Factual Background

Red Pine Point LLC owns United States Patents 8,424,048 (the "'048 patent") and 8,521,601 (the "'601 patent") that were originally owned by inventors Phillip and Robert Lyren. Red Pine is a limited liability company organized under the laws of Nevada. Red Pine's principal place of business is located in Wadsworth, Ohio.

The field of the invention of the '048 and the '601 patents is movie distribution. Movies have historically been distributed by leveraging the period of time when the public may only view the movie in a theatre. Thus, the movie distributor risked substantial capital to promote the movie, maximize box office sales, and prolong the exclusive period during which the movie was only available for viewing in the theater.

This historic method of movie distribution posed a number of challenges and missed opportunities. For example, promoting a movie in order to drive box office sales is expensive and time-consuming. In addition, and obviously, not all movies have the same potential at the box office. The target audience of Best Man Down is not the same as the target audience of Avatar or Titanic.

The '048 and '601 inventions provide a solution. By segmenting the movie distribution market and determining which movies' potential at the box office does not warrant the same promotional effort, companies may distribute movies like Best Man Down to hand-held devices like iPad for viewing before Best Man Down is publicly available for viewing in theaters or on DVD.

Patent Infringement Count One

In Count One of this patent infringement case, Red Pine Point states in their formal complaint that "Apple directly infringes claims of the '048 patent. Apple makes, uses, sells, and offers for sale products, methods, equipment, and services that practice claims 1, 2, 4, 8, 10, 13, 14, 15, 18, 19, and 20 of the '048 patent.

For example, and without limiting the '048 patent claims that will be asserted in this action or the Apple devices and services accused of infringing the '048 patent claims, the distribution of Best Man Down through Apple's iPad infringed claim 1 of the '048 patent.

Claim 1 is "[a] handheld portable electronic device (HPED) [that] purchases and downloads . . . the feature length movie before a public release date of the feature length movie . . . ." Apple makes, uses, and sells the iPad, which purchases and downloads feature length movies like Best Man Down before the movie's public release date.

The invention as claimed in claim 1 "plays the feature length movie on the display before the feature length movie is publicly available for viewing by a general public in movie theaters . . . ." Once a movie like Best Man Down has been downloaded, the iPad plays the movie before the general public may view the movie in the theaters.

Claim 1 is a device "wherein a private release group of the general public purchases" the movie for viewing before the movie is released in theaters. Before an individual may purchase Best Man Down from Apple and view the movie before the release date, this individual must become a member of Apple, and thereby become part of a "private release group."

According to claim 1, members of the private release group "designate specific times when the feature length movie plays on the HPEDs before the feature length movie is publicly available for viewing by the general public in movie theaters." Individuals who purchased Best Man Down from Apple designated where, when, and how they would play the movie, and many of these individuals played Best Man Down before it was out in theaters.

Patent Infringement Count Two

In Count Two of this patent infringement case, Red Pine Point states in their formal complaint that "Apple and Magnolia directly infringe claims of the '601 patent. Apple, Magnolia, or both make, use, sell, and offer for sale products, methods, equipment, and services that practice claims 1 and 4 of the '601 patent.

Claim 1 is a method of displaying "an advertisement to purchase a feature length film (FLM) before the FLM is publicly available to view in movie theaters and before the FLM is publicly available to buy on digital video disks (DVDs) . . . ." Apple and Magnolia advertised Best Man Down for purchase before the movie was publicly available to view in movie theaters and before the movie was publicly available to buy on DVD.

The method of claim 1 involves displaying a movie trailer for the FLM. Apple and Magnolia displayed a movie trailer for Best Man Down.

When practicing claim 1, you sell the FLM for purchase with "handheld portable electronic devices (HPEDs) before the FLM is publicly available to view in the movie theaters and before the FLM is publicly available to buy on the DVDs." Apple and Magnolia sold Best Man Down for purchase with an iPad before Best Man Down was in the theaters and before Best Man Down was publicly available on DVD.

The claim 1 method involves wirelessly transmitting and downloading of the FLM. Apple and Magnolia did this with respect to sales and rentals of Best Man Down. These sales and rentals were also "downloaded to the HPEDs such that the FLM plays on the HPEDs at times decided by the individuals viewing the FLM with the times being before the FLM is publicly available to view in the movie theaters and before the FLM is publicly available to buy on the DVDs . . . ."

Apple and Magnolia practiced the remaining steps of claim 1 because Best Man Down was distributed to movie theaters and is greater than sixty minutes long.

Red Pine Point is seeking to have Apple and Magnolia pay them a royalty should they be found guilty of patent infringement by the court.

The patent infringement case presented in today's report was filed in the Illinois Northern District Court, Chicago Office. At present, no Judge has been assigned to the case.

A Note about Patent Trolls

A 2011 study showed that Patent Trolls cost tech companies $29 Billion and a 2012 study made the case that patent trolling was out of control. In the first half 2013, Apple remained the #1 Target of Patent Trolls. In the second half of 2013 Apple remained in the top three.

On December 5, 2013, The US House of Representatives overwhelmingly passed the "Innovation Act" bill on Thursday aimed at discouraging frivolous lawsuits by patent holders. The move was backed by companies like Apple, IBM, Cisco and Google. House Judiciary Committee Chairman Bob Goodlatte (R., Va.) sponsored the bill, which won strong bipartisan support in passing by a 325-91 vote. Goodlatte said his bill "takes meaningful steps to address the abusive practices that have damaged our patent system and resulted in significant economic harm to our nation."

In Addition to the new act, the FTC is currently examining the practices of patent trolls or Patent Assertion Entities (PAEs) which are firms with a business model based primarily on purchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies. The FTC is conducting the study in order to further one of the agency's key missions—to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.

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