The LA Times Forgot About The 80/20 Rule

I got the link for this article about patent trolls at the LA Times from the blog written by my friend and yours, Dr. Roy Schestowitz.   I’ll freely admit that I don’t read the LA Times, online or otherwise, because TMZ.  Like I need another source for what’s going on in LA LA land?  Nevertheless, it appears that right there in the title is a problem and now that I’ve read the whole article?  Well, I just can’t leave well enough alone or I wouldn’t  be, you know, me.

Let’s address first things first:

One of Silicon Valley’s favorite hobbies is complaining endlessly about the rise of “patent trolls” and how they’re destroying innovation.

I thought Silicon Valley’s favorite hobbies were drinking coffee, comparing really good quality wines and fast cars, talking about start ups who are innovating despite innovation’s being destroyed, and vying to be on the next cover of Wired magazine.   I would, evidently, be wrong about that.

Now that we’ve all wasted spent the requisite 25 minutes reading the government’s study that tells what we already knew, everyone’s trying to parse it out to mean what they want it to mean (and I include myself in that category because I have abandonment issues and don’t like to be left out).  Isn’t that how it’s done?  But I think the LA Times misses the mark here.

There’s this little rule that I learned about when I was born because my family talked about nothing but business and politics when I was growing up so I pretty much had command of the laws of supply and demand by the 3rd grade, in addition to memorizing the mantra “buy low, sell high”.  They taught us the 80/20 rule thusly:  80% of the work in any organization is done by 20% of the people.  And they also taught me that this percentage split applies almost universally across all of life:

  • 80% of the cereal in the box will be eaten by 20% of the people in the home
  • 80% of the dog’s poop will be deposited in 20% of the yard
  • 80% of your child’s most expensive toys will be played with only 20% of the time

And on and on.  But what you realize as you get older and gain more experience in life, is that what’s in that 20% is what really matters.  So while this quote may be true:

Yes, NPEs appear to be contributing to a rise in patent litigation. But overall, NPEs account for only 20% of patent litigation, according to the report.

You have to look at what that 20% is costing in terms of actual dollars, lost productivity, and lost consumer options as start up after start up is targeted and faces shuttering their business rather than pay to fight a troll.  Whether or not you believe the $29 billion dollar number, it cannot be argued that even though “only 20%” of patent litigation is from trolls, it’s not having an impact.

The article on the whole makes the same good points that most of the others have:

  1. Patent quality matters.  Shout out to Article One Partners for the awesome company tag line!
  2. Software patents in particular are problematic
  3. Legislation isn’t likely to resolve any of the real issues derived from patent trolling

It just seems disingenuous to say that since the percentage of patent litigation brought by patent trolls is only 20% of the total, it’s not really a problem.

 Chris O’Brien?  I guess we just disagree on that.



Wherein The Fox Tells Us How To Guard The Hen House

I’m no chicken farmer, but I’ve watched enough Foghorn Leghorn to know that you don’t put the fox in charge of the hen house.  Nor, I submit, would it be wise to take advice on how to punish the real trolls from a real troll.

I must take a moment here and congratulation the author, Mr. Peter “I invented the troll term, y’all!!” Detkin on his vocabulary.  I love phrases like “feckless” and “assembly-line” when referring to lawsuits.  Looks like someone found his thesaurus over the weekend!

Among Peter’s advice on how to deal with “real” trolls is the following, with my comments in my favorite color blue following:

  • Look for companies that send dozens or even hundreds of identical, cut-and-paste “demand letters” at the same time.  Right there with ya, Pete.  That Patent Tool gets more and more of these every day.  But see, since this isn’t how you operate this piece of advice won’t affect you, now will it?  Great choice for a lock on the old coop door, there!  Strike One.
  • Look for companies that file lawsuits without attempting to enter into negotiations or doing any pre-filing analysis; Negotiations come in many forms.  There’s good faith negotiations where both sides have an interest in a mutually satisfying outcome, and then there’s what you guys do.  By virtue of the fact that you are Intellectual Ventures, funded heavily by your buddies at Microsoft, you’re the ultimate deep pockets.  Your negotiation can be tantamount to, oh, I dunno, showing up with the paperwork?  So once again, Mr. Fox, your attempts at protecting the  chickens falls flat.  Strike Two.
  • Look for companies that make big financial demands, without any attempt to justify the numbers. I‘m not sure how this is advice, because isn’t one of the problems with patent trolling the fact that they don’t disclose their settlement demands?  Many times, it’s not even in the threat demand letter…no, they use wording that’s much more generalized.  While we are trying to get that data, and actually do have a good chunk of it for those crazy Scanner Dudes, it’s not always available.  Besides which, justifications are like a**holes: everyone’s got one.  Trolls operate under the “ends justifies the means” most of the time, so no attempt or a stupid attempt to justify big demand numbers is irrelevant.  Strike three.

I’ll absolutely grant that the SHIELD Act is not going to do much good.  It’s rare that I agree with a troll, but I’m woman enough to admit it when it happens.  Kudos for recognizing that legislation isn’t the panacea (whose got a thesaurus now, huh?) we want it to be.

One thing I intensely dislike is when people use the “but the other guy is worse” excuse for their own poor behavior.  Bad behavior is rarely relative.  This is the approach IV is talking about here.  I believe it’s called “poor justification”…see third bullet point above:

Patent infringers can be as ruthless with frivolous litigation tactics as any alleged “trolls.” Some infringers even fire the first shot.

Just because the other guys are ruthless and use frivolous litigation tactics doesn’t mean it’s right.  That’s a lazy out, and I think you know it.

In life and in business, I tend to seek out advice from people who are honest and authentic.  People whose words match their actions.  Intellectual Ventures?  You fall into neither category.

When you are a company that owns tens of thousands of patents and portends to be a hotbed of innovation yet can’t bring a single innovative product to market, and when you are a company who has thousands of shell companies doing your dirty work for you, I don’t understand how you can write this stuff with a straight face.


What, I say WHAT are you tryin’ to pull, boy??



{Foghorn Leghorn image courtesy of, and if this isn’t irony I don’t know what is, Looney Tunes.}

My Tax Dollars At Work: US Gov’t Tells Us What We Already Know

Sitting in 9th grade civics class during my “blue and silver years” as a high school student, I thought the government was the ultimate authority when ever they put out an Official Report, regardless of the subject matter.  I don’t remember if my teacher taught me that, though I know she was leftward leaning and I recall vividly how upset that made some of my friends for reasons I still don’t get.  I, for the record, never got into those arguments.  All I cared about was which Duran Duran member was the cutest (hint: Simon, by a landslide) and when the next Harrison Ford movie was coming out.

But I digress.

Fast forward 25 15 years and I’m shaking my head as I flip through the study that came out yesterday, the title of which is “Assessing Factors That Affect Patent Infringement Litigation Could Help Improve Patent Quality”.  Are they telling me they’re going to assess those factors, or just that if they did, it could help improve patent quality?  You people need better names for your studies, to start with.

The very first sentence of the report shows the bias of the patent trolls creeping in, which is funny because I thought for sure it would take at least until page two.

History is filled with examples of successful inventors who did not develop
products based on the technologies they patented.

This is a direct response to one of the many names for patent trolls that reference the fact that they do not manufacture products, such as Non-Practicing Entity.  Now, all of a sudden, that’s the battle cry.  “LOTS of people have patents and don’t manufacture anything!  That doesn’t make us bad!  Quit picking on us!  WAHH! ”


Cry me a river, trolls.

This is why we need to keep using the term patent troll instead of all the niceties and euphemisms:  NPEs aren’t inherently bad, and neither are patent monetization entities.  But that is NOT what we’re trying to address and once again, you people know that.  What aggressive patent litigation a la Lodtellectual Venturesys (for you Aggies out there, that’s Lodsys+Intellectual Ventures), MPHJ, Uniloc, et al is about is shakedowns using old and decrepit patents to go after companies for infringement in the hopes of getting a payout.  Which is why studying litigation is not going to get you all the pieces of the puzzle and why we need things like That Patent Tool to track pre-suit communication, where the meat of the problem lies.

It’s not that studying patent litigation isn’t a good idea, but don’t we have a plethora of companies out there already doing that, and on their own dime vs. using my tax dollars?  I mean, this report even says that a large chunk of the problem occurs outside of litigation:

[Companies] said that these letters, which they refer to as “demand letters,” sometimes threaten lawsuits if the parties do not reach a licensing agreement. These company representatives told us that for every patent infringement lawsuit filed against them, they might receive many times more letters notifying them of potential infringement and offering licenses.

Calling these people out before it even gets to trial is what is going to help resolve the troll issue.  Without a doubt, patent quality matters and we have the awesome folks at Article One Partners banging that drum really well.  And yeah, loser pays and other changes to damage awards would help.

But don’t we already know this?  Did we need a commissioned study that I pay for when I write my check to Uncle Sam every quarter to tell us this?

Survey says?  No.



{Crying baby image courtesy of Erich Spangenberg’s Mom Jill Greenberg:}

Minnesota AG Lori Swanson Goes All Buford Pusser On MPHJ

Maybe you have to have been a kid in the 70’s to know who Buford Pusser is, but suffice it to say that Lori Swanson, Minnesota’s Attorney General, took a page right smack out of his book when she went after the Scanner Dudes.  You may know them as MPHJ, a company with as many shells as a South Padre Island beach, all of which were created to send shakedown notices to every Mom and Pop who owns a scanner and uses email. Like Vermont and Nebraska before, Minnesota has thrown down the gauntlet against these guys and others of their ilk.

Robert Ten Eyck, an intended victim of the Scanner Dude Scam, said it right:

“It’s difficult enough operating a small company without some sideshow that really has no legal basis for happening,”

That’s exactly what these guys are, a sideshow.  You know, the thing that people don’t really pay attention to as they rush past for the main attractions.  Only once in a while, you find that the bearded woman is attracting more attention than the elephants, so you start trotting her out more often, trying to milk that cash cow for as much as you can.  Well, circus  boys?  Looks like more and more, folks are on to your snake-oil scam.

For MPHJ’s part, they honestly don’t seem to understand what’s going on:

“The agreement does not allege any wrongdoing on the part of MPHJ,” the company said in a statement issued through the lawyer. “It also does not restrict MPHJ’s right to bring patent infringement suits against Minnesota companies.”

Is it just me, or doesn’t this quote from the Star Tribune article say exactly that (emphasis mine)?

Under the settlement, MPHJ and a host of its subsidiaries agreed to stop their campaign and to not restart without approval from the state attorney general.

What the hell, Farney Daniels?

In another brilliant quote from Mr. Farney:

Bryan Farney, a lawyer at Farney Daniels near Austin, Texas, said that MPHJ Technology is legitimately enforcing the patents covering a technology invented by an IT consultant in Virginia named Laurence Klein in the mid-1990s.

Watch and learn, folks:  if what you’re doing is legitimate, people tend not to come after you.  So far, we’ve got Vermont, Nebraska, and now Minnesota lobbing complaints and suits against you.  That should tell you something, and what it should tell you is that your business model is, and forgive me for shouting, NOT LEGITIMATE.

Lori Swanson now joins the ranks of other heroes of the Patent World.  Like the Braveheart Guy (Alan Schoenbaum of Rackspace) and Luke Skywalker (Vermont’s AG, William Sorrell) before her, she is speaking softly and carrying a big stick.  And in the words of the immortal Buford Pusser himself, or at least the movie about him:

If you let them do this to me and get away with it, THEN YOU’RE GIVING THEM THE ETERNAL RIGHT TO DO THE SAME DAMN THING TO ANY ONE OF YOU!

What I think he means is, don’t let the trolls win EVER.  If they do, they will go after everybody else they can.


Look out, trolls.  Thanks to people like Lori Swanson, it’s our turn at bat!



Note:  There are already over 45 letters sent by Farney Daniels tracked at That Patent Tool.  Add your letters today…let’s track these trolls!

{Joe Don Baker/Buford Pusser image found here:, Image of Lori Swanson from Minnesota AG site:}

MythBusters: Patent (Troll) Litigation Explosion Edition

It’s always fun when something starts to get national attention after some of us (*cough* *cough*) have been banging the drum on that same issue for, oh, 12 years now.  Detractors and proponents seem to come out of the woodwork, citing studies and statistics as if any of it really means anything.  Adam Mossoff, he of the claim that there really isn’t $29 Billion in costs associated with patent trolling because how could there be, when the whole shebang is myth anyway, is at it again.  Hi Adam, long time, no blog post refuting pretty much everything you’ve said!  Hugs!

Mr. Mossoff would have us believe that the whole increase in patent troll litigation is a myth.  I was right there with him until the second sentence.  OK, ok, that’s mean.  The second paragraph, where he waxes poetic about the number of patents being issued because why? I’m not sure, and this quote doesn’t help:

A simple comparison to population growth, especially taking into account the explosive growth in the innovation industries in the past several decades, could as easily justify the claim that we haven’t got enough patents issuing today.)

Why would we compare the number of patents to the number of people?  Is there some magic number of patents per person that is right and  good for society and another number that isnt’?  I don’t get this.  I mean, yes, the number of patents would theoretically increase the number of potential patent infringement lawsuits in much the same way that number of cars on the road at rush hour increases the number of potential drivers I have to flip off honk at merge with.  But beyond that, huh?

Adam's Nirvana

An infographic of the mythical but precisely perfect mix of patents to population.

Moving along:

Unfortunately, the mythical claims about a “patent litigation explosion” have shifted in recent months (perhaps because the original assertion was untenable).  Now the assertion is that there has been an “explosion” in lawsuits brought by patent licensing companies.

Instead of just saying that patent litigation has exploded because that would be wrong, we are now hearing people say that there’s an explosion in patent litigation brought by trolls.  That feels an awful lot like a semantic red herring, but we’ll go with it for now.

This, however, is just poppycock:

’ll note for the record here that patent licensing companies are often referred to today by the undefined and nonobjective rhetorical epithet of “patent troll.”

You may claim that the terms used to negatively refer to patent licensing companies are complicated and don’t always apply across the board, or that they are at times ill-defined.  But you can’t claim that terms are undefined because hello?  I defined them.  Also, “rhetorical epithet”?  Nicely done.  Excellent wordsmithing there, 10 points in your favor!

I’m not going to cut and paste the next quote because it’s long I’m lazy but the gist of it is that with the America Invents Act, of course the number of patent litigation suits is going to go up.  Joinder clause, anyone?  We knew that, but I don’t think you can say that’s the whole reason that the numbers are higher because wait…didn’t you say the numbers weren’t higher?  That increased patent litigation is a myth?  Is that circular logic, is that why I’m getting dizzy?  “The numbers are not higher but when they are higher, it’s because of the AIA.”  Please step away from the merry-go-round, my friend.


If you didn’t play on one of these growing up, two things:
1. I hate you for being younger than me, and 2. You *totally* missed out.

The article also takes aim at “secret data” spouted by the likes of RPX and Patent Freedom, with regard to litigation statistics.  I really hope those guys are wearing their flak jackets, that’s a serious BOOM there.  I know the RPX folks are because they’re in San Francisco and OMG, how is it possible that you have to wear a fleece in July in that town?  A flak jacket is not heavyweight enough, I don’t think.  Still, he makes a valid point which is who’s funding their data collection efforts and what stake do they have in the outcome being very high?

The thing is, lawsuits are a matter of public record.  If you don’t trust the data from those sources, then go to  Lex Machina if you feel they are not funded by people with a vested interest, or commission a study of your own!  That’d work, no?  But it’s not quite fair to just shoot the messenger.

As has been discussed on this very blog in the past and right there in the Backgrounder link, it’s not a secret that the small-ish inventor in this country can have trouble monetizing their patent, especially in larger technological sectors.  Patent licensing companies do serve an unfilled need in the economy and no one I don’t think would argue that they don’t so yeah, we get that.  Likewise, we get that you don’t have to make a product to be considered a valid owner of a patent.  Over on IP Watchdog, Steve Moore makes a big “to do” about this.  Again, we get it.  And in fact, that’s one reason that the term NPE is not the same as the term Patent Troll.   All patent trolls are NPE’s, but not all NPE’s are patent trolls.

What articles like this do though, is negate that there really is a problem with companies going after business for the sole purpose of extracting licensing fees over patents that are either old and worthless or that the targets are not infringing on.  Those are the trolls we’re after, and they make up a significant portion of the increase in patent litigation in recent years.  If you believe there’s been an increase, I mean.

It’s fair to question statistics and the motives of those behind them.  It’s fair to criticize people who only want legislative relief of the problem in the form of more laws from Congress because they (incorrectly, in my view) believe that that is the only way out of the problem, or even a good way out.

But you can’t just throw the baby out with the bathwater and say that because a few statistics are misquoted or unfounded or skewed by the companies putting them out that there isn’t really a problem.  All you need to do to verify that there is is to ask the Dittos and the Farks and the TMSofts.

They’ll tell you that, increase in patent litigation or no, there IS a problem.



{Merry go round image found here:}

Let’s Revisit Lodsys v. TMSoft One Moore Time, Shall We?

I know, I know.  Recycling content, thou art the bane of summer.  And those of you with no sense of humor or grammatical puns will write to tell me I’ve misspelled a word in the title.  Nevertheless, it’s very much worth another recap because this story is important.  I wrote about it here and here, and now I’m writing about it again here.

The salient lessons we can learn, and by “we” I mean anyone anywhere who’s been sued by a troll, in no particular order:

1.  Refusing the Gag Order Is A Great Move:  I’m not sure how practical this is because I’m not a lawyer and maybe you can’t always not sign a confidentiality agreement?  But this right here was key in this case.  What trolls thrive on is being hidden under the bridge.  When you talk about them and what they’re doing, you shine a light in their  face and just like the cockroaches they emulate, they’ll run scampering back into the dark depths from which they came.  Hopefully.

2.  There Are Ways To Fund Defense Against The Dark Arts:  As Todd Moore says on his blog, there’s no one else out there right now like the Public Patent Foundation providing small businesses with pro bono legal services.  That tide of options is turning, however.  Already, we’ve seen Defense Mob come onto the scene with the ability to crowdfund patent defense.  Even if the troll doesn’t start out with litigation, this type of site could be used to respond to demand letters, fund prior art searches, etc.  And by tracking demand letters at That Patent Tool, we can build a core of knowledge surrounding these guys and what they’re doing, predict where they will hit next, build a list of the most egregious offenders and who their counsel is, etc.  Exciting times!

3.  Loser Pays Is Not An Effective Solution To This Problem:  As Todd says (emphasis mine):

And even if you could win and get awarded your attorneys fees and costs, which are very rare, you probably won’t see a dime of that money.

This is because patent trolls are set up as shell companies without much in assets.  Any money that the patent troll receives from all the licensing agreements is immediately distributed to other companies—this includes the law firm representing the patent troll on contingency and the company that originally held the patent.  Any money you might be awarded will be long gone by the time it comes to collect.

I’m glad he made this point because I made it too and I really like it when people back me up.  High five, Todd!  It’s not bad to make the loser pay, it’s just that patent trolls are losers with a capital “L” and they’re going to hide their money from you so you’ll never see it if you win.  That’s just the cold, hard, truth.  And so is this:


4.  History Is Important, Kids:  This is the best thing of all right here, the back story.  As the Apple Insider article on the story points out,

Lodsys first began filing lawsuits against iOS developers using Apple’s in-app purchase feature in 2011. The suits prompted Apple to attempt to intervene on behalf of its development community.

But the legal action spurred a number of developers to settle out of court by agreeing to licensing dealswith Lodsys, ending the lawsuits and allowing them to continue to offer in-app purchases. Though Lodsys started with smaller developers, it moved on to bigger companies like Electronics Arts and Disney.

This is a great lesson in the troll MO…go after the little guys first and see what kind of reaction you get.  Low and behold, if the little guys pay up, they start trolling for bigger fish.  Which, incidentally, might be where your friend enemy and mine Peter Detkin was going with his term “patent troll” to begin with.  Maybe he didn’t mean the guy under the bridge after all, but it was a reference to fishing troll lines, where you drag a net behind your boat and see what you can catch?  Anyway, by putting the full story together, we can see that these guys were successful at the little game so they stepped it up and went after deep pockets.

Some trolls use a different campaign, they go straight for the deep pockets first and bypass the little guy altogether.  Others go after only the little guys, figuring if they blanket the country with demand letters (MPHJ, I’m looking at you), they’ll get enough hits to fund their next souped-up Ford Mustang.  (Because, you know, small town Texas lawyers probably haven’t heard of the Bugattis that the play-uhs drive.)


Mac Rust, “nice guy” lawyer for MPHJ.
Via Joe Mullin and Ars Technica.


It looks like Lodsys got a lot moore than they bargained for when they went after TMSoft.  Like Rackspace, Fark, Neiman Marcus, and NewEgg before him, Todd Moore has discovered that backing down or rolling over is exactly what fuels these guys to keep playing their game.

Congratulations, Todd!  As we say in Texas, “You done a good thang.”



{loser image found here:

Lodsys Takes One On The Chin, Pwned By Pro Bono Lawyers

Well well well, what have we here?   I haven’t looked yet for can’t find the name of the law firm that handled the case but wouldn’t you love to shake their hand, give ’em a big ol’ Texas Hug and say “Atta Boy!”?

I totally would.  First round of margaritas is on me!!

Background added:  Lodsys is a shell of Intellectual Ventures company that is going after app developers for using in-app purchases because they say they have a patent on that, and are demanding that developers rustle up some licensing fees but quick.  One app developer fought back with the help of some pro bono attorneys who gave up a $200k paycheck to help.  They brought Lodsys to its knees in a settlement that ended up putting money in the hands of a charitable organization.  Which is winning on every.single.front.

Forbes has their take on the story in this article, and I want to bring a few things to light, namely his main point, if I may be so bold as to disagree.  Ahem.

And the answer to killing the trolls while still allowing the legitimate patent assertion entities to flourish is to level that legal and financial playing field. Something that could be done very simply.

Actually, I do agree that it can be done simply, but not using his tactic, which is as follows:

Just move to loser pays all legal fees in patent cases.

That sounds super terrific on the surface, but the way the shell game works is that these entities who are doing the suing are playing funny money.  You can’t get blood out of a turnip, as my grandfather used to say.  Do you think that if a Lodsys/Intellectual Ventures (because let’s just call a quacking duck a quacking duck here, they’re one and same) does lose that they’ll pony up the fees?

I don’t think so.

I think they’ll do what they do best:  lie, cheat, hide, be nefarious, all of those things.  They’re going to make it all go *POOF*, all of their assets and bank accounts.  Besides which, not spending the money on a defense up front is always preferable to trying to get it back afterwards.  Once it’s out of your hands, money is really tough to get back under any circumstances.  (Don’t ask me how I know that because I totally do not have a bag of clothes in my closet that don’t fit/didn’t match/need to go back to the store for some reason but I haven’t made the time to take them. )

Same thing here: the money’s spent on the suit up front: whether or not the loser is required to pay, and really it should be called “loser pays back“, that money’s already left the defendant’s coffers. If nothing else, you lose the interest so supposing you do get it back, you’re still out the time value of money. You’re welcome for showing off the mad math skillz you taught me in 4th grade, Mrs. Unger.

I think a better approach, and I’ve said this many times, is a sort of crowd funding for these suits. Bring people together who have a vested interest in seeing this problem go away, and give them a place to put some funds.  I recently learned of DefenseMob, whose purpose is to crowdfund patent defense, which can include patent litigation.  It can also be used to fund things like re-exam, or inter partes review (IPR) requests which is how Rackspace is going after IP Nav.  I’m no genius, but isn’t that exactly what we need?  The beauty of it is that it allows the little guys a chance, and that’s who the trolls are increasingly going after because they tend to fight the least.  If there was a way to get the money fronted, even if it’s just a portion of it, you have to believe that more of them would fight, no?

This type of solution needs no government intervention.  It needs no legislation, no persuading of judges, no permission from anyone.  All it needs is people willing to solve the problem collaboratively using any amount of funds they’re willing to let go of for a common good.

And if that common good means someone like Nathan, who wants so terribly bad to be the next Cooking Channel celebrity, goes down in a blaze of glory like his henchmen Lodsys just did, doesn’t it make you want to do it even more?

mhyrvold_guy fieri mesh

Nathan Mhyrvold/Guy Fieri mashup.
In case that wasn’t obvious.

The answer is yes, Yes it does.



{Guy image found here:  Nathan image found here:}