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  (Source: SFGate)
Taiwan firm Elan gets a nice payday and licensing rights

Back in 2003, Elan Microelectronics Inc. (TPE:2458), a small but enterprising hardware startup had a very good idea.  What if you could control your computer not just with a touchpad, but with a touchpad that took multiple touch inputs and responded differently to different "multi touches".

I. Close, but no MacBook

Elan used a technology called "projective capacitance" to make the idea a reality.  Projective capacitance involves using a series of wires to sense press on a screen.  Presses subtly bend the wire down towards a bottom, charged layer.  The result is that the measure capacitance fluctuates.

The company filed its patent back in Sep. 2003.

Soon it was producing perhaps the first glass multi-touch displays, and selling them to top companies like Micro-Star International Comp., Ltd. (TPE:2377).  

But it would get no contract from Apple, Inc. (AAPL) who instead hooked up with Synaptics (SYNA), a Calif.-based touchpad firm.  To Elan's frustration, Synaptics' new touch technology was almost identical to its own found on the MSI notebook and other laptop designs.

Elan MacBook
Synaptics introduced multi-touch on its Macbook TouchPads as early as 2006. 
[Image Source Notebook Review]

II. The iPhone Snub

And then there was the issue of a certain iconic gadget.  Apple had already been building up its own little multi-touch stable.  It had brought in TPK Holding Comp., Ltd. (TPE:3673) and Optera (a small U.S. display firm) to supply the multi-touch hardware for a secret project in 2006 [Sources: 12].  To supply the software, it in 2005 bought a company called FingerWorks, which had implemented and slightly expanded on some of the multi-touch gestures published by Bill Buxton back in the 1980s.  But one player was noticeably absent from this multi-touch "dream team" -- Elan.

Anyhow, that secret project would go on to create little bit of a splash -- it was called the iPhone.

Apple iPhone
[Image Source: Getty Images]

Scorned yet again, Elan claims it contacted Synaptics about licensing and pointed out that it owned patents on the multi-touch technology -- two important ones to be precise (U.S. Patents 5,825,352 and 7,274,353).  Soon after it would sue Synaptics.  

Around the same time it reportedly contacted Apple about the iPhone snub, giving it the same message -- saying that it was fine with others producing the iPhone multi-touch screen, but that it was entitled to a piece of the pie.  Allegedly, Apple, who refused to pay up, yet again snubbed it.

It was about at that point that it finally dawned on Elan that Apple wasn't ever going to willingly license, and that its patents on "projected capacitance" technology weren't going to enjoy any small fraction of Apple's billions in iPhone profits, without drastic action.

III. Vindication

In 2008, after the U.S. International Trade Commission granted a preliminary injunction against Synaptics' imports of touchpads; Synaptic agreed to a confidential payout to Elan. 

Emboldened by its success, Elan shacked up with Android, starting to produce screens through various arrangements with device manufacturers and other firms.  That same year in April it decided to hand Apple a U.S. ITC trade complaint lawsuit [PDF] over the iPhone.  Apple wasn't to inviting to this idea, and it sued right back, smacking Elan with claims that it infringed on U.S. Patents 7,495,659 (which covers touchpad packaging) and 6,933,929 (which covers a touchscreen implementation).

Elan v. Apple
Elan's capacitive multi-touch (left) versus Apple's multi-touch (right). [Image Source: USPTO]

Apple soon withdrew the second patent from the claim.  To be honest, both patents essentially claimed the same thing and Apple's was first, if a bit more ambiguous upon thorough inspection.  Apple's '659 patent, filed in June 2002, described in ambiguous terms supporting hardware and software for a projected capacitance touch sensor interface, while Elan's '353 patent, filed in Mar. 2003, described in slightly less ambiguous terms a design for the capacitive sensor itself, and in equally ambiguous terms the design for the supporting circuitry and software.

It's important to note that neither company's patent explicitly mentions "multi touch" or "multi-touch", but both companies claimed their patents claimed ownership of the same aspect of multi-touch (the hardware side) given that it was a seemingly obvious conclusion that if you could detect one touch event via multiple changes in wire capacitance, you could detect more than one touch event by even more changes in capacitance.  Such an approach would likely require seemingly obvious additions -- a finer grid of transparent wires and some basic software logic to detect, file, and send out multiple touch events from the I/O device to the CPU.

But curiously Apple backed down in its countersuit.

IV. The War of Attrition

Elan lost its first round in April of this year before a U.S. ITC judge, who ruled that Apple had not infringed on Elan's patent -- in contrast to the court's earlier ruling against Synaptic.  In August the full panel declined to review the decision [PDF], basically ruling "game over" for Elan in terms an import ban.

But Elan still had one remaining option -- the old fashioned route of suing Apple in standard federal civil court.  It was beginning to prepare for the suit, when apparently Apple finally reached out and agreed to a semi-confidential settlement.  Apple will pay Elan $5M USD in licensing fees (and possibly undisclosed court fees) plus license its multi-touch patents to Elan.  In return, Elan will license its multi-touch patents to Apple.

The settlement is pocket change to Elan, but it could give the firm a competitive advantage over rivals in the increasingly crowded multi-touch manufacturing market.  Since it has an agreement with Apple, that means that Apple will have trouble suing any Android phone makers who use Elan's displays [1][2][3][4] [5][6][7][8] [9][10][11][12] [13][14].

Granted it's unclear whether Elan has gained licensing rights to some of Apple's small stable of software multi-touch patents.  To be fair, these patents are surprisingly not as strong as they have been portrayed upon close inspection, which is probably why Apple has declined to use them in its anti-Android lawsuit crusade.

For example the most famous of the multi-touch patents is U.S. Patent 7,966,578, which was granted in 2009.  The patent does not cover pinch-to-zoom, though it does provide a single trivial iterative improvement on the 1980s software designs of Bill Buxton, who at the time consider the multi-touch gestures too obvious to patent, instead publishing his work in an academic setting.

Bill Buxton
While a number of academics and industry players at the time could claims some degree of ownership for developing multi-touch software, Bill Buxton was by far the most prominent inventor of the kinds of gesture-driven navigation we today know as "multi-touch"
[Image Source: The New York Times]

The single feature in the patent is the ability to scroll on a piece of content using one finger, and then use two fingers to move a piece of sub-content within a specific piece of content.  How this one sentence became pages and pages of verbose jargon is a compelling question.  But it's pretty clear that this feature isn't found almost anywhere in Android, and that if Apple ever did try to use this in litigation, that it would be at high risk of invalidation do to the obvious nature of the software algorithm involved, which could be implemented by an experienced programmer in under 15 minutes.

To head off claims that Elan is just a non-productive "patent troll" like NPR alleged Intellectual Ventures to be, the company actually is actively producing touch screens.  It just recently released a line of Windows 7 certified touch panels, and it also supplied the touchpads for ASUSTek Computer Inc.'s (TPE:2357popular Eee PCs.  

V. Projective Capacitance -- Inside the USPTO's Web of Redundancy

Multi-touch is an interesting creature in that so many people claim to own rights to it or some redundant aspects of it, including Apple, Synaptics, Elan, and 3M Comp. (MMM).  

The issue of redundancy is extreme in the field of projected capacitance touchscreens.  For example Synaptics claims two patents on slightly different versions of the technology -- U.S. Patents 5,543,588 and 7,129,935 -- the first of which uses transparent wires and diamond elements in the backplane. 

3M claims yet another on its 2001-era MicroTouch design (U.S. Patent 6,819,316).  This patent uses a solid top conductive layer, with a bottom set of square electrically distinguishable square sensors.

Touch Patents
Synaptics filed patents way back in the 1990s on projected capacitance, while 3M filed a slightly modified scheme in 2001. [Image Source: USPTO]

Together, these two companies appear to possibly have the most legitimate claim to project capacitance and hence the underlying hardware of multi-touch, but ironically neither 3M nor Synaptic has been particularly aggressive in suing people over the patents.  However, essentially minor redesign "repeats" of those early patents have been granted to companies like Elan (who uses a grid of two perpendicular sets of parallel transpare wires in the '353 patent) or Apple (in the '769 patent).  At least the U.S. Patent and Trademark Office helpfully flagged the Apple patent as A1 indicating a similar prior patent (or explicitly "Pre-grant publication available March 2001"). 

But the question remains that other than to gain increased fee collection, what gains are to be had for the USPTO to allow redesigns of essentially the same design -- either a matrix bottom layer or a grid/patterned bottom layer, combined with a top layer of transparent wires or a solid plane.  What results is a game in which companies like Apple and Elan are taking the wheel and adding a new rubber tread pattern to it and then claiming to have invented the wheel.

VI. Beware Critics, This is Not the Example You're Looking For

Further worsening the situation is the fact that no one has every really clearly told the public the difference between these early examples of projective multi-touch, and other fundamentally different methods, such as the light-driven frustrated total internal reflection (FTIR).

FTIR caused a stir when it was first demoed in tabletop form by 2006 TED multi-touch presenter Jeff Han, a New York University professor who later would patent the technology and spin off a startup Perceptive Pixel, which is still trying to shrink the tech to the more useful form factors.

As the demo is pre-iPhone, many erroneously bring it up as proof of prior art, although it's not really anything of the sort hardware-wise.  This is unfortunate given that there are so many good prior art examples as described in the previous section.

When examples like FTIR get brought up as proof of the invalidity of Apple, et al.'s multi-patents, it just confuses the issue.  There are several fundamental unique multi-touch technologies -- two of which are FTIR and projected capacitance.  With the smartphone industry focused almost solely relying on projected capacitance, it is here that scrutiny should be focused in terms of cleaning up the mess of redundant patents and resulting piles of litigation.  Doing so is pretty important given that these long dragged out legal wars gobble up taxpayer dollars in Judge fees and stifle free trade.

Sources: Taipei Times, Elan [Synaptic Settlement]

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...that sound you hear...
By inperfectdarkness on 1/6/2012 2:52:53 PM , Rating: 3 tony swash's head exploding after trying to reconcile his personal conviction that "apple can do no wrong" with the truth of this article.

RE: ...that sound you hear...
By retrospooty on 1/6/2012 3:43:37 PM , Rating: 2
"is tony swash's head exploding after trying to reconcile his personal conviction that "apple can do no wrong" with the truth of this article. "

You underestimate the power of denial. =)

RE: ...that sound you hear...
By Shig on 1/6/2012 3:50:19 PM , Rating: 5
The sound I'm hearing is international courts moving so slowly vs. innovation and product introduction, it ceases to matter.

Downrate me if you will, but at this point in the 21st century, it is a perfectly legitimate business model to exploit international legislation red tap for your own gain. By the time something happens, you have gained X market share at the loss of X dollars. This gain is usually in your favor.

RE: ...that sound you hear...
By BZDTemp on 1/7/2012 10:50:00 AM , Rating: 2
There really isn't such a thing as "international courts" unless we talk human rights and war crimes (the later which the US does not recognize fully). The rest is more like working within trade agreements.

However with regards to speed the issue is not new or just international. Look at Netscapse vs. Microsoft for instance. Microsoft abused their OS dominance to destroy Netscape and it took years for the matter to be handled in court and it even ended much quicker than it could have due to a settlement.

RE: ...that sound you hear...
By spaced_ on 1/11/2012 3:44:32 AM , Rating: 2
Perfectly legitimate and financially sound strategy in this day and age.

Always reminds me of one of the civilization games I played, where you start off conquering other societies by building armies, then as civilization advances, you end up conquering other societies with lawyers (complete with suit & briefcase).

RE: ...that sound you hear...
By borismkv on 1/6/2012 5:25:59 PM , Rating: 3
Denial? Nah. Delusion? Yep.

RE: ...that sound you hear...
By Natch on 1/9/2012 9:26:06 AM , Rating: 2's not just a river in Egypt!

RE: ...that sound you hear...
By Pirks on 1/6/12, Rating: -1
RE: ...that sound you hear...
By Tony Swash on 1/6/12, Rating: -1
RE: ...that sound you hear...
By wiz220 on 1/6/2012 6:08:22 PM , Rating: 3
Ya, I'm sure they had to dig through the cushions of multiple couches on the 3rd floor of their headquarters to come up with that sorta cash! :)

RE: ...that sound you hear...
By Reclaimer77 on 1/6/2012 6:26:14 PM , Rating: 1
It's not about the money.

RE: ...that sound you hear...
By HypocriteWatch on 1/6/2012 7:38:20 PM , Rating: 2
Why do companies have to file suit in order to do business with Apple on this level?

RE: ...that sound you hear...
By Cheesew1z69 on 1/6/2012 9:23:10 PM , Rating: 3
Because Apple thinks they own all tech patents and refuse to work with companies until they are forced too.

By honkj on 1/6/2012 8:48:55 PM , Rating: 2
you went through a great bit of detail, but failed to see the forrest for the trees...
here is a bit of the forest you missed:

you can tell the outcome of the "forrest" by the amount of the settlement.

and SETTLEMENT is the key here... what is going on is that Apple just bought the patent... not to use to sue, but to never have it used against Apple... for an extremely small fee by the way...

so while you are claiming a "great loss" to Apple, in fact it is an extremely easy to see win... Apple now holds all usable (for suing) the "multi-touch" patents in it's bag of tricks, and has settled for small fees on ones that can now never be used against it....

By honkj on 1/6/2012 9:09:06 PM , Rating: 1
by the way, you actually were stating what makes it obvious that Apple had the leverage to settle, it is strange that you actually figured out that Elan lost it's first round... and had just continued it's second round, when they suddenly "settled" for an extremely small fee...

but i guess to each his own... you see a "huge" win, and anyone else sees a laughably small fee... by the way, your claim of a "cross licenses" is well.... false at best, wishful thinking at most... Apple does not give up it's crown jewels in a CIVIL CASE, meaning civil only introduces fines, not import bans... Apple has more money than God even knows what to do with, it can afford to pay Elan in a losing civil case... but probably would have won that too...

you'd have to be completely blind to think or even suggest that there was a "licensing" agreement for the crown jewels... for a civil case no less... seriously????

Apple gave Elan access to two "touch patents" but not the REAL INNOVATIONS of the multi-touch in the iPhone or iPad or iPod.... THAT is what you are apparently wishful thinking about...

seriously, you thought Apple would give up it's crown jewels for a 5 million dollar settlement? in a CIVIL CASE???? what in the world were you thinking...

By JasonMick on 1/7/2012 4:12:45 AM , Rating: 2
but i guess to each his own... you see a "huge" win, and anyone else sees a laughably small fee... by the way, your claim of a "cross licenses" is well.... false at best, wishful thinking at most... Apple does not give up it's crown jewels in a CIVIL CASE, meaning civil only introduces fines, not import bans... Apple has more money than God even knows what to do with, it can afford to pay Elan in a losing civil case... but probably would have won that too...

Err... I don't see this as a huge win.

I see this as two companies who have what appear to be invalid, redundant patents on capacitive multi-touch tech trolling each other....

True the cash value was trivial, but again as I mentioned, the guarantee that Apple will not sue is a big selling point for Elan, in terms of attracting business with Android partners who are currently very wary of Apple lawsuits... How well Elan parlays this into cashflow is up to it, but it could easily pull in more than the cash value of the licensing in terms of extra business.

3M and Synaptic have the oldest, most valid patents, as I mention in my review...

What I find truly baffling is that Synaptics lost @ the ITC, while Apple won. Either that shows the influence of money @ the ITC or Synaptic had some terrible lawyers. Because its IP predates Apple's AND Elan's and describes almost precisely the same inventions.

You seem to badly miss my point, sorry.

By Motoman on 1/6/2012 11:58:20 PM , Rating: 4
...f%ck Apple.

Decent Screen
By Sazabi19 on 1/6/2012 2:28:38 PM , Rating: 3
I've never had a problem with touch on my Asus Eee Pad Transformer (not the prime) even with my Skinomi screen protector on it, always gets my touch down just fine, even lighter touches. It obviously has a threshold but I don't feel as though I have to hammer on it or press excessivly hard to make it respond. The screen is also clear and crisp.

Warm Apple Pie
By Spookster on 1/6/2012 6:09:30 PM , Rating: 2
I guess you could say they got themselves some Apple pie.

By dark matter on 1/7/2012 12:20:15 PM , Rating: 2
Or hit them with lawsuits for doing so. Considering it turns out they had no right to do this, will Apple be open to counter-suits and have existing claims quashed. Ouch, this could be a big payout day for Apple.

If I had stocks in Apple, I would be selling about now. There is no way Apple is going to take the world on in lawsuits and win. Time to sell.

By CityZen on 1/7/2012 5:08:12 PM , Rating: 1
Why are SO MANY of Jason's articles SO LOOOOONG???? Man, we don't have all day to read them. Jason, you often complain that "one sentence became pages and pages of verbose jargon", yet you display the same lack of conciseness in many of your articles

Prior art
By Tony Swash on 1/6/12, Rating: -1
RE: Prior art
By retrospooty on 1/6/2012 7:40:11 PM , Rating: 2
The source of Apple's idea for iPhone...

RE: Prior art
By Tony Swash on 1/6/12, Rating: -1
RE: Prior art
By retrospooty on 1/7/2012 8:00:43 AM , Rating: 2
No, but the idea of putting a fully funtctional OS and apps on a phone was done by Palm/Handspring and copied by Apple. Of course Apple made it better by the great screen and mutitouch UI, but 95% of it was a total ripoff of Palm.

All I am saying is to gain some perspective man. They are just a company, not your soul.

RE: Prior art
By phantom505 on 1/7/2012 9:12:14 AM , Rating: 1
The reality is that it's painfully obvious to everyone. Everyone that saw computers shrinking knew that these devices would exist one day.

That's why these patents are pretty much retarded... they're all obvious. It's convergent technology, not divergent.

RE: Prior art
By catavalon21 on 1/8/2012 11:04:26 AM , Rating: 2
It's convergent technology

Not to be confused with Convergent Technologies (cool little company back in the day) <g>

RE: Prior art
By Tony Swash on 1/7/12, Rating: -1
RE: Prior art
By Tony Swash on 1/7/12, Rating: -1
RE: Prior art
By DeluxeTea on 1/7/2012 12:53:00 PM , Rating: 2
Remove your Apple blinders and re-read his post.
No, but the idea of putting a fully funtctional OS and apps on a phone was done by Palm/Handspring and copied by Apple.

You are describing a PDA. A PDA is not a phone.

RE: Prior art
By Tony Swash on 1/7/12, Rating: -1
RE: Prior art
By retrospooty on 1/7/2012 8:49:27 PM , Rating: 2
"Where is the slightest evidence that Apple copied Palm"

History. The Treo was released years before the iPhone.

I am NOT knocking Apple, all companies build on the ideas of others... THe difference with Apple is that they ACT like they invented things that they didnt invent. They sue when other copy them, but its perfectly OK for them to copy others.

You need to take off your Apple blinders and play on a level field. All companies copy others. Its all about who can make the best product at the right price points. Apple has plenty of merit to succeed in the market ( I think you would agree to that), they do not need to do it in the courtroom.

RE: Prior art
By retrospooty on 1/7/2012 8:46:22 PM , Rating: 2
""The Apple Newton preceded the Palm Pilot"

Not phones dood. Not phones.

RE: Prior art
By robertgu2k on 1/9/2012 2:21:18 PM , Rating: 2
If my memory serves me right Windows Pocket PC 2000 smartphones predated the Treo as it was first released in April 2000 while the Treo was released in 2002.

So if your claiming Treo was prior-art to the iphone, it would appear the Window Pocket PC phones was prior-art to the Treo.

RE: Prior art
By nocturne_81 on 1/9/2012 2:37:41 PM , Rating: 2
Well, you can't forget the rest of the handheld world that led right into the now burgeoning smartphone market..

Back in.. 2000-2001, I think, I had a Casio BE300.. neat little device. It came with a stripped down WinCE, with a custom list driven ui (rather like Metro for it's day); along with an 'app store' provided by Casio so they could get their cut (though it didn't work directly on the device -- like the first gen iPhone). I was active in a few communities where we helped create a few alternate gui's, mostly active ripoffs of Palm's icon driven interface of the time. Before we got a full fledged hacked up version of WinMo working, my preferred UI would be rather familiar to any iPhone user.. black bg, a grid layout of icons, as well as the 'system' icons at the bottom. Wish I still had the cool little casio, but unfortunately had it stolen from my car..

A few years later.. 2003ish, I got my gf an Axim x3, so I delved back into the booming (yet still quite underground) handheld community. The market was on fire -- WinMo and Palm were in a dead heat, pumping out devices quicker than the community could keep up. Games, apps, incredible accessories such as laser projected keyboards (to those that saw that amazing iPhone 5 concept vid a few months back -- ya, we had those almost a decade ago) -- I even have this nifty little SD-IO GPS receiver with 512mb builtin RAM, just enough to hold my TomTom gps software and most the maps of north america (really wish I could hack up a windows driver for this thing, hehe).

Then, to retrospooty's credit, the smartphone was born.. though I recall the Treo coming a bit later (just prior to Palm's meltdown). At that time, smartphone basically meant any any open and unrestricted handheld device that had a cell chip.. The palms were cute (but useless), Symbian devices just weren't getting much attention, but the PPC world.. HTC (most notably) and other manu's were cranking out fully functional WinMo smartphones as fast as people could nab them up. Then the bottom fell out of the market, as feature phones took over the majority leading up to the iPhone rls.

Sure, we may have been on crude bulky devices with low res touchscreens, 200mhz ARM cpu's, and 32-64mb RAM -- but I haven't seen anything on a modern smartphone that we didn't pave the way for almost a decade prior, mostly accomplished as hacks, mods, and custom content.

Mick still spins the hate
By Phynaz on 1/6/12, Rating: -1
RE: Mick still spins the hate
By Pirks on 1/6/12, Rating: -1
RE: Mick still spins the hate
By djcameron on 1/6/2012 4:47:47 PM , Rating: 1
Apple will pay Elan $5M USD in licensing fees (and possibly undisclosed court fees) plus license its multi-touch patents to Elan. In return, Elan will license its multi-touch patents to Apple.

Oops, you missed the part where they'll continue to pay to license the Elan technology.

RE: Mick still spins the hate
By Phynaz on 1/6/12, Rating: -1
RE: Mick still spins the hate
By adiposity on 1/6/2012 6:22:07 PM , Rating: 2
It doesn't say they will pay to license (other than the $5M). It does say that they will both license each other's tech, meaning it could well be a wash at this point.

Bottom line is, this doesn't affect Apple's.

RE: Mick still spins the hate
By honkj on 1/6/12, Rating: -1
RE: Mick still spins the hate
By Cheesew1z69 on 1/7/2012 12:29:59 PM , Rating: 2
it was a patent troll
Sounds like Apple too...

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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