08.31.17

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Patent Trolls Are Under Attack and on the Run

Posted in America, Antitrust, Courtroom, Patents, Security at 5:51 pm by Dr. Roy Schestowitz

“I would much rather spend my time and money and energy finding ways to make the Internet safer and better than bickering over patents.”

Dean Drako, Barracuda’s CEO

Summary: Wetro Lan LLC panics and pays ‘protection’ money after a failed trolling attempt; MPEG-LA too is under fire, as an antitrust lawsuit has finally been filed against it

EARLIER today we found two interesting reports, one from Dale Walker and another from Joe Mullin, who has been tracking and writing about patent trolls for about a decade. Following TC Heartland we certainly hope that things will change; patent trolls will hopefully altogether go out of business [sic] some time soon. Extortion and racketeering have no value/benefit to the economy.

Walker explained how the latest twist of events got started: “The Moscow-based security company [Kaspersky] was first approached by a patent holder in October last year, who issued a patent lawsuit and demanded a $60,000 cash settlement to make the case disappear.”

Guess what happened instead (and not for the first time).

The tables are turning. Wetro Lan and other patent trolls find themselves on the run when they may be forced to pay the defendant’s legal fees and sometimes lose their patents too. This is what happened in this latest case. To quote Mullin:

The patent-licensing company, Wetro Lan LLC, owned US Patent No. 6,795,918, which essentially claimed an Internet firewall. The patent was filed in 2000 despite the fact that computer network firewalls date to the 1980s. The ’918 patent was used in what the Electronic Frontier Foundation called an “outrageous trolling campaign,” in which dozens of companies were sued out of Wetro Lan’s “headquarters,” a Plano office suite that it shared with several other firms that engage in what is pejoratively called “patent-trolling.” Wetro Lan’s complaints argued that a vast array of Internet routers and switches infringed its patent.

This is the key part:

As claim construction approached, Kaspersky’s lead lawyer Casey Kniser served discovery requests for Wetro Lan’s other license agreements. He suspected the amounts were low.

Finally there’s this:

On a post to his personal blog detailing the victory against Wetro Lan, founder and CEO Eugene Kaspersky says his company has now defeated five claims from patent assertion entities, including the infamous claims from Lodsys, a much-maligned patent holder that sent demand letters to small app developers. Lodsys dropped its case against Kaspersky right before a trial.

While the company has spent plenty in legal fees, its total payout to so-called “trolls” has been $0. Firms that engage in “trolling” know that companies often simply settle instead of dealing with the costs and pain of a court litigation.

Kaspersky and others in his field do not like software patents. They speak out about it (occasionally).

The above reveals an interesting strategy where neither invalidation or (legal) fees award acts as a deterrent; it’s discovery requests. Apropos, Patently-O published this short post earlier today about the meaning of “all expenses,” noting a new CAFC decision where the judgment “was split – with Judges Prost and Dyk in majority and Judge Stoll in dissent and arguing that the term “expenses” is not sufficient to overcome the traditional american rule regarding attorney fees.”

The second story we found today came from IAM, which revealed MPEG-LA as the target of litigation, for a change (background about this troll can be found in our Wiki). Patent trolls can, as it turns out, be sued, this time using antitrust law. This gigantic troll is in hot water not only in the far east, with the lawsuit actually being filed in the US:

Chinese appliance maker Haier has filed an antitrust lawsuit in the Northern District of New York against MPEG LA and six licensors that are part of its ATSC patent pool. The complaint accuses the companies and pool administrator of a range of anti-competitive practices affecting the market for televisions, the effect of which it says is to disadvantage implementers like Haier which compete on price at the lower end. For that reason, Chinese companies – many of which have argued that their low margins entitle them to different patent licence terms – will be interested to see how far this case goes.

It’s nice to see the patent trolls getting a taste of their own ‘medicine’ (or poison). It’s now them who find themselves needing to shell out ‘protection’ money.

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