Demand Letters And The Entry (Or Not) Of Such Into A Repository

Almost a year ago, because President Obama has no regard for my schedule, I launched an online patent assertion/demand letter repository called That Patent Tool.  It’s been well received, and lots of people, really really cool people to boot, have signed up.  There’s data in the system, and for that I am most humbly grateful!

I had a discussion with Julie Samuels just before she left EFF.  I have to admit that I was kind of upset when I saw that they came out with trollingeffects.org because, like the Highlander, I was thinking “There can be only one.”  THE WORLD CANNOT HANDLE TWO DEMAND LETTER REPOSITORIES, PEOPLE!!  I think I may have even given the folks at the Application Developer’s Alliance some {ahem} feedback for throwing their weight behind Trolling Effects rather than behind me.  Ah, the insecurity foibles of youth.  Sorry, ADA!!

therecanbeonlyone

 

Only Julie’s point, which she made ever so calmly and with much less drama than I myself am prone to, was “Um, no I don’t think so.  If people are willing to put the information in one repository, that almost makes them more likely to put it in another.”  Well Bob’s your uncle, I never thought of it that way.

But you know what?  People are not flocking to enter demand letter information at nearly the rate either of us expected.  I mean, the President himself said we needed a Demand Letter Registry.  Right there out in the open, he said that.   The President said you should do it and yet hordes of people have consistently not done it which means someone’s getting sent to bed without supper tonight.

As serendipity would have it, this article by Megan M. La Belle was posted on Twitter by @PatentWire  It includes a lot of things I personally hadn’t thought about in terms of the effects of settlement (either through the use of demand letters or settlements after a lawsuit has been filed) on the patent industry in general.  While the entire article is worth a full and focused read, I think the very best summary of the issue is right at the beginning:

Not only are patent settlements frequently coerced, they also come at the expense of judicial precedent, which is particularly valuable in the patent context since an invalidity judgment estops the patentee from ever asserting that patent again.18 A related concern is that patent settlements may achieve peace between the parties, but not justice. When patent litigants settle, the accused infringer usually agrees to pay the patent owner, stipulates to the patent’s validity, and promises not to challenge the patent in the future.19 Even assuming such an agreement is in the best interests of the parties, it may undermine the public·s interest by allowing a potentially invalid patent to remain intact.20

Note:  footnotes are left in the quote, but you’ll need to refer to the original article, linked above, to view them.

Let’s pull out a quote from a quote: “A related concern is that patent settlements may achieve peace between the parties, but not justice.”  Peace is what demand letters are designed to achieve, if only for the asserter and through a very Reagan-esque “through strength” approach.  The trolls don’t want justice, they want money, they want their toll.  They know that going to trial is not only expensive for them as well as the defendant, but it means the potential for loss, either on invalidity or non-infringement.   By exposing what they are asking for and who they’re asking it of, other recipients can get a lock on how to respond.  This is the primary goal of collecting the letters: exposure.

What the article seems to indicate is that in some cases, going to trial (or “adjudicating”, because that’s a much fancier word) is better for the public good because it will remove bad patents from the system, the data indicating that when patent suits go to trial, invalidity is a very likely outcome.  I won’t go into all the details of which cases the author feels are better going to trial vs. settling because that would be plagiarism.

What I’d like to touch on is that those companies in the Patent Troll Fighter Heroes Gallery believe in this mantra, that it is better to fight (litigate) than settle with the trolls.  To me and to them, it is about the moral issue and how you should never not ever let the bully win.  According to the article, there is empirical data to back that approach up, suggesting that not settling is the better way to both justice and more effective patents.  With all the talk about “bad patents” out there, and there are many (hint: mostly software), I wonder if part of the reason is that so few patent cases actually get litigated?

Here’s another issue with demand letters and settlements:

Another reason scholars have denounced settlement is because it is shrouded in secrecy.73 Unlike adjudication, the outcome of which is available to the general public, settlements are usually confidential, so that only the parties know the terms of the agreement.74

And again, this is why I and others have created an online demand letter repository.  It’s a way to de-shroud settlement requests, which is what a demand letter is, if we are wanting to use the most euphemistic term possible.  I do realize that, in order to avoid declaratory judgment or venue issues, many trolls no longer put all the information into a demand letter that they used to.  But a surprising amount of trolls still do, as you can tell by both my data and EFF’s data.

donotfeedthetrolls

I’m working on a post about why recipients are reticent to upload letters, because I’ve spoken with a lot of people about their fears which are frequently summed up in two words:  “outside counsel”.  As in, my outside counsel won’t let me.  We’ll get to that faulty lawyer logic in due time.  The most common response people give so far is the age-old “What’s in it for me?”

I’ve been looking since the beginning for ways to incentivize or entice or coerce or somehow get people to provide this data.  Recognizing that settlement may not always  be in the public’s best interest in patent litigation, when it comes to dealing with trolls I think that exposure of those “settlement” demand letters actually is in the public’s best interest.

Now all I have to do is convince the rest of you…

 

JustSayin_small_New

IPTT

{Meme found here. Incredibly awesome troll sign found here.}

Goodlatte Needs A Latte And A Talking-To Re: Patent Reform

Getting him a latte shouldn’t be hard, and he’s going to need one to stay awake for the discussion of how his proposed bill isn’t worth the disk drive space it takes up.   I don’t mean to say that patent law is boring but….zzzz….it’s lots of legal stuff and…*nod*..*snort*…then the sheep went over the fence….and…

Ho, hey, what just happened there?

latte

Because no one’s ever made this joke about his name 1000 times.
Also? Not Senator Goodlatte’s arm. As far as you know.

If you can manage to stay awake to read the Goodlatte Bill Proposal (or isn’t that what a bill is?  a proposed law?  I really should have paid attention to Schoolhouse Rock) then you’ll find loopholes and balderdash designed once again to make people think that the government actually cares to solve this problem.  (Hint: they don’t.)

Let’s start off with page three, lines one and two, emphasis mine:

1 cross-claim for patent infringement, unless the informa-
2 tion is not reasonable accessible, the following:

First off, typo.  Reasonably accessible.  Don’t I pay you enough taxes to hire a proofreader?  Either way, since when has anyone known a patent troll to be reasonable?  This is not just a loophole, it’s a giant gaping chasm you’ve left open to interpretation by a group of people who think nothing’s wrong with extorting money from Grandma Mimma who bought a printer/fax/scanner machine to use to run her quilt-selling store on Etsy.  “Reasonable”?  Not bloody likely.

This bill, like a few others out there, bangs the “Loser Pays” drum:

(a) AWARD.—The court shall award, to a prevailing
25 party, reasonable fees and other expenses incurred by that

1 party in connection with a civil action in which any party
2 asserts a claim for relief arising under any Act of Con-
3 gress relating to patents, unless the court finds that the
4 position of the nonprevailing party or parties was substan-
5 tially justified or that special circumstances make an
6 award unjust.

Here again, there’s a way out for the trolls.  They’ll argue all day long that there are “substantially justified” or “special circumstances” that prevent them from paying.  Besides which, as I’ve argued before, they’ll hide their assets and claim you can’t get blood from a turnip.   I like the theory of loser pays as it applies to trolls, but the reality will not bear out the way you want.  What will actually happen is it will prevent small inventors who are really truly being infringed on from taking the risk of a lawsuit.  Strike 1 1/2, Bob.

Why 1 1/2?  Well, because this is a pretty decent addendum:

‘‘(b) RECOVERY.—If a nonprevailing party is unable
8 to pay reasonable costs and other expenses awarded by
9 the court pursuant to subsection (a), the court may make
10 the reasonable costs and other expenses recoverable
11 against any interested party joined pursuant to section
12 299(d).’’

What I read here is that, since all interested parties would be required to be named, when Lodsys claims it can’t pay the bills on account of the high rent it has to pay for those swanky offices in Marshall, TX, the prevailing party can go after Intellectual Ventures.  That’s got some teeth.

_69312301_lodsy2

Swanky digs, Lodtellectual Venturesys!

Like so many of the other bills that’ve been proffered of late, it offers a lot of after-the-fact solutions.  I like what Jon Potter at the Application Developers Alliance says:

“Reform should include demand letter transparency …,”

Totally agree.  I realize the Goodlatte bill puts the hurt on long and drawn out discovery requirements, which is the stage that kills a lot of defendants.  But wouldn’t it be better to resolve some of this prior to the suit actually being filed?  If we can continue to gather information on the demands the trolls are making by tracking their threatening “pre-suit communications” at That Patent Tool, I maintain that we can rally the troops and shut these guys down.  All you need is a solid set of data and communication between recipients and you’ve got yourself a way to collaborate and refuse to let these trolls even get to the litigation stage.

It’s great (I think) that the government is all over the patent trolling problem because it’s real, and it’s costing people money and companies.  But what I remain unconvinced of is that these bills aren’t going to do more harm than good, and end up being repealed or modified in some way that’s going to cost us yet more money as taxpayers.

As always, I remain a fan of market-based solutions, though I commend Senator Goodlatte for a) trying and b) having a great name that I can poke fun at (even though it’s really pronounced “Goodlat“, and not “lottay” like the drink, which is a total bummer).

JustSayin_small_New

IPTT

{Latte image found here , Lodsys office image via Online News Corporation Unlimited, here.}