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Angry entrepreneur replies to patent troll with racketeering lawsuit (arstechnica.com)
308 points by Suraj-Sun on Sept 16, 2013 | hide | past | web | favorite | 62 comments



This points to an interesting strategy folks could take when taking on Patent Trolls ... cutting through the corporate veil of the holding companies and personally identifying the people who are behind the trolls....the inventors, the patent owners, the lawyers, etc.

Not to cross the line by slandering them, but just shining a light on them -- shaming them, basically.

I'm sure plenty don't and won't care, but I wonder whether it might make a dent. Maybe that inventor who figured "sure, why not - free money from my patent" might have a different feeling if the whole world knows what they're up to and doing so damages their reputation.


There's no need to pierce the corporate veil - RICO charges are against the individuals involved, not the corporation. Their personal assets can be seized even prior to prosecution. It's a brutal law and this is a wonderful way to apply it.

From http://en.m.wikipedia.org/wiki/Racketeer_Influenced_and_Corr...

"The RICO Act focuses specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them, closing a perceived loophole that allowed someone who told a man to, for example, murder, to be exempt from the trial because he did not actually commit the crime personally."

For example in the case that a corporation commits the covered crimes, such as extortion, the individuals driving the actions are subject to RICO prosecution.

The penalties are brutal, it's fantastic for trolls:

http://www.law.cornell.edu/uscode/text/18/1963


> The penalties are brutal

And, regretfully, it's likely the reason why RICO won't be applied against patent trolls.


And once you start forfeiting the troll's assets right out from under their noses, well that is really going to leave a mark.


The most beneficial aspect of reacting this way is probably from letting others being victimized by the troll know that they are not alone. I am sure these trolls are careful to only bite off what they think they can chew, but if their targets begin banding together they may find themselves choking.


My thought is that one of the best paths to patent reform is that all patent infringement claims must be publicly submitted, even prior to legal filings. In other words, you can't send me a letter claiming I've infringed. You have to submit it to a government office, who will then forward the claim on to the alleged infringer. This would allow for A) gathering data on actual infringement claims. B) verification of claims. C) collectivization of resources of targeted parties.


This is the best solution I have heard yet! I wish this would get implemented.

For now, a public wiki like system to which anyone could submit claims made against them for patent infringements in order to find others in the same situation, in order to join forces, would be great.


See http://www.trollingeffects.org, a project of the EFF.


There's also http://patents.stackexchange.com, which allows users to request and submit examples of prior art.


I find it hard to reconcile the idea that courts provide justice with the extremely high cost to the interested parties.

I see nothing inherently wrong with being a patent "troll". The idea behind patents is to provide financial incentives to innovation. A little guy with a legitimate patent may have difficulty convincing large corporations to pay a license fee. One way for such a person to reap that benefit is to sell the patent to a holding company that does the work of monetizing the patent. Or to seek settlements and avoid long legal battles that he or she may not have the resources to endure. Patent "trolls" are just the market at work, and that is normally a good thing.

The problem is, the high cost of litigation makes it a very easy system to abuse. That high cost imbues patents with a substantial value regardless of their merit. It's very easy to disagree about whether a patent applies in a particular situation, or is even valid generally, but very costly to resolve such disagreements.

Unfortunately, you can't just shift the cost burden to the trolls, because then you also have to stick the little guy with the cost of sueing a giant multinational corporation for any wrongdoing. It's hard enough as is. It may seem easy to tell the difference between those situations, but it's difficult to encode those ideas in laws that apply universally. Other solutions tend to have similar problems. This RICO thing could potentially affect future class action suits against Big Evil.

My point, I guess, is this: the real problem isn't the "trolls" but the high cost of justice. Short of eliminating patents, to attack the problem from any direction other than the cost of justice tends to turn it into the same sort of thing as pornographers and free speech. You can't easily attack patent trolls or pornographers without damaging other users of the courts or of free speech.


> A little guy with a legitimate patent may have difficulty convincing large corporations to pay a license fee.

I think the key distinction is that "legitimate patent" would seem to have a different definition for the USPTO than it does for the technology industry.

For example USPTO considers sending a scan to an e-mail a legitimate patent, while I would venture to guess the tech world does not: http://arstechnica.com/tech-policy/2013/04/meet-the-nice-guy...

So yes, some of these are so broad and obviously just there to make a buck - like the swipe option.

The idea of a patent was to ensure that the creator who had spent considerable time, energy and money creating the invention was ensured that for some period he could benefit from that. Being the first person to patent something which is simple and often thought up does not in my opinion meet that threshold.


There needs to be a cheaper way to challenge patents and force the USPTO to do a thorough job of it. If the obvious option is always, "nope, challenge", and the usual outcome is, "hm on second thought it doesn't take a rocket scientist to come up with scan-to-email"; patent trolls would find some copyrights to troll or move into a related field like blackmail.


I don't get this.

Its simple, why can't we just tell HP or Canon we would get sued if we used their printers. So we won't.

HP or Canon has much to lose here. And its very obvious a big part of business is under a threat because of these stupid games. They would definitely take on the troll themselves.


Yep - it's this gap between common sense and actual patents that the patent Trolls are exploiting. The only true way to fix it is to reform the patent system itself.


You hinted at the solution in the last paragraph. Eliminate software and process patents entirely. They are stifling innovation at this point instead of encouraging it.

Eliminate all patents if need be.


That's _a_ solution, though it's arguable whether it's a good one. Obviously the current implementation of patents has numerous downsides. The costs are high. But what are the benefits? If they even slightly outweigh the costs, then having patents is better than not having them. And regardless of the cost/benefit ratio, is there a better implementation of the idea?

The intention behind patents is clearly a good idea. Who can argue with fostering innovation in a way that requires open publication? (Open source your idea, receive profits!) If anything, software patents are even more important than other kinds, in this age of the cloud and web services where there are no physical artifacts that can be taken apart and studied. We can take apart a cotton gin, but we can't see Google's source code. At least we get the PageRank patent.

There is less need in software for the monopoly benefit, and more need for open publication requirement. That's what makes software patents different than other kinds.


The patent expiration on a drug is a huge event and it provides tangible benefits - creation of a drug, and then wider availability.

The same is hardly true with software and many other technologies. By the time the patent expires, the described technology is frequently obvious and offers little additional value.

Patents may be a good thing when applied correctly, but use of software with a vague tie to some physical hardware is not the right way to apply it, as evidenced by the these extortions.

If one actually examines how the software is being patented and the problematic linkages to hardware that make it patentable, the entire argument falls apart in my eyes.

"For computer implemented processes, the “machine” is often disclosed as a general purpose computer. In these cases, the general purpose computer may be sufficiently “particular” when programmed to perform the process steps. Such programming creates a new machine because a general purpose computer, in effect, becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software." [1]

In other words, the only thing that separates software from a business methods, which enjoy much less protection, is the fact that instead of a human performing the tasks, a general computer is performing the tasks.

If you consider a software program is nothing more than a collection of instructions, it then can be considered similar in nature to a operator's manual given to a worker processing something.

[1] http://www.uspto.gov/web/offices/pac/mpep/s2106.html


Software patents are not as useful as a cotton gin patent because:

1. Most software can be reverse engineered through observation, without disassembly.

2. A sizable chunk of software innovation is already publicly documented in the form of research papers.


> I find it hard to reconcile the idea that courts provide justice with the extremely high cost to the interested parties.

This is a shortcoming of the justice system.

> A little guy with a legitimate patent may have difficulty convincing large corporations to pay a license fee.

Isn't this also a shortcoming of the justice system, partially if not entirely?


"That set in motion a bizarre series of events. Lumen View's lawyer accused O'Connor of committing a "hate crime" by calling the inventor, Eileen Shapiro of Hillcrest Group. ("I didn't know patent trolls were a protected class," quips O'Connor.) Then the lawyer threatened criminal charges (again, for calling an inventor). From there, it got personal."

I'm getting flashbacks to that "The Oatmeal" incident and, in a less extreme way, Jack Thompson. These people sound positively mental. Is there a term for when lawyers meltdown like this?


> These people sound positively mental. Is there a term for when lawyers meltdown like this?

If not ... are they drafting for the DSM-6 already? :)


The first lawyer I witnessed publicly losing it was Charles Carreon during the Oatmeal lawsuit. The term could be "oatmealing" =)



I think a person acting in this way is best classified as a sociopath.


If we're going for diagnosis-via-internet I think that it sounds a lot more like ILD (Intermittent Lawsuit Disorder). It's a pretty classic case - sudden displays of aggressive legal threats, weirdly self-righteous justifications, conflating criminal & civil law, completely disproportionate responses, and assertion of bizarre offenses. I think it meets most of the criteria in the C&DSM IV.

Less flippantly I think that there may be a pretty strong correlation between these behaviors and personality disorders, but bullying and animal threat display behaviors are still relevant models. It's potentially a big mistake to confuse one of these people who is panicking and trying to use intimidation as a response with someone who has slipped into a state of irrational anger & obsession. The former can be dissuaded or possibly negotiated with, the latter is more likely to just keep escalating. In particular I'd presume that the latter are more likely to actually file the frivolous lawsuits and it's a higher priority to get everything locked down on the legal front. Generally a good idea anyway.


The idea behind requiring quick action on someone's part is to exploit the emotional impact of a demand so the person who is being backed into a corner doesn't have time to think and just reacts to remove the pain.

Without a time constraint people end up gathering information, and getting over the psychological shock that clouds judgement.

A somewhat similar concept (not related to this) is the idea that "time kills all deals". The more time goes on the less likely a deal will occur.


Is there a database of patent trolls, like a wikipedia where everyone documents their experiences or lists these people? Searching for Mrs Shapiro shows that she is a VC in Boston, should the people behind the shell companies be unearthed and put in a database?

EDIT: This was found on reddit from 2yrs ago, "So, Shapiro and Mintz (whom I'm still trying to track down) have some other patents with associated LLCs, all colocated with Hillcrest: System and method for authenticating and registering personal background data, assigned to VeriVita; and System and method for facilitating bilateral and multilateral decision-making, assigned to DecisionSorter LLC. There are also some patent applications, which haven't been granted and therefore don't have assignees yet. See this google search. With another partner, Shapiro also has Apparatus and method for authenticated multi-user personal information database assigned to Gold Standard Technologies, again colocated with Hillcrest. Given that she's an MBA, and seems to collect patents and LLCs, I'm thinking "IP entrepreneur"/patent troll."

http://www.reddit.com/r/AskReddit/comments/fog7u/hey_reddit_...


PlainSite keeps track of trolls, patent assignments, trademark assignments, parent companies, litigation, judges, lawyers, firms, and a lot more.

http://www.plainsite.org/tags/index.html?id=635


It would be awesome if someone set up a db like the one you're describing, where users could identify trolls anonymously and submit other information about them, including links to parent companies.


Anyone can tag any entity on PlainSite with anything, including Patent Troll. You have to be signed in but your identity isn't revealed in connection with the tag.


I don't think it should be anonymous. Patent claims should be required to be public and searchable, prior to legal filings.


Anonymous for the submitter of the information, not the assholes exposed by it.


Well yeah, i get that, but they shouldn't have to be anonymous about the fact they're getting trolled. this should be all out in the open.


Appreciate all the support. I'm on my way to Washington DC to meet with some members of Congress in hopes of influencing some legislation to minimize the huge negative effects these trolls have on our industry. I'm also on a panel tomorrow night with the chief lobbyist for "intellectual" ventures. Should be fun.

The bad news is these huge, institutional patent troll companies will be influencing legislation via "contributions" which is hard to overcome. There's billions at stake here.


The last few ArsTechnica articles posted to HN have had really terrible writing.

This one doesn't even introduce the patent troll (Lumen View), but just mentions their name with no introduction, as if everybody will know who they are and that they're the patent troll.

Ars used to be really good, it's unfortunate their writing quality is getting so bad.


I don't know if the article was edited after you made this post, but Lumen View was introduced further down the article.

  Lumen View is owned, at least in part, by Eileen Shapiro, a Boston 
  executive who works at a company called the Hillcrest Group. She 
  has a co-inventor named Steven Mintz, who FindTheView also believes 
  is involved with the operation.


It mentions that RICO cases against patent "troll" companies have been tried twice before, and both failed, then moves on without any other information. I feel like that information is relevant to this story.


There seems to be a new editorial team, and with that tone. As you point out the quality of both the articles and subsequent discussion has dropped considerably. It much more like the Verge now, which IMHO is not necessarily a good thing.


I'm with you on this one. I scrolled up a few time to see who Lumen View was and they had never introduced them.


If going for RICO, why not ethics type complaints with the attorney's bar? I have no idea what type of success one might expect, but clearly baseless threats of criminal charges and what have you is out of line. I would also think "escalator clauses" for filing a response in court is also illegal or at least unethical, and could potentially get the lawyer(s) suspended or reprimanded. Probably the fastest way to kill a patent troll is to take out their legal!


I would say the same thing but remember we are talking about attorneys here and they are good at getting a leg to stand on when their ass is on the line.

Not to mention the fact that one strategy is simply to flood the deciding party with so much information at once that the main points get lost and diluted with other issues that don't matter.

One of the reasons criminal trials take so long. If you were a defense attorney and had a jury wouldn't you try to string out the trial as long as possible to numb the jury so that the main points against your client were buried with a bunch of less relevant data?

(Similar to a kid getting into a dispute with a sibling where the parent gets so frustrated they don't even want to decide the issue they just punished both parties?)


Eileen Shapiro's shell companies:

http://www.plainsite.org/tags/index.html?id=704

It's not clear to me where the case mentioned here was actually filed. I can't find it on PACER. Anyone?


The RICO case was filed before the US District Court of the Southern District of NY.


I wonder why it isn't showing up? Do you know the case number?


I thought it was interesting that they named companies who'd settled.

It would be interesting to make a site isettled.com where people could leak that a company had settled to trolls. The idea being that you'd have to weigh the cost of fighting the troll against the risk of bringing a flood of secondary trolls. If the secrecy was removed it would start to make business sense to fight


Double Click, Which was known to being a privacy nightmare in its time -- if i remember right; - Glad to see $1m of that money is going in fighting a patent troll.


Everything doubleclick was doing is still happening. We've just gotten more comfortable with the idea—or people have forgotten its going on.


On this matter, this needs to be traced:

http://slashdot.org/comments.pl?sid=3891677&cid=44076497

An important information from the "confidential" studies here for example would be what kind of monitors were tested.



It's a shame that it comes to this - someone fighting with their personal wealth. The patent trolls are very well funded.


It's not that they are well funded, it's just that most people without a pile of cash are very risk averse, and doing what the big mean patent troll says is, to many people, the least risky option.


In general the trolls make a lot of money. 20-50k multiplied by a lot of victims. I recall a news article describing their multi million dollar lifestyles.


It's also unlikely they'd be able to recover meaningful damages from a shell LLC. There's no real financial upside here, just principle.


More power to these guys. I hope they get some legislation going to protect entrepreneurs soon.


There wasn't really any other outcome its why trolling works in the first place. While govts are starting to take note (its affecting non geek industries now...) They're a while off fixing it.

And also on the topic, piss enough people off eventually you'll find one of us willing to throw business "logic" out the window n fight back.


The article says it makes 100% sense from a business perspective to settle. That's not true, at least not in a collective way, where we should fight to make these scumbags disappear. It's a situation where the personal and the collective are at odd.


Lawyers are a "racket." They show up when you have just enough money.


I knew almost nothing about this guy before reading this but I must say, karma be damned, this guy is legend... wait for it... dary!


I don't know what this guy is getting so upset about, he claims his company isn't infringing the patent, so all that he'll have to do is file a DJ for non-infringement. If he's not infringing, he'll win. Then if the 'troll' really didn't do any pre-filing research there are sanctions the judge can use to get the company all their attorney's fees back. This is pretty simple stuff, assuming the patent isn't even close to being infringed like the guy says. Nothing to get all upset about. The system seems to be working just fine. If the patent really is infringed and is valid, why shouldn't he have to pay a license? Also, pledging $1mm to defend a patent infringement suit is kind of funny, I think the average is more like ~$6mm.


>I don't know what this guy is getting so upset about, he claims his company isn't infringing the patent, so all that he'll have to do is file a DJ for non-infringement. If he's not infringing, he'll win

I gues this is how it should work in any modern country with working juridical system. Unfortunately it seems to me (note that i'm not from USA) that in U.S., justice is available only to the rich and/or powerfull.

From the article: "Perhaps not coincidentally, $50,000 is just about what it costs to hire a lawyer and file the initial set of paperwork to defend a patent case"


You say that the legal system only works for the rich and powerful, but don't back it up. It's just a blind accusation, bare cynicism.

Money and power can't change facts, and if the infringement accusation is as thin as the article says it is, there is no way a court could find infringement. and as far as the money, that's what rule 11 sanctions are for.

I just don't see anything interesting here, assuming its all as egregious as the article says. now, if its a closer case, then why get all upset? you are infringing someone patent! part them!


>You say that the legal system only works for the rich and powerful, but don't back it up.

I cited from the article that $50000 is required to hire lawyer and fill the required paperwork to defend the case. As i said i'm not from U.S. so i don't know if it is actualy true.

I could probably give you another example... if i'm not mistaken there is very high rate of cases in U.S. which end with some kind of settlement without ever getting to the trial. Often fears of financial expenses play a big role in those settlements which seems hardly fair to me.




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