How I Screwed a Patent Troll Out of a Billion Dollars

Fighting a tax on logos in software

Patent trolls are unusually-cunning souls for the greedy bastards that they are. No conscience. No morality. No apologies.

Have you ever been befriended by a troll — the mark?

It always starts out the same way. You get a nice letter complimenting you on your success. The one I got began like this:

Dear Mr. Avritch:
I commend you on the success of your company and in particular your screen saver program which displays the Energizer bunny. Your efforts to exploit the potentially huge market of computers and advertising are noteworthy.

Little did I know, this seemingly-innocent letter was just the beginning of an unbelievable nightmare that sparked national outrage and nearly put me out of business.

This is a true story of how a well-financed troll tried to leverage an absurd patent to get paid every time a logo appeared on a computer screen. They came after me first, and I shut them down with a surprise move they never saw coming.


It was February, 1994, and I was flying high on the monumental success of a screen saver I had published a number of months earlier that was topping the charts.

I had the good fortune of being able to obtain a license for Eveready Battery’s famous mascot, the Energizer Bunny, and I created a hilariously-captivating Windows screen saver that was selling like hotcakes in retail stores all over the country.

It was an amusing product for under $15, and it was getting lots of positive press. How could it not? The bunny was adorable.


The Friendly Offer

The letter I received was from a lawyer with Knobbe, Martens, Olson & Bears; a prominent West Coast firm. It included a copy of an odd patent granted about two years earlier to a company named Software Advertising Corporation.

Patent 5,105,184
METHODS FOR DISPLAYING AND INTEGRATING COMMERCIAL ADVERTISEMENTS WITH COMPUTER SOFTWARE
click to view letter

It was a short letter. It simply stated that their client would be “willing to grant you a license under the 5,105,184 patent to make and sell computer programs having integrated advertisements.

They only wanted a fair price and would appreciate it if I would review the enclosed material and get back to them at my convenience.

I figured they just wanted to sell me this patent. I took a quick look at the first page and immediately concluded it was a total joke — absolute junk.

No thanks!

Normally, I would just toss something like this into the trash and not give it another thought.

I received random license solicitations like this all the time due to the popularity of my screen saver. Mostly, they came from owners of antiquated cartoons hoping that I would make new screen savers based on their old has-been characters and pay them a royalty — just like I was doing with the bunny.

Thanks, but No Thanks

I decided that since this nice lawyer, named Edward Treska, was kind enough to stroke my ego with a few compliments, I’d at least be courteous and call him back to decline his offer.

After all, it was a seriously-stupid patent.

Maybe I was in a good mood that day. Or maybe I just felt bad for this low-level guy who wasn’t even important enough to get his name at the top of his firm’s letterhead.

Edward was surprised I didn’t want a license. And I was surprised that he was surprised. After all, it was a seriously-stupid patent. I wasn’t going to be the sucker to take if off his hands.

But the real surprise came next. Edward told me that if I wouldn’t license this bullshit patent that he’d sue me for infringement and crush my tiny little company like a bug.

He made it real clear that they had hundreds of attorneys and an unlimited budget. He could pretty much guarantee an expensive and protracted litigation that would undoubtedly ruin me.

This Shit Just Got Real

This shit just got real serious, real fast. This guy was planning to strong-arm me into licensing his ridiculous patent. And worse, the law was on his side.

Once a patent has issued, it’s presumed valid by the courts. The legal burden is on the defendant, people like me, to prove that the United States Patent Office made a mistake — and that takes serious bank.

If I refused Edward’s offer, his job was to kill me. He was a trained assassin, armed with a yellow legal pad and a fancy law degree.

In contrast, I was just a mortal developer; a small business owner with a warehouse full of adorable bunny software.

To ensure my ultimate demise if I didn’t play along, Edward said he’d soon be sending letters to all of my distributors. He wanted to scare them into dropping me by putting them on notice that if they continued to sell my products, they could easily find themselves on the hook for contributory patent infringement.

He knew that once he cut off my revenue, I’d have no choice but to sign his crazy license agreement. And he could do that because the rules of patent enforcement were stacked in his favor. It was all perfectly legal.

Yeah, I walked right into that like a total idiot.

I had absolutely no clue that kindly-worded letters like the one I had received from Edward were how loathsome patent trolls slither their way into your life.

Edward was a troll — a first-class opportunistic asshole troll.

I hung up the phone and reread Edward’s letter, and then scoured over every word of the patent. What was I missing? Why was he so confident?

What made this guy think he was holding all the cards? Or was he just talking smack to intimidate me?

Well, I’ll be the first admit — it was working!

As I looked more carefully over all the documents I eventually noticed this curious line at the end of the cover letter:

cc: Louis J. Knobbe

Why was Louis J. Knobbe being copied on this absurd extortion play? He was the managing partner; the top guy at a firm with literally hundreds of attorneys.

Surely, Louis didn’t need to be kept in the loop for low-life shakedowns like this. There was simply no way he would be routinely copied on all correspondence from hundreds of attorneys. That would be nuts.

My guy, Edward, barely got his name on the letterhead. A nobody. For all I knew, Louis didn’t even know the guy.

I’m not sure why, but something told me that innocuous cc was somehow important. It heightened my level of concern.

Again, what was I missing?

Is this Patent for Real?

I read the patent again. And again. Something wasn’t adding up. I was absolutely sure of it.

All I could think about was how was this even a patent in the first place?

Read the full patent PDF here.

Below is the main diagram that accompanied the scant single claim in the text. Yes, this is actually the guts of the patent.

Flowchart for Patent 5,105,184

Don’t feel bad if this picture doesn’t make sense to you. You just think it doesn’t make sense because it looks so simple.

Here’s a screen shot of the patent in actual use, for clarity.

This Logo Infringes Patent 5,105,185

Take any computer screen, yes, literally any screen, add your company name or logo (ORCO in the example), and boom — pay up, you just infringed this patent.

And look at the list of covered screen types (19) in the first diagram. Did you notice that last item is OTHER SCREENS; as if the rest of the list wasn’t comprehensive enough?

Isn’t this an insane patent?

Do you understand how far-reaching this patent seems to be?

Are you pissed off yet? You should be.

My new adversary at Knobbe et al., claimed that when the Energizer Bunny strutted across the screen in my software, it infringed the patent. Case closed. It didn’t really matter where in the software the bunny showed up, OTHER SCREENS pretty much covered every possible circumstance.

This patent has to be bullshit, right?

But remember, the law is on their side. They have no legal requirement to prove the patent has merit. That was already decided by the Patent Office before it was granted. Now, bullshit or not, the patent was real.

What about other screen savers? Didn’t Windows ship with a flying Windows logo screen saver? And IBM too, in OS/2.

Was he looking to go after big fish like Microsoft and IBM?

But still, why was Edward so damn smug? And not just regular smug, I mean extra smug; the kind with attitude.

A license with Microsoft or IBM would surely be sweet, but not sweet enough to warrant a cc to the big guy over the likes of me so early in the game.

I kept returning to my original question. What did he know that I didn’t know? My nose was telling me that there was definitely something more to this than some two-bit lawyer trying to extract a couple of bucks out of a screen saver. It simply wouldn’t have been worth his time if this was a one-off.

I was totally consumed with solving this mystery and I wasn’t going to sleep until I did. No way was this asshole going to put a target on my back or use me as a pawn in some unknown game and get away with it.

Eventually, I homed in on this intriguing sentence buried deep within the patent’s description:

This new use is simple enough for all software manufacturers to use, and yet powerful enough to change the face of the software industry.

“Change the face of the software industry” — hmm, that’s quite a bold statement for such a bullshit patent. Did they actually believe this?

Maybe it was just puffery.

But what if it wasn’t?

Then it hit me. OMG! Is this what I think it is?

Is this a bonafide, fully enforceable, United States patent that literally covers every time any logo shows up on any screen for the next 17 years (the usual enforceable lifetime of a patent)?

The simple answer — pretty much, yeah!


A Billion-Dollar Patent

Now I know why the big guy, Mr. Louis J. Knobbe, Esq., was copied on the correspondence. This was freak’n huge! No, bigger than huge.

Seriously, this patent could be worth billions.

Every business in the country would be an infringer, sooner or later. The industry was right at an inflection point where screens and anything having to do with pixels had finally become affordable. Digital logos would soon be everywhere.

Look again at the sample screen shot included with the patent. Simply displaying your company name or logo on any screen might make you an infringer. And this wasn’t explicitly limited to computer screens. It covered all digital technology.

These vultures could legitimately hit up every business in the country for the next two decades and force them to pay a modest license fee just for using their own logos. The fee just had to be small enough so people would rather pay up than fight a war against the United States Patent Office.

This is a common strategy used by trolls to squeeze money out of meritless patents. They start with vulnerable small businesses who they know would never have the funds to challenge them on the merits. And that establishes precedent to go after bigger fish once they’ve accumulated enough momentum.

Notice, we’re no longer just talking about screen savers with cute little bunnies. This was huge. There was some kind of strategy behind their approach, and for whatever reason, I was the first domino.

My brain racing. I was on fire. The puzzle was coming together in my head just as fast as I could think.

Still, why me?

What made me the unlucky bastard they decided to go after first?

Surely, they had some kind of strategy.

Maybe if I agreed to license the patent for my screen saver it would set a precedent to make it easier to go after Microsoft.

Was my recent success about to be my downfall?

Was I just a pawn in some game?

All I knew was that there was no way this was just about screen savers and adorable bunnies.


Time to Lawyer Up

One thing had become abundantly clear. I needed a lawyer. A good one. Somebody on par with the trolls.

I also knew my plan of attack needed more than just a good lawyer — I needed other software publishers to join the fight.

Finding people brave enough or big enough to draw fire from the trolls quickly proved to be a non-starter. Nobody would even return my calls, and in the off-chance I actually got through to somebody, they ended the call so fast you’d think it was a wrong number.

I had leprosy.

And, I still didn’t have a lawyer.

I even resorted to sending unsolicited faxes with the text of the patent to everyone I could think of who might be a future target with deep pockets.

Still, notta.

I later found out that just talking to me and learning that the patent even existed was enough to put people in legal jeopardy; and that was the reason for the radio silence.

Since the law is stacked in favor of patent holders, once you learn about a patent through any means, if you continue to sell products which are later deemed to infringe the patent, you’re on the hook for treble damages.


Remember, this was 1994. The Internet was a relatively new thing and it would still be another four years before Google was founded. I couldn’t just look things up online like you can today.

All my research needed to be done old school. I had the phone book, my hoard of developer magazines and the public library.

Still looking for a lawyer, I found an ad for Morrison & Foerster (MoFo) in Dr. Dobb’s Journal; a popular magazine back in the day for hard-core developers. It said they specialized in intellectual property law and had offices all over the world — apparently bigger than the trolls, perfect!

I soon found myself talking to a bright attorney named James Shay. I liked James right off, but quickly learned I could never afford him. Fighting the patent would cost upwards of $250,000; and ten times that if we went to trial.

I had a good feeling about James. He was my guy. I just needed to figure out how to pay him.


Save the Bunny

After thinking about it for a few days, it suddenly dawned on me that I was going about this all wrong. I couldn’t afford to fight these bastards on their turf, the courts, but I could afford to fight them on mine — the press.

Yes. That adorable bunny was press worthy. What mean asshole sues the Energizer Bunny? Now that’s a story!

What business doesn’t have their name on a t-shirt or coffee cup? Nobody wants to be told what they can or can’t do with their own logo. I just knew readers would totally relate to this story — and empathize.

I just needed to pitch it the right way.

I had a badass PR guy, Steve Leon, who ran an agency named Technopolis Communications. Steve had handled all of my public relations work for several years running. I loved Steve. He did fantastic work and he had a great Rolodex.

I got Steve on the phone and asked him if he could get this story to play out in the media. I don’t recall his exact words, but it was probably something like “Duh, Energizer Bunny goes to jail. I can work with that.”

But Steve and I both knew we still needed James to make it work. The reporters would want to talk to a real lawyer — the kind I can’t afford.

I called James back with an ingenious proposal. I’ll bankroll a media campaign to save the bunny and you talk to the press — for free. And throw in my legal work, too; it will be great publicity for your firm.

James countered, asking for a $10,000 retainer to cover his initial review of the patent and any correspondence with the trolls; but he’d talk to the press for free.

Steve and James were now locked and loaded; just waiting for me to pull the trigger.

I had one more call to make — to Edward

It was time to start playing hardball with Edward, the troll. I called and offered him a choice. He could either just drop the whole damn thing right now, or my next call was to the press.

It was hard for me to keep from telling Edward that I had a PR machine and a top attorney from MoFo on standby, but it was important to let that surprise come later.

He just laughed at me like I was some poor little animal caught in a trap with no way out. In his eyes, I was as good as dead — and still without a lawyer.

I remember that pissed me off; that he thought he could just dismiss me because he had a law degree and I didn’t. “Screw you. I’ll have a story in the New York Times within 48 hours.” And then I hung up.

We’d all know within a few days whether or not I was full of shit. Time to pull the trigger and release the Kraken.

Game On, Troll

James. It’s on. Fax me the paperwork. Your check’s in the mail.

Steve. It’s on. Call the Times first; we need a story to hit in 48 hours. No time to explain — just make it happen, please.

Now, Steve was good, but not 48 hours good — that would be pretty much impossible, right? But I wanted to let the trolls know that they were messing with the wrong dude, and that I had just seized control of the narrative.

Steve must have worked some kind of serious magic. Our original press release hit the wire on Monday, April 4th; the same day I gave Edward the ultimatum. Damned if I wasn’t crowing like a rooster when I saw an article in the New York Times on Friday, followed by another one Monday morning in the Wall Street Journal, and then another in the Los Angeles Times.

Man, I only wish I could have seen the expression on Edward’s face when he saw that this was really happening.

And guess who fielded reporters’ calls on behalf of the trolls — Mr. Louis J. Knobbe, Esq., himself; the guy from the mystery cc on the original cover letter.

And things just took off from there. One story after another in major publications all over the country.

Our plan had worked.


“Louis Knobbe wants to put the bunny in jail.” That’s what I kept telling the reporters when they called. It was catchy, and it resonated.

The story had traction because it was relatable on several fronts. Everyone understands screen savers. Everyone also feels they have the right to put their logo on anything they want, from t-shirts to computers. And finally, the shtick about sending the famous Energizer Bunny to jail was just too good to pass up.

Forget Edward, I was now focusing all of my ire on the top troll, Louis, and he played right into my hands. He just kept making a fool of himself by talking to the press and defending this ridiculous patent.

The media latched onto this story in ways I never expected. It was about the bunny, then logos, and then even whether or not I had the right to litigate my case in the press or if the Patent Office should be allowed to weigh in. It was amazing.

Hey Edward, who’s in charge now? Not you!

Like the bunny — it just kept going, and going.

The press was great. It wasn’t long before several big trade organizations were putting pressure on the Patent Office; not to mention all the calls the office was getting directly from reporters.

The USPTO was clearly annoyed with my tactics, and, I’d imagine, a bit embarrassed about needing to publicly defend their reasoning behind this bullshit patent.

Meanwhile, James and Edward were busy trading letters about the case. It was the traditional dance between opposing attorneys that used up a lot of paper, but didn’t net much for real results.

The trolls stood firm.

Edward wasn’t budging. Even with all the negative press, he just dug in and held his ground; just like how they taught him to do in troll school.

Edward also seemed to be going out of his way to be a jerk and run up my legal bills. He would’t even explain to my attorney, James, what actual infringement he was asserting.

He said the only way he was going to tell us how my product infringed the patent was if we agreed to begin formal discovery — a process that would cost tens of thousands of dollars.


The Energizer Bunny Goes to Washington

It was time to bring out the big guns.

It’s not that I was holding back on my big guns, I was just waiting for them to arrive. Specifically, a shipment of three-foot-tall fluffy Energizer Bunnies — just like the big stuffed animals you can win at carnivals.

I boxed up these big fluffy bunnies with a copy of the patent and a cute note that said “Please save me from the trolls.” And off they went to my California Senators, Representatives and just about anyone else I could think off.

I even sent one to the White House.

Apparently, back then, sending giant stuffed rabbits all over Capital Hill didn’t trigger a visit from the FBI. I think if I did that today, I’d be hauled in for questioning.

Sadly, none of my California representatives ever got back to me. Maybe they just didn’t like bunnies.

I still had bunnies, so I just kept going.

Next in my sights was Senator Dennis DeConcini from Arizona. He chaired the Subcommittee on Patents, Copyrights and Trademarks. The U.S. Patent Office answered directly to him for oversight.

Booyah! The three-foot fluffy bunny went home to the grand kids and I got a call from an aid the very next day.

My job, according to the aid, was to convince the Senator that this patent thing was something bigger than just keeping the adorable little bunny out of jail. It had to be something grand; something national.

If I could do that, the Senator would send a letter off to Bruce Lehman, the Commissioner of the United States Patent Office.

Piece of cake. I was well prepared.

I figured I’d start out with an infallible concrete example before I ventured into the abstract futuristic stuff.

I asked the Senator’s aid “Have you ever bought stamps from a U.S. Post Office kiosk? Did you happen to notice the Eagle logo on the touch screen as you walked up? That’s a screen saver — and it directly infringes the patent.”

Score!

If you’re wondering how I just managed to pull that piece of Postal trivia out of thin air, it was because five years earlier I did a short stint as a contract software developer for Unisys, building, you guessed it — kiosks for the Post Office. Strange coincidence, but true!

I now had the aid’s full attention, and I was only just getting started.

Remember that odd passage in the patent:

“powerful enough to change the face of the software industry”

How about a some futuristic examples I envisioned back in 1994 that would live up to that statement:

  • When you watch TV the networks put their logos down in the corner of the screen. As TVs turned digital, those logos would infringe the patent.
  • Ever go to a ball game an look up at the scoreboard? See the teams’ logos next to the scores? If the scoreboard is run by a computer, that infringes the patent.
  • Think about the next generation of smart appliances, such as microwave ovens or refrigerators. They’ll all have tiny screens or touch displays; and inevitably, logos.
  • What about cars? The next generation of cars surely will have digital dashboards; and of course, logos.

“Stop. I’ve heard enough.” The aid thanked me and said he’d be in touch if they had any more questions.

A few days later, on April 28th, Senator DeConcini sent a strongly-worded oversight letter to Bruce Lehman, the Commissioner of the Patent Office.

I am concerned that the patent could have a tremendous impact on numerous software uses and could also affect the next generation of computer software.
click to view letter

DeConcini then listed some of the examples I rattled off to his aid, and asked the Commissioner to get back to him.

I am concerned about the public policy ramifications of this particular patent. I would appreciate a written response as soon as possible.

And just think, it hadn’t even been 30 days since my first press release.

Sorry, Edward —

This isn’t looking good for your side.


Sweet Victory

On May 6th, Commissioner Bruce Lehman put out a public statement announcing that they had found prior art that would ultimately invalidate the patent.

click to view document

See our press release.

It would still take a few more months for the paperwork to formally work its way through the PTO bureaucracy — but it was over. We won.

We kept the bunny out of jail.

Edward, the troll, just vanished — never to be heard from again.

Trolls don’t have a conscience.

Trolls don’t have a conscience, so of course, Edward never bothered to call or apologize for totally killing my sales and nearly putting me out of business.

But at least it was over, and I wasn’t dead.

I remember feeling it was a bitter-sweet victory. I stood up to the trolls, and I accomplished something that nobody thought possible. I was proud of that, even though it came at a cost.

Strangely, I never even considered the simple path of paying off the trolls. That patent was going to cause a lot of grief, for a lot of people, for a lot of years. It needed to die, and the trolls made a major strategic miscalculation when they picked a fight with me and the adorable pink bunny.

The trolls obviously had some kind of big game plan right from the start about how to collect on their billion dollar patent. But why me? What made me the first domino in their master plan? Did the media campaign catch them off guard? I guess I’ll never know.


Case Closed

My attorney, James, closed out the case and returned most of my retainer. He even picked up a few new clients from all the press and got his picture on the front page of The Recorder, a popular Bay Area legal newspaper which ran a huge cover story about our fight.

And remember Steve, my badass PR guy from Technopolis? He won a national public relations award for the Save the Bunny campaign. How cool is that? He deserved it.

But the story didn’t quite end there.

My strategy of using the press instead of the courts stoked quite a bit of controversy within the legal community; especially since I had also managed to find a path straight to the Commissioner.

The Commissioner had only personally intervened once before on a software patent. That case involved Compton’s New Media; another truly bad patent that had to go. The community just didn’t like having the Commissioner weighing in on cases. They believed in the traditional process and envisioned a dangerous shift if people like me could manipulate its course.

Suddenly, articles were showing up in legal journals debating the ethics of my approach. I thought that was a bit hypocritical, as nobody seemed to care about the ethics of trolls using the legal system to coerce small companies like mine to sign bogus license agreements or face certain ruin.

Articles:

And finally, if you were wondering where Eveready was in all of this, they were nowhere to be found. I was on my own. They had ongoing litigation with several patents of their own and didn’t want to get on the bad side of the Patent Office. They told me to leave them out of it.


So yeah, I totally screwed those asshole trolls out of their billion-dollar payday and spared a generation of logos from paying their bridge tax. Booyah!

Now that you’ve read this, I hope that every time you watch TV, drive your car, go to a ball game or use that fancy new microwave with the touch-screen display, you’ll remember this remarkable tale about how we beat the trolls and kept the Energizer Bunny out of jail.


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