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03.02.17

The Latest Three Stories Which Show Why the US Supreme Court Must Stop Patent Trolls

Posted in Apple, Courtroom, Google, Patents at 5:29 pm by Dr. Roy Schestowitz

How long and how much more will it take for the Supreme Court to realise there is a profound issue in Texas?

Rodney Gilstrap

Summary: The lack of justice in the American patent system, where trolls receive favourable treatment from particular judges and one bogus patent (now invalid) can earn a person over $45 million in ‘protection’ money, necessitates firm and decisive intervention from the US Supreme Court

Federal Circuit Once Again Overrules Mistakes by the Kangaroo Patent Court of Rodney Gilstrap in the Eastern District of Texas

Kangaroo courts are not monopolised by the EPO and the USPTO hasn’t a monopoly on bad patents, either (thankfully, the USPTO is actually improving and lowering the incentive for trolls). The US Supreme Court, together with CAFC below it, already do a fine job, further aided by PTAB (the appeals board) for quicker and cheaper determinations against bad patents.

When Apple celebrates the death of bad patents we too are happy, even if we are far from friends of Apple (we used to call for boycotts). Apple has just defeated Smartflash and there are a lot of articles about this, especially or initially in pro-Apple sites. Headlines include “Apple has $533m verdict against iTunes software patents thrown”, “Apple won’t have to pay $533 million to an iTunes patent troll”, “U.S. appeals court tosses patent verdict against Apple”, and “Apple tastes victory against Smartflash at Federal Circuit”.

“When Apple celebrates the death of bad patents we too are happy, even if we are far from friends of Apple (we used to call for boycotts).”“This ruling isn’t surprising,” one of the above articles states, “as US District Judge Rodney Gilstrap ordered a damages retrial, saying the jury’s view of Apple’s infringement might have been confused by his instructions on how properly to calculate royalties.”

But the pro-trolls Judge Rodney Gilstrap did not in fact dispute a liability. To him, it was just a matter of how much money would be paid. First to cover the news, as far as we were able to see, was Michael Loney of MIP. He wrote about it as early as yesterday, noting that CAFC had found yet another ruling from the notorious Eastern District of Texas to be bunk. “The Federal Circuit has found invalid three Smartflash patents,” he wrote, “reversing the Eastern District of Texas.”

Eolas Driven Out of the Eastern District of Texas

There is another important development down in Texas and Joe Mullin probably wrote the best report about it (Mullin is quite the expert in this domain). To quote Mullin:

Eolas Technologies, which has been called a “patent troll,” has continued to file against big companies, even after losing a landmark 2012 trial. But following an appeals court order (PDF) last week, Eolas will have to pursue its lawsuits in California—not its preferred patent hotspot of East Texas.

As of Friday, Eolas’ lawsuits against Google has been transferred to the Northern District of California. The move could reduce Eolas’ chances of winning a settlement or verdict since East Texas courts have been viewed by some as favoring patent holders. Similar lawsuits against Amazon and Wal-Mart remain in East Texas, for now.

Michael Loney wrote about it too, noting that CAFC is potentially moving trolls out of that notorious Eastern District of Texas (even before the Supreme Court rules on TC Heartland LLC v Kraft Foods Group Brands LLC). To quote:

Google’s request for a writ of mandamus to transfer a case brought by Eolas Technologies to the Northern District of California from the Eastern District of Texas has been granted, with the Federal Circuit citing “a clear abuse of discretion”

Eolas was mentioned here as far back as one decade ago and many more times since. It’s definitely a patent troll, but Mullin put the word “troll” (in the headline) and “patent troll” (in the body) within scare quotes, perhaps fearing legal action against the publisher (his employer).

Software patents, as in the above case, are bunk, but it’s very expensive (usually too expensive) going to court to show it (especially if there are appeals). This means that most defendants will silently fold and pay the Mafia (or troll) ‘protection’ money. Insistent and persistent aggressors or trolls, some of whom are well-funded, will just file more and more motions until the defendant — even if repeatedly deemed innocent — decides that it’s simply cheaper to settle. It means that wealth trumps justice and it can be exploited time after time, by simply choosing vulnerable litigation targets which are almost certainly going to buckle.

“Software patents, as in the above case, are bunk, but it’s very expensive (usually too expensive) going to court to show it (especially if there are appeals).”Speaking of software patents, this tweet says that “Salesforce tries to patent Records Management……quick take” (in an image).

Erich Spangenberg Turns Out to be a Patent ‘Fraud’

In the above cases we see deep-pocketed companies like Google and Apple fighting back, again and again, simply because they can afford it. So can smaller (but still very large companies) such as Newegg, which already spent millions of dollars on very few patent cases — and that’s just in legal fees!

According to Mullin’s other new report, mega-troll Erich Spangenberg went after Newegg and finally (belatedly) lost. That’s another software patent dead and we can expect more to come; it’s expensive to prove the invalidity. The USPTO should clean up this (its own) mess. PTAB helps towards that. Mullin wrote:

Patent-holding company TQP Development made millions claiming that it owned a breakthrough in Web encryption, even though most encryption experts had never heard of the company until it started a massive campaign of lawsuits. Yesterday, the company’s litigation campaign was brought to an end when a panel of appeals judges refused (PDF) to give TQP a second chance to collect on a jury verdict against Newegg.

The TQP patent was invented by Michael Jones, whose company Telequip briefly sold a kind of encrypted modem. The company sold about 30 models before the modem business went bust. Famed patent enforcer Erich Spangenberg bought the TQP patent in 2008 and began filing lawsuits, saying that the Jones patent actually entitled him to royalties on a basic form of SSL Internet encryption. Spangenberg and Jones ultimately made more than $45 million from the patent.

Will Spangenberg now refund the extortion money (more than $45 million), plus legal expenses? Or will this be another case of an invalid patent costing a fortune to countless companies, even though they were innocent all along because this patent was bogus?

We certainly hope that the Supreme Court is watching all these cases and will take them into account later this year when TC Heartland can become the new “patent killer” (precedent).

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