Google, Amazon, And Microsoft Are Using Third Party Companies To Sell Surveillance Tech To ICE, CBP

from the same-as-it-ever-was dept

A few years ago, tech companies stood up to the US government, issuing statements objecting to immigration policies instituted by the Trump Administration and, in some cases, threatening to pull contracts with ICE (Immigration and Customs Enforcement) and the CBP (Customs and Border Protection).

It wasn't much of a stand, however. And whatever statements were issued by companies like Google, Microsoft, and Amazon were mainly prompted by hundreds of employees who wished to work for companies that didn't aid and abet in civil liberties violations, and ongoing mistreatment of immigrants and their families.

Whatever statements came out of the front end of these companies haven't been matched by the backend. According to a new report by Caroline Haskins for Business Insider, Google, Microsoft, and Amazon are still selling plenty of tech and software to ICE and CBP. They're just getting better at hiding it. (Alt link)

Amazon, Google, and Microsoft have repeatedly used a common tactic to sidestep public scrutiny and work with US immigration agencies, despite employee backlash and some company policies against doing such work.

This tactic, in which the companies use third parties or act as subcontractors to sell their technology, has helped these tech giants quietly secure dozens of cloud contracts with Immigration and Customs Enforcement and Customs and Border Protection, Insider has found.

The products provided range from innocuous bundling of office software to analytics and APIs that are integral parts of surveillance systems. The use of third party resellers keeps these companies' names from appearing in federal contracts, as well as allows them to sidestep internal protests and internal policies. Google, for instance, assured irate employees it would not assist the federal government with border surveillance. But use of third party contractors allows it to bypass the promises it made.

So much for taking a stand:

From 2015 to 2021, Amazon used third parties to sell its cloud services at least 16 times to ICE and CBP. Google used third parties to sell various cloud and professional tools at least 28 times to these agencies. Microsoft used third parties to sell its cloud services and software more than 200 times to immigration agencies from 2002 to 2021, in addition to selling to ICE and CBP directly more than 100 times.

Having briefly implied the status quo of selling to ICE and CBP was unacceptable, these companies quietly maintained the status quo by selling products via companies with far less-recognizable names like Panamerica Computers, Inc., Four Points Technology, LLC, and Systems Engineering Solutions.

And, while this reselling may not have been happening directly under these companies' noses, it's unlikely they were completely unaware the middlemen were securing contracts with these agencies to do the sorts of things company officials claimed they would no longer do. At best, there was an indifferent blindness. Contracts were signed with these companies and paper trails should have alerted them that their third-party partners were delivering tech to federal agencies. Employees spoken to by Haskins confirmed it's all but impossible to remain unaware of what third party partners are doing with tech and software because of this.

These companies haven't denied their indirect involvement in CBP and ICE border surveillance activities. But they also haven't denied any knowledge of this use of their products. "No comment" across the board.

The surveillance business is still booming, and ICE wants more of it. It has $300 million to spend on a new system it calls RAVEn (Repository for Analytics in a Virtualized Environment) -- one that will allow it to mine hundreds of thousands of documents for data in order to find people who aren't authorized to work in the United States. All three companies are likely to get a piece of that $300 million, at least indirectly.

People who attended the April industry-day event told Insider that companies like Amazon, Google, and Microsoft would probably use intermediaries rather than bid on the contracts directly.

Google "typically will not pursue as a prime on non-cloud opportunities because of the potential conflicts of interest with ALL the other companies they work with," a person who attended the industry day told Insider. "Google will only sub and they will be non-exclusive."

"AWS, MSFT and Google typically sell through their reseller partners," another person who attended the industry day told Insider.

Showing solidarity with employees doesn't mean much if you're willing to let intermediaries do the dirty work for you. The end result is identical. The only difference is it keeps Amazon's, Google's, and Microsoft's names out of the news whenever a new form of pervasive surveillance starts making the wrong kind of headlines.

Filed Under: cbp, ice, shell companies, surveillance
Companies: amazon, google, microsoft

Intellectual Ventures Aims To Tax Wind Power Producers With New Batch Of Patents

from the because-patent-trollery-is-designed-to-tax-innovation dept

Wind Power Monthly (I had no idea such a thing existed) has an article about how Intellectual Ventures is apparently targeting its patent trollery towards wind power, having filed a bunch of patents on very broad and basic concepts related to wind power. Of course, IV is trying to hide its involvement here by using one of its many shell companies. For reasons that are beyond me, Wind Power Monthly declines to name the shell companies. It's not clear why it does this -- even withholding the name after it got IV to confirm that it's an IV shell. There seems to be no journalistic reason for withholding the name, but Wind Power Monthly still does it.

Asked about the IV holding company, a spokesperson confirmed its relationship and added: "Intellectual Ventures does file some patents invented during sessions held by its in-house invention group... under the holding company [name withheld] to help maintain its patent portfolio."

The report further warns that patent trolls appear to be on the lookout to buy up other broad, wind power-related patents on the cheap as this particular market is expanding.

Second or third-tier wind manufacturers may be most exposed to trolls, especially as wind patents are currently relatively cheap, as they are during any downturn. Such manufacturers are a worthwhile target financially, may not have a robust IP strategy, and are far more likely to settle rather than fight in court.

Of course, right now we should be helping to speed up the adoption of alternative energy sources like wind power, but these patent trolling activities do the exact opposite, they make it more expensive. Notice that the article doesn't talk about any of these methods actually advancing the pace of innovation in the field, mostly because they don't. These aren't companies with experience building or managing wind power systems. These aren't experiences learned in the field. They appear to be pure trolling techniques designed to put a toll on the companies actually innovating in the field.

Filed Under: innovation, patent trolls, patents, shell companies, toll booths, wind power
Companies: intellectual ventures

International Men Of Mystery: How Discredited German 'Anti-Piracy' Company May Secretly Be Behind Malibu Media's Copyright Trollery

from the well,-look-at-that dept

Things have been getting more interesting on the Malibu Media front lately. The company, which is responsible for 40% of all copyright cases, has certainly faced claims of abusive and seriously questionable practices. But some new information suggests it goes much further down the rabbit hole of questionableness. Like Righthaven and Prenda before it, new accusations are coming out about some highly questionable shell games to try to hide what's really going on.

In this case, it's come out that behind all of Malibu Media's shady tactics, the folks actually pulling the strings (or, at least, heavily involved) may be the German company Guardaley, or one of its many sneaky shell companies. If you've been following copyright trolls for a while, you may recognize Guardaley as the shady company involved (secretly) in some of the original copyright trollery in the US, which was slammed in court for highly questionable technology that was at the center of its attempts to "identify" people to go after in the shakedown scam known as copyright trolling.

Guardaley had been laying low for a while, but back in April, Sophisticated Jane Doe over at FightCopyrightTrolls turned up Guardaley's secret playbook, which was clearly not meant for public consumption. It is... quite a read. It highlights the various shell games and individuals involved -- and also notes how Guardaley can quickly churn out cookie cutter legal filings against the various individuals it "sues" (with the entire effort actually focused on getting people to pay them to go away). And, astoundingly, it basically admits that Guardaley will supply bogus "experts" to support the claims in court. From page 35 of the presentation: Okay, now jump back to January, in which one of the lawyers representing Malibu Media admitted that the "expert" company it uses, IPP (a Guardaley shell) worked "pursuant to an oral contingency fee." In other words, it was getting a cut of any money secured via these lawsuits and corresponding shakedowns. That's kind of a big deal: when your "expert witness" has a direct financial stake in the outcome, that means your expert witness is doing something very, very shady. No wonder Guardaley doesn't want the judges to question them too much.

For the past few months there had been some ongoing efforts to get various Malibu Media lawyers to reveal the details of their relationship with Guardaley/IPP and other related shells. Not surprisingly, Malibu Media lawyers are trying to block all of that. This finally resulted in an impressive filing from copyright troll fighter, lawyer Morgan Pietz, who accuses the company of champerty -- a scheme to "buy into" lawsuits, something that is at the very least frowned upon, but more frequently against the law. Furthermore, Pietz notes that Malibu Media should have been proactively disclosing Guardaley's interest in the cases, but has not -- instead highlighting how the company (actually, its lawyers) has been "fighting tooth and nail all attempts by defendants to inquire about these arrangements." He even calls Guardaley "the German computer guys."

Separately, the filing dismantles Malibu's bizarre attempt to avoid this whole issue by blaming it on some other guy in Florida.

Malibu concedes that it did [disclose this information] here, and counsel on the pleadings here in Maryland concludes that there could not possibly be any kind of breach of this duty because lead national counsel in Miami, not counsel here, negotiated the improper witness contingency agreement. Regardless of what local counsel here did or did not know, lead counsel in Miami, whose firm presumably authored the early discovery papers in the first instance, and who participated in the consolidated proceedings in this district before Judges Titus and Grimm, had a duty to make sure this fact was disclosed to the Courts here and across the country.

The filing then goes into significant detail about the whole mess, under the wonderful title:

International Men Of Mystery: Tobias Fieser, Michael Patzer, Daniel Macek, Patrick Achache, Guardaley & The Shell Companies, And The Software With A Name Nobody Seems To Know

The "software with a name nobody seems to know" involves constantly changing claims about what software is being used to identify people accused of infringement, along with the claims that this unnamed and ever-changing software is somehow infallible (despite Guardaley's tech being so discredited previously). In an amusing section, Pietz points out how quite clearly "fallible" the technology is:

In the letter Malibu submitted to Judge Titus and Judge Grim last year, they argued that IPP’s proprietary software was literally “infallible.” ... In the opposition to the instant motion, Malibu submits a declaration from Michael Patzer where he avers that “the PCAPs recorded the IP address 76.100.228 [sic] infringing Plaintiff’s copyrights.” That is incorrect. Mr. Patzer left out three digits in that IP address. This simply goes to show that no matter how “infallible” Malibu and Patzer think the software and corresponding proprietary system they designed may be, there is always room for human error, at either the input stage, or the output stage.

The filing highlights the similarities of these shell companies with the recent ruling against Prenda, and highlights increasing evidence of how the people above are really deeply involved in a bunch of shell games. It calls out evidence in a non-Malibu Media case, Elf-Man LLC v. Lamberson, which lays out more evidence of an incredible circle of shell companies. I won't repost it here, but it's worth reading, just to see some of the crazy chain of shell companies. This is not the whole chain of crazy, but just a snippet:

As the defendant’s own investigation revealed in Elf-Man, Crystal Bay Corporation, the company Macek (and Patzer?) supposedly “worked for” ... was a defunct South Dakota corporation, apparently incorporated in 2012 by a disbarred lawyer who, according to his website, “now specializes in creating ‘anonymous’ ‘shelf’ corporations.” .... The official address Crystal Bay Corporation registered with the South Dakota Secretary of State? It belongs to a mail forwarding company, and it is the same address given for the disbarred lawyer’s “Agent Services” company.... Same thing with the Stuttgart, Germany address given for Patzer and Macek: it corresponds to an office building in Stuttgart “that offers mail drop services and short term office rents, even by the hour.” ... The Elf-Man defendant also investigated the phone numbers given for Patzer and Macek. The regional code for Macek’s number corresponded to Karlsruhe, Germany. The regional code for Patzer was for a suburb of Karlsruhe....

The coup de grace from Elf-Man: when defense counsel there recently called the (Karlsruhe) phone number given for Macek in the initial disclosures in that case, the person on the other end of the line answered it “Guardaley.”

Boom. Also, there's the part in which one of the guys admits he works for one of these shell companies and then has to be lead by Malibu Media's lawyer into saying he didn't actually work for the company:

More importantly, the testimony Malibu complains Pietz omitted only further supports the argument that Guardaley = IPP = Excipio, and that Patzer, Fieser, and Macek are all part of the same organization. For starters, at the beginning of Patzer’s testimony, he first says “yes” when asked if he works at IPP Limited.... Malibu’s counsel then asks him a leading question, reminding him that “you don’t actually work for IPP, Limited. You said you work for a firm that provides these services to IPP, Limted, correct?” and Patzer confirms that.... However, throughout Patzer’s testimony, he constantly refers to “we” when it is clear he is referring to IPP. None of that suggests that Excipio is really a totally different company that should be credited as possibly more trustworthy than Guardaley; it suggests Patzer thinks of himself as working with Fieser at IPP.

And, of course, days after this was filed, the lawyer who had been representing the copyright holders in Elf-Man, Maureen VanderMay, suddenly filed a motion to withdraw as counsel, noting that "issues have arisen between Plaintiff's representative and counsel, the nature of which make it impossible for counsel to both continue with representation and comply with the governing rules of professional conduct." However, she refuses to detail those reasons, citing their "privileged and confidential nature," though says that if required to, she would like to do so under seal. It's not too difficult to put two and two together here, suggesting the likely issue is that VanderMay realized how much trouble everyone involved in this scheme may be in soon. And, anyone who witnessed both the Righthaven and Prenda debacles knows that random outside lawyers who help out are the first ones often thrown under the bus in these disputes.

There have been stories for quite some time suggesting Malibu Media was, in some ways, worse than Prenda. Now, it appears that it may have been Guardaley and its rotating crew of shell companies behind all of this all along -- something they'd mostly been able to keep quiet. However, it looks like the scheme may be starting to unravel. Now, we just need Pietz to put together one of his infamous org charts like he did with Prenda.

Filed Under: champerty, copyright trolls, daniel macek, elf-man, michael patzer, patrick achache, shell companies, tobias fieser
Companies: apmc, excipio, guardaley, ipp, malibu media

New Anti-Patent Trolling Bill Released

from the a-good-start dept

Earlier this year, about half a dozen different bills were introduced in Congress trying to tame the patent troll problem. Now, Rep. Bob Goodlatte has basically strung together a bunch of the different ideas from those earlier proposed bills to create The Innovation Act of 2013, which includes a bunch of ideas to limit patent trolls. It's a good bill that will definitely do plenty to stop some of the most egregious forms of patent trolling, though it doesn't go nearly far enough in terms of stopping bad patents from being issued in the first place, or allowing all kinds of companies (trolls or not) to attack other innovators. The bill is definitely a step in the right direction -- and it's impressive that Congress really did realize that patent trolling was such a problem, after pretending that it had solved all of the patent system ills a couple years ago with the America Invents Act, which was close to useless.

Among the good things in this bill: (1) in cases of really egregious behavior, the bill will allow for awarding attorneys' fees to the prevailing party. So in cases where a patent troll files a bogus lawsuit as part of the shakedown, the defendant can get attorneys' fees. That's helpful, but it will still require years of fighting and expenses to get to that point. (2) In the lawsuit, suing companies actually have to explain what was infringed and how. I know, it seems crazy that this wasn't a requirement before, but welcome to the insanity that is our patent system. (3) Limiting the discovery process. Discovery can be incredibly expensive, and trolls have leveraged that to burden innovative companies that they're suing. This bill tries to limit the power to abuse discovery, though there are always loopholes. (4) "Transparency of ownership." Basically, patent trolls won't be able to hide behind shell companies as easily as before. (5) It tries to (somewhat) limit the ability of patent trolls to go after end consumers of products (such as the troll claiming it could sue all WiFi users) or the troll going after anyone using a networked printer/scanner. All it really does here is allow the consumers to continue using the products while other stuff gets resolved if the troll has also sued the manufacturer. This means, if it's more lucrative, trolls will just avoid suing the manufacturer and go after the users. Again, this protection is not complete, but it's a step forward.

All of these are useful and positive steps, but won't stop trolling. It will, hopefully, limit the most egregious cases, but we've certainly seen that trolls can get creative in how they troll, so I imagine that, if this becomes law, we'll start to see new methods pop up quickly. That said, it's still a long way from actually passing. The fact that the bill is being introduced with a wide variety of powerful backers -- Reps. Bob Goodlatte, Pete DeFazio, Zoe Lofgren, Jason Chaffetz, Howard Coble, Anna Eshoo, Lamar Smith, Tom Marino and George Holding -- means that the bill actually has a better chance than most of actually getting to the floor and passing. But there will be others fighting against it, and a similar bill needs to get through the Senate as well, though that seems likely. If it can get through Congress, it seems like that the administration will support it, but that's not definite.

Honestly, the best thing about this is that, contrary to our expectations after the America Invents Act passed, patent trolling behavior became so egregious that Congress was actually willing to step back into this issue. That suggests that if the activity does continue, Congress will actually address it at some point. That's a good thing, and as EFF notes, we have the patent trolls to thank for that.

Filed Under: bob goodlatte, discovery, fee shifting, patent reform, patent trolls, patents, shell companies

Intellectual Ventures Responds To This American Life & President Obama By... Filing More Patent Lawsuits

from the how-do-these-guys-live-with-themselves? dept

Ah, Intellectual Ventures. Over the weekend, This American Life ran their report updating a critical look at Intellectual Ventures from two years ago by showing that the shell company, whose patent IV had insisted was a perfect example of IV helping small inventors get their due was (a) completely bunk and invalidated in court, and (b) despite IV "selling it off," 90% of the profits from the approximate $100+ million that was raised via shakedown threats with that patent... went back to IV. On Tuesday, President Obama came out strongly against patent trolling, and part of his proposal would require revealing who was really behind various shell companies.

So how did Intellectual Ventures respond? By filing patent infringement lawsuits. Yes, basically, a big "F*** you" to those concerns. At this point, they seem to just be laughing at everyone as they rake in the cash from threatening businesses who don't pay up. Apparently, a few billion dollars paves over any conscience pretty easily.

And, yes, IV did also release a laughable "statement" about the This American Life episode, in which the company tries (as it normally does) to brush off the issues raised in the report, with the basic summary being, "Hey, this is how business gets done." But they're not being fully honest here. Let's just pick off a few points.

• Oasis Research is an independent company who purchased patent assets from IV.
• Oasis Research is not a holding company that IV owns, controls or manages.
• Oasis Research is not a company doing business at IV’s direction.

No, but your deal gets you 90% of the profits from any trolling efforts. For a bogus patent that lots of people knew was completely bogus all along and said so. At the very least, this makes you a clearly very interested party in the litigation -- and in the original TAL episode, IV's Peter Detkin clearly was trying to play down the relationship, and made statements that most normal people would take to suggest that IV had sold off most of its financial interest in the patents, and maybe was taking back a small royalty. No, he didn't say it, but the implication was quite clear. Most people would consider this dishonest.

IV’s acquisition entities (what others refer to as “shell companies”) are holding companies that hold our assets – they are not vehicles for our litigations. Since that part of our business continues to confuse people and generate speculation, we wrote about it at length here last December.

No. The first sentence would be a lot more accurate if it said "hide our assets" instead of "hold our assets" because that's what's really going on. Whether or not they're vehicles for litigation is really not that important. Especially when you can "sell off" (*cough cough* *nudge nudge* *wink wink*) the patents to a "third party" shell company in which 90% of the profits go right back into your coffers.

As for the inference that we sold Oasis low-quality assets – IV has no business interest in buying, litigating or selling assets that are going to be found invalid. Our business depends on owning and monetizing high-quality assets.

Again, this is not true. Their business depends on buying low value assets but then convincing others that they're high value assets -- sometimes by bundling them with so many other low value assets that the "threat" of that giant bundle makes it make sense to pay off IV not to sue them. Whether or not the patents are actually low value or high value is immaterial to IV so long as it can make more money off of it in the long term. And... it just so happens that they can buy low value patents for much cheaper, and then bundle them and make much bigger margins.

This attention to quality has been validated by some of the world’s largest technology companies who are our customers, licensees, and, in some cases, investors. In the intellectual property industry, we are recognized for our market leadership and for creating a portfolio that stands above the rest.

Again, I'd argue that's a rather charitable rewriting of history, especially as many of the "world's largest technology companies" that IV speaks about felt that IV pulled a bait and switch to get them to invest in the first place, promising that the focus was on creating a "patent defense fund" to protect companies from trolls, not to create the world's largest troll. And, many of those same companies who paid up felt like they had to in order to avoid getting sued -- which is the whole basis of any trolling operation. They didn't buy in because of the "high value" of the patents, but because it was cheaper to buy in than get sued. Many of those same companies seem quite happy to talk off the record about how much they hate IV and how they felt completely shaken down by IV.

Intellectual Ventures keeps trying to present itself as something that it's not. But almost no one believes it.

Filed Under: patent trolls, patents, shell companies
Companies: intellectual ventures

This American Life Followup On Patents Reveals Intellectual Ventures Is Even Slimier Than Previously Believed

from the well-of-course-they-are dept

Nearly two years ago, This American Life did an incredible episode about patents and patent trolling, which really got the issue of patent trolling into the mainstream. At the center of that episode was an exploration into Intellectual Ventures, the world's largest, most obnoxious patent troll. The story revolved around one single patent (5,771,354), which Intellectual Ventures itself had held up as an example of how they were really just helping the poor, brilliant, lone inventor who was being ripped off. In that story, This American Life reporter/producer Alex Blumberg and NPR New reporter Laura Sydell tried to follow the story of that patent to exonerate Intellectual Ventures and show that, indeed, it was helping small inventors get their due. But the story turned out to not stand up to even the slightest amount of scrutiny. Because when they went in search of the inventor, Chris Crawford, he refused to respond to them, and then IV itself noted that it had "sold off" the patent and it was currently engaged in litigation. The entity doing the litigation was a company called Oasis Research, which had an empty office in Marshall, Texas with no employees, but had sued over a dozen internet companies for broadly doing online backup.

In a hilarious exchange, IV's Peter Detkin, the guy who coined the phrase patent troll but now likes to delude himself that he's not an executive at the world's largest troll, pretended that it was some sort of "ambush" when Blumberg simply asked him to explain when IV bought the patent from Crawford and then when and to whom they sold it, based on the data on the US Patent Office's own website. Hilariously, Detkin insisted that he hadn't looked at the USPTO website, so he didn't know what was going on.

Detkin: I won't be able to tell you, probably, from looking at this. I mean I'd have to talk to... I'm not even an expert in... You're looking at the USPTO website? I haven't looked at this particular website in a while. I don't know how it's organized....

Alex Blumberg, from TAL: Wait... are you telling me that you're the... (long pause)... you run a patent company and you were the head counsel at Intel in the patent department, and you don't know what the Patent Office website is... you don't know how to read this...?

Detkin: (Frustrated) Look, I can look at this if you want, but I haven't looked at this particular website and I don't now how it's organized, and I'm not exactly sure what it is you're trying to get at... and I'm happy to answer questions, but if you're going to cross-examine me on the record about a patent website, I don't quite think that's fair...

And then a PR person jumped in and tried to kill the interview. Later they went back, and Detkin "explained" the details, claiming that it had bought the patent from Crawford in 2007 and then sold it off to Oasis Research more recently. When Blumberg quizzed him about how the patent is now being used to shake down companies for money (exactly the kind of thing that led Detkin to coin the term patent troll), Detkin insisted that IV had nothing to do with the patent any more, and had no control over these third party entities once it sold off the patents. They then pointed out to him that in the legal documents, Oasis Research had listed Intellectual Ventures as having a financial interest in the outcome of the case, and he brushed it off as an aside -- basically saying, "oh sure, perhaps we receive some royalty from future monetization." Specifically, he said "we get some percentage of the royalty stream down the road that is generated from the monetization of these assets."

Uh huh. So, This American Life has now done a follow up on that first episode, in which they finally get a bunch of answers that eluded them when the first episode aired -- and it's in part because two companies, out of 18 that were sued, fought Oasis Research and won by invalidating the patent. The other 16 likely settled, and hopefully are kicking themselves for giving in to a patent troll and paying the fees. The episode replays some clips from the original episode, including the interview with Detkin above, but what they revealed when all was said and done suggests, yet again, that Detkin was being less than forthright in that interview. The "ongoing royalty"? Apparently Intellectual Ventures got 90% of the net profit from the patent. 90%. That's not an ongoing royalty. That's basically someone who still owns the patent and is using a shell company to pretend that it's not involved in the "dirty business" of demanding exorbitant fees from companies who actually do something.

This American Life also estimates, based on how much Oasis Research demanded from Carbonite ($20 million), that Oasis probably got over $100 million in settlements from the companies that did settle. They also found out that IV paid back to Chris Crawford a nice chunk of change as well. They originally bought the patent for $12 million from him (via a series of shell companies), and then they paid him another 17.5% of any of the money that they collected.

And all this over a bogus patent. Not only was it bogus, but as later came out in court, Chris Crawford apparently filed for the patent by copying someone else's idea. The details are a bit involved, so it's worth listening to the whole thing, but the short version is that Carbonite and EMC tracked down Crawford's "boss" from way back when, and discovered that two other entrepreneurs had come up with the basic idea of backing up data via a network on computers, and they'd hired Crawford to help out. But what they discovered was they were unable to actually make the idea work, for a variety of reasons. They disbanded the company, but Crawford, who took notes at the meetings, later filed for a series of patents using the ideas from that company, and never bothered to tell the guys who were his "partners." Even though the other partners testified that the whole thing had been their idea in the first place, and not Crawford's, patent law is so stupid that Crawford still might have been able to keep the patents if he hadn't made one mistake. Among the piles upon piles of documents he filed with the patent, one of them mentioned one of the original entrepreneurs, and noted that it was that guy's idea.

In a hilarious bit of tape from the deposition of Chris Crawford, he tries to explain away the fact that he used an apostrophe "s" after the entrepreneur's name, to pretend that it had really been Crawford's idea, even though the notes clearly stated otherwise. He argued that he's not very good with grammar, so sometimes he uses an "'s" when he doesn't mean to. But that's even more nonsensical, because if was just a regular s, meaning plural, then the sentence wouldn't make any sense.

While that bit of evidence was damning enough to get the jury to knock out the patent, as the report notes, the jury still wouldn't accept the direct testimony of the other three partners in the business with Crawford, saying only that the patent (which is completely bogus in its own right) probably should have gone to the one guy who was named in Crawford's notes. If that doesn't show how bogus the patent system is, I'm not sure what else to show people at this point.

Remember a few months ago, when Intellectual Ventures said that there was nothing at all nefarious about their 2,000 or so shell companies? Perhaps they knew what was coming... which was a pretty clear expose of how Intellectual Ventures is very much the same sort of entity that Peter Detkin once claimed were hellbent on holding up innovation. Except, now he's profiting from it. Massively. While pretending not to.

It's clearly time to fix the patent system, and this is just yet another example of a bunch of lawyers shaking down companies that actually do stuff. This is just one little bogus patent, and yet it took $100 million or so from companies who actually innovate and build products that the market wants, and handed it over to lawyers like Peter Detkin to be used to buy up more such patents and sue more people. And this patent probably would have been used for even more similar efforts if Carbonite and EMC hadn't been able to find that one document and its rather important apostrophe s. These lawsuits and these kinds of battles are a massive shift of money from actual innovation... to lawyers and those who failed to build things that people wanted. It's an economic disaster.

Filed Under: alex blumber, chris crawford, laura sydell, patent trolls, patents, peter detkin, shell companies
Companies: carbonite, emc, intellectual ventures, oasis research

New Bill Would Stop Patent Trolls From Hiding Behind Shell Companies

from the about-time dept

We've talked in the past about how patent trolling operations love to use shell companies to hide who actually owns the patents. Intellectual Ventures has thousands of shells, but it's even worse in many cases when it's smaller trolls, where no one has any idea who's actually behind the trolling. You may remember a few years back, when Reddit, Digg, Fark, Slashdot and others were sued over a bogus patent held by a shell company called "Gooseberry Natural Resources LLC," and we wondered if the collective communities behind those sites might be able to figure out who actually owned the patent in question. But even those hive minds failed to turn up much of use.

Thankfully, Rep. Ted Deutch has introduced a bill that would require a true disclosure of the owners of patents that are being used in litigation. Specifically, the bill would require a much clearer accounting of who "any real party in interest" would be concerning any patent. Failure to do so would mean that it would limit the ability of those patent owners to collect on any damages. Specifically, patent owners can only collect on damages that occur after the true owners of the patent are disclosed. This would help a tremendous amount, since so much in the patent troll world today is done in incredibly shady ways. It is believed that a very large number of patent trolling operations are actually run by patent lawyers themselves, who saw how lucrative it was, but who don't want to be publicly identified with their trolling. Forcing the actual owners to identify themselves would be a big help in making sure that people actually understand what's happening with patent trolling.

It's interesting to see Congress suddenly interested in patent reform again, even if in a piecemeal fashion. After spending nearly a decade fighting over a "comprehensive" patent reform bill that became the America Invents Act (a watered-down, mostly useless, bill) we kept hearing people say that patent reform was "done" in Congress. But in the past few months, three key bills have been introduced, each targeting the patent trolling problem. There was Rep. DeFazio's SHIELD Act, which would make it easier to shift fees and make trolls responsible for the costs of bogus lawsuits. Then, a few weeks ago, there was Senator Schumer's bill to make it easier to get tech patents reviewed relatively quickly by the USPTO to see if we can throw out more bad patents. And now this bill, called the End Anonymous Patents Act, from Rep. Deutch.

So far, none of the bills has received much momentum, but it's good to see that more and more people in Congress are realizing that the patent system is incredibly broken, and that trolls are a big part of that.

Filed Under: anonymity, patent trolls, patents, shell companies, ted deutch

Team Prenda Does Not Show Up In Court; Judge Is Not Amused

from the bad-day-for-prenda dept

Update: And here is the deep dive analysis by Ken.

We'll have a more complete report soon from Ken "Popehat" White, who was in the courtroom for the Prenda hearing today and will be writing about it for us (and for his own site), but for the quick version of what happened, with a huge assist from both Adam Steinbaugh and White, is that the judge has not made a ruling yet, but he is not at all pleased, saying "the client has been running everything. I know who the client is." There was no direct admission of who owns AF Holdings (other than that it had been transferred to another holding company, LiveWire -- as Pietz pointed out in his chart), but nothing else directly came out in court, apparently, other than Judge Wright's claim that he knows what's going on. In fact, he noted that the shell companies are "not even shells." This does not bode well for Prenda.

Of all the people ordered to appear, Team Prenda decided not to bother -- instead telling the judge they were available by phone, though the judge chose not to call. The only person (outside of Gibbs and Morgan Pietz) who did make it was Alan Cooper. But just one of the Alan Coopers. The caretaker one, who claims that his name was used illegally on various documents. In other words, as expected, Prenda and John Steele have still failed to produce another Alan Cooper who actually was associated with the shell companies. Apparently, Cooper showed up with voicemails left by John Steele which sound vaguely threatening, promising to tie him up in litigation -- possibly the defamation case that Steele filed against Cooper and the anonymous internet commenters. This will not help Steele's case. At all.

Apparently, Judge Otis Wright was not particularly pleased about this turn of events. Similarly, he blasted Paul Hansmeier for his deposition in which he tapdanced around pretty much every question. Remember, Hansmeier gave the deposition as the official designated "representative" of AF Holdings, one of the mysterious shell companies at issue in these cases, but Judge Wright pointed out that Hansmeiers evasiveness suggested he "doesn't know anything about his own firm." Or, you know, he's choosing not to say things.

Gibbs was put on the stand to testify, and apparently continued his "I was just taking orders" defense, in which he pointed the judge to Prenda. He also apparently claims he left Prenda because of the "online harassment and unwelcome exposure," though that wouldn't explain why he then became "in house counsel" for LiveWire, the shell holding company that was "acquiring" various Prenda shells. Judge Wright pointed out that Gibbs was the official counsel of record, and therefore the person responsible, even if he was attempting to throw Prenda under the bus. Gibbs also claimed that while he was "in house counsel" for LiveWire for two months, he never got paid (just like the Hansmeier deposition). It seems that no one associated with Prenda ever seems to want to pay anyone. Funny, that.

Also, Gibbs and his lawyers apparently tried to push back on the Verizon filing, which suggested that Gibbs failed to inform Verizon that the order allowing subpoenas to move forward in one of the cases had been killed by the court, and, furthermore, suggested Gibbs then lied to the court in claiming that Verizon had been informed. However, Verizon's lawyers showed up, and that apparently silenced Gibbs' lawyers.

Anyway, that's our quick update... There will be a ruling soon enough, but come back tonight when we post a more complete analysis from inside the courtroom.

Filed Under: alan cooper, brett gibbs, john steele, morgan pietz, otis wright, paul hansmeier, prenda, shell companies
Companies: prenda, prenda law

Patent Troll Shell Companies Shake Down Small Businesses For $1k Per Employee For Using Network Scanner

from the shakedown dept

In the latest example of just how broken our patent system is, Joe Mullin has an excellent and detailed article unveiling one of the latest patent trolling scams: using some vague and highly questionable patents, combined with a series of shell companies, to send out tons of letters to small businesses, demanding approximately $1,000 per employee from any company that has a scanner connected to a network which has a "scan to email" function (as most new scanners do). The story is bizarre and complex, but that's part of the "game" that the trolls are playing to try to hide their trail.

Go read the long version, but the more compact version is that it appears that patent trolls are learning from some of the "innovations" of today's copyright trolling programs in which the focus is to broadly hit a ton of small possible "licensees" in the hopes that a reasonable percentage pays up. Traditionally, patent trolling mostly focused on larger companies with big bank accounts, thinking that most would rather just pay up than deal with the lawsuit. But this new generation is even more nefarious. The example in the article is a series of ridiculous patents originally granted to "Laurence Klein," which lawyers are now claiming cover using a scanner that's connected to the internet to email a scan. Here are the patents in question:

• US Patent 6,185,590: Process and architecture for use on stand-alone machine and in distributed computer architecture for client server and/or intranet and/or internet operation environments
• US Patent 6,771,381: Distributed computer architecture and process for virtual copying
• US Patent 7,477,410: Distributed computer architecture and process for virtual copying
• US Patent 7,986,426: Distributed computer architecture and process for document management

The article talks about how a company called Project Paperless LLC started sending around threat letters about those patents, telling companies that they had to pay $1,000 per employee if they had a scanner that was networked and had such a feature -- which scanners from HP, Brother, Xerox and Canon all do. But, rather than go after those companies, the patent troll in this case claims that any company using one of their scanners is liable and has to pay these outrageous sums. One of the companies who received the notice, BlueWave Computing, led by Steven Vicinanza, decided this was ridiculous and fought back, following the Drew Curtis / Fark "How to fight patent trolls" plan to a tee: he pointed out he didn't infringe, made it very, very clear he would fight this to the end and that he was going to make it as painful as possible for the troll. While Paperless Post sued BlueWave, it quickly backed down and dropped the lawsuit two weeks later, leading BlueWave to issue a press release (continuing with the Fark plan of publicizing the result).

While all this was happening, there was also an ongoing effort by some unnamed people to expose Project Paperless' effort and to show that the patents aren't valid.

Among the things they discovered was that it appeared that some of the partners in the law firm that "represented" Project Paperless, likely had an ownership interest in the patents. Hill, Kertscher, and Wharton, LLP is the firm, and research suggested that partners Steven Hill and Scott Wharton had holding companies, Bonita Sunrise and Wexford Holdings, that at least partially owned the patents. Given that exposure, plus the success of BlueWave in fighting loudly, what happened next was only too predictable: Project Paperless wrapped up its various lawsuits and... "sold" the patents to MPHJ Holdings, whose ownership is completely unclear. Soon after that, a whole series of companies popped up sending letters to companies demanding similar per-employee-payments for network-connected scanners. Among the companies Mullin uncovered doing this: AccNum, AllLed, AdzPro, CalNeb, ChaPac, FanPar, FasLan, FulNer, GosNel, and HunLos. Note a similarity in the style of all of those names?

Mullin includes a (redacted) threat letter from AllLed as an example. He also has the transcript of his phone call with the number listed on the letters (it's the same number on all the letters):

As for the phone number on the letters, 855-744-2360—I called it. The conversation was not enlightening.

"Thank you for calling the legal department," said a youngish-sounding man. "This is Kevin, how can I help you?"

I was calling about a letter I was holding from AllLed, I explained. Kevin asked for my letter's "file number," which was the one thing I couldn't give him—it would have revealed the source from whom I had received the letter. I told Kevin I was a writer who had been given the letter by someone else. All I wanted to do was contact AllLed, LLC directly—so how could I do that?

"We don't have any information on the entities that send the letter," he said. It was just an answering service. "We don't have their contact information."

"Well, who are you the 'legal department' for?" I asked.

"Hmmm," said Kevin. "Legal department."

"I don't get it—is 'Legal Department' a real company?" I persisted.

"Hmmm," said Kevin again. "We're just Legal Department."

"Well, you work for someone, right? What company do you work for?"

"This is Legal Department. That's all we can say."

As Mullin notes, this isn't a one-off case, either. There have been a growing number of similar attempts by patent trolls to go after large numbers of people or companies further down the supply chain, clearly following the traditional trolling strategy of just seeking lots of "settlements" from people who can't afford a lawsuit and don't understand the specifics.

No matter how you look at this, though, it's yet another example of how the patent system is completely broken. It hearkens back to the 19th century when scam artists roamed the countryside hitting up farmers for "licenses" for "patents" on common farm equipment. At that time, they were called patent sharks, and Congress actually changed the rules on what could be patented to fix the problem. Of course, today Congress isn't known for actually fixing problems.

Filed Under: networked scanning, patents, scanners, shell companies
Companies: accnum, adzpro, allled, bluewave, bonita sunrise, calneb, chapac, fanpar, faslan, fulner, gosnel, hill kertscher wharton, hunlos, paperless post, wexford holdings

Intellectual Ventures: Don't Mind Our 2000 Shell Companies, That's Totally Normal

from the nothing-nefarious-at-all dept

Back in 2010, we wrote about a report suggesting that Intellectual Ventures was using somewhere around 1000 shell companies to hide many of its patent shakedown attempts. For years, IV itself liked to say that it wasn't involved in any patent litigation directly (that changed not so long ago), but we had seen some IV patents showing up from some small patent trolls, where it was impossible to determine who actually controlled the patent or the lawsuits. However, at times, other companies have argued that the shell lawsuits were really IV in disguise.

A few months ago, we wrote about an attempt to crowdfund an investigation into all of IV's shell companies. While that attempt to raise money did not reach its goal, it has helped put renewed attention on IV's use of a massive number of shell companies. In response, IV has been trying very hard to play down the whole thing. It published a ridiculous blog post arguing that the use of thousands of shell companies is just a normal business procedure:

This is a common practice for asset management firms, and it’s just common sense. Do stock brokers broadcast tips to their competitors? Does Warren Buffet tell the world where he’s investing next? Does Disney broadcast which plots of land it is planning to buy for its next theme park? Of course not, and IV takes a similar approach to our investments.

Ah, sure, this is all to throw other companies off the scent of what IV is "investing" in. That makes sense if IV were actually an investment company, rather than a shakedown play. The idea that publicly stating what patents it owns would somehow "broadcast tips" to "competitors" is ridiculous. Who out there is really an IV competitor? No, what IV is almost certainly worried about is that, if the extent of its activities were known, there would be more fodder for real and necessary reform against trolling -- and, more importantly, it's worried about tipping off the companies it's about to go after. It's not about competition -- it's about avoiding a smart company going to court to get a declaratory judgment against IV, which they admit later on in the post:

Moreover, were we to publish the entirety of our holdings we, or any other company for that matter, could find ourselves mired down in a series of tactical declaratory judgments and reexaminations.

Shocking. Perhaps if you didn't go around demanding huge sums of money from companies with a giant stack of vague and overly-broad patents you wouldn't face a series of declaratory judgments and re-exams.

In fact, no one has ever suggested that transparency is needed in the real estate world, yet properties are routinely held in the name of holding companies. When it comes to property ownership, patents shouldn’t be held to a different of set of rules

Well, if property holding companies routinely used their assets to shake down every other real estate owner out there, perhaps there would be calls for the practice to end. Plus, sorry, patents are not "property" like real estate is property. And, in fact, this is the key to IV's entire business model. If patents properly delineated the boundaries of what the patents covered, there wouldn't be much room for trolling. But, instead, IV relies on the fact that patents are broad and vague and "might" apply to all sorts of things.

In response to an article about all of this, IV also claimed that anyone who wanted to know about what patents IV holds can simply "search the USPTO's public database." Of course, this is a snarky and misleading answer for a number of reasons. First, it ignores the shell company patents. Second, it assumes that the USPTO's search actually works well (it does not).

Thankfully, however, the good folks at PlainSite, who try to shine some light on the hidden corners of the legal system, decided to take Intellectual Ventures up on its offer -- and actually went through the data to see what was lurking:

Like all of the USPTO's on-line systems, the assignment database is a technological abomination--sadly ironic for the agency that effectively manages the nation's technology rights. (The USPTO does deserve credit for making raw XML data available through Google, which is where our project began.) It must be noted that Intellectual Ventures would have had a much harder time lurking in the shadows all these years if government information technology systems, such as the USPTO assignment database and different states' corporation databases, were kept up to par. In fact, its business model would likely be impossible, as the courts would be likely to label the company as a vexatious litigant if they only knew how many lawsuits it filed.

In the end, after digging through the database, PlainSite has identified -- and released for all your enjoyment -- the names of what appear to be over 2,000 shell companies, though they admit that some of them may be fully independent. But... many of them apparently had "some obvious overlaps" like sharing "managing corporations, telephone numbers, and other factors." Oops. They're hoping not to "crowdfund" the efforts here, but rather to crowdsource the data. As they note, they're spreading this information, because "we hope that Congress and the courts take notice of one of the largest racketeering schemes ever perpetrated on the nation, with some of its richest billionaires acting more like thugs than visionaires."

What's really amazing in all of this is the way that IV execs keep spewing highly questionable arguments for why they're not so evil, when all the data just keeps pointing in the other direction. You could almost respect the folks there if they just came out and admitted that they'd realized that there was a system that could be gamed, and they've gamed it to the tune of billions of dollars. But, instead, they keep trying to justify the company's entire model by completely denying reality.

Filed Under: patents, shell companies
Companies: intellectual ventures