Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. This week I've got an update on video game dispute that could make important new copyright law – if a sanctions threat doesn't derail it first – and the latest jockeying in the $5 billion Qualcomm antitrust class action. Plus, the Federal Circuit is back in action next week and I've got a brief preview of three arguments, including one that will cross Section 101 eligibility with sovereign immunity. Can't get trendier than that! As always you can email me your thoughts and feedback and follow me on Twitter.

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Virtual smoke grenades depicted in the PUBG complaint (left) and on Unreal Engine Marketplace.

Winner Winner Rule 11 Dinner

Remember that litigation battle royale over the battle royale style video games? The one that has the potential to create important new copyright law for a lucrative young industry?

Back in September it looked as if PUBG and NetEase, the developers of PlayerUnknown's Battlegrounds and Rules of Survival respectively, were on the verge of settling the dispute. Now the parties instead appear on the verge of a Rule 11 sanctions fight.

On Tuesday, NetEase's Quinn Emanuel Urquhart & Sullivan counsel asked U.S. District Judge Jeffrey White to hold off ruling on its motion to dismiss PUBG's complaint. The company contends that some game elements PUBG describes as uniquely creative are actually clip art marketed by third parties. And PUBG's claim that NetEase ripped off its catch phrase “Winner Winner Chicken Dinner” is a “false allegation,” according to the motion, which is signed by Quinn Emanuel partner Claude Stern.

It's too soon for NetEase to bring an actual Rule 11 motion—the 21-day notice period hasn't run yet, Stern acknowledges in Tuesday's motion. But one will be brought “promptly” if PUBG doesn't clean up its complaint, he warns.

PUBG has not formally responded. But in email correspondence attached to the NetEase motion, Sidley Austin partner Rollin Ransom tells the Quinn attorneys there's no basis for Rule 11. He describes NetEase's filing as an improper end-around Rule 11, which precludes such motions from being “filed or presented to the court” until 21 days after service.

PUBG sued NetEase in April, accusing it of copying the look and feel of its blockbuster video game, including the virtual weaponry players use to mow each other down. “The visual appearances of the weapons are realistic, but each weapon has been stylized to make it distinct from actual real life weapons,” PUBG states in its complaint.

NetEase's Tuesday filing highlights several weapons pictured in PUBG's complaint that appear to be identical—down to the serial number—of weapon art that's publicly available on the Unreal Engine Marketplace. “PUBG cannot allege a copyright claim based on art it neither owns nor has an exclusive license to,” Stern writes.

On Wednesday, White issued a brief order neither granting nor denying the stay, but instead ordering the parties to meet and confer face-to-face or by telephone, not over email.

Too Soon for Qualcomm Appeal, Consumers Say

Last month I wrote about Qualcomm complaining to the Ninth Circuit that U.S. District Judge Lucy Koh certified a 250 million member class without holding a hearing.

As you might expect, the attorneys representing the consumer class have come to her defense. “Judge Koh considered 102 pages of briefing by the parties and an extensive evidentiary record, including over 1,800 pages of reports submitted by five experts,” Susman Godfrey partner Kalpana Srinivasanwrote in an Oct. 24 opposition to Qualcomm's request for interlocutory review.

Given the depth of the briefing, “it is not surprising that Judge Koh felt capable of preparing her 66-page order without the need for additional minutes of oral elaboration by counsel,” Srinivasan adds in a footnote.

Although plaintiffs may be asking for $5 billion, that represents just a fraction of Qualcomm's $35 billion cash on hand and equivalents, Srinivasan writes. And the company just reported spending $413 million on litigation costs in 2018 alone, she notes. “If ever a defendant had the resources to litigate a class action through trial and appeal if it so chooses, it is Qualcomm,” she writes.

Qualcomm argues that nearly half of the class members Koh certified are from states that don't recognize California's law on indirect purchasers. The class also covers some 100 million iPhones purchased after Apple's contract manufacturers stopped paying royalties on Qualcomm chips. “That fact alone precludes Rule 23(b)(3) predominance,” Keker, Van Nest & Peters partner Bob Van Nest wrote to the Ninth Circuit on Tuesday.

Who's Arguing?

Next week is a calendar week at the U.S. Court of Appeals for the Federal Circuit. Here are a few of the cases I have my eye on:

➤ The University of Florida Research Foundation v. General Electric Co. This is a sovereign immunity case—the old-fashioned kind from district court, not one of the newfangled versions from the Patent Trial and Appeal Board. U.S. District Judge Mark Walker ruled the university's patent on a method of managing medical data from bedside devices ineligible under Section 101. Shore Chan DePumpo partner Michael Shore will argue Nov. 5 that by suing GE, the university waived only its immunity to compulsory counterclaims such as novelty and non-obviousness—not patent eligibility. Reed Smith partner Jim Martin will argue for GE that the university failed to raise the immunity argument below, and that in any event Walker properly dismissed the suit.

➤ PurePredictive v. H20.AI. The smartphone wars are winding down. Will the artificial intelligence wars soon take their place? We'll get an early taste Mondayin a patent dispute between AI platforms over a “predictive analytics factory”that generates “improved predictive ensembles for processing predictive analytics data.” U.S. District Judge William Orrick ruled that the patent describes the abstract idea of running data through a machine. Perry Clegg ofKunzler PC argues for PurePredictive that its technology produces “greater confidence metrics, reduced noise, optimized overhead, and greater effectiveness and efficiency.” Orrick partner Melanie Bostwick will argue for H20.AI that the patent is directed purely to data manipulation in the abstract, without being tied to any computer, software, algorithm, data, metadata or type of prediction.

➤ WesternGeco v. Ion Geophysical. Does that name ring a bell? WesternGecoreturns to the Federal Circuit on Nov. 16 after making Supreme Court law on worldwide patent damages just last summer. On remand, Ion Geophysicalis making one last try to get out from under a $93 million jury award over patents for surveying the ocean floor. Ion and appellate counsel Williams & Connolly argue the PTAB has invalidated four of the six patent claims that were before the jury, and that the other two don't really count. WesternGeco, backed by Kirkland & Ellis, argues that the PTAB decision isn't final yet, and that even if it were, the other two patent claims support the verdict. W&C partner David Berl will argue for Ion. WesternGeco hasn't designated an attorney yet, though Kirkland partners Gregg LoCascio, who argued a previous damages appeal, and John O'Quinn, who argued the PTAB appeal, look most likely.

EFF Is Far From Done Telling Troll Stories

In my last newsletter I wrote about PTO Director Andrei Iancu's call for an end to the “patent troll” narrative and his jibes at those who promote it. “In what I believe amounts to Orwellian 'doublespeak,' those who've been advancing the patent troll narrative argue that they do so because they are actually pro-innovation,” he told the Eastern District of Texas Bar Association on Oct. 18.

Those are fighting words across a lot of Silicon Valley. Especially so if you occupy the Mark Cuban Chair to Eliminate Stupid Patents at the Electronic Frontier Foundation.

So Daniel Nazer came back with guns blazing Wednesday in a Stupid Patent of the Month column, highlighting the bankruptcy of notorious, ahem, non-practicing entity Shipping and Transit.

Shipping and Transit and its predecessor Arrivalstar brought hundreds of patent suits over the last decade. In its Sept. 6 bankruptcy filing, it valued its portfolio of 34 patents at $1. “We agree that these patents are worthless,” Nazer writes. “Indeed, they have always been worthless, except as litigation weapons.”

So how did Shipping and Transit use them to leverage $15 million in licensing fees over the years? I'll bet you can see where Nazer is heading with this.

“All patent troll stories start with [the] Patent Office,” he writes. “You can't be a patent troll without patents. And you can't have patents unless [the] Patent Office grants them.” The PTO spends only a few hours per patent application, often leading to dubious software patents, he argues. “This helps explain how an entity like Shipping & Transit could end up with dozens of valueless patents.”

I have a feeling this isn't the end of the debate.

The Lessons of the IP Downturn

Is the decline of the IP legal market a bellwether for Big Law practice as a whole? That's the thesis of a provocative ALM Intelligence articleWednesday from Hugh Simons, a former Boston Consulting partner and Ropes & Gray COO.

“Patent fights have gone from being seen as must-win to being wars of choice, and increasingly the choice is not to bother,” Simons writes. “The upshot has been a sharp curtailment in aggregate demand and a reshaping of the competitive landscape as firms fight for share of the re-sized pie.”

That has resulted in both severe pricing pressure and “a major shakeup in the relative standing of the firms in the IP market,” he contends.

Access to this article may require a subscription to ALM Intelligence, but I highly recommend the piece, and would be especially interested in reader feedback on it.

Venable Hires 98th IP Litigator

It's official. Venable's merger with Fitzpatrick, Cella, Harper & Scinto closed Thursday. But apparently the addition of 97 IP attorneys wasn't quite enough for the firm. Venable also announced this week that it's brought Goodwin Procter partner Shane Brun into its San Francisco office.

“As we look to build upon our IP capabilities on the West Coast, Shane's experience as an intellectual property litigator in the technology sector will be perfect addition to the practice,” James Nelson, Venable's partner in charge in S.F., said in a written statement.

My ALM colleague Xiumei Dong has more details here.

Robins Kaplan Adds Orrick Partner in N.Y.

Robins Kaplan added to its IP capabilities this week with the hiring of patent and trade secret litigator Elizabeth Gardner from Orrick, Herrington & Sutcliffe.

Ron Schutz, managing partner of Robins Kaplan's New York office, said the firm is excited to welcome Gardner to its IP group. “Her extensive work as a patent litigator—combined with her background in a wide variety of technology industries—will make her a tremendous asset to the firm and our clients,” he said in a written statement.

Kirkland Brings in 5 Allen & Overy Alums

Last and definitely not least, Nicola Dagg, Allen & Overy's former global IP chief, formally joined Kirkland & Ellis' London office this week. The move was originally announced in May. Former A&O associates Daniel Lim and Katie Coltart also join Kirkland as partners, along with associates Jin Ooi and Steven Baldwin.

“We are focused on rebuilding a crème de la crème intellectual property litigation team to serve on the most complex international patent litigation and technically rich cases for some of the biggest global names,” Dagg told Law.com's London-based publication Legal Week. ”We want to serve life sciences and tech clients and we are a team that has the skillset from both a technical and experience perspective.”

My ALM colleague Hannah Roberts has more details here.

That's all from Skilled in the Art for this week. I'll see you all again on Tuesday.