perspective hopefully limit) the use of injunctions in patent cases.  The question remains whether this is the way our patent system should work.  I am working on a paper on strategic behaviors and competition and am particularly interested in patent trolls and strategic uses of intellectual property.  I am also looking at the role that the increasing predominance of intangibles plays in intellectual property generally.  What should we consider to be a strategic use of IP?  Have strategic uses of intellectual property increased in recent years?  Do markets value intellectual property and other intangibles in a different way today than they did in the past?  Should it be harder for the NTPs of the world to use the injunction weapon to extract settlements from those who actually commercialize inventions?  Is NTP just taking advantage of the fact that BlackBerry devices have an avid and in some cases addicted user base (leading some to call them CrackBerries)?  What are other examples of strategic uses of IP (copyright and patent) that have had an adverse influence of competition?  Do examples exist where strategic behaviors have enhanced competition?                                                                        

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I can't wait to see what kind of traffic we get today, but apparently Hooters of America, Inc. is suing another Florida restaurant chain for violation of its trade dress.  The trade dress in question is the use of female waitresses that wear tight tank tops and short sport shorts.  (Note that the tops/shorts are of different color combinations.)  At some point, I would think that the objectification of young women with physical gifts cannot be described as "trade dress."  But then I'm not sure that tying one's tank top in a knot behind one's back to make it really tight is purely functional, either.

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As I was wringing my hands about whether to buy a Blackberry (I didn't), the U.S. Patent & Trademark Office was clearing the way for the company who manufactures Blackberries to keep operating. On Monday, the PTO notified Research In Motion that it was planning to invalidate all five patents on which NTP is basing its patent infringement claim. A blog called Blackberry Cool has this scoop and lots more on Blackberries.

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Interesting news today on the book digitization front: According to this story in the New York Times, Microsoft has joined the Open Content Alliance. (For those who can't link through to the Times, you can read the same basic info in this OCA press release.) OCA is the alternative to Google Print. It thus appears that both MSN and Yahoo! will offer search results from the same OCA-sponsored digital data well.
In the shadow of the two recent suits against Google, the most salient difference between Google Print and OCA relates to the decision to scan a library book into the digital archive. Google Print is opt-out (such that the copyright holder must notify Google not to scan it), and OCA is opt-in (such that OCA must inquire of the copyright holder before knowing whether to scan it).
Put aside the (highly contentious, and already well-blogged) copyright law questions. The real debate here is about the completeness of the digital archive, right?
And the juiciest bit in the Times story is not that Microsoft has joined. It is that Google might, too:
"Mr. [Brewster] Kahle [founder of the Internet Archive and a key player behind OCA] has said repeatedly that one of his greatest hopes is to have Google join the project. Mr. Kahle said Tuesday that talks with Google seemed to be progressing toward an agreement. Nathan Tyler, a Google spokesman, confirmed Tuesday that Google was speaking with Mr. Kahle about joining the alliance, but there was nothing yet to announce."

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