Erie Insurance wins patent lawsuit

Aug. 26--ERIE, Pa. -- A major patent investment company known for its patent infringement litigation has lost a case against Erie Insurance in federal court.

The company, called Intellectual Ventures, in August 2014 filed a complaint accusing Erie Indemnity Co., the management company that oversees Erie Insurance Group, of infringing four patents Intellectual Ventures holds.

U.S. District Judge Mark R. Hornak, of Pittsburgh, has dismissed the patent infringement claims, with his most recent ruling coming earlier this month when he dismissed the last remaining claim because he found Intellectual Ventures' patent to be too broadly drawn.

The patent claimed ownership of a system of identifying and comparing computer files to determine if they contain illegal content, such as pirated music, to protect companies from liability. Intellectual Ventures said Erie Insurance used such a system without permission and asked for an unspecified amount in damages in its complaint.

Hornak found that the patent covered an idea that was too abstract and that did not forward an "inventive concept."

"Selecting files based on identifiers and matching different files/identifiers is just what computers do. There is nothing inventive about it," Hornak wrote in dismissing the claim.

Erie Insurance and Intellectual Ventures each declined to comment on the litigation, filed in U.S. District Court in Erie.

But Intellectual Ventures' lawsuit represents a tactic that's familiar to Erie patent attorney Jonathan D'Silva, of MMI Intellectual Property. D'Silva said he does some legal work for Erie Insurance but did not participate in this lawsuit.

"There are a whole slew of companies and individuals that have collected patent portfolios," D'Silva said. "You're not required to actually practice the invention in order to have a patent."

These "nonpracticing entities" enforce patents on behalf of small inventors who cannot afford to do so themselves, D'Silva said.

Intellectual Ventures, of Bellevue, Washington, wrote in its complaint that it purchases and licenses inventions from individual inventors and institutions.

"Through this business, Intellectual Ventures allows inventors to reap a financial reward from their innovations, which is frequently difficult for individual inventors to do," the complaint states.

The company's website states it has acquired 70,000 patents and patent applications since its founding in 2000. The "Legal Updates" page on the company's website shows it frequently engages in patent litigation.

D'Silva said this practice can help inventors make money off their creations, but it has also been criticized for spawning litigation.

"The flip side is some of the people who own some of these patent portfolios are incentivized to find infringement where they can, and it can be very disruptive to respond to some of these things," D'Silva said.

But D'Silva said a 2014 U.S. Supreme Court decision has tightened patent rules, making it more difficult for companies to rely on software and business methods patents in litigation.

"On one hand, there has been historical leniency toward awarding patents in the computer and business methods fields," D'Silva said. That trend has reversed, he said, making software patents more difficult to acquire and use for litigation -- and resulting in decisions like the one Hornak handed down in the Erie Insurance case.

"This patent is a victim of both pendulum swings," D'Silva said.

Madeleine O'Neill can be reached at 870-1728 or by email. Follow her on Twitter at twitter.com/ETNoneill.

___

(c)2016 the Erie Times-News (Erie, Pa.)

Visit the Erie Times-News (Erie, Pa.) at www.GoErie.com

Distributed by Tribune Content Agency, LLC.