124. How To Ru(i)n A Business: Patent Troll Exploits In The Patenting Process

07 important lessons from this Episode:

00:00:07 Patents are a form of intellectual property and exclusive rights granting an inventor or assignee a limited period of time in exchange for detailed public disclosure of an invention. In the United States, patent grants go through the US Dept of Commerce Patent And Trademark Office.

00:01:35 While patents are an essential element of competitive business, the patent system has been increasingly prone to abuse. 

Austin Meyer created X-Plane:

The world’s most advanced flight simulator. For Mac, Windows, and Linux. Mr Meyer was then sued for patent infringement by Uniloc, a company ‘best known for its controversial patent lawsuits’ for infringing upon their patent of a computer program which ‘checks servers for essential server for authorization;’ a technology upon which 99.99% of Android apps are based. 

[EDITOR’S NOTE: You can read Meyer’s open letter to Congress on this lawsuit. The gist of the lawsuit is:

  • Uniloc sues Meyer for “using an e-commerce distribution system provided to me by Google to sell X-Plane.”
  • Three year later after investing significant time and money, one of Uniloc’s infringement claims were overturned. Uniloc retaliated by changing the claim X-Plane had infringed, and added 113 additional claims.
  • Meyers is offered to settle out of court for $50K and sign a non-disclosure agreement or close his business, neither of which he refuses to do. “97% of the people who are sued for Patent Infringement, unable to afford to defend themselves, are forced to settle, paying the Patent Troll that frivolously sued them an average of $300,000.”]

The SouthEastern Employment Services was sued by FolNer, LLC for using a company-owned photocopying machine, demanding $1,000 per employee using the photocopier. The FolNer, LCC claimed it owned the patents for the scan-to-email function on the photocopying machine. Watch/read the full NBC story.

http://www.nbcconnecticut.com/portableplayer/?cmsID=207822311&videoID=9EW1Qmc9XAgk&origin=nbcconnecticut.com&sec=troubleshooters&subsec=&width=550&height=309

00:02:41 Patent trolls are people or companies who attempt to enforce patent rights against other people or companies (businesses large and small) for infringement. Many times, these patent trolls don’t actually manufacture products or supply services based upon the patent they hold; their revenue model is essentially buying patents and then suing companies for ‘violating the patent.’

Of the 4,700 patent lawsuits filed in 2012, 3,000 were from ‘patent trolls,’ and the number of lawsuits filed by ‘patent trolls’ has nearly tripled, costing investors over $500,000,000,000 since 1990.

How can ‘patent trolling’ be possible?

00:04:45 According to the US Patent & Trademark Office (USPTO), patents are supposed to be granted to ideas and inventions which are “new, useful and non-obvious.” However during technological revolutions, for example with railroad revolution and more recently with software development, the US Dept of Commerce Patent And Trademark Office can inevitably become overwhelmed and grant patents which shouldn’t be granted.

Because software design and functionality is so broad and vague, their uses overlapping and built on top of each other, that patent owners can ‘justifiably’ claim ownership of future inventions and implementation.

00:06:02 Nearly 90% of patent infringement claims are settled out of court because the price of settling is always much, much less expensive than the cost of fighting the infringement claim; a sort of legalized extortion. Further, non-disclosure agreements in the out of court settlement ensures that this patent ‘extortion’ is never uncovered and dealt with.

00:07:33 A quarter of all patent infringement cases are filed through Marshall Texas because, “for ‘whatever reason,’ East Texas judges are sympathetic to plaintifs.” Samsung, who has been sued through Marshall Texas multiple times, has responded by injecting millions of dollars in Public Relations campaigns into the city of Marshall.

00:08:59 The H.R. 3309 Innovation Act which passed in the House in December 2013 and aimed to require restitution from patent trolls who lose in the court of law as well as more transparency in their business dealings was shot down in the Senate because, according to David Martin, M-Cam Founder & Chairman in a Bloomberg interview, “trial lawyers’ influence in Washington is alive and well.”

[EDITOR’S NOTE: For more information on how copyright patents and patent trolls affect music and videos, watch the informative talk Copy, Cut, Paste by Andy Baio.]

2 thoughts on “124. How To Ru(i)n A Business: Patent Troll Exploits In The Patenting Process

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s