Law Students Fend Off a Patent Troll.

How a handful of Brooklyn Law students forced a patent troll to drop a meritless lawsuit.

The engineers at CarShield, a connected-car startup, were working on their trip-route optimization features when a patent troll interrupted their day. This troll didn’t bother sending a demand letter, it just filed a lawsuit. No prior notification. This was odd, as the plaintiff — 911 Notify, LLC — claimed to own a patent on notifications. The notification CarShield did eventually receive was an offer to settle the lawsuit for $250,000. They were shocked.

Startups in this situation are trapped between a rock and a hard-place. They can either pay off the troll (unsavory) or defend the lawsuit (expensive). Many startups decide to hold their nose and pay the trolls. Everyone would prefer to defend the lawsuit, but not everyone can afford the cost of defense. This is why we started using law school clinics to do free legal defense. It’s a win-win arrangement: students cut their teeth on real litigation, startups get free legal defense, and patent trolls get nothing.

Brooklyn Law School’s BLIP clinic tried it last semester, and was fairly successful in getting a patent troll lawsuit dismissed. I’ll tell you a little about the clinic, the case, and how other law schools can do similar work.

The BLIP Clinic

Professor Jonathan Askin operates the Brooklyn Law School BLIP clinic like a law firm. Students sign up clients and perform basic legal work like forming companies, reviewing contracts and filing trademarks. Defending a patent lawsuit is not basic legal work. Its risky, complex and involves hundreds of hours of legal research and writing.

BLIP was fortunate to have an exceptional student running the defense team. Maegan Fuller, a 3rd year student, organized the defense, wrote the briefs, and negotiated with the troll. BLIP also had Jorge Torres, a former litigator at Skadden and Fish & Richardson, providing informal guidance on high-level litigation strategy.

As the clinic advisor, I was the lawyer signing off on final drafts before filing them with the court.


image courtesy of everythingisaremix.info

The Patent Troll

The plaintiff is a shell company. I consider it a patent troll because it doesn’t seem to make anything, and it files lots of patent lawsuits. It filed ten last year and ten more this year. It targets huge public companies as well as startups.

The patent behind all these lawsuits is not particularly innovative. It claims something about sending notifications after an emergency phone call. Here’s the gist from one of the figures:

the patent on “notifications”

Legal Defense & Litigation Strategy

This was a straightforward case (as far as patent litigation goes) and we used a straightforward defense strategy. First, the clinic made it clear that our client was not an easy mark. CarShield was going to defend this case all the way to trial, and challenge the patent at every stage. While defendants always make these threats, our client had a free legal team to back them up.

Free legal support drastically changes a patent troll’s calculus. They win by offering to settle cases for less than the cost of the legal defense. It’s much cheaper for defendants to pay a troll $50,000 to settle a lawsuit than to pay lawyers $200,000 to win it. However, when a law school clinic is involved, the cost of legal defense drops to zero, and defendants have no incentive to pay trolls anything at all. With a free legal and a winning defense, who wouldn’t fight all the way to trial?

The clinic was also lucky. The Supreme Court issued 6 helpful patent decisions while our case was pending. In particular, Alice v. CLS Bank invalidated patents on taking mundane tasks and doing them on a computer. The patent in our case was basically for sending notification calls from a computer. Probably invalid under Alice. A second Supreme Court case, Octane v. Icon encouraged judges to impose “fee shifting” penalties in appropriate patent cases. Patent trolls are taking note. Ours seemed to get flustered whenever I mentioned these new cases.

The clinic filed its first motion, a “motion to dismiss for lack of jurisdiction” in late April. The motion basically argued that it was unfair to drag a California startup across the country to a Delaware court for a patent lawsuit, especially when the startup had never sold its products in Delaware. The motion was fully briefed by July, and we were preparing for oral argument.

The Students Win… Mostly

It was a persuasive motion. After reading it, and weighing the recent Supreme Court decisions, the troll simply dropped its case against CarShield. After months of dedicated work, the clinic students deserved a gavel-banging judicial decision in their favor. All they got was a quiet withdrawal. But I think we can still chalk it up in the win column. The case is dismissed (for now), the students learned real patent litigation skills.

With the lawsuit dismissed, CarShield can get back to doing what it loves, building technology to optimize the driving experience.

Case Dismissed! (at least for now).

A Patent Litigation Clinic Model?

Running a patent litigation clinic isn’t easy, but our initial model seems to be working. I’m sure there’s room to improve it over future iterations. Here are the basic ingredients:

  • A clinic director willing to get involved in complex litigation.
  • A handful of 3rd year law students ready to sink most of their time into the defense. I think a small team of dedicated students is better than a big team of distracted students.
  • A handful of 2nd year law students ready to take up the torch when the third-year students graduate.
  • Practicing patent litigators willing to review, edit and sign court filings.
  • Startup founders willing to take a principled stand against frivolous patent litigation, and willing to trust law students with the fate of their company.

Running a patent litigation defense clinic is not easy, but its possible, and its a worthwhile project. Patent trolls hurt innovation, and law students can help stop them.


Eric Adler is a patent and tech lawyer at Adler Vermillion LLP and an advisor to the BLIP Clinic. However, the views in this article are his alone.

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Clones Wars: Video Game Litigation Illustrated

by Eric Adler

Copyright law allows — perhaps even encourages — copying ideas. Ideas are always free to use and modify. What copyright law prohibits is copying the original creative expression of an idea. Since video games are collections of both ideas and expressions, we need to figure out whether the clone copied any “creative expression” from the original game. Some examples might help explain what we mean by separating idea from expression. Let’s start with a case about Atari’s Breakout, and whether it has any protectable “creative expression” at all.

Even Simple Video Games are Copyrightable: Breakout (1992)

Atari, maker of “Breakout” (left) was unhappy with Romstar’s “Arkanoid” game (right). But before Atari could sue for infringement, it needed to register the copyright to Breakout. The Copyright Office initially refused, dismissing Breakout as a mere collection of functional rules applied to basic shapes and colors, and lacking creativity. Atari, feeling insulted, appealed the matter to a young Ruth Bader-Ginsburg (59).

Ruth Bader-Ginsburg appreciated the creativity involved in designing video games. While simple shapes and colors are unprotectable, Atari’s selection and arrangement of simple shapes were copyrightable, especially when paired with creative sound effects. And while game mechanics based on pure physics are public domain, the Breakout game mechanics were governed by creative physics: “The ball’s path in Breakout varies depending on which of four sections of the paddle it hits. Its trajectory does not follow from the laws of physics.” Atari v. Oman (1992). Judge Ginsburg decided that the Copyright Office’s video game philistines didn’t have a “rational basis” to deny Breakout’s copyright registration based on a perceived lack of creativity.


Crazy Kong: Crazy Infringement (1982)

Elcon made a straight-up Donkey Kong clone called “Crazy Kong.” Crazy Kong “embodies audio-video material, including the characters on the screen and the sound, that is virtually identical” to Donkey Kong. Nintendo v. Elcon (1982). Crazy Kong copied every detail of the original Kong, and predictably, got slapped with a rolling barrel of infringement.


K.C. Munchkin: Infringement (1982)

K.C. Munchkin looked a lot like Pac-Man, but it wasn’t an identical copy. This means the judge needed to “filter out” the unprotectable elements before looking for copyright infringement. The judge first filtered out scènes à faire (i.e., stock video game elements):

The maze and scoring table are standard game devices, and the tunnel exits are nothing more than the commonly used “wrap around” concept adapted to a maze-chase game. Similarly, the use of dots provides a means by which a player’s performance can be gauged and rewarded with the appropriate number of points, and by which to inform the player of his or her progress. Given their close connection with the underlying game, K.C. Munchkin’s maze design, scoring table, and “dots” are sufficiently different to preclude a finding of infringement on that basis alone. Atari v. Philips, 672 F.2d 607 (7th Cir. 1982).

The judge then looked at Pac-Man’s “creative expression” — the part of the game protected by copyright. He decided that a maze-chase game “does not dictate the use of a ‘gobbler’ and ‘ghost monsters.’ Those characters are wholly fanciful creations, without reference to the real world.” Atari v. Philips. Finally, comparing only the protectable creative elements, the court found copyright infringement:

The K.C. Munchkin gobbler has several blatantly similar features, including the relative size and shape of the “body,” the V-shaped “mouth,” its distinctive gobbling action (with appropriate sounds), and especially the way in which it disappears upon being captured. An examination of the K.C. Munchkin ghost monsters reveals even more significant visual similarities. In size, shape, and manner of movement, they are virtually identical to their Pac-Man counterparts. K.C. Munchkin’s monsters, for example, exhibit the same peculiar “eye” and “leg” movement. Both games, moreover, express the role reversal and “regeneration” process with such great similarity that an ordinary observer could conclude only that North American copied plaintiffs’ Pac-Man. Atari v. Philips.

Next we’ll compare Pac-Man, a maze game with fictional characters, to a sports game rooted in non-fiction themes and physics.


Karate Champ: No Infringement (1988)

“World Karate Championship” (right) is a clone, more or less, of Data East’s “Karate Champ” (left). The two games have similar graphics and game play. The court first filtered out the elements that were unprotectable under the “merger” rule. Data East could not protect the “idea” of a karate game, nor any game mechanics that necessarily flow from that idea. The unprotectable elements “consist of the game procedure, common karate moves, the idea of background scenes, a time element, a referee and bonus points.” They are unprotectable because “they necessarily follow from the idea of a martial arts karate combat game, or are inseparable from, indispensable to, or even standard treatment of the idea of the karate sport. Data East v. Epyx (1988).

There was no infringement because Epyx only copied the “idea” of a Karate video game, and the non-copyrightable graphics and game mechanics that necessarily flowed from the idea of a karate style fighting game.


Street Fighter II: No Infringement (1994)

After losing the World Karate Championship case, Data East changed it’s stripes. Rather than develop original games, it started cloning games. When Data East cloned Street Fighter II, CapCom cried foul. While Fighter’s History (right) copied most of its details and game play from Street Fighter II, it was careful not to copy the creative game elements. Here’s the judge:

Although Guile and Matlok both have spiky hair and wear similar clothing, they are not identical to one another. Guile is a military figure who wears military garb and has a military base as his home stage. Matlok is a “punkrocker” whose characterization is underscored by his tough appearance and “breakdance” type moves.

Not only did the judge compare the appearance of Guile and Matlock, he compared their magic projectiles:

Their magic projectiles, while similar in appearance, are not identical. In keeping with his personality, Matlok throws a spinning compact disc, the form of which is apparent in some video sequences. Guile, on the other hand, throws a Ch’i mental energy ball and shouts “sonic boom” upon its release. This is in keeping with his military persona.

Some special moves were unprotectable scènes à faire, while other special moves were copyrightable creative expression. According to the court, these 7 moves were not protectable: “(1) Sagat’s ‘tiger knee’ which is a common kickboxing move; (2) E. Honda’s ‘knee bash’ which is a common wrestling move; (3) Vega’s mid-air throw which is a basic fight maneuver; (4) Vega’s floor slide which again is a basic fight maneuver; (5) Balrog’s ‘dashing punch’ which is a simple punch; (6) Zangief’s ‘backwards throw’; and (7) Zangief’s ‘body leap’ both of which are common wrestling moves.” Two special moves were protectable: “Chun Li’s head stomp and E. Honda’s 100 hand slap.”

Since Fighter’s History only copied non-protectable game elements, it was not infringing the Street Fighter II copyright. CapCom v. Data East.


Tetris Infringed by Mino (2012)

Desiree Golden started a video game company called Xio Interactive. Before releasing Mino, a Tetris clone for iOS (right), she carefully researched the applicable copyright law. The judge even acknowledged her research: “Based on this research, Xio believed it could freely copy any part of Tetris that was based on a ‘rule of the game’ or that Xio viewed as being functional to the game.” Tetris v. Xio Interactive (2012).

She understood the gist of the law, but still copied too much. She tried to make a World Karate Champ (copied idea), but ended up with a Crazy Kong (copied expression). The idea of a falling-block puzzle game is not protectable. However, the creative expression of that idea as Tetris is protectable.

The style, design, shape, and movement of the pieces are expression; they are not part of the ideas, rules, or functions of the game. Tetris v. Xio.

Since Mino copied the exact same 7 Tetris shapes, the same board dimensions (10 x 20) and the way the shapes moved through the board, it infringed the Tetris copyright.


Yeti Town: Copyright Infringement (2012)

LolApp cloned Triple Town (left) to make Yeti Town (right). As usual, the copyright analysis starts by filtering out the unprotectable ideas:

The idea underlying Triple Town is that of a hierarchical matching game, one in which players create objects that are higher in the hierarchy by matching three objects that are lower in the hierarchy. Frustrating the player’s efforts are antagonist objects; aiding the player are objects that destroy unwanted or ill-placed objects. Spry Fox’s copyright gives it no monopoly over this idea. Spry Fox v. LolApps (2012).

The court also filtered out unprotectable game mechanics. Using a six-by-six game grid is not an expressive choice. “A grid that is too small would make the game trivial; a grid that is too large would make it pointless.” Similarly, the pricing structure in Triple Town’s marketplace, along with its strategic limits on how many advantages a player can purchase, are functional considerations. Spry Fox v. LolApps.

The court then looked at the remaining protectable game elements, and court decided they were likely infringing. For one thing, “in Triple Town, the antagonist is a bear. In Yeti Town, the antagonist is a yeti… bears and yetis are both wild creatures.” Spry Fox v. LolApps. The judge then compares more specific details:

The object hierarchy is similar. Progressing from grass to bush to tree to hut is similar to progressing from sapling to tree to tent to cabin. Perhaps more importantly, the object hierarchy coupled with the depiction of the field of play comprise a setting and theme that is similar to Triple Town’s. Spry Fox v. LolApps.

The judge also defers to the opinion of video game bloggers: “The bloggers, who are ordinary observers of video games, find Yeti Town and Triple Town to be substantially similar.” Spry Fox v. LolApps. In any event, this case was settled before a final decision was reached. The settlement was confidential, but Yeti Town is no longer available in the app store.

Conclusion

Video game copyright cases turn on whether the clone copied ideas (tolerated) or creative elements (verboten). When looking for similarities between the clone and the original game, we need to mentally “filter out” the unprotectable game elements using several different techniques:

  • Idea-Expression Dichotomy. First we filter out the unprotectable “ideas” from the protectable expression. The idea of a karate style fighting game can’t be copyrighted, but the expression of E. Honda’s “100 hand slap” can be protected by copyright. The idea of a maze-chase game can’t be copyrighted, but the expression of a chomping gobbler antagonized by colorful ghosts (a la Pac Man) can be protected by copyright.
  • Merger Rule. The policy of free ideas is so powerful that if the idea and its expression are inseparable, then the policy favoring free ideas drags both idea and expression into the public domain.
  • Functional Elements. Copyright does not “extend to any idea, procedure, process, system, method of operation…” 17 USC § 102(b). Broadly-defined game mechanics are unprotectable as functional, but more specifically defined game mechanics can be creative expression and therefore copyrigtable.
  • Scènes à Faire. Copyright doesn’t protect cliches, stereotypes, stock elements or standard treatments. For example, Pac-Man’s dots, Street Fighters vitality bar, and zombie-chainsaw-decapitations are all unprotectable scènes à faire. (It’s French for “that which must be done”).
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How to Pirate a Book on Copyright Law

What I learned remixing a 250 page copyright treatise into a website about fair use.

by Eric Adler


“Although copyright infringements are quite generally termed piracy, only a minority of infringers fly the Jolly Roger.” Shapiro v. Green (2nd Cir. 1963). The minority flying the Jolly Roger are a dull lot compared to artists who copy to transform and create. Fair use would encourage this creativity, if we only understood the rules. Copyright law doesn’t give us clear-cut rules like “using less than 10% of an original is OK.” The actual fair use rules are not only subjective and imprecise, they’re scattered across an archipelago of boring legal decisions. While I can’t make the rules more precise, I can at least collect and organize them.

I started my collection by copying Professor Robert Gorman’s 250 page treatise, “Copyright Law, 2nd ed.” (huge pdf). He spent years writing the book, and it’s really a great resource. I spent a few days remixing it into Copyright Codex, a website that draws on the visual elements of copyright cases to ease the tedium of learning fair use. Here are some of my favorite examples:

Fair Use

Sorry for Partying” is an easy win for fair use. “The photograph was posterized, the background was removed, and Soglin’s face was turned lime green and surrounded by multi-colored writing… almost none of the copyrighted work remained.Kienitz v. Sconnie Nation (7th Cir. 2014).

Sorry for Partying was fair use because it used only a sliver of the original photo. However, fair use isn’t just about the amount of art copied. Fair use weighs four central factors: (1) is the copy transformative or non-commercial? (2) Was the original work factual or creative? (3) How much was copied? (4) Does the copy harm the market for the original work?

Keep these questions in mind as you look at the next images.

Infringement

The Jeff Koons sculpture (right) infringed the original Art Rogers photo (left). Why isn’t a blue-puppy sculpture a fair use copy of a photo? The Koons work had a commercial purpose (he sold it for $376,000), it copied from an artistic (rather than factual) source, and Koons copied nearly every detail of the original. But the real gist of Koons’ fair use argument was that his sculpture was satire, and criticized societies’ fascination with mass-produced commodities. The Judge disagreed, deciding that copying an artists’ work to criticize society at large was not fair use —to be fair use the copy must criticize the original work. Rogers v. Koons (2d Cir. 1992).

(But check out Cariou v. Prince (2d Cir. 2013), “The law imposes no requirement that a work comment on the original or its author in order to be considered transformative…”).

Fair Use

Photographer Andrea Blanch took the original photo (left) and published it in Allure Magazine. Jeff Koons used the photo in his “Niagara” painting (right). A New York court decided the Koons painting was transformative because:

The use of a fashion photograph created for publication in a glossy American “lifestyles” magazine — with changes of its colors, the background against which it is portrayed, the medium, the size of the objects pictured, the objects details and, crucially, their entirely different purpose and meaning — as part of a massive painting commissioned for exhibition in an art-gallery space. Blanch v. Koons (2d Cir. 2006).

Infringement

A video game copying Pac-Man’s design and game play was copyright infringement:

The K. C. Munchkin gobbler has several blatantly similar features, including the relative size and shape of the “body,” the V-shaped “mouth,” its distinctive gobbling action (with appropriate sounds), and especially the way in which it disappears upon being captured. An examination of the K. C. Munchkin ghost monsters reveals even more significant visual similarities. In size, shape, and manner of movement, they are virtually identical to their PAC-MAN counterparts. K. C. Munchkin’s monsters, for example, exhibit the same peculiar “eye” and “leg” movement. Both games, moreover, express the role reversal and “regeneration” process with such great similarity that an ordinary observer could conclude only that North American copied plaintiffs’ PAC-MAN. Atari v. Philips (7th Cir. 1982).

Fair Use

In a complicated case, Microsoft’s copying of Apple’s GUI was fair use. Microsoft had licensed several GUI components from Apple. The handful of unlicensed components Microsoft copied were mainly functional (rather than artistic). This tipped the scales for fair use. Apple v. Microsoft (9th Cir. 1984).

Fair Use

Photoshopping Leslie Nielsen’s face onto a photo of pregnant Demi Moore for a movie poster was fair use as a parody:

Plainly, the [Nielsen photo] adds something new and qualifies as a “transformative” work. … Because the smirking face of Nielsen contrasts so strikingly with the serious expression on the face of Moore, the ad may reasonably be perceived as commenting on the seriousness, even the pretentiousness, of the original. Leibovitz v. Paramount (2d Cir. 1998).

Infringement

Showing a quilt in the background of a sitcom for 27 seconds is copyright infringement. Despite the brief appearance, this was not a transformative use. The purpose of the original quilt was to decorate and depict African-American church culture. The purpose of the duplication was to decorate an African-American church set in a TV show. Ringgold v. BET (2d Cir. 1997).

Infringement

Mayor McCheese infringed H.R. PufinStuff. McDonalds tried to avoid copyright infringement by highlighting some trifling details differentiating McCheese from PufinStuff. It didn’t work:

We do not believe that the ordinary reasonable person… will even notice that Pufnstuf is wearing a cummerbund while Mayor McCheese is wearing a diplomat’s sash. Krofft v. McDonalds (9th Cir. 1977).

I’m not sure why the court analyzes the cummerbund vs. sash while ignoring the fact that MAYOR MCCHEESE’S HEAD IS A GIANT GOD DAMN HAMBURGER.

Lightning Round

Richard Prince created 30 works of art, each using different amounts of Cariou’s original photography. Cariou v. Prince (2d Cir 2013). The appeals court decided 25 were clearly fair use, but 5 were too close to call without more information. Here are four examples:

Fair Use:

Close Call:

Fair Use:

Close Call:

The appeals court sent the five “close call” works back to the trial court for further analysis, but Cariou v. Prince settled out of court before the fair use issue was decided.


Remixing the original treatise into a more visual, more interactive website was a great excuse to dive into copyright law and fair use. I think the resulting Copyright Codex website is itself a fair use copy of the original. I copied from a factual work rather than a creative work, which favors fair use, and I copied for a non-profit, educational purpose, which also favors fair use. I also transformed the original book into a website, but changing the medium doesn’t always help. For example, copying a photo to make a sculpture didn’t save Jeff Koons in Rogers v. Koons, but copying parts of a photo to make a painting was fair use in Blanch v. Koons. The purpose of the original book wasn’t really transformed in making the website: both exist to teach copyright law. Since it’s a close call on fair use, and since I’m a boring lawyer, I got a license from the copyright owner (it was free!).

Law librarians and students like Copyright Codex. Duke Law School called it “a great starting place for copyright law research.” Stanford Law called it a “work in progress” that’s trying “to make U.S. copyright law useful and accessible for designers, coders and lawyers.” If you’d like to pitch in, I need help researching, copy editing, sys-admining, and information architecting. Get in touch!


Eric Adler is a technology lawyer at Adler Vermillion LLP in NYC. His monthly newsletter covers everything interesting in law and technology.


Tony Abruzzo’s original comic art. Appropriated by Roy Lichtenstein for his famous “Drowning Girl” painting.
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Just Deserts: Patent Troll Edition

Good news everyone! Four Patent Trolls have been hit with penalties since the Supreme Court’s Octane v. Icon decision.

I don’t actually know what case this tweet is about.

In May 2014, the Supreme Court made it easier to stick patent trolls with “fee shifting.” Trial judges now have wide discretion to order patent trolls to cover the defendant’s legal costs. At least four trolls have been hit with these fee shifting penalties since May. I think we’re starting to see a trend.


The Supreme Court’s New “Fee Shifting” Rule.

In two recent cases, the US Supreme Court told judges that (a) anyone who files an “exceptionally” weak patent case should be forced to pay the defendant’s legal fees (Octane v. Icon) and that (b) appeals judges can no longer second-guess this decision (Highmark v. Allcare).

The Patent Statute has always been clear on this point: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285. But under the old rules, the Federal Circuit added lots of additional requirements to this simple statute, making it nearly impossible to penalize trolls filing frivolous lawsuits. We can skip the details of the old Brooks Furniture v. Dutailier standard because you know the results: patent trolls fired off hundreds of meritless lawsuits with relative impunity.

We’re now 2 months in to new fee-shifting paradigm, and we’re already starting to see trial courts issue decisions under the new rules.


Lumen View v. FindTheBest (May 2014)

Lumen View owned a patent on some kind of computerized matchmaking system. A Federal Judge invalidated the patent last year, and then in May ordered Lumen View to pay FindTheBest.com’s legal fees.

The Judge called this a “prototypical exceptional case,” and as Julie Samuels points out, “it’s also a prototypical patent troll case.” Judge Cote’s decision on Lumen View does seem to describe a prototypical troll:

The boilerplate nature of Lumen’s complaint, the absence of any reasonable pre-suit investigation, and the number of substantially similar lawsuits filed within a short time frame, suggests that Lumen’s instigation of baseless litigation is not isolated to this instance, but is instead part of a predatory strategy aimed at reaping financial advantage from the inability or unwillingness of defendants to engage in litigation against even frivolous patent lawsuits.

The size of the penalty has not yet been determined, but Judge Denise Cote is clearly displeased with the plaintiff, concluding that “The question of whether this cased is exceptional is not close, and fee shifting in this case will ‘serve as an instrument of justice.’” Lumen View Technology, LLC v. Findthebest.com, Inc., 2014 U.S. Dist. LEXIS 74209 (SDNY May 30, 2014). That has a nice ring to it.

Fee shifting will “serve as an instrument of justice.”

Intellect Wireless v. Sharp (May 2014)

Intellect Wireless boldly claimed to have invented the camera phone. But to get its patents issued, Intellect Wireless “made affirmative, false representations to the PTO.” Essentially, they lied about the date of their invention to pre-date some prior art. Once the bogus patents were issued, Intellect Wireless filed patent infringement lawsuits against 30 different companies.

The court used the phrase “pattern of deceit” four different times to describe the plaintiff’s behavior. Among other things, Intellect Wireless made a big huff about donating its prototype camera phone to the Smithsonian. This might have been impressive, except it had actually donated “hollow imitations made of wood and plastic.” Also, Intellect Wireless essentially lied about a $5,000,000 licensing deal with Motorola to try to extract big licensing deals from other defendants.

Predictably, the court found this case “exceptional” under the new Octane/Highmark rules, and will be awarding the defendant its attorneys fees (amount to be determined). Intellect Wireless, Inc. v. Sharp Corp, 2014 U.S. Dist. LEXIS 73653 (ND Ill May 30, 2014).


Home Gambling v. Piche (May 2014).

Plaintiffs Mel Molnick and Home Gambling Network claimed to have invented online gambling. They filed at least three patent infringement cases. This particular lawsuit was “exceptionally” bad for 3 reasons:

  1. Plaintiff knew some of the allegedly infringing activity was taking place in Costa Rica, and that their US Patent only covers US activity.
  2. “Plaintiffs attempted to sue for infringement of a patent that they did not own and in fact voluntarily relinquished years earlier.”
  3. Plaintiffs engaged in “patent misuse” by trying to sell a license on technology wasn’t actually covered by their patent.

As a result, Home Gambling Network will be force to pay defendant’s attorneys fees (amount to be determined). Home Gambling Network, Inc. v. Piche, 2014 U.S. Dist. LEXIS 71071 (May 21, 2014 D. Nev.).


Precision Links v. USA Products (June 2014)

In this case, the plaintiffs had invented a type of adjustable bungee cord that they call “The best idea since rope.” At first, Precision Links really did sell a product. Later, they stopped selling and starting suing.

This case has had problems since the beginning. The mistakes range from misunderstanding basic patent law doctrine down to “non-compliance with the Court’s page and font limitations.” Three things made this case “exceptional”:

  1. Most of the asserted patent claims were “clearly frivolous”;
  2. Plaintiff filed a bogus motion for a preliminary injunction; and
  3. Plaintiff missed filing deadlines and then made up excuses that were “frivolous and baseless.”

The Court concluded that “it would be a gross injustice not to compensate the Defendants for having to defend against frivolous claims and for having to expend extra effort to counteract the Plaintiff’s frivolous litigation conduct.” Its not surprising that the court ordered plaintiff to pay defendant’s $180,000 of attorneys fees.

“It would be a gross injustice not to compensate the Defendants for having to defend against frivolous claims.”

The Court made its analysis under the new Octane/Highmark framework, but noted that it would have reached the same conclusion under the older, stricter Brooks Furniture framework. Precision Links Inc. v. USA Prods. Group, 2014 U.S. Dist. LEXIS 85694 (WD NC June 24, 2014).


Will All Trolls be Penalized Like This?

Probably not. I hope these four recent examples are the start of a trend. But there is no rule automatically makes all patent troll litigation “exceptional” and requires fee shifting penalties. Lots of Trolls file nuisance lawsuits that don’t really rise to the level of “ frivolous” or “exceptional.”

These four cases are signs of progress towards a more fair and efficient patent system. Hopefully, patent trolls will take note of this trend, and start to curb their abusive litigation tactics. As always, I’m optimistic.

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Good News in the Fight Against Patent Trolls

The Supreme Court Rules Against Aggressive Patent Owners in 6 Unanimous Decisions. 


The Supreme Court rarely decides patent cases, so when they do, its a big deal. When the Supreme Court decides 6 patent cases in a single term, its a very big deal. And when all 6 are unanimous decisions against overreaching patent owners, the Supreme Court is sending a message to lower courts: patent rights need to be scaled back.

While none of these 6 cases involved trolls directly, the rulings will be applied to patent troll cases, and hopefully reduce their impact on technology startups. Here’s a plain-language summary of the cases, and what they mean for startups.

No Patents for Just Doing it on a Computer.

Alice v. CLS Bank says that taking an abstract idea and doing it on a computer is not an invention and can’t be patented. In this case, the Supreme Court decided that taking the “abstract idea” of an escrow agent, and doing it in software is not an invention worthy of a patent. In the Supreme Court’s language:

We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.

Alice v. CLS should have two positive effects. First, startups can more easily invalidate many of the old software patents favored by trolls. Second, Alice makes it more difficult to obtain software patents in the first place. In fact, the Patent Office has already started rejecting software patent applications based on Alice.

Remember that Alice doesn’t kill off all software patents. Software patents are still valid if the software is a novel solution to a real technology problem. (See Prof. Chisum’s early analysis).

No Vague Patents

Nautilus v. Biosig says that vague patents are invalid. In the legalese, patent claims are “invalid” for “indefiniteness” if they fail to describe the invention with “reasonable certainty.” As Justice Ginsburg put it:

we hold that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention.

For software patents, “those skilled in the art” means something like “average software developer.” Not a recent grad, and not a ninja-rockstar-unicorn. Just your average developer. Would he/she understand what the patent is about? If not, the patent is invalid.

Of course, this has always been the rule, and courts have never applied it with much force. Most developers have no idea what most software patents are about, and yet judges rarely invalidate them for being vague. The Nautilus case should give the rule some bite.

Going forward, it will be easier for tech startups to invalidate the notoriously nebulous software patents thrown around by trolls.

Make Trolls Pay for Frivolous Lawsuits

Two sister cases, Highmark v. Allcare and Octane v. Icon are about punishing plaintiffs for filing frivolous patent lawsuits. Octane sets the standard for when a plaintiff can be punished, and Highmark sets the standard for when a plaintiff can appeal the punishment.

Octane v. Icon says that judges can punish plaintiffs that file “exceptionally” weak patent lawsuits by forcing them to pay the defendant’s legal bills (called “fee shifting”). Before Octane, Judges could only impose fee shifting if the plaintiff filed the case in “subjective bad faith” and the case was “objectively baseless.” This standard was nearly impossible to meet, and plaintiffs filed all kinds of worthless lawsuits with impunity.

Under the new rules, patent trolls lose the protection of such a rigid test. Instead of the rigid test, judges can look at all of the relevant facts to determine which cases are “exceptional” and warrant “fee shifting.” This should lead to more defendants winning back the money they paid for legal defense against meritless patent lawsuits.

Highmark v. Allcare says that if a judge decides to punish a plaintiff for filing a frivolous lawsuit, this decision can only be overturned on appeal if the trial judge was “abusing her discretion.” Appellate judges are a polite bunch, and don’t like to accuse their peers of “abusing discretion.” Therefore, trial judges have a free hand to impose fee shifting penalties without worrying about reversal from the Federal Circuit. This new rule should work in tandem with the Octane v. Icon rule to make it easier for courts to punish patent trolls.

Two More Decisions: Complicated, but Ruling Against Aggressive Patent Owners.

The last two cases are more complicated. Limelight v. Akamai is about “inducing” a third party to infringe a patent, and Medtronic v. Boston Scientific is about who has the “burden of proof” in a declaratory judgment action. The important thing is that they were both unanimous 9-0 opinions, and both ruled against the patent holder. In both cases, the Supreme Court continued its efforts to scale back the problem of frivolous patent litigation.


6 Unanimous Wins for Patent Defendants

It will take some time for these 6 Supreme Court wins to trickle down into the trial courts and day-to-day lives of technology startups. But they will, eventually, have a positive effect:

  • Software patents are no longer allowed for simply taking a known business idea and doing it on a computer. (Alice v. CLS Bank)
  • Patents can’t be too vague. They need to describe the technology with enough detail that an average developer can understand whats actually being patented. (Nautilus v. Biosig)
  • Startups can more easily stick trolls with their legal defense bills. (Highmark v. Allcare & Octane v. Icon)

Trolls Now File 67% of All Patent Lawsuits: Will it Get Better?

I’m an optimistic guy. So, I’m predicting that this 67% figure is the high-water mark for patent trolls. In the next few months, we will see judges start punishing the worst trolls with “fee shifting” penalties (under Highmark and Octane). Word will spread, and trolls will think twice before indiscriminately firing out dozens of patent lawsuits.

Will the trolls stop altogether? Probably not. But they will cut back. These 6 Supreme Court decisions don’t solve the patent troll problem, but they’re a step in the right direction. I’ll take what I can get.

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