Rep. Zoe Lofgren Recognizes The Nuances And Complexities Of Regulating Internet Companies

from the there-are-so-many-tradeoffs dept

It's taken as given among many politicians (and much of the media) that "something must be done" about "big tech" companies. The public seems a lot less concerned about it all. Unfortunately, as we've noted repeatedly, many in the government are focused on specific regulatory levers that seem incredibly unlikely to work (and which have a high likelihood of making any of the problems discussed even worse). A big one is antitrust. We keep hearing grandstanding politicians talk about how they need to break up "big tech" without any of them getting into how that will solve any particular issue. In the House, Rep. David Cicilline has been the poster child of this approach -- insisting that antitrust is the answer, but refusing to actually explore the nuances and tradeoffs of that approach.

One of the big problems with the antitrust approach is that the traditional remedies of antitrust do very little to fix the issues that people insist come about due to the big internet companies. Big fines seem mostly meaningless to them (though they will shift some behavior). And breaking them up really doesn't do very much at all. The value of the internet is the ability to communicate with everyone, and you can't create "BabyBooks" for Facebook in the same way it was possible to create "BabyBells" out of AT&T in the 1980s (and, we can all see how well that worked in the long run).

Some of us have suggested alternative approaches that might lead to more real competition and better end-user control over data. Over the last few months, I have been having more discussions with various different government officials about exploring some of these alternative remedies, but I have been less and less sure if any government official would ever actually pay attention.

So it's actually nice to see Rep. Zoe Lofgren, responding to Cicilline's giant confusing mess of a "Digital Markets" report by posting her own thoughts on better ways to think about regulating the internet. I don't agree with all of Lofgren's points, but it's one of the most sane and reasonable documents I've seen coming from a government official in a long, long time regarding issues on regulating internet companies. Unlike so many, it acknowledges the nuances and trade-offs inherent to this discussion, and the lack of any silver bullet fix.

The more difficult questions are in deciding how and when to regulate single-firm conduct, which the report often describes as a platform exercising its “gatekeeper power” over who uses it and under what terms. Our laws should promote open platform ecosystems as a central objective, but this is far from a simple matter in practice, because many of a digital platform’s assertions of gatekeeping power can be good faith efforts to serve user interests – such as privacy, security, and/or quality of service – and may protect the long-term health of the larger ecosystem. In certain instances, platforms may need to exclude certain parties or content outright – for example, moderating hate speech and the advertisement of fraudulent or harmful products – to ensure that a platform otherwise remains open and vibrant for other speakers and transactions.

A platform company could also abuse gatekeeping power – to promote its own products and services, to lock in users from leaving for other platforms, and so on. The challenge for Congress is to craft a legal framework to allow regulators to distinguish abusive gatekeeping from legitimate efforts to serve user interests and prevent ecosystems from breaking down. These sorts of cases will often resist easy categorizations and generalized answers, as regulators are forced to consider how deeply to intervene in the details of a platform’s operations, such as its precise terms of services or particular design aspects of its user interface.

The document also talks about privacy issues, and whether or not antitrust is truly the tool to deal with that.

The Report contends that privacy abuses by online platforms are symptoms of inadequate competition. This can be true in some cases, and in those instances competition policy could play a useful supporting role to give consumers more privacy-protective alternatives in the marketplace. But it is a mistake to treat privacy largely as a competitive problem with competition-focused remedies. Abusive data practices are found not only in large platforms but also from many smaller companies, as the latter are more likely to buy and sell sensitive user data to data brokers and other third parties. Even in more competitive digital markets, users often do not have enough visibility or understanding into how their personal data is being collected, used, and disseminated, and face insurmountable barriers to defending their own privacy interests, through either individual or collective action.

Effective privacy and data regulations can and will promote competition, both by restricting abusive business models that otherwise can trigger a race to the bottom, and by giving users more practical control over who holds their data and how it is used. The Report’s call for greater authority to promote data portability and interoperability is important. However, as with other privacy measures, it’s unlikely this can be accomplished through the ex post enforcement of generalized antitrust laws. Instead, it requires more specialized, expert, and prospective privacy regulation.

I still worry that we run into the same issues with most privacy legislative proposals as we run into with antitrust remedies: those putting in place the rules will misunderstand the nature of the problem and the remedy, and create results that only favor the largest companies who can comply with silly rules that don't always make sense.

But taking approaches that (1) lead to more interoperability, (2) more end-user control, and (3) greater transparency have always seemed to be the approach that might eventually have a real impact. It's good to see that Lofgren seems to be thinking along similar lines.

And, she also notes that many other private interests are trying to use these discussions to get their own favored results, and Congress should be wary of that. She doesn't name them, but Hollywood, the telcos, and the legacy newspaper business (not to mention big lumbering old tech companies like Oracle and IBM) have been actively trying to co-opt this process in a punitive way against companies which effectively out-innovated them. This gets far too little discussion, but it's great to see Lofgren point out the risk:

In all of this – competition, privacy, and or any other fundamental objective in platform regulation – we must be vigilant against regulatory and legislative agendas being co-opted to serve narrower interests. As I noted above, the rise of digital platforms unleashed a flood of new competition for earlier incumbents in many other industries. While these incumbents can have legitimate complaints about their treatment within platform ecosystems, this does not justify special regulatory protections that would lock down such ecosystems, favor conventional business models against digitally-native content and services, or attempt to restore markets to their pre-digital states.

Exactly.

Filed Under: antitrust, competition, david cicilline, gatekeepers, privacy, tradeoffs, zoe lofgren

Daily Deal: Way Pro No Code Landing Page Builder

from the good-deals-on-cool-stuff dept

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Note: The Techdirt Deals Store is powered and curated by StackCommerce. A portion of all sales from Techdirt Deals helps support Techdirt. The products featured do not reflect endorsements by our editorial team.

Filed Under: daily deal

EFF Sues California Law Enforcement Training Entity Over Its BS Use Of Copyright Law To Deny Public Records Requests

from the conveniently-invoked-IP-rights dept

Following the passage of a law that finally made lots of documentation related to police misconduct publicly accessible in California, the requests for information began pouring in. Some law enforcement agencies complied. Others sued. The state Attorney General showed the public how much they mattered by siding with the secretive agencies.

The entity behind the standards for law enforcement training in the state -- Police Officers Standards and Training (POST) -- was supposed to post its training materials publicly in response to the new law. But it found a convenient out: copyright law. It claimed the company that produced its training materials on everything from ALPR readers to deployment of facial recognition tech refused to allow its copyrighted material to be posted publicly.

This was obviously a load of crap. Copyright law does not forbid the publication of public interest documents by the agencies that utilize them. Allowing the public to view and download the documents does not destroy the market for law enforcement training materials. This was obviously nothing more than a convenient way to avoid complying with the new public records law.

Making this even stupider was the fact the EFF had already obtained a copy of POST ALPR training materials through a public records request. That copyrighted material had already been "distributed" to outsiders, all without putting POST or the EFF on the wrong side of IP law.

This bullshit is probably going to end up costing the state's taxpayers. The EFF is suing POST over this convenient kowtowing to meaningless copyright claims.

The Electronic Frontier Foundation (EFF) sued the California Commission on Peace Officer Standards and Training (POST) to obtain materials showing how police are trained in the use of force, after the organization cited third-party copyright interests to illegally withhold them from the public.

The lawsuit, filed under California’s Public Records Act (PRA), seeks a court order forcing POST to make public unredacted copies of outlines for a number of police training courses, including training on use of force. As the country struggles to process the many painful-to-watch examples of extensive and deadly use of force by police, Californians have a right to know what officers are being trained to do, and how they are being trained.

As the lawsuit [PDF] points out, the state has directly -- through legislation -- ordered the release of this material. And that mandate contains nothing saying "unless copyright protections are invoked."

SB 978 mandates that, as of January 2020, “the Commission on Peace Officer Standards and Training and each local law enforcement agency shall conspicuously post on their Internet Web sites all current standards, policies, practices, operating procedures, and education and training materials that would otherwise be available to the public if a request was made pursuant to the California Public Records Act.”

And who is the private entity invoking copyright law to avoid complying with the law? Well, it's none other than the state's largest pro-police lobbying group, the California Peace Officers' Association. When not misapplying the law to prevent the public from knowing more about their public servants, the CPOA is acting against the public's interest by opposing legislation affecting everything from marijuana legalization to sentence reductions for nonviolent crimes to facial recognition tech bans.

Even if the CPOA is right about copyright law (and it isn't), fair use covers both the distribution of the material by POST and any further publications by recipients like the EFF.

First, the purpose of POST’s use—to comply with the CPRA’s transparency requirements—would be a non-commercial, transformative use in service of the public interest. Second, the ECO is a primarily factual work, subject to thinnest copyright protection. Third, sharing the complete, unredacted ECO is necessary to achieve meaningful transparency and educate the public. Fourth, POST’s use of the ECO would not harm the market for CPOA’s training materials.

Once again, it's copyright acting as a convenient censor. Hopefully, the court will see it for what it is and direct POST to stop screwing around and hand over the training materials to the EFF and publish them to the POST website. If the EFF succeeds (and it should), it will be the public sector forced to pay for the CPOA's censorial actions. While CPOA may be a private entity, it's the state's law enforcement training entity that's being sued. Maybe the state's residents will realize POST could have blown off the lobbying association without worrying about being sued for copyright infringement and respond accordingly -- possibly by stripping the funding headed to the CPOA to produce training materials or rerouting it to another agency that's not going to pretend federal copyright law mandates non-compliance with state transparency laws.

Filed Under: california, copyright, foia, law enforcement, training, transparency
Companies: eff, police officers standards and training, post

US Telecoms Keep Getting Wrist Slaps For Repeatedly Ripping Off The US Government

from the we're-not-actually-fixing-the-problem dept

You may have to squint to see it, but tell me if you can detect the faint outline of a pattern here.

Last year, AT&T and Verizon paid $116 million to settle allegations they'd been ripping off state government agencies for more than a decade. Last March, an AT&T whistleblower stated that AT&T had been ripping off US schools for just as long, and that he was summarily fired when he brought that to the attention of his superiors (there's been no meaningful government inquiry into his claims). And this week, AT&T was required to strike a $1.5 million penalty to settle a lawsuit (pdf) accusing the company of, you guessed it, ripping off the local DC government for years. From the DC AG announcement:

"Today’s settlement resolves a lawsuit by the Office of the Attorney General (OAG) against AT&T for allegedly submitting false invoices that did not comply with contract requirements to provide cost optimization and the most cost-effective telecommunications plans available. Instead, AT&T knowingly invoiced the District for features, add-ons, and other services that failed to comport with this mandate, causing millions in improper charges that were paid with taxpayer funds."

You know, basically the same way AT&T treats its residential broadband and TV customers.

In many of these deals, the settlement itself barely comes close to actually covering the amount of money AT&T made ripping off governments and taxpayers. And the companies don't have to actually admit to any wrongdoing. Other times, nothing happens at all. In 2016, the Obama FCC attempted to fine AT&T $106,425 for repeatedly overcharging two school districts in Florida, only to have that inquiry gutted when Trump and Ajit Pai came to town. The FCC would have much of its consumer protection authority gutted by the Trump administration, at direct lobbyist behest, one year later.

While we like to insist the US isn't a corrupt mess, we've built a system where accountability, when it actually happens, is usually just viewed as a minor pest and the cost of doing business. To hold AT&T properly accountable you'd need government policies that encourage competition in consumer and government service broadband, better antitrust enforcement and tougher merger review, properly funded and empowered regulators, and lawmakers genuinely interested in consumer protection and fraud prevention, all things we're very much not doing consistently. In part because AT&T is politically powerful and doles out plenty of campaign contributions, but also because it's tethered to our intelligence and law enforcement systems.

That's not to say some regulators and governments haven't tried all the same. In just the last five years or so AT&T has been fined $18.6 million for helping rip off programs for the hearing impaired; fined $10.4 million for ripping off a program for low-income families; fined $105 million for helping "crammers" by intentionally making such bogus charges more difficult to see on customer bills; and fined $60 million for lying to customers about the definition of "unlimited" data. Again it's subtle, but maybe you see a pattern here?

In nearly every instance regulators will pat themselves on the backs for issuing "record" fines. But once these efforts wind their way through litigation, most of these fines are usually reduced, if not eliminated altogether. And they're collectively still a pittance compared to the money AT&T makes from being a natural monopoly across vast swaths of the country. But instead of directly targeting telecom monopolization and the rampant state and federal corruption that protects it from change, competition, and accountability, we dole out a parade of wrist slaps and then pat ourselves on the back for a job well done.

Filed Under: false invoices, fcc, ftc, governments, overcharging, rip offs, scams, subsidies
Companies: at&t, verizon

Funniest/Most Insightful Comments Of The Week At Techdirt

from the dye-a-log dept

This week, our first place winner on the insightful side is David with a comment about the cop accused of beating up another cop:

So the only reason he is on trial is because he got a cop?

It would seem that beating up an undercover cop was more of a coincidence that made someone take notice. So what's with the other victims of him and his department? I mean, it's obvious that he was regularly acting in this manner while not stepping far enough out of line to warrant attention.

It seems like prosecuting only him for only this particular incidence is leaving citizens without a badge wide up for more abuse.

In second place, it's PaulT on our post about smart TV data, responding to someone who brought up the fact that they, personally, do not watch television, which isn't especially useful to the conversation:

Good for you. Always nice to know that someone will always react to an industry problem with "I don't personally use that product". That's always so helpful...

Meanwhile, you'd be even more protected if you didn't use electricity, while the privacy issue concerned here (which expands way beyond broadcast TV) will still exist for anyone who has it.

For editor's choice on the insightful side, we start out with an anonymous comment on our post about Twitch's DMCA enforcement, responding to someone who wanted to pin the whole thing on Jeff Bezos personally:

... and Bezos sounds a lot like Soros, so they're probably in the conspiracy together, scheduled for just after the the next round of the Central American Migrant Caravan and just before removing the Icelandic Prime Minister from power.

However, once you take off the tinfoil hat, you might realize that Bezos is on top of such a big pile of Things That Need Attention Now that he probably hasn't spared the time for the Twitch DMCA issue.

Similarly, folks are saying "Amazon should know better than this", which might be true if Amazon itself was paying close attention to its subsidiaries. You can see the truth of that in that we're even talking about this. Meanwhile, the people on the ground who handle DMCA issues for Amazon itself are not the same people as the people doing so for Twitch.

Not saying you shouldn't be angry about this. But be angry at the right people, for the right reasons.

Next, it's Thad responding to a question about why the DOJ apparently got involved in one of Devin Nunes's lawsuits:

Bill Barr is an authoritarian who used the DoJ to protect Trump and his cronies, and retaliate against their enemies.

That wasn't hard to see at all; they did it right out in the open.

Over on the funny side, our first place winner is Baron von Robber with a theory about why Nunes' voters haven't gotten rid of him yet:

The cows are smarter than the farmers there.

For second place, we head all the way back to last week's comments post, where Bobvious continued riffing on a winning comment about "left-wing fascism":

It's the sort of Democratic Republicanism you would have seen at Hitler's Bar Mitzvah, or Vladimir Putin presenting Florence Nightingale with a posthumous Ukraine Medal of Honour, along with the Flat Earth Society education videos winning a Golden Globe Award.

For editor's choice on the funny side, we start out with a comment from Jojo about the UK's name-changed internet bill:

How they went about reforming this bill

UK Parliament: "Okay lets reform this bill."
proceeds to just change the title.
UK Parliament: "We did it. The children are now safe online!"

Finally, it's That Anonymous Coward with a comment on our post about the scammers using bogus copyright threats to spread malware:

9 out of 10 Nigerian princes agree its effective.

That's all for this week, folks!

This Week In Techdirt History: May 16th - 22nd

from the memory-lane dept

Five Years Ago

This week in 2016, we were digging deeper into the Oracle/Google fight over the Java API and the challenges therein. Comcast was trying to claim that it wasn't 'feasible' to deliver TV to third-party set top boxes, a cable lobbying group was saying that more competition would hurt consumers, and a former FCC boss turned cable lobbyist was complaining that the industry was being unfairly attacked. Meanwhile, the story of the CIA Torture Report was getting even stranger, and Senators Wyden and Paul introduced a bill to stop the expansion of government hacking.

Ten Years Ago

This week in 2011, we looked closer at the awful PROTECT IP act, while Google noted the assault on free speech it represented — an attitude its defenders labelled as thinking you're above the law. A Supreme Court ruling took a huge chunk out of the 4th Amendment, while the Indiana Supreme Court took an even bigger chunk out of it. And it really wasn't a good week for said amendment in general, with the RIAA calling for warrantless searches and Congress extending the Patriot Act with no concessions.

Fifteen Years Ago

This week in 2006, we wrote about how amazing an online searchable database of scanned books could be, and how it was already helping bring attention to commercially neglected works. MLB was trying to find a backdoor way to control game data, astroturf continued to grow in the net neutrality debate, and a Canadian politician gave a rare inside look at the RIAA's lobbying/fearmongering tactics. We got a couple important court rulings too, with the Supreme Court noting that injunctions don't always make sense in patent cases, and an appeals court highlighting why making a profit doesn't disqualify something from fair use exceptions to copyright.

Filed Under: history, look back

Makers Of 'Peaky Blinders' Show Fail To Get Injunction Against Distillery For 'Peaky Blinders' Whiskey

from the cheers! dept

When you cover as many trademark disputes centered around the alcohol industry as I have, you really do start to realize just how many other industries don't seem to understand that their products are not the same as adult libations. Alcohol, you see, is not the same as a major metropolitan city. Alcohol is also not the same thing as fruit juice. Beer, as well, is not the same thing as wine. Alcohol is also not the same thing as a famous movie franchise.

And, as the producers of the hit show Peaky Blinders are hopefully about to learn, alcohol is also not the same thing as a television show about a famous historical gang. See, Sadler's Brewhouse in the UK recently applied for a trademark on the many "Peaky Blinders" alcoholic drinks it sells in the United States. The production company for Peaky Blinders the Netflix show caught wind of this and promptly sued for trademark infringement, going so far as to ask the court for an injunction to prevent Sadler's from selling its products.

Mandabach sued Sadler’s for trademark infringement in November, alleging Sadler’s “Peaky Blinder” whiskey, gin, rum, and dark beer was likely to cause confusion with its show about the 19th century Birmingham, U.K., gang after which the show is named.

Sadler’s applied for a U.S. trademark for the name in 2017. Mandabach sent it a warning letter in 2018, and Sadler’s began selling the drinks in the U.S. through co-defendants Halewood Wines & Spirits Inc and The Winebow Group LLC in 2020.

Now, before we get to how the court ruled on the injunction, there are a couple of things you have to understand about all of this. Peaky Blinders is not a fictional gang created by the show's producers. They were a very real street gang that operated in England until the early 1900s. Sadler's former owner was a descendent of a Peaky Blinder gang member and the gang used to go to the brewery's venues on the regular as a result. It's for those reasons that the company decided on using Peaky Blinders branding.

Now, the show producers claimed a number of things in its lawsuit and request for an injunction. It claimed that the trademark it held for the show was not at all descriptive, that it had acquired secondary meaning, and that there was real customer confusion in the public due to Sadler's use. The court denied the injunction and the reasoning it did so should give the producers pause on whether to keep this lawsuit going in the first place.

Caryn Mandabach Productions Ltd didn’t show that it owned a protectable trademark in the name, that Sadler’s Brewhouse Ltd’s products were likely to cause confusion, or that the alleged confusion caused it irreparable harm, U.S. District Judge Consuelo Marshall said Wednesday, rejecting the production company’s bid for a preliminary injunction.

Marshall found Wednesday that Mandabach didn’t prove it had a protectable interest in its unregistered trademarks, in part because its use of “Peaky Blinders” is “likely descriptive or suggestive of a television show regarding a group of persons named the Peaky Blinders.” Mandabach also didn’t make the “clear showing” required for a preliminary injunction that Sadler’s was likely to confuse consumers. Mandabach also wouldn’t be irreparably harmed without an injunction, Marshall said, noting that it waited over two years to sue and nearly three years to request an injunction after sending Sadler’s the warning letter.

The full ruling on the denied injunction is embedded below. If you want a sense of why Mandabach maybe should just drop this whole thing, it's worth a read. Injunction rulings have lower bars than would be considered in a motion to dismiss argument, should Sadler's seek one, but the analysis is still fairly damning. In a nod back to the opening paragraph of this post, for instance, consider the court's view on whether these two companies operate in the same marketplace.

“Related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods.” Network Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1150 (9th Cir. 2011). Here, Plaintiff’s good is a television show whereas Defendants’ goods are whiskey. Therefore, the proximity of the goods factor does not favor finding a likelihood of confusion.

Most of the tests for trademark infringement and for granting an injunction follow a similar track.

Frankly, a great deal of this hinges on the show's own decision to use the name of a historically famous real life street gang as its show name. The idea that this slice of history could be locked up by a television show and prohibit its use in a totally unrelated market flies in the face of the purpose of trademark law.

Filed Under: beer, injunction, likelihood of confusion, peaky blinders, trademark, tv shows
Companies: mandabach, sadler brewhouse

If There's A Defamatory Review On Yelp, Is It Google's Job To Hide It?

from the always-a-way dept

One point that we keep trying to make in the various debates about content moderation and Section 230 in particular is that the second you give people a legal method through which they can seek to remove unflattering information from the internet, they will use it... and abuse it. We've seen it for decades with the DMCA, certainly, which is regularly abused to try to remove unflattering information even if it has nothing whatsoever to do with copyright. We've also seen it in the context of fake defamation lawsuits.

Of course, it also opens up some other scenarios as well, which Yelp recently discovered when Google alerted the company that one of its pages, about an auction house in Knoxville, Tennessee, was going to be delisted from Google's index. Why? Well, according to the takedown letter that was sent to Google, by Wray Williams, the owner of the auction house, the statements on the website were found to be defamatory.

The Permanent Injunction that is attached covers the defamatory remarks which include all of the content that was posted by defendant, Kim Babel, on multiple Websites. The last 2 paragraphs of page 2 of the Injunction cover removing postings and Kim Babel being prohibited from further postings or republishing the defamatory statements.

And, indeed, the takedown letter includes an injunction issued by the court, back in 2012. The injunction applies to the person who allegedly posted the content (apparently Kim Babel), saying that she is enjoined from reposting the content to RipoffReport. There is then a handwritten addition saying "or any other online forum" though it's not entirely clear who wrote that.

It might be the judge. I'm no handwriting expert, but the handwriting does look maybe similar to the judge's handwriting entering the date at the end.

So, if we accept that a jury found the defendant to have defamed the company, you can understand how there's an interesting conundrum here. Contrary to what the anti-Section 230 crowd insist, most websites, including Google, do take it seriously when there are court orders regarding defamatory content, and they do seek to deal with it. And yet... there have to be some questions raised about this result. First of all, the injunction is against the woman who was found by the court to have posted the reviews. It talks about RipoffReport, but not Yelp (though there is the hand-scrawled message on the injunction).

But, as it stands, anyone searching for this auction house on Google, will not be shown the Yelp page (which has two reviews, both of them just one star). To Wray Williams credit, he responds to both of the reviews, though with the second one he does so to point out that the review was ruled to be defamatory. If you search for the same business on YouTube, you see that Google Review has 30 reviews with an average rating of 4.8 out of 5 stars. Google will also show you reviews from Facebook, which are also all positive.

So, in the end, I'm not sure what's the best result here. If the content is truly defamatory, then it seems reasonable to ask for it to be taken down. But it seems that the auction house should have sent the request to Yelp, rather than to Google. Yelp might then be in a position to review the court ruling and determine whether or not it wanted to pull down the review -- which it very well might. And, in that scenario, then people searching on Google would still also be able to see the Yelp reviews.

It does seem at least marginally curious that there are so few Yelp reviews, and so many Google reviews. In my experience the reverse is often true, though perhaps that's changing. Perhaps if the auction house hadn't nuked the entire page from Google there would actually be more Yelp reviews for the auction house (and perhaps those would have been more positive).

The larger issue, to me, once again is what is the remedy for the situation. And when we're dealing with content on other sites (such as Yelp), it seems dangerous to put that issue on Google to decide. I understand the basic thinking behind it -- given how much traffic Google drives. But also, it seems worrisome that Google's only response is a sledge hammer approach that removes all access to that page. Perhaps it "feels" right in this scenario in which there are just those two negative reviews, and one has been adjudicated as defamatory -- but what if there were a bunch of reviews, and the vast majority of them were legit (good or bad)? The fact that this results in Google just removing the entire page from its index, feels like going too far.

Filed Under: defamation, intermediaries, reviews, search, takedowns, third parties
Companies: google, yelp

How A Camera Patent Was Used To Sue Non-Profits, Cities, And Public Schools

from the stupid-patent-of-the-month dept

Patent trolls are everyone’s problem. A study from 2019 showed that 32% of patent troll lawsuits are directed at small and medium-sized businesses. We told the stories of some of those small businesses in our Saved by Alice project.

But some patent trolls go even further. Hawk Technology LLC doesn’t just sue small businesses (although it does do that)—it has sued school districts, municipal stadiums, and non-profit hospitals. Hawk Tech has filed more than 200 federal lawsuits over the last nine years, mostly against small entities. Even after the expiration of its primary patent, RE43,462, in 2014, Hawk continued filing lawsuits on it right up until 2020. That’s possible because patent owners are allowed to seek up to six years of past damages for infringement.

One might have hoped that six years after the expiration of this patent, we might have seen the end of this aggressive patent troll. Nope. The U.S. Patent and Trademark Office has granted Hawk Tech another patent, U.S. Patent No. 10,499,091. It’s just as bad as the earlier one, and starting last summer, Hawk Tech has started to litigate.

Camera Plus Generic Terms

The ‘091 patent’s first claim simply claims a video surveillance system, then adds a bunch of computer terms. Those terms include things like “receiving video images at a personal computer,” “digitizing” images that aren’t already digital, “displaying” images in a separate window, “converting” video to some resolution level, “storing” on a storage device, and “providing a communications link.” These terms are utterly generic.

Claim 2 just describes allowing live and remote viewing and recording at the same time—basic streaming, in other words. Claim 3 adds the equally unimpressive idea of watching the recording later. The additional claims are no more impressive, as they basically insist that it was inventive in 2002 to livestream over the Internet—nearly a decade after the first concert to have a video livestream. Most laughably, claim 5 specifies a particular bit rate of Internet connection—as if that would make this non-invention patentable.

In order to be invalidated in court, however, the ‘091 patent would have to be considered by a judge. And Hawk Tech’s lawsuits get dismissed long before that stage—often in just a few months. That’s because the company reportedly settles cases at the bottom level of patent troll demands, typically for $5,000 or even less. That’s significantly less than a patent attorney would request even for a retainer to start work, and a tiny fraction of the $2 million (or sometimes much more) it can cost to defend a patent lawsuit through trial.

The patent monetization industry includes the kind of folks that can be counted on to sue a ventilator company in the middle of a pandemic. Even in that context, Hawk Tech has taken some remarkable steps.

Hawk Tech has sued a municipal stadium that hosts an Alabama college football team; a suburban Kentucky transit system with just 27 routes; non-profit thrift stores and colleges; and a Mississippi public school district that serves an area with a very high (46%) rate of child poverty. That last lawsuit is one of at least three different public school districts that Hawk Tech has sued.  These defendants would be hard pressed to mount a legal defense that could easily cost hundreds of thousands of dollars.

One type of company you won’t see on the long list of defendants is a company that actually makes camera systems. Instead, Hawk Tech finds those companies’ customers and goes after them. For instance, Hawk Tech drew up an infringement claim chart against Seon, a maker of bus camera and GPS systems; then used that chart to sue not Seon, but the Transit Authority of Northern Kentucky (TANK), based on a Seon pamphlet that pointed to TANK as a “case study.” Instead of suing camera company Eagle Eye, Hawk Tech sued the city of Mobile, Alabama, likely after seeing a promotional video made by Eagle Eye on how the city’s stadium used its camera systems.

The problem of what to do about patent trolls that demand nuisance-level settlements is a tough one. What may be a “nuisance” settlement in the eyes of large law firms can still be harmful to a charity or a public school serving impoverished students.

That’s why EFF has advocated for strong fee-shifting rules in patent cases. Parties who bring lawsuits based on bogus patents won’t be chastened until they are penalized by courts. We also have supported reforms like the 2013 Innovation Act, which would have allowed customer-based lawsuits like the Hawk Tech cases to be stayed in situations when the manufacturer of the allegedly infringing device steps in to litigate.

Right now, there are two different parties seeking to invalidate Hawk Tech’s ‘091 patent and collect legal fees. One is Nevada-based DTiQ, a camera company whose customers, including a Las Vegas sandwich shop, have been sued by Hawk Tech. Another is Castle Retail, a company that owns three supermarkets in Memphis. Let’s hope one of those cases gets to a judgment before Hawk Tech files off another round of bogus lawsuits against small companies—or public schools. 

Reposted from EFF's Stupid Patent of the Month series.

Filed Under: non-profits, patent trolls, patents, schools
Companies: hawk technology