Bonum Certa Men Certa

Spangenberg's Reputation Laundering, Parasitic Taxes on Products Everyone Uses, Electronic Frontier Foundation (EFF) Calls Patent Trolling “Extortion”

Another week of patent trolls everywhere, especially in the Eastern District of Texas

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Summary: A roundup of recent news about the patent trolls with their modus operandi

PATENT trolls are without any shadow of a doubt a serious problem. What they depend on, however (typically software patents), can be tackled in order to address this problem along with other problems (like patent shakedowns by large corporations that harm innovation).



Famous Trolls Want a 'Soft' Image



Several troll 'celebrities', such as Nathan Myhrvold or Erich Spangenberg, were covered here many times over the years. IP Watch now entertains one of the world's most notorious patent trolls, Spangenberg, just as IAM recently did. It is understandable that IAM, which is paid by patent trolls, does this, but why IP Watch? It's nothing but a puff piece, like the one it did with Battistelli a few months back. We hope that IP Watch stays true to its original goals (it is now looking for writers, having just advertised positions for freelance authors) rather than getting tempted by the PR industry.

Stupid Patent Of This Month



"We hope that IP Watch stays true to its original goals (it is now looking for writers, having just advertised positions for freelance authors) rather than getting tempted by the PR industry."Over at the EFF's site, which writes quite a lot about patents these days (it usually focuses on patent trolls), there are two new articles, "It’s Time to Shut Down the Most Prolific Patent Troll in the Country" and "Stupid Patent AND Trademark of the Month: My Health€®" (crossposted in TechDirt). "Since getting patent and trademark rights," the EFF explains, "My Health has been pretty active in federal court. It has sued at least 30 companies for patent infringement and has been involved in another three lawsuits involving allegations of trademark infringement. But regardless of what type of case it is, we think both the patent and trademark are stupid."

This is nowhere as bad as Erich Spangenberg or Intellectual Ventures' Nathan Myhrvold. They just use more entities from which to initiate litigation. The EFF is currently focused on venue reform, discouraging filing in the Eastern District of Texas, and also "bad" patent prevention (it doesn't say software patents). There is still no push in the ideal direction and not much is getting done at all, except perhaps by the US Supreme Court (we shall cover this in a separate article). Hardly any proposed law or bill gets passed and this so-called "Patent Reform" that a pro-software patents site speaks of this month does nothing whatsoever about software patents. It's a waste of time and effort. It's somewhat of a distraction.

Spending on Lawyers, Not Engineers



"The EFF is currently focused on venue reform, discouraging filing in the Eastern District of Texas, and also "bad" patent prevention (it doesn't say software patents)."Even if patent trolls were ever to be eliminated, it would still not put an end to other forms of litigious aggression which does nothing to advance science (or "innovation", to use a buzzword). Here is a very recent story about a case between two giants. To quote the introduction: "In a recent order in VIA Techs., Inc. v. ASUS Computer Int’l, Magistrate Judge Grewal Court found VIA’s expert disclosures insufficient under the “straightforward” claim construction process of the Northern District’s Patent Local Rules. Despite VIA’s failure to strictly comply with the rules, the Court rejected the “last resort” penalty of striking the expert’s testimony altogether, and instead granted ASUS additional deposition time to inquire into his opinions. In so ruling, the Court considered the “relative banality” of the undisclosed opinions and the weeks remaining before the claim construction hearing."

Even if this case is not about software patents, what it does show is a lot of bickering over patents and passage of money to lawyers rather than engineers. It's no wonder some companies now exist solely based on patents and royalties extraction rather than production of goods. Take Ericsson for example. It has become little more than a patent troll by proxy and IAM says there are billions at stake. To quote: "In late April Gustav Brismark took over one of the biggest jobs in IP. As the chief IP officer at Ericsson he not only has control of a vast patent portfolio, which is generally accepted to be one of the highest quality stockpiles in cellular communications, but is also in charge of a licensing business that generates more than $1.5 billion in annual revenues."

"It's no wonder some companies now exist solely based on patents and royalties extraction rather than production of goods."Where does this money come from? Artificially inflated prices of (overpriced) phones that are manufactured by the billions of units. The public collectively pays for this and the money ends up in the coffers of a non-(or barely)producing company, According to this new article from Patently-O: "In a bench trial, the court found that a reasonable royalty was about $.83 per WiFi product sold by Cisco. On appeal, however, the Federal Circuit vacated that Judgment – holding that the royalty rate was likely too high because it internalized the lock-in value of the standardized technology."

“Extortion” as a Business Model



Here again we see an example of products getting more expensive for the enrichment of parasitic entities, such as CSIRO in this case. It continues to be an unfair and unreasonable patent predator, as we noted here in past years, and it now uses the Eastern District of Texas for litigation. The EFF rightly calls this kind of practice “extortion” in this new press release which states: "The Electronic Frontier Foundation (EFF) filed a lawsuit today against a well-known patent troll that tried to shake down a small business owner for tens of thousands of dollars on bogus claims of infringement on patents that were never used and were expired or invalid.

"Well, start by fixing (limiting) patent scope as per Alice and common sense.""Defendant Shipping & Transit LLC has filed hundreds of lawsuits asserting frivolous patent infringement claims as part of its business model to intimidate and extort money from people, EFF alleged in a complaint filed with co-counsel Julie Turner of California-based Turner Boyd and Matthew Sarelson with Miami-based Kaplan Young & Moll Parrón. Shipping & Transit sends out letters accusing businesses of patent infringement and demanding thousands of dollars to license the patents or settle the matter. It then routinely sues those who don’t pay up to extort “nuisance value” settlements."

We mentioned these cases here before. It's not hard to see how to put an end to them. As one person put it the other day, "Software Patents are a Cornerstone of the Patent Trolling Problem" as "Todd Moore shares his experience with patent trolls.

"It's time to fix patents."

Well, start by fixing (limiting) patent scope as per Alice and common sense.

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