11.07.16

Where the Sun Rises (Far East) and Software Patents Emanate (US) Come the Patent Trolls

Posted in America, Asia, Patents at 2:42 pm by Dr. Roy Schestowitz

Identify the patterns of patent trolling to effectively combat them

Summary: The latest examples of patent trolls around the world and a report about their activity or what fuels their growth (mostly software patents)

PATENT trolls thrive in countries that have software patents. It started with the USPTO (US), it later started to happen in the EPO (Europe), and it is already becoming an epidemic in SIPO (China), as we repeatedly warned in recent months. There are several reasons for this correlation and we explained these before.

Software patents are the weapon of choice of patent trolls in almost all cases (some say 70%). “Of the 16 patent lawsuits filed today,” wrote United for patent Reform the other day, “11 were filed by patent trolls — 69%. It’s time for Congress to take action to #fixpatents!”

They are right, but they suggest a fix that tackles trolls themselves, not the patents they tend to rely on. One part of the solution, whilst also pursuing end of all software patents, was mentioned by the EFF the other day when it wrote: “This bill would close the venue loophole in patent lawsuits. https://act.eff.org/action/fight-patent-trolls-support-the-venue-act-of-2016″

This mostly deals with the pattern of patent trolls choosing Texas. It does not deal with trolling itself or the type of patents that they usually buy to use against a large number of companies, especially small ones that cannot afford going to court. Vera Ranieri from the EFF very recently published the article “A Bit More Transparency in Patent Lawsuits” and in it she wrote:

Should patent lawsuits filed in federal courts be hidden from the public? We don’t think so, especially where a patent owner may be suing multiple people based on the same claim. Apart from the general principle that legal processes should be open to the public whenever possible, as a practical matter sealed filings prevent other people under legal threat from the same person from learning information that may be crucial to their own defense.

That’s why we were concerned when we noticed that numerous court filings and at least three court orders were made entirely under seal in a patent case. We contacted the parties to the lawsuit, Audible Magic and Blue Spike, and asked them to file public versions of significant court filings, redacting only information that was truly confidential. Audible Magic quickly agreed to EFF’s request. However, Blue Spike opposed it entirely, forcing EFF to intervene in the case and ask that the court order the filing of public-redacted versions of the sealed filings.

The court granted EFF’s motion to intervene and our motion to unseal. The court ordered Audible Magic and Blue Spike to submit redacted versions of any document a party wished to keep partially sealed. Again, Audible Magic quickly complied. The documents revealed, among other things, that Blue Spike had not created a product it advertised, called the “Giovanni Abstraction Machine,” despite Blue Spike’s public statements indicating otherwise. We also discovered allegations that Blue Spike’s owner, Scott Moskowitz, took the technology that formed the basis of some of Blue Spike’s patents from company called Muscle Fish,1 and therefore shouldn’t have gotten those patents in the first place. (The parties settled before trial, thus leaving the question of Moskowitz’s alleged misappropriation, and also the related validity of Blue Spike’s patents, unanswered.)

This is a very famous (or infamous) case and it’s one among many cases that EFF speaks about it, directly or indirectly. The focus on trolls at the EFF was very prominent last month [1, 2, 3], but also at the end of the month it published this article (cross-posted in TechDirt) about stupid software patents. Here is the latest ‘winner’:

Stupid Patent Of The Month: Changing The Channel

Is somebody really claiming to have invented a method for switching from watching one video to watching another?

This question comes from a lawyer at the New York Times, as an aside in an interesting article about the paper’s response to a defamation threat from a presidential candidate. Apparently, that defamation threat distracted the his legal team from their work on another task: responding to a patent troll. Intrigued, we looked into it. The patent troll is called Bartonfalls, LLC and its patent, U.S. Patent No. 7,917,922, is our latest Stupid Patent of the Month.

The patent is titled “Video input switching and signal processing apparatus.” It includes just two pages of text and, as the title suggests, describes an apparatus for switching between channels that come from different inputs (e.g. between cable channels and free-to-air broadcasts). The patent is directed to the equipment found in and around a 1990s television (such as VCRs, cable converters, satellite tuners). It does not even mention the Internet.

What’s noteworthy here is that again (as usual) we’re confronted with the description of a ‘pure’ software patent. It should never have been granted in the first place. It gave ammunition to trolls who produce nothing and sue everybody.

Over in Japan, based on what IAM says, patent trolls try to paint themselves “medical”. It’s the same trick which is so often used by the world’s largest patent troll, Intellectual Ventures, in order to pretend not to be a troll and to actually have something to offer to society. The corporate Japanese media (English-speaking) has just published “Outdated Design-Patent Laws Thwart Progress”, signaling a sort of worrisome imitation of the USPTO (where design patents are now poised to come under Supreme Court scrutiny).

Over in China, based on some other reports [1, 2], there a bubble of patents in the making. IAM gets rather excited about China’s SIPO becoming a cesspool of crappy patents, including software patents. Based on this one new report, a WiLAN subsidiary hits China, showing that companies from North America now run after everyone and everything in the Land of the rising Sun (Japan) and its much bigger neighbour. Patent trolls in China are not a new ‘thing’; but right now they gain a foothold and it’s a cause for concern because the EPO collaborates with them quite a lot. In fact, SIPO is like the role model of Battistelli, who doesn’t mind the quality of patents, just quantity (or short-term profit). Here is an IAM article that mentions software patents in China as though they’re desirable (IAM is a longtime booster of software patents). To quote:

Last Thursday, China’s State Intellectual Property Office (SIPO) published new draft guidelines for patent examination. Amid tweaks that will be greeted by pharmaceutical innovators, there are also changes to the standards for software patenting that should be a boon to companies seeking protection for computer programmes, something that has been increasingly difficult to obtain in the US and some other markets. SIPO says the measures are driven by “urgent demand” from innovative industries. It is the latest reminder that in the post-Alice environment, many observers say software protection is easier to obtain in China than in the US.

The USPTO’s senior counsel for China, Mark Cohen, drew attention to the proposed new rules in a blog post last week, saying that they “appear to loosen the standards for obtaining software enabled inventions”. According to Cohen’s translation, a section of the Patent Examination Guidelines which asks applicants to describe “which parts of the computer programme are to be performed and how to perform them” is amended to add that “The components may not only include hardware, but may also include programmes”. If adopted, the guidelines would also make it easier to obtain business method patents, as they provide that: “Claims related to business methods that contain both business rules and methods and technical characteristics, shall not be excluded from the possibilities of obtaining patent rights be Article 25 of the Patent Law.”

The IAM Weekly E-mail, distributed on November 2^nd, mentioned this as well and said:

Subscribe
IAM Weekly

Editor's round-up

See current issue
The death of software patents has been greatly exaggerated, at least
in China and the United States. On the IAM blog this week, we reported
on new examination guidelines at the Chinese State IP Office which
seem to indicate that it will be easier to get protection for
computer-implemented inventions in the country than it has been thus
far. Meanwhile, in an exclusive article the former chief patent
counsel at Microsoft explained why it has been a very good six months
for US software patent owners. The European Commission has just
released a detailed report on patent assertion entities which
concludes that troll-like behaviour is unlikely to be seen in Europe
for a number of reasons, including the preponderance of high-quality
patent rights and comparatively low litigation costs. Elsewhere, we
looked at Hillary Clinton’s IP policies and focused on a major
BlackBerry licensing deal in Asia. There was news, too, of
confidence-boosting third-quarter results from InterDigital, as well
as claims from its CEO that a recently launched Internet of Things
licensing platform could deliver significant revenue boosts in the
near future.

Joff Wild
Editor

IAM ‘magazine’ is meanwhile grooming yet another patent troll. It started last week and we expect to see more of that from IAM, which is now actually receiving money from some infamous patent trolls like MOSAID/Conversant.

One more item of news regarding patent trolls came from the trolls expert, Joe Mullin (who has written about them for about a decade). He decided to dive into the dark operations of ArrivalStar and here is what he found:

Since 2006, hundreds of US businesses have received letters informing them that they infringe patents belonging to Martin Kelly Jones, who briefly ran a business called “BusCall” in the early 90s. The Jones patents, owned for many years by a company called ArrivalStar, have been called out repeatedly as one of the most egregious examples of patent abuse.

ArrivalStar sent out hundreds of demand letters, often targeting small companies that couldn’t hope to afford a drawn-out defense of a patent infringement suit. It also took the unusual step of suing public transit agencies, saying their bus-tracking systems infringe Jones’ patents. The patents were moved into a new entity called Shipping & Transit LLC last year.

Jones and the lawyers who work with him have squeezed royalty payments from over 800 companies over the years, but little has been known about him, outside the short explanation included in the demand letters he sends out. Now, Jones has made what appear to be his only public comments since his inventions launched a decade-long campaign of lawsuits, in statements to The Wall Street Journal.

It’s sad to see that patent trolls are still treated with some level of recognition and companies like IBM have begun acting more like them (assimilation) because all they have is a huge pile of patents. Here is Manny Schecter from IBM saying that “If apple slicer for eye-appealing apple slices (US9427103) is eligible for patenting, so too should be software…”

MinceR from our IRC channels said that’s “pretty weak argumentation” and Toby agreed, saying that he too noticed.

As if one bad patent supports another… what utterly poor logic from Mr. Schecter. People elsewhere have responded to this tactless tweet of his.

Speaking of patents that are too problematic to defend, how about patents you’re not allowed to get away from, or SEPs as they’re sometimes called (a tax on any implementation with conformance)? It is truly an abomination w.r.t. the raison d’être of patent systems, yet here is MIP writing about it, calling it a “conundrum” rather than a travesty.

Negotiations over patent licensing are tricky. One bad sign is if parties start discussing standard-essential patents in detail

Michele Herman of Metabl and Richard Taffet of Morgan Lewis staged a mock negotiation yesterday as part of the session called “The Nuts and Bolts of Licensing: Strategies for Negotiating to Yes.”

Negotiations over patent licensing are tricky enough. But Herman said it’s a bad sign if parties start discussing standard-essential patents (SEPs) in detail.

In the case of SEPs, there are already many trolls and parasites out there (like WiLAN, which now expands to China). When does the patent system become simply an obligatory tax authority rather than a system where one can license to copy (having found something innovative), rather than comply/adhere to industry standards? RAND/FRAND also comes to mind. █

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