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.}

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FTC Asks, Intellectual Ventures Answers (Hint: Probably A Satirical Post)

Just like a Wendy interview, the FTC is about to get all up in the patent trolls’ business.  The full list of questions can be found on the FTC site and boy do they get specific.   Like, seven appendices worth of specificity, which on the official Specificity Scale is pretty much an F5.  So, seriously specific.

SpecificityGraph

Thankfully, they’ve posted a summary of the types of answers they’re after as well, and this is much easier to digest:

  • How do PAEs organize their corporate legal structure, including parent and subsidiary entities? (Request B)
  • What types of patents do PAEs hold, and how do they organize their holdings? (Request C & D)
  • How do PAEs acquire patents, and how do they compensate prior patent owners?  (Request E)
  • How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)? (Request F)
  • What does assertion activity cost PAEs? (Request G); and
  • What do PAEs earn through assertion activity? (Request H)

Intellectual Ventures has likely received their personalized FTC Troll Expose’ Kit and are busy cutting and pasting their standard PR rhetoric preparing their answers.  Don’t tell anyone, but what follows is an advanced copy of their reply.  Remember, shhhh.  You didn’t get this from me, OK?

*********** SUPER SECRET INTERNAL RESPONSE TO FTC QUESTIONS ***************

1.  How do PAEs organize their corporate legal structure, including parent and subsidiary entities?

We’re a private company.  We take money from investors and on occasion, actually pay them back.  That’s not going so well for us right now, though.  What’s a subsidiary?  We don’t have any, and Lodsys certainly isn’t one of them, whatever they are.  From a legal structure perspective yes, we have lawyers.  Is that what you’re asking?

2.  What types of patents do PAEs hold, and how do they organize their holdings?

The kind that we can extort money for, of course.  My cooking lessons aren’t going to pay for themselves, you know!  We organize our holdings into file folders by patent number.  ??  Geez, what a stupid question.

3.  How do PAEs acquire patents, and how do they compensate prior patent owners?

Well, sometimes we go through brokers.  Other times, we send our henchmen to all those nifty little incubator meet ups and convince first-time inventors to let us help them file and obtain a patent for whatever they’re doing that could be even remotely similar to something that we can sue people for infringing on.   As far as compensation goes, we spring for dinner at the local taco wagon after we have their signatures.  Because seriously, nothing says “We value your contribution to our monolithic patent coffers” like some ground beef and beans wrapped in a week-old tortilla.  Yeah, baby!

4.  How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?

“Yes” to the first two, “Aggressive” to the third.

5.  What does assertion activity cost PAEs?

Money.  Wampum went out of style when all the beaches on the Atlantic seaboard eroded.

6.  What do PAEs earn through assertion activity?

Money.  While I’d like to be paid in solid gold bars, it just never seems to work out that way, you know? Besides which, we also earn a reputation that we’re not to be messed with which is actually worth way more than money.  You pick on enough of the people enough of the time, and word gets around.  All of a sudden, it only takes one or two meetings to get the signature you need.  Holla!

*********** END OF SUPER SECRET INTERNAL RESPONSE TO FTC QUESTIONS ***************

Right now, this is all just a bad dream for the trolls, who have 60 days to send in comments about this proposal that questions their livelihood.  They’ll not go down quietly, so we should all be on the lookout for complaints from all the usual suspects.  From the FTC’s site:

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).6 Your comment will be kept confidential only if  the FTC General Counsel grants your request in accordance with the law and the public interest.

Considering how far under the hood they’re willing to dig, I’d be surprised if any of the responses were actually kept confidential.

In a way, I’m sad to see the gov’t having to get so involved in this problem because I remain of the opinion that if we let the market ferret these guys out by doing things like tracking the demand letters they send (at That Patent Tool, come on and join in the fight!!) we can solve this issue on our own.  It always worries me when law-makers set out to bring down one rogue section of an industry because the effects are almost always more far-reaching than initially thought.  The “Law of Unintended Consequences”, and all that.

That said, I get a fiendish delight thinking of how much these trolls are squirming right now, just reading the list of questions.

JustSayin_small

IPTT

An Open Letter To Martha Stewart And Eugene Kaspersky Re: Lodsys

Dear Mr. Kaspersky and Ms. Stewart,

You almost want to feel sorry for them, don’t you?  I mean, how bloodied and beat up are these Lodsys cats these days anyway, am I right?  From Joe Mullin over at Ars, we have the tale of the chicken:

Lodsys decided over the weekend to dismiss its case against Kaspersky with prejudice. Instead of facing a jury, Lodsys will slink away instead. It was an unconditional surrender.

Hello!

Even better, I woke up this morning to the whole story in your own words, Mr. Kaspersky, my favorites of which were:

The enemy is defeated, demoralized, and on the run! Churchill was right: “Never give up!” We’ve followed his advice in our fight against a particular troll. As a result the troll gave up and ran away with nothing and its tail between its legs.

tail_between_legs_Kaspersky

Defeated.  Demoralized.  On the run.

Hello!  Again!  Although I must take issue with the second adjective because how can you be “de”moralized when you have no morals to begin with, eh trolls?  But hey, I’ll forgive you that because how awesome is that picture of your team and also?  I hope you saved at least one bottle of Chivas to send to Martha.

From the “what-I’ve-been-saying-all-along” department (with acknowledgement to Techdirt), we see that Kaspersky Lab, like Todd Moore at TMSoft before you, has simply refused to roll over for the likes of these “vermin”.  That’s the only way to send a message that the bullies can’t have your lunch money, folks!

What I’m hoping these recent victories against Lodtellectual Venturesys* don’t mean is that you’ll back down, Ms. Stewart.  I watched every episode of The Apprentice: Martha Stewart and if memory serves (and it does), you don’t seem the type.  Nevertheless, there’s always the danger that, when the bully backs off one or two victims, the posse that’s been assembled to meet him at the bike racks the next afternoon and give him what-for will decide he doesn’t need it.

Rest assured, Lodsys needs and deserves the ass-whoopin’.

You’ve gone for the jugular here by filing for Declaratory Judgement on non-infringement and invalidity.  As we say in Texas, put a bullet in it.  Knock out this meager family of four piddly patents and be the hero to all the companies still in Lodsys’ path!  Don’t settle out because they’re down, go right ahead and kick ’em, no?  Crack open the can, baby!!

whoopass

I hate to say the troll tide is turning because there’s still a lot of bad going on out there.  But if we (and by “we” I mean “you”) see this one through, it’ll take a whole lotta steam out of the engine.

Just sayin’,

IPTT

*Intellectual Ventures + Lodsys = Lodtellectual Venturesys.  Try and follow along, people.

{Happless coyote image found here. Can of whoop-ass image found here, along with some decent advice.}

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.

JustSayin_small

IPTT

{Guy image found here: http://theonefeather.com/2011/03/guy-fieri-bringing-his-food-tour-to-harrah%E2%80%99s-cherokee/  Nathan image found here: http://www.intellectualventures.com/index.php/about/leadership/nathan-myhrvold}

If I’ve Told You Once, I’ve Told You 100 Times

Aww, blogs grow up so fast these days.  One day you’re logging in to WordPress and trying to figure out what theme to use then *WHAM!*: you’re 100 posts into it and you can’t account for 1/2 the time in between.  It was only two years ago that I started mouthing off about trolls.  Either there’s a whole lot going on with patent trolls or I talk a lot.  (Hint: the first one.  Definitely the first one.)

When I first starting writing, the Nortel Auction had just occurred and boy were those fun times.  Those patents cost “the consortium” 4.5 Billion-with-a-‘B” dollars and helped ignite a Patent War that rages on.  Writing about it was the last thing Joe Mullin did before moving over to Ars Technica, and I love that his last post on The Prior Art is still up there.

What’s interesting is to see that some of the things I prattled on about back in July of 2011 are still in vogue, like Lodsys going after developers and my picking on Intellectual Ventures, in comic form.  Literally.

Just for fun and because I broke with my usual M.O. and completed a project one hour ahead of time instead of one minute ahead of time, I went back and re-read some older posts.  My goal was to make sure that I was consistent with whatever it is I’m saying.  I like that term way better than integrity because it’s more descriptive.  One’s actions should be consistent with one’s words should be consistent with one’s values.

To that end, I thought it might serve to list out what the whole patent troll issue boils down to for me:

  1. The business model of purchasing broadly written and poorly enforceable patents and suing anyone and everyone who might even remotely possibly be anywhere close to infringing is not just bad for business or bad for the economy or bad for small inventors or bad for larger businesses.  It may not be illegal, but it is WRONG.  The difference between those two is the difference between a person with character and a person without it.  You don’t see the word “wrong” very often because people don’t like to call a spade a spade for whatever reason.  I, however, have no problem with that.  Obviously.
  2. The patent system itself needs to focus on the execution of good ideas rather than the idea itself.  Ideas are like buses, according to Richard Branson:  A new one comes along every minute.  So have your idea, but do something with it!  Don’t just pay to have the government hand you a “Granted” stamp and wait for the money to start rolling in.
  3. Not all who are labeled patent trolls are.  One way to distinguish the white hats from the black hats is to ask Barry Leff track troll behavior via a demand letter registry like That Patent Tool.  By tracking who the trolls send shakedown notices to, we can build a picture of what’s going on.  We can put two and two together and introduce people who are under attack from the same troll and see if there might be a way to join forces and either go on the offensive, or make the process so much harder for the troll that the demand either goes away altogether or is reduced to pennies on the patent. We can build a community and expose the real trolls for who they are:  PEOPLE WHO ARE DOING SOMETHING WRONG.

I want to see the patent troll problem go away.  And I want to see it  go away because good ol’ American ingenuity has made it happen, not because the government stepped in to save anyone.  New laws and enforcement of existing ones can be a good thing, but I think the solution lies with the people to make this issue go away.

Even though it would put me out of a writing gig, I still want that to happen.

JustSayin_small

IPTT

Ross Perot’s Giant Sucking Sound, Redux

First of all, Lodsys, are you bragging?  Are you intentionally trying to be obnoxious for attention?**

As of October 8, 2012, there are greater than 150 companies which obtained the rights to use the Lodsys Group patent portfolio, and more than 4 out of 5 of these companies have entered into licenses outside of the litigation process. These companies have realized significant savings by taking advantage of lower licensing rates. Lodsys Group has engaged the firm, IPMG AG to conduct a non-litigation licensing program.

Allow me to translate:

As of October 8, 2012, there are greater than 150 companies which we have bullied into purchasing rights to our patent portfolio, which we own for the sole purpose of harassing people.  Also?  More than 4 out of 5 of these companies have entered into licenses outside of the litigation process, because they were too small to mount a defense against us. These companies have realized that we are not going away and that the price of licensing is only slightly less than the price of litigating against us so either way they lose, but at least they will lose less if they take a license.  Lodsys Group has engaged the firm, (<– See how I left that comma splice in there?  You’re welcome.) IPMG AG to conduct our continued shake downs.

{shakes head} One of many negative effects of this kind of harassment and bullying, because really we ought to call a spade a spade, is that talent is leaving the US.  Ross Perot was right, even if things didn’t go South of the border, but across the pond instead.  Mike Lee, the original founder of a collaborative defense team called the Appsterdam Legal Defense team, makes an excellent point:

“Every non-American organization trying to unseat Silicon Valley as the world leader in technology production should be popping champagne” over Lodsys’ continued claims, Lee said. “More patent madness means more talent flowing into Europe, which is great, because it means we can start using our embassies to kick some of that over to countries like Greece and Italy who could definitely use the work.”

Is this really what we want?  You can argue, and many do, that the patents system should be dissolved altogether and I’m down with that in some ways.  I think rather than that you just alter it and turn to the Use It or Lose It approach, that would help out a lot.  But one thing that you simply MUST do is rid the landscape of companies like Lodsys.  You know,  NPEs, patent grabbers, Ne’er-do-wells…a Troll by any other name would smell as foul.

Just sayin’,

IPTT

**I felt compelled to use that phrase because it was used against moi in a recent Twitter direct message.  It was in response to a tweet I made about someone posting a link wherein followers were invited to caption a picture.  At least that’s how I understood it.  But when you click the link, you had to sit through an ad for a cold beverage that is not Coke, but the other guy.  I took exception to that and tweeted as such.  And I got direct messaged back and, I think, insulted.  You decide (hint:  it’s the first one):

I think I've been insulted.

The Godfather (i.e., Nathan Mhyrvold)

Great article by Jeff John Roberts.

First up, I’d love to be the one to find the link between IV and Lodsys.  Talk about a bounty…why hasn’t someone issued one to the first intrepid reporter who can prove a link?  That’s how it’s done folks…although if I had the time and resources I’d do it just for the “I told you so” value.

Second, this sounds very Mark Cuban-ish:

Namely, before it began its suing spree, IV made sure that many of its potential critics became its investors.

Well played, IV.  And it’s exactly what people like Mark Cuban, who purports himself to be a patent expert, have decided to do.  “If you can’t beat ’em, join ’em.”  Bah, humbug.  You’re telling me the likes of Mark Cuban can’t find a way to beat the trolls without becoming (part owner of) one?  C’mon.  You disappoint.  Someone, somewhere has to find a better business model.  Oh wait, someone already did.  The problem is, that model only covers patents that are still at play.

Someone is going to have to solve the problem of the trolls who are suing over what they own.  I say you create a non-profit collaborative defense fund.  You reach out to each and every company that is sued by the trolls, and you know that information is available via either Patent Freedom, RPX, or, if you have to strip it yourself, from the US Court dockets, and get them to pony up some money.  Pool resources and every time the trolls fight, no matter who they fight, you fight back.  Get in bed with your enemies against a common goal.  These trolls are not bottomless pits of money.  They are individual companies that are suing Deep Pockets.  Well, guess what happens when Deep Pockets joins up with another Deep Pockets?  Follow the math here…DEEPER POCKETS.  Deeper than the trolls.

That’s how you beat them at their own game.  It’s what I tell my sons when the schoolyard bully picks on them.  Knock that sucker to the ground but good.  If you can’t do it alone?  Round up your posse, as we say in Texas, and git ‘er done that way.   But whatever you do, don’t ever, ever hand over your lunch money.

Third, there’s this gem from our buddy Nate:

Myhrvold this week portrayed his patent practices as simply another form of capital allocation. In his view, the company’s trolling is a good thing because it raises money for Intellectual Venture’s experiments which will, in turn, produce more patents.

How about producing products?  Inventing something new and, oh, I dunno, useful?  Producing more patents should not be the goal here, unless all you do is sue people for infringing on them.  Oh, wait…

And finally, there’s the understatement of the year forever:

The problem, of course, is that patents are not synonymous with value and innovation.

No.  No they are not.

Just sayin’,

IPTT