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Biggest patent troll of 2014 gives up, drops appeal (arstechnica.com)
223 points by imglorp on Mar 4, 2016 | hide | past | web | favorite | 62 comments



If they're a shell company, I wonder if they'll actually end up paying the fee or just declare bankruptcy and start another shell company. Can the owners be made to pay the fee?


This can be prevented by setting conditions for suing:

* The entity suing should set aside a budget in case they are gonna lose. If the "presumption of innocence" is extended to the case of patent infringement this would be not such an awkward demand towards the plaintiff.

* This fee should not just be to cover lawyer costs of the defendants. If a company is wrongfully sued, it's 1.) a type of defamation, 2.) incurring internal costs regarding time/resources to set up the defense apart from just the third-party lawyer costs, 3.) incurring immaterial costs regarding the sued party who are forced to worry about matters that have nothing to do with running their business. It can be seen as a legal DDOS attack of that business, 4.) incurring future costs w.r.t. setting up defenses against these practices. You don't need to buy locks if there are no burglars. (I personally file patents as a defensive action and it would be great if sharks like these pay for that, because they are the reason I've to do so).


Presumption of innocence is only a thing for criminal cases. Civil cases use the balance of probabilities. To win there, you don't have to prove your case beyond a reasonable doubt, just that your version of events is more likely to be true than than your opponent's, however slightly.

Requiring plaintiffs to maintain a budget to pay fees would shut a lot of people out of the legal system, like individuals, for example. It would make it easy for large companies to violate the rights of IP holders.

And if a lawsuit really defames a defendant, after winning they can always turn around and file a defamation lawsuit.


"Ei incumbit probatio qui." I know it's not the case for civilian law in the US. I was only pointing out strategies for change.

Your point about plaintiffs with small budgets is an interesting one. Do you have examples of a David (individual) successfully suing Goliath over patents?

Burdening the system with more lawsuits isn't necessary if you immediately get a yellow card when committing a schwalbe. :-)


Yes, just googling "small plaintiff ip case" brought up one example: https://www.iplitigationcurrent.com/2014/10/08/attorneys-fee...

Not sure why you ask though. Are you getting at that looking out for small plaintiffs is a waste of time if they never win anyways? Because I don't think that's a good road to go down.

To address your last point, defamation is something that has to be proven in the US, and the standards for it are quite high (compared to the UK, for example, at least). A defendant can't attempt to argue and prove damages caused by the plaintiff without filing a countersuit, so I'm not sure how courts could go about handing out "yellow cards."


So your patent only matters if you can afford to sue someone stealing your patent? Isn't that swinging too hard the other way?


I am just so sick of it. Just make them pay the toll for once, for god sake. How is this damn different than any other criminal offence. We just need a good example of crashing a patent troll. Somebody should crush them, crush them so hard. Then, maybe we can have a chance to end this maddness.


My exact thoughts. One would think rule number one in the patent troll manual is to limit your own downside by doing everything through a shell company.


Only certain things can pierce the corporate shield, like unpaid workers comp. Legal fees, thankfully, don't.

Of course patent trolling always becomes a discussion of corporate shielding instead of the conversation we need to have: a radical reform of the patent system and a re-thinking of what should be patentable, especially in the software world.

This conversation always gets derailed by the tort reform crowd on the right or the anti-corporate shield crowd on the left. Those are just symptoms to a larger problem and both of those things (torts, shields) exist for valid reasons. Fix patents instead.


If the corporation was created for "wrongful conduct" to avoid legal fees, the court can and will pierce the corporate shield.

But you're right, piercing the corporate shield is difficult.

IANAL, just a wikipedia reading engineer.

https://en.wikipedia.org/wiki/Piercing_the_corporate_veil#Un...


How is it wrongful conduct to use a corporate structure to limit liability? That is exactly what corporations are for.


You can't limit the liability on penalties for breaking laws.

Some laws are clear and unambiguous, for example no one uses a corporation to shield themselves from a murder investigation.

Others laws can be fuzzier, like the laws that separate harassment and real intellectual property lawsuits.


The patent wars are hardly a recent phenomenon. They go back to tremendous and crippling fights over the telegraph, telephone, auto, movies, radio, television and airplanes.

It's a bit hard to see how patents promoted anything - they mostly seemed to retard progress. The airplane patent wars were so bad that aircraft development shifted overseas out of reach of US patent courts. The movie industry packed up and left for Hollywood to evade patent courts. Industry progress on the TV happened only when the patents expired. And on and on.


Even further back, to steam engines.


Absolutely. James Watt didn't invent steam engine but came up with an innovative design that gave him a big advantage. He based this on other, unpatented, technologies. Then he sued the living day lights out of all his competitors and if argue prevented innovation for years.


Unpatented? Not quite. Savery's patent (which Newcomen licensed because it would last longer than any he could have gotten himself) had long since expired, and Boulton and Watt had to work around Pickard's patent on the crank (!) using planetary gears.


Yeah, the planetary gears they came up with were pretty crazy. Everyone switched to the crank, once the patent ran out.


That has been shown to be a myth as well: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589712


Pretty sure this is the 3rd time we've had this exchange :-) but... it is a myth that the Wright patent held back the US airplane industry, as demonstrated by industrial data from the period:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2355673

As for the movie industry moving to Hollywood, it's not like they were building competing or advancing technology that was blocked by patents: they were just consumers that straight-up refused to pay for the technology they took advantage of.

> Industry progress on the TV happened only when the patents expired.

Hmm, hadn't heard of this. Source?


I read the paper, thanks. It is mostly concerned with events from 1916 on. The Wrights had earlier demanded and gotten 20% royalties, and had a history of liberally and repeatedly suing other aircraft manufacturers. It is also pretty clear, despite the paper's claims, that the leaders in manufacturing and innovation were in Europe.

Note also that current patent litigation hasn't exactly retarded the computer industry, but it has imposed huge costs on it, and it's hard to see any evidence that such patents have promoted the arts and sciences in any way.


> The Wrights had earlier demanded and gotten 20% royalties, and had a history of liberally and repeatedly suing other aircraft manufacturers.

Because all the manufacturers were using the technology they had invented, the very technology that made controlled heavier-than-air flight possible at a time when people were starting to doubt that it was possible. Many chose to fight the patent, but courts time and again found it to be valid and infringed. The Wrights may have gotten a bad rap for being litigious, but only because many like Curtiss tied them up in court for years to avoid paying royalties on technology they clearly owed.

> It is also pretty clear, despite the paper's claims, that the leaders in manufacturing and innovation were in Europe.

Not so sure about that. Most historical accounts still show America as being more innovative than Europe. Things like the seaplane were invented by Curtis in America.

>... hard to see any evidence that such patents have promoted the arts and sciences in any way.

There are a number of studies showing how patents help the arts and sciences. For instances, there are studies showing a direct increase in r&d expenditures and increase in strength of IP laws. Patents have been shown to increase the chance of finding from VCs and other sources. This has also been shown to apply to the tech and computer industries. It may be hard to see because few think of the huge role money plays in the vast majority of innovation.


Watched a National Geographic "American Genius" episode that covered the Farnsworth/Sarnoff TV saga.


I'm in favor of a strong legal shield. A business started in good-faith with some legal uncertainty that loses a lawsuit shouldn't cause its owners to have their wages garnished for the rest of their lives.

Shell companies whose sole purpose is to shield the owners from lawsuits that they're planning to make seem like a different matter, though. It would be dangerous to limit them while preserving the usefulness of the first case, but I was mainly asking if there was already something in the law for this. It sounds like there isn't?


One way to deal with the shell problem us to require a bond to be posted, that's forfeit if the lawsuit is found without merit. An insurance company then can pick the risk and set the premium according to their assessment whether the lawsuit has been filed in bad faith.

The court will have to work extra hard to make the distinction, but that might be the acceptable compromise in dealing with shell companies.


Would that mean every business would need to have a bond, or just in the case of litigation?


Only for litigation they initiate.


Here's an idea: undertake tort reform, don't allow corporate shields to exist that allow for shell companies like this one, and fix the very broken patent system.

I'm certain that all three things can be done in parallel.


We can fix rentiers and less than savory Texas attorneys at the same time.


Do you really want to be on the hook for legal fees? You start company x. Company y, a larger wealthier foe, pummels you in court over questionable claims, say another broad and abstract patent. You lose, get a judgement and have to pay legal fees.

Your company folds. Company y then requests your corporate shield be taken down. Now you personally have to pay his $5 million in legal fees which are now on you. You lose your house, you get your wages garnished forever, etc.

You want this?


Under the American rule (as opposed to the English rule) loser pays is very rare. Specifically for patents the law only authorizes them in "exceptional cases". In this case they were ordered for filing numerous frivolous lawsuits. Nothing in the scenario you outlined suggests anything exceptional. Defendants are allowed to defend themselves.

If a court finds a defendant meets this high burden as to the plaintiff's actions, then yes I think the real parties in interest behind the corporate veil should be on the hook. What's the alternative? That defendants who were the victims of frivolous lawsuits have to pay hundreds of thousands of dollars out of their own pockets? Who knows what assets had to be sold to raise that money or whose livelihood was destroyed? How is that an equitable outcome?


We also do not want what we have now - where you can sue with impunity as a patent troll as a means for profit. Because you cannot hold individuals liable for their businesses, people can exploit that loophole for profit.

But what you touch on is a more fundamental issue that the "justice" system in the US is more often than not a competition between who has the most money on hand, and as a means for lawyers to profit generously, rather than anything righteous or just.


There's another angle to attack that particular problem - sanctioning the attorneys that bring and threaten frivolous patent lawsuits.


There is no better system, as long as two people have different opinions on what is righteous or just.


It's a great system in commonwealth countries. It discourages litigation from larger companies precisely because the judge has discretion to award costs. In some cases the judge can even award in favour of the plaintiff, and then award costs against them as well. Yes - you should want this.


It would be nice if it only applies to scummy patent holding shell companies though!


The ArsTechnica piece says the judge ruled the patent invalid. I assume that overrides the USPTO?

"eDekka's patent, which had been used to sue a wide array of online retailers, described nothing more than "the abstract idea of storing and labeling information," Gilstrap found. Those were "routine tasks that could be performed by a human" and didn't meet the standard for getting a patent. Gilstrap ruled the patent invalid."


> The ArsTechnica piece says the judge ruled the patent invalid. I assume that overrides the USPTO?

Correct.

If the USPTO or the Federal Court invalidates it, it is invalid and stays that way.

http://www.uspto.gov/patents-maintaining-patent/patent-litig...

> In general, patents can stay in force for up to 20 years from the time of filing although the actual length of a patent’s life can vary depending on a variety of factors. More information about patent term, and an explanation of how to estimate whether a patent has expired, is available on the Patent Term Calculator webpage. Also, note that the claims of a patent can be invalidated by federal courts and/or the USPTO only prior to their expiration date.


Wish we could do this for extending Copyrights so that Disney gets their Golden Ticket for Mickey Mouse and everything else gets to be Public Domain.

Make it cost $20,000,000 to file the motion, a million to every Senator's campaign fund and $25,000 for every Representative and $2,000,000 for the Chairman of every committee.

That way it is just upfront who wins a special copyright extension and everyone else get's Anne Frank's Diary, the rest of Sherlock Holmes and the Autobiography of Malcolm X.


What does patent law have to do with Mickey Mouse?


Why is this downvoted? Copyright and patents are two completely separate things.


Yes that is 100% why I said I wish this could be done for COPYRIGHTS. Guess this is the new Hacker News read a portion and then down vote. (This will get down voted by at least two people.

If there was no Disney there would be now Copyright Extensions where we have No Public Domain works entering the US system for the last 30 years.

http://artlawjournal.com/mickey-mouse-keeps-changing-copyrig...


> Wish we could do this for extending Copyrights so that Disney

I am saying I wish a court could just make rulings on copyrights.

http://artlawjournal.com/mickey-mouse-keeps-changing-copyrig...


Didn't they pass some law making patent trolling a lot harder to do? People keep telling me this, but this behavior seems to continue.


There is a proposal to make it slightly harder to troll called the "Innovation Act." You can look it up on http://thomas.loc.gov

IT has not passed.


How the hell does something like this get granted a patent? https://www.google.com/patents/US6266674


It gets worse. https://docs.google.com/a/google.com/viewer?url=www.google.c...

Talking between two tin cans and a length of string.


Did you read the patent? That's not tin cans and a string. It's an improvement that allows it to be packaged in cereal and assembled by the end-user.

Sure it's not complicated, but novel inventions aren't always complex. This is a unique-enough idea that it probably deserves the patent.


i just looked through it beyond the abstract after your comment. "probably deserves a patent" is a weak argument for granting protection.

i did not find anything that was so novel as not to be obvious to any high school student if presented with an assignment to design this device with the purpose of minimizing cost/weight/assembly.

i suppose it does protect from very literal copying, but it is trivial to make any of a dozen modifications such that not all claims hold up to scrutiny.


The "claims" portion of the patent does not reference any of that. The scope of the grant is wider than you think.


The claims establish the legal bounds of a patent, however, they must be read in light of what is disclosed in the specifications. The enforceable scope of this patent is fairly limited.


You would think so, but in practice, that's not really what happens. NCR, for example, successfully settled with many companies "infringing" on their ancient patents with their ecommerce sites. The patents predated ecommerce, and made reference to things like microfiche.


tl;dr:

"This configuration is the most advantageous for molding and for shipping in cereal packages."

The patent is on the specific packaging efficient design, not on the general idea.


What matters is "the claims". That text is not in the claims.


Good note, thanks for the warning. My quote is the patent applicant's summary of its invention and so worth taking with a large side of salt. I'm far from an expert but my interest has been piqued.

Reviewing the document after this note, I would say that the claims[1] themselves seem more vague than the diagrams suggest, but refer to the diagrams. Taken together the claims and diagrams referenced therein suggest a specific device, but the claims taken alone could equally apply to a much broader set of possible devices, which are nonetheless at least superficially distinct from the traditional tin-can walkie talkie. However, the nesting configuration does not seem to be covered by the claims explicitly, though it is illustrated in the diagrams.

If the claims irrespective of any referenced figures compose the whole of the patent, then it would seem that this patent took the general idea of a tin can walkie talkie and added a couple very straightforward practical construction considerations to obtain a patent that covers a large chunk of the possible ways you would want to go about mass producing a tin can walkie talkie inspired device. To wit, the claims seems mostly descriptive of a tin can-style walkie talkie with notches cut into the lip surrounding the diaphragm, then limited to more common modern mass production materials including poly resins, paper, and plastic. That is pretty broad without bringing significant innovation to the idea (unless I'm missing other nuances in the claims that make the invention described distinct from the platonic idea of a tin can walkie talkie other than the notches and the material).

If on the other hand, the specifics set out in the figures add restrictions to what is covered by the patent, i.e. if the patent doesn't cover items which could be construed to hold to the text of the claims, as long as they substantially diverge from the specifics of the figures, then the patent seems fairly specific.

I would be interested in any commentary on whether the figures are purely illustrative or if they actually add specificity apart from the text of the claims that further restricts the scope of the patent. Given the comment I'm responding to, I'm guessing that they are purely illustrative, which in this case seems to mean completely misleading since a more accurate illustration of the 'innovation' would be a tin can with notches in the lip surrounding the intact end of the can along with a note "not made out of tin", more or less.

[1] The claims:

1. A device for communicating comprising a flat base and a hollow frustum integral therewith and extending outwardly therefrom, retaining means at the smaller end of said frustum, a discrete diaphragm complementary in shape to said smaller end of said frustum and held thereagainst by said retaining means, and means for connecting a string between a pair of said diaphragms, whereby when a string between two diaphragms is under tension conversation into one device is transmit ted via the string to the other device.

2. The device set forth in claim 1, wherein the intersection between said base and said frustum is oval.

3.The device set forth in claim 1, wherein said resilient retaining means includes an inwardly facing flange at the smaller end of said frustum with a plurality of tabs spaced therefrom and integral therewith.

4. The device set forth in claim 3, wherein there are tabs spaced equidistantly around the periphery of said flange and spaced therefrom to define four undercuts therebetween.

5. The device set forth in claim 1, wherein said connecting means is spaced apart apertures in said diaphragm.

6-9 just cover suitable materials


Here's a patent that I feel is somewhat similar in it's obviousness and overly broad claims:

http://www.google.com/patents/US6361186

The litigation over this one shut down an entire functioning company and a lot of people lost their jobs. The companies that were sued by the patent holders provided "simulated neon" with products that did not resemble the diagrams in any way, other than the real general theme of "a translucent tube/rod/whatever backlit by LEDS such that it looked like neon".


submitted on Apr 1 probably as a joke.

Is this patent actually valid?


http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sect2=H...

Valid and it wasn't submitted on April 1, 1980 it was approved on that date.


a fitting coincidence for this joke of a patent. /imo


It's real and granted. They were made to put into breakfast cereal as prizes by a toy company (Rb Toy Development Co) that holds many other patents. I suspect the April 1st date is just a coincidence.




How do you even enforce a hair style patent?

Do you go after the people who have the hair style, or the hair stylists?




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