
Patent troll gives up, can’t defend “matchmaking” patent under new law - kjhughes
http://arstechnica.com/tech-policy/2014/09/lumen-view-gives-up-on-matchmaking-patent-cant-defend-it-under-new-law/
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dthal
_" We imagine they siphoned off any remaining cash to investors, so they can
declare bankruptcy and not pay the court-ordered legal fees."_ Is that a
crime? If it isn't, it seems like it should be. The creditor already has a
legal claim to the funds at that point. That's at least economically
equivalent to stealing their money.

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ChuckMcM
Sadly no, it is not a crime. And it is nearly entirely the reason that one
creates a legal entity (and LLC in this case) to "hold" the liability. The
flip side is that it is also not a crime for someone to take a million dollars
of someone elses money and spend it paying themselves and some friends a
salary while building a web site devoted to cat pictures while buying a bunch
of hardware on credit. Only to have the web site go bust. In both situations,
monetary judgements can be levied only to have the entity "die" and take with
it the liability it was holding.

The "win" here is that "do it on a computer" patents are being invalidated
left and right by the courts and that is crimping the revenue stream of trolls
and having them re-evaluate their portfolios.

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JoshTriplett
> Sadly no, it is not a crime.

That depends; it _can_ be, if the owners of the LLC act in sufficiently bad
faith. That's what "piercing the corporate veil" is about: when the owners of
a company abuse the liability shield badly enough that they should be
personally liable. Pulling money out in anticipation of a bankruptcy (as
opposed to spending it in good faith as part of doing business) could
potentially qualify for that.

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rdudek
That only applies if they still do something illegal. This generally applies
to cases of money-laundering, drugs, criminal intentions. There would have to
be a separate case initiated by the legal system.

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jgable
Not the case. Piercing the corporate veil depends on a number of factors that
do not involve grossly illegal actions like you describe.

[https://en.wikipedia.org/wiki/Piercing_the_corporate_veil#Un...](https://en.wikipedia.org/wiki/Piercing_the_corporate_veil#United_States)

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shmerl
Why can't it be classified as RICO? It's such a classic racket / shakedown
scheme.

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jeffdavis
Not a lawyer, but RICO has to do more with conspiracies that try to hide
crimes by assigning the individual acts to underlings.

And it's not a racket if what you're threatening is legal, which this kind of
abuse of patent law unfortunately is.

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shmerl
But it wasn't legal, since the patent was fake. So it was racket.

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jeffdavis
What law does it break to threaten legal action to enforce a patent granted to
you by the USPTO?

It sounds like you don't like what you see, and you want to find something in
the law to use against them. But lots of smart people have looked and nobody
has found anything, so it's probably not there. The correct solution is to
change the law, not to use overly broad interpretations.

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shmerl
So, USPTO grants an invalid patent, and patent troll uses it to shake down
whoever they wish? I surely think it's illegal. If there is no law which makes
it so, there should be one. I'd say even if the patent is valid, one can't use
shakedown methods like "pay up or else".

Patent trolls even big ones like Microsoft for example use intimidation to
squeeze money. Their tactic is clearly to use high cost of litigation to force
everyone to settle outside of court. I.e. it can go like this. A troll comes
to some company and says: "Nice business you have here, it would be a pity if
anything happens to it. Pay up or else". Company answers: "We'll fight to
invalidate your patents". Troll says: "So what, we have tons more we can pull
out, you don't have money to fight to invalidate them all, so better pay up".
Whether they are valid or not such practice should be illegal because it's not
any different than criminal shakedown.

 _> It sounds like you don't like what you see, and you want to find something
in the law to use against them._

Indeed. I'd prefer them to be persecuted as racketeers, because they are such.
I agree that if the law doesn't cover such case it should be fixed.

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cbasoftware
I hope one of these companies takes the troll to the very end and gets their
money back from the scum bags (excuse me attorneys) at the head of the troll.
That will stop this very quickly and completely. Then this embarrassing
history of patenting software can come to its logical end.

If any piece of software should've/could've been patented it was the original
OS. And, Bell Labs took care of that when they gave Unix to the public domain.
Ditto for the original BIOS. When IBM didn't bother to defend it that option
was over too.

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reallycurious
This feels like the scene in Godfather where Michael Corleone walks into the
restaurant washroom, comes out with a gun and gets his vengeance.

