Deeplinks

Is Landmark Technology’s Two-Decade Patent Assault On E-Commerce Finally Over?

Joe Mullin — Fri, 13 Oct 2023 16:59:15 +0000

Landmark Technology’s U.S. Patent No. 7,010,508, and its predecessor, are very likely two of the most-abused patents in U.S. history. These patents, under two different owners, have been used to threaten thousands of small businesses since 2001.

In just one 18-month period, the ‘508 patent was the subject of more than 1,800 patent demand letters sent to more than 1,100 different businesses. All of these businesses were told to pay up—typically $65,000—for using basic e-commerce technology like home pages, customer login pages, and product-ordering pages.

Now the ‘508 patent’s threat is likely dead, thanks to a recent ruling by a North Carolina federal judge in a case that started after Landmark threatened the website Binders.com for selling binders (but, you know, on the Internet). NAPCO, the company that owns Binders.com, responded to Landmark’s $65,000 demand by challenging Landmark’s patent in court. After more than two years of litigation, the judge issued a ruling stating that the ‘508 patent’s disputed claim is invalid because it is ‘indefinite.’ Specifically, it purported to cover network technology that could perform various functions but failed to describe a way those functions could be achieved. While not at issue here, similar terms in the patents’ other independent claims are likely invalid for the same reasons.

“[T]he company broadly and aggressively misuses the patent claims, targeting virtually any small business with a website, seemingly at random,” is how the Washington State Attorney General describes Landmark’s business model.

The Washington State Attorney General’s office sued Landmark in 2021, claiming its aggressive patent trolling violated state consumer protection laws. That case has been removed to federal court and is ongoing.

We hope to never see the ‘508 patent—or any patent related to it—in a threat letter again. Landmark’s long, punishing campaign against small businesses who simply used basic online tools is, hopefully, over. It’s a good moment to take stock of how we got here. Unfortunately, many elements of our broken patent system continue to encourage behavior like Landmark’s.

Courts Let “Functional Claiming” In Software Patents Get Out Of Control

The ‘508 patent involves “means-plus-function” claims. This is a type of patent that allows for broad, functional claiming. As explained by the Federal Circuit, the nation’s top patent court, this type of patent allows “patentees to express a claim limitation by reciting a function to be performed rather than by reciting structure for performing that function.”

The Federal Circuit, the nation's top patent court, has explicitly allowed this type of patent claim, and they are most used in software patents. Allowing broad “functional” claiming is part of what’s led software patents to become the disaster they have for developers and ordinary internet users.

As patent scholar Mark Lemley explained in a 2012 research paper on functional claiming, it’s similar to allowing a pharmaceutical inventor to claim “an arrangement of atoms that cures cancer,” and assert their patent against any chemical, in any form, that achieves the purpose of curing cancer. “Indeed, the whole idea seems ludicrous,” he wrote.

Lemley’s paper goes through the history of functional claiming, which has had ups and downs throughout American history. The idea of a “means-plus-function” claim is that functional claiming is allowed, as long as it’s connected to a “structure” described in the specification of the patent.

Functional claiming has taken off in software patents. The Federal Circuit established rules that disclosing an “algorithm” would constitute the type of structure that could allow a patent. But the court set the bar for what an “algorithm” is to be shockingly low. You don’t have to send in a mathematical formula at all; prose or even a flow chart is sufficient.

Would-be patent owners have definitely taken advantage of the idea that a flow chart can constitute an “algorithm.” It’s allowed patent trolls to get patents on things like using mathematical proofs, using a lyrics website, and clocking in to work.

The law on software patents is so bad it requires real reforms. In our Defend Innovation whitepaper discussing patent reform ideas, EFF proposed installing strong limits on functional claiming and requiring those who want software patents to provide running code for each patent claim. Those are still good and necessary ideas.

The ‘508 Patent’s “Algorithm”

The ‘508 patent’s supposed “algorithm” is truly a nothingburger. Its primary claim just describes a bunch of things computers do, strung together. Yet Landmark’s lawyers argued that the patent contained a “detailed six-step algorithm” with the following steps. (The “station” here is a general-purpose computer.)

The station reading textual data from memory;
The station reading graphical data from memory;
The station accepting user input;
Displaying, after accepting user input, textual data along with mutually-related graphical data describing more than one transaction option;
Analyzing data provided by the user of the station or data received from a remote location;
Depending on the result of the analysis, retrieving additional data from mass memory.

In other words, getting data and analyzing it.

Of course, “processing” or “accepting” data and “analyzing” it are simply generic verbs that don’t tell you how to do anything. That was exhaustively pointed out in the 66-page order finding Landmark’s patent claim to be invalid. Landmark’s citations “contain no explanation of how that data is ‘analyzed’ or how one would program the ‘processor’ to conduct such processing,” explained District Judge Thomas Schroeder.

Landmark History

At some point in 2019, Landmark Technology stopped filing lawsuits, and a new entity called “Landmark Technology A” began using the ‘508 patent, again targeting small businesses. Litigation has revealed that while inventor Lawrence Lockwood owned the original entity, Landmark Technology A—the newer company that has been sued by the state of Washington— is wholly owned by an IP consultant named Raymond Mercado.

The Washington State Attorney General was able to identify more than 1,800 businesses threatened by Mercado, but the number may be much higher. And while this stupid patent was filed in 1995, it is related to an even earlier stupid patent, which won our Stupid Patent of the Month award a few years ago, for terrorizing even more small businesses.

Lawrence Lockwood used these patents to terrorize hundreds of small businesses, demanding that any sized e-commerce operation: bakers, brownie shops, an organic farm, and many others, all pay him a royalty payment for making basic use of the internet economy.

Adding insult to injury is the fact that there’s no evidence that “inventor” Lawrence Lockwood made any contribution whatsoever to software. Lockwood, a former travel agent, started his long patent trolling career by suing American Airlines for their software system. In that litigation, Lockwood admitted under oath that he had “never, for any length of time, used a personal computer.” When asked what he did for a living, he said that he simply litigated patents, according to a 2003 profile of Lockwood in the Los Angeles Times.

We’ve lived with ultra-aggressive patent trolls like Landmark and its predecessor, PanIP, for more than two decades now. Congress needs to think about how to reel them in and must reject proposed bills that would actually help trolls get more broad patents, and ruin our existing legal defenses against them.

NAPCO v. Landmark Technology A Complaint
NAPCO v. Landmark Technology A Opinion And Order

Stupid Patent of the Month: Traxcell Tech Gets Ordered To Pay Attorneys’ Fees

Joe Mullin — Fri, 31 Mar 2023 20:58:53 +0000

If someone loses a patent lawsuit very badly—to the point where they face orders to pay attorneys' fees—you wouldn’t think they would be eager to come back to court with a nearly identical lawsuit. But that’s what has happened with this month’s patent. What’s more, the lawyer representing the patent owner, William Ramey, has been ordered to pay attorneys' fees no fewer than five times in recent years.

U.S. Patent No. 10,820,147 is owned by Traxcell Technologies. It’s not clear what, if anything, Traxcell ever made. The company applied for patents back in 2002. By 2004, it had a bare-bones website stating that its mission “is to provide leading edge technology and innovation to in [sic] the field of telecommunications.” Today, its business is pretty clear—Traxcell is a patent troll. The company’s website has little information beyond its patents, which have been used in dozens of lawsuits since 2017.

The key claim of the ‘147 patent is long, but it essentially describes a wireless device that collects and shows location information, and also includes traffic congestion information. There’s also the “feature” that the device can allow, or disallow, tracking (a standard feature on modern smartphones).

This patent has come up in more than 20 of Traxcell’s lawsuits in the last two years, with its litigation picking up steam as the patent’s expiration date of September 2022 drew near. It’s been used to sue major cell phone companies like T-Mobile and Verizon, the makers of online maps like Google and Apple, and delivery and gig companies. It’s sued FlightAware for using publicly available flight-tracking information, and the Curb app for tracking taxis, and Instacart for tracking its own shoppers.

“Objectively Baseless Theories”

Traxcell was scheduled to bring this patent to trial next week in a federal Texas court. The trial actually would have been the conclusion of Traxcell’s second lawsuit against Verizon. Since it’s coming back for another round, one might think that Traxcell’s first lawsuit was a big success. That’s not the case, though.

In the first Traxcell v. Verizon patent lawsuit, filed in the Eastern District of Texas (then a hot patent venue), Verizon won on summary judgment—meaning, before the case went to a jury, a judge ruled there was no patent infringement, and that the case was over. Traxcell appealed, but the appeals court agreed that Verizon should win the case. After the failed appeal, a judge awarded Verizon attorneys’ fees based on “Traxcell’s pursuit of objectively baseless infringement theories and filing of meritless motions that disregarded the earlier rulings.”

Traxcell objected to the fee order, and didn’t pay. But its objection was overruled and in December 2022, it was ordered to pay within 30 days. Traxcell appealed 28 days later, and also filed a motion in district court asking to not post a bond, or have a reduced bond. Last month, the district court ordered it again to pay, posting a bond of the fee award plus 20% interest, for a total of $587,902. But Traxcell still hasn’t paid the fees, or paid for a bond.

None of this stopped Traxcell from filing its second lawsuit against Verizon, this time in the Western District of Texas (Waco division), which became popular after a Supreme Court ruling narrowed the ability of patent trolls to shop for favorite venues.

Last week, the judge in charge of Traxcell’s second case dismissed it, ruling that Traxcell no longer has standing. Its patent is in receivership.

“Ignored Obvious Issues”

Traxcell’s lawsuit never should have gotten this far. Now that a judge has shown it clearly doesn’t have standing to sue Verizon, its lawsuits against other defendants, including much smaller companies, should be called into question as well.

Traxcell has been subject to repeat fee orders since at least 2017. That year, an Eastern District of Texas magistrate judge ordered Traxcell to pay fees to Samsung, Alcatel-Lucent, Nokia, and Huawei after failing to send key documents to the defendants.
In another Traxcell case, the company was ordered to pay $44,866.27 to Nokia for attorneys’ fees for filing objections to court rulings long after the deadlines. Those fees were affirmed just last week.
In a case called WPEM v. SOTI Inc., Ramey again represented a patent owner who was ordered to pay attorneys’ fees. The plaintiff “wholly failed” to conduct a pre-filing investigation and “ignored obvious issues that should have been readily apparent,” the judge found. The attorneys’ fee award of $179,622 was upheld on appeal in 2020.
Working for a patent troll called NetSoc, LLC, Ramey sued several companies over a patent on “establishing and using a social network to facilitate people in life issues.” The claims in the patent didn’t even match the patent claims listed in the lawsuit. “NetSoc provided no explanation for why it failed to correct its pleadings for three months,” a New York federal judge held in that case. Two defendant companies were awarded just under $30,000 in fees.
Just last month, another patent-assertion company represented by Ramey, ZT IP, was ordered to pay $92,130.35 in fees in a case where it sued VMWare over a product that VMWare created a year before ZT’s patent even issued. When VMWare threatened to move for sanctions against Ramey, Ramey used “expletives direct at VMWare during the conference,” then dropped his lawsuit 30 minutes after the call.

U.S. technology users and companies shouldn’t have to constantly face the same bogus threats from the same actors. Judges should vet these repeat players. A company with Traxcell's track record, or a company hiring an attorney who has been subject to at least five fee orders in recent years, can and should be required to post bonds to proceed to get their patent lawsuits past the initial pleading stage. Finally, judges should follow the example set by 25% of courts in this country and demand that the financial interests in patents be disclosed at the outset of litigation. In 2020, at least 30% of all patent litigation was financed by outside entities—up from essentially zero 15 years ago.

Documents related to this post:

Traxcell v. Huawei, Alcatel-Lucent, Nokia, and Samsung Fee Order
Traxcell v. Nokia Fee Order
WPEM LLC v. SOTI Inc. Federal Circuit Opinion
NetSoc LLC v. Chegg, Oath, and Quora Fee Order
ZT IP LLC v. VMWare Fee Order

Stupid Patent of the Month: Clocking In To Work—On an App

Joe Mullin — Tue, 28 Feb 2023 16:11:06 +0000

What if we told you the Stupid Patent of the Month has a sponsor, but we don’t know who it is? That would seem shady, wouldn’t it?

This month’s stupid patent, U.S. Patent No. 9,986,435, was brought to you—to all of us, really—from the murky depths of the litigation finance industry. Originally assigned to a shell company linked to giant patent troll Intellectual Ventures, this patent was sold off and is now in the hands of Mellaconic IP LLC, a recently-created Texas shell company. Mellaconic has sued more than 40 companies over claims that a vast array of HR software infringes their patent.

Here is Mellaconic’s key patent claim:

1. A method to perform an action, comprising:

receiving, by a first device located at a first geographical location, one or more messages that indicate geographical location information of a second device located at a second geographical location, and

include a request for a first action to be performed by the first device, wherein the one or more messages are received from the second device, and wherein the geographical location information of the second device acts as authentication to allow the first action to be performed by the first device; and

autonomously performing, based at least on the received one or more messages, by the first device, the authenticated first action.

In other words: A device receives a request from a second device to take action. That action may or may not be performed, depending on the location of the second device.

Mellaconic’s lawyers say this applies to something hourly workers do every week: clock in and clock out of their jobs. Even though their patent doesn’t even discuss clocking in—and despite the fact that clocking in has happened since, well, clocks—they’ve sued a huge swathe of U.S.-based companies that market human resources and payroll software.

For instance, they sued Paychex, saying that the Paychex server is the first device, and the second device is a mobile user with the Paychex Flex app, which, like many HR apps, allows for clocking in and out of a job. Same thing for Hi Bob, a smaller HR company that Mellaconic sued in August. They’ve repeated this allegation—that clocking in (but with an app!) equals infringement of their patent, which means the companies owe money to the people behind Mellaconic.

Who’s Making Money From This Patent?

Mellaconic, like so many patent trolls, has been able to hide its true beneficiaries. Most of the 40 companies that Mellaconic sued have likely paid to settle, because their cases ended within a few months, before any significant hearings. That suggests many defendants settled for less than the hundreds of thousands (potentially even millions) of dollars that it would have cost to fight off this stupid patent.

Unusually in this case, a Delaware federal judge overseeing some of Mellaconic’s cases has insisted that the supposed owner come to testify in court. That’s what led Hau Bui, a Texas restaurateur and food-truck owner who says he owns Mellaconic, to travel to Delaware in November and testify under oath in federal court.

But Hau Bui has now said under oath (see transcript p. 87) that he hasn’t paid anything for Mellaconic’s patent, nor the other patents it hasn’t yet sued over. He hasn’t paid anything to Mellaconic’s lawyers (p. 96), or any other litigation expenses. And Bui said he only collects 5 percent of Mellaconic’s settlement money (p. 91), which has amounted to about $11,000 (p. 98).

Bui was promised this “passive income” stream by Linh Dietz, a person whose name has come up at every stage of the Delaware investigation, and is linked to IP Edge, a large-scale patent troll. Every supposed “owner” of the patent troll entities who have testified in Delaware acquired their patents, for free, by talking to Dietz and signing paperwork she provided.

Patent Trolls Have A Growing Network of Secret Funders

IP Edge is far from the only player in the vast world of patent trolling, which continues to account for the great majority of patent lawsuits against tech companies—more than 88% in 2022. Why do these lawsuits keep coming even while overall patent litigation is going down?

In part, it’s because there is nothing stopping aggressive litigation finance from paying out money to fund patent lawsuits, in the hopes that “investing” in a broad campaign of patent lawsuits will pay off a big return. Unified Patents, a company that sells patent defense services, recently estimated that about 30% of all patent lawsuits are now backed by third-party financing.

That’s one reason why EFF, along with other public interest groups, filed a brief stating that the Delaware investigation must be allowed to continue. The lawyers working for Mellaconic and related shell companies are doing everything they can to shut it down. They appealed to the Federal Circuit, twice, and were rejected both times.

The public deserves to know more about patent trolls that are using our public courts to seek rents for innovations they had nothing to do with. That’s especially true as litigation finance helps spread lawsuits over patented “inventions” like clocking in on an app.

Stupid Patent of the Month: Digital Verification Systems Patents E-Signatures

Joe Mullin — Mon, 30 Jan 2023 20:00:04 +0000

Patent trolls make patents, and argue over them. They don’t have to ever make the thing described in their patents, if it’s even possible to determine what those things are. Instead, they generate legal threats and waste the time and money of companies that do do these things.

This month’s Stupid Patent of the Month is a great example of that. U.S. Patent No. 9,054,860 has been used by a company called Digital Verification Services, LLC, (DVS) to sue more than 50 companies that provide different types of e-signature software.

There’s no evidence that the inventor of this patent, Leigh Rothschild, ever created his own e-signature software. But in patent law, that doesn’t matter. He acquired this patent in 2015, by adding a trivial, almost meaningless limitation to an application that the U.S. Patent Office had spent the previous seven years rejecting.

You can’t learn much about how to verify digital identities from the patent owned by Digital Verification Services. But the breadth of work on actual digital verification can be gleaned by looking at the long list of companies and products that DVS has sued. In fact, DVS has sued more than 50 different companies. Some are large, like NASDAQ-listed DocuSign, but many more of its targets are small companies with less than 50 or even less than 10 employees. They stand accused of offering “hardware and/or software for digital signature services.”

That’s a pretty big chunk of litigation even for a Rothschild-linked company. Some of Rothschild’s other “inventions” include an internet drink mixer that’s positively out of a sci-fi novel, and a patent on online movies (from the cloud!) that was filed in 2011.

So what’s described in this patent, which so many companies are accused of infringing?

The patent’s key claim describes “module generating assembly” that will receive a “verification data element” resulting in a “digital identification module.” This “module” will then “at least partly associate” with an “entity,” and be embedded in a file.

In his declaration, inventor Rothschild says the “module generating assembly” could be a lot of things—a computer application, a web server, a file server, or “or other computing device.” In a recent deposition, he declined to describe that term any further. In court filings, DVS described a person “skilled in the art” of understanding this patent as someone “having a bachelor’s degree in computer science or electrical engineering,” or the equivalent. Rothschild—whose software patents have been used to sue hundreds of companies—admitted he had no such degree.

Rothschild’s patent, like the great majority of software patents, includes no code—it simply proclaims it’s made up of “modules,” “assemblies,” and “components.”

Actual E-Signature Software Rest On Well-Known Standards And Laws

Innovation in this area—electronic signatures—rests on a bedrock of publicly shared knowledge and publicly known law. There’s no evidence at all that patents on e-signatures (of which Rothschild’s stupid patent is not the only example) have done anything to push forward innovation in the e-signature space.

The history of e-signatures is long. The U.S. government established standards for digital signatures in 1994, and Congress passed the E-Sign Act in 2000, establishing a general rule of validity for electronic signatures. The E.U. regulated them beginning in 1999. The United Nations published a Model Law on Electronic Commerce in 1996 that has addressed e-signatures. These foundational laws all have been revised multiple times. They are all much older than the claimed 2008 priority date on Rothschild’s patent application.

Using electronic signals to verify identities and seal contracts pre-dates the internet, as well. A New Hampshire Supreme Court case from 1869 called Howley v. Whipple said that a contract established via telegraph was binding. “Nor does it make any difference that in one case common record ink is used, while in the other case a more subtle fluid, known as electricity, performs the same office,” wrote the justices in that case.

That’s not to say there isn’t room for new and improved types of electronic signatures. The proof of innovation won’t be found in this stupid patent, however. But it can be found in the ongoing work of the dozens of companies, large and small, that have been sued by DVS. At least one DVS defendant has been providing e-signature services since 2000. As with so many other flourishing areas of software, patents don’t push forward the state of the art—they drag it down.

Unfortunately, getting software patents based on vague terms like a “module generating assembly” and a “digital identification module” is not uncommon. We need better laws to kick out indefinite patents like these faster, so they can’t be used to harass companies into paying settlements, as most of DVS’ targets appear to have done. We also support a stronger patent review system to weed out patents that courts can’t get to. Finally, we need strong and enforceable fee-shifting in patent cases to penalize repeat litigants like the Rothschild-linked companies, which use some of the stupidest patents we’ve seen to terrorize small companies.

Digital Verification Systems v. Kofax Complaint
Digital Verification Systems v. RPost Complaint
Digital Verification Systems v. Trustifi Complaint
Digital Verification Systems v. Encyro, Defendant's Responsive Claim Construction Brief
Inventor Leigh Rothschild Deposition Transcript

Patent Troll Uses Ridiculous "People Finder" Patent to Sue Small Dating Companies

Joe Mullin — Fri, 27 May 2022 17:02:10 +0000

Finding people near you with shared interests, and talking to them, has a very long history in human culture. We’re social animals. We need to find other people close to us to work together with, play games with, and build relationships and families with. Modern online social networks are built on top of those basic human needs.

The technologies we humans use to do these things are ever-changing, but the basic concepts aren’t. Software that promotes new types of social networking is a terrible fit for the patent system, which hands out hundreds of thousands of 20-year monopolies each year on inventions that are supposedly new, but often aren’t. No one should be able to patent an “invention” that simply describes a method of finding like-minded people.

Unfortunately, that seems to be just what happened with a patent we looked at recently. A patent troll called Wireless Discovery LLC sued eight different social and dating apps for patent infringement, claiming that they infringe U.S. Patent No. 9,264,875, which claims “location-based discovery” based on people’s “personal attributes.” Wireless Discovery, which was created just before its patent was granted in 2016, sued eight different online dating apps in April—most of them small apps.

Claiming the “Mobile Social” World

Wireless Discovery lawyers say that a simple combination of basic computing services is enough to infringe their patent. Its claim chart makes it explicit what is required to infringe the ‘875 patent. For its lawsuit against the dating network Zoosk, the claim chart describes how:

Zoosk has a website that mobile devices can connect to.
Zoosk’s server collects information from the mobile devices, including location and unique device identifiers.
Zoosk users can send and accept invitations to connect with and send messages to each other.
Zoosk shares profile information of connected users, who are “members of a same social network” (i.e., they’re on Zoosk)
Zoosk can connect users who are in the immediate vicinity of each other, or a particular distance away.

And that’s it.

The Wireless Discovery patents were originally filed for a company called Ximoxi, which tried to market a type of “electronic social cards.” Ximoxi founder Ramzi Alharayeri, who is the named inventor on the patent, said in a 2012 press release that his software was “the first social-discoverability application that works on iPhone, Android and Blackberry alike.”

In 2016, however, the Ximoxi website said that the app was still “under development.” It continued: “After releasing our Beta, we needed to go back to work for bugs fixes and features improvements.” Today, the Ximoxi website is defunct.

Not the First

The idea of connecting nearby users of a social network isn’t an idea that should be patentable at all. But it’s also worth noting that—even if Ximoxi executed this concept in some way—it was far from the first. The Ximoxi patent was filed in 2014, but claims that it’s a continuation of a patent that was originally filed in October 2008, the time that Ximoxi was founded.

Location-based social networking on mobile devices is quite a bit older than that, though. It was conceptualized, and used, well before smartphones were common. The New York City-based app “Dodgeball” dates back to 2000. It was acquired by Google (with plenty of press coverage) in 2005. By then, it was clear that different types of social mobile apps were going to be taking off. A paper presented at the 2006 IEEE engineering conference notes the growth of mobile social networking: “An entire sub-industry of the wireless sector is slowly being created as companies such as Dodgeball, Playtxt, and SmallPlanet.net begin to capitalize on this new phase in the mobile technology platform.”

None of this earlier technology was presented to the U.S. Patent and Trademark Office in Wireless Technology’s patent applications.

Unfortunately, this is all too common. It’s how many software patents get issued—examiners have just 18 hours, on average, to complete the examination, and the applicants can come back with endless revisions. Ultimately, persistent applicants get patents, even when they don’t have a great case for one.

And those monopolies do serious damage. Most patent lawsuits filed in the past several years aren’t disputes that result from a company trying to defend the market for its product. Rather, they are initiated by patent trolls—companies with no products, that simply use patents to demand payment from others. In 2021, 87 percent of high-tech patent disputes in federal courts were filed by companies or people that make most of their money from patent licensing.

It’s very difficult, and expensive, to get patents thrown out in court, even when the technology described in the patent existed long before the patent was filed. That’s why 10 years ago, Congress created a more robust review system for already-granted patents, called inter partes review (or IPR). Over the years various patent owners have tried to weaken the IPR system, encouraging the patent office to reject many IPRs on technicalities, or even saying IPRs are unconstitutional. Thankfully, those efforts have all failed.

There’s a bill in Congress that would strengthen IPR, closing some of the loopholes that patent owners have used over the years to dodge the IPR process. Right now, passing the Restoring America Invents Act, as it was introduced, is the best thing we could do to weed bad patents out of the system.

This Captcha Patent Is An All-American Nightmare

Joe Mullin — Fri, 06 Aug 2021 18:40:58 +0000

A newly formed patent troll is looking for big money from small business websites, just for using free, off-the-shelf login verification tools.

Defenders of the American Dream, LLC (DAD ), is sending out its demand letters to websites that use Google’s reCAPTCHA system, accusing them of infringing U.S. Patent No. 8,621,578. Google’s reCAPTCHA is just one form of a Captcha test, which describes a wide array of test systems that websites use to verify human users and keep out bots.

DAD’s letter tells targeted companies that DAD will take an $8,500 payment, but only if “licensing terms are accepted immediately.” The threat escalates from there. If anyone dares to respond that DAD’s patent might be not infringed, or invalid, fees will rise to at least $17,000. If DAD’s patent gets subject to a legal challenge, DAD says they’ll increase their demand to at least $70,000. In the footnotes, DAD advises its targets that “not-for-profit entities are eligible for a discount.”

The DAD demand letters we have reviewed are nearly identical, with the same fee structure. They mirror the one filed by the company itself (with the fee structure redacted) as part of their trademark application. This demand letter campaign is a perfect example of how the U.S. patent system fails to advance software innovation. Instead, our system enables extortionate behavior like DAD’s exploding fee structure.

DAD Didn't Invent Image Captcha

DAD claims it invented a novel and patentable image-based Captcha system. But there’s ample evidence of image-based Captcha tests that predate DAD’s 2008 patent application.

The term “Captcha” was coined by a group of researchers at Carnegie Mellon University in 2000. It’s an acronym, indicating a “Completely Automated Public Turing test to tell Computers and Humans Apart.” Essentially, it blocks automated tools like bots from getting into websites. Such tests have been important since the earliest days of the Internet.

Early Captcha tests used squiggly lines or wavy text. The same group of CMU researchers who coined “Captcha” went on to work on an image-selection version they called ESP-PIX, which they had published and made public by 2005.

By 2007, Microsoft had developed its own image-categorization Captcha, which used photos from Petfinder.com, then asked users to identify cats and dogs. At the sime time, PayPal was working on new captchas that “might resemble simple image puzzles.” This was no secret—researchers from both companies spoke to the New York Times about their research, and Microsoft filed its own patent application, more than a year before DAD’s.

There’s also evidence of earlier image-based Captcha tests in the patent record, like this early 2008 application from a company called Binary Monkeys. Here's an image from the Binary Monkeys Patent:

And here's an image from DAD's patent:

So how did DAD end up with this patent? During patent prosecution, DAD’s predecessor argued that they had a novel invention because the Binary Monkeys application asks users to select “all images” associated with the task, as opposed to selecting “one image,” as in DAD’s test. The patent examiner suggested adding yet another limitation: that the user still be granted access to the website if they got one “known” image and one “suspected” image.

Unfortunately, adding trivial tweaks to existing technology, such as small details about the needed criteria for passing a Captcha test, can and often does result in a patent being granted. This was especially true back in 2008, before patent examiners should have applied guidance from the Supreme Court’s 2014 Alice v. CLS Bank decision. That’s why we have told the patent office to vigorously uphold Supreme Court guidelines, and have defended the Alice precedent in Congress.

Where did DAD come from?

DAD’s patent was originally filed by a Portland startup called Vidoop. In 2010, Vidoop and its patent applications were purchased by a San Diego investor who re-branded it as Confident Technologies. Confident Tech offered a “clickable, image-based CAPTCHA,” but ultimately didn’t make it as a business. In 2017 and 2018, Confident Tech sued Best Buy, Fandango Media, Live Nation, and AXS Group, claiming that the companies infringed its patent by using reCAPTCHA. Those cases all settled.

In 2020, Trevor Coddington, an attorney who worked on Confident Tech’s patent applications, created Defenders of the American Dream LLC. He transferred the patents to this new entity and started sending out demand letters.

They haven’t all gone to large companies, either. At least one of DAD’s targets has been a one-person online publishing company. Coddington’s letter complains about how Confident Tech failed in the marketplace and suggests that because of this, reCAPTCHA users should pay—well, him. The letter states:

[O]nce Google introduced its image-based reCAPTCHA for free, no less, [Confident Technologies] was unable to to maintain a financially viable business… Google’s efficient infringement forced CTI to abandon operations and any return on the millions of dollars of capital investment used to develop its patented solutions. Meanwhile, your company obtained and utilized the patented technology for free.”

Creating new and better Captcha software is an area of ongoing research and innovation. While the lawyers and investors behind DAD have turned to patent threats to make money, other developers are actively innovating and competing with reCAPTCHA. There are competing image-based Captchas like hCaptcha and visualCaptcha, as well as long lists of Captcha alternatives and companies that are trying to make Captchas obsolete.

These individuals and companies are all inventive, but they’re not relying on patent threats to make a buck. They’ve actually written code and shared it online. Unfortunately, because of their real contributions, they’re more likely to end up the victims of aggressive patent-holders like DAD.

We’ll never patent our way to a better Captcha. Looking at the history of the DAD patent—which shares no code at all—makes it clear why the patent system is such a bad fit for software.

How A Camera Patent Was Used to Sue Non-Profits, Cities, and Public Schools

Joe Mullin — Fri, 14 May 2021 17:21:24 +0000

Stupid Patent of the Month

Patent trolls are everyone’s problem. A study from 2019 showed that 32% of patent troll lawsuits are directed at small and medium-sized businesses. We told the stories of some of those small businesses in our Saved by Alice project.

But some patent trolls go even further. Hawk Technology LLC doesn’t just sue small businesses (although it does do that)—it has sued school districts, municipal stadiums, and non-profit hospitals. Hawk Tech has filed more than 200 federal lawsuits over the last nine years, mostly against small entities. Even after the expiration of its primary patent, RE43,462, in 2014, Hawk continued filing lawsuits on it right up until 2020. That’s possible because patent owners are allowed to seek up to six years of past damages for infringement.

One might have hoped that six years after the expiration of this patent, we might have seen the end of this aggressive patent troll. Nope. The U.S. Patent and Trademark Office has granted Hawk Tech another patent, U.S. Patent No. 10,499,091. It’s just as bad as the earlier one, and starting last summer, Hawk Tech has started to litigate.

Camera Plus Generic Terms

The ‘091 patent’s first claim simply claims a video surveillance system, then adds a bunch of computer terms. Those terms include things like “receiving video images at a personal computer,” “digitizing” images that aren’t already digital, “displaying” images in a separate window, “converting” video to some resolution level, “storing” on a storage device, and “providing a communications link.” These terms are utterly generic.

Claim 2 just describes allowing live and remote viewing and recording at the same time—basic streaming, in other words. Claim 3 adds the equally unimpressive idea of watching the recording later. The additional claims are no more impressive, as they basically insist that it was inventive in 2002 to livestream over the Internet—nearly a decade after the first concert to have a video livestream. Most laughably, claim 5 specifies a particular bit rate of Internet connection—as if that would make this non-invention patentable.

In order to be invalidated in court, however, the ‘091 patent would have to be considered by a judge. And Hawk Tech’s lawsuits get dismissed long before that stage—often in just a few months. That’s because the company reportedly settles cases at the bottom level of patent troll demands, typically for $5,000 or even less. That’s significantly less than a patent attorney would request even for a retainer to start work, and a tiny fraction of the $2 million (or sometimes much more) it can cost to defend a patent lawsuit through trial.

The patent monetization industry includes the kind of folks that can be counted on to sue a ventilator company in the middle of a pandemic. Even in that context, Hawk Tech has taken some remarkable steps.

Hawk Tech has sued a municipal stadium that hosts an Alabama college football team; a suburban Kentucky transit system with just 27 routes; non-profit thrift stores and colleges; and a Mississippi public school district that serves an area with a very high (46%) rate of child poverty. That last lawsuit is one of at least three different public school districts that Hawk Tech has sued. These defendants would be hard pressed to mount a legal defense that could easily cost hundreds of thousands of dollars.

One type of company you won’t see on the long list of defendants is a company that actually makes camera systems. Instead, Hawk Tech finds those companies’ customers and goes after them. For instance, Hawk Tech drew up an infringement claim chart against Seon, a maker of bus camera and GPS systems; then used that chart to sue not Seon, but the Transit Authority of Northern Kentucky (TANK), based on a Seon pamphlet that pointed to TANK as a “case study.” Instead of suing camera company Eagle Eye, Hawk Tech sued the city of Mobile, Alabama, likely after seeing a promotional video made by Eagle Eye on how the city’s stadium used its camera systems.

The problem of what to do about patent trolls that demand nuisance-level settlements is a tough one. What may be a “nuisance” settlement in the eyes of large law firms can still be harmful to a charity or a public school serving impoverished students.

That’s why EFF has advocated for strong fee-shifting rules in patent cases. Parties who bring lawsuits based on bogus patents won’t be chastened until they are penalized by courts. We also have supported reforms like the 2013 Innovation Act, which would have allowed customer-based lawsuits like the Hawk Tech cases to be stayed in situations when the manufacturer of the allegedly infringing device steps in to litigate.

Right now, there are two different parties seeking to invalidate Hawk Tech’s ‘091 patent and collect legal fees. One is Nevada-based DTiQ, a camera company whose customers, including a Las Vegas sandwich shop, have been sued by Hawk Tech. Another is Castle Retail, a company that owns three supermarkets in Memphis. Let’s hope one of those cases gets to a judgment before Hawk Tech files off another round of bogus lawsuits against small companies—or public schools.

Blyncsy’s Patent On Contact Tracing Isn’t A Medical Breakthrough, It’s A Patent Breakdown

Joe Mullin — Wed, 20 Jan 2021 21:21:11 +0000

Stupid Patent of the Month

Contact tracing is critical for limiting the spread of a contagion like COVID-19, but that doesn’t mean it’s inventive to compare people’s locations using their smartphones. Rather, it’s all the more important to protect the basic methods of public health from bogus patent claims.

The CDC recommends contact tracing for close contacts of any “confirmed or probable” COVID-19 patients. But doing the job has been left to state and local public health officials.

In addition to traditional contact tracing by public health workers, some are using “proximity apps” to track when people are near one another. These apps should be used only with careful respect for user privacy. And they can’t be a substitute for contact tracing done by public health workers. But, if used carefully, such apps could be a useful complement to traditional contact tracing.

Unless someone with an absurdly broad patent stops them.

In April, while many states were still under the first set of shelter-in-place orders, a Utah company called Blyncsy was building a website to let government agencies know that it wanted to get paid—not for giving them any product, but simply for owning a patent they’d managed to get issued in 2019. In news reports and its own press release, Blyncsy said that anyone doing cellphone-based contact tracing would need to license its patent, U.S. Patent No. 10,198,779, “Tracking proximity relationships and uses thereof.”

By September, Blyncsy had begun demanding $1 per resident payments from states that released contact tracing apps, including Pennsylvania, North Dakota, South Dakota, and Virginia.

“State governments have taken it upon themselves to roll out a solution in their name in which they’re using our property without compensation,” Blyncsy CEO Mark Pittman told Wired.

The developer behind North Dakota and Wyoming’s contact tracing apps told Wired that Blyncsy’s threatened patent battle could “put a freeze on new states rolling out apps.”

Given Blyncsy’s $1 per person price point, a state like Virginia, with more than 8 million residents, would be vastly overpaying for contact tracing technology. That state’s app cost $229,000 to develop.

Contact Tracing is Very Good And Very Old

Unfortunately, our patent system encourages the acquisition and use of bad patents like the one owned by Blyncsy. The company’s patent essentially claims technology that’s well over a century old, and could be performed with pencil and paper. Simply adding a smartphone into the works—a “mobile computing device,” as Blyncsy’s patent describes it—doesn’t make the patent valid.

And the patent’s primary claim doesn’t have any technology in it at all. It’s a pure “business method” patent, except that the only business it appears to support is demanding money from state public health departments. Simplifying the language of Claim 1, it describes:

Receiving data about the location of a first person, who “has a contagion”
Receiving data about the location of a second person
Determining if they’re close together
Determining when they were close together
Determining whether the “proximity relationship” is positive or negative
Labeling the second person as being either contaminated or not

That’s just contact tracing, a process that has been done with simple writing and human interviews since at least the mid-19th century. In a famous breakthrough for the field of epidemiology, British doctor John Snow traced an 1854 cholera epidemic near London to a specific water pump on Broad Street.

Patent documents have even more specific descriptions of Blyncsy’s claimed method. Last week, Unified Patents published some prior art for the Blyncsy patent, including a 2003 patent application directed to an “electronic proximity apparatus” that alerts individuals when they are exposed to a contagious disease.

Doing research, writing down the results, and trying to figure out how people got sick isn’t a patentable invention—it’s just basic science. The patent’s other claims are no more impressive. The issuance of the Blyncsy patent isn’t a success story, it’s evidence of glaring flaws in our patent system.

Too often, patents are issued that don’t embody any innovation. These simply become a 20-year-long invitation for a company to demand payment for the innovation and work of others. Sometimes that’s other companies, and sometimes it’s our own governments. In this case, Blyncsy is trying to make a buck by levying what amounts to a tax—but one that only benefits a single, for-profit company.

Unfortunately, we’ve seen patent holders repeatedly try to take advantage of the pandemic. Last year, patent troll Labrador Diagnostics tried to use old patents belonging to the notorious firm Theranos to sue a real firm making COVID-19 tests. Another patent troll sued a ventilator manufacturer. A health crisis is a time to carefully limit, not expand, the power of patents.

Guitar Villain? Ubisoft Patents Basic Teaching Techniques

Rory Mir — Mon, 10 Aug 2020 22:27:36 +0000

In 2012, Ubisoft launched an educational video game called Rocksmith. The idea was simple: why get good at playing a toy guitar, as in games like “Guitar Hero,” when you can use—and learn to play—the real thing? Their game helps beginner musicians identify the skills they need to work on, and then helps them improve those skills by providing gradually more complex songs and exercises.

These steps will sound familiar to anyone who has tried to learn an instrument. A teacher offers exercises, evaluates your performance, and adjusts the difficulty of the lesson to match your ability—keeping you from being bored or overwhelmed. This cycle of feedback is an example of a well-established teaching technique that many educational programs use to help users hone other skills, from language fluency to typing proficiency. Educational games, like Mario Teaches Typing (1992), have been using many of these techniques for several decades. Is adding a guitar to the picture really that innovative?

According to Ubisoft, one of the world’s largest game developers, this idea is so innovative that it’s worthy of a patent. The company managed to claim this idea in US Patent No. 9,839,852, titled "Interactive Guitar Game,” even though the date of Ubisoft’s supposed “invention” was November 21, 2008—three years after Guitar Hero was released.

Ubisoft’s patent says the claimed invention offers benefits beyond other learning materials like CDs, books, or even private instructors. But these benefits require seriously understating the efficacy of those well-established teaching materials. For example, the patent slams music books as “necessarily static” materials that “provide a limited instructional capability,” and private instructors as so “limited in both time and depth” that learning from them “may limit the student’s creativity and spontaneity.” Even if these statements were true, they are irrelevant: benefits like flexibility and limitless capacity are benefits that come from advances to computer and networking technology—not anything Ubisoft developed for its particular game.

The claims of Ubisoft’s patent don’t include anything that could be inventive. The first claim is for a computer program that performs basic steps: it presents fingering notations on a display device, receives signals back from a guitar input device that a user plays, assesses the user’s performance of the song, changes the difficulty level, and generates “at least one mini-game.” That’s it.

This program sounds like most educational video games—it evaluates a player's performance and generates engaging ways to improve. While using your actual guitar to play some kicking ska bops sounds totally rad, Ubisoft’s patent doesn’t say anything about how to do that. It just combines old teaching techniques with old video game technology. Is this really something that can be patented?

That question was raised in 2018 when Ubisoft sued a Finnish startup called Yousician Oy, which develops a phone app for learning to play musical instruments. Ubisoft, an industry giant with over $1 billion in revenue, claimed that Yousician's learning software infringed their "interactive guitar game" patent. If Yousician lost the suit, the company would have been required to pay damages to Ubisoft, and could have been required to cease offering interactive guitar lessons altogether. Yousician countered that the case should be dismissed because the patent’s subject matter was not eligible for protection under Section 101 of the U.S. Patent Act.

Section 101 may be familiar to readers of our Stupid Patent of the Month posts. This part of the Patent Act helps ensure the patent system promotes innovation by limiting what can be patented. Section 101 prohibits patents on laws of nature, things that exist in nature, and abstract ideas. These are basic building blocks of science that no one could have invented, and all of us need to fuel further innovation.

These limitations are powerful weapons against software patent trolls. Software patents often claim an old idea in very broad terms, and add something non-abstract in technical jargon that effectively means “on a general-purpose computer.” Many of these patents should never have been granted, but trolls earn money from them anyway. In part, that’s because so many companies—especially smaller ones without deep pockets— settle out of court rather than risk losing more money in legal fees by challenging a patent. In 2014’s Alice v. CLS Bank decision, the Supreme Court made clear that courts can reject patents under Section 101 early in a case before the expensive discovery stage of litigation begins. That has made it possible for many small businesses to fight back, including many who have shared their experiences in our Saved by Alice project.

The Ubisoft case shows how Section 101 can also protect smaller companies and consumers from bogus monopolies the patent system would otherwise create.

On August 9th of last year, the U.S. District Court for Eastern District of North Carolina agreed with Yousician, holding that the Ubisoft patent doesn’t claim patent-eligible subject matter. Ubisoft appealed this decision, arguing the court had oversimplified the patent, but the U.S. Court of Appeals for the Federal Circuit upheld the decision this June, and the district court closed the case on July 20th.

The Federal Circuit rejected Ubisoft’s attempt to patent old teaching techniques by putting them into a video game. "Here, the claims recite nothing more than a process of gathering, analyzing, and displaying certain results," wrote the three-judge panel. "The mini-game generation step is ... no different from the ordinary mental processes of a guitar instructor teaching a student how to play the guitar."

Cases like this are important in ensuring the U.S. patent system actually does what is meant to do—promote the advancement of knowledge and ensure its accessibility to the public. In the past year, we’ve fought back against patent trolls, powerful interest groups, and big pharma companies, all of whom are seeking to weaken Section 101 so they can monopolize and profit from knowledge that is, and should remain, available to us all. The patent system is supposed to benefit the public as a whole, not be a bludgeon for powerful entities trying to amass and maintain monopolies. When the patent system puts the preferences of patent owners above the public’s interest, we lose options as consumers as well as the freedom to create, tinker, and play. That's why EFF will keep fighting for a robust, strong Section 101. Let's ensure that companies can't monopolize old ideas by just waving their hands at basic computer technology the public has used for decades.

New Low for a Bad Patent: Patent Troll Sues Ventilator Company

Joe Mullin — Wed, 20 May 2020 22:03:10 +0000

Patent trolls don’t care much about innovation. Their lawsuits and threats are attempts at rent-seeking; they’re demanding money from people who make, use, or sell technology just for doing what they were already doing—for crossing the proverbial “bridge” that the patent troll has decided to lurk under.

You might think that, during the Coronavirus outbreak and concurrent economic downturn, meritless patent threats might ease up a bit. After all, a lot of companies—particularly smaller ones—are having a hard time making ends meet. And about 32% of patent troll lawsuits do target small and medium-sized businesses. But that’s not what’s happening. In fact, lawsuits by patent trolls are up this year—20% higher than in last year, and 30% higher than 2018. By the count of one company that tracks them, patent trolls have filed 470 lawsuits in the first 4 months of 2020.

Meritless patent assertions take a major toll on the economy. In boom times, that’s bad enough; during a recession, it can be even more painful. Patent trolls demand money that struggling companies don’t have; and thriving companies will have less to spend on R&D and innovation.

Not only are we seeing a rise in overall litigation, but we can see specific cases that are likely to impact companies involved in direct medical response. Last month, we noted the case of Labrador Diagnostics LLC, a patent troll that sued a company that makes and distributes COVID-19 tests, using patents that it acquired from Theranos, the fraudulent blood-testing company.

Now, a shell company called Swirlate IP has acquired a patent that describes generic data transmission, and has used it to sue five different companies—including ResMed [PDF], a company that makes ventilators. Other targets include Livongo Health [PDF], Corning Optical Communications [PDF], Badger Meter [PDF], and Continental Automotive [PDF].

What is Swirlate? It’s a limited liability company whose address is a “Pack and Mail Shoppe” in a strip mall in Plano, Texas. Unified Patents, which is offering a $3,000 bounty for prior art on one of Swirlate’s patents, has linked Swirlate to IP Edge—a big patent assertion company owned by three IP lawyers, that controls a vast swath of shell companies like Swirlate that it uses to hold its patents and sue operating companies. IP Edge shell companies have been recipients of multiple EFF Stupid Patent of the Month awards, and IP Edge has been linked to some of the most lawsuit-happy patent trolls of all time.

Patenting Generic Data Transfer

Swirlate IP is using two similar patents to sue ResMed, U.S. Patents No. 7,567,622 and 7,154,961. Let’s take a close look at the ‘622 patent. Once you dig through the technical jargon, the ‘622 patent just really describes data transmission. For instance, the first claim of the ‘622 patent talks about “modulating data packets”—a generic and conventional procedure that can be performed with any computer capable of connecting to the internet, not to mention analog technology. It’s done according to a “modulation scheme,” which could be any kind of already-available technical standard—the patent doesn’t describe the scheme.

Subsequent steps describe using a “diversity branch,” using a “receiver,” the “retransmi[ssion]” of data packets when the first transmission wasn’t successfully decoded, and “demodulating,” or decoding, the transmitted data. There’s nothing about how it’s done. The accused products, like ResMed’s BiPAP breathing machine, use standard technology like LTE transmission.

Unfortunately, this is a pattern we’ve seen over and over again with technology patterns. It’s particularly egregious in this situation, because the lawyers who run IP Edge are set to profit from a lawsuit against a company that is directly responding to the COVID-19 crisis.

The patent was originally owned by Panasonic, but was sold in 2015; it ended up in the hands of Swirlate in April. But Panasonic didn’t invent ARQ retransmission, or the various other types of data transmission methods that are often agreed to by international standard-setting bodies. And it certainly didn’t invent LTE, an international data transmission protocol that was finalized in 2008. Yet, in the hands of Swirlate, this patent is being used to sue over products that use everyday LTE technology. This isn’t the first time Panasonic has sold patents to litigious patent trolls; in 2018, it sold a portfolio of patents to Wi-LAN, a Canadian patent assertion company.

What’s the solution to all this? We’ve suggested that the government take immediate action against patent abusers who are exacerbating the health crisis. But that’s only part of the solution here; three of Swirlate’s targets aren’t health care companies. We need to have other protections against patent threats like this. Those include a strong “inter partes review” system to check out already granted patent patents; and strong fee-shifting laws for companies that insist on pushing forward with low-quality patents in court. Ultimately, we need a patent office that will just say no to generic patents like these. That means a patent office that will enforce Supreme Court rulings like Alice v. CLS Bank, that have tightened up the rules on patenting generic ideas.

Who’s A Patent Troll, and Who’s An Inventor?

Joe Mullin — Wed, 29 Apr 2020 17:52:09 +0000

Two Congressmen recently introduced a bill that would create a special type of patent called an “Inventor-Owned Patent.” Having classified a group of “inventors,” the Inventor Rights Act (H.R. 5478) goes on to give them a long list of special privileges that will help them sue other people for patent infringement. If the bill passes, patent owners whom the government deems “inventors” will be able to exploit a big list of legal loopholes—including the ability to shut down product lines, avoid Patent Office reviews, and blow off important venue reforms established by recent Supreme Court rulings. Then, those who have “inventor-owned patents” will be able to return to venues that have historically been widely abused by patent owners, such as the Eastern District of Texas.

We’ll take a closer look at the Inventor Rights Act in a subsequent blog post, but first we need to answer a more basic question. Are most patent owners “inventors,” with all the weight that word entails? Are “inventors” a special class of patent owner, separate and distinct from the “patent trolls” that we track and critique here at EFF?

How Patent Trolls Make Money

Abuse of our patent system is, unfortunately, widespread. There are a vast array of people, companies, and institutions that make money by using patents, particularly software patents, to threaten or sue other companies, instead of developing or building technology of any kind. These lawsuits don’t spur innovation—they’re just exercises in rent-seeking. There are hundreds of patent owners, big and small, who live parasitically off companies that actually develop inventions, products, and services. Some of the trolls’ targets are big companies—after all, big companies have the most money to write big settlement checks. But lots of them are smaller—some of them very small, mom-and-pop businesses, sole proprietorships, or companies with just a few workers.

Those are the companies who will suffer most from efforts to tilt the scales further in favor of patent owners. They often can’t afford to mount a legal defense against patent trolls. Even if they’re likely to win, litigation costs could bankrupt them before that day ever comes. On our Saved by Alice page, we’ve published some true stories of small business owners who’ve been harmed by patent trolls, including video interviews with business owners Ruth Taylor and Justus Decher.)

There’s so much money to be made in abusing the patent system that there is an entire ecosystem of institutions that threaten people for licensing money. Stanford Law School has even created an database, the NPE Litigation Database, to categorize and track the various types of “non-practicing entities” that have businesses based on patent assertion. There are also companies like Unified Patents, and RPX, that collect and sell vast stores of data about the various types of patent assertion entities—companies that people who work in the tech sector often call “patent trolls.”

One type of patent troll refers to a company that buys up others’ patents, and then uses them to file lawsuits. An example of that would be Acacia Research Corporation, which buys patents (or “partners with” with patent owners) to sue companies, and splits the proceeds.

But that’s really only one type of patent troll. Others are firms that failed years ago, and now exist as shell companies that hold and assert patents. Or companies that never got a product off the ground, and now focus instead on litigating patents in court. And some patent owners never tried at all—they are simply individuals who acquire patents from the U.S. Patent Office for the purpose of making infringement accusations against others. It’s all bad behavior that hurts innovation—whether they use the term “inventor” or not.

Government-Approved “Inventors” vs. True Invention

When we talk about patent trolls at EFF, we’re looking at any individual or shell company that’s focused on threatening and suing people over patents—not making products or services. Some of those trolls are original patent owners—they applied for their patents from the U.S. Patent Office, ultimately received them, and haven’t transferred them to others. That makes them, legally speaking, “inventors.” But they aren’t inventors by any standard definition that we would understand them—because very often, the patents simply aren’t inventive.

When a company is focused on repeated legal attacks, and doesn’t actually provide any goods or services, that’s an abuse of the patent system—a system of limited monopolies that the Founders authorized Congress to grant only to “promote the progress” of the useful arts. Abuse is abuse, whether it’s done by an “original” patentee, or a third party who bought the patent. An inventor may have a fractional interest in a patent, with outside investors owning part of the action.

Many patent owners, and even named inventors on patents, aren’t true “inventors” by any common definition of the word. There are tens of thousands of non-inventive patents issued every year by an overworked government office. Those low-quality patents can easily become fodder for abuse.

It’s people and their accomplishments, not patents, that prove who the world’s inventors are. That’s why the idea of anointing a special class of patent owners, as the Inventor Rights Act would do, is a fundamentally flawed idea.

Calling Out The Trolls

Our “Stupid Patent of the Month” archives, and our Saved by Alice project, highlight lots of patents that would likely qualify as “inventor-owned” under the Inventor Rights Act, H.B. 5478. Consider a company like Motivational Health Messaging LLC, which held a patent on the idea of sending motivational text messages. The named inventors behind this patent, one of whom was an attorney, were also inventors on patents that other patent trolls had asserted hundreds of times. The same inventor got a patent related to message notifications, which was used to sue a Sonoma County bike gear company, a small business selling brownies, and many others.

While we don’t know the exact ownership breakdowns of these patent assertion companies, it’s very likely that the named inventors, who have been making money from patent lawsuits for a long time, have a significant stake in them. These are exactly the so-called “inventors” who are trying to get special privileges from Congress right now. They’re making claims that they “own” vast areas of technology, and are owed royalty payments.

We also fight those claims legally—like we did with the Personal Audio “podcasting” patent, a bogus language teaching patent, and the recent Inventergy GPS tracking patent. But we can’t take every case. Sometimes, we simply call out the patent’s ridiculous claims in public, so that users and technologists can share information about the legal demands being made by patent trolls. And in a case where a patent owner claimed it was defamatory to even call him a “patent troll,” we told the court to stand up for free speech—and won.

Some notorious patent trolls are the named inventors; other times, they’re buyers or licensees of patents. But the solution isn’t to create a separate class of “inventor-owned” patents. In our next blog post, we’ll explain more about the special privileges that the Inventors Rights Act seeks to bestow on certain types of patent trolls.

Design Patents Are Useless. So Why Are They Getting a Boost in DC?

Alex Moss — Wed, 29 Jan 2020 19:05:24 +0000

When we talk about patents, we’re usually talking about “utility” patents. Utility patents protect inventions that claim to have some practical application or use. (A lot of them still claim things that are actually useless, but they’re supposed to be potentially useful.)

“Design” patents, by contrast, protect only the ornamental or decorative aspects of a design. They don’t protect any kind of functionality. If there’s a functional work to protect, only a utility patent will do.

Because design patents can only protect non-functional works, they’re kind of like copyrights for visual works. And the bar for creativity and originality in a patented design is low—so low that even a standard-issue graphical user interface can get patent protection, as our latest Stupid Patent of the Month shows.

Shown below is a patented design owned by Siemens Healthcare GmbH, a company that’s part of Siemens, the most prolific patent-filer in Europe:

This patent, U.S. Patent No. D872,112, is a relatively standard GUI, with rows of circular icons displayed beneath a header bar. But the patent doesn’t protect everything in that picture—importantly, the portions circled by broken lines are not part of the patented design. The design also includes features that are not in the picture—namely, the colors used in the display. To understand what’s actually been patented here, a member of the public must do more: they can request and pay for a hard copy of the patent from the U.S. Patent Office or navigate through the PTO’s (extremely clunky) PAIR database in the hopes of finding a downloadable version of the originally-filed image.

Between the image’s poor quality and the broken lines denoting unprotected features, it’s practically to impossible to identify what the patented design even is. Is it the specific arrangement of circular icons in the three rows? If so, then why are certain circular icons excluded? Is it the icons that a Siemens designer created to represent things like “users” and “receivers?” If it’s this hard to say what the patented design actually is, it will be even harder to determine whether other designs are infringing. Infringement turns on the comparison between the patented design, the accused design, and the prior art. But that analysis can’t even happen until it is clear exactly what a design patent protects.

The low examination standards, lack of clarity, and resulting low quality of design patents already pose a big problem. But it could be about to get worse. Pro-patent lobbyists are pushing to give design patent owners more power over tech developers and users. They’ve introduced a bill that gives Customs and Border Protection the power to seize products at the border just by sizing them up and comparing them to design patents, whose owners are demanding this new type of special treatment.

Giving CBP so much power will pose a real danger to ordinary technology users. Imagine CBP trying to determine infringement for a patented design like the one above, which is a GUI for medical software. To assess infringement, CBP officers could examine a device, including software applications, to see if they match patented designs in the registry. When those applications pertain to health services, the medical privacy of users may be at risk.

Design patents owners don’t need more power than they have today. Instead, we should be asking whether design patents should exist at all. We already have copyright. It’s not clear that granting extra patent rights to works with no practical application provides any benefit to the public at all.

How a Patent on Sorting Photos Got Used to Sue a Free Software Group

Alex Moss — Tue, 03 Dec 2019 23:45:18 +0000

Taking and sharing pictures with wireless devices has become a common practice. It’s hardly a recent development: the distinction between computers and cameras has shrunk, especially since 2007 when smartphone cameras became standard. Even though devices that can take and share photos wirelessly have become ubiquitous over a period spanning more than a decade, the Patent Office granted a patent on an “image-capturing device” in 2018.

A patent on something so commonplace might be comical, but unfortunately, U.S. Patent No. 9,936,086 is already doing damage to software innovation. It’s creating litigation costs for real developers. The creator of this patent is Rothschild Patent Imaging LLC, or RPI, a company linked to a network of notorious patent trolls connected to inventor Leigh Rothschild. We've written about two of them before: Rothschild Connected Devices Innovations, and Rothschild Broadcast Distribution Systems. Now, RPI has used the ’086 patent to sue the Gnome Foundation, a non-profit that makes free software.

The patent claims a generic “image-capturing mobile device” with equally generic components: a “wireless receiver,” “wireless transmitter,” and “a processor operably connected to the wireless receiver and the wireless transmitter.” That processor is configured i: to (1) receive multiple photographic images, (2) filter those images using criteria “based on a topic, theme or individual shown in the respective photographic image,” and (3) transmit the filtered photographic images to another wireless device. In other words: the patent claims a smartphone that can receive images that a user can filter by content before sending to others.

According to Rothschild’s complaint, all it takes to infringe its patent is to provide a product that “offers a number of ways to wirelessly share photos online such as through social media.” How in the world could a patent on something so basic and established qualify as inventive in 2018?

At least part of the answer is that the Patent Office simply failed to apply the Supreme Court’s Alice decision. The Alice decision makes clear that using generic computers to automate established human tasks cannot qualify as an “invention” worthy of patent protection. Applying Alice, the Federal Circuit has specifically rejected a patent on the “abstract idea of classifying and storing digital images in an organized manner” in TLI Communications.

Inexplicably, there’s no sign the Patent Office gave either decision any consideration before granting this application. Alice was decided in 2014; TLI in 2016. Rothschild filed the application that became the ‘086 patent in June 2017. Before being granted, the application received only one non-final rejection from an examiner at the Patent Office. That examiner did not raise any concerns about the application’s eligibility for patent protection, let alone any concerns specifically stemming from Alice or TLI.

The examiner only compared the application to one earlier reference—a published patent application from 2005. Rothschild claimed that system was irrelevant, because the filter was based on the image’s quality; in Rothschild’s “invention,” the filter was based on “subject identification” criteria, such as the topic, theme, or individual in the photo.

Rothschild didn’t describe how the patent performed the filtering step, or explain why filtering on these criteria would be a technical invention. Nor did the Patent Office ask. But under Alice, it should have. After all, humans have been organizing photos based on topic, theme, and individuals depicted for as long as humans have been organizing photos.

Because the Patent Office failed to apply Alice and granted the ’086 patent, the question of its eligibility may finally get the attention it needs in court. The Gnome Foundation has filed a motion to dismiss the case, pointing out that the patent’s lack of eligibility. We hope the district court will apply Alice and TLI to this patent. But a non-profit that exists to create and spread free software never should have had to spend its limited time and resources on this patent litigation in the first place.

Price Setter LLC Falsely Claims Online Ad Invention, Demands Money from Android Devs

Joe Mullin — Mon, 28 Oct 2019 20:14:52 +0000

Unfortunately, app developers are facing another onslaught of letters demanding money they shouldn’t have to pay. This time, the sender is Jorge Maass, a patent owner who also runs a real-estate business in Texas. In recent months, Maass has been sending out threatening letters under the name of his company, Price Setter, LLC. The letters tell developers that the apps they built infringe his patent—and they owe him money—just for using standard software to display online ads.

The Price Setter letters, titled “Notice of Potential Infringement” [PDF] or the more threatening “Final Notice of Potential Infringement,” [PDF] demand that developers pay an annual license fee ranging from $400 to $2,000, depending on the number of times the app is downloaded.

In the letter, Price Setter specifically cites claim 15 of U.S. Patent No. 9,892,445. This claim doesn’t come close to showing that Maass is some kind of a pioneering creator of ad technology. In fact, it’s not evidence of much at all, beyond the fact that Maass could paste together buzzwords. We’re declaring the ‘445 patent the winner of our Stupid Patent of the Month award.

A "Real-Time" History of Ad Bidding

The dominant form of online advertising today uses a technique known as real-time bidding, or RTB. This is what takes place when you load a webpage, and algorithms figure out who you are, then auction off the online ad space in a fraction of a second. Today, most online ads use RTB technology. (As an important aside from the patent issues here, RTB technology involves invasive tracking, and its growth has harmed user privacy.)

There’s some debate over who is most responsible for the creation of RTB. But by about 2010, it was clear that RTB had taken root. One name that doesn’t pop up in trade press articles about the creation of RTB is Jorge Maass—the man who's sending out demand letters to inventors, insisting that they pay him money.

Despite his apparent absence from the well-documented history of RTB advertising, Maass says he is central to it. “We invented Real Time Bidding back in the year 2005!” he claims on the Price Setter LLC website. He calls his system “a block-chain RTB patent licensing program for digital advertising and dynamic pricing for mobile shopping partipants,” and says the company will have an Initial Coin Offering to return RTB “back to the way it was originally intended to be.”

Maass does have a “parent” patent that was filed back in 2005. But the claims describe a “transaction arbiter system” that’s basically an auction system, but tied to a mobile phone and with extra data, like location. The patent application uses the term “real-time” as a buzzword, in the sense of “very fast.”

Then—much later, in 2014—Maass was able to file the ‘445 patent, which again describes “real-time” bids but has one claim focused on advertising. Because the ‘445 patent is a “continuation” of the original parent patent, he’s able to claim priority back to 2005, and demand money from today’s app developers.

Maass’s patents are examples of the continuation abuse plaguing the patent system. Determined applicants are able to game the system by filing broad applications early and then filling in the blanks in later applications that describe in more specific and concrete terms work that others had already achieved—and even made ubiquitous—in the real world. The developers being threatened by Maass are just using display advertising software and services that were created by others, such as AdMob, the Google-owned service that Maass cites in one of his letters.

This campaign by Maass’s company, Price Setter LLC, is not the first to target small and independent app developers. That strategy is reminiscent of the campaign waged by the notorious patent troll Lodsys. That company sued a bunch of small developers, and threatened many more with aggressive demand letters, accusing them of infringing because they used standard “click to upgrade” software. When Lodsys actually went after a target that could afford to fight back—Kaspersky Lab—it backed down, settling for $0 instead of taking the risk of a trial over its patents.

Rather than paying attention to these problems, Congress is trying to roll back the clock, making it even harder to dismantle ridiculous patents like the Maass patent. Right now, a patent bill under consideration in the Senate would dismantle the type of review that developers could use to knock out a wrongly issued patent like this one efficiently.

Congress needs to move the system in the right direction, not continue to consider wrongheaded legislation like the “Stronger Patents Act.” Instead, let’s consider some policies that would actually help people who create new software. One good step would be legislation to crack down on continuation abuse, by limiting applicants’ ability to get new patent rights based on the dates of old patent applications.

Someone Is Suing Companies for Using SMS Messages in 2019

Elliot Harmon — Wed, 31 Jul 2019 17:45:27 +0000

Anuwave’s Suit Against Coinbase Demonstrates a Longstanding Flaw in the Patent System

This month’s Stupid Patent of the Month deals with SMS (short messaging service), a technology that goes back to the mid-1980s. Modern-day SMS messages, typically bundled with mobile phone services, have been around since 1992, but one company believes that you should have to pay a licensing fee simply to incorporate them into your app or service.

That company is Anuwave, which recently sued cryptocurrency exchange Coinbase (PDF) for infringement of US Patent 8,295,862. That’s only the most recent suit: Anuwave has sued dozens of companies since 2015 for alleged infringement of the patent—Symantec, Avast, and Bitdefender, just to name a few that have faced lawsuits.

Anuwave’s patent is on a software application using SMS to check for information—for example, for use on a device that can send and receive SMS messages, but doesn’t have an Internet connection. Anuwave alleges that Coinbase infringed the patent by letting users perform tasks like checking their balance via SMS.

Here’s the first claim of the patent:

A method of enabling communication through SMS communication channel, comprising:

listing all services at a terminal station that are available with an SMS gateway according to meta information available at the terminal station;
upon selecting a service, a network aware application displaying associated parameters that a user needs to select or enter;
upon user selection, submitting a request to the SMS gateway; and
the SMS gateway responding back with a response,
wherein the associated parameters include the parameters listed at the terminal station and the parameters desired by the user and not listed at the terminal station.

Coinbase is not the first company to use SMS messages to perform basic software commands. Unified Patents filed a complaint in 2017 with the Patent Trial and Appeal Board to invalidate Anuwave’s patent (PDF), and Unified’s complaint identifies three different provisional patent applications as prior art. (Unfortunately, the PTAB never made a decision: Unified reached a settlement with Anuwave and dropped the complaint.)

In the world of software, combining existing technologies or processes happens every day as a matter of course.

According to the law, a person isn’t entitled to a patent if the claimed invention already existed when the application was filed or would have been obvious to someone skilled in the relevant technology area. The Supreme Court has held that a combination of existing inventions can be ruled obvious even if that particular combination didn’t previously exist before the patent was issued.

In the world of software, combining existing technologies or processes happens every day as a matter of course. As patent expert Charles Duan wrote, “Non-proprietary software developers and other innovation communities value interoperability and combinability of software. Thus, the legal assumption that new combinations are uncommon and often worthy of patents conflicts with the experiences of those software developers, for whom new combinations are routine and expected.”

But let’s put aside the question of whether combining SMS with other services would have been obvious before Anuwave’s patent was granted. It really shouldn’t have been issued for a much more basic reason: it’s not an invention.

The landmark Supreme Court opinion Alice v. CLS Bank says that an abstract idea does not become a patentable invention simply by being implemented on a computer. At its core, Anuwave’s patent is on the idea of using SMS messages to provide information to a device. It’s clearly vulnerable to a challenge under Alice.

Anuwave v. Coinbase is one of the first patent lawsuits ever in the blockchain world, so we expect that the cryptocurrency community will be watching it closely. But it tells an all-too-common story about how low-quality software patents all too often undermine innovation: a company that does not produce anything wields an overly broad software patent against an entire field of actual, practicing companies. This is only the most recent example.

Today, some members of Congress are bent on undermining the Alice decision, destroying the most valuable tool that innovators can use against these stupid software patents. Please take a moment to write your members of Congress and urge them to reject the Tillis-Coons proposal.

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How LBS Innovations Keeps Trying to Monopolize Online Maps

Joe Mullin — Tue, 11 Jun 2019 19:11:00 +0000

Stupid Patent of the Month

For years, the Eastern District of Texas (EDTX) has been a magnet for lawsuits filed by patent trolls—companies who make money with patent threats, rather than selling products or services. Technology companies large and small were sued in EDTX every week. We’ve written about how that district’s unfair and irregular procedures made it a haven for patent trolls.

In 2017, the Supreme Court put limits on this venue abuse with its TC Heartland decision. The court ruled that companies can only be sued in a particular venue if they are incorporated there, or have a “regular and established” place of business.

That was great for tech companies that had no connection to EDTX, but it left brick-and-mortar retailers exposed. In February, Apple, a company that has been sued hundreds of times in EDTX, closed its only two stores that were in the district, located in Richardson and Plano. With no stores located in EDTX, Apple will be able to ask for a transfer in any future patent cases.

In the last few days those stores were open, Apple was sued for patent infringement four times, as patent trolls took what is likely their last chance to sue Apple in EDTX.

This month, as part of our Stupid Patent of the Month series, we’re taking a closer look at one of these last-minute lawsuits against Apple. On April 12, the last day the store was open, Apple was sued by LBS Innovations, LLC, a patent-licensing company owned by two New York patent lawyers, Daniel Mitry and Timothy Salmon. Since it was formed in 2011, LBS has sued more than 60 companies, all in the Eastern District of Texas. Those defendants include some companies that make their own technology, like Yahoo, Waze, and Microsoft, but they’re mostly retailers that use software made by others. LBS has sued tire stores, pizza shops, pet-food stores, and many others, all for using internet-based maps and “store location” features. LBS has sued retailers that use software made by Microsoft, others that use Mapquest, some that use Google, as well as those that use the open-source provider OpenStreetMaps.

Early Internet Maps

LBS’ lawsuits accuse retailers of infringing one or more claims of U.S. Patent No. 6,091,956, titled “Situation Information System.” The most relevant claim, which is specifically cited in many lawsuits, is claim 11, which describes a method of showing “transmittable mappable hypertext items” to a user. The claim language describes “buildings, roads, vehicles, and signs” as possible examples of those items. It also describes providing “timely situation information” on the hypertext map.

There’s a big problem with the ’956 patent, and its owners’ broad claim to have invented Internet mapping. The patent application was filed on June 12, 1997—but electronic maps, and specifically Internet-based maps, were well-known by then. Not only that, but the maps were already were adding what one would think of as “timely situation information,” such as weather and traffic updates.

Mapquest, the first commercial internet mapping service, is one example. Mapquest launched in 1996—before this patent’s 1997 priority date—and by July of that year, it was offering not just driving directions but personalized maps of cities that included favorite destinations.

And Mapquest wasn’t the first. Xerox Parc’s free interactive map was online as far back as 1993. By January 1997, it was getting more than 80,000 mapping requests per day. Michigan State University was getting 159,000 daily requests [PDF] for its weather map, which was updated regularly, in March 1997. Some cities, such as Houston, had online traffic maps available in that time period, which also got timely updates.

In 1997, any Internet user, let alone anyone actually developing online maps, would have been aware of these very public examples.

As technology advanced, and Internet use became widespread, the information available on the electronic maps we all use became richer and more frequently updated. This was no surprise. What’s described in the ‘956 patent added nothing to this clear and well-known path.

The Trouble With Prior Art

How has the LBS Innovations patent hold up in court? Despite the fact that these examples of earlier Internet maps can be found online fairly easily, that doesn’t mean it’s easy to get rid of a patent like the ‘956 patent in court. The process of invalidating patents using prior art—patent law’s term for relevant knowledge about earlier inventions—is difficult and expensive. It requires the hiring of high-priced experts, the filing of long reports, and months or years of litigation. And it often requires the substantial risk of a jury trial, since it’s difficult to get an early ruling on prior art defenses.

Because of that drawn-out process, LBS has been able to extract settlements from dozens of defendants. It’s also reached settlements with companies like Microsoft and Google, which intervened after users of their respective mapping software were sued. In one case where LBS got near trial, after having settled with several other defendants, it simply dropped its lawsuit against the final company that was willing to fight, avoiding an invalidity judgment against its patent.

LBS never should have been issued this patent in the first place. But patent examiners are given less than 20 hours, on average, to examine an application. Faced with far-reaching claims by an ambitious applicant, but little time to scrutinize them, examiners don’t have many options—especially since applicants can return again and again. That means the only way for examiners can get applications off their desk for good is by approving them. Given that incentive, it’s no surprise judges and juries often find issued patents invalid.

For software, it can be extremely difficult to find prior art that can invalidate the patent. Software was generally not patentable until the mid-1990s, when a Federal Circuit decision called State Street Bank opened the door. That means patents aren’t good prior art for the vast majority of 20^th century advances in computer science. Also, software is often protected by copyright or trade secret, and therefore not published or otherwise made public.

Often, published information may not precisely match the limitations of each patent claim. Did the earlier maps search “unique mappable information code sequences,” where each code sequence represented the mapped items, “copied from the memory of said computer”? They may well have done so—but published papers on internet mapping wouldn’t bother specifying inane steps that just recite basic computer technology.

The success of a litigation campaign like the one pushed by LBS Innovations shows why we can’t rely on the parts of the Patent Act that cover prior art to weed out bad patents. Section 101 allows courts to find patents ineligible on their face and early in a case. That saves defendants the staggering costs of litigation or an unnecessary settlement. Since the Alice v. CLS Bank decision, Section 101 has been used to dispose of hundreds of abstract software patents before trial.

Right now, key U.S. Senators are crafting a bill that would weaken Section 101. That will greatly increase the leverage of patent trolls like LBS Innovations, and their claims to own widespread Internet technology.

Proponents of the Tillis-Coons patent bill argue that there’s little need to worry about bad patents slipping through Section 101, because other sections of the patent law—the sections which allow for patents to be invalidated because of earlier inventions—will ensure that wrongly granted patents don’t win in court. But patent trolls simply aren’t afraid of those sections of law, because their effects are so limited. For many defendants, the costs of attempting to prove a patent invalid under these sections makes them unusable. Faced with legal bills of hundreds of thousands of dollars, if not millions, many defendants will have little choice but to settle.

We all lose when small businesses and independent programmers lose their most powerful means of fighting against bad patents. That’s why we’re asking EFF supporters to contact their representatives in Congress, and ask them to reject the Tillis-Coons patent proposal.

How Landmark Technology’s Terrible Patent Has Survived

Joe Mullin — Tue, 16 Apr 2019 23:06:09 +0000

Stupid Patent of the Month

There’s an increasing insistence from the highest echelons of the patent world that patent abuse just isn’t a thing anymore. The Director of the U.S. Patent Office, Andre Iancu, has called patent trolls—a term for companies that do nothing but collect patents and sue others—mere “monster stories,” and suggested in a recent oversight hearing that it was simply name-calling.

But whatever you call them—trolls, non-practicing entities, or patent assertion entities—their business model, which involves stockpiling patents to sue productive companies rather than making goods or services, continues to thrive. It’s not hard to find examples of abusive patent litigation that make clear the threat posed by wrongly-issued patents is very real.

Take, for instance, the patents that Lawrence Lockwood owns. These patents have been used to sue companies, large and small, for nearly 20 years now. Through his company Landmark Technologies and his earlier company PanIP, more than 100 lawsuits have been filed against businesses—candy companies, an educational toy maker, and an organic farm, to name a few. Because these companies engage in “sales and distribution via electronic transactions,” or use an automated system “for processing business and financial transactions,” Landmark says they infringe one of its patents.

Those lawsuits don’t account for the other companies that have received licensing demands, but have not been sued in court. The numerous threats made with Lockwood’s patents are made clear both by news accounts of Lockwood’s activity, as well as the several small business owners that have reached out to EFF after being targeted by Lockwood’s patents.

Patent Office records show Lockwood first applied for a patent in 1984, but his litigation ramped up after he acquired U.S. Patent No. 6,289,319 back in September 2001. The document describes an “automatic business and financial transaction processing system,” which Lockwood has interpreted to give him rights to demand licensing fees from just about any web-based business. Upon receiving that patent, Lockwood promptly sent 100 letters to various e-commerce businesses, demanding $10,000 apiece. When that didn’t work, he started filing lawsuits.

For more than 15 years now, some companies have been paying thousands of dollars to license Lockwood’s patents rather than pay the legal fees required to defend themselves. Hiring attorneys to fight the patents would have cost far more, and Lockwood was keenly aware of this leverage.

“Do they really want to spend $1 million and two years of their life to invalidate a patent they can license for a couple thousand dollars?” Lockwood said in 2003, speaking to a Los Angeles Times reporter about his lawsuits. “People get divorced over this stuff. They have strokes over this.”

Sixteen years and more than 100 lawsuits later, stress and the expenses continue to mount for Lockwood’s targets. Through Landmark, Lockwood continues to demand money from businesses that provide basic e-commerce, although his price has gone up. Companies targeted by Landmark Technology patents in recent years have shown demand letters [PDF, PDF] indicating the company now demands around $65,000 to avoid a lawsuit.

Not a single court has ever weighed in on the merits of Lockwood’s patent claim, according to court papers [PDF] filed in 2017 by one of his targets.

Despite some court rulings that have helped cut back patent trolling over the years, nothing has slowed down Lockwood’s broad assault on Internet commerce. This year, through a newly created company called “Landmark Technology A,” Lockwood’s patent no. 7,010,508—related to the ‘319 patent that came before it—has been used to sue two more companies: a specialty bottle-maker in south Seattle, and an Ohio company that sells safety equipment.

Based on Landmark’s history, it’s unlikely these two lawsuits will be the last.

Continuations and Consequences

How did this happen, and how does it continue? Lockwood applied for his first solely-owned patent in 1984, getting it two years later. It describes a network of “information and sales terminals” that could “dispens[e] voice and video information, printed documents, and goods,” accepting credit card payments. There’s no evidence Lockwood developed any such network or even had the ability to do so. In fact, Lockwood, a former travel agent, reportedly admitted during a deposition that he had never used a personal computer “for any length of time,” according to the 2003 Los Angeles Times profile.

In the mid-90s, Lockwood sued American Airlines for patent infringement, seeking to collect royalties on its SABRE flight reservation system, which he claimed infringed three of his patents. He lost that case when, in 1997, an appeals court agreed with the district court that his patent claims were not infringed and were invalid.

That wasn’t the end of Lockwood’s efforts to make money through patent litigation, though. He continued to get more patents, acquiring Patent No. 6,289,319 in 2001, and 7,010,508 in 2006. Both patents have been used in more than 85 lawsuits, according to the LexMachina legal database. He was able to get those patents despite the fact that they were based on a patent that had been found invalid. Even better for Lockwood, he was allowed to use the “priority date” of the earlier patent. That means the only prior art that could be used to invalidate the patent would have to be from earlier than that priority date—May 24, 1984.

Led by a family-owned chocolate shop, a group of small businesses banded together to share legal costs and fight Lockwood’s PanIP. When they put up a website about PanIP’s abuse of the system, Lockwood sued the owner of the chocolate shop for defamation and trademark infringement.

The ‘319 patent, which is richly deserving of our “Stupid Patent of the Month” award, was issued because of a problem we’ve spoken about before—abuse of the continuation process.

The Patent Office allows applicants to file “continuation” applications with new claims, as long as they’re based on what was disclosed in previously-filed applications. This creates opportunities for applicants to game the system and get patents on advances they could not have developed. For example, even though Lockwood applied for the ‘319 patent in 1994, it’s a continuation of the original 1984 application—which means that only prior art from 1984 or earlier can be used to invalidate it.

Landmark’s complaints demand money from operating businesses, claiming that because their systems process “business and financial transactions between entities from remote sites,” they infringe the ‘319 patent. Their recent complaint [PDF] against Illinois-based Learning Resources, Inc. includes a claim chart [PDF] explaining the alleged infringement, which is a 42-page detailed chart that describes using a computer to order a toy on the defendant’s website.

That chart makes clear that Landmark’s patent doesn’t claim any particular technological advance—just the basic idea of transmitting data between networked computer terminals.

This patent should be invalid under Section 101 of the patent laws for failing to claim an actual invention. At best, it describes basic computer technology—like an “on-line means for transmitting said information, inquiries, and orders”— to exchange information, and respond to orders. That is a ubiquitous and essential part of e-commerce, not a patent-eligible invention.

Right now, lobbyists are pushing for a wholesale re-write of Section 101, which is the best chance of stopping patents like this one early enough in a case to avoid spending hundreds of thousands of dollars on lawyers and expert witnesses. Drastic alterations to Section 101 could leave targets of Landmark in an even worse position—in order to get out of a multi-million dollar lawsuit, they’ll have to find published, pre-1984 prior art describing the precise, nearly indefinable contours of Lockwood’s “invention,” and invest huge sums on prior art investigations as well as expert witness reports.

Before lawmakers distort Section 101 so that it’s nearly useless, they should consider campaigns like Landmark’s. It involves an “inventor” who’s long been focused on litigating patents, not creating new innovations—and who admits to leveraging the high cost of litigation defense against small businesses. Lowering the bar for patent-eligibility even further will do far more to threaten innovation than encourage it.

Stupid Patent of the Month: Veripath Patents Following Privacy Laws

Joe Mullin — Fri, 01 Mar 2019 01:53:13 +0000

What if we allowed some people to patent the law and then demand money from the rest of us just for following it?

As anyone with a basic understanding of democratic principles can see, that is a terrible idea. In a democracy, elected representatives write laws that apply to everyone, ideally, based on the public interest. We shouldn’t let private parties “own” legal principles or use technical jargon to re-cast those principles as “inventions.”

But that’s exactly what the U.S. Patent Office has allowed two inventors, Nicholas Hall and Steven Eakin, to do. Last September, the government proclaimed that Hall and Eakin are the inventors of “Methods and Systems for User Opt-In to Data Privacy Agreements,” U.S. Patent No. 10,075,451.

The owner of this patent, a company called “Veripath,” is already filing lawsuits against companies that make privacy compliance software. With Congress and many states actively engaged in debates over consumer privacy laws, Veripath might soon be using this patent to extract licensing cash from U.S. companies as well.

Privacy-For-Functionality isn’t an “Invention,” it’s a Policy Debate

Claim 1 of the ’451 patent describes a basic data privacy agreement. An API provides personal information from a software application; then the user is asked for a “required permission” for the use of that information. There’s one add-on to the privacy deal: in exchange for the permission, the user gets access to “at least one enhanced function.”

The next several claims go on to describe minor variations on this theme. Claim 2 specifies that the “enhanced function” won’t be available to other users. Claim 3 describes the enhanced function as being fewer advertisements; Claim 4 describes offering the enhanced function in exchange for a monetary payment.

To say this “method” is well-known is a major understatement. The idea of exchanging privacy for enhanced functionality or better service is so widespread that it has been codified in law. For example, last year’s California Consumer Privacy Act (CCPA) specifically allows a business to offer “incentives” to a user to collect and sell their data. That includes “financial incentives,” or “a different price, rate, level, or quality of goods or services.” The fact that state legislators were familiar enough with these concepts to write them into law is a sign of just how ubiquitous and uninventive they are. This is not technology this is policy.

(An important aside: EFF strongly opposes pay-for-privacy, and is working to remove it from the CCPA. Pay-for-privacy undermines the law’s non-discrimination provisions, and more broadly, creates a world of privacy “haves” and “have-nots.” We’ve long sought this change to the CCPA.)

Follow the Law, Infringe this Patent

Veripath has already sued two companies that help website owners comply with Europe’s General Data Protection Regulation, or GDPR, saying they infringe its patent. Netherlands-based Faktor was sued [PDF] on Feb. 15, and France-based Didomi was sued [PDF] on Feb. 22

Some background: Venpath, Inc., a company with a New York address that appears to be a virtual office, assigned the rights in the ’451 patent to VeriPath just days before the patent issued in September last year. As it happens, the FTC began enforcement proceedings against VenPath last September. The FTC’s complaint [PDF] alleged that VenPath’s website represented that “VenPath participates in and has certified its compliance with the EU-U.S. Privacy Shield Framework.” The FTC alleged a count of “privacy misrepresentation.” It claimed that VenPath “did not complete the steps necessary to renew its participation in the EU-U.S. Privacy Shield framework after that certification expired in October 2017.” The FTC issued a Decision and Order [PDF] requiring VenPath to remove the misrepresentations.

An exhibit [PDF] attached to the complaint shows that one of the named inventors on the patent, Nick Hall, contacted Faktor to ask what its prices were. Hall identified himself as the CEO of VenPath. Once Faktor responded, Veripath sued Faktor in federal court in New York.

In its lawsuits, Veripath claims that basic warnings about cookies on websites, a now-common method of complying with the GDPR, violate its patent. The lawsuit against Faktor notes that Faktor’s own website “might not work properly” unless a user consents to having her browser accept cookies.

Veripath and its legal team argue that this simple deal—accepting cookie use, in order to visit websites—is enough to infringe the patent. They also claim that Faktor’s Privacy Manager software infringes at least Claim 1 of the patent, and facilitates infringement by others.

The ’451 patent should never have been granted. In our view, its claims are clearly ineligible for patent protection under Alice v. CLS Bank. In Alice, the Supreme Court held that an abstract idea (like privacy-for-functionality) doesn’t become eligible for a patent simply because it is implemented using generic technology. Courts have struck down similar claims, like a patent on the idea of conditioning access to content on viewing ads.

Even when a patent is invalid, defendants face pressure to settle. Patent litigation is expensive and it can cost tens or hundreds of thousands of dollars just to get through the early stages. To really protect innovation we have to ensure that patents like the ’451 patent are never issued in the first place. The fact that this patent was granted shows the Patent Office is failing to apply the law.

We are currently urging the public to tell the Patent Office to stop issuing abstract software patents. You can use our Action Center to submit comments.

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Stupid Patent of the Month: IBM's Software Patent on Texting and Driving

Joe Mullin — Fri, 01 Feb 2019 00:06:37 +0000

In the smartphone era, “distracted driving” is a serious, and well-known, problem. Official warnings about poor driving habits are as old as the automobile itself. The New York Times published a Pulitzer-winning series on distracted driving back in 2009.

Increasingly, technological assists are available for those seeking to manage their smartphone’s distractions while in the car. Apple integrated a “do not disturb while driving” mode into iOS 11, and Google has long had similar functionality in its Android Auto app. Multitudes of third-party smartphone apps exists to address the issue. Finally, more than 50 companies are working on what may be the ultimate solution to distracted driving: autonomous vehicles.

Unfortunately, the U.S. patent system creates warped incentives for emerging software fields like road-safety features. Rather than competing in a challenging space, some players are seeking broadly-worded patents, then hope to sit back and extract profits later.

That may be the strategy of the International Business Machine Corp., which has acquired more U.S. patents than any other company for decades now. This week, IBM was awarded U.S. Patent No. 10,191,462, describing a “Vehicle electronic receptionist.”

IBM likely has the resources to make technology to manage communications while driving. But the ’462 patent describes nothing of the sort. Instead, IBM’s patent simply describes a computerized decision-making process.

The patent’s Claim 1 describes a computer system that determines the “driving context” of a vehicle; analyzes an incoming communication; and then determines an “electronic action” in response, considering various weights and risk factors. The electronic action could be “taking a message, providing a silent or audible notification… [or] providing an automated response.”

Other claims add more layers to the analysis, like considering road conditions, doing voice analysis on a voicemail, or considering whether a passenger is sleeping before deciding to put a call through.

Essentially, IBM has described a futuristic car computer system that will analyze the driving conditions and the context of an incoming text or call, then use some unspecified type of AI to decide what to do about the communication. The specification is filled with empty platitudes typical of software patents, like “[t]he computer system may be described in the general context of computer system executable instructions, such as program modules, being executed by a computer system.” Aside from hand-waving like this, the patent has essentially no information about how one would actually create the claimed system.

IBM: Ignore the “Troll Scare”

Some of the claims describe good ideas that could be useful parts of automotive software in the future. But the patent is just that—a list of ideas, not instructions for executing the ideas or creating anything. IBM’s patent offers no code, no algorithms, not even a vague description of how the rules might work.

We’ve seen this problem before, in which the Patent Office awards a patent not to the first proven inventor, but to the first applicant who describes a task using technological and legal jargon that patent professionals respect. The Patent Office and the Federal Circuit have been far too willing to approve patents that merely state the idea of applying rules without even specifying what those rules are. The public gains nothing from companies getting patents on the mere idea of using an algorithm to solve a particular problem. Patents like the ’462 patent leave all of the hard work—actually writing, debugging, and deploying software that solves the problem under real-world conditions—as an exercise for the reader. And they allow IBM to exclude the public from making or creating any of the wide range of algorithms that these broad patent claims could ensnare.

In our view, IBM’s new patent should fail under the Supreme Court’s Alice v. CLS Bank decision, which holds that you can’t patent basic decision-making processes by adding references to generic computer hardware and software. Given that, it may come as no surprise that IBM is lobbying to throw out the Alice precedent. In a recent interview, top IP executives from IBM explained their plans to demolish Alice by getting Congress to re-work Section 101 of the patent laws, which bars abstract patents. “Every time we try to enforce a patent, we get a 101 defense that comes back at us,” said IBM Chief Patent Counsel Manny Schecter. IBM VP Mark Ringes said he’s hearing “positive messages from Congress” about changing Section 101 to better suit big patent owners.

Ringes went so far to claim that the “troll scare is largely just noise now.” That assertion flies in the face of the patent litigation landscape. By one estimate, about 90 percent of patent lawsuits filed last year in the tech sector were filed by non-practicing entities. IBM appears to be downplaying the damage done by patent trolls because its business interests have become aligned with them. IBM collected more than 9,000 patents in 2017 alone. It uses that massive storehouse of IP to fuel a licensing business that earns more than $1 billion per year.

In some cases, that means IBM can let other companies battle for dominance in a particular sector, then step in and demand licensing payments when it’s clear who can pay. There’s less need for IBM to build new social media apps, when the company can use a patent threat to collect $36 million from Twitter right before its IPO. There’s less need to build an e-commerce business, when IBM can sue Amazon over an “electronic catalog” patent that dates back to 1994.

Make no mistake: IBM has an incentive to pile up overly broad patents like this one because these patents might allow it to extract revenues from other companies’ future products. A broken patent system encourages companies to use patents, rather than products, to assure dominance in key sectors like driving communications and autonomous driving. Getting rid of Alice would only make the system worse and lead to another flood of do-it-on-a-computer patents. We hope Congress agrees.

Stupid Patent of the Month: Trading By Tweet

Joe Mullin — Thu, 20 Dec 2018 22:54:49 +0000

We’ve written many times about how the patent system is a poor fit for software. Innovation in the U.S. software industry happens despite, not because of, the thousands of software patents that are granted each year.

But software is not the only industry where patents make very little sense. In the 1990s, the Federal Circuit opened the door to patents on methods of doing business. While the Supreme Court tried to undo some of that damage, financial institutions are still hit with patent lawsuits. Many of these suits come from trolls that don’t produce anything. And yet, just as in the tech sector, there are some financial companies that keep heading back to the U.S. Patent and Trademark Office seeking a 20-year monopoly on some tactic or another.

This month, we’re highlighting U.S. Patent Number 10,147,140, which was recently granted to BNY Mellon Bank. The first claim of the ’140 patent uses a lot of financial jargon to describe an extremely simple process: checking social media for a particular event or statement, then making a trade based on that “investment triggering content.” One example of that: making a trade because someone put a hashtag in a tweet.

Even if this was a new product idea or investment strategy, it is not a new invention. The trend of stock market trading has been clear now for decades: automated trading has become faster and more computerized each year. BNY Mellon Bank did not invent computerized trading, social media, or anything else remotely technical. Rather, its patent proposes the idea of trading based on a social media event.

In the patent prosecution documents, the patent examiner even starts out by admitting that “the concept described in claim 1 is not meaningfully different than the economic concept… found by the courts to be an abstract idea.” Appropriately, the examiner cited Alice v. CLS Bank, which forbids “do it on a computer”-type patents. Similarly, Alice should clearly forbid patents on very old practices, like trading stocks, and simply adding in “social media monitoring.

But then the examiner goes on to agree with the applicant’s specious argument that just because the claim has additional limitations—such as “using a processor to withdraw[] funds from a customer financial account and then purchase shares,” and an interface that shows social media information—it becomes eligible. “When viewed as an ordered combination, the additional limitations amount to significantly more than the abstract idea,” the examiner concludes, “[t]he idea is patent eligible.”

Adding generic computer processes shouldn’t have made this patent eligible. So how does it happen? One big problem is that incentives in the patent application process line up to favor the granting of patents. Patent examiners are graded through a “count” system that gives them progressively less credit as persistent applicants file new amendments, arguments, requests for continued examination, and continuation applications. This system makes it impossible for the Patent Office to ever finally reject an application. There is only one way for the Patent Office to get rid of a persistent applicant: give them a patent.

In this case, the BNY Mellon’s lawyers essentially just pounded their fists on the table. They offered nothing more than the bare insistence that the patent included an “ordered combination,” and that should negate the Alice rules. “There was no showing that the combination as a whole failed to provide an inventive concept,” wrote the applicants. The examiner simply gave up and issued a patent that is plainly ineligible under Alice and many other cases.

We’ve written before that the Patent Office needs to do a better job applying Alice. Unfortunately, the new Director appears to want the opposite. Other lobbyists are pushing for legislation to undo Alice entirely. If they get their way, we can expect another flood of silly patents on business methods and software.

Stupid Patent of the Month: A Patent on Using Mathematical Proofs

Joe Mullin — Fri, 30 Nov 2018 20:58:49 +0000

In some fields, software bugs are more than the proverbial pain in the neck. When software has to ensure that an airplane lands safely, or that a pacemaker keeps operating, there’s no room for error.

The idea that mathematical proofs could be used to prove that software is error-free has been around since the 1970s, and is known as “formal verification.” But like a lot of technologies that some visionaries saw coming, it took time to develop. In recent years, computing power has become cheap enough for formal verification to become practical for more software applications.

Unfortunately, last month, the field had a monkey wrench thrown into it, in the form of U.S. Patent No. 10,109,010, which the patent office awarded to a U.K.-based company called Aesthetic Integration Ltd.

Claim 1 of the patent describes creating mathematical “axioms”—formal mathematical statements—that describe a computerized trading forum. The patented method then describes analyzing, with a “computer assessment system … the mathematical axioms that describe the operation of the trading forum.” In other words, the patent describes using formal proofs to check for bugs in a “computerized trading forum.” It’s formal verification—just applied to the financial services industry.

Of course, Aesthetic Integration didn’t invent formal verification, nor did the company invent the idea of software powering a “trading forum.” The company has apparently created software that utilizes formal verification in the financial services space, and that software might be perfectly good. But the Patent Office has effectively allowed the company to patent a whole sector of formal verification.

To be fair, the ’010 patent appears to reflect some advanced and difficult programming by Aesthetic Integration. But that does not mean it should be patentable. Consider the following analogy: there are no 50 story buildings in Cincinnati. Building a 50 story building in Cincinnati, and making it compliant with seismic safety standards, would be hard work. It would take many engineers a great deal of effort to apply existing techniques to complete the project. You could write a lengthy paper describing that process, which might include lots of complex charts and diagrams. Still, that does not mean a company that completes such a project should then get a monopoly on tall buildings in Cincinnati.

Aesthetic Integration claims to be the first to apply formal verification to trading software. If that’s true, the company may get a well-earned competitive advantage by being the first to this market. But it should not get a 20 year monopoly simply for applying programming techniques that the company itself has described as part of a “mature and effective field of science.”

Ultimately, the ’010 patent reflects a broader problem with Patent Office’s failure to apply a meaningful obviousness standard to software patent applications. We have explained before that the Patent Office is all too willing to hand out patents for using known techniques in a particular field. Flow charts and whirligigs can make a concept look new when it isn’t—especially when a patent owner fills its application with obscure language and “patentese.” The Federal Circuit has also encouraged this through its hyper-formalistic approach to obviousness. The end result is an arms race where people rush to patent routine software development.

As we’ve said before, patents are simply a bad fit for software. The Patent Office should stop giving out patents on formal verification, or other well-known software processes.

Stupid Patent of the Month: How 34 Patents Worth $1 Led to Hundreds of Lawsuits

Daniel Nazer — Wed, 31 Oct 2018 17:35:30 +0000

One of the nation’s most prolific patent trolls is finally dead. After more than a decade of litigation and more than 500 patent suits, Shipping & Transit LLC (formerly known as Arrivalstar) has filed for bankruptcy. As part of its bankruptcy filing [PDF], Shipping & Transit was required to state how much its portfolio of 34 U.S. patents is worth. Its answer: $1.

We are recognizing Shipping & Transit’s entire U.S. portfolio as our latest stupid patent of the month. We agree that these patents are worthless. Indeed, they have always been worthless, except as litigation weapons. In the hands of their unscrupulous owners, they caused enormous damage, costing productive companies more than $15 million in licensing fees and untold legal expenses. That’s tens of millions of dollars that won’t be used to invest in new products, reward shareholders, or give raises to workers.

Dozens of worthless patents

All patent troll stories start with the Patent Office. You can’t be a patent troll without patents. And you can’t have patents unless the Patent Office grants them. We have found many occasions to write about problems with patent examination. The Patent Office spends only a few hours per application and regularly issues software patents without considering any real-world software at all. This helps explain how an entity like Shipping & Transit could end up with dozens of valueless patents.

Shipping & Transit claims to be “one of the pioneers of determining when something is arriving and being able to message that out.” Its patent portfolio mostly relates to tracking vehicles and packages. Of course, Shipping & Transit did not invent GPS tracking or any protocols for wireless communication. Rather, its patents claim mundane methods of using existing technology.

Consider U.S. Patent No. 6,415,207. This patent claims a “system for monitoring and reporting status of vehicles.” It describes using computer and software components to store status information associated with a vehicle, and communicate that information when requested. In other words: vehicle tracking, but with a computer. It doesn’t disclose any remotely new software or computer technology. Rather, the patent claims the use of computer and software components to perform routine database and communications operations. There is nothing inventive about it.

Given that it was aggressively filing lawsuits as recently as 2016, it is striking to see Shipping & Transit now admit that its patent portfolio is worthless. While many of its patents have expired, that is not true of all of them. For example, U.S. Patent No. 6,415,207 does not expire until 2020. Also, the statute of limitations for patent infringement is six years. An expired patent can be asserted against past infringement so long as the infringement occurred before the patent expired and within the last six years. Many of the patents Shipping & Transit have asserted in court expired less than six years before its bankruptcy filing. Yet Shipping & Transit valued all of its U.S. patents at $1.

A decade of patent trolling

When it was known as Arrivalstar, Shipping & Transit sued a number of cities and public transit agencies claiming that transit apps infringed its patents. (While the exact legal relationship between Arrivalstar S.A. and Shipping & Transit LLC is unclear, Shipping & Transit has itself said that it was “formerly known as Arrivalstar.”) Its litigation had all the hallmarks of classic patent trolling. When transit agencies banded together to defend themselves on the merits, it quickly abandoned its claims.

Shipping & Transit’s campaign continued for years against a variety of targets. In 2016, it was the top patent litigator in the entire country, mostly targeting small businesses. One judge described its tactics as “exploitative litigation.” The court explained:

Plaintiff’s business model involves filing hundreds of patent infringement lawsuits, mostly against small companies, and leveraging the high cost of litigation to extract settlements for amounts less than $50,000.

For many years, this strategy worked. Shipping & Transit/Arrivalstar is reported to have collected more than $15 million from defendants between 2009 and 2013.

Finally, after more than a decade, Shipping & Transit’s exploitative tactics finally caught up with it. First one, then another federal judge awarded attorneys’ fees to the defendants in cases brought by Shipping & Transit. With defendants successfully fighting back, it stopped filing new cases.

The end: Shipping & Transit files an inaccurate bankruptcy petition

Shipping & Transit filed its bankruptcy petition [PDF] on September 6, 2018. The petition discloses that Shipping & Transit’s gross revenue in the two-year period of 2016 and 2017 was just over $1 million dollars. Of course, this does not include the legal costs that Shipping & Transit imposed on its many targets. It claimed to have no revenue in 2018.

Other than its 34 U.S patents (valued at $1), and its 29 worldwide patents (also valued at $1), Shipping & Transit claims to have no assets at all. Where did the more than $1 million dollars it received go? The application doesn’t say.

The bankruptcy petition, submitted under the penalty of perjury and signed by Shipping & Transit’s Managing Member Peter Sirianni, contains at least one false statement. A bankruptcy petition includes Statement of Financial Affairs (Form 207). Part 3 of this form requires the debtor to list any “legal actions … in which the debtor was involved in any capacity—within 1 year before filing this case.” Shipping & Transit said “none.”

But that isn’t true. On July 23, 2018, a writ of execution [PDF] was issued as to Shipping & Transit in the amount of $119,712.20. This writ was issued in Shipping and Transit, LLC v. 1A Auto, Inc., Case No. 9:16-cv-81039, in the Southern District of Florida. The judge in that case had issued a final judgment [PDF] on April 3, 2018, awarding fees and costs to the defendant. Both of these orders, and many other court filings, took place within a year of Shipping & Transit’s bankruptcy petition. Yet Shipping & Transit still affirmed that it had not been involved in litigation “in any capacity” within a year of the bankruptcy filing.

Shipping & Transit’s petition does list 1A Auto as an unsecured creditor. Even though a court has issued a writ of execution with a precise six-figure amount, Shipping & Transit stated that the amount of 1A Auto’s claim is “unknown.”

It is not surprising that a decade of abusive patent trolling would end with an inaccurate bankruptcy petition. To be clear, our opinion that Shipping & Transit’s bankruptcy petition includes a false statement submitted under oath is based on the following disclosed facts: its answer to Part 3 of Form 207 of its petition, and the public docket in Case No. 9:16-cv-81039 in the United States District Court for the Southern District of Florida.

A monster story for Halloween

UPSTO Director Andrei Iancu recently gave a speech where he suggested that those who complain about patent trolls are spreading “scary monster stories.” It may finally be dead, but Shipping & Transit was a patent troll, and it was very, very real. We estimate that its lawsuits caused tens of millions of dollars of economic harm (in litigation costs and undeserved settlements) and distracted hundreds of productive companies from their missions. Research shows that companies sued for patent infringement later invest less in R&D.

A patent system truly focused on innovation should not be issuing the kind of worthless patents that fueled Shipping & Transit’s years of trolling. Courts should also do more to prevent litigation abuse. It shouldn’t take an entire decade before an abusive patent troll faces consequences and has to shut down.

While it lived, Shipping & Transit/Arrivalstar sued over 500 companies and threatened many hundreds more. That might be a “monster story,” but it is true.

Stupid Patent of the Month: Trolling Virtual Reality

Daniel Nazer — Fri, 28 Sep 2018 16:06:36 +0000

This month’s stupid patent describes an invention that will be familiar to many readers: a virtual reality (VR) system where participants can interact with a virtual world and each other. US Patent No. 6,409,599 is titled “Interactive virtual reality performance theater entertainment system.” Does the ’599 patent belong to the true inventors of VR? No. The patent itself acknowledges that VR already existed when the application was filed in mid-1999. Rather, it claims minor tweaks to existing VR systems such as having participants see pre-recorded videos. In our view, these tweaks were not new when the patent application was filed. Even if they were, minor additions to existing technology should not be enough for a patent.

The ’599 patent is owned by a company called Virtual Immersion Technologies, LLC. This company appears to have no other business except patent assertion. So far, it has filed 21 patent lawsuits, targeting a variety of companies ranging from small VR startups to large defense companies. It has brought infringement claims against VR porn, social VR systems, and VR laboratories.

Virtual reality was not new in mid-1999. The only supposedly new features of the ’599 patent are providing a live or prerecorded video of a live performer and enabling audio communication between the performer and a participant. Similar technology was infamously predicted in the Star Wars Holiday Special of 1978. In this sense, the patent is reminiscent of patents that take the form: “X, but on the Internet.” Here, the patent essentially claims video teleconferencing, but in virtual reality.

Claim 1 of the ’599 patent is almost 200 words long, but is packed with the kind of mundane details and faux-complexity typical of software patents. For example, the claim runs through various “input devices” and “output devices” assigned to the “performer” and “participant.” But any VR system connecting two people will have such things. How else are the users supposed to communicate? Telepathy?

Like many software patents, the ’599 patent describes the “invention” at an absurdly high, and unhelpful, level of abstraction. Any specific language in the patent is hedged to the point that it becomes meaningless. The “input devices” might be things like a “keypad or cyberglove,” but can also be any device that “communicate[s] with the computer through a variety of hardware and software means.” In other words, the “input device” can be almost any device at all. The patent suggests that the “underlying control programs and device drivers” can be written in “in many different types of programming languages.” Similarly, the “network communication functions” can be accomplished by any “protocols or means which may currently exist or exist in the future.” The overall message: build yourself a VR system from scratch and risk infringing.

RPX filed an inter partes review petition arguing that claims of the ’599 patent were obvious at the time of the application. The petition argues, persuasively in our view, that earlier publications describe the supposed invention claimed by the ’599 patent. The inter partes review proceeding has since settled, but any defendant sued by Virtual Immersion Technologies, LLC can raise the same prior art (and more) in their defense. Unfortunately, it is very expensive to defend a patent suit and this means defendants are pressured to settle even when the case is weak.

The ’599 patent highlights many of the weaknesses of the patent system, especially with respect to software patents. First, the Patent Office failed to find prior art. Second, the patent claims are vague and the patent isn’t tied to any concrete implementation. Finally, the patent ended being used to sue real companies that employ people and make things.

Stupid Patent of the Month: A Newspaper on a Screen

Alex Moss — Thu, 30 Aug 2018 00:47:16 +0000

One of the oldest challenges in journalism is deciding what goes on the front page. How big should the headline be? What articles merit front-page placement? When addressing these questions, publishers deal with a physical limit in the size of the page. Digital publishing faces a similar constraint: the storage capacity of the user’s device. You can only put as much content on the device as will fit. If that sounds like a fundamental to you, and unpatentable, idea, we agree. Unfortunately, the Patent Office does not. They recently decided to issue our latest Stupid Patent of the Month: U.S. No. 10,042,822, titled “Device, Method, and System for Displaying Pages of a Digital Edition by Efficient Download of Assets.”

The ’822 patent adds nothing remotely inventive or technological to the basic idea of providing a portion of a periodical—i.e., a newspaper—based on the amount of space available. The patent owner, Nuglif, makes an application for distributing news and media content.

Even a cursory glance at the patent reveals the limits of its technological reach. It explains: “The present invention is concerned with a processor-implemented method for displaying a digital edition readable by a dedicated software application running on a data processing device having a display screen, even though the digital edition is not completely downloaded on the data processing device.” The specification is typically elusive as to what that invention actually is, instead repeating the boilerplate phrase beloved by patent applicants, that “the description set forth herein is merely exemplary to the present invention and is not intended to limit the scope of protection.”

For the limits of the patent, we look to its claims, which define the applicant’s legal rights instead of describing the operation of the “invention” to which the claims supposedly correspond. The patent has only one independent claim, which includes steps of (a) receiving a pre-generated file linking to at least some content from current and upcoming digital editions, (b) requesting the linked-content for display, and (c) determining how much content from the upcoming edition to download based on publication date and device capacity.

Notably, the patent does not claim as the invention the processor, the network, the digital edition, the software application for reading the digital edition on the device, or any other technical aspect. Instead, it claims the combination of receiving, requesting, and determining, without limiting it to any particular device or manner of operation. Aside from the reference to a “processor-implemented” method in the preamble to the claim, nothing in the claim indicates these steps would even have to be performed by machinery rather than a human. Nor does it indicate why providing a partial edition would be challenging once a complete edition can be provided.

In 2014, the Supreme Court’s Alice v. CLS Bank decision confirmed what numerous earlier decisions had already established: to be eligible for a patent, an applicant must actually invent something. Patents on abstract ideas, laws of nature, and naturally-occurring phenomena are prohibited. These represent the fundamental building blocks of innovation and scientific progress that must remain available to the public. When a patent claims something in these prohibited categories and adds nothing to transform the claims into a specific invention, the patent takes from the public domain, and adds nothing in return.

Abstract ideas are basic principles that apply and often represent methods of organizing human activity that people have known and used for years without technological intervention. Too often, applicants obtain patents on abstract ideas by claiming systems or methods that merely apply these ideas using off-the-shelf computer hardware and software and without adding anything that is inventive and patent-eligible—i.e., something attributable to the applicant other than the abstract idea or pre-existing computer technology that supposedly makes it concrete.

The ’822 patent issued on August 7, 2018, and has a priority date of January 10, 2014. That means the Alice decision came out in plenty of time to block its issuance. The idea of providing less based on resource constraints is not even technological, let alone innovative. It is a basic idea that drives human activity every day: from our decision not to consume an entire day’s worth of food at breakfast, to our decision to fill our bag with only what we can carry, and actually need, for work or school.

Nothing in the patent suggests that the applicant came up with anything beyond the idea of making a determination based on timing and capacity. Even the patent relies on the obvious analog analogies, explaining that Saturday editions are typically “more voluminous” and thus demand more capacity than “lighter” Sunday editions with fewer sections. But that was just as true for paper editions distributed by newspaper carriers as for digital editions distributed on devices today. The need to adapt to the constraints of a medium is not a problem tied to any particular technological tool or environment.

Right now, we have no concerns about the conduct of the assignee, Nuglif. But we are worried that the Patent Office is still issuing patents like this one. Because the ’822 patent issued so recently, it has the potential to be used to threaten or bring suit until it expires in 2034. Since it directly relates to the distribution of news content, these threats could add to risks and costs of creating and distributing newspapers, magazines, and other creative content—activities the First Amendment protects.

Stupid Patent of the Month: Upaid Sues “Offending Laundromats” For Using Prepaid Cards

Joe Mullin — Tue, 31 Jul 2018 18:00:42 +0000

When patent trolls threaten and sue small businesses, their actions draw the public’s attention to the worst abuses of the patent system. In 2013, a company called MPHJ Technology got called out in a U.S. Senate hearing as a “bottom feeder” engaged in “garden-variety extortion” after it sent out thousands of demand letters demanding payments from small businesses that dared to use printers with “scan-to-email” functions. Lawmakers, understandably, found it incomprehensible that broad, stupid patents were being used to sue burger stands and grocery stores.

It’s essentially a patent on having a prepaid account for—well, anything.

There’s a good reason for that concern. It’s hard to see how lawsuits against small businesses using basic technology do anything to “promote the progress of science and the useful arts.” By contrast, it is easy to see how these lawsuits harm companies and consumers by increasing the costs and risks of doing business.

But the intermittent public attention hasn’t stopped this most basic abuse of the patent system. Upaid Ltd., a shell company based in the British Virgin Islands, has been filing patent infringement lawsuits throughout 2018, including 14 against laundromats—yes, laundromats—from California to Massachusetts.

Upaid says that laundromats are infringing U.S. Patent No. 8,976,947. Claim 1 of the patent describes a computer system that performs “pre-authorized communication services and transactions,” after checking an account to see if a user “has a sufficient amount currently available for the … transaction.” It’s essentially a patent on having a prepaid account for—well, anything.

Right now, Upaid lawyers are focused on systems run by Card Concepts, Inc., a service provider that markets a system called Laundry Card to laundromats. Many of the Upaid’s complaints simply point to online photos of the laundromats and the relevant card dispensers as evidence of infringement.

This incredibly broad patent was granted in 2015, but dates to a series of applications stretching back to 1998. Even in 1998, a prepaid account was not an inventive concept. It’s a basic and longstanding idea, that isn’t improved by adding verbiage about a “plurality of external networks” and a “computer readable medium.”

And that’s exactly the argument that lawyers for Card Concepts Inc. made [.pdf] when they got sued by Upaid last year. CCI has rightly argued that the patent should be invalidated as abstract under the Alice decision. CCI’s motion may well succeed in defending their customers—at some point.

Meanwhile, though, Upaid has unleashed 14 lawsuits against laundromats in different states, and has promised more. Faced with the prospect of paying a lawyer, even if just to buy time, some of those small businesses are likely to pay unjustified licensing fees for this patent.

In fact, it has begun to happen. Last week, UPaid put out a press release boasting that a Houston-based facility called 24 Hour Laundry had agreed to pay them. Laundromats in Kansas, Massachusetts, and Monterey, California are next up on the list.

“When required, we will strenuously enforce our rights through litigation against offending laundromats,” warned Upaid CEO Simon Joyce. “Our recent settlement reveals that many parties are not aware that the card equipment critical to their successful laundry business infringes our patents.”

Upaid’s behavior is brazen, but it is not an anomaly. Other patent trolls have waged campaigns against small businesses that merely use off-the-shelf technology. For example, Innovatio IP Ventures sent thousands of letters targeting hotels and cafes that provide Wi-Fi for customers. In Upaid’s case, the company’s website doesn’t list any products or services, but states that it is engaged in “ongoing development” of “intellectual property related to mobile commerce systems.”

Lawsuits against small, non-technology business show how trolls exploit the patent system. The costs to challenge a wrongly granted patent are high—defending a patent lawsuit through a jury trial can cost millions of dollars. Faced with the possibility of that kind of “winning,” small businesses will often fold.

Yet this year, patent maximalists are actually talking about rolling back the key changes to patent law that give small businesses a fighting chance. The Alice Corp. v. CLS Bank decision has stopped hundreds of “do it on a computer” style patents in their tracks. Meanwhile, inter partes review, a process that can get wrongly issued patents thrown out at a lower cost, are also under attack.

Instead of considering patent bills that move in exactly the wrong direction, like last year’s STRONGER Patents Act, Congress should consider legislation focused on how to help the smallest businesses from being roped into unjustified and expensive patent disputes.

Stupid Patent of the Month: Alleged Cult Leader Wants to "Improve Performance"

Joe Mullin — Fri, 29 Jun 2018 18:31:13 +0000

In April, Mexican federal police arrested Keith Raniere, taking him from the $10,000-per-week villa where he was staying and extraditing him to New York. According to the NY Daily News, Raniere, leader of self-help group NXIVM (pronounced “nexium”), is now being held without bail while he awaits trial on sex-trafficking charges. Through NXIVM, he preached “empowerment,” but critics say the group was a cult, and engaged in extreme behavior, including branding some women with an iron.

This was not the first controversial program Raniere was involved in. In 1992, Raniere ran a multilevel marketing program called “Consumer Buyline,” which was described as an “illegal pyramid,” by the Arkansas Attorney General’s office. More recently, he has collected more than two dozen patents from the U.S. Patent Office, and has more applications pending—including this one, which is for a method of determining “whether a Luciferian can be rehabilitated.”

The USPTO has granted Raniere protection for a variety of curious inventions, including a patent on “analyzing resonance,” which eliminates unwanted frequencies in anything from musical instruments to automobiles. Raniere also received a patent on a virtual currency system, which he dubbed an “entrance-exchange structure and method.” He applied for a patent on a method of “active listening,” and received patents on a system for finding a lost cell phone, and a way of preventing a motor vehicle from running out of fuel. NXIVM members reportedly identified their levels with various colored sashes, which helps explain Raniere’s design patent on a “rational inquiry sash.”

Today, we’re going to focus on Raniere’s U.S. Patent No. 9,421,447, a “method and apparatus for improving performance.” The patent simply adds trivial limitations to the basic functioning of a treadmill, like timing the user and recording certain parameters (speed, heart rate, or turnover rate.) Since most modern treadmills allow users to precisely measure performance on a variety of metrics, the patent is arguably broad enough that it could be used to sue treadmill manufacturers or sellers.

Given Raniere’s litigation history, that’s not such a remote possibility. NXIVM has sued its critics for defamation—enough that the Albany Times-Union called NIXVM a “Litigation Machine.” And Raniere sued both AT&T and Microsoft for infringement of some patents relating to video conferencing. The latter suit ended very badly for Raniere, who was ordered to pay attorneys’ fees after he couldn’t prove that he still had ownership of the patents in question. So it’s worth taking a look at how Raniere got the ‘447 patent.

Raniere’s Law ™

Raniere has never been shy about proclaiming how special he is. His bio on a website for Executive Success Programs, a series of courses run by NXIVM, explains that he could “construct full sentences and questions” by the age of one, and read by the age of two. Raniere was an East Coast Judo Champion at age 11, recruits are told, and he entered college at Rensselaer Polytechnic Institute by age 16. The honorifics continue:

He has an estimated problem-solving rarity of one in 425,000,000 with respect to the general population. He has intellectual patents pending in the areas of human potential and ethics, expression, voice and musical training, athletic performance, commerce, education and learning, information processing and human modeling. He also holds several technological patents on computer inventions and a sleep guidance system.

Raniere may be able to convince NXIVM followers that he is a one-in-425 million level genius. A new article from Vanity Fair explains that, inside NXIVM, Raniere’s patents were often used as evidence of his brilliance. But how did Raniere convince the US Patent and Trademark Office of his inventing abilities?

Ultimately, he didn’t really have to. Taking a close look at the history of Raniere’s patent application shows how the deck is stacked in favor of a determined, well-funded applicant. For someone who’s determined to prove they’re a great inventor, and is reasonably well-funded, the patent office can ultimately be cowed into compliance.

In this case, Raniere’s original patent application claimed a “performance system” with a “control system” and a sensor for monitoring “at least one parameter.” His examples went beyond exercise: he intended to patent humans making mathematical calculations at increasing speed, or a weightlifter decreasing the time between repetitions.

Appropriately, the examiner rejected all 13 of his proposed claims. But nothing stops patent applicants from coming back and trying again—and again—and that’s exactly what Raniere did. To his bare-bones description of a “performance system” he added this dose of jargon:

Wherein said control system includes a device to determine a point of efficiency, said point of efficiency occurring when the linear proportional rate of change in [] at least one parameter of the subject being trained varies rapidly outside of the state of accommodation and the range of tolerance.

Whew! That’s a lot of verbiage just to explain that the same “performance system” is measuring how fast changes occurs. The patent would be infringed by any treadmill that could measure a changing variable. Even though earlier patents had described essentially the same thing—Raniere’s lawyers insisted that his idea of measure the “rate of change” was “completely different” from a system that used a “precalculated range.”

The examiner rejected Raniere’s application again, noting that an older patent for an exercise bike attached to a video game still fulfilled all the elements of Raniere’s new, jargon-filled patent.

But Raniere simply paid $470 to file a “request for continued examination,” and kept pounding his fist on the proverbial table. Raniere, or his lawyers, bloated Claim 1 up with yet more language about the point of efficiency occurring “just prior to the subject no longer being able to accommodate additional stress” and entering a state of exhaustion, and claimed now that it was this more narrow description that was his stroke of genius.

“Nowhere in [earlier patent] Hall-Tipping is it suggested that the user be exercised to the point of exhaustion,” pointed out Raniere’s lawyers, this time around.

Rejected again, they had an interview with the examiner before coming back with yet another $470 “continued examination” request. Then Raniere loaded up Claim 1 with almost twice as much language about the system repeating itself, and re-measuring new “points of efficiency.”

This went on and on [PDF], with Raniere continuing to change language and add limitations. Eight times, the examiner threw out every single one of his claims. Finally, after he added language about the “range of tolerance” being plus or minus two percent, his claims were allowed.

In his specification, Raniere was typically un-self-effacing. He crowed that he had created “Raniere’s Maximal Efficiency Principle™” or “Raniere’s Law™.” (The guy is clearly into branding.)

Unfortunately, this is par for the course. Determined patent applicants get an endless number of chances to create a piece of intellectual property that just barely avoids all the other patents and non-patent art that overworked patent examiners are able to find. The strategy is: find a basic process, and slowly add limitations until you get a patent. That’s how we get patents on filming a yoga class and Amazon’s patent on white-background photography. The fault lies not so much with the examiner here, but with the Federal Circuit for interpreting patent law’s obviousness standard in a way that effectively prohibits the Patent Office from relying on common sense.

So what’s the solution? We need the Federal Circuit to apply the Supreme Court’s decision in KSR v Teleflex more faithfully and allow the Patent Office to use common sense when faced with mundane claims. We also need to defend the Alice v. CLS Bank ruling so that examiners can reject patents that claim abstract ideas implemented with conventional tools (like treadmills). Patent law should also be changed so that applicants don’t get an endless number of bites at the apple.

Stupid Patent of the Month: Facebook Joins the Online Dating Arms Race

Joe Mullin — Tue, 22 May 2018 19:19:23 +0000

Earlier this month, Facebook announced that it will wedge its way into an already-crowded corner of online commerce. The social networking site plans to use its giant storehouse of personal data to create a dating service, promising to help users find “meaningful relationships,” not just “hookups,” as Facebook CEO Mark Zuckerberg put it.

It remains to be seen whether Facebook’s new service will be a “Tinder-killer” that users flock to, or a flop for a company that’s long been beset with privacy concerns. But there’s one thing Facebook, its competitors, and its detractors should all be able to agree on. When a new dating service launches, it should rise or fall based on whether it can win the trust of users—not an arbitrary race to the Patent Office.

Unfortunately, well before it built and launched an actual dating service, Facebook engaged in just such a race. The company applied for a stupid patent on “social dating” back in 2013, and earlier this year, the Patent Office granted the application.

Take Established Methods, Add One “Social Graph”

Online dating is a perfect example of a software-based business that truly doesn’t need patents to be innovative. Companies have built such services based on what they hope will be useful or attractive to different groups of users, rather than engaging in arguments over who did what first. Patent tiffs are particularly pointless in a space like online dating, which builds on a long history of pre-digital innovation. Placing personal ads in newspapers has a history that dates back more than a century.

The first claim of Facebook’s US Patent No. 9,609,072 describes maintaining a “social graph” of user connections, then allowing one to request “introductions” to friends-of-friends. Subsequent claims are variations on the theme, like allowing users to include “preferences” and rank their possible matches.

This application should have been rejected under the U.S. Supreme Court’s 2014 decision in CLS Bank v. Alice. In that case, the high court made it clear that simply adding “do it on a computer”-style jargon to long-established ways of doing business wasn’t enough to get a patent. Unfortunately, here, the Patent Office allowed Facebook to pull a similar trick. The company essentially took the idea of introducing available singles through friends-of-friends, added graphics, profiles and the “social graph,” and then got a patent on it.

The idea of finding good matches is positively ancient, whether people have been looking for the right lover, the right product, or the right business partner. It doesn’t warrant a patent, and when patent trolls have claimed otherwise, they haven’t fared well in court.

“Having two or more parties input preference data is not inventive,” wrote U.S. District Judge Denise Cote in 2013, as she dismantled the patent of a shell company called Lumen View Technology LLC. “Matchmakers have been doing this for millennia.”

Patently Pointless

To be fair to Facebook, the company may have felt compelled to get its own stupid patent because there are so many other stupid online dating patents out there. In a phenomenon that’s the patent equivalent of “mutually assured destruction,” many tech companies have stockpiled poor-quality Internet patents simply to have a threat to fight off other companies’ poor-quality Internet patents. This arms race, of course, costs many millions of dollars and benefits no one other than patent system insiders.

In the world of online dating, wasteful, anti-competitive patent litigation isn’t just theoretical. Earlier this year, Match Group sued up-and-comer Bumble for patent infringement. The suit was brought shortly after Match reportedly tried to purchase Bumble. And in 2015, Jdate sued Jswipe, accusing their competitor of infringing U.S. Patent No. 5,950,200, which tried to claim the idea of notifying people that they “feel reciprocal interest for each other.” It was a basic patent that sought to encompass just about the whole concept of a dating service.

This growing web of stupid patent claims won’t stop Facebook from getting into online dating. It won’t stop Facebook’s giant competitors, like Match Group or IAC. But for an entrepreneur who wants to start a new business, the costly dueling patent claims will be a barrier. The battle to win the hearts and minds of online daters should be won with apps and code, not with patents.

Stupid Patent of the Month: Suggesting Reading Material

Joe Mullin — Mon, 23 Apr 2018 20:49:01 +0000

Online businesses—like businesses everywhere—are full of suggestions. If you order a burger, you might want fries with that. If you read Popular Science, you might like reading Popular Mechanics. Those kinds of suggestions are a very old part of commerce, and no one would seriously think it’s a patentable technology.

Except, apparently, for Red River Innovations LLC, a patent troll that believes its patents cover the idea of suggesting what people should read next. Red River filed a half-dozen lawsuits in East Texas throughout 2015 and 2016. Some of those lawsuits were against retailers like home improvement chain Menards, clothier Zumiez, and cookie retailer Ms. Fields. Those stores all got sued because they have search bars on their websites.

In some lawsuits, Red River claimed the use of a search bar infringed US Patent No. 7,958,138. For example, in a lawsuit against Zumiez, Red River claimed [PDF] that “after a request for electronic text through the search box located at www.zumiez.com, the Zumiez system automatically identifies and graphically presents additional reading material that is related to a concept within the requested electronic text, as described and claimed in the ’138 Patent.” In that case, the “reading material” is text like product listings for jackets or skateboard decks.

In another lawsuit, Red River asserted a related patent, US Patent No. 7,526,477, which is our winner this month. The ’477 patent describes a system of electronic text searching, where the user is presented with “related concepts” to the text they’re already reading. The examples shown in the patent display a kind of live index, shown to the right of a block of electronic text. In a lawsuit against Infolinks, Red River alleged [PDF] infringement because “after a request for electronic text, the InText system automatically identifies and graphically presents additional reading material that is related to a concept within the requested electronic text.”

Suggesting and providing reading material isn’t an invention, but rather an abstract idea. The final paragraph of the ’477 patent’s specification makes it clear that the claimed method could be practiced on just about any computer. Under the Supreme Court’s decision in Alice v. CLS Bank, an abstract idea doesn’t become eligible for a patent merely because you suggest performing it with a computer. But hiring lawyers to make this argument is an expensive task, and it can be daunting to do so in a faraway locale, like the East Texas district where Red River has filed its lawsuits so far. That venue has historically attracted “patent troll” entities that see it as favorable to their cases.

The ’477 patent is another of the patents featured in Unified Patents’ prior art crowdsourcing project Patroll. If you know of any prior art for the ’477 patent, you can submit it (before April 30) to Unified Patents for a possible $2,000 prize.

The good news for anyone being targeted by Red River today is that it’s not going to be as easy to drag businesses from all over the country into a court of their choice. The Supreme Court’s TC Heartland decision, combined with a Federal Circuit case called In re Cray, mean that patent owners have to sue in a venue where defendants actually do business.

It’s also a good example of why fee-shifting in patent cases, and upholding the case law of the Alice decision, are so important. Small companies using basic web technologies shouldn’t have to go through a multi-million dollar jury trial to get a chance to prove that a patent like the ’477 is abstract and obvious.

Stupid Patent of the Month: A Token of Troll Appreciation

Joe Mullin — Thu, 22 Mar 2018 18:57:44 +0000

In 2014, the U.S. Supreme Court decided a case that, for the most part, banned the kind of “do it on a computer” style patents that have plagued the U.S. patent system for decades. Ever since then, IP maximalists have been doing whatever they can to roll back or reverse the landmark Alice v. CLS Bank case. Small businesses, meanwhile, rely on it to avoid death-by-patent-troll.

Today, we take a look at a patent that shows why the Supreme Court’s Alice decision is so vital. U.S. Patent No. 7,177,838 claims “electronic tokens,” and the primary claim simply describes using such tokens in Internet commerce. The patent dates back to an application first filed in 2000, a time when many “inventions” were able to get the stamp of approval from the Patent Office simply because they mentioned the World Wide Web.

The ’838 patent is nothing more than a kind of “e-money,” and as most people should be able to see, that’s not really much of an invention, much less a patentable one. Using tokens and symbols to represent monetary value is as old as currency itself. It’s a classic example of something that has existed for a long time before the Internet and before computers—clearly abstract and barred under Alice.

It wasn’t unusual for companies to acquire silly patents like this one in the go-go days of the first dot-com boom. If the patent had just moldered on a shelf, perhaps it wouldn’t be a big deal. But that’s not what GTX Corp., the owner of the ’838 patent, decided to do. The owners of GTX have engaged in a years-long campaign to squeeze tens of thousands of dollars out of businesses, and their newest targets are small gaming studios. The newest target is a company called Playsaurus, which makes a game called “Clicker Heroes 2.” A lawyer from GTX wrote to them and said they’d be sued unless they agreed to pay the “bargain” $35,000 licensing fee to avoid “costly litigation.”

Playsaurus decided to fight back rather than pay that fee. The company’s attorney wrote a letter to GTX correctly noting that the ’838 patent is “a perfect example of a patent that is subject matter ineligible under 35 U.S.C. § 101.” Issuing tokens for purchases just isn’t an invention, and shouldn’t be considered one, whether it’s done on a computer, on the Internet, or offline. GTX’s stunning suggestion that its electronic token idea is a patentable concept, deserving of a $35,000 payout, didn’t escape the notice of the programming community and the technology press.

Putting aside Alice, the patent has other serious problems. GTX and inventor Martin Ling were not the first to use tokens as cash even in the context of a videogame. Playsaurus cites just one example of this, the 2000 game Neopets, in which “users could buy and use Neocash within the game.” Electronic payments systems also had been theorized, analyzed, and discussed in academic literature well before 2000.

The ’838 patent is also currently featured in Unified Patents’ prior art crowdsourcing project Patroll. If you know of any more prior art for the ’838 patent, you can submit it (before May 4) to Unified Patents for a possible $2,000 prize.

Alice Under Threat

Changes to the patent system, including the Alice v. CLS Bank decision, have helped make it easier for a company like Playsaurus to resist against a bogus patent demand. But Alice has threatened the trolling business model so much that it keeps facing threats, in both courts and Congress.

A recent decision called Berkheimer v. HP may make it much harder to defend a case using Alice. In Berkheimer, the district court invalidated a patent that described a system for “archiving and outputting documents.” But the district court judge was overturned on appeal, when the U.S. Court of Appeals for the Federal Circuit held [PDF] that whether or not a technology was “well-understood, routine, and conventional” is a factual determination that requires more proceedings.

This ruling could undermine a key benefit of Alice: namely, that patent defendants shouldn’t have to engage in expensive discovery and trial proceedings to negate patents that are abstract on their face. The defendant in that case, HP, has asked the full Federal Circuit to reconsider that decision, and we agree that it warrants the court’s attention.

Businesses like Playsaurus shouldn’t have to go through extensive discovery and motion practice to prove what real innovators in their industry know: e-tokens are an abstract idea and not eligible for a patent. Neither are ideas like tracking a package, or remotely diagnosing an illness, or holding a photo contest. The Alice decision is indispensable to small businesses that are being held up by such patents, and it’s worth protecting.

Stupid Patent of the Month: Buying A Bundle of Diamonds

Joe Mullin — Wed, 28 Feb 2018 19:01:35 +0000

This month’s Stupid Patent shows what happens when the patent system strays outside its proper boundaries. US Patent No. 8,706,513 describes a “fungible basket of investment grade gems” for use in “financial instruments.” In other words, it’s a rating and trading system that attempts to turn diamonds into a tradeable commodity like oil, gold, or corn.

Of course, creating new types of investment vehicles isn’t really an invention. And patents on newfangled financial techniques like this were generally barred following Bilski v. Kappos, a 2008 Supreme Court case that prevents the patenting of purely financial instruments. Since then, the law has become even less favorable to abstract business method patents like this one. In our view, the ’513 patent would not survive a challenge under Bilski or the Supreme Court’s 2014 decision in Alice v. CLS Bank.

Despite its clear problems, the ’513 patent is being asserted in court—and one of the people best placed to testify against the patent may not be allowed to.

The public’s right to challenge a patent in court is a critical part of the US patent system, that has always balanced the exclusive power of a patent. It’s especially important since patents are often granted by overworked examiners who get an average of 18 hours to review applications.

But there are two types of persons that, increasingly, aren't allowed to challenge problematic patents: inventors of patents, and even partial owners of patents. Under a doctrine known as “assignor estoppel,” the Federal Circuit has barred inventors from challenging patents that they acquired for a former employer. Assignor estoppel was originally meant to cover a narrow set of circumstances—inventors who engaged in fraud or bad dealing, for instance—but the nation’s top patent court now routinely applies it to prevent inventors from challenging patents.

Patent scholar Mark Lemley flagged this problem in a 2016 paper, noting assignor estoppel could be used to control the free movement of employees or quash a legitimate competitor. “Inventors as a class are put under burdens that we apply to no other employee,” he wrote. “If they start a company, or even go to work for an existing company in the same field, they will not be able to defend a patent suit from their old employer.”

In this case, the Federal Circuit’s expansive view of assignor estoppel may prevent a person who owned just a fraction of a patent from fighting back when that patent gets used in an attempt to quash a competing business.

Despite the fact that this gemological trading system should never have been granted a patent, so far, it’s being successfully used by its owner to beat up on a competitor—and the competitor could be barred from even challenging the patent by assignor estoppel.

Competing Diamond Companies

GemShares was created in 2008 to market “diamond investment products.” The original partners were joined in business by a man named Arthur Lipton, who bought 20% of GemShares in 2013. He struck a deal not to compete with GemShares.

GemShares says [PDF] Lipton broke that deal in 2014, when he started working on his own project, a “secure diamond smart card,” and filed for patents related to it. But in addition to breach of contract, GemShares sued for patent infringement. They said Lipton’s new business violated the ’513 patent.

The litigation also involves breach of contract claims, and allegations of fraud from Lipton’s former partner. Without getting into the weeds on all that, the defendant in this case may not even be allowed to argue that the “gem financial product” patent is invalid. Earlier this month, the judge overseeing the case issued an order [PDF] noting that “the Federal Circuit has upheld the doctrine of assignor estoppel, which precludes an inventor-assignor of a patent sued for infringement from arguing the patent's invalidity.”

The Federal Circuit has made assignor estoppel so powerful, in fact, that Lipton’s 20% ownership contract with GemShares may be enough to stop him and his lawyers from mounting an invalidity defense.

It’s bad policy to stop the public from challenging bad patents, and assignor estoppel should only be used in narrow cases, like outright fraud. As it’s been applied by the Federal Circuit, it’s destined to be used in exactly the way that Lemley warned it would—as an anticompetitive cudgel.

We agree with the brief signed by Lemley and more than two dozen other law professors [PDF] in EVE-USA, Inc. v. Mentor Graphics Corp., arguing that the Supreme Court should take up this issue and keep assignor estoppel within the narrow limits it originally intended.

Startup Won't Give In to Motivational Health Messaging's $35,000 Patent Demand

Vera Ranieri — Wed, 07 Feb 2018 17:44:20 +0000

Trying to succeed as a startup is hard enough. Getting a frivolous patent infringement demand letter in the mail can make it a whole lot harder. The experience of San Francisco-based Motiv is the latest example of how patent trolls impose painful costs on small startups and stifle innovation.

Motiv is a startup of fewer than 50 employees competing in the wearable technology space. Founded in 2013, the company creates fitness trackers, housed in a ring worn on your finger.

In January, Motiv received a letter alleging infringement of U.S. Patent No. 9,069,648 (“the ’648 Patent”). The letter gave Motiv two options: pay $35,000 to license the ’648 Patent, or face the potential of costly litigation.

The '648 Patent, owned by Motivational Health Messaging LLC (“MHM”), is titled “Systems and methods for delivering activity based suggestive (ABS) messages.” The patent describes sending “motivational messages,” based “on the current or anticipated activity of the user,” to a “personal electronic device.” It provides examples such as sending the message “don't give up” when the user is running up a hill, or messages like “do not fear” and “God is with you” when a “user enters a dangerous neighborhood.” Simply put, the patent claims to have invented using a computer to send tailored messages based on activity or location.

While the name “Motivational Health Messaging” may sound new, the actors behind it aren’t: the people associated with MHM and its patent overlap with the people associated with notorious patent assertion entities Shipping & Transit, Electronic Communication Technologies, ArrivalStar, and Eclipse IP, who we’ve written about on numerous occasions. Collectively, these entities have filed over 700 lawsuits, with Shipping & Transit setting the 2016 record for most patent infringement lawsuits filed.

Though MHM and its the patent may be new, the business model seems to be the same as the other, related entities: make patent infringement demands, often against small businesses, and leverage the high cost of litigation to extract settlements in the $25,000 to $45,000 range. (As of the date of this post, MHM has not yet filed any lawsuits and the related entities have been faring very poorly in court.)

Unfortunately, for many small businesses it often makes sense to simply pay for a license instead of spending years tied up in court challenging a patent. Receiving a demand letter frivolously asserting infringement is annoying enough. Even more frustrating is being forced to divert resources away from product development in order to defend against a non-practicing entity with bad patents.

Nevertheless, Motiv decided it would not go down without a fight. Motiv retained Rachael Lamkin, who replied with her own letter explaining why Motiv does not infringe, and why MHM’s patent is invalid. Lamkin also says that in the event of litigation, Motiv would seek to join the individuals behind MHM to the lawsuit—and make them personally responsible for “any sanction or fee award.” The letter laid out in painstaking detail many of the numerous deficiencies with MHM’s patent and infringement claim, and refused to pay MHM a cent. The complete set of materials sent to MHM can be found at the end of this post.

We hope that MHM does not push ahead with a business model that preys on the vulnerability of small businesses, and only succeeds when undeserved settlements are paid. Patent holders like this takes advantage of inefficiencies in our legal system, despite the extreme weakness of their cases. By publishing Motiv’s response letter and supporting documentation, Motiv and EFF hope that others may benefit and not pay the troll under the bridge.

If you have recently been sued or received a demand letter from MHM, contact info@eff.org.

Links to documents and correspondence between Motivational Health Messaging, LLC and Motiv, Inc.

Stupid Patent of the Month: Bigger Screen Patent Highlights a Bigger Problem

Vera Ranieri — Wed, 31 Jan 2018 22:03:17 +0000

For more than three years now, we’ve been highlighting weak patents in our Stupid Patent of the Month series. Often we highlight stupid patents that have recently been asserted, or ones that show how the U.S. patent system is broken. This month, we’re using a pretty silly patent in the U.S. to highlight that stupid U.S. patents may soon—depending on the outcome of a current Supreme Court case—effectively become stupid patents for the entire world.

Lenovo was granted U.S. Patent No. 9,875,007 [PDF] this week. The patent, entitled “Devices and Methods to Receive Input at a First Device and Present Output in Response on a Second Device Different from the First Device,” relates to presenting materials on different screens.

The first claim of the patent is relatively easy to read and understandable, for a patent. What Lenovo claims is:

A first device, comprising:

at least one processor;

storage accessible to the at least one processor and bearing instructions executable by the at least one processor to:

receive user input to present an output on a display; and

determine a second device different from the first device on which to present the output based at least in part on identification by the first device of the second device as having a relatively larger display on which to present the output than the first device.

This claim describes a distinction a child may make, in asking a parent to put something up on the “big screen.” It covers a generic computing device, programmed to make a comparison between the size of display screens, and choose one of the screens based on that comparison, something that any person would know how to do, and any programmer would know how to implement. A review of what happened [PDF] at the Patent Office shows the fine (and trivial) distinctions Lenovo made over what was known in order to claim there was an invention. Lenovo argued that although previous technologies allowed for displaying material on second devices with larger screens, those technologies didn’t do it by identifying second devices by determining the size of the screens. Even if what Lenovo claims is true (though we have doubts that they were the first to do this), we’re not sure why as a public policy matter Lenovo should be entitled to a monopoly on this “invention.” It seems more the product of basic skill and design rather than anything inventive. Generally, people are not supposed to get patents on things that are obvious.

It’s quite possible that Lenovo will never assert this patent against anyone, and it will become like many patents, just a piece of paper on a wall. But what if Lenovo decided to assert this patent?

We’re highlighting this patent in order to bring attention to the fact that a U.S. Supreme Court case being decided this term could make this patent not just a stupid U.S. patent, but effectively a stupid worldwide patent.

Generally, countries’ patent laws only have domestic effect. If you want to have patent protection in the U.S., you need to file for a U.S. patent and show your application complies with U.S. patent law. If you want protection in India, you also need to file in India and show it complies with Indian patent law. There are differences between the patent laws of various countries; some provide more protection, some provide less. That patent laws differ in different countries is generally considered a feature, not a bug.

There’s an important exception in the U.S., however, to this general idea that patent rights are limited to a particular country. Under the Patent Act, specifically 35 U.S.C. § 271(f), if combining certain parts would constitute patent infringement in the U.S., then someone who knowingly supplies those same parts with the intention that they be combined abroad is also liable for infringement. Basically, you can’t make parts A and B in the U.S., ship them abroad and tell people to combine them into AB, if you know that you’d infringe a patent in the U.S. if you just combined them into AB in the U.S. and then shipped them abroad. The point of this narrow rule is to prevent people from offshoring the final step of a process, where they’re purposefully doing so in order to evade U.S. patent rights.

There is a new case currently pending at the U.S. Supreme Court called WesternGeco v. Ion Geophysical that relates to this fairly narrow law, § 271(f). The question the Supreme Court has been asked is: if someone is liable for patent infringement under § 271(f), can the patent owner recover lost profits relating to the combinations that were made abroad? If confined to § 271(f), the result (whichever way the court could rule) would be a fairly narrow decision. Most cases asserting patent infringement are not brought under that basis, and the circumstances that would cause infringement under that section don’t arise very often.

But at an earlier stage of the case, the Solicitor General, whose opinion is often given great weight by the Supreme Court, advanced [PDF] a startling idea: patent owners should be able to collect damages for any act that was a foreseeable result of the U.S. based infringement in every case of patent infringement, not just those brought under § 271(f), even if the act occurred completely abroad.

This would result in a dramatic expansion of the scope of U.S. patent remedies, making them, effectively, act the same as worldwide patent rights for any product that has a global market.

An example is useful here. Suppose a display systems designer BobCo designed a system that it sold to Lenovo’s competitor CompCo in China to include in CompCo’s goods built in China. CompCo sells its goods globally, and some of the goods end up in the U.S., infringing on Lenovo’s patent in the United States. Under the Solicitor General’s view, Lenovo should be able to sue BobCo for violating the U.S. patent, and recover all the profits that BobCo made from CompCo for all the goods sold worldwide—regardless of whether they ever ended up in the U.S. Lenovo could get this reward despite the fact that all of BobCo’s acts (other than importing a few of the products) occurred abroad. Even though technically only the products that entered the U.S. infringed the U.S. patent, Lenovo’s remedy for violation of those rights would include recovery for all products worldwide.

This example is essentially the facts of a case called Power Integrations, where the U.S. Court of Appeals for the Federal Circuit (correctly, in our view), rejected such a broad scope of remedies, stating that U.S. patent laws “do not [] provide compensation for a defendant’s foreign exploitation of a patented invention, which is not an infringement at all.” The Solicitor General is now challenging this rule.

It’s not hard to see how the Solicitor General’s rule could interfere with rights held by others abroad—including the rights of the public—and would mean that U.S. patent rights would be effectively exported to other countries. Innovations that are in the public domain in China or Germany, for example, could all of a sudden become more expensive because a U.S. patent rights holder gets to impose a cost on goods in those countries because some end up in the U.S. For example, even though Lenovo has applied for a patent in China that is related to the U.S. patent, no patent has (yet) issued. Lenovo’s attempt to get a patent in Germany has also not yet been successful. But under the Solicitor General’s theory, if sales in Germany or China were a foreseeable result of infringing sales in the U.S., Lenovo could impose costs in those countries regardless of whether they actually were entitled to a patent in that jurisdiction. We’re also concerned that such a rule would lead to a race to the bottom: if U.S. courts impose a worldwide patent tax to benefit U.S. patent holders, other countries may try to do the same as well. This could lead to companies being subject to multiple claims of infringement with multiple payments of worldwide damages, again increasing costs to consumers.

We’ve now spent years highlighting some pretty silly U.S. patents. We hope the Supreme Court rejects the Solicitor General’s desire to expand the scope of U.S. patent remedies, and refuses to turn stupid U.S. patents into, effectively, stupid worldwide patents.

Stupid Patent of the Month: Motivational Health Messaging LLC Gets a Patent on Sending Uplifting Texts

Daniel Nazer — Thu, 21 Dec 2017 23:28:29 +0000

Have you ever sent a motivational text to a friend? If you have, perhaps you tailored your message to an activity or location by saying “Good luck in the race!” or “Have fun in New York!” Now, imagine doing this automatically with a compuuuter. What a great invention. Actually, no. That’s not a good invention, it’s our latest Stupid Patent of the Month.

U.S. Patent No. 9,069,648 is titled “Systems and methods for delivering activity based suggestive (ABS) messages.” The patent describes sending “motivational messages,” based “on the current or anticipated activity of the user,” to a “personal electronic device.” The patent provides examples such as sending the message “don't give up” when the user is running up a hill. The examples aren’t limited to health or exercise. For example, the patent suggests sending messages like “do not fear” and “God is with you” when a “user enters a dangerous neighborhood.”

The patent’s description of its invention is filled with silly, non-standard acronyms like ABS for “activity based suggestive” messages or EBIF for “electronic based intelligence function.” These silly acronyms create an illusion of complexity where plain, descriptive language would reveal the mundane nature of the supposed invention. For example, what the patent grandly calls EBIF appears to be nothing more than standard computer processing.

The ’648 patent is owned by Motivational Health Messaging LLC. While this may be a new company, at least one of the people behind it has been involved in massive patent trolling campaigns before. And the two named inventors have both been inventors on patents that trolls have asserted hundreds of times. One is also an inventor listed on patents asserted by infamous patent troll Shipping and Transit LLC. The other named inventor is the inventor on the patents asserted by Electronic Communication Technologies LLC. Those two entities (with their predecessors) brought over 700 lawsuits, many against very small businesses. In other words, the ’648 patent has been issued to Troll Co. at 1 Troll Street, Troll Town, Trollida USA.

We believe that the claims of the ’648 patent are clearly invalid under the Supreme Court’s decision in Alice v. CLS Bank, which held abstract ideas do not become eligible for a patent merely because they are implemented in conventional computer technology. Indeed, the patent repeatedly emphasizes that the claimed methods are not tied to any particular hardware or software. For example, it states:

The software and software logic described in this document … which comprises an ordered listing of executable instructions for implementing logical functions, can be embodied in any non-transitory computer-readable medium for use by or in connection with an instruction execution system, apparatus, or device, such as a computer-based system, processor-containing system, or other system that can fetch the instructions from the instruction execution system, apparatus, or device and execute the instructions.

The ’648 patent issued on June 30, 2015, a full year after the Supreme Court’s Alice ruling. Despite this, the patent examiner never even discussed the decision. If Alice is to mean anything at all, it has to be applied to an application like this one.

In our view, if Motivational Health Messaging asserts its patent in court, any defendant that fought back should prevail under Alice. Indeed, we would hope that the court would strongly consider awarding attorney’s fees to the defendant in such a case. Shipping & Transit has now had two fee awards made against it for asserting patents that are clearly invalid under Alice. And the Federal Circuit recently held that fee awards can be appropriate when patent owners make objectively unreasonable argument concerning Alice.

In addition to the problems under Alice, we believe the claims of the ’648 patent should have been rejected as obvious. When the application was filed in 2012, there was nothing new about sending motivational messages or automatically tailoring messages to things like location. In one proposed embodiment, the patent suggests that a “user walking to a hole may be delivered ABS messages, including reminders or instructions on how to play a particular hole.” But golf apps were already doing this. The Patent Office didn’t consider any real-world mobile phone applications when reviewing the application.

If you want to look for prior art yourself, Unified Patents is running a crowdsourcing contest to find the best prior art to invalidate the ’648 patent. Aside from the warm feelings that come from fighting patent trolls, there is a $2000 prize pool.

Despite the weakness of its patent, Motivational Health Messaging LLC might still send out demand letters. If you receive such a letter, you can contact EFF and we can help you find counsel.

We have long complained that the Patent Office promotes patent trolling by granting obvious and/or abstract software patents. The history of the ’648 patent shows how the Patent Office’s failure to properly review applications leads to bad patents falling into the hands of trolls.

EFF Pushes For More Transparency in Patent Cases, Whether In Court or at Patent Office

Vera Ranieri — Tue, 05 Dec 2017 18:40:46 +0000

In a promising step toward transparency, the Eastern District of Texas (the court that sees many of the nation’s patent cases) recently announced an amendment to its Local Rules that would require parties to file redacted versions of documents that contain confidential information. Previously, parties would file whole briefs under seal, without any public version being provided, even if only one word or line in the brief was claimed to be confidential. One of the few ways the public could protest against this improper sealing was to attempt to intervene in cases so as to require the parties and the courts to justify the sealing. But members of the public can’t possibly intervene to unseal in every case. This rule change is a step toward greater transparency.

EFF has, in recent years, worked to push back against oversealing, especially in patent cases where improper sealing is practically routine. We successfully intervened in several cases in order to provide greater transparency to the public.

For example, EFF recently successfully unsealed materials in the case of My Health v. ALR Technologies. We intervened after the parties filed numerous briefs and documents under seal relating to whether patent owner My Health (whose patent on telehealth we awarded Stupid Patent of the Month in May 2016) litigated its case in an exceptional manner. The court recently agreed to unseal a large amount of information previously withheld from the public.

EFF has also been pushing for greater transparency in the high profile patent litigation between Allergan (a branded pharmaceutical company) and generic companies who wish to make a lower cost version of the drug Restasis. The litigation took on new interest when Allergan announced it had “sold” its patents to the Saint Regis Mohawk Tribe in an attempt to shield the patents from scrutiny at the Patent Office.

Once news of the Allergan-Tribe deal became public, we watched as the parties filed briefs in the related district court case with the most relevant exhibits about the controversial deal being filed under seal, completely hidden from the public. Concerned about this level of sealing, we reached out to the parties and asked them to provide greater transparency, or at minimum, provide justification for the high level of sealing. In the end, Allergan refiled many of the papers, significantly limiting the amount of information withheld from the public.

The Eastern District of Texas’ new rule is a step in the right direction, although we believe it still falls short of what the law requires. We submitted comments regarding the new rules, applauding the positive step, but urging the court to recognize that it is the parties’ burden to show why materials should be kept from the public each and every time they submit documents to the court. The Reporters Committee for Freedom of the Press also submitted comments urging the court to do more to protect the public’s interest in court filings.

Beyond the courts, we have also been pushing for greater transparency at the Patent Office. We recently sought materials from the Patent Office related to the Allergan-Tribe deal (many of which were the same as those filed in court). In October, we sent a Freedom of Information Act (FOIA) Request to the Patent Office asking for records from the proceeding related to Allergan’s patents. There, the Tribe had asked the Patent Office to end the proceedings based on a claim of sovereign immunity. Once again, the most relevant information was filed completely under seal without any justification for withholding it from the public.

The fact that this material was under seal became particularly problematic when the Patent Office issued a call for public input as to whether sovereign immunity applied to the proceedings. The ability of members of the public to evaluate the deal and determine its nature was hampered by the fact that the public could not determine what, exactly, the deal was.

After we filed our FOIA request, the Patent Office asked the parties to explain why the materials were filed under seal and what justification there could be do withhold the information from the public. This led, again, to the materials being significantly unmasked.

In both the district court case and at the Patent Office, it is clear that parties are often sealing much more information than the law allows. It is only when challenged do they agree to reveal what should have been public in the first place. While we’re glad there has been greater transparency in the cases mentioned above, it should not take EFF (or anyone else’s) intervention before the courts and parties make public what should have been public all along.

Court Rules That EFF's Stupid Patent of the Month Post Is Protected Speech

Kurt Opsahl — Mon, 20 Nov 2017 22:52:48 +0000

A federal judge has ruled that EFF need not obey an Australian injunction ordering EFF to take down a “Stupid Patent of the Month” blog post and never speak of the patent owner’s intellectual property again.

It all started when Global Equity Management (SA) Pty Ltd (GEMSA)’s patent was featured as the June 2016 entry in our Stupid Patent of the Month blog series. GEMSA wrote to EFF accusing us of “false and malicious slander.” It subsequently filed a lawsuit and obtained an injunction from a South Australia court purporting to require EFF to censor itself. We declined and filed a suit in the U.S. District Court for the Northern District of California seeking a declaration that EFF’s post is protected speech.

The court agreed, finding that the South Australian injunction can’t be enforced in the U.S. under a 2010 federal law that took aim against “libel tourism,” a practice by which plaintiffs—often billionaires, celebrities, or oligarchs—sued U.S. writers and academics in countries like England where it was easier to win a defamation case. The Securing the Protection of Our Enduring and Established Constitutional Heritage Act (SPEECH Act) says foreign orders aren’t enforceable in the United States unless they are consistent with the free speech protections provided by the U.S. and state constitutions, as well as state law.

The court analyzed each of GEMSA’s claims for defamation, and found “[n]one of these claims could give rise to defamation under U.S. and California law,” and accordingly “EFF would not have been found liable for defamation under U.S. and California law.” For example, GEMSA’s lead complaint was that EFF had called its patent “stupid.” GEMSA protested that its patent is not “in fact” stupid but the court found that this was clearly protected opinion. Moreover, the court found “that the Australian court lacked jurisdiction over EFF, and that this constitutes a separate and independent reason that EFF would prevail under the SPEECH Act.”

Furthermore, the court found that the Australian order was not enforceable under the SPEECH Act because “U.S. and California would provide substantially more First Amendment protection by prohibiting prior restraints on speech in all but the most extreme circumstances, and providing additional procedural protections in the form of California’s anti-SLAPP law.”

After its thorough analysis, the court declared “(1) that the Australian Injunction is repugnant to the United States Constitution and the laws of California and the Unites States; and (2) that the Australian injunction cannot be recognized or enforced in the United States.”

The decision was a default judgment. GEMSA, which has three pending patent lawsuits in the Northern District of California, had until May 23 to respond to our case. That day came and went without a word. While GEMSA knows its way around U.S. courts—having filed dozens of lawsuits against big tech companies claiming patent infringement—it failed to respond to ours.

EFF thanks our counsel from Ballard Spahr LLP and Jassy Vick Carolan LLP.

Stupid Patent Data of the Month: the Devil in the Details

Vera Ranieri — Wed, 15 Nov 2017 19:28:02 +0000

A Misunderstanding of Data Leads to a Misunderstanding of Patent Law and Policy

Bad patents shouldn’t be used to stifle competition. A process to challenge bad patents when they improperly issue is important to keeping consumer costs down and encouraging new innovation. But according to a recent post on a patent blog, post-grant procedures at the Patent Office regularly get it “wrong,” and improperly invalidate patents. We took a deep dive into the data being relied upon by patent lobbyists to show that contrary to their arguments, the data they rely on undermines their arguments and conflicts with the claims they’re making.

The Patent Office has several procedures to determine whether an issued patent was improperly granted to a party that does not meet the legal standard for patentability of an invention. The most significant of these processes is called inter partes review, and is essential to reining in overly broad and bogus patents. The process helps prevent patent trolling by providing a target with a low-cost avenue for defense, so it is harder for trolls to extract a nuisance-value settlement simply because litigating is expensive. The process is, for many reasons, disliked by some patent owners. Congress is taking a new look at this process right now as a result of patent owners’ latest attempts to insulate their patents from review.

An incorrect claim about the inter partes review (IPR) and other procedures like IPR at the Patent Trial and Appeal Board (PTAB) has been circulating, and was recently repeated in written comments at a congressional hearing by Philip Johnson, former head of intellectual property at Johnson & Johnson. Josh Malone and Steve Brachmann, writing for a patent blog called “IPWatchdog,” are the source of this error. In their article, cited in the comments to Congress, they claim that the PTAB is issuing decisions contrary to district courts at a very high rate.

We took a closer look at the data they use, and found that the rate is disagreement is actually quite small: about 7%, not the 76% claimed by Malone and Brachmann. How did they get it so wrong? To explain, we’ll have to get into the nuts and bolts of how such an analysis can be run.

Malone and Brachmann relied on data provided by a service called “Docket Navigator,” which collects statistics and documents related to patent litigation and enforcement. The search they used was to see how many cases Docket Navigator marked as a finding of “unpatentable” (from the Patent Office) and a finding of “not invalid” (from a district court).

This is a very, very simplistic analysis. For instance, it would consider an unpatentability finding by the PTAB about Claim 1 of a patent to be inconsistent with a district court finding that Claim 54 is not invalid. It would consider a finding of anticipation by the PTAB to be inconsistent with a district court rejecting an argument for invalidity based on a lack of written description. These are entirely different legal issues; different results are hardly inconsistent.

EFF, along with CCIA, ran the same Docket Navigator search Malone and Brachmann ran for patents found “not invalid” and “unpatentable or not unpatentable,” generating 273 results, and a search for patents found “unpatentable” and “not invalid,” generating 208 results (our analysis includes a few results that weren’t yet available when Malone and Brachmann ran their search). We looked into each of 208 results that Docket Navigator returned for patents found unpatentable and not invalid. Our analysis shows that the “200” number, and consequently the rate at which the Patent Office is supposedly “wrong” based on a comparison to times a court supposedly got it “right” is well off the mark.

We reached our conclusions based on the following methodology:

We considered “inconsistent results” to occur any time the Patent Office reached a determination on any one of the conditions for patentability (namely, any of 35 U.S.C. §§ 101, 102, 103 or 112) and the district court reached a different conclusion based on the same condition for patentability, with some important caveats, as discussed below. For example, if the Patent Office found claims invalid for lack of novelty (35 U.S.C. § 102), we would not treat a district court finding of claims definite (35 U.S.C. § 112(b)) as inconsistent.
We did not distinguish between a finding of invalidity or lack of invalidity based on lack of novelty (35 U.S.C. § 102) or obviousness (35 U.S.C. § 103), as these bases are highly related. For example, if the Patent Office determined claims unpatentable based on anticipation, we would mark as inconsistent any jury finding that the claims were not obvious.
We did not consider a decision relating the validity of one set of claims to be inconsistent with a decision relating to the validity of a different, distinct set of claims. For example, if the Patent Office found claims 1-5 of a patent not patentable, we would not consider that inconsistent with a district court finding claims 6-10 not invalid. We would count as inconsistent, however, any two differing decisions that overlapped in terms of claims, even if there was not identity of claims.
We distinguished between the conditions for patentability of 35 U.S.C. § 112. For example, a district court finding of definiteness under 35 U.S.C. § 112(b) would not treated as inconsistent with a Patent Office finding of lack of written description under 35 U.S.C. § 112(a).
We did not consider a district court decision to be inconsistent with Patent Office decision if that district court decision was later overturned by the Federal Circuit. However, we did treat a Patent Office decision as inconsistent with a district court decision even if that Patent Office decision were later reversed.1 For example, if the Patent Office found claims to be not patentable, but the Patent Office was later reversed by the Federal Circuit, we would still mark that decision as inconsistent with the district court. We even counted Patent Office decisions as inconsistent in the five cases where they were affirmed by the Federal Circuit and therefore were correct according to a higher authority than a district court. We did this in order to ensure we included results tending to support Malone and Brachmann’s thesis that the Patent Office was reaching the “wrong” results.
We excluded fourteen results that were not the result of any district court finding. Specifically, several patents were included because of findings by the International Trade Commission, an agency (like the Patent Office) which hears cases in a non-Article III court and that does not have a jury. Those results would not meet Malone and Brachmann’s thesis of being considered “valid in full and fair trials in a court of law.”
We excluded two results ~~that should not have been included in the set and appear to be a coding error by Docket Navigator~~.* These results were excluded because there was no final decision from the Patent Office as to unpatentability.

Here’s what we found of the 194 remaining cases:

A plurality of the results (n=85) were only included because the Patent Office determined claims were unpatentable based on failure to meet one or more requirements for patentability (usually 35 U.S.C. § 102 or 103) and a district court found the claims met other requirements for patentability (usually 35 U.S.C. § 101 or 112). That is, the district court made no finding whatsoever relating to the reasons why the Patent Office determined the claims should be canceled. Thus the Patent Office and the court did not disagree as to a finding on validity.

For example, the Docket Navigator results include U.S. Patent No. 5,563,883. The Patent Office determined claims 1, 3, and 4 of that patent were unpatentable based on obviousness (35 U.S.C. § 103). A district court determined that those same claims however, met the definiteness requirements (35 U.S.C. § 112(b)). The Federal Circuit affirmed the Patent Office’s decision invalidating the claims, and the district court did not decide whether those claims were obvious at all.

A further 46 results were situations where either (1) the patent owner requested the Patent Office cancel claims or (2) claims were stipulated to be “valid” as part of a settlement in district court. Thus the Patent Office and the court findings were not inconsistent because at least one of them did not reach any decision on the merits.
- For example, the Docket Navigator results includes U.S. Patent No. 6,061,551. A jury found claims not invalid, but the Federal Circuit reversed that finding, holding the claims invalid. After that determination, the Patent Owner requested an adverse judgment at the Patent Office.
- As another example, the Docket Navigator results includes U.S. Patent No. 7,676,411. The Patent Office found claims invalid as abstract (35 U.S.C. § 101) and obvious (35 U.S.C. § 103). Because the parties stipulated that this patent was “valid” as part of settlement, which is generally not considered to be a merits determination, this patent is also tagged as “not invalid” by Docket Navigator.
A further 15 results were not inconsistent for a variety of reasons.
- For example, five results were not inconsistent because the Patent Office and the district court considered different patent claims. As another example, U.S. Patent No. 7,135,641 represented an instance where a jury found claims not invalid, but the district court judge reversed that finding post-trial. As another example, in the district court, U.S. patent 5,371,734 was held “not invalid” on summary judgment, but that determination was later reversed by the Federal Circuit.

Under this initial cut, only 48 of the entries arguably could be considered to have inconsistent or disagreeing results between the Patent Office and a district court.

But in the majority of those cases, a judge or jury considered one set of prior art when determining whether the claim was new and nonobvious, but the Patent Office considered a different set (n=28). It is not surprising that the two forums would consider different evidence. The Patent Office proceedings generally only consider certain types of prior art (printed publications). That a district court proceeding may result in a finding of “not invalid” based on, e.g., prior use, is not an inconsistent result.

Eliminating those results where the Patent Office was considering completely different arguments and art means the total number of times the Patent Office arguably reached a different conclusion than a district court is only 20 times out of 273 that a district court determined a patent "not invalid" for some reason. That means that the Patent Office is “inconsistent” with district courts only 7% of the time, not 76% of the time.

It is also important to keep in mind that there have been over 1,800 final decisions in inter partes review proceedings, covered business method review proceedings, or post grant review proceedings. In all that though, only 20 times did the Patent Office reach a conclusion that may be considered inconsistent with the district court in ways that negatively impact patent owners. That’s a rate of only around 1% of the time. That’s a remarkably low rate. Moreover, inconsistent results happen even within the court system. For example, in Abbott v. Andrx, 452 F.3d 1331, the Federal Circuit found that Abbott’s patent was likely to be held invalid. But only one year later, in Abbott v. Andrx, 473 F.3d 1196, the Federal Circuit found that the same patent was likely to be not invalid. The two different results were explained by the fact that the two defendants had presented different defenses. This is not unusual. Thus the fact that there may be different results doesn’t lead to a conclusion that the whole system is faulty.

An analysis like ours with respect to this data set takes time and a few cases might slip through the cracks or be incorrectly coded, but the overall result demonstrates that the vast majority of patent owners are never subject to inconsistent results between district court and the Patent Office.

It is disappointing that Johnson, Malone, and Brachmann made claims that the data don’t support, but demonstrates a valuable lesson. When using data sets, it is important to understand what, exactly, the data is and how to interpret it. Unfortunately here it looks like an error in understanding the results provided by Docket Navigator by Malone and Brachmann propagated to Johnson’s testimony, and would likely travel further if no one looked harder at it.

We’ve used both Docket Navigator and Lex Machina in our analyses on numerous occasions, and even briefs we submit to the court. Both services provide extremely valuable information about the state of patent litigation and policy. But its usefulness is diminished where the data they present are not understood. As always, the devil is in the details.

*Correction [Dec. 5, 2017]: After posting this report and in discussions with Docket Navigator, we learned that these two entries, although not final decisions, were properly coded as findings of "invalid" after the patent owner disclaimed certain claims prior to the decision instituting an inter partes review. As a result, they reflect findings of "invalidity" as to certain challenged claims due to a voluntarily relinquishment of the claims by the patent owner. This correction does not change the ultimate outcome of this post: these determinations should not be considered to show inconsistent results, as they represent no finding on the merits of the canceled claims.

1. For this reason, our results differ slightly from those of CCIA, reported here. CCIA did not treat decisions as inconsistent if the Patent Office decision was later affirmed on appeal. Five patents we considered inconsistent in our analysis were excluded in CCIA’s analysis. Each approach has merit.

Stupid Patent of the Month: Bad Patent Goes Down Using Procedures at Patent Office Threatened by Supreme Court Case

Vera Ranieri — Tue, 31 Oct 2017 17:57:21 +0000

At the height of the first dot-com bubble, many patent applications were filed that took common ideas and put them on the Internet. This month’s stupid patent, U.S. Patent No. 6,738,155 (“the ’155 patent”), is a good example of that trend.

The patent is titled “System and method of providing publishing and printing services via a communications network.” Generally, it relates to a “printing and publishing system” that provides “workflow services...using a communication network.” The original application was filed in 1999, and the patent issued in 2004.

The ’155 patent has a significant litigation history. Starting in 2013, its owner1 CTP Innovations, LLC, filed over 50 lawsuits alleging infringement, and told a court it intended to file as many as 200 additional cases. CTP claimed [PDF] that infringement of its patent was “ubiquitous” by the printing and graphic communications industry.

In response to CTP’s claims of infringement, several defendants challenged the patent at the Patent Office, using a procedure called “inter partes review” (or “IPR” for short). The IPR procedure allows third parties to argue to the Patent Office that a patent shouldn’t have been granted because what was claimed in the patent was either known or obvious (two requirements for being awarded a patent) at the time it was allegedly invented. The challenger presents what's called “prior art,” that is, material known to the public before the alleged invention. The challenger uses the prior art to show that the patent’s claims weren’t new or non-obvious when the application was filed. A patent owner is then given the chance to show why they are entitled to a patent.

Here is claim 10 of the ’155 patent, one of the claims challenged by the defendants:

10. A method of providing printing and publishing services to a remote client in real time using a communication network, the method comprising:

storing files on a computer server, the files containing information relating to images, text, art, and data;

providing said files to a remote client for the designing of a page layout;

generating a portable document format (PDF) file from the designed page layout;

generating a plate-ready file from said PDF file; and

providing said plate-ready file to a remote printer.

Here’s how the Patent Office presiding over the IPR described [PDF] claim 10:

Claim 10 is drawn to a method that requires: (1) storing files; (2) providing the files to a remote user for designing a page layout; (3) generating a PDF from the designed page layout; (4) generating a “plate-ready file” from the PDF; and (5) providing the plate-ready file to a remote printer.

In order to show that this claim should be cancelled, the challenger relied on several pieces of prior art to show that claim 10 of the ’155 patent was obvious.

During the IPR, the parties generally did not dispute that steps (1)-(4) were disclosed by the prior art. The only dispute noted by the Patent Office about what was disclosed by one particular prior art combination known as “Dorfman and Apogee” was whether sending a file to a remote printer (step (5)) was new or non-obvious. The Patent Office originally found [PDF] that even though the prior art disclosed all the other parts of the alleged invention, the prior art didn’t disclose sending files to a remote printer. That was enough to rule that claim 10 was new and non-obvious, and in favor of the patent owner.

We don’t think that minor difference from the prior art should matter. The ’155 patent doesn’t claim to have invented how to send files to a remote printer (nor could it in 1999, as a quick search reveals). Such a trivial change shouldn’t allow someone to claim a monopoly, especially when everyone was doing things “on the Internet” in 1999. For this reason, this patent is worthy of our award.

Fortunately, the Patent Office changed its mind [PDF] on the patentability of claim 10 and sending files remotely, after the challenger pointed out that the prior art did disclose doing exactly that. In January 2017, the Patent Office ruled that claim 10, as well as claims 11-7, 19 & 20, should be cancelled, and CTP did not appeal that decision.

Thanks to IPR, CTP can no longer use many of the claims of the ’155 patent to sue others. Indeed, it does not appear that CTP has brought suit against the 200 parties it threatened to sue.

IPR is currently facing an existential threat: the Supreme Court is currently deciding whether it is constitutional for the Patent Office to double-check its work after a patent has issued. We think it is. As this short story shows, the Patent Office sometimes misses things in the prior art, and unsurprisingly then, often allows patents that it shouldn’t. The public should be able to point out those mistakes to the Patent Office and not have to pay patent owners for things that rightfully belong to the public.

1. It turned out that at the time CTP filed its lawsuits, it didn’t actually own the patent [PDF].

Stupid Patent of the Month: Will Patents Slow Artificial Intelligence?

Jeremy Gillula — Fri, 29 Sep 2017 19:00:45 +0000

We have written many times about why the patent system is a bad fit for software. Too often, the Patent Office reviews applications without ever looking at real world software and hands out broad, vague, or obvious patents on software concepts. These patents fuel patent trolling and waste. As machine learning and artificial intelligence become more commonplace, it is worth considering how these flaws in the patent system might impact advances in AI.

Some have worried about very broad patents being issued in the AI space. For example, Google has a patent on a common machine learning technique called dropout. This means that Google could insist that no one else use this technique until 2032. Meanwhile, Microsoft has a patent application with some very broad claims on active machine learning (the Patent Office recently issued a non-final rejection, though the application remains pending and Microsoft will have the opportunity to argue why it should still be granted a patent). Patents on fundamental machine learning techniques have the potential to fragment development and hold up advances in AI.

As a subset of software development, AI patents are likely to raise many of the same problems as software patents generally. For example, we’ve noted that many software patents take the form: apply well-known technique X in domain Y. For example, our Stupid Patent of the Month from January 2015 applied the years-old practice of remotely updating software to sports video games (the patent was later found invalid). Other patents have computers do incredibly simple things like counting votes or counting calories. We can expect the Patent Office to hand out similar patents on using machine learning techniques in obvious and expected ways.

Indeed, this has already happened. Take U.S. Patent No. 5,944,839, for a “system and method for automatically maintaining a computer system.” This patent includes very broad claims applying AI to diagnosing problems with computer systems. Claim 6 of this patent states:

A method of optimizing a computer system, the method comprising the steps of:

detecting a problem in the computer system;

activating an AI engine in response to the problem detection;

utilizing, by the AI engine, selected ones of a plurality of sensors to gather information about the computer system;

determining, by the AI engine, a likely solution to the problem from the gathered information; and

when a likely solution cannot be determined, saving a state of the computer system.

Other than the final step of saving the state of the computer where a solution cannot be found, this claim essentially covers using AI to diagnose computer problems. (The claim survived a challenge before the Patent Trial and Appeal Board, but the Federal Circuit recently ordered [PDF] that the Board reconsider whether prior art, in combination, rendered the claim obvious.)

A more recent patent raises similar concerns. U.S. Patent No. 9,760,834 (the ’834 patent), owned by Hampton Creek, Inc., relates to using machine learning techniques to create models that can be used to analyze proteins. This patent is quite long, and its claims are also quite long (which makes it easier to avoid infringement because every claim limitation has to be met for there to be infringement). But the patent still reflects a worrying trend. In essence, Claim 1 of the patent amounts to ‘do machine learning on this particular type of application.’ Indeed, during the prosecution of the patent application, Hampton Creek argued [PDF] that prior art could be distinguished because it merely described applying machine learning to “assay data” rather than explicitly applying the techniques to protein fragments.

More specifically, the patent follows Claim 1 with a variety of subsequent claims that amount to ‘When you’re doing that machine learning from Claim 1, use this particular well-known pre-existing machine learning algorithm.’ Indeed, in our opinion the patent reads like the table of contents of an intro to AI textbook. It covers using just about every standard machine learning technique you’d expect to learn in an intro to AI class—including linear and nonlinear regression, k-nearest neighbor, clustering, support vector machines, principal component analysis, feature selection using lasso or elastic net, Gaussian processes, and even decision trees—but applied to the specific example of proteins and data you can measure about them. Certainly, applying these techniques to proteins may be a worthwhile and time-consuming enterprise. But that does not mean it deserves a patent. A company should not get a multi-year monopoly on using well-known techniques in a particular domain where there was no reason to think the techniques couldn’t be used in that domain (even if they were the first to apply the techniques there). A patent like this doesn’t really bring any new technology to the table; it simply limits the areas in which an existing tool can be used. For this reason, we are declaring the ’834 patent our latest Stupid Patent of the Month.

In fairness, the ’834 patent is not as egregious as some of the other patents we have selected for this dubious ‘honor.’ But we still think the patent is worth highlighting in this series because the problems similar patents could create for innovation and economic progress might be much more serious. Handing out patents on using well-known machine learning techniques but limited to a particular field merely encourages an arms race where everyone, even companies doing routine development, attempts to patent their work. The end result is a minefield of low-quality machine learning patents, each applying the entire field of machine learning to a niche sub-problem. Such an environment will fuel patent trolling and hurt startups that want to use machine learning as a small part of the larger novel technologies they want to bring to market.

We recently launched a major project monitoring advances in artificial intelligence and machine learning. As we pursue this project, we’ll also monitor patenting in AI and try to gauge its impact on progress.

With EFF’s Help, Small Business Stands Up To Patent Troll Electronic Communication Technologies, LLC

Vera Ranieri — Wed, 13 Sep 2017 23:38:34 +0000

Since 1992, Fairytale Brownies has sold delicious brownies based on a secret family recipe. It’s a small business founded by two childhood friends who were quick to see the potential of the Internet and registered the domain www.brownies.com in 1995. Fairytale Brownies became an e-commerce website before the first dot-com boom and has remained in business ever since.

But earlier this year, Fairytale Brownies received a surprising letter. The letter said its e-commerce website infringes U.S. Patent No. 9,373,261 (“the ’261 patent”). The ’261 patent is owned by Electronic Communication Technologies, LLC (“ECT”), a company that was previously known as Eclipse IP. We have written about it many times before.

What is the technology claimed by the patent?

Generally, ECT states that it patented “unique solutions to minimize hacker’s impacts when mimicking order confirmations and shipment notification emails.” From what we can tell, it claims to have invented sending an automated email in response to an online order, that contains personally identifiable information (“PII”). ECT claims that including PII allows customers to know that the email is not a “phishing” email or “part of an email fraud system,” and as a consequence customers will know to trust the links in the email.

There are a few more details about what exactly ECT claims to have invented and what it says infringes, which can be seen in the “chart” ECT provided to Fairytale Brownies. The chart points to claim 11 of the ’261 patent and describes how it believes Fairytale Brownies infringes the ’261 patent. In doing so, ECT tells Fairytale Brownies (and everyone else) what it thinks the ‘261 patent allows it to claim, and at least some subset of what it claims to have “invented.”

Fairytale Brownies disputes that ECT is properly reading its claims, and that Fairytale Brownies infringes. Regardless, as we point out in our letter on behalf of Fairytale Brownies, many, many companies engaged in the behavior ECT says it invented long before ECT ever applied for a patent. That patent, entitled “Secure notification messaging with user option to communicate with delivery or pickup representative,” issued in 2016, but ECT claims the technology was invented in 2003. But many other companies did exactly what Fairytale Brownies does, and we provided copies of order confirmation emails from Amazon.com that included the so-called “anti-phishing invention” from over two years before ECT’s “invention.” (We have redacted some information from those emails to protect privacy). We included examples from many other companies that show the same thing, including emails from NewEgg, Crate & Barrel, and Old Navy. Indeed, this “invention” seems practically mundane, and nothing that should have been seen as “novel” in 2003.

We also note in our letter that the ’261 patent is likely invalid under Alice. The Alice decision was the basis of a court ruling that invalidated claims from three of ECT’s other patents (this ruling issued when it was still known as Eclipse IP). We attach a motion that is currently pending in the Southern District of Florida that seeks a finding that claim 11 of the ’261 patent, the same claim that is asserted against Fairytale Brownies, is invalid for failing to claim patentable subject matter.

Electronic Communication Technologies demanded Fairytale Brownies pay $35,000 to license the ’261 patent. We think that $1 would be too much. As a small business, getting a letter out of the blue demanding a payment for infringing on patents you’ve never heard of based on technology that forms a standard part of any e-commerce business can be a daunting experience. With EFF’s help, Fairytale Brownies is pushing back, and refusing to pay for something that was commonplace in e-commerce long before ECT claims to have invented it.

Stupid Patent of the Month: JP Morgan Patents Interapp Permissions

Daniel Nazer — Thu, 31 Aug 2017 19:07:30 +0000

We have often criticized the Patent Office for issuing broad software patents that cover obvious processes. Instead of promoting innovation in software, the patent system places landmines for developers who wish to use basic and fundamental tools. This month’s stupid patent, which covers user permissions for mobile applications, is a classic example.

On August 29, 2017, the Patent Office issued U.S. Patent No. 9,747,468 (the ’468 patent) to JP Morgan Chase Bank, titled “System and Method for Communication Among Mobile Applications.” The patent covers the simple idea of a user giving a mobile application permission to communicate with another application. This idea was obvious when JP Morgan applied for the patent in June 2013. Even worse, it had already been implemented by numerous mobile applications. The Patent Office handed out a broad software monopoly while ignoring both common sense and the real world.

The full text of Claim 1 of the ’468 patent is as follows:

A method for a first mobile application and a second mobile application on a mobile device to share information, comprising:

the first mobile application executed by a computer processor on a mobile device determining that the second mobile application is present on the mobile device;

receiving, from a user, permission for the first mobile application to access data from the second mobile application;

the first mobile application executed by the computer processor requesting data from the second mobile application; and

the first mobile application receiving the requested data from the second mobile application.

That’s it. The claim simply covers having an app check to see if another app is on the phone, getting the user’s permission to access data from the second app, then accessing that data.

The ’468 patent goes out of its way to make clear that this supposed invention can be practiced on any kind of mobile device. The specification helpfully explains that “the invention or portions of the system of the invention may be in the form of a ‘processing machine,’ such as a general purpose computer, for example.” The patent also emphasizes that the invention can be practiced on any kind of mobile operating system and using applications written in any programming language.

How was such a broad and obvious idea allowed to be patented? As we have explained many times before, the Patent Office seems to operate in an alternate universe where the only evidence of the state of the art in software is found in patents. Indeed, the examiner considered only patents and patent applications when reviewing JP Morgan’s application. It’s no wonder the office gets it so wrong.

What would the examiner have found if he had looked beyond patents? It’s true that in mid-2013, when the application was originally filed, mobile systems generally asked for permissions up front when installing applications rather than interposing more fine-grained requests. But having more specific requests was a straightforward security and user-interface decision, not an invention. Structures for inter-app communication and permissions had been discussed for years (such as here, here, and here). No person working in application development in 2013 would have looked at Claim 1 of the ’468 patent and think it was non-obvious to a person of ordinary skill.

JP Morgan’s “invention” was not just obvious, it had been implemented in practice. At least some mobile applications already followed the basic system claimed by the ’468 patent. In early 2012, after Apple was criticized for allowing apps to access contact data on the iPhone, some apps began requesting user permission before accessing that data. Similarly, Twitter asked for user permission as early as 2011, including on “feature phones”, before allowing other apps access to its data. Since it didn’t consider any real world software, the Patent Office missed these examples.

The Patent Office does a terrible job reviewing software patent applications. Meanwhile, some in the patent lobby are pushing to make it even easier to get broad and abstract software patents. We need real reform that reduces the flood of bad software patents that fuels patent trolling.

Stupid Patent of the Month: HP Patents Reminder Messages

Daniel Nazer — Mon, 31 Jul 2017 20:23:50 +0000

On July 25, 2017, the Patent Office issued a patent to HP on reminder messages. Someone needs to remind the Patent Office to look at the real world before issuing patents.

United States Patent No. 9,715,680 (the ’680 patent) is titled “Reminder messages.” While the patent application does suggest some minor tweaks to standard automated reminders, none of these supposed additions deserve patent protection.

Claim 1 of the patent states (comments in brackets):

A non-transitory computer-readable storage medium containing instructions, the instructions when executed by a processor causing the processor to [use a computer to]:

receive at a first computer system, via a network, event data descriptive of an event to occur at an event time [get event and time information];

receive via the network, reminder data descriptive of a reminder time to occur on or before the event time [get the reminder time];

at a time after receipt of the event data, receive via the network article data descriptive of an article to be associated with the event, the article data created during an electronic scanning operation [receive some additional information (created by scanning) relating to the event]; and

at the reminder time send via the network a reminder message describing the event and the article to a second computer system, for presentation at the second computer system [at the reminder time, send the reminder message].

Although this claim uses some obscure language (like “non-transitory computer-readable storage medium” and “article data”), it describes a quite mundane process. The “article data” is simply additional information associated with an event. For example, ‘buy a cake’ might be included with a birthday reminder. The patent also requires that this extra information be input via a “scanning operation” (e.g. scanning a QR code).

The ’680 patent comes from an application filed in July 2012. It is supposed to represent a non-obvious advance on technology that existed before that date. Of course, reminder messages were standard many years before the application was filed. And just a few minutes of research reveals that QR codes were already used to encode information for reminder messages. For example, QRickit suggested using QR codes for calendar events and reminders (with the option of adding additional information beyond the event descriptor). This 2011 article suggests using QR codes to embed information such as “assignments for the week.” The only even arguable difference from the prior art is that the patent’s claims require the “article data” to be received after the event data. In our view, that is not a distinction that warrants the government-granted monopoly power inherent in a patent.

The Patent Office reviewed HP’s application for years without ever considering any real-world products. Indeed, the examiner considered only patents and patent applications. We have complained before that the Patent Office seems to operate in an alternative universe where only patents provide evidence of the state of the art in software. The fact that the Patent Office doesn’t take developments in real software into account in its assessment of prior art speaks poorly for its ability to determine whether patent applications actually reflect new inventions.

In addition to failing to consider real products, the Patent Office gives little weight to common sense and takes an extremely rigid approach to evaluating whether or not a patent application is obvious. This leads to patents on things like taking photos against a white background, filming a yoga class, voting for a favorite photo, and out-of-office email. Much of the responsibility for this mess rests with the Federal Circuit, which has failed to apply a Supreme Court case called KSR v. Teleflex that calls for a flexible, common sense approach to obviousness. Together with Public Knowledge, EFF recently filed an amicus brief [PDF] asking the Supreme Court to consider the obviousness standard in patent law and to reaffirm that examiners can reject common sense combinations of known elements.

Even leaving obviousness aside, HP’s patent application still should have been rejected under Alice v. CLS Bank. In Alice, the Supreme Court ruled that an abstract idea does not become eligible for a patent simply by being implemented on a generic computer. As with many software patents, the patent goes out of its way to explain that its method can be implemented on a generic computer, or, as the patent puts it “generally any computer.” Despite this, the prosecution history [PDF] reveals that the examiner never even mentioned Alice, even in office actions written well after the Supreme Court’s decision came down. We have written many times (e.g. 1, 2, 3, and 4) to protest that the Patent Office is not doing enough to diligently apply the Alice decision. The ’680 patent provides yet another example of abstract software patents being issued despite the Supreme Court’s ruling.

In case you want to set a reminder, the ’680 patent will expire on December 16, 2035.

EFF Asks Court to Strike Down Unconstitutional Restraint on Our Speech

Karen Gullo — Mon, 24 Jul 2017 23:26:53 +0000

EFF has asked a federal court to rule in its favor in a lawsuit we filed against an Australian company that sought to use foreign law to censor us from expressing our opinion about its patent. While the company, Global Equity Management (SA) Pty Ltd (GEMSA,) knows its way around U.S. courts—having filed dozens of lawsuits against big tech companies claiming patent infringement—it has failed to respond to ours. Today we asked for a default judgment, which if granted means we win the case.

It all started when GEMSA’s patent litigation was featured in our June 2016 blog series “Stupid Patent of the Month.” The company wrote to EFF accusing us of “false and malicious slander.” It subsequently filed a lawsuit and obtained an injunction from a South Australia court ordering EFF to take down the blog post and blocking us from ever talking about any of its intellectual property.

We have not removed the post. The South Australian injunction can’t be enforced in the U.S. under a 2010 federal law that took aim against “libel tourism,” a practice by which plaintiffs—often billionaires, celebrities, or oligarchs—sued U.S. writers and academics in countries like England where it was easier to win a defamation case.

The Securing the Protection of Our Enduring and Established Constitutional Heritage Act (SPEECH Act) says foreign orders aren’t enforceable in the United States unless they are consistent with the free speech protections provided by the U.S. and state constitutions, as well as state law. Our lawsuit, filed in U.S. District Court, Northern District of California, maintains that GEMSA’s injunction, which seeks to silence expression of an opinion, would never survive scrutiny under the First Amendment in the United States and should therefore be declared unenforceable. We stood ready to defend our right to express constitutionally protected speech.

GEMSA, which has three pending patent lawsuits in in the Northern District of California, had until May 23 to respond to our case. That day came and went without a word. We can’t speculate as to why GEMSA hasn’t responded. To get a default judgment, we need to show that not only has GEMSA failed to answer our claims but also, regarding our claim that the South Australia injunction is unenforceable in the U.S., the law is on our side.

We believe that we should prevail. The law does not allow companies or individuals to make an end run around the First Amendment by finding a judge in another country to sign an injunction that censors speech in the U.S. The law the Australian court applied to grant the injunction didn’t provide as much protection for EFF’s speech as American law, which means it’s unenforceable under the SPEECH Act. Additionally, the injunction is unconstitutional under American law as it prohibits all future speech by EFF about any of GEMSA’s patents. Such prohibitions are also known as prior restraints, and are allowed only in the rarest of circumstances, none of which apply here.

Our laws also don’t allow plaintiffs to be left under a cloud of uncertainty as to their ability to speak publicly about something as important as patent litigation and reform. The Australian injunction states that failure to comply could result in the seizure of EFF’s assets and prison time for its officers. GEMSA attorneys have threatened to take the Australian injunction to American search engine companies to deindex the blog post, making the post harder to find online.

The court should set the record straight and grant our request for a default judgment. Our laws call for no less.

Stupid Patent of the Month: Using A Computer To Count Calories

Daniel Nazer — Fri, 30 Jun 2017 22:15:12 +0000

This month’s stupid patent, like many stupid patents before it, simply claims the idea of using a computer for basic calculations. U.S. Patent No. 6,817,863 (the ’863 patent) is titled “Computer program, method, and system for monitoring nutrition content of consumables and for facilitating menu planning.” It claims the process of using a computer to track nutrition information like calorie or vitamin intake. It is difficult to think of a more basic and trivial use for a computer.

The ’863 patent is owned by a patent troll called Dynamic Nutrition Solutions LLC. Dynamic Nutrition filed a lawsuit this month in the Eastern District of Texas accusing Australian company Fatsecret of infringing the ’863 patent. Dynamic Nutrition had filed four other lawsuits. Consistent with a pattern of nuisance litigation, each of those earlier suits settled very quickly.

What “invention” does the ’863 patent purport to cover? Claim 1 of the patent is reproduced in full below (with comments in brackets):

A computer program comprising a combination of code segments stored in a computer-readable memory and executable by a processor to provide nutrition content information related to consumables, the computer program comprising:

a code segment operable to receive and store an input related to consumption of consumables, and to associate the input with a calender [sic] date [i.e. program a computer to track daily food intake]; and

a code segment operable to generate an interactive display screen, wherein the interactive display screen includes— [i.e. include some kind of user interface]

one or more lists of consumables and related nutrition content information, and [i.e. list food options and nutrition information]

a summary section of past consumption of consumables. [i.e. list past food intake]

In other words, program a computer to help people keep track of meals and calorie or vitamin intake.

The application for Dynamic Nutrition’s patent was filed on June 11, 2001. By that time, computers had been around for decades and there was nothing remotely surprising or innovative about programing a computer to keep track of data—whether it be nutrition data or units shipped or accounts receivable or whatever. Nevertheless, the Patent Office takes an extremely rigid approach to whether or not a patent application is obvious. This means that companies often get patents on common sense ideas (like taking photos against white background or filming a yoga class).

Even leaving aside the issue of obviousness, the claims of the ’863 patent are invalid under the Supreme Court’s Alice v. CLS Bank decision (which struck down patents that merely claim the use of conventional computers to implement an abstract idea). Indeed, the first company to be sued by Dynamic Nutrition, Under Armour, filed a motion to dismiss the case under Alice. Under Armour pointed out that the ’863 patent itself repeatedly emphasizes that its methods can be implemented using any conventional computer or programming language. Given the strength of this argument, it is unsurprising that the litigation settled before Dynamic Nutrition even filed a response.

Dynamic Nutrition’s patent is not even the only patent that claims using a computer for routine meal planning. A patent troll called DietGoal sued dozens of companies with a meal planning patent. A court invalidated DietGoal’s patent under Alice because it claimed nothing more than the “conventional and quotidian tasks” of selecting meals. The Federal Circuit affirmed that ruling. The logic of this decision applies straightforwardly to Dynamic Nutrition’s patent claims.

We recently launched our Saved By Alice project where we are highlighting cases where companies attacked by stupid software patents were able to use the Alice decision to defend themselves. The Dynamic Nutrition litigation is yet another example of why the Alice ruling is important and how it can protect productive companies from patent trolls.

Federal Circuit Hits Stupid Patent Owner With Fee Award

Daniel Nazer — Tue, 06 Jun 2017 20:32:07 +0000

Patent litigation abuse thrives when patent trolls can force defendants into making a hard choice: pay the troll (even though the claim is absurd) or pay even more to your lawyers. This week, the Federal Circuit issued an encouraging ruling that will make it harder to use this gambit. Overturning a contrary decision by the patent-friendly Eastern District of Texas, the appellate court required a notorious patent troll practicing this model to pay the defendant’s attorney’s fees. The lower court had given the troll a pass because it dismissed its case early (which would give impunity to any troll that runs away when the defendant fights back). This week’s decision is an important win for victims of abusive litigation.

The patent troll in question is Rothschild Connected Devices Innovations LLC (RCDI). RCDI’s patent on an Internet-connected drink mixer is so stupid we awarded it our August 2015 Stupid Patent of the Month. As we explained in that post, RCDI’s patent not only claimed an obvious idea, but had been expanded so broadly that it effectively covered any kind of remote updating over the Internet.

Armed with an absurdly broad patent, RDCI began suing dozens of companies ranging from ADT to Whirlpool. It effectively claimed to own the entire Internet of Things. For example, its complaint against ADT claimed that a system that allows customers to “remotely customize the operation” of a “thermostat” infringed RCDI’s patent. Many of these cases settled quickly for nuisance amounts. When defendants fought back, RCDI simply dismissed its claims.

Some defendants were able to deter RCDI by filing a motion arguing that its patent is invalid under Alice v. CLS Bank (which holds that abstract ideas do not become patent eligible by being performed with generic computers). If it weren’t for the Alice decision, it would have been far more difficult for defendants to avoid lengthy and expensive discovery and that would have created intense settlement pressure. This case is a good example of why Congress should leave the Alice decision alone.

After RCDI dismissed its case against ADS Security, ADS kept fighting and demanded attorney’s fees. Magistrate Judge Payne rejected the request because RCDI had dismissed its case early, after ADS sent a letter explaining that RCDI’s claims were frivolous. As the Federal Circuit explained, Judge Payne’s decision conflated Rule 11 (which gives parties the chance to withdraw) with Section 285 of the Patent Act (which allows for fee awards in exceptional cases). The Federal Circuit also noted that the district court had failed to give enough weight to RCDI’s pattern of vexatious litigation.

The Federal Circuit’s recent ruling is not the only challenge RCDI faces. International tech company Garmin, Inc. is also fighting back and seeking fees. Garmin’s most recent filing outlines a disturbing pattern of misconduct, including:

RDCI’s principal misrepresented his residency in a signed form submitted to the Texas Secretary of State.
RDCI’s real office is in Florida but it claimed that a virtual office in Texas was its “principle place of business” and its only address.
RDCI argued that a motion under Section 101 could not be decided until formal claim construction then later argued no claim terms needed construction.

Garmin supports each of these allegations with documentary evidence. In opposing Garmin’s fee motion, RCDI had been relying heavily on the now-overturned decision denying ADS’s fees. Hopefully, the Federal Circuit’s new guidance will help the Eastern District of Texas reach a fair result this time.

While this week’s decision is encouraging, more reform is needed. The decision does nothing to prevent the Patent Office from issuing more stupid software patents to fuel patent trolling. Patent trolls are still desperately trying to get their cases into the Eastern District of Texas, even after the Supreme Court’s decision in the TC Heartland case. Even if trolls have to leave Texas, that doesn’t prevent them from shaking down defendants in other districts.

The principal and supposed inventor behind RCDI, Leigh Rothschild, was once featured by Intellectual Ventures in an Inventor Spotlight blog post where he argued against patent reform. But RCDI is not a poster child for the patent system. It is a poster child for patent litigation abuse. EFF agrees with Intellectual Ventures on one thing: the absurd patents and abusive litigation conduct of trolls like RCDI should be at the center of any debate about patent reform.

Stupid Patent of the Month: Ford Patents a Windshield

Elliot Harmon — Wed, 31 May 2017 22:55:39 +0000

The Supreme Court’s recent decision in Impression Products v. Lexmark International was a big win for individuals’ right to repair and modify the products they own. While we’re delighted by this decision, we expect manufacturers to attempt other methods of controlling the market for resale and repair. That’s one reason we’re giving this month’s Stupid Patent of the Month award to Ford’s patent on a vehicle windshield design.

D786,157 is a design patent assigned to a subsidiary of Ford Motor Company. While utility patents are issued for new and useful inventions, design patents cover non-functional, ornamental aspects of a product.

Unlike utility patents, design patents have only one claim and usually have little or no written description. The patent only covers the non-functional design of a certain product. But design and utility patents are alike in an important way: both are intended to reward novelty. According to U.S. law, the Patent Office should issue design patents only for sufficiently new and original designs. By that test alone, it’s easy to see that the windshield patent should never have been issued.

Why did Ford apply for the patent on its windshield design? One possible reason is that it’s the automotive industry’s latest attempt to control the market for repair. If the shape of your windshield is patented by Ford, then no one else can replace it without risking costly patent litigation.

Ford has a troublesome history with independent repair shops: in 2015, it sued the manufacturer of an independent diagnostics tool under Section 1201 of the Digital Millennium Copyright Act, the infamous law that makes it illegal to circumvent digital locks on products you own. Later in 2015, the Librarian of Congress granted an exception to 1201 for some forms of auto repair, but manufacturers have continued to seek out creative ways to close out the market, whether it’s through copyright, contract clauses, or patents.

In the Supreme Court Lexmark opinion, Justice John Roberts specifically noted the danger of automobile manufacturers shutting out competition in the repair space:

Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale. Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits.

If the Patent Office continues to issue stupid design patents like Ford's windshield patent, it risks giving manufacturers carte blanche to decide who can repair their products. And customers will pay the price.

Stupid Patents of the Month: Taxi Dispatch Tech

Vera Ranieri — Fri, 28 Apr 2017 17:33:28 +0000

With all the attention ride-sharing has been getting lately, some might think Uber and Lyft were highly inventive apps. But according to at least one company, the apps are just highly infringing. Who’s right? Probably neither.

Hailo Technologies, LLC (“Hailo”) has recently sued both Uber and Lyft, alleging they infringed Hailo’s taxi dispatch patent, U.S. Patent No. 5,973,619 (“the ’619 patent”). The patent claims a method for a “computer system” that: (1) displays a list of transportation options; (2) asks the customer for a number of passengers; (3) shows destinations graphically; (4) displays the approximate fare; (5) calls a selected taxi company up for a ride; and (6) gives an estimated arrival time. A few months ago, Hailo also sued a few other companies for infringing a different patent, U.S. Patent No. 6,756,913 (“the ’913 patent”), which claims a method for keeping track of available taxis on the road. More specifically, it claims a method where a computer (1) determines if a taxi is free (i.e. currently has no rider); and if free (2) sends the current location of the taxi to the taxi dispatch server.

Both of Hailo’s patents date to the late 1990s. That is, the patents claim these inventions didn’t exist (or weren’t obvious) at that time. Except a brief Internet search shows that similar taxi dispatch technology not only existed, but was widely used. Two reports from the Department of Transportation from 1991 and 1992 describe the state of “computer dispatch” technology at that time, and show many of the claimed features of the ’619 and ’913 patents. Another report, from 1995, has even more detail about various taxi dispatch technologies. For example, on page 115 the report details a product called “MT GU,” an automated call box that allows customers to order “one or several taxis”, specify “the taxi desired” (including getting a larger van), and provides the waiting time. The MT GU system seems to describe many, if not all, of the features in the system claimed in the ’619 patent, and predates it by several years.

So there’s good reason to think that the inventions claimed in the two patents were not actually novel or nonobvious when the patent applications were filed. But will any of that matter? Patents, once issued, are presumed valid. In order for a patent to be declared invalid in court, a challenger must show “clear and convincing evidence” of invalidity. When the argument for invalidity is based on prior art, this can be an expensive and time consuming process, often costing in the hundreds of thousands, if not millions, of dollars. Thus even if these patents are in fact invalid and never should have issued, due to the cost of litigation courts often never decide the issue.

An alternative to court exists in the form of inter partes review at the Patent Office. This allows the Patent Office to take a second look at claims in a patent, and declare them unpatentable under a more lenient “preponderance of the evidence” standard. But this procedure, although cheaper than court, is still relatively expensive. One study estimated costs through appeal at $350,000.

Given the costs of litigation in court or at the Patent Office, a patent owner can sue on a “presumed valid” patent and use the threat of fees and costs to get an undeserved settlement. When a company does nothing else (meaning, it doesn’t have a real business other than litigation) we call those companies “patent trolls.”

Hailo strikes us as pretty trollish. As noted, the patents in questions seem weak at best, and Hailo doesn’t seem to be seriously using the “inventions” in any event. In its complaint against Uber, Hailo states that it is an app maker. But its website, www.bring.bikes, was registered only 10 days before it sued Uber and Lyft. Confusingly enough, there is another company named “Hailo” that actually does make a taxi hailing app. Even more confusing: “Hailo” the patent owner says it does business under the name “Bring,” but does not appear to be associated with another company called Bring that’s actually involved in transportation.

This “Hailo” by contrast, seems focused on litigation. A recently filed document attaches the agreement assigning the ’913 patent from its original owner to Hailo. The contract is replete with references to patent enforcement and litigation. And in an earlier complaint, Hailo listed its business address as that of a law firm, and one of its members, 2S Ventures, has been associated with at least one entity that has filed over 20 lawsuits (login req.), a typical litigation pattern for a patent troll.

Whether or not Hailo is a practicing company, these are weak patents that deserve serious challenge. Sadly, that’s unlikely to happen – which is why stupid patents like these should never issue.

Patent Owner Can’t Use Foreign Court Order To Block EFF From Speaking Out

Karen Gullo — Thu, 13 Apr 2017 17:54:45 +0000

EFF Sues Company To Assert Constitutional Right to Criticize a Patent and Litigation Over It

San Francisco—The Electronic Frontier Foundation (EFF) filed a lawsuit yesterday against a company that’s using foreign laws to stymie EFF’s free speech rights to publish information about and criticize its litigation over a patent featured in EFF’s “Stupid Patent of the Month” blog series.

The company, Global Equity Management (SA) Pty Ltd (GEMSA), owns a patent claiming the idea of using “virtual cabinets” to graphically represent different operating systems and storage partitions. GEMSA has filed dozens of patent infringement cases in the U.S.

Since 2014, EFF’s stupid patent blog series has called attention to questionable patents that stifle innovation, harm the public, or can be employed to shake down users of commonplace processes or technologies. After EFF wrote about the patent, GEMSA accused EFF of slander. The company went to court in Australia to obtain an order to take down the article and prohibit EFF from publishing anything about any of GEMSA’s patents.

This order, which purports to silence expression of an opinion, would never survive scrutiny under the First Amendment in the United States. In a complaint filed in San Francisco yesterday, EFF asked a federal district court to rule that the order is unenforceable. Under the 2010 Securing the Protection of Our Enduring and Established Constitutional Heritage Act (SPEECH Act), foreign orders aren’t enforceable in the United States unless they are consistent with the free speech protections provided by the U.S. and state constitutions, as well as state law.

The injunction issued by the South Australian court purports to order EFF to remove the blog post and forbid EFF from speaking in the future about any of GEMSA’s intellectual property. It states that failure to comply could result in the seizure of EFF’s assets and prison time for its officers.

“We are going to court to ensure that EFF is not silenced by foreign laws that forbid speech our Constitution protects,” said EFF Deputy Executive Director and General Counsel Kurt Opsahl. “GEMSA may not like what we’ve said about its patent, but we will defend our right to express our constitutionally protected opinion."

EFF is represented by law firms Levine Sullivan Koch & Schulz, LLP and Jassy Vick Carolan.

For the brief:
https://www.eff.org/document/eff-v-gemsa-complaint

For EFF’s Stupid Patent of the Month series:
https://www.eff.org/issues/stupid-patent-month

Contact:

Kurt

Opsahl

EFF Special Counsel

Stupid Patent of the Month: Storing Files in Folders

Daniel Nazer — Fri, 31 Mar 2017 19:08:34 +0000

Our ongoing Reclaim Invention campaign urges universities not to sell patents to trolls. This month’s stupid patent provides a good example of why. US Patent No. 8,473,532 (the ’532 patent), “Method and apparatus for automatic organization for computer files,” began its life with publicly-funded Louisiana Tech University. But in September last year, it was sold to a patent troll. A flurry of lawsuits quickly followed.

Louisiana Tech sold the ’532 patent to Micoba LLC, a company that has all the indicia of a classic patent troll. Micoba was formed on September 8, 2016, just a few days before it purchased the patent. The patent assignment agreement lists Micoba’s address as an office building located in the Eastern District of Texas where virtual office services are provided. As far as we can tell, Micoba has no purpose other than to sue with this patent.

So what does Micoba’s newly acquired patent cover? Claim 13 reads:

A computer system comprising a processor, memory, and software for automatically organizing computer files into folders, said software causing said computer system to execute the steps comprising:

a. providing a directory of folders, wherein substantially each of said folders is represented by a description;

b. providing a new computer file not having a location in said directory, said computer file being represented by a description;

c. comparing said description of said computer file to descriptions of a plurality of said folders along a single path from a root folder to a leaf folder; and

d. assigning said computer file to a folder having the most similar description.

In other words, put files into folders that contain similar files. Do it on a "computer system" (in case you were worried office workers from the 1930s might have infringed this patent).

For a software patent, the ’532 patent is unusually free of patent jargon and pseudo-technical babble. Its specification (this is the description of the invention that comes before the claims) does describe a method for determining when the contents of a file match a folder description. The patent proposes representing folders and files as vectors (which should reflect the frequency of particular words found within). The patent suggests assessing similarity by calculating the dot product of these vectors. But, even assuming this was a new idea when the application was filed in 2003, many of the patent’s claims are not limited to this method. The patent effectively captures almost any technique for automatically sorting digital files into folders.

The ’532 patent issued in June 2013, about a year before the Supreme Court’s decision in Alice v. CLS Bank. In that case, the Supreme Court held that an abstract idea (like sorting files into folders) does not become patentable simply because it is implemented on a computer. The ’532 patent should be found invalid under this standard. In our view, this patent has no value after Alice except as a litigation weapon.

Louisiana Tech represents that it “seeks industrial partners to commercialize the technology developed at Louisiana Tech for the benefit of society.” But it completely failed to consider this public interest mission when it sold the ’532 patent to Micoba. Within two months of the sale, Micoba had filed nearly a dozen cases in the Eastern District of Texas, suing companies like SpiderOak and Dropbox, alleging they infringed at least claim 13 of the ’532 patent. Instead of benefiting society, Louisiana Tech unleashed a torrent of wasteful litigation.

According to RPX, Micoba is associated with IP Edge, which itself is associated with eDekka (the biggest patent troll of 2014) and Bartonfalls (the winner of our October 2016 Stupid Patent of the Month for its patent on changing the channel). Bartonfalls’ trolling campaign recently collapsed when a judge ruled that its patent infringement contentions were “implausible on their face.” If RPX is correct that these companies are connected, Louisiana Tech has hitched its wagon to one of the biggest trolling operations in the nation.

EFF’s Reclaim Invention project was launched to stop universities from feeding patent trolls like this. The project includes a Public Interest Patent Pledge for universities to sign stating that they will not sell their patents to trolls. We also drafted a model state law to help ensure that state-funded universities don't sell their inventions to patent trolls. You can ask your university to sign the pledge.

Tell your university: Don’t sell patents to trolls.

Stupid Patent of the Month: IBM Patents Out-of-Office Email

Daniel Nazer — Tue, 28 Feb 2017 23:40:55 +0000

Update: March 1, 2017 Today IBM told Ars Technica that it "has decided to dedicate the patent to the public" and it filed a formal disclaimer at the Patent Office making this dedication. While this is just one patent in IBM's massive portfolio, we are glad to learn that it has declared it will not enforce its patent on out-of-office email.

On January 17, 2017, the United States Patent and Trademark Office granted IBM a patent on an out-of-office email system. Yes, really.

United States Patent No. 9,547,842 (the ’842 Patent),“Out-of-office electronic mail messaging system,” traces its history to an application filed back in 2010. That means it supposedly represents a new, non-obvious advance over technology from that time. But, as many office workers know, automated out-of-office messages were a “workplace staple” decades before IBM filed its application. The Patent Office is so out of touch that it conducted years of review of this application without ever discussing any real-world software.

The ’842 Patent describes technology that would have been stupefyingly mundane to a 2010 reader. A user inputs “availability data” such as a “start date, an end date and at least one availability indicator message.” The system then uses this data to send out-of-office messages. The only arguably new feature it claims is automatically notifying correspondents a few days before a vacation so that they can prepare in advance for a coworker’s absence. From a technological perspective, this is a trivial change to existing systems. Indeed, it is like asking for a patent on the idea of sending a postcard, not from a vacation, but to let someone know you will go on a vacation.

It is worth considering the full prosecution history (PDF) of the ’842 Patent to understand how the patent system reached such an absurd result. There were two big oversights. First, the examiner never considered whether this patent’s software-related claims were eligible under the Supreme Court’s decision in Alice v. CLS Bank. Second, the Patent Office did an abysmal job of reviewing prior art and considering obviousness.

In Alice, the Supreme Court ruled that an abstract idea does not become eligible for a patent simply because it is implemented on a generic computer. That decision came down in June 2014, so the Patent Office had plenty of time to apply it to the application that led to this patent. If it had, it likely would have rejected the claims. The ’842 Patent goes out of its way to make clear that its method can be implemented on a generic computer. The final three columns of the patent recite at length how its claims can be implemented in any programming language on essentially any kind of hardware.

At one point, the examiner did reject some of the application’s claims under Section 101 of the Patent Act (which is the statute the Alice decision applies). But IBM overcame the rejection simply by arguing that the patent’s method was implemented in computer hardware. In January 2013, IBM noted that “it was agreed [between IBM and the patent examiner] that the rejection ... under 35 U.S.C. § 101 could be overcome by reciting that a hardware storage device stores computer readable instructions or program code.” Even if that was a reasonable response in 2013, it certainly was not after Alice. Yet the Patent Office never revisited the issue. We have submitted multiple rounds of comments (1, 2, 3, and 4) to the Patent Office urging it to be more diligent in applying Alice.

Even if the claims of the ’842 Patent were non-abstract, they still should have been rejected as obvious. We’ve written before about how the Patent Office does a terrible job of finding and considering real-world evidence when reviewing patents. In fact, it seems to operate in an alternative universe where patents themselves provide the only evidence of the state of the art in software. The prosecution that led to the ’842 Patent is a stark illustration of this.

You might think that a patent examiner faced with a patent application on an out-of-office email system might look at some real out-of-office email solutions. But the examiner considered only patents and patent applications. The Patent Office spent years going back-and-forth on whether IBM’s claims where new compared to a particular 2006 patent application. But it never considered any of the many, many, existing real-world systems that pre-dated IBM’s application.

A figure from IBM’s patent (left) and from its 1998 publication about Notes (right)

To take just one example, the Patent Office never considered this detailed specification from 1998 (PDF) from IBM describing the out-of-office agent in Notes. Nor did it consider other well-known email features like scheduling and signatures. If the Patent Office had taken a peek at the real world, and applied a modicum of common-sense, it would have quickly rejected IBM’s claims.

Some advocates for software patents have recently been pushing for legislative reform to undo Alice. Indeed, IBM is among those asking Congress to reopen the software patent floodgates. If they succeed, perhaps IBM can finally get a patent on shorter meetings (that application was rejected under Section 101). It’s clear that software patents do not help people who actually write software. And while Alice has caused some frustration for those who churn out software patents, it has not harmed the software industry.

The patent system is still far from perfect. But the last thing we need is to go backwards and encourage the Patent Office to issue more nonsense like IBM’s patent on out-of-office email.

Stupid Patent of the Month: A Lyrics Website With User Interaction

Daniel Nazer — Tue, 31 Jan 2017 23:03:47 +0000

Song lyrics are some of the most searched-for topics on the Internet. This has lead to fierce competition among lyrics sites. If you scroll to the bottom of one of these websites, you’ll see the claim: “Song discussions is protected by U.S. Patent No. 9,401,941.” We are honoring this “song discussions” patent as January’s Stupid Patent of the Month.

The patent (we’ll call it the ’941 Patent) is owned by CBS Interactive and discloses a “computer-implemented system” for “processing interactions with song lyrics.” It explains that other websites display lyrics in a “static form” and suggests there is a “lack of mechanisms for increasing the engagement of users with song lyrics.” The patent suggests allowing users to interact with lyrics by allowing them to “select[] a segment,” displaying a “menu of options,” and allowing the user to enter an “interpretation of the selected line.”

The patent dates back to an application filed in February 2011. Although it is 23 columns long, in our view the patent does not describe any software or Internet technology that was remotely new or innovative at that time. Rather, it describes common and mundane features, such as a “menu of options,” “user-inputted text” and a “user interaction database,” and applies these features to a lyrics website. That should not be enough to get a patent.

In fairness, the ’941 Patent’s claims were significantly narrowed during prosecution. While the Patent Office often does a poor job searching for prior art, the examiner in this case did at least find the Rap Genius website (now known as Genius). As a result, CBS narrowed its claims to require that the website suggest possible comments to users based on what others have commented in the past. This means most lyrics websites likely won’t infringe the patent.

But the ’941 Patent should not have been granted even in its narrowed form. Online annotations were certainly not new. And there was nothing revolutionary in 2011 about suggesting entries to a user based on previous user data. (To take just one example, autocomplete for Google search debuted in 2004.) Simply applying these techniques to a song lyric website should not have been patentable. Indeed, the patent itself notes that its methods could be applied to any form of text.

Ultimately, patents like this one reflect the near total failure by the Patent Office to police obviousness in software and Internet patents. Any website will involve multiple design decisions. It requires choices regarding user accounts, passwords, encryption, cookies, software languages, advertising, user interface/user experience, database structure, APIs, server architecture, etc. Given the number of choices, major websites usually reflect a unique combination of those decisions.

But giving someone a patent merely for having a unique combination of features is absurd. The patent system is supposed to reward innovation that we wouldn’t have without the incentive of a patent. It should not reward routine web development with a 20 year monopoly.

This month’s patent is similar to the patent on filming a yoga class or Amazon’s infamous patent on white-background photography. In both of those cases, the examiner found some prior art but the applicant persisted by adding mundane features to the claims until the examiner could not find documentary evidence of those exact features. An applicant can effectively game the system by adding elements so obvious no one would ever write them down in a reference. Together with Public Knowledge, EFF recently filed an amicus brief [PDF] asking the Supreme Court to consider the obviousness standard in patent law and to reaffirm that examiners can reject common sense combinations of known elements.

Leaving aside obviousness, the ’941 Patent should also have been rejected under Alice v. CLS Bank. Routine web development decisions should be considered “generic” computer processes that are insufficient to elevate an abstract idea to patent eligibility. A patent application like this one, with rote recitations of basic computer functions and a bunch of boxes and lines in a flow chart, should at least draw a searching analysis under Alice. Yet the Patent Office never even raised Alice and subject matter eligibility during prosecution. We have submitted multiple rounds of comments (1, 2, 3, and 4) to the Patent Office asking it to be more diligent in applying Alice.

Fortunately, the ’941 Patent has never been asserted in litigation. But software patents like it are the raw materials behind the rise of patent trolling. Ultimately, we need broad patent reform so such patents are not issued in the first place.