07.18.16

Large Corporations’ Software Patenting Pursuits Carry on in Spite of Patent Trolls That Threaten Small Companies the Most

Posted in IBM, OIN, Patents at 9:27 pm by Dr. Roy Schestowitz

Hostile environment in which trolls thrive owing to software patents and cashless startups that must settle

Robert BahrSummary: With unconvincing excuses such as OIN, large corporations including IBM continue to promote software patents in the United States, even when public officials and USPTO officials (like Bahr on the left) work towards ending those

SOFTWARE patents remain a very major barrier not just to FOSS developers but to all software development. Such patents, unsurprisingly, are being promoted by monopolists and their facilitators, to whom they’re a major source of revenue. Those monopolists continually rig the whole system in their favour as they can definitely afford it; in fact, it might be considered part of the obligation to shareholders (protectionism through legislation).

The mainstream media or corporate media no longer talks about software patents. Instead it speaks about “patent trolls” and by patent trolls it means the small ones, not the media owners. Apple, for instance, is directly connected to some major media conglomerates, so bias in patent coverage is to be expected in some cases (we wrote about this in past years). Let’s be easily deluded and just ignore Apple demanding billions (not millions) from Android OEMs (patent aggression and sometimes trolling includes big vendors) and also forget Apple’s unique role in Intellectual Ventures (explained here several years ago), the world’s largest patent troll which goes after Android vendors. The article “Apple will pay $25M to patent troll to avoid East Texas trial” is eye-catching and so is “Newegg’s Three-Step Solution to Fighting Patent Trolls” by Gary Shapiro, President and CEO of Consumer Technology Association (CTA). This group likes to focus on patent trolls rather than patent scope. Here is some of the latest from Gary Shapiro:

Lee Cheng is a troll trapper. As chief legal officer for Newegg.com, the second-largest online only retailer in the United States, Cheng has successfully battled the almost three dozen trolls that have attacked his company in the last ten years. And not just fight them, but win.

Patent trolls — sometimes called “non-practicing entities,” or NPEs — don’t actually create any products or services. Instead, they scoop up patents for the express purpose of using them to extort money from real companies large and small that can’t or don’t want to pay high legal defense costs. NPEs focus on settlements and generally have no desire to test their generally poor-quality patents in trial and through appeal. Even bad patents can generate millions in settlement dollars.

A newly-updated Harvard Business School study finds patent trolls sue cash-rich firms “seemingly irrespective of actual patent-infringement” — because that’s where the money is. The Harvard researchers noted trolls are taking a toll on innovation at the firms they target: “After settling with NPEs (or losing to them in court), companies on average reduce their research-and-development (R&D) investment by more than 25 percent.” So instead of funding development of the Next Big Thing in consumer technology, these American small businesses are handing over legalized extortion payments to trolls.

Research estimates that patent trolls drain a prodigious $1.5 billion a week from the economy. I sat down with Lee Cheng to get a from-the-trenches account of the patent troll problem, and to let him share his lessons for taking down the trolls.

“They also rely a great deal on software patenting, as a look at their patent portfolio easily and instantly reveals.”What Gary Shapiro misses here is that patent trolls are often part of a broader shell game played by large corporations such as Microsoft. They also rely a great deal on software patenting, as a look at their patent portfolio easily and instantly reveals. All the focus is now being shifted towards trolls, both in the media and US Congress. Just see this new tweet (“VIDEO: Sen. Jeff Flake Targets Patent Trolls”).

Proskauer Rose LLP, which likes to cherry-pick cases in promotion of software patents, recently released this so-called ‘analysis’. They try to maintain a grip on software patents no matter what. Some large corporations are doing the same thing and it’s not limited to Microsoft. Consider IBM.

IBM’s commitment to Free software, especially now that it pays lobbyists like David Kappos for software patentability, should be seriously doubted. It just likes “Linux”. Manny Schecter, a patent chief at IBM, is an ardent proponent of software patents and he has just linked to “Latest very brief USPTO update to patent examiners on subject matter eligibility in view of recent cases…”

This is a PDF of a new Robert Bahr (Deputy Commissioner for Patent Examination Policy) letter regarding the Rapid Litigation case and Sequenom case (both covered here earlier this month). Herein he is alluding to Mayo and Alice as he might try to gently challenge these or begrudgingly adopt what the ‘pesky’ Supreme Court said. Here is a quote from the PDF: “In summary, the USPTO’s current subject matter eligibility guidance and training examples are consistent with the Federal Circuit’s panel decisions in Rapid Litigation Management and Sequenom. Life sciences method claims should continue to be treated in accordance with the USPTO’s subject matter eligibility guidance (most recently updated in May of 2016). Questions should be referred to Technology Center subject matter experts or your SPE.”

Where does IBM stand on the subject? It’s hardly even a mystery. IBM does not like Alice because IBM loves software patents and actively works to expand these to more countries/continents. At the same time IBM brags about OIN as though it magically makes IBM’s patent policies absolutely fine and compatible with FOSS. “I don’t think there is an alternative choice when you are small entity,” told me someone today. “When has OIN actually helped a small company? Even as a deterrent,” I replied. “When your entity is relatively small,” he said, “OIN represents a potential shield to provide you even a minimum of security.”

“Life sciences method claims should continue to be treated in accordance with the USPTO’s subject matter eligibility guidance (most recently updated in May of 2016).”
      –Robert Bahr
But how in practice can OIN protect one against a troll for example? It cannot. OIN is totally useless against patent trolls. Don’t ever forget that. I saw that firsthand when I was part of E-mail thread I had initiated. Small companies sometimes try taking rivals to court with their patents. If the rival is big enough, then countersuit is massive (IBM has a massive portfolio which virtually every software patents infringes on), defeating the very point of bothering with a lawsuit in the first place. Large companies may use trolls as satellites/proxies, so the lawsuits/countersuits can come from all sorts of mysterious directions.

“Intel and McAfee Sued for Patent Infringement,” writes Patent Buddy this week. Security Profiling LLC (LLCs are usually patent trolls) is suing in the Eastern District of Texas. What can Intel do about it? Nothing. Intel is now trying to sell/offload McAfee, based on last week’s news reports (see our daily links for half a dozen such reports). Has it become too much of a burden perhaps? The point about patent trolls and OIN sticks, no matter what. Steven J. Vaughan-Nichols has just fallen for the OIN public relations machine, joining the chorus which began with an 'exclusive' puff piece. OIN is not a “Linux” thing as some want it to be widely viewed; it’s mostly an IBM, Sony etc. thing. It helps legitimise software patents rather than acknowledge that they are not compatible with FOSS or Linux and thus need to be ended.

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