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Obama Plans to Take Action Against Patent-Holding Firms

Old 06-04-13, 10:42 AM
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Obama Plans to Take Action Against Patent-Holding Firms

Will the answer to this problem be more regulation or less? Would patent trolls be a problem if we didn't give patents away for some ridiculous shit?

Microsoft has a patent on page up/page down features on a keyboard.
Google has a patent on the Google Doodle (changing a logo to commemorate a special event).
Apple has a patent on rounded corners on a cell phone.

Do those "inventions" really compare to the light bulb, the cotton gin, or the phonograph?
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Old 06-04-13, 02:59 PM
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Re: Obama Plans to Take Action Against Patent-Holding Firms

I'm surprised Newegg wasn't mentioned in the article. They have had some resounding successes standing up to this nonsense this year alone.

Newegg nukes “corporate troll” Alcatel in third patent appeal win this year
In 2011, Alcatel-Lucent had American e-commerce on the ropes. The French telecom had sued eight big retailers and Intuit saying that their e-commerce operations infringed Alcatel patents; one by one they were folding. Kmart, QVC, Lands' End, and Intuit paid up at various stages of the litigation. Just before trial began Zappos, Sears, and Amazon also settled. That left two companies holding the bag: and Newegg, a company whose top lawyer had vowed not to ever settle with patent trolls.

Then things started going badly for the plaintiff. Very badly. Instead of convincing the East Texas jury to hand Alcatel the tens of millions it was asking for—$12 million from Newegg alone—the company got a verdict of non-infringement. And as for the one patent Alcatel had argued throughout trial was so key to modern e-commerce—US Patent No. 5,649,131—the jury invalidated its claims.

Alcatel-Lucent was scrambling. The company's patent-licensing operations were contentious but lucrative and Alcatel surely had plans to move on from those eight heavyweights to sue many more retailers. The '131 patent, titled simply "Communications Protocol" and related to "object identifiers," was its crown jewel.

Alcatel-Lucent went all-out on appeal. With upwards of $19 billion in revenue, the company was easily able to amass legal firepower not available to your average patent troll. For its appeal it hired Wilmer Hale, the kind of top law firm that handles high-stakes appeals and which is filled with lawyers who have their own Wikipedia pages.

Last Friday May 10, Alcatel-Lucent's appeals lawyer Mark Fleming made his case to a three-judge panel. Representing Newegg and Overstock was Ed Reines, the same attorney who helped Newegg blow apart the infamous "online shopping cart" patent on appeal a few months ago.

Federal Circuit judges typically take months, and occasionally years, to review the patent appeals that come before them. Briefs in this case were submitted last year and oral arguments were held May 10. The three-judge panel upheld Newegg's win without comment—in just three days.

Yesterday morning Reines sent Newegg's legal team an e-mail: "I'm pleased to report we received a summary affirmance. That is extraordinary to my eye given the stakes and complexity of the matter."

"Mark Fleming is phenomenal, a great lawyer," said Lee Cheng, Newegg's chief legal officer, in an interview with Ars. "I heard him argue. But even he can't make bad facts go away."

Alcatel-Lucent dropped the case over its other two patents, desperate to get back the '131 patent that Newegg and Overstock had killed at trial. “If they had been able to revive this patent, the litigation machine would have continued on," Reines told Reuters after the win.

"There's good news and there's bad news," said Cheng in an interview with Ars. "The good news is, we won this case on every point. The bad news is, we're running out of lawsuits. There are fewer trolls for us to fight. I've spent a lot of time over the last seven years figuring out what to do with these guys. There are strategies I think would be really neat and effective that I literally can't execute. I can't make good law because I don't have any appellate cases left. They [the trolls] are dismissing cases against us before any dispositive motions."

Newegg has already won two other patent appeals this year from Kelora Systems and Soverain Software. Even though Alcatel-Lucent has billions in revenue from real businesses, when it comes to patent battles Cheng doesn't see them as being so different. Since Alcatel is asserting patents in markets it's nowhere near actually participating in he sees them as a kind of "corporate troll."

"It's an operating company that happens to hold a patent," said Cheng. "But it does nothing at all to bring the benefit of that patent to society."

Mark Griffin, Overstock's general counsel and Cheng's co-defendant in this case, began to see Alcatel-Lucent in the same terms. "They took an old cell phone patent and tried to say that it applied to the Internet," Griffin told Bloomberg. His company is looking to take a harder line against trolls as Newegg has. "The general counsels of publicly traded companies have started to wake up—we don't feed trolls," Griffin said.

Even so fighting them off was no easy task. Alcatel acquired Lucent in 2006 and the French telecom used the intellectual property it acquired to kick off one of the most aggressive and wide-ranging patent licensing campaigns in history, embracing the "patent troll" model even as it maintained operating businesses in other realms.

"These are the Bell Labs patents," Cheng said. "It is truly, truly tragic how the mighty have fallen. This company was once the pride of American innovation, a company that has roots going back to Alexander Graham Bell. And it ended up selling off its patents for a few bucks. What Alcatel-Lucent did was really offensive." He continued:

"They systematically sent thousands of letters out saying, 'Hey, we own 27,000 patents, and here are some patents we think you infringe.' They had a whole licensing group whose job was to monetize these patents, by threatening litigation and in some cases litigating. It didn't actually matter if you did your own analysis and got back to them and said, 'Hey guys, we actually think we don't infringe.' The response was something to the effect of, well, we have 27,000 patents—and you probably infringe something, so give us a licensing fee."

At trial in East Texas Cheng took the stand to tell Newegg's story. Alcatel-Lucent's corporate representative, at the heart of its massive licensing campaign, couldn't even name the technology or the patents it was suing Newegg over.

"Successful defendants have their litigation managed by people who care," said Cheng. "For me, it's easy. I believe in Newegg, I care about Newegg. Alcatel Lucent, meanwhile, they drag out some random VP—who happens to be a decorated Navy veteran, who happens to be handsome and has a beautiful wife and kids—but the guy didn't know what patents were being asserted. What a joke."

"Shareholders of public companies that engage in patent trolling should ask themselves if they're really well-served by their management teams," Cheng added. "Are they properly monetizing their R&D? Surely there are better ways to make money than to just rely on litigating patents. If I was a shareholder, I would take a hard look as to whether their management was competent."
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Old 06-04-13, 03:32 PM
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Re: Obama Plans to Take Action Against Patent-Holding Firms

I think issuing less patents is a better solution than more regulation. I don't know what level of criteria you'd set, but things like rounded corners on cell phones shouldn't be owned by anyone. Reminds me of this:,599/

Originally Posted by The Onion
Microsoft Patents Ones, Zeroes
NEWS • Business • ISSUE 33•11 • Mar 25, 1998

REDMOND, WA—In what CEO Bill Gates called "an unfortunate but necessary step to protect our intellectual property from theft and exploitation by competitors," the Microsoft Corporation patented the numbers one and zero Monday.

At a press conference beamed live to Microsoft shareholders around the globe, Bill Gates announces the company's patenting of the binary system.

With the patent, Microsoft's rivals are prohibited from manufacturing or selling products containing zeroes and ones—the mathematical building blocks of all computer languages and programs—unless a royalty fee of 10 cents per digit used is paid to the software giant.

"Microsoft has been using the binary system of ones and zeroes ever since its inception in 1975," Gates told reporters. "For years, in the interest of the overall health of the computer industry, we permitted the free and unfettered use of our proprietary numeric systems. However, changing marketplace conditions and the increasingly predatory practices of certain competitors now leave us with no choice but to seek compensation for the use of our numerals."

A number of major Silicon Valley players, including Apple Computer, Netscape and Sun Microsystems, said they will challenge the Microsoft patent as monopolistic and anti-competitive, claiming that the 10-cent-per-digit licensing fee would bankrupt them instantly.

"While, technically, Java is a complex system of algorithms used to create a platform-independent programming environment, it is, at its core, just a string of trillions of ones and zeroes," said Sun Microsystems CEO Scott McNealy, whose company created the Java programming environment used in many Internet applications. "The licensing fees we'd have to pay Microsoft every day would be approximately 327,000 times the total net worth of this company."

"If this patent holds up in federal court, Apple will have no choice but to convert to analog," said Apple interim CEO Steve Jobs, "and I have serious doubts whether this company would be able to remain competitive selling pedal-operated computers running software off vinyl LPs."

As a result of the Microsoft patent, many other companies have begun radically revising their product lines: Database manufacturer Oracle has embarked on a crash program to develop "an abacus for the next millennium." Novell, whose communications and networking systems are also subject to Microsoft licensing fees, is working with top animal trainers on a chimpanzee-based message-transmission system. Hewlett-Packard is developing a revolutionary new steam-powered printer.

Despite the swarm of protest, Gates is standing his ground, maintaining that ones and zeroes are the undisputed property of Microsoft.

"We will vigorously enforce our patents of these numbers, as they are legally ours," Gates said. "Among Microsoft's vast historical archives are Sanskrit cuneiform tablets from 1800 B.C. clearly showing ones and a symbol known as 'sunya,' or nothing. We also own: papyrus scrolls written by Pythagoras himself in which he explains the idea of singular notation, or 'one'; early tracts by Mohammed ibn Musa al Kwarizimi explaining the concept of al-sifr, or 'the cipher'; original mathematical manuscripts by Heisenberg, Einstein and Planck; and a signed first-edition copy of Jean-Paul Sartre's Being And Nothingness. Should the need arise, Microsoft will have no difficulty proving to the Justice Department or anyone else that we own the rights to these numbers."

Added Gates: "My salary also has lots of zeroes. I'm the richest man in the world."

According to experts, the full ramifications of Microsoft's patenting of one and zero have yet to be realized.

"Because all integers and natural numbers derive from one and zero, Microsoft may, by extension, lay claim to ownership of all mathematics and logic systems, including Euclidean geometry, pulleys and levers, gravity, and the basic Newtonian principles of motion, as well as the concepts of existence and nonexistence," Yale University theoretical mathematics professor J. Edmund Lattimore said. "In other words, pretty much everything."

Lattimore said that the only mathematical constructs of which Microsoft may not be able to claim ownership are infinity and transcendental numbers like pi. Microsoft lawyers are expected to file liens on infinity and pi this week.

Microsoft has not yet announced whether it will charge a user fee to individuals who wish to engage in such mathematically rooted motions as walking, stretching and smiling.

In an address beamed live to billions of people around the globe Monday, Gates expressed confidence that his company's latest move will, ultimately, benefit all humankind.

"Think of this as a partnership," Gates said. "Like the ones and zeroes of the binary code itself, we must all work together to make the promise of the computer revolution a reality. As the world's richest, most powerful software company, Microsoft is number one. And you, the millions of consumers who use our products, are the zeroes."
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Old 06-04-13, 03:58 PM
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Re: Obama Plans to Take Action Against Patent-Holding Firms

Reminds me of story Groucho Marx would tell. While making the Marx Brother's movie "A Night In Casablanca", Groucho received a phone call from Jack Warner, head of Warner Brothers studio. Warner told Groucho they could not use the word "Casablanca" in the title because WB owned it. Groucho told him he had to change the name of his studio because the Marx Brothers owned the word "brother".
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