“Last month, we were hit with two new patent troll cases. With each, there was no warning, no offer to license – just a lawsuit.” Sun Microsystems general counsel Mike Dillon doesn’t hold back (May 14).
Posts Tagged ‘patent trolls’
Update: Streaming-media patent troll goes respectable?
The Electronic Frontier Foundation in 2004 derided Acacia Technologies Group’s claims of ownership over streaming-media technology as “laughably broad” (see Aug. 17, 2004), but the firm has prospered since then through licensing deals with big companies. It hasn’t had to face its toughest courtroom challenges yet, though. (Xenia P. Kobylarz, “Extreme Makeover: From Patent Troll to the Belle of the Ball”, IP Law & Business, Feb. 15).
Patent troll, meet Rule 11
Just sending out batches of letters claiming infringement and demanding money may no longer be a workable business plan:
Based in the British Virgin Islands, Eon-Net is run by an evangelical minister-cum-inventor, who holds several patents (including one on a device for collecting “canine waste”). In March 2005 the company filed a patent suit in New Jersey against Flagstar, a $16 billion savings bank based in Michigan. The bank was one of 32 companies sued separately by Eon-Net for infringing a patent that, the company claims, covers technology that allows online shoppers to enter information into Web sites and have it transferred to the Web retailer’s computer. Eon-Net, which also has pending litigation against JetBlue Airways and Liz Claiborne Inc., had successfully extracted settlement money from ING Bank and Sony Corp. over the same patent.
Eon-Net’s enforcement method involved filing a complaint followed by a letter offering a settlement ranging from $25,000 to $75,000.
Flagstar decided to fight the suit, and its attorney, Melissa Baily of Quinn Emanuel, noticed that Eon-Net’s lawyers “had used nearly identical complaints and demand letters in all 32 suits,” suggesting a lack of careful advance investigation. Although Rule 11 sanctions are especially hard to obtain in the Ninth Circuit, Western District of Washington Judge Marsha Pechman agreed that the suit was both baseless and made without reasonable inquiry and, after ruling in favor of Flagstar on summary judgment in the case itself, ordered Eon-Net and its attorney, Jean-Marc Zimmerman, to pay the bank’s defense costs, estimated at more than $100,000. (Xenia P. Kobylarz, “Patent Trolls Put on Notice Over Generic Infringement Letters”, IP Law & Business, Dec. 14).
“Jay-Z versus the Sample Troll”
“Similar to its cousins the patent trolls, [Bridgeport Music Inc.] and companies like it hold portfolios of old rights (sometimes accumulated in dubious fashion) and use lawsuits to extort money from successful music artists for routine sampling, no matter how minimal or unnoticeable. … Since 2001, Bridgeport’s shotgun approach has led to many dismissals and settlements, but also two major victories. … there’s only one appellate court, the 6th Circuit, that takes the ridiculous position that any sample, no matter how minimal, needs a license.” (Tim Wu (Columbia lawprof), Slate, Nov. 16). Frank Pasquale at Concurring Opinions has some further thoughts: Nov. 21. More on sampling litigation in Ted’s “Overlawyered iMix” post, Aug. 9, 2005, and comments.
Patent trolls and Paul Allen
In his New York Times column today, Joe Nocera recounts a battle between a company called Audible.com, headed by Donald R. Katz, and one called Digeo, backed by Paul Allen of Microsoft fame, over whether Audible was infringing on Digeo’s patents. The column is behind the TimesSelect screen (“Tired of Trolls, a Feisty Chief Fights Back”, Sept. 16), but David DeJean at ComputerWorld summarizes some of the relevant content and poses some pointed questions for Mr. Allen (” Patent troll? Say it ain’t so, Paul Allen”, Sept. 16).
“Meet the original patent troll”
“Troll was a derivative of, er, me,” says Chicago patent litigator Raymond Niro, a pioneer of contingency-fee IP practice:
Niro’s former partner Gerald Hosier found fame and fortune turning Jerome Lemelson’s patents on bar code technology into a billion-dollar licensing business. But Niro taught the patent world a more enduring lesson: Lemelson isn’t unique. Like an irritating mosquito that GCs can’t squash, Hosier’s licensing approach could be applied over and over again, on different patents across different industries for huge profits. Niro has extracted royalties on everything from patents covering hemodialysis catheters to wireless technology used to locate items of interest in online maps. In the process, he’s made some serious royalties of his own: a Falcon 10 jet, six Ferraris, acres of land in Chicago, Boca Raton and Aspen, and a $250,000 gift to DePaul University endowing the Raymond P. Niro professorship in intellectual property law…. Love him or hate him, Niro’s methods have become ingrained in the patent world.
(Lisa Lerer, IP Law & Business/Law.com, Jul. 20).
Trolls-B-Gon?
Forbes says “patent trolls” will be deterred by the Supreme Court’s new ruling in the eBay case, in which “the justices ruled unanimously that federal courts must weigh several factors before barring a patent infringer from using a contested technology or business method.” (Jessica Holzer, “Supreme Court Buries Patent Trolls”, May 16)(& Lattman)(opinion, PDF).
“Patent troll”
…made the American Dialect Society’s list of “Words of the Year 2005” (PDF) (Jan. 6). For more on patent trolls, see our tech/IP page. Also: Patent Baristas, Jan. 4, and Peter Zura’s 271 Patent Blog, Dec. 29 (both via Blawg Review #40 at Small Business Trends).
“Making the Leap from PI to IP”
Some Texas personal injury lawyers, feeling squeezed by that state’s far-reaching liability reforms, are eager to shift into contingency-fee patent litigation work, especially in the plaintiff-friendly little jurisdiction of Marshall, Texas (see Jan. 14)(Alan Cohen, Law.com/IP Law & Business, Nov. 14).
Wall Street Journal on patent trolls
All sorts of interesting reporting on the news side of the subscriber-only WSJ:
In one of Douglas Fougnies’s early business ventures, he provided phony new-vehicle titles for stolen cars. His partner, Larry Day, is a onetime blackjack dealer in Las Vegas.
Together, the two men have found a more lucrative line of work: suing cellphone companies for patent infringement. Earlier this year their company — which consists of four employees and six patents — won $128 million in damages from Boston Communications Group Inc. and four other companies over alleged misuse of a 1998 patent.
Suing can be as lucrative as manufacturing as a way to profit from a patent, sometimes a lot more so:
Lured by the potential returns, hedge funds and other institutional investors now are bankrolling businesses that buy up patent portfolios. More law firms, including some branching out from product-liability and malpractice work, are taking patent cases on a contingency basis. That means the law firms are paid a percentage of any damages awarded but little or nothing if the patent-holder loses.
(William M. Bulkeley, “Aggressive Patent Litigants Pose Growing Threat to Big Business”, WSJ, Sept. 14)(sub). For more, see Sept. 1, May 2 and many other entries on our technology/intellectual property page.
In a major development, however, the federal judiciary seems to be ringing down the curtain on the most successful and controversial patent-prosecution shop of all time (Aug. 23, etc.): “After hundreds of companies paid inventor Jerome Lemelson more than $1.5 billion in licensing fees, the U.S. Court of Appeals for the Federal Circuit has concluded that his patents aren’t enforceable after all. The Federal Circuit ruled Friday that Lemelson’s 18- to 39-year delay in prosecuting patent claims relating to machine vision and bar-code technologies was unreasonable.” (Brenda Sandburg, “Lemelson Patents Ruled Unenforceable”, The Recorder, Sept. 13; Dennis Crouch, Sept. 9; IP Litigation Blog, Sept. 11; David Jacobs, MassLawBlog, Sept. 15; TechDirt, Sept. 12; LemelsonInfo.com; AP two-part series reprinted in Miami Herald, Aug. 20 (part I) and Aug. 21 (part II)).