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.}

It’s Going Down, I’m Yelling “Timber”!

Never let it be said that I don’t have a flair for the dramatic, because I totally do.  (I also have a highly embarrassing story about that song, but we’ll get to that later.)

Have y’all read this yet, re: Intellectual Ventures cutting 5% of it’s workers?  I’m no business school graduate (oh, wait…yes I am) but laying off employees is not generally considered a sign of corporate health.  Last October, Intellectual Ventures had to stop buying patents to beat people up with because they were out of funds to do so.  Prior to that, it had been reported that they were not exactly wowing their investors with dividends.

pitbull-600x450

Note: This is not Nathan Mhyrvold.

So what’s going on in Nathan’s world?  Are the kitchen fumes getting to him?

I think what’s happened is that with the increased noise about patent trolling, things aren’t going as easy for IV anymore.  It’s no longer enough to be a 400 lb gorilla and jump up and down insisting people pay you royalties or you’ll kneecap them.  No, the public narrative has made that path a little more difficult.  Plus, when you sue one of your original investors they probably tend not to like it and that certainly can’t be good for business.

Intellectual Ventures was founded in 2000.  Back then, the idea of a company investing in patents for the sole purpose of finding people who may potentially be infringing on it, or who operated in a space that was anywhere remotely close to a particular patent that they held, was just coming into vogue.  For a fairly long period of time, it worked, in part, I believe, because the approach was so novel that companies didn’t quite know how to react.  Couple that with corporate counsel, who tend to be extremely risk-averse, and most victims likely just said “pay the dude, make it go away”.

pitbull-600-1366027778

Not a corporate lawyer. Probably also not risk averse.

But starting a few years ago, lets say around 2007-8, people began to get all wise to that approach and even wrote about it online and tried to expose the trolls for their wretched behavior. And then all hell broke loose last year when President Obama scooped me and announced an initiative to reform the patents system and get a handle on these ne’er-do-wells.

If it were just that there were staff  cuts at IV, it would be one thing.  Companies sometimes need to trim the fat and eliminate duplicative positions and that can have nothing to do with their overall health.  It matters then, where within the company the layoffs are occurring:

IV has over 800 employees, according to its website, so a five percent reduction would impact at least 40 people. The bulk of the staff cuts involved attorneys and engineers who worked for IV’s large patent acquisition funds, three sources familiar with the company said.

IV also runs a laboratory which pursues inventions that the company itself can patent. That part of the business was not impacted by the job cuts, the sources said. Clouse declined to provide additional detail about the reductions.

  • Area of company that buys patents to sue people with:  cuts
  • Area of company that invents things to patent: no cuts

The (purported) location of the cuts speaks directly to the heart of their business model as a troll.

Like I said, “Timber!”

JustSayin_small_New

IPTT

{Pitbull image found here.  Second Pitbull image via Rolling Stone, found here.}

True Story:  As a reading class assignment, my 7th grader had to pick song lyrics and add stanzas of his own creation using whatever literary technique they were currently studying, which if memory serves was metaphors and similes.

He submitted the lyrics to Timber, by Pitbull.  Have you read the lyrics to Timber, by Pitbull?  I have.  Now.

And that is why I will never be able to look his teacher in the eye as long as we both shall live, why I assume that pretty much any song that is popular nowadays will have equally offensive lyrics, and why OMG, I’ve discovered to my horror that I have become the people I hated when I was 13: my parents.