Attached here is more HX from Google. I'm sure it brings back many memories for the real longs here. Patriot's Provocative Plan Rancho Bernardo company is suing 5 Japanese goliaths in patent infringement case By Bruce V. Bigelow STAFF WRITER, SAN DIEGO UNION TRIBUNE February 3, 2004 Based on its corporate vital signs, there should probably be a tombstone at the entrance to Patriot Scientific, a tiny technology company in Rancho Bernardo. But the epitaph would likely read, "Hope Springs Eternal." Patriot Scientific's stock, which trades over the counter, has been more or less flatlining at less than 15 cents a share since 2002. Patriot has never posted a profit in its 15 years as a public company. It has issued nearly 150 million shares and incurred millions of dollars in debt to fund its operations in a largely unsuccessful quest to commercialize its proprietary technology. With eight employees on the payroll, Patriot reported $63,200 in sales for the six months ended Nov. 30. Its outside auditors have even pronounced the last rites. In recent financial documents, Patriot said its accountants "expressed substantial doubt about our ability to continue as a going concern." But never mind all that. Based on an assessment of the patents that protect its proprietary microprocessor technology, the company has embarked on a provocative new corporate strategy. Over the past six weeks, Patriot Scientific has filed federal lawsuits against Sony, Toshiba, Fujitsu, NEC and Matsushita, alleging that the goliath Japanese computer makers have been infringing on its patented chip technology. And the five initial patent suits, which seek several hundreds of millions of dollars in damages, are just the beginning, said Jeff Wallin, who was named Patriot's chief executive in March 2002. Based on its analysis of a key patent awarded in 1998, Patriot contends that every computer chip that operates at speeds above 120 megahertz might be, in effect, operating without a license. "It would suggest that every PC manufactured after 1994 or 1995 is benefiting from this technology," Wallin said. As the company put it in a recent news release, "It is now time for Patriot Scientific and its shareholders to be properly remunerated." The lawsuit against Sony alleges that the Japanese consumer electronics giant makes at least 14 products that infringe on Patriot's patent, including Vaio desktop and laptop computers, DVD equipment and server systems. A spokesman at Sony, which was Patriot's first target, said it does not comment on pending litigation. But there's more. Valuable patents Wallin said the scope of Patriot's patent litigation is not limited to makers of personal computers. Because such technology also is used by embedded processors in various other industries, he said, "We see this as applying equally to medical equipment, commercial equipment and other mass-produced consumer products." Wallin added, "This sounds terrible, but we intend to get around to everybody." To Jim Turley, a Patriot adviser and semiconductor industry consultant, it's not unusual for a microprocessor company to suddenly find that its patents are worth more than its products. "They've discovered in their vault that they have what appear to be some pretty defensible patents in the way chips are made," Turley said. "From my point of view, they appear to have a solid case. But how these things play out in the end is anybody's guess." But that view is far from universal. "You rarely if ever find a patent that's as enforceable as broadly as the patent holders think it is," said Peter Glaskowsky, editor of The Microprocessor Report, an industry newsletter in San Jose. "And when you find a company that failed to develop a product commercially and then is refinanced for the purpose of prosecuting its patents – that trick never works," Glaskowsky added. Similar litigation But Patriot's inability to successfully commercialize its microprocessor is immaterial, said Russel "Cap" Beatie, a New York lawyer representing the San Diego company on a contingency basis. "It seems to me the market loves their product, they just don't want to pay for it," Beatie said. Beatie said the Patriot case is similar to patent litigation over bar coding technology filed by the estate for the late inventor Jerome Lemelson. Lemelson never actually developed a commercial bar code system, but he filed and amended a series of patents for the technology over decades. Lemelson then filed patent infringement lawsuits against retailers, computer makers and other industries that use "machine vision" technology. Lawyers in the case have said some 1,000 companies signed licensing agreements and paid Lemelson more than $1.5 billion. "What he did is a model for anybody who has a situation like this," Beatie said. "He did a lot of careful thinking and a lot of trial and error. We are familiar with his cases and would look to following his successes and avoiding his errors." In fact, the Lemelson litigation case was stopped in its tracks Jan. 23, when a federal judge in Las Vegas ruled that Lemelson's bar code patents were invalid and unenforceable. The ruling, which was viewed as a sweeping victory for the makers of machine vision systems, apparently won't compel Lemelson's holding company to refund licensing money it has already collected. But it could, if upheld, terminate those Lemelson patent claims. Most patent infringement cases come down to two key issues – the validity of the patent and whether it's actually being infringed upon – said Jay P. Kesan, who teaches intellectual property law at the University of Illinois College of Law in Champaign. "The argument will be made that the inventor did not invent anything and that the technology was already known," said Kesan, who also holds a doctorate in electrical and computer engineering. "Another argument may be that he didn't teach the world how to make it," Kesan said. "You can't just run to the patent office and say give me a patent for a washer and dryer that operate as one. You have to show that it works." Patriot, which was founded by Elwood "Woody" Norris, acquired its chip technology with the buyout of Oregon-based NanoTronics Corp. in 1994, according to filings with the Securities and Exchange Commission. The inventors, Charles Moore and Russell H. Fish III, had relied on an integrated circuit design known as stack-based architecture to design a chip tailored to operate the "Forth" programming language developed by Moore. But Silicon Valley, and the rest of the chip industry, followed a different path. Most of the market for "embedded" microprocessors used in everything from toasters to cars has gone to bigger, general purpose processors, said Patrick Nunally, Patriot's chief technology officer. Patriot went in the opposite direction, Nunally said, developing a smaller, low-power type of 32-bit RISC (Reduced Instruction Set Computer) microprocessor called Ignite. Industry pioneers Even if Patriot's processor has not gained widespread market acceptance, Nunally said Fish and More were legitimate industry pioneers who invented basic techniques in microprocessor design. One of Patriot's patents in particular, No. 5,809,336, covers technology for a "variable speed system clock." The technique synchronizes the processor's highspeed internal operations with the stream of external instructions, which communicates with the processor at a relatively slow speed. Because of the unique design of their processor, Moore and Fish addressed the problem of synchronizing the processor speed earlier than other chip designers, Nunally said. "Everything we've done so far is based on that patent," Wallin said. "We consider two of our 11 patents foundational, but this one patent is going to keep us busy for a good long time." Bruce Bigelow: (619) 293-1314; bruce.bigelow@uniontrib.com