Glassesgate, Because Someone Had To Get There First

According to the book I’m reading, there’s nothing new under the sun, which is why it’s totally OK to steal my own “-gate” title from my Girdlegate post, which was of course stolen from Watergate.  Not the hotel, I’ve never even been there and I certainly didn’t steal anything when I was.  As far as you know.

I hear that Glasses.com, owned by 1-800 Contacts, is suing Ditto over patent infringement, and honestly the whole thing could have been avoided if the 1-800 Contacts people would have just stuck with what they knew.  They went all greedy and branched off into glasses and from what it looks like, someone beat them to market with an idea for online try-ons.

I am a fervent glasses-wearer, in that I am not a candidate for contacts or lasik surgery on account of a poke in the eye with a sharp object.   Ladies?  Don’t try and separate your lashes with a safety pin, that’s the moral of that story.  Point being I have a vested interest in this story because I buy a lot of glasses.

Here’s where it gets dicey, and we’ve been down this road before with ye old Surfast v. Microsoft.  1-800 Contacts bought “an old patent from a defunct company” and is now suing Ditto over it’s alleged use.  This is different from Surfast in that if I recall correctly, the owners of Surfcast actually held the patent for what is now called “live tiles” themselves, whereas 1-800 Contacts purchased it.  The underlying issue is the same though:  neither company actually made anything that uses the patent, but later went on to sue someone who did.

From the linked article, it looks like 1-800 Contacts at least intended to do something:

1-800 Contacts claims that it plans to its own service as an iPad app sometime soon. But this plan was first publicized on April 17, 2013, while Ditto launched its version a year ago.

So therein lies the rub:  If ditto.com is infringing then they should certainly get a spanking in court and take a license and come what may.  But how long should a company be allowed to sit on something before they’re made to execute?  This is one of the great, real, tangible improvements that the government can make to the patent system:  institute a use it or lose it approach.  You can patent whatever wonderful thing you want or purchase a patent for same, but if you don’t bring a product to market inside of two years, then it’s fair game.

Could this entire issue be a misunderstanding, where 1-800 Contacts actually spent years pouring money into this concept, only to see a brash startup steal its lunch? Maybe, but 1-800 Contacts’ history of aggressive litigation doesn’t inspire confidence in that interpretation.

The super-competitive part of me thinks this right here is what happened and the lawsuit is sour grapes, only the patent that 1-800 Contacts has is not going to prove to be up to snuff so their wasted time won’t matter.  And for Ditto’s side, there are enough stories in the news right now about patent trolling that surely, surely they did their homework on the technology?  Who’s their outside counsel, I wonder, and was there proper due diligence before they brought their idea to market?  One would hope.

This is also an example of how the free market is better suited to help the plight of startups, which is in serious trouble as noted here:

“If we win this infringement case, we’re still out the millions of dollars we spent winning. That’s why it has become punitive for companies to innovate,” Endress said. “The patent systems is structured in a way where it lets corporations act like patent trolls where they can buy things they didn’t invent.” And in this case, “we are literally going up against a giant corporation,” Endress noted.

This is a tough one, because the 1-800 Contacts/Glasses.com people were at some point a start up too.  They managed to get past that stage and are now raking it in, so they should be punished for that?  No, certainly not.  But neither should they pick on the new kid on the block who swooped in and, apparently, beat them to the punch.  They do seem to be the sort that sues over the drop of a hat.

But the point about the market solving the problem is that the SHIELD Act wouldn’t help at all in this case.  What would help is invalidating the patent, and perhaps getting Ditto’s counsel in contact with counsel on previous targets of 1-800 Contacts and getting some 411 on them.  But are they a troll?  Can we call them that?

Look, I hate trolls as much as anyone, but we can’t cry foul unless the ball is over the line.  While every troll is a vexatious litigant, not every vexation litigant is a troll, and I have the graph to prove it:

Just sayin’,

IPTT

Private: Can We Make A Verb Out of That? Yes We Can!

I don’t recall that being an option available to me as a kid, when Schoolhouse Rock reigned supreme.  But evidently, one can take the word “private”, turn it into an intransitive verb, and use it in a sentence as “privateering”.  As in:

Dern those silly operating companies!  They done gone and sold them’s patents to some trolls and started privateering!

This is what I was talking about, unbeknownst to me because I don’t regularly make up words (shut.up.), when I posted about Ericsson lying down with dogs by selling a portion of their portfolio to a troll.

Tom Matikainen, a 1L at Washington College of Law explains it much better in his article for American University Intellectual Property Brief.  It seems that privateering could be synonymous with Cubaning, which is to say joining with the patent trolls because you can’t beat them.

It’s a  little different because that Sneaky Cuban, Mark invested in trolls, hoping that would make them steer clear of his companies.  (How’s that working out for you?  Not pulling a Dr. Phil, I sincerely want to know.)  What privateers are doing is transferring valid patents to trolls but retaining a license, and letting them fight a proxy war with anyone else who wants to use the technology.  If the trolls win, they get a cut of the profits.

I must object at this point by saying that I dispute the use of the word “profit” here.  Profit to me is the result of hard work.  What the trolls get when they win a patent suit is ill-gotten gain.  Blood money, of a sort.  Not profits.

But returning to the story, what’s super sad is to see the big players thinking they have to be a part of the problem:

Yet while privateering is seen as an unsavory business practice, many companies see it as a strategic opportunity to oust their competitors.

Call me old fashioned, but what happened to hard work and ingenuity to “oust [your] competitors”?  Must we play dirty just because everyone else is?  Is it naive to think you have to join this type of ne’er-do-well strategy to remain relevant and profitable in today’s technology world?

I don’t think so.  I think enough attention is being paid to the trolling practice that someone, somewhere is going to neuter these guys.  Companies are springing up all over to fight the battle in real ways, like buying up the patents at play (RPX, AST), pairing little guys with big guys to build a micro-system of alerts and warnings (Unified Patents), invalidating patents based on prior art (Article One Partners)…that’s how you beat these guys!  Or, you can whip out your blue paint and sword and fight back like the badasses* at Rackspace and Newegg and Fark.  And if all else fails, you can get Uncle Sam involved if you absolutely feel you must.

But what you must never do is become a part of the problem.  It doesn’t matter if everyone else is doing it.  Did your mothers teach you nothing, Ericsson?  Look, here’s the deal:

Patents are not simply a right to the spoils of one’s work, but are assets that collectively can become a dangerous weapon.

This has, indeed, become a Patent Arms Race.  And what did the 80’s teach us, besides that Madonna wants us to think she can sing?  That this sort of tactic results in mutually assured destruction.

No, thankyouverymuch.

Just sayin’

IPTT

*Sorry!  Not normally a cusser but darn if that word didn’t just fit perfectly!

Wherein We Liken Patent Trolls To Winnie-the-Pooh

Oh yes, I went there.

I really hope this article from Law 360 isn’t paywalled because it’s just terrific.

Serendipitously, my recent guest post on Article One Partners’ blog talks about patent litigation insurance as one of the Patent Risk Management options available.  High-five to Law 360 for timing.

James Morando of Farella Braun & Martel LLP gets right out in front of the obvious train and hops in the conductor’s seat:

“The impact of one or two patent troll suits can be significant for smaller and medium-sized companies,” he said. “These suits can create a legal expense that is unbudgeted and unpredictable, and they can have a big impact on a company’s earnings and where it’s going.”

So if you’re in any business that relies on patents for it’s products and don’t have a legal expense budget for patent infringement lawsuits then may I please ask where your rock is, the one you’re hiding under?  Because that’s plum irresponsible not to put aside some money to fight off the trolls.  I mean, it isn’t as if the news about them isn’t pretty much everywhere.

This statement I don’t quite get:

Meanwhile, IPISC’s insurance defense product relies on actuarial data, which helps anticipate what industries are more likely to be sued by patent trolls than others, he said. IPISC has offered IP insurance since 1988.

I had said in my post over at AOP that there really aren’t actuarial data that you can rely on.  I’m guessing what they mean here is litigation data, where you can go see what patents are sued over and that makes sense.  Still not sure that it’s going to help you arrive at the right premium, but OK.

From the “oh, but one is coming” department:

Another challenge is that companies looking to provide this insurance still don’t have a good predictive model to determine when a policyholder is likely to be sued by a patent troll, according to Gauntlett.

Oh, but one is coming.  It’ll be here, better than before.  Yesterday’s gone, yesterday’s gone…  What?  Sorry.  A little Fleetwood Mac on the iPod this morning, my bad.

Here’s the crux and hold onto your hat:

Under federal rules of civil procedure, any defendant has to disclose insurance that might be applicable to the lawsuit.

Dern those federal rules of civil procedure all to hell, this can’t  be good.  And sure enough, it’s not:

“If you set an open jar of honey on the back porch, you are going to attract some bees*,” he said. “If a plaintiff learns defendants have insurance policies set aside for cases brought by nonpracticing entities, it might drive a harder bargain to settle for a larger amount because it knows that in addition to company funds, there are insurance funds. In addition, nonpracticing entities and their lawyers may talk amongst themselves and trade information on companies that have insurance, making those companies a more inviting target.”

And there it is folks, in one black and white paragraph:  buying patent infringement insurance makes you a potentially bigger target for the trolls and also?  Trolls are gossips.

*That’s where Pooh comes in…because he likes pots of honey too, which you would remember if you’d get out of your office for a few minutes a day, borrow a five year old, and read to it.

I’m not a fan of insurance because it shields the price that anyone actually pays for anything and if you ever actually have to use it?  Your rates go up which is just mean.  But in the case of patent litigation insurance with respect to trolls in particular, it’s even more difficult to see the upside because once you buy it?  Your honeypot is showing.

Just sayin’,

IPTT

Defense Against the Dark Arts (You Knew Someone Was Going to Use That)

Cease and desist letter from the Harry Potter people in my mailbox in 5, 4, 3…

Or is this considered “Fair Use”?  I don’t know, copyright isn’t really my thing.  I’d have to get the creator of the Comic Constitution for advice on that.

On March 27th, Jeremy P. Oczek wrote this article about defending against patent trolls.

To defend the case, even if the case is bogus, can be quite expensive, potentially costing your company millions of dollars.

This is exactly the issue that so many of us troll-haters have. We all know that suing for patent infringement is a legal remedy provided by the US Constitution.  But the typical troll goes after companies for crap patents.  Crappy patents?  Patents that they know are dubious at best, is the point.

I want to highlight this:

They know the thought process that companies go through when assessing a newly filed patent lawsuit: What is the amount at risk? How much will it cost us to defend the case? Can we settle the case for less than it will cost to defend the case?

because the thought process that companies go through probably sounds more like this:

OMG OMG OMG!!  What fresh hell is this??  Where’s my attorney?  Get me my attorney, get me my accountant!  Do you have the Beatles White album?  Nevermind, get me a glass of hot fat, and bring me the head of Alfredo Garcia while you’re out there...Where’s my highball glass and the scotch? I need a drink…

Which is to say, they panic.  And Mr. Oczek is 100% right when he says that that is exactly the response the NPE/PAE/Trolls are after.  The more off guard and unsettled they can get you the easier is for them to extract their extortionistic fees.   <— I moonlight as a wordsmith.  True story.

Now, Jeremy’s argument is that one reason the cost to defend against these suits is so high is the price of designer attorneys:

Patent trolls salivate when companies hire expensive lawyers to defend patent lawsuits. …

But this approach doesn’t work with trolls. They aren’t afraid of going up  against any firm, and usually interpret the hiring of expensive counsel to mean: “If you’re willing to pay high billing rates to outside counsel, then you’re more likely to pay our high settlement demands.”

In other words, you bring in the top Jedi Knight like Luke Skywalker and his band of rebels and they counter with Jabba the Hutt, who pushes a little button next to that ugly, screeching, Chihuahua-looking pet of his and sends your Jedi ass into a pit full of angry Rancor and then when you manage to get out of that mess, he decides to send you and your thawed-out mercenary, his giant pet dog, and his princess girlfriend into an upside down octopus out in the middle of the desert, all of which costs you tons of money and assets and even when you win, you still have to de-sand your R2 unit.

Digression aside, there’s no question he’s right about that.  He says you can get just as good of representation for less of an hourly rate by going with a smaller firm and/or to some sort of alternative fee schedule.  Which, by the way, is the billable hour still rocking in the free world?  Law firms are seriously still doing that?  {scratching head}

I like his way of thinking and troll targets, especially the mid and lower tiered demand letter recipients who don’t have high-dollar counsel on retainer would do very well to pay attention.

Beyond all that though, I think that Colleen Chien has got a fantastic idea when she says that we could probably head off a lot of the panic or fear-driven responses  to trolls if only the recipients of demand letters understood their options better.  Letters from lawyers scare people, that’s the bottom line.  Maybe it’s because I worked with them for so long but I came to see that most lawyers really are people too so I’m not 100% sure why seeing a law firm name in the return address is so frightening.  Then again I’ve never been sued (as far as you know).

I think the article and Colleen’s ideas point to something interesting that heretofore I hadn’t really thought about, which is that a lot of what drives the trolls is the reaction they get.  If people would stop panicking, understand their options and when to use which ones, or alternatively pull a William Wallace and fight to the death, it might just change the behavior of the other guy.

I haven’t read all the books because the dementors in the Prisoner of Azkaban scared the living daylights out of me.  But surely there is more than one defense against the Dark Arts?  I think evaluating options upon receipt of a demand letter, and making sure you’re getting good value for your outside counsel are two good ones to start with.

Just sayin’,

IPTT

The Google’s Chrome Disappoints And I Think It’s Surfcast’s Fault

Remember that company with the really lame website?  Not specific enough, huh.  OK, this is the one I mean, Surfcast.  These are the guys that are suing MSFT over live tiles which, let’s be honest, was really invented way back in the 1940’s by Brockton Enterprises.

The case goes to trial in September and already I’m feeling the effects.  I use Google Chrome as my browser of choice and a few days ago my whole world fell apart.  I have no idea how it happened, but it is definitely the fault of a patent troll because really, isn’t everything?

I used to have a really cool set of little mini-windows…tiles, if you will, that showed all my most recently opened windows.  It made it really easy for me to check TMZ to find out what those silly Kardashians are up to these days.  Now, I get this nonsense:

LiveTiles

WTH, Google?

To say nothing of which WHAT IS UP with the “Ask Toolbar”?  How did I get that installed and can someone please, PLEASE  just make it go away?

I’m blaming this on Surfcast.  Now, I know that we have had a discussion about whether or not they are a true troll (and by “we” I mean “me, myself, and I”).  It’s possible that they came up with the idea and patented it but ran out of funding before they could bring it to an operating system.  Or perhaps they were unable to negotiate the price they wanted for a license from the big boys and so decided to just lay in wait until Windows 8 came out and then stick their hairy knuckles out like the troll they are.

Who knows.  But I’m pretty sure they’re the reason that what was once a really easy to use “New Tab” interface in Chrome has gone all to hell.

Just sayin’,

IPTT

Mr. Smith Goes To Washington, Patent Edition

So it wasn’t Mr. Smith so much as it was Ms. Chien.  Off to congress is more like it, to discuss patent trolls and what the government can do to stem the tide.  What does it say about a problem that you have to ask congress for help?  I’m no Einstein but I”m pretty sure that’s not a good sign.

While most people were content to simply watch a group of 4th graders pummel each other on the football practice field, I dragged ye old laptop with me and spent my time reading Ms. Chien’s testimony.  I appreciated the sneak peek via Twitter and was excited to read the full thing.  Don’t judge.  We all have our vices.

I was sorely disappointed in Ericsson a while back, but you can see why they are taking the approach they are via this quote from the transcript:

Following their lead, large companies are monetizing and asserting their patents at a greater rate as well, e.g. through the smartphone wars.  Those who aren’t are being pressed to think about making money off their patents by their CFOs, including by partnering with PAEs.

I wonder if they’re itching yet?  You know, from all the fleas on the dogs they’re now lying down with.  Sad sad sad that operating companies feel squeezed to behave like trolls.

In offering suggestions about how the government can help stem the tide of troll behavior, there’s this:

Congress should reduce the duplication that results, by immunizing or limiting liability for innocent end-users or implementers that use the invention as intended and notice the suppliers of the use.

SAP is doing this by filing a declaratory judgment on behalf of it’s resellers and users.  Indemnification:  It’s what’s for breakfast.  Other companies could do the same and force the trolls to deal with the big guy, who, with deeper pockets and resources, won’t be as easy to shove around as the little guy.

This is where it gets good, this next bit.  I love this idea:

Even a basic fact sheet from a trusted source explaining that the receipt of a demand letter or even suit does not legally obligate the recipient to pay the demander could help.

Here we’re talking about standard legal language that the average citizen has no idea he hasn’t got to pay attention to. A demand letter and a court order are not the same. A demand letter typically obligates the recipient to do absolutely nothing if they don’t want to. It’s a threat. It’s the class bully sending his mouthpiece to say he’s gonna meet you at 3:00 by the bike rack and beat you up. If you instead go home after school like your Mother told you to, what’s the guy at the bike rack gonna do? Beat up…who?

But the problem is, people who get threatened by the trolls don’t understand that’s an option. There’s an information gap that needs to be plugged. Whether or not that is the government’s job is up for debate. I happen to like the market approach. I like for Uncle Sam to build me an army and build me some roads so I can get to Colorado for Spring Break. Beyond that, I’d like the old man to take his hands out of my back pocket and let me be.

I’ve said it before and because I’m afflicted with redundancy disease, I’ll say it again:  the best solution to the troll problem is going to come from the market.  We see this in the variety of patent risk management business models currently proffered, and there will be more sprouting up.

Putting information out there and driving targets to it is a great way to promote the common defense.  Trolls count on the fear factor just like the schoolyard bully.  We have to tell targets when it’s OK to skip the bike rack scene, and when to show up with your posse to fight back.

Hey trolls?  The troops are rallying.  Your days are numbered.

Just sayin’,

IPTT

Everyone’s a Patentpreneur Now

Don’t you just love when people make up words?  I do.  Obviously.

Just today read this piece about the new First-to-File that the AIA ushered in.  I like this point the best:

At a time when we should be doing everything to help our future business leaders, we are ensuring that small startups and entrepreneurs will have to choose between designing great products and filing patents, just to win that “race to the Patent Office”.

It dovetails nicely with the piece that Andy Gibbs wrote on how IP Strategists should best advise their clients under the new rules.  He touched on a similar point, which would make the second time I’ve quoted this part of his post.  Can I do that, are there rules against multiples of the same quote in different blog entries?  Either way:

However, the elephant in the room is the client’s implicit desire not for a “patent”, but for a mechanism to deliver superior market position, protect competitive market share, and to create increased shareholder value. They believe the “patent” is their ticket.

The thing of it is, while patent trolls clearly hinder innovation, a patent itself does not equal innovation.  It does not equal creativity.  It does not equal profits (just ask the Fuzzibuns lady).  The post continues and boy is this fun:

I guess I have to accept that Congress in its infinite wisdom knows what it’s doing to help our economy recover, just like when it decided that the Sequester was the answer to our Federal budget woes.  You multi-millionaires who sit in seats of power must truly understand what this nation needs.

Strike one.

Maybe you are hoping to siphon off all of those extra filing fees to shore up social security.  Certainly all of the extra money spent on patent attorneys will help our sagging legal industry.

Yeowch!  Strike two.

But alas, I know this is not true.  I must face reality and live with your stupid, dumb-#@! attempts to fix a patent system that isn’t broken because solving the real issues that we face as a nation is just too #$@! difficult for you.

Aaaaand you’re out!

I think there are clearly issues with the patent system so saying it isn’t broken…well, I respectfully disagree.  (I can hear you scoffing…I can too be respectful!)  But it doesn’t matter because the salient point Kelli Proia is making is that “Do you have the patent on that?” is the new “Is that Spanx or Yummie Tummie?”  It’s the first question anyone asks when they see you on Oscar night something new comes along, rather than “Do you have a product that people want and need?” or “Do you have a Wharton MBA, or access to someone who does who can help you with the business end of your…business?”

Those are the kinds of questions we should be asking, but because of the patent wars the the trolls have exacerbated, patents are all the rage.  Even the Avon Guy is at risk by refusing to play the game.

So how do you fix it?

Shut down the trolls.

Just sayin’,

IPTT