Guy Who Inspired The Term 'Patent Troll' May Be Leaving The Patent Trolling Business

from the but-watch-out-for-those-trade-secrets dept

Anyone remember Ray Niro? He's the lawyer who so perfected patent trolling that the term "patent trolling" was first used (by future patent troll Peter Detkin) back in the 1990s to describe... Ray Niro for his lawsuits. Niro was the original uber patent troll, demanding settlements and suing all sorts of people. Perhaps his most famous move was that he had control over a patent that he argued covered any use of a JPEG image -- and would use it to go after basically anyone who displeased him (if they had any JPEGs on their websites). This included the Green Bay Packers and a resort in Florida. When noted patent system critic Greg Aharonian described that patent as "crap," Niro sued him for infringing on it as well. Niro also put a bounty on the identify of an (at the time) anonymous blogger who called himself the "Patent Troll Tracker."

Either way, Niro apparently claims that he's getting out of the patent trolling business. He's blaming the Supreme Court's ruling in the Octane Fitness case that made it easier for the victims of patent trolls to seek fees. While many people point to last year's ruling in the Alice case, which has been used to kill a bunch of software patents, as shifting the balance against patent trolling, the Octane Fitness ruling may be having an even bigger impact, because it can directly hit patent trolls in their wallets. And that's what's happening with Niro:

Niro and his firm have been ordered to pay fees in a patent suit he brought against HTC on behalf of Intellect Wireless and an inventor. The parties are still litigating over the amount, but HTC is seeking $4.1 million.

The fee order was "a wake-up call," Niro told Crain's. "I can take it once, twice, but am I going to take it three or four times? No. Why should I?"

The Ars Technica article linked above notes that another prominent patent troll, Erich Spangenberg, has been pointing to the Octane Fitness ruling for why he's moving out of the business as well:

"You invested up front to buy the patent, did the research and found infringement," Spangenberg explained to Ars in an interview last year, shortly after he made the decision to move on from IPNav. "Over and above that, you go through an IPR and spend another million there, and then you get hit with a $2 million to $3 million fee award. I don't want to be working on cases where that's what I'm worried about."

But, fear not for Niro. He's moving on to other lucrative trolling areas. The Crain's article where he initially claimed to be moving out of the patent trolling business notes that he's moving more aggressively into trade secrets:

Changes in patent law in the past year have gutted the business model that made it possible for law firms to represent “little guy” clients whose patents were being infringed, says Raymond Niro, founder of Niro Haller & Niro, one of the country's highest-profile plaintiff-side intellectual property boutiques. The firm, which has shrunk to 18 lawyers from 30, is considering taking more cases involving alleged breach of contract, nondisclosure agreements and misappropriation of trade secrets.

I've been meaning to write more about this (and I promise I will get to it eventually)... but over the last few years, there's been a big move to ratchet up laws around "protected trade secrets" with a big push coming from the US. Because of this, there is some evidence that we're already starting to see some "trade secret trolling" going on -- and given Niro's nose for early trolling opportunities, it's little surprise that he's exploring that as a new area for business.

Filed Under: fee shifting, jpeg patent, patent troll, patent trolling, ray niro, trade secrets
Companies: octane fitness

Patent Troll That Accused FindTheBest Of 'Hate Crime' For Fighting Back Now Has To Pay FTB's Legal Fees

from the fee-shifting-ftw dept

We've been talking about the importance of fee shifting in deterring bogus patent trolling suits for a while now. And while the trial lawyers fear of fee-shifting stupidly led them to kill the patent reform bill that included them, thankfully, the Supreme Court made fee shifting in patent cases more reasonable after smacking down the Federal Circuit (CAFC) once again.

The impact of the Supreme Court's ruling in the Octane Fitness case around fee shifting is already being felt. We already noted that NewEgg was able to pursue fees against a troll, but in another high profile case, a court has already ordered a patent troll to pay up for the bogus lawsuit it brought.

You may recall this case: After patent troll Lumen View went after startup FindTheBest, FTB's CEO Kevin O'Connor announced that he'd spend $1 million fighting the troll rather than settling for the $50,000 offered. In response, Lumen View accused O'Connor of "hate crimes" for calling Lumen View a patent troll. Later, Lumen View sought (and thankfully failed) to get a gag order on FTB for revealing information that was perfectly fine to reveal. In fact, Lumen View demanded that FTB try to remove prior disclosures from the internet.

Of course it was all just posturing. While this was going on, Lumen View kept making more and more desperate attempts to get FTB to settle. But FTB knew it didn't need to settle because it wasn't violating the patent -- something it made clear to Lumen View right at the beginning. In the end, the court not only found that FTB didn't infringe, it invalidated the patent itself (US Patent 8,069,073, in case you were wondering).

And, now, Judge Denise Cote has also told Lumen View that, in light of the Octane Fitness ruling, it has to pay FTB's legal fees as well. The ruling notes that it was clear from the outset that FTB didn't infringe (whether or not the patent was valid), and Lumen's continued pursuit of FTB was clearly abusive.

First, Lumen’s lawsuit against FTB was “frivolous” and “objectively unreasonable.” “To be objectively baseless, the infringement allegations must be such that no reasonable litigant could reasonably expect success on the merits.” .... No reasonable litigant could have expected success on the merits in Lumen’s patent infringement lawsuit against FTB because the ‘073 Patent claimed a bilateral matchmaking process requiring multiple parties to input preference information, while FTB’s “AssistMe” feature utilizes the preference data of only one party. Lumen’s own claim construction brief construed the independent claim of the ‘073 Patent as requiring two or more parties to input preference data. That submission urged the term “preference data” to be construed “in conjunction with its plain and ordinary meaning.” And Lumen’s Complaint alleged that FTB’s infringement was predicated on the alleged use of bilateral preference matching. But FTB does not employ bilateral preference matching.

And the most basic pre-suit investigation would have revealed this fact.... And if there were any confusion on this score -- and Lumen has provided no basis to find it was confused by the website -- Lumen was certainly on notice of this fact from the outset of the litigation. FTB’s Seigle and O’Connor informed Lumen that FTB’s AssistMe feature did not use the bilateral or multilateral preference matching process in a telephone conversation of June 19. And FTB’s attorney again informed Lumen by telephone and by letter of June 26. Yet Lumen proceeded with an obviously baseless lawsuit, failing to point to any specific way in which FTB infringed the patent.

The Judge makes it clear she knows that this was purely about trolling for settlement money all along:

Lumen’s motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation. Lumen never sought to enjoin FTB from the allegedly infringing conduct in its prayer for relief. Lumen’s threats of “full-scale litigation,” “protracted discovery,” and a settlement demand escalator should FTB file responsive papers, were aimed at convincing FTB that a pay-off was the lesser injustice.

Furthermore, the judge notes that since Lumen filed a bunch of very similar complaints, fees are certainly justified since the company seems to be using patent lawsuits as "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."

This is a great win for a company that was willing to stand up against a bogus patent troll lawsuit, and it's great to see that the troll will now have to pay up (how much will be determined later). Once again, we see how badly CAFC had screwed things up (for years!) with its ridiculously high standard for patent fees. Thanks to the Supreme Court fixing things in the Octane ruling, hopefully, we'll see more companies willing to stand up to trolls and not having to worry so much about how much it will cost to defend themselves against obviously bogus claims.

Filed Under: cafc, fee shifting, kevin o'connor, patent trolls, patents, supreme court
Companies: findthebest, lumen view, octane fitness