Cable Modem Patent Hoarder Accused Of Pretending To Enter The Market

from the sneaky,-sneaky,-sneaky dept

Tue, Jun 3rd 2008 8:54am — Mike Masnick

Rembrandt IP is a patent hoarding firm that we've written about a few times before. It buys up patents and then sues companies to get them to pay licensing fees. However, one thing that's been really interesting about Rembrandt is how it's been figuring out new and creative ways to skirt recent Supreme Court rulings that seek to lessen the impact of such non-practicing entities. Two years ago, in the landmark MercExchange case, the Supreme Court ruled that courts shouldn't automatically grant injunctions preventing the sale of products, even if they're found to have violated a patent.

This didn't get rid of injunctions entirely, but basically (reasonably) noted that the courts should take into account whether or not the product on the market was actually harming the market for the patent holder's products. Thus, if you were a non-practicing entity (patent hoarding firm), it didn't make sense to ban another company's products from being in the market -- it just made sense to fine them. After all, since the patent holder didn't have a product on the market, what harm was being done to the patent holding firm's market? Patent hoarding companies flipped out, because the threat of an injunction barring the sale of products was one of the biggest weapons they had (it's part of what made RIM pay $612 million to NTP, even though the USPTO had said that NTP's patents were invalid).

So, how is Rembrandt getting around this ruling that takes away the threat of injunction as a weapon? Well, earlier this year, we noted a sneaky trick where it sued two companies in a single market over the same patent, but gave each of them a choice: whoever settled first, would get to join the lawsuit against the other one. Then, since the side that joined was a practicing entity, it could push for an injunction against the other. Sneaky, right?

Well, now it gets better. Rembrandt also happens to hold some patents on cable modem technology. In this case, Rembrandt bought the patents from a former AT&T subsidiary that had an agreement with the cable companies to license the patents under reasonable terms. Rembrandt is now claiming that since it bought the patents, it no longer needs to abide by that earlier agreement (despite the fact that the FTC has already slammed other patent holders for claiming similar things). Rembrandt, however, is pushing ahead and has sued a ton of cable companies, broadcasters and cable modem makers over this patent -- but how can it get an injunction since it's not a practicing entity?

Well, how about pretending to be a practicing entity?

Broadband Reports points us to the news that Rembrandt has convinced a small Taiwanese cable modem manufacturer to make a batch of cable modems with Rembrandt's name on them, which have now been sold to a tiny ISP in ~~Seattle~~ Tacoma. So, now, Rembrandt can try to claim that it's really "in the market" (even though it has admitted publicly to being a non-practicing entity) and can push for an injunction against all the companies it's suing. Those companies are calling out this practice as a "sham," and it will be interesting to see how the court rules. If the court rules that this practice allows Rembrandt to ask for injunctions, we may start seeing other patent hoarding firms quickly finding "partners" who can white label a few products just for the sake of appearing to be a "practicing" entity rather than a non-practicing one.

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Filed Under: cable, docsis, injunctions, non-practicing entities, patents
Companies: rembrandt, rembrandt ip

19 Comments

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Kiba, 3 Jun 2008 @ 9:18am

So basically, they relies on extortion as a business model and is willing to lie if it going to make a buck.

On top of it all, they produce no wealth and legitimized thievery. :(

If you're going to be greedy, at least produce something of value to society. That way your greed have some benefit for society.
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angry dude, 3 Jun 2008 @ 9:43am

horseshit again
What about exclusive patent license given to just one company to produce patented invention ?
Did SCOTUS abolish all exclusive patent licensing ?
I don't think so
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- Flame Warrior, 3 Jun 2008 @ 4:58pm
  
  Re: horseshit again
  Ferrious Cronus
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deathbychichi, 3 Jun 2008 @ 9:54am

Courts will not be bound by nominal/artificial sales
Courts have already ruled on using nominal/artificial sales to establish and support the rights to a trademark (Procter & Gamble (P&G) v. Johnson & Johnson (J&J), (2nd Cir. 1980), p. 134), saying there was no right to trademark protection if the mark was not used in commerce.

P&G argued that they had used it in commerce by having done the same thing Rembrandt did. I realize this is about patents, not trademarks, but I don't think the courts will be bound to accept Rembrandt's claim to be a practicing entity based on this sales gambit.
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angry clown, 3 Jun 2008 @ 10:06am

Exactly
This company should be able to enforce its exclusive patent licence!!!

If they don't want to be bothered with producing a product based on that patent that's fine, their product would clearly be too good for the current market anyway. There should be room for passive aggressivism in the modern technology market shouldn't there?

What's inherently wrong with 'extortion' I see it as a perfect good business model, it worked great for the Mafia didn't it? Hoarding patents out from under manufacturers and then suing them for the products they continue to produce is no different than forcing a guy to take loan you know he can't pay and then killing him when he doesn't pay it, right? What is wrong with that?!?

Honestly, mike you are easily one of the worst people I have ever had the misfortune of happening across, what were you born into some crazy hippie commune? Are you a goddam Commie!?!? A truly free market is the only market where I will be able to rape the commoners on a whim and not have to suffer the consequences don't you want me to be able to be happy? Why the FCUK WON'T YOU LET ME BE HAPPY?!?!
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Ajax 4Hire, 3 Jun 2008 @ 10:07am

Irritation is not a long term business model.
Pissing people off is never a sustainable profit model.

But it can make you money in the short term.
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- snowburn14, 3 Jun 2008 @ 10:28am
  
  Re: Irritation is not a long term business model.
  Tell that to governments the world over :P
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Gnome, 3 Jun 2008 @ 10:34am

FYI
Tacoma, WA != Seattle, WA. :)
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- Mike (profile), 3 Jun 2008 @ 12:56pm
  
  Re: FYI
  Tacoma, WA != Seattle, WA. :)
  
  Oops. Fixed.
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Wolfy, 3 Jun 2008 @ 10:35am

What we have is a situation, where criminals, masquerading as lawyers, have rewritten the laws, so they can extort, steal, and commit a variety of other crimes, all within the letter of the law. This is the situation from the top of the Fed. Gov't. do down to local levels. Until politicians and businessmen can be legally shot on sight for defrauding the public, this is unlikely to change.
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GeneralEmergency (profile), 3 Jun 2008 @ 11:01am

Please educate me...
Since Patent and Copyright are completely artifical, never found in nature, legal constructs cut from the "whole cloth" of our imaginations, why can we not revoke transferrability of these constructs?

What would be the down side of making Patent and Copyright non-transferrable?
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- angry dude, 3 Jun 2008 @ 11:23am
  
  Re: Please educate me...
  "What would be the down side of making Patent and Copyright non-transferrable?"
  
  The demise of the contract law for employing scientists and engineers in US (as far as patents are concerned)
  
  An employed inventor is required to assign his patents to his corporate employer
  That's the essence of korporate america
  As far as I am concerned you are very welcome to petition your politicians to change that....
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  - Chronno S. Trigger, 3 Jun 2008 @ 11:46am
    
    Re: Re: Please educate me...
    Not sure exactly what you speak of. Our company applies for patents under the company name not the individual who did the inventing. Seems to save a step and money.
    
    The only thing I can think of is that revoking the transfer of patents will just stop the people who invent to sell, or it would stop patent hoarders from buying up patents just to sue. I see no down side to this.
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    - angry dude, 3 Jun 2008 @ 12:02pm
      
      Re: Re: Re: Please educate me...
      wrong
      
      In US patents are issued to original true inventors ONLY,
      not to companies
      
      The inventor's employment contract takes care of the rest
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      - Flame Warrior, 3 Jun 2008 @ 5:01pm
        
        Re: Re: Re: Re: Please educate me... horseshit
        Prove it! Since you say ONLY it only takes one counterexample to disprove. And you've ALREADY been given many.
        
        You are Ferious Cronus
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F, 3 Jun 2008 @ 11:29am

So they're lying to the courts in order to be able to extort money from people who do real business... Hmmm with that kind of ethics from their side, I think paying lads to smash the windows of Rembrandt's execs SUVs (and maybe break one of two of their legs in the process) is a perfectly reasonable response.
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angry dude, 3 Jun 2008 @ 11:40am

Eat your brain punk
people who do real business... ???

YOu mean a monopoly like MShit ?

A basement developer who developed and sold a few copies of his own OS should not be allowed to bother "people who do real business" aka huge multinational monopolies like MShit ?

Sorry punk
That's what patent system is all about - small upstarts with new patented technologies assaulting huge existing monopolies
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- Flame Warrior, 3 Jun 2008 @ 5:02pm
  
  Re: Eat your brain punk
  You are Ferious Cronuis. You have recived MANY examples where the small companies are stomped out by the larger ones
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Little Punk, 3 Jun 2008 @ 5:15pm

I'm beginning to see a pattern in the AD posts.
I think AD is shilling the patent trolls because he thinks that they are the only ones who will pay him for his inventions. The big evil corps just steal his ideas without paying a license fee, and the anti patent folks are bad because they would abolish the patent holding corps.

Disclaimer: I am not and never have been a member of the AD club. The first rule of AD club is never talk about AD club.
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