Definition - "Patent Troll"

"PATENT TROLL" - Any party that intentionally misconstrues the claims of their patent to assert it against another. A patent troll does not have to be a non-practicing entity (NPE) or in any particular industry, all that is required is an intentional misconstruing of the claims in an attempt to extort money from another.


Disclaimer - All information and postings in this blog are provided for educational purposes only. Nothing in this blog constitutes legal advice and you should not rely on any information herein as such. If you do not have a signed engagement agreement with me, then you are not represented by me and you should retain your own attorney for any legal issues you are having.

Thursday, June 16, 2011

More potential prior art for Lodsys patents

Note - I really like this first reference, but have not had the time to compare it to the claim charts.














Non-Patent Literature  (I currently have not found these references, but would like to see them.)

"Tiny Computer," Popular Science, Feb. 1977, p. 75
"Infopac I1/2 Data Terminal," Azur Data Literature, Mar. 1976

Thank you to Richard Pitt in the comments to pointing my search in a specific direction.


Financially Viable Patent Defense Strategy for Application Developers

Some commentators believe low-income application developers have no ability ($$$) to defend themselves against absurd patent claims like Lodsys is pursuing.  Such commentators fail to think outside the box and are stuck in sort of an old world way of thinking that does not actually provide real solutions to application developers.

Various commentators, including myself, have mentioned that application developers (or other companies) could join in a joint defense agreement.  The costs of a winning strategy against Lodsys could cost a minimum of $50,000 - $100,000, so even if the couple dozen threatened developers get together, they might still have to pitch in at least $10,000 each.  This may not be feasible or a good business decision for some application developers.

However, there is another option available to application developers and I believe this has to come from the developer community itself.  While this could be tough to implement quickly to deal with Lodsys and Macrosolve, this may help deal with future threats.

The application developer community as a whole, not just those developers that are directly threatened, could start a App Dev Patent Defense Organization.  This could be implemented in may ways and I am sure people will have contributions to this that I have not thought of, but here are the basics:

1) Application developers join and contribute a yearly fee ($500?) to an organization that is solely created to defend members against patent infringement claims. 

2) If massive participation could occur (I've seen the number of publishers near 90,000, but I have no idea if that is true)  If 10,000 developers join, then the fund would have $5 MILLION dollars PER YEAR to defend against the likes of Lodsys and Macrosolve!

That is a sizable amount of cash to defend against any patent threat, as most patent infringement accusations are disposed of for a lot lower amount than that.  There would be a lot of organizational details and structure to work out.  I would suggest to have some type of Troll test so as not to defend against actually valid claim assertions, though that might be too limiting; an alternative may be to limit the fund for paying for defense costs but not paying for judgments of actual infringement.  The fund should not provide coverage for actual infringers of valid patents.

If one of the OS makers (Apple, Google, Microsoft, etc.) included contributing to the fund as a requirement to use their app store, then massive participation could occur.  However, the App Dev Patent Defense Organization should be independent of any OS maker and owe a fiduciary duty to the app developer members, not any OS maker or other distributor. (though conflicts between members would have to be addresses also)

What do people think?  Let me know your thoughts.

Just my thought for the day, if you need legal advice, go hire an attorney.

Tuesday, June 14, 2011

To Kill a Patent Troll

Multiple lawsuits for declaratory judgment against Lodsys have been filed by Foresee, ESET, OpinionLab, and The New York Times.

I previously discussed a strategy to kill a patent troll.  While what is happening is not my actual strategy being implemented, I believe this is an important development that might encourage more companies threatened by Lodsys to file declaratory judgment actions.  Hopefully facing many DJ actions will deter future patent trolls from such aggressive tactics like Lodsys is using, thought I think ultimately we need some reform concerning what is required to file an infringement suit.

I would still like to see many, many more DJ actions filed in many other jurisdictions.  I hope Lodsys sees its legal bills skyrocket.  Though, Lodsys's response so far has been like a wounded animal, lashing out at everything that moves... before it eventually dies off, hopefully.  (In the corporate sense only, I do NOT wish literal death on any person, for the most part.)

Here's to hoping more companies pile onto the DJ actions!  I also would love to see the invalidity arguments... oh the anticipation of a good legal smackdown... (legal geek at heart) I hope that the DJ suits are not settled before disclosing the invalidity arguments.


Monday, June 13, 2011

Issues Raised By Apple's License

Apple is asserting license (contract) rights and patent law doctrines of exhaustion and first sale while trying to intervene in the Lodsys v. small app devs lawsuit.  This is a strategic move on Apple's part for likely many reasons, most of which we can and have guessed at, but will likely never fully know because we would need knowledge of Apple's licenses and relationship with IV. 

Apple's assertion of license rights will revolve around the critical question of who could be an infringer of the Lodsys patents.  If Apple is the direct infringer or caused contributory infringement, then per Apple's assertions, they are licensed for that.  This is the crux of Apple's defense, that Apple and only Apple could be an infringer of the Lodsys patents and Apple has a license which permits that.

However, if Lodsys can somehow establish that the application developers could infringe the patents exclusive of Apple, then Apple's license likely does not apply.  (I personally do not consider this very likely to happen; see my discussion of Divided Infringement.)  I would guess that we will see the application developers respond and assert claims of non-infringement because in essence, that is Apple's argument also, though Apple is being careful not to speak for the application developers.

Thus, if Apple is allowed to intervene and assert it's license rights, the lawsuit will still be decided on the question of infringement (direct, induced, contributory) and non-infringement.  And the issues surrounding Divided Infringement will be heavily analyzed and argued if the lawsuit gets that far.  Thus, Apple's attempted intervention does not necessarily short circuit the lawsuit by itself.  I hoped it would induce Lodsys to back off, but recent news shows that they have an aggressive campaign against many companies.

I have no idea how Lodsys will respond to Apple's assertions because I have a hard time trying to formulate legal strategies that are completely divorced from facts of the case and the law.  Lodsys's claim charts are a joke and no decent patent attorney would ever sign their name to a lawsuit asserting them.  As I have stated a few times earlier, I think Lodsys's patents are likely not infringed by anyone and highly likely to be invalid.

Just my thoughts, retain your own attorney if you need actual legal advice.


Thoughts on Apple's Intervention in Lodsys Lawsuit

If you have not heard, Apple has filed a motion to intervene in the Lodsys patent suit against application developers.  See here, here, or for additional analysis see here

I like Apple's move, as it puts pressure on Lodsys and tries to bring themselves in as a defendant with enough resources to fight Lodsys properly.  However, everyone should understand that Apple is not providing ALL application developers full indemnification.  Apple explicitly states this in the motion to intervene. (I'll add the citation later)  (It is not known if Apple has made individual agreements with the application developers already sued.) This is a smart business move by Apple because it is in their best interests to make sure Apple does not have an implied obligation to provide indemnity anytime an application developer is sued or threatened.  In some situations, an application developer may get sued, and unlike the Lodsys patents, if the patents could be infringed solely by the application, Apple will probably not want to provide indemnification or get involved.  (Note:  These possible situations are typically addressed in a standard indemnification agreement.)

In other suits,  Foresee Results has filed a declaratory judgment action against Lodsys, asking for a finding of non-infringement and invalidity of Lodsys's patents.  See here.


Tuesday, June 7, 2011

Why Macrosolve is substantially different from Lodsys

Macrosolve has been busy lately filing lots of lawsuits.  While Macrosolve seems to be a Troll like Lodsys, there are substantial differences that will affect application developers for their legal strategies and risk analysis.

A huge difference from the Lodsys analysis is that the claims in the Macrosolve patent (7,822,816) (from a quick review) do not necessarily require another party (such as the operating system or hardware) to be infringed, whereas I believe the Lodsys '078 patent does.  That is, in plain english, a software company or application developer could possibly infringe the claims of the Macrosolve patent due to just their products.

What this means from a practical effect is that there may be no hardware company or OS company (such as Apple or Google) coming to the rescue to defend the application developers or offer indemnification.

At this time, I have no opinion as to whether any applications do or do not infringe the Macrosolve '816 patent or whether there are any non-infringement or invalidity arguments with respect to the Macrosolve '816 patent.  From an initial reading of the patent, much detail will need to be analyzed to determine the scope of the claims and how they could apply to each application, which analysis may be different for each application.  Thus, a customized legal analysis for each application developer sued by Macrosolve might be needed.

(I have to run this will likely be updated later)


Monday, June 6, 2011

Leverage If You Are Threatened with Patent Infringement (and why you should ignore FOSSpatents)

Gene Quinn over at IP Watchdog has some good information on "What To Do If You Are Sued for Patent Infringement".  Go read the entire article.  Whatever you do, please ignore the advice of non-attorney commentators (such as Florian Muller @ fosspatents) because they can be shortsighted and are not qualified to provide the complex legal analysis and advice you will need.  (e.g. from one of Florian's latest posts about the Lodsys patents, any patent attorney should be able to recognize that Florian does not understand the law regarding patent infringement and numerous other issues.)

For example, some commentators (including Florian Muller @ fosspatents) are advising targets of patent trolls to roll over and pay the license fee; Florian is even advising you that the license agreement that has not been made public is acceptable for you to sign.  I very much question the soundness of this advice, especially considering the above article at IP Watchdog. Contrary to the bad advice and legal analysis put forth by Florian, there are options available to companies threatened by patent trolls and even if the outcome is a license agreement, Florian's legal analysis and advice is not solid. (I could write a white paper explaining why Florian's analysis is messed up, but I don't have the time right now.  If anyone requests me to provide more detailed analysis, I will put it on my to-do list.)

For starters, in my opinion, Lodsys probably LOVES Florian's analysis and opinions.  (I have no connection or contact with anyone at Lodsys, Apple, and no longer any contact with Florian).  He seems to be making all the arguments that support the troll's business plan - you can't afford to fight, don't even try, the trolls arguments are decent, just give in and sign the license.  Florian dismisses prior art searching, dismisses non-infringement arguments when he clearly does not understand the law, ignores invalidity arguments, misinterprets the claims to determine that Lodsys has a case that is possibly good enough to go to trial (remember, he is not an attorney), and makes statements such as "app devs will lose" unless they have blanket coverage from someone else.  (note - of course, Florian includes CYA language in his posts so that he can have wiggle room out of his responsiblity for misleading people.)

Generally, this is why Florian is wrong:  "In order to be a party at the peace talk table, however, you need to have leverage of some kind, otherwise you are not a party to talks as much as you are having terms dictated."  See Gene Quinn's article.  Gene does not provide a list of what that leverage might be, but he alludes to invalidity or reexam arguments.

To expand on that article, here are potential strategies that could add leverage during negotiations for a company threatened by a patent troll:
- have a non-infringement opinion
- have an invalidity opinion
- have a reexam prepared to file or filed
- file a motion for summary judgment
- file a declaratory judgment action
- consider counter claims (tortious interference, antitrust, etc...)
- have IP insurance provisions
- help fund a joint defense agreement
- hold off settling until a Markman opinion

Many of these strategies can be implemented by a small company.  Some companies may even implement more than one of these strategies at the same time.  As I have said before and Gene notes: "The advice you need, and will get if you hire an attorney, will be tailored to your unique circumstances.There are many variations of these strategies and others that can be implemented that will NOT cost one million dollars.  You need to determine the right strategy for your company based on your circumstances.

Any good negotiator (which IMO excludes Florian) will tell you that you do not negotiate with yourself.  Thus, I have no idea why Florian claims to be supporting application developers when he writes analysis that attempts to shred their potential leverage arguments and advises them to pay what Lodsys is asking.  If someone was truly supporting the application developers, they would be trying to bolster the application developers leverage arguments (as I have been trying to provide on this blog).

Another issue I have with Florian is he seems not to recognize the value of a non-infringement or invalidity opinion, which can reduce a significant amount of risk for a comparatively small cost.  Just another fail in his analysis.  (I think his excuse for will be that none of the accused application developers have the resources available for any strategy other than pay the fee.  Again, I think this shows why Florian is not qualified to advise anyone on strategy or risk concerning patent litigation.)

On a personal note, Florian accused me of being an "anonymous smearer".  While I am doing this anonymously, my response still stands:  "FYI rebutting factually inaccurate statements does not make me a "smearer", it makes you uninformed".

If you are threatened, whatever you do, hire an attorney to advise you for your particular circumstances.  There are many options and strategies available to you whether you fight or negotiate.

Just my opinion, go hire your own attorney for legal advice.

Saturday, June 4, 2011

Hint of help for app devs? Just speculation...

Yesterday, @chockenberry (Craig Hockenberry creator of Twitterrific) posted on Twitter: "Do the developers affected by Lodsys a favor next week: don't ask questions about what's going on. We can't talk about it. #wwdctips"

Please listen to his request, as I am sure there is a good reason.  While I wish he could talk about it, please respect that there are reasons why he can not.

Though, I am in a mood to speculate this morning, so I asked myself "Why can't they talk about it?" and here are some possible reasons:

1.  Maybe the app devs are in confidential negotiations with Lodsys and agreed not to talk about it publicly.

2.  Maybe Apple's legal team is talking to the app devs and they agreed to confidentiality with Apple.

3.  Maybe the app devs are in a joint defense arrangement with other app devs and they agreed to confidentiality in the joint defense agreement.

4.  Maybe their legal counsel advised them not to talk about it.

5.  Maybe the app devs are just sick of all the bullshit surrounding the issue and don't want to talk about it.

I personally hope that this tweet is an indication that option 2 or 3 might happen, but I have absolutely no inside information and this is pure speculation.  What I do know is that litigation is stressful for most parties involved, especially a small company that may be inexperienced as a defendant in a patent litigation.

Whatever the application developers do, I hope they have retained their own counsel (even if option 2 or option 3 is occurring) to look out for their interests first.

If anyone thinks of anymore reasons (hey, I think I do a good job, but I am not infallible) to add to the list, let me know.


Friday, June 3, 2011

More analysis and claims charts of Lodsys patent

Another firm, M-Cam, which is not associated with me in any way, has also done a good analysis, prior art search, and claim charts concerning the Lodsys '078 Patent.  See here.

The prior art focused on for the '078 Patent are:

US 4,634,845 - Portable personal terminal for use in a system for handling transactions

US 5,535,407 - Data processing system for locally updating customer data distributed by a host computer to a remote facility and for returning the updated customer data to the host computer

Their report is detailed and includes even more prior art for people to consider.

UPDATE (6/5): I have spent a little more time reviewing the M-Cam document.  While I am glad to see other organizations out there trying to help invalidate Lodsys's patents, their analysis, in my opinion, ignores some basic issues:

1) They state "Apple maintains that developers are legally covered under their license, citing the legal doctrines of patent exhaustion and first sale".  While I acknowledge that many non-attorney commentators are making similar statements, that is not exactly accurate from a legal standpoint of what Apple's letter stated.  Any good patent attorney should be able to dissect the Apple letter to really get at the heart of what they were saying.  For example:
 "Sewell recognizes that it is Apple, not the developer, that provides most of the claim elements in any reasonable mapping of the claim, and asserts that Apple is licensed to practice the inventions.  He says developers are protected by Apple's license, not that developers are fully licensed."  See igoeIP Apple Patent Blog.

In essence, this is all about divided infringement and non-infringement by the application developers.  The rest of Apple's letter is smoke and mirrors and any good patent attorney can tease out the true legal arguments.  Also see IP Watchdog.  I expect someone trying to produce a document such as M-Cam should understand and explain these legal distinctions.

2) Seems like they used "M∙CAM DOORS™ analytic platform", which I would guess is some sort of automated claim analyzer.  While such systems can be powerful and useful to point a prior art search in the right direction, analysis of claims need to be done by an attorney, which they do not say has occurred.

3) They compare claims of the '078 patent to claims of the prior art references.  This seems very odd to me, because an invalidity argument is not based on the claims of the prior art, but what the prior art teaches as a whole.  Thus, a patent attorney would not likely make such a chart for an invalidity argument using just the claims of a prior art system, they would include analysis from the rest of the reference.

4)  They completely ignore one of the major issues of the claims, what a "user perception of the commodity" is and whether their prior art addresses such.  A patent attorney should never write such a document while omitting any analysis of such an important claim element.

My conclusion: the art M-Cam cited is relevant, but they are far from having a high quality invalidity claim chart.  To be clear, M-Cam never asserted or labeled their claim chart as an invalidity claim chart, they label it as "similarities in innovation in this technology space", though I am not sure what the point is other than trying to establish invalidity.

I have not had a chance to review  their long list of other references, if anyone else does, please let me know.


Shortsighted to call App Devs a "mastermind"

Ugh, non-attorney commentators... give lots of bad legal advice.  Even if some conclusions and advice might be similar to that of an attorney, a lot of the analysis I have seen is not correct.  (and it is easy to get some things right, when you post a ton of crap, the percentages are in your favor).  Any person or company involved in highly complex legal issues, like patent infringement, need to receive advice and proper analysis from a qualified attorney.

One particular issue I read just this morning:
At least one non-attorney commentator I have read believes that the application developers could be a "mastermind" when considering divided infringement and thus, the divided infringement theory is skeptical (I refuse to link to his site because he is clearly giving legal advice and he is NOT an attorney).

Of course to come this conclusions, such commentator glosses over many issues and seems to ignore the facts of the case, the elements of the claims, and the law on the matter.

For example, if an attorney had done a similar "mastermind" or "control" analysis, they probably would have discussed this case, Centillion Data Systems, LLC v. Qwest Communications International, Inc. (Fed. Cir. 2011):

The only way that Centillion can establish "use" by Qwest is if Qwest is vicariously liable for the actions of its customers such that "use" by the customers may be attributed to Qwest. Our precedents on vicarious liability, BMC, Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1328-29 (Fed. Cir. 2008), Akamai Technologies, Inc. v. Limelight Networks, Inc., 2009-1372, 2009-1380, 2009-1416, 629 F.3d 1311, 2010 U.S. App. LEXIS 25825, 2009-1417, 2010 WL 5151337 (Fed. Cir. Dec. 20, 2010), and Cross Medical, analyze the circumstances in which the actions of one party ought to be attributed to a second party for purposes of direct infringement — vicarious liability. In BMC, we noted that "[f]or process patent or method patent claims, infringement occurs when a party performs all of the steps of the process." 498 F.3d at 1378-79. However, we noted that in some instances, one party could be liable for infringement of a method claim even if it did not perform all of the steps. This vicarious liability arises when one party controls or directs the actions of another to perform one or more steps of the method. Id. at 1379. We confirmed this approach for method claims in Muniauction, 532 F.3d at 1328-29  [*19]  and recently explained in Akamai Technologies that for infringement to be found when more than one party performs the steps of a method claim, an agency relationship or other contractual obligation to perform the steps must exist. See Akamai Techs., 2010 U.S. App. LEXIS 25825, 2010 WL 5151337, at *6. In Cross Medical, we considered the issue of vicarious liability for making a claimed apparatus or system under § 271(a). The claim related to a medical device and, as properly construed, required contact between the device and human bone. 424 F.3d at 1310-11. In the particular facts of that case, the accused manufacturer created the accused product, but did not perform surgeries to bring the device into contact with bone. We held that the manufacturer did not "make" the claimed apparatus. We held that if anyone made the claimed apparatus, it was the surgeon who implanted the accused device, possibly bringing it into contact with bone. Id. at 1311. We noted that the manufacturer would not be liable for the surgeon's direct infringement unless the surgeon acted as an agent of the manufacturer. Id.

Following our vicarious liability precedents, we conclude, as a matter of law, that Qwest is not vicariously liable for  [*20]  the actions of its customers. Qwest in no way directs its customers to perform nor do its customers act as its agents. While Qwest provides software and technical assistance, it is entirely the decision of the customer whether to install and operate this software on its personal computer data processing means."
With this in mind, I find it very hard for an application developer to be considered the "mastermind" or in "control".

These are very complex legal issues that need a great deal of legal analysis and advice from a QUALIFIED ATTORNEY.

If you are threatened, do not take your advice from non-attorney bloggers.  Hire a qualified attorney to advise your options and legal strategy.

Just my opinion, go hire your own attorney for legal advice.


Will Apple support the developers by filing a reexam?

In the past, when dealing with patent trolls, Apple has taken an aggressive stance in filing reexams.  Will Apple file reexams on the Lodsys patents to support the application developers that were sued?

As detailed with my posts earlier (here, here, and here), there is plenty of prior art out there to put together a high-quality reexam, especially if a company like Apple throws their resources behind the prior art searching.  The prior art I posted is the results of myself and a friend searching for only a few hours each;  Apple could easily fund a much more comprehensive search and possibly find even better prior art.  Most of the large companies sued by Lodsys have likely done prior art searches for invalidity opinions; I wish we could see the prior art they found, but I have not received any responses to such requests yet.

There are a lot of considerations that Apple is likely weighing to determine the amount of support or involvement to provide the sued application developers.  For instance, there are issues concerning whether Apple can directly challenge an IV patent (see here), which I do not know the answer to because it depends on the contracts between Apple and IV.

Hopefully Apple jumps in to support the application developers at least with reexam support.


Wednesday, June 1, 2011

Lodsys files suit to bully small app developers

Unfortunately for application developers, Lodsys has decided not to leave them alone.  This is not a surprise considering Lodsys's whole business model is based upon a mound of smelly bullshit.  Their patent infringement assertions are laughable and their patents are questionably valid They are in essence highway robbers that hope the threatened will pay them to let them pass unharmed rather than risk the expense of fighting.

Each application developer that is threatened or sued needs to hire an experienced patent attorney ASAP to consider which options will be most suitable for their business.

One option that should be given consideration is filing a motion for summary judgment of non-infringement.  See my arguments earlier considering non-infringement (these arguments will similarly apply to the '565 Patent that has been asserted).  This may be able to be done and allow the app developers to win the fight without sacrificing their whole company.  Though, each app developer still needs to determine if they wish to fight or pay the highway robbers.  I hope the application developers are also considering a joint defense arrangement to help with the costs.

This is a great learning moment for small business and other app developers not yet sued.  It might also be a good time to look into IP infringement insurance if you are in a tech industry.

ALSO SEE: igoeIP deconstructs the highway robbers bullshit offer of $1,000.  I planned to do another post on this exact thought, but igoeIP explained it all.

Best of luck to the application developers.