09.17.18

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Abstract Patents (Things One Can Do With Pen and Paper, Sometimes an Abacus) Are a Waste of Money as Courts Disregard Them

Posted in America, Courtroom, Patents at 2:28 am by Dr. Roy Schestowitz

An abacus

Summary: A quick roundup of patents and lawsuits at the heart of which there’s little or no substance; 35 U.S.C. § 101 renders these moot

THIS almost final post (for today) is also the longest. It covers new examples in which the patent system — notably the USPTO in this case — presents recklessness or disregards for patent quality, legal certainty and so on. What good are patents if their legitimacy isn’t being assured and whose underlying economics are misunderstood (or worse — ignored)? Mere ideas aren’t inventions. Thoughts aren’t inventions, either. Nature is not an invention and merely discovering things which always existed in nature can’t be considered an invention (at best a discovery). The patent systems oughtn’t be misused or endlessly stretched to cover just about every conceivable thing because that would hold science as well as free thought back. Those who care about patents should shun the patent maximalists and aim to restrict the scope of patents. The same goes for copyrights and trademarks.

We start our journey with this bizarre new article that uses the term “IP”, probably conflating trade secrets, copyrights and trademarks with patents. Proactive Investors UK speaks of “patent licensing,” but this case appears to concern something like copyrights (which they vaguely allude to as “IP”). GAN must be extremely misguided if it thinks that it can win a patent lawsuit over software in the US, so on the face of it it boils down to bad reporting or bad communication (misleading on purpose) from Irwin IP LLP. What does the following mean by “technology”? Code? Mere ideas? Secrets? It doesn’t say clearly. To quote:

GAN claims that some internet gambling operators have been using its technology without permission, and it is now seeking “commercial settlements” for these alleged infringements

[...]

But it appears others have been using the software without permission, and the company said the offending firms had been “substantially and progressively placed on notice” of GAN’s patents.

Chicago-based law firm Irwin IP LLP will now seek “commercial settlements” for any infringements, which, along with patent licensing, represent a “potentially high-margin incremental income stream for GAN”.

We’ll come back to Chicago in a moment. The next and final post will deal with it.

Here is another baffling new article. They speak of a new stationary bike, but they actually describe software, not a bike. In their own words:

Last May, in-studio cycling business Flywheel Sports announced plans for a new stationary bike called the FLY Anywhere that would allow users to stream both live and archived cycling classes into the comfort of their homes, all while tracking performance and letting users compete with other riders.

To the folks at Peloton, it sounded familiar. A little too familiar. So on Wednesday, the company filed a lawsuit against its cycling rival, alleging that Flywheel had willfully infringed on Peloton’s patents in the development of its new toy. But the story Peloton spins about how that infringement took place is the most stunning part of all.

They’re preparing for a patent fight. One thing we know for sure: the law firms will win. They will get richer. At both ends.

Also mind Christopher Wood’s new article, which is actually marketing by law firms. It resorts to intimidation and scare-mongering tactics like this:

Harris related a story of a company making a pitch for investment at a Rockies Venture Club event, with the entrepreneur including a patent number in their slide deck. An investor at the event looked up that number, only to discover that the patent didn’t exist.

So what? Unless they’ll looking to invest in a patent troll, it’s rather improbable that a startup can pick on a large rival in court. Such legal fights favour the wealthier party.

Speaking or legal action, a law firm closely connected to Microsoft (Shook, Hardy & Bacon LLP) took note of a lawsuit in which bogus software patents are being used to “assault” (their word) a rival:

In a recent development set against the backdrop of ever-increasing cloud competitor lawsuits, longtime provider of Unified Communications-as-a-Service (UCaaS) and cloud-based Voice over IP (VoIP) solutions RingCentral filed a patent infringement suit last month against competitor Dialpad in the U.S. District Court for the Northern District of California. In its 22-page Complaint filed on August 27, 2018, RingCentral alleges direct and indirect infringement of four of its patents granted between 2010 and 2017 by several of its competitor’s VoIP offerings, namely Dialpad Standard, Dialpad Pro, Dialpad Enterprise, Dialpad Free, UberConference Free, and UberConference Business. RingCentral has been on the receiving end of its fair share of patent infringement suits over the last several years, but this appears to be the first case in which RingCentral has gone on offense as a patent plaintiff.

[...]

While RingCentral appears to have dominated the UCaaS space for some time, Dialpad—a relatively young San Francisco-based company co-founded as Firespotter in 2011 by Craig Walker (creator of Yahoo! Voice and Google Voice) and adopting its current namesake in 2016—has also amassed its share of accolades during its young existence. Along with RingCentral, Dialpad boasts its appearance on Deloitte’s 2017 Technology Fast 500 list, and was also a recipient of TMC’s 2017 WebRTC Product of the Year Award. Additionally, in 2016, TMC Labs awarded Dialpad a winner of its IT Innovations Award for their advancements in VoIP solutions.

It seems pretty clear to us that these are abstract software patents — the sort of thing Microsoft accumulates and leverages in bulk to thereafter blackmail large firms. On the tax evasion aspects of this, Reuters weighed in last week when it wrote: “The GILTI provision, meant to discourage multinational corporations from avoiding U.S. taxes by holding intangible assets such as software patents abroad in low-tax countries, imposes an effective 10.5 percent tax rate on income from tax havens.”

We covered this scam many times before. It’s a side ‘perk’ of accumulating many bogus software patents.

Notable over the past week was actually the number of such patents being heralded to the world. This press release spoke of patents on “cloud computing, machine learning and IoT connectivity for HVAC optimization,” i.e. just buzzwords for software patents (bunk patents, worthless in US courts) . Here are some more patents on utter rubbish (technology giants like Google just striving to stockpile garbage for the numbers, presumably to cross-license without even assessing the patents individually).

Aaron Gin and Michael Krasniansky from McDonnell Boehnen Hulbert & Berghoff LLP wrote about bogus software patents that get ‘dressed up’ as “AI” (as almost any algorithm can be). We wrote a great deal about so-called ‘AI’ patents and here come more of these clueless pieces with “AI” in the headline. “Machine bias is difficult to identify and eliminate,” say patent maximalists. One cannot patent algorithms, however, or at least not enforce them in courts. Bunk patents cannot be made any less bunk by adding buzzwords like “AI” to them. Lawyers know this, but they still try to convince us otherwise. From the paywalled article:

Vincent Violago and Nikko Quevada discuss [...] They also discuss patents and directed to bias mitigation, as well as the reasons machine bias is difficult to identify and eliminate

Another site of patent maximalists then said (with “AI” in the headline) that “[t]he emergence of artificial intelligence has coincided with uncertainty of the patentability framework for protecting such innovations.”

So they know that these are bunk, but they go along with it anyway. There was no “emergence of artificial intelligence,” just reemergence of it as a buzzword about a year ago. It’s a marketing strategy, much like “cloud”. They give new labels to old things. The buzzword just means algorithms in this context; “AI” can be just about anything, e.g. algorithm, which does something “clever” (however one defines that). There’s a new paper [PDF] titled “Ethics of Using Artificial Intelligence to Augment Drafting Legal Documents,” but that’s inherently different because it’s about using algorithms to manage and author patents. Even patent lawyers often conflate or confuse these things.

Law firms ought to stop assuming that US courts will respect software/algorithm patents because they won’t. See their track record. How about this from Jessica Zimmer? It’s about Hedera Hashgraph:

Hedera Hashgraph began life as an algorithm. But over the years since 2015 it morphed into a leviathan, raising around $100M on a $6bn valuation from institutional and accredited investors. After launch, it will be almost entirely independent from founding parent Swirlds, which is now one of the members of the Hedera Council and will have the same voting rights as other members.

The algorithm is probably not patentable, but that does not prevent the company from moving ahead and beyond that. Companies which stop innovating and depend only on a pile of patents may end up like Blackberry, which is nowadays behaving like a patent troll. This is the kind of headlines it has earned so far this month and its patents aren’t even legitimate. “BlackBerry’s patent 8,745,149 is invalid, Patent Trial and Appeal Board says in opinions posted on its electronic docket,” as was covered at the time (end of last month). This is what happens when one tries to leverage software patents against large firms; they don’t fold as they can afford to fight back and win.

A Microsoft-connected news site (“Motley Fool”) is meanwhile mischaracterising this Microsoft-like patent trolling. Leo Sun wrote:

Over the past five years, BlackBerry (NYSE:BB) has phased out its smartphone business and expanded its enterprise software portfolio. That turnaround strategy was painful, but it resulted in shallower revenue declines and rising non-GAAP profits.

Another pillar of BlackBerry’s turnaround is its effort to monetize its portfolio of over 44,000 patents through royalties and licensing fees. Some companies willingly paid those fees, but many others didn’t.

That barely helped cover any of the lost revenue. The person behind this strategy is no longer at BlackBerry. The bottom line is, those who pursue software patents and assume these to be worthwhile in court will be rather disappointed. Unless of course they wish to become patent trolls, preying on those opting for a quick settlement without fighting back in court.

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