Judge Alsup Slams Patent Troll For Basically Everything

from the don't-try-to-pull-a-fast-one-on-judge-alsup dept

Lots of folks probably remember Judge William Alsup from the Google/Oracle mess, in which he seemed to be one of the few reasonable people in the room, who actually took the time to understand the deeper technical issues. Alsup has quite a reputation for a number of other cases as well, and one thing that seems fairly clear is that you don't want to try to bullshit this judge who knows how to code on technical issues. You might recall in the Uber/Waymo fight, he also ordered both companies to teach him how LiDAR works and he made it clear that he wasn't messing around:

Please keep in mind that the judge is already familiar with basic light and optics principles involving lens, such as focal lengths, the non-linear nature of focal points as a function of distance of an object from the lens, where objects get focused to on a screen behind the lens, and the use of a lens to project as well as to focus. So, most useful would be literature on adapting LiDAR to self-driving vehicles, including various strategies for positioning light-emitting diodes behind the lens for best overall effect, as well as use of a single lens to project outgoing light as well as to focus incoming reflections (other than, of course, the patents in suit). The judge wishes to learn the prior art and public domain art bearing on the patents in suit and trade secrets in suit.

That brings us to a more recent case, involving notorious patent troll Uniloc -- a company we've written about a bunch in the past, mainly for its buffoon like attempts at patent trolling. This includes suing over the game "Mindcraft" (the trolls were in such a rush to sue, they didn't notice it was actually "Minecraft"), and a weak attempt to patent basic math. All the way back in 2011, we wrote about Uniloc getting smacked down by the Federal Circuit for pushing a ridiculous way of calculating patent damages.

It appears that in the intervening years, Uniloc hasn't given up any of this. The company keeps buying up more patents and suing lots of companies -- including Apple, which it has sued multiple times. One of those lawsuits was filed back in 2017. In response to this lawsuit, Apple argued that Uniloc didn't actually hold the right to sue over the patent. Ridiculously, Uniloc demanded most of the details be blacked out, arguing that it was "confidential."

It sounds like a situation not unlike the Righthaven situation from a few years ago, where the "real" holder of the patent (or, in Righthaven's case, the copyright) retained real ownership, but created a sham transfer whereby the suing company (in this case Uniloc) really only had the right to sue, and was disconnected from the actual right to license the patent. But, it's difficult to tell for sure, given all the black ink.

EFF got involved to protest this, and back in January Judge Alsup agreed that Uniloc couldn't hide this info. Since then, Uniloc has been trying to convince Judge Alsup to change his mind, with a ton of filings (and a few hearings) back and forth on this issue. Earlier this week Judge Alsup more or less rejected every argument Uniloc made, even going beyond the question of redacting info.

In short, Judge Alsup says he got it right the first time, and the public's right to know outweighs any concern Uniloc has for giving up its "secret sauce."

This order reiterates the prior order denying plaintiffs’ initial request to seal: generalized assertions of potential competitive harm fail to outweigh the public’s right to learn of the ownership of the patents-in-suit, which patents grant said owner the right to publicly exclude others.... It also reiterates that this is particularly true where, as here, the public has an especially strong interest in learning the machinations that bear on the issue of standing in the patent context. Furthermore, the United States government bestows entities such as Uniloc the right to control the use of the purported inventions at issue. Because Uniloc’s rights flow directly from this government-conferred power to exclude, the public in turn has a strong interest in knowing the full extent of the terms and conditions involved in Uniloc’s exercise of its patent rights and in seeing the extent to which Uniloc’s exercise of the government grant affects commerce.

In other words, a patent grants you tremendous power to exclude in exchange for the public revelation of what you've invented. Uniloc shouldn't be able to conduct its business in secret.

Alsup also notes that Uniloc doesn't even come close to justifying the reasons for its requested redactions other than a general "oh, but it will hurt our business."

... plaintiffs’ supposed risk of (still) generalized competitive harm in future negotiations from disclosure did not and does not compellingly outweigh the public’s interest in accessing this information for the reasons stated above

Alsup mocks Uniloc's reference to other patent suits (including Apple v. Samsung) in which some information was redacted by noting that that was a totally different situation involving actually confidential information from companies selling actual products, not just trolling.

Plaintiffs’ reliance on Apple Inc. v. Samsung Electronics. Co. Ltd., ... is unavailing, inasmuch as the parties there sought to seal product-specific financial information (such as costs, sales, profits, and profit margins), as opposed to the licensing-specific financial information at issue here.... Plaintiffs here have no products to sell and thus their (alleged) risk of competitive harm is entirely distinguishable from that in Apple.

A few other areas where Uniloc sought to hide info, Alsup dismisses by pointing out that a "boilerplate assertion of competitive harm fails to provide a compelling reason to seal."

And that's not all that Alsup appears displeased with Uniloc over. Remember earlier when I talked about Uniloc running into trouble years back for using a nutty formula for trying to calculate damages? Well, Alsup notes that redacting all this info might help Uniloc hide "reasonable royalties" from being used in damage calculations, and calls out "vastly bloated figures."

The impact of a patent on commerce is an important consideration of public interest. One consideration is the issue of marking by licensees. Another is recognition of the validity (or not) of the inventions. Another is in setting a reasonable royalty. In the latter context, patent holders tend to demand in litigation a vastly bloated figure in “reasonably royalties” compared to what they have earned in actual licenses of the same or comparable patents. There is a public need to police this litigation gimmick via more public access. We should never forget that every license has force and effect only because, in the first place, a patent constitutes a public grant of exclusive rights.

Once again, the message is: don't try to bullshit Judge Alsup, especially on technical issues. Now, hopefully, we'll finally see the details of Uniloc's agreements over these patents, and why exactly Apple thinks Uniloc really has no standing to sue.

Filed Under: court records, damages, ownership, patent trolls, patents, redactions, seal, transparency, william alsup
Companies: apple, uniloc

Comic Con Verdict: Salt Lake Comic Con Loses The Battle, Now Seeks To Win The War

from the a-comic-can-of-worms dept

As you will all know, we've been covering the trademark case between San Diego Comic-Con and Salt Lake Comic Con pretty much since this whole dispute began some three years ago. From the outset, this whole thing seemed wholly unreasonable. Whatever trademarks SDCC managed to get past the USPTO, there are roughly a zillion comic cons across the country, few of which have any licensing arrangement with SDCC, meaning the plaintiff in this case hasn't bothered to enforce its trademarks for some time. That generally leads to the mark being abandoned, or considered generic. Either should have kept SLCC in the clear. Add to all that the fact that this is arguably a trademark that should never have been granted on the grounds that it's almost purely descriptive -- a "comic con" is a comic convention -- and many observers thought this was going to be an easy win for SLCC in court, including this writer.

Well, the jury has come back, and it managed to rule for San Diego Comic-Con instead.

In a case that could potentially complicate the lives of comic convention organizers the country over, a federal jury has ruled in San Diego Comic-Con’s favor in a suit brought against Salt Lake Comic Con for violating copyright law with their use of the term “comic con.” The verdict, which was arrived at on Friday afternoon, found SDCC’s trademark is valid, and that Salt Lake Comic Con used it without permission, according to a report by Fox13 in Salt Lake City.

That sound you hear in the distance is a hundred other comic convention organizers slapping their own foreheads. With this ruling, which SLCC may appeal, comic cons all over the place may feel more pressure to give in to any licensing demands from SDCC. Although, perhaps those other cons just need to run out the clock -- more on that in a minute.

I said SLCC may appeal this ruling for two reasons. First, the damages the jury awarded are almost laughably small and nowhere near what SDCC was asking for.

San Diego Comic-Con initially sought up to $12 million in damages from Dan Farr and Bryan Brandenburg, Salt Lake Comic Con’s organizers, but was rewarded only $20,000. According to the ruling, the violation was not a “willful infringement” of the copyright.

“It felt like it was a draw,” Brandenburg told Fox13. He told the news organization that he was currently considering whether or not to appeal. Additionally, Salt Lake Comic Con has proceedings underway with the US trademark office to officially cancel San Diego Comic-Con’s trademark.

And that last bit is the other reason it may not appeal and was my reference above to other cons simply running out the clock. The real misstep here might be in San Diego Comic-Con opening up this can of worms by bullying other cons over its abandoned, generic, descriptive trademark, with the potential end result being one of its victims getting that trademark cancelled entirely. Were I any other comic con in some other city in America, I would be trying to help SLCC getting this mark cancelled in any way I could. It would be a poetic end, to be sure, no matter what one jury thought of that actual case of trademark infringement.

So, more to come, I am sure.

Filed Under: comic con, confusion, damages, trademark
Companies: salt lake comic con, san diego comic-con

Supreme Court Adds Yet Another Smackdown To Patent Court, Says It Misinterpreted Patent Law In Apple/Samsung Case

from the not-how-patent-law-works dept

It's becoming a fairly standard thing at this point: patent cases make their way up to the Supreme Court (after traveling through the patent appeals court at the Federal Circuit, better known as CAFC), then the Supreme Court smacks down the CAFC ruling and reminds the court that CAFC doesn't seem to understand patent law at all. It's happened many times, and now we've got another one with a short and sweet ruling that puts Apple's famous big patent win against Samsung at risk. As you recall, Apple sued Samsung over copying iPhone/iPad designs, and after a long jury trial, Apple prevailed and was awarded $399 million. CAFC had upheld the award, despite Samsung noting (correctly) that since the design patents only covered a small part of the device, it was ridiculous to give Apple all the profits from the entire device.

The Supreme Court, in a unanimous smackdown of CAFC written by Justice Sotomayor, points out that patent law does not require the profits to be on the entire device, but could be on separate components.

This case involves the infringement of designs for smartphones. The United States Court of Appeals for the Federal Circuit identified the entire smartphone as the only permissible "article of manufacture" for the purpose of calculating §289 damages because consumers could not separately purchase components of the smartphones. The question before us is whether that reading is consistent with §289. We hold that it is not.

In short: just because one small piece of a larger product infringes, it doesn't mean the patent holder should get all the profits.

The more weedy issue here was the definition of an "article of manufacture" which is how damages are calculated under patent law. Apple argued (and the lower courts agreed) that the single "article of manufacture" here was the total device (phone or tablet). Samsung, on the other hand, argued that there are lots of different components, each of which could be an "article of manufacture" and since it only infringed on a few distinct components, not all of the profit should be lost. As the ruling notes, it's pretty clear that "article of manufacture" can refer to just components as well as to the full product.

"Article of manufacture" has a broad meaning. An "article" is just "a particular thing." J. Stormonth, A Dictionary of the English Language 53 (1885) (Stormonth); see also American Heritage Dictionary, at 101 ("[a]n individual thing or element of a class; a particular object or item"). And "manufacture" means "the conversion of raw materials by the hand, or by machinery, into articles suitable for the use of man" and "the articles so made." Stormonth 589; see also American Heritage Dictionary, at 1070 ("[t]he act, craft, or process of manufacturing products, especially on a large scale" or "[a] product that is manufactured"). An article of manufacture, then, is simply a thing made by hand or machine.

So understood, the term "article of manufacture" is broad enough to encompass both a product sold to a consumer as well as a component of that product. A component of a product, no less than the product itself, is a thing made by hand or machine. That a component may be integrated into a larger product, in other words, does not put it outside the category of articles of manufacture.

And, of course, there's the slap directed at CAFC's wacky and wrong interpretation of patent law:

The Federal Circuit’s narrower reading of "article of manufacture" cannot be squared with the text of §289.

Of course, in unfortunately typical fashion, the Supreme Court punts on some of the bigger questions -- including what is the proper "article of manufacture" here in this case. Instead, it just says that the lower courts used the wrong standard and kicks it back to them to try again. This means that this case, that has been going on for roughly half a decade, is going to go on even longer. Apple may still get its giant reward, but for now Samsung gets another chance to convince the courts to lower it to just the components, rather than the profit on the overall devices.

Filed Under: article of manufacturing, cafc, damages, design patents, patents, supreme court
Companies: apple, samsung

Supreme Court Just Made It Easier For Patent Trolls

from the wrong-direction,-guys dept

As we've noted over the past decade or so, the Supreme Court has been smacking down the Court of Appeals of the Federal Circuit (CAFC) over and over and over again on issues related to patent law. And on Monday, the Supreme Court did it once again -- but this time in a way that actually might not be good.

The key issue in the case (which is actually a combination of two separate cases that the Supreme Court put together) -- Halo v. Pulse and Stryker v. Zimmer -- concerns when it is and when it's not appropriate to triple damages in patent infringement cases. Basically, for centuries, the patent system has allowed for treble damages, but basically made it optional and a tool only for egregious violations of clear copying for most of that time. In 2007, CAFC created a specific two part test for awarding treble damages. First, an "objective recklessness" standard defined as "the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent...." Second, it must be shown that the risk of such infringement "was either known or so obvious that it should have been known to the accused infringer."

The unanimous ruling does state that it shouldn't be easy to get treble damages, and that it is fitting that it only applies in the most extreme cases -- but then says that the test above, called the Seagate test since it was first articulated in a case involving Seagate -- is "unduly rigid." And the Justices' main concern is that such a rigid test might leave out other kinds of egregious behavior that deserve punitive damages awards:

The principal problem with Seagate’s two-part test is that it requires a finding of objective recklessness in every case before district courts may award enhanced damages. Such a threshold requirement excludes from discretionary punishment many of the most culpable offenders, such as the “wanton and malicious pirate” who intentionally infringes another’s patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business...., a district court may not even consider enhanced damages for such a pirate, unless the court first determines that his infringement was “objectively” reckless. In the context of such deliberate wrongdoing, how- ever, it is not clear why an independent showing of objective recklessness—by clear and convincing evidence, no less—should be a prerequisite to enhanced damages.

Conceptually, this argument makes sense. The court points to the important Octane Fitness ruling from a couple years ago that tossed out a similarly "rigid" standard, but that one was over the question of when to award attorneys' fees for egregious behavior by patent holders. The court notes that this is a similar issue, though one more likely to negatively impact defendants, rather than plaintiffs in patent cases.

And I certainly see the logical consistency there, especially in allowing flexibility to the courts in deciding what's truly egregious behavior. But, of course, this somewhat ignores the reality of the patent landscape today, where so much activity is really in the shakedown process, where the final outcome is unlikely to be via a court ruling. Instead, it's all about the shakedown threats -- and this ruling can be seen as giving trolls even greater leeway in insisting that someone they're threatening has much greater liability on the line. I can almost guarantee that we'll start hearing of threat letters from patent trolls that point to this ruling in Halo as providing support for massive punitive damages.

So, in the end, I don't necessarily think this is the wrong decision. There's certainly a legal consistency there (especially one that says "damn, CAFC gets everything wrong..."). But that doesn't mean we should be concerned about the overall impact. Perhaps it won't matter that much -- as any competent patent attorney will let many people facing a shakedown know that the treble damages argument is unlikely to meet any reasonable standard used by any court. But lots of people are scared into just settling when they see the potential losses they face, and it seems like this might embolden patent trolls some more.

At least some of the Justices seem to understand this. Even though they signed onto the unanimous opinion, Justices Breyer, Kennedy and Alito added a concurrence (written by Breyer, who is usually quite good on patent issues) that at least raises the issue of patent trolling behavior. Breyer uses the concurrence to basically try to prevent the case from being misused (something that it might not succeed at, as it holds no weight at all as case law). He reiterates that treble damages should only be used in the most extreme cases, and nothing in this ruling changes that. He also notes that not checking with a patent lawyer before creating a product is not evidence of willful infringement. And, finally, he notes that such "enhanced" damages should have a "limited" role, as they have a high likelihood of impeding, rather than enabling, innovation.

To say this is to point to a risk: The more that businesses, laboratories, hospitals, and individuals adopt thisapproach, the more often a patent will reach beyond itslawful scope to discourage lawful activity, and the moreoften patent-related demands will frustrate, rather than “promote,” the “Progress of Science and useful Arts.”

One hopes that this concurrence helps stop the ruling from being abused, but that may be too optimistic.

At the very least, this seems like an argument for Congress to finally stop sitting around and doing something to fix the patent troll problem.

Filed Under: cafc, damages, extraordinary damages, patent trolls, patents, rigid rules, supreme court, treble damages

If Microsoft Wins Its 'Stupid Patent Of The Month' Lawsuit, Expect A Plague Of Trolls To Move Into Design Patents

from the agonies-of-atomization dept

The recent Techdirt article about Microsoft's design patent on a slider understandably focused on the absurdity of companies being forced to hand over all of the profits that derive from a product if it is found to have infringed on someone else's design patent even in just a tiny portion of that product. But there's another angle worth mentioning here that picks up on something Techdirt has written about several times before: the rise and threat of patent thickets. Back in 2012, it was estimated that 250,000 active patents impacted smartphones. That makes it impossible to build devices without licensing large numbers of patents, and even then, it's likely that claims of infringement will still be brought.

The underlying problem is that patents were originally devised for a complete, self-standing process or invention. For example, some of the earliest patents were those granted in fifteenth-century Venice for glass making. Over the centuries, invention has become atomized, with smaller and smaller elements being granted patents. These are not, in general, useful on their own, but must be combined with other components to make something useful.

That process of atomization has reached its peak in the world of software, which is typically made up of thousands of smaller software parts. That's in part why computing has emerged as the field most plagued by patent litigation: if you own a patent on a key element that is required for the other software parts in a product to work properly, you are in a very strong position to force manufacturers to pay you for a license.

The situation described in the Techdirt article about Microsoft's slider shows that there is a risk that the consequences of atomization in the field of design patents, where even tiny, obvious elements are awarded a patent, could be worse than for "ordinary" utility patents. That's because of the high level of damages based on the total profits derived from an infringing product, irrespective of the importance of the design element in question. Let's hope the Supreme Court decides to take this case, and comes out with a sensible ruling that heads off the danger of disproportionate damages. If it doesn't, we can probably expect trolls to move into the design patent world in a big way -- and for real innovation to face even more hurdles than it does at present.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: damages, design patents, patent trolling, patents
Companies: microsoft

Stupid Patent Of The Month: Microsoft's Design Patent On A Slider

from the if-only-it-had-rounded-corners dept

For the first time ever, this month's Stupid Patent of the Month is being awarded to a design patent. Microsoft recently sued Corel for, among other things, infringing its patent on a slider, D554,140, claiming that Corel Home Office has infringed Microsoft's design.

The design patent, as detailed by Microsoft in its complaint, is titled "User Interface for a Portion of a Display Screen" and entitles Microsoft to own this:

More specifically, Microsoft claims to own this design of a slider.

Design patents aren't like the utility patents that most people think of when they think of patents. Unlike utility patents, which are meant for new and useful inventions, design patents are meant for new, non-functional, ornamental aspects of articles. They have only one claim, little to no written description, and usually a series of images detailing what exactly is being claimed. (A note about design patents: solid lines are used to show what is claimed; broken or dotted lines show the unclaimed "environment related to the design" or define the boundary of the design.)

As Professor Sarah Burstein points out on her fantastic Tumblr, design patents are often issued on a small part of a product, and often for things that seem unoriginal, not ornamental, or just ridiculous.

Microsoft's patent claims against Corel are unsurprising in light of how much money is potentially at stake. If Corel is found to infringe even one of Microsoft's design patents through even the smallest part of Corel Home Office, current Federal Circuit law entitles Microsoft to all of Corel's profits for the entire product. Not the profits that can be attributed to the design. Not the value that the design adds to a product. All of the profit from Corel Home Office.

The well-known Apple v. Samsung dispute addressed the issue of whether an infringer should be required to pay all of its profits for infringing a design patent that applies only to a portion of a product. Samsung had asked the Court of Appeals for the Federal Circuit to reject this reading, but the court disagreed in a May, 2015 opinion.

Samsung has now asked the Supreme Court to weigh in. In its petition for certiorari, Samsung points out the absurd results of this rule. For example, Samsung explains that under the Federal Circuit's ruling, "profits on an entire car—or even an eighteen-wheel tractor trailer—must be awarded based on an undetachable infringing cup-holder." In addition, given that many products will include multiple ornamental features that could be covered by design patents, this raises the possibility that a company could get hit for multiple judgments for all its profits.

That sounds pretty crazy to us. But that's exactly what might happen if Microsoft prevails against Corel. Putting aside whether Microsoft's design was actually new and not obvious in 2006 (when Microsoft filed its application), whether Microsoft needed the patent incentive in order to come up with this design, and whether it is even desirable to grant a company a government-backed monopoly on a graphical slider (we don't think so, that's why this is a stupid patent), the scope of damages for design patent infringement has the potential to become a powerful tool to shut down legitimate competition based on the mere threat of a lawsuit.

Reposted from the Electronic Frontier Foundation

Filed Under: damages, design patent, patents, slider, stupid patent of the month
Companies: corel, microsoft

How The Tribune Company And The DOJ Turned A 40 Minute Web Defacement Into $1 Million In 'Damages'

from the fudging-the-numbers dept

Last week we wrote about Matthew Keys being found guilty of three CFAA charges which will likely lead to some amount of jailtime for him (the prosecution has suggested it will ask for less than 5 years). While Keys still denies he did anything he's accused of, the prosecution argues that he took a login to the Tribune Company's content management system, handed it off to some hackers in an internet forum and told them to mess stuff up. And... so they made some minor vandalism changes to an LA Times article. It took the LA Times all of 40 minutes to fix it. Even if we assume that Keys did do this, we still have trouble seeing how it was any more than a bit of vandalism that deserves, at best, a slap on the wrist. Its ridiculous to say that it's a form of felony hacking that requires a prison sentence. As we noted in our original article, the Tribune Company and the feds argued that the damage cost the company $929,977 in damage, well above the $5,000 threshold for the CFAA to apply. We still have trouble seeing how the $5,000 could make sense, let alone nearly a million dollars. And it's important to note that the sentencing guidelines match up with the dollar amount of the "damages" so this actually matters quite a bit for Keys.

Sarah Jeong, who's been doing an awesome job covering this for Motherboard, has a deep dive article looking at the case, which is totally worth reading. I wanted to dig in, though, just on the craziness of the $929,977 number and how that came about. First off, it appears that the feds pushed the Tribune Company to inflate the numbers. The original estimate from the Tribune Company turned out to be well below the $5,000 threshold, let alone the $900k+ number: That's obviously not going to cut it, so they had to ratchet things up a bit. For what it's worth, Brandon apparently said on the stand that he was just joking, and he realizes that's not the best thing to joke about, but who are we to say anything about jokes who miss their mark? What we can say, however, is that the final numbers look absolutely ludicrous:

Let's dig in a bit here, because suddenly I feel underpaid. Those emails are pricey! In case you're wondering the X Files references have to do with another thing that Keys apparently did: sending some nasty emails to people at the TV station after he left that job. From the look of it they were pretty obnoxious/childish behavior on the part of Keys (who eventually admitted to sending them), but they had absolutely nothing to do with the supposed CFAA violation. They were just nuisance emails, not any kind of hacking. However, to make the dollar value go up, the DOJ decided to lump this and some other incidents all together and asked the Tribune Company to add up all the time it was dealing with that issue, and so they did. Even to the point that they blamed ratings drops at the Fox channel that Keys used to work for on him as well, and put a dollar value on that.

Again, assuming Keys actually did all these things, it would make him something of an immature jerk. But it still seems like a huge stretch to turn that into nearly a million dollars in damages, directly due to a CFAA violation. Either way, it's yet another reminder that when the DOJ decides it wants to take you down, it can find almost anything to use against you.

Filed Under: cfaa, cfaa reform, damages, doj, matthew keys
Companies: tribune company

Sony Pictures, Which Hyped Up 'Harm' Of Hack, Now Tells Court No Harm Done To Employees

from the thread-that-needle,-sony... dept

In the wake of the Sony Pictures hack, the company went somewhat ballistic in trying to describe just how "harmful" the hack was. It brought on famed lawyer David Boies to threaten anyone who published any information from the hack, claiming that it was a violation of the First Amendment (yes, it told the media that publishing news was a violation of the First Amendment). The company also (ridiculously) threatened to sue Twitter, claiming that Twitter would be held "responsible for any damage or loss arising from such use or dissemination by Twitter." Thoughout it all, Sony kept arguing that this hack was a complete disaster and incredibly harmful.

However, now, in court, Sony is suddenly forced to tap dance around those claims and argue that there has been no harm at all done to the employees of the company, who have filed a class action lawsuit against Sony Pictures for failing to protect their data. In a filing first highlighted by Eriq Gardner at The Hollywood Reporter, Sony Pictures insists that basically there has been no harm whatsoever and mocks the employees who say otherwise, noting that their "PII" (Personally Identifiable Information) disclosed was not particularly private in the first place.

Plaintiffs’ experiences in the wake of the cyberattack are entirely consistent with the empirical consensus just discussed. To start, the PII disclosed for each Plaintiff varies widely.... For example, Mathis asserts only that her name, SSN, and former (not current) home address were disclosed.... (Even on that score, she appears to be wrong. Plaintiffs cite no evidence that her SSN was disclosed. The sole document they cite... has the SSN of a different Mathis.) For his part, Forster believes an array of his PII was disclosed, including his SSN and birthday, as well as outdated bank information, an invalid driver’s license, and former medical insurance information (which he admits are “useless” or “worthless”)....

What is more, some Plaintiffs maintain active online presences, which means that much of the PII they claim was disclosed in the cyberattack already had voluntarily been made available online. For example, while Forster complains that his title, place of work, and dates on which he joined and left SPE were disclosed, he acknowledges that he had posted that information to LinkedIn and thus could not be harmed by its disclosure.... Levine likewise admits that he has “put a lot of [his] life online.” ... For him and others, a wide range of PII was available online prior to the attack.

The other line of defense? If there is any harm, who can really say that it actually came from the Sony hack, rather than any other recent hack?

Plaintiffs (and, undoubtedly, unnamed classmembers) have been exposed to multiple breaches and incidents of identity theft involving various permutations of their PII.... To prove that any injury—or even risk of future injury—is attributable to the cyberattack, each classmember would have to show that this cyberattack, and not another event, caused any incident of identity fraud.

The other problem is that the only actual loss that any of the plaintiffs show right now was an unauthorized purchase on a credit card, but the filing points out, this employee was fully reimbursed (i.e., no loss) and it's also not at all clear that it happened because of the Sony hack.

Similarly, while Corona claims that somebody made an unauthorized purchase using his credit card after the cyberattack on SPE (for which he was fully reimbursed), he acknowledges that he also had unauthorized purchases on his credit card before the cyberattack, and that he could only “guess” at the connection, if any, between the more recent unauthorized purchase and the cyberattack.

To be honest, Sony's argument here is pretty strong. Courts have pretty consistently rejected class action lawsuits over data breaches when there are no actual losses, or where the losses are purely theoretical. It seems very likely that the former Sony employees here are going to lose.

But... it does seem rather amusing to see Sony -- which went on and on and on about all the "damage" the leak was going to cause -- now have to argue that its own employees experienced no harm at all...

Filed Under: class action, damages, emails, hack, harm, lawsuit, sony hack
Companies: sony, sony pictures

Copyright Enforcement Company Uses Sketchy Algorithms And Questionable Math In Hopes Of Becoming Copyright Trolls' Go-To Resource

from the DOES-NOT-COMPUTE dept

Yet another person thinks there's money to be made (albeit indirectly) in the copyright trolling business. (h/t to the Cyberlaw and Policy Blog)

Stephen Moignard lives a quiet life in the Coonawarra wine district in South Australia, tending his vineyard and small wine company, the Hundred of Comaum.

He also beavers away until 4am most mornings writing software for a new business venture which he’s hoping will be a global winner in the internet age.

It detects breaches of international copyright on millions of websites and produces almost instantaneous legal letters of demand.

Moignard survived the turn-of-this-century dotcom bust. He used to have a successful company that installed high-speed internet connections in office buildings, but his fortunes crashed with many others in the early 2000s.

Now, he's looking to make some money by using an algorithm to hunt down "substantially similar" text across multiple websites and serve demand letters to alleged copyright infringers. His new business is called Plfer, and its detection algorithm bears many similarities to commercial plagiarism detection software, albeit with a few tweaks that allow it to bypass web formatting and other obstacles that might throw off comparisons.

Moignard designates "victims" as "Plferees" and those using words written by others as "Plferers." At the site, you can view scans requested by site visitors, along with some very sketchy math used to determine potential damages. (Bad news for those of you who block Java by default: nearly the entire site is Java, so you'll be greeted with nothing but a banner. Incredibly annoying, but presumably there to prevent people like me from copying and pasting Moignard's words and thus becoming one of those pesky "Plferers.")

One such example of sketchy math and questionable algorithms involves perfume site Fragrantica and some short-lived Wordpress blog. Somehow, the use of Cartier-related words adds up to more than $600,000 in potential damages. [pdf link to printed report]

The report contains a lot of cool-sounding "weights" and "scores," all of which are presumably part of Plfer's proprietary algorithm.

Shallow scan: (stage one)
Found with string: "Cartier gained notoriety in 1904 when Louis Cartier created the first wristwatch" on search page: 0
amongst total results of: 16 (weighted value: 1.6)
with snippet: "Cartier gained notoriety in 1904 when Louis Cartier created the first wristwatch for aviator Alberto Santos-Dumont. This famous timepiece was known as the ..."
Recorded on Plfer search page:fragrantica.com (in full:fragrantica.com/designers/Cartier.html)
This string was number: 16 on the page.
It has an improbability weighting of: 520.
The infringement has a duration of: 708 days.
The Plfer score is:-1741.

The Plfer score is explained on the "Getting Started" page:

The complexity of the string of text, the time between the earliest and later dates and the total number of copies in existence can be used to create a score (plfer score)(10).

The lower the number (or the larger the negative number) the more serious the breach.

After a deep scan, the plfer score is updated with many more known factors. A shallow scan plfer score should not be solely relied upon to issue infringement notices.

Using both of these, Plfer arrives at this conclusion:

The plferer earned 1164 points which is greater than the score required to amount to an 'actionable infringement' .

The last sentence makes no sense, but there it is. "Actionable infringement" doesn't need a score. Either it's infringement or it isn't, and much of what gets highlighted by Plfer's "Deep Scan" seems to be nothing but language that would be common to two sites covering the same subject matter. Here's a screenshot from one Plfer report on two SEO/web design companies' websites.


"Substantially similar" phrases include "understanding... signals algorithmically" and "reach your audience." For the two sites noted above, the "substantially similar" wording contains phrases that would be common across all Cartier biographical information. ("Cartier gained notoriety in 1904 when Louis Cartier created the first wristwatch…")

Finding matching phrases and keywords across two marketing sites and claiming it's copyright infringement is a bit like looking over the resume of someone applying for the same position as you and claiming the similar buzzwords and job descriptions are due to your competitor reading over your shoulder.

Now, we get to the really fun stuff: potential damages. These numbers are key to Plfer's success. Plfer charges very minimal fees. "Deep Scans" and "Shallow Scans" run $1/per plus $0.85 in fees. There will presumably be small fees for demand letters and other forms, but the site is still in beta and no pricing is available. Plfer, notably, does not want a cut of recovered damages, which doesn't make it so much a copyright troll as a copyright troll facilitator. From Moignard's advertorial PDF "2015 - the end of copyright?"

Plfer differs from other online copyright service providers in that it takes no pecuniary interest in any of the copyright infringements it uncovers. It does not become a party to any of the cases it reveals but merely assists to provide evidence, pro-forma documents and "wizards" for users and their advisors.

Plfer may not partake of any damages recovered, but it still needs to sell its services. And when a scan returns an amount in the low hundreds, it still looks like a bargain because the infringed party only spent a few bucks in return for this "evidence" of "actionable infringement." (The PDF quoted above also hints at Plfer entering into mutually-beneficial contracts with IP-oriented law firms, but there appears to be nothing in place at the moment.)

In the case of Fragrantica, the potential damages are huge. Here's the "math" behind the massive number.

The total value of fragrantica is $ 2,389,600 according to Alexa.com and WorthOfWeb.com. We have calculated the plferee's actual losses as follows:

Our daily advertising income is valued at a minimum of $3314. The proportion of our site contained in parentalstyle.wordpress.com is 5.51%, giving a proportionate advertising revenue loss of $182.60 per day.

The value of this loss over 708 days is therefore $129280.8 USD. Applying a penalty multiplier of 5 times gives a total fair and just actual damages amount of $646,404.00 USD. A standard fee for enforcing an infringement of this nature and degree is $1,998.00 USD.

The total amount payable is therefore $1,998.00 + $646,404.00 = $648,402.00 USD.

Plferer Alexa ranking: 15,105,799
Plferer value: 64
Plferee Alexa ranking: 8,185
Plferee value: 2389600
Duration (years): + 1.94
Penalty: + 646404.00
Fee: + 1998.00
Total: + 648,402.00

That's some, um, interesting math, especially when the "plifering" site ranks 14 million places lower than the "victim" and would probably never surface in a search for Cartier products -- which would seem to make it more difficult to claim damages. Sure, Fragrantica could pursue this payout and present Plfer's proprietary Alexa math to a judge, but the numbers cited here as mathematically sound are actually beyond the point of speculative.

Going beyond the sketchy math, there's the reality of the situation. Has anyone ever made money going after "scrapers," who "republish" posts of others in their entirety and whose sites contain 100% infringing material? Of course not. Smaller infringements like these -- which are closer to plagiarism than copyright infringement -- won't be moneymakers either. Plfer might have limited success selling $1 scans to the curious and litigiously stupid, but it's not going to change the face of copyright enforcement, much less supplant Moignard's vineyard as his primary moneymaker.

So, why is Moignard doing this? Well, according to his own statements, it appears to be some sort of crusade against the internet's "devaluing" of copyright-protected content. In the FAQ, under the heading "Is copyright evil?," Moignard first points out that copyright isn't a moral right...

[C]opyright, like all intellectual property rights, is an incentive device, designed to elicit more of certain kinds of 'learning' or knowledge creation and certain kinds of knowledge processing by government, rather than being any fundamental sort of moral right...

... before going on to make this a moral issue by quoting two supposed copyright opponents (at least one of which will be very familiar to Techdirt readers)...

For instance, Mike Masnick at TechDirt says:

"People copy stuff all the time, because it's a natural and normal thing to do. People make copies because it's convenient and it serves a purpose -- and quite often they know that doing so causes no harm in those situations."

There are a raft of similar postings by annonymous file-sharing fans such as Enigmax [TorrentFreak], who argues that all information should be free and authors should not receive anything.

... and summing it up by claiming the high ground.

Plfer stands in total opposition to the Enigmaxs and Mike Masnick's of this world, and can prove that the technology that makes copying easy also makes prosecuting infringers just as easy.

He also presents the copyright industry's attitude towards technological advancement in a far better light than it deserves, while simultaneously portraying innovation as an "attack" on rightholders. (From the "End of copyright" PDF.)

Digital 'internet' transmissions have obviously increased the risk that copyrighted works will be 'reproduced' and 'distributed' in violation of the exclusive rights granted to copyright owners. Copyright law, however, has withstood attacks from other developing media.

Specifically, copyright has coped with the invention of broadcast media, copy machines, and the video cassette recorder, and technology is assisting copyright law to step up again today.

Yeah, if by "coped" you mean "pushed for favorable legislation" and "sued endlessly." That's not coping. That's finally relenting to the inevitable because you've exhausted all your options.

Plfer is positioning itself as a "volume" business, making money from quantity rather than quality.

Its developers’ are assuming that the sheer volume of infringements will enable it to generate significant income despite offering these services at a fraction of the cost of equivalent legal advice.

This puts it in the same group as copyright trolls like Malibu Media and Prenda Law, even if it doesn't directly benefit from settlements and awarded damages. What it hopes to do is become the starting point for aspiring copyright trolls, using questionable algorithms and damage assessments. It even wants to further limit fair use protections -- again, by using some questionable rationalizations.

With the increasingly commercial nature of all aspects of the public internet and the "monetisation" of site traffic via ubiquitous advertising services such as Google™ AdSense™ and other variants, it is difficult to argue any part of the internet is truly "non-commercial" and so the application of the "fair use" defence would seem to remain limited.

Fair use isn't limited to non-commercial enterprises. This misconception refuses to die, and self-proclaimed copyright enforcers like Plfer are doing their best -- either out of spite or ignorance -- to keep it alive. You can make money and still avail yourself of the fair use defense.

Plfer is a mess. Moignard may be ambitious, but his "solution" to small-time infringement will either become another also-ran or the tool of copyright trolls. There's nothing here that doesn't point to either of these two outcomes.

Filed Under: automated threat letters, copyright, copyright troll, copyright trolling, damages, dmca, infringement detection, plagiarism, stephen moignard
Companies: plfer