Stupid Patent Of The Month: This Captcha Patent Is An All-American Nightmare

from the this-turing-test-outs-patent-trolls dept

A newly formed patent troll is looking for big money from small business websites, just for using free, off-the-shelf login verification tools. 

Defenders of the American Dream, LLC (DAD ), is sending out its demand letters to websites that use Google’s reCAPTCHA system, accusing them of infringing U.S. Patent No. 8,621,578. Google’s reCAPTCHA is just one form of a Captcha test, which describes a wide array of test systems that websites use to verify human users and keep out bots. 

DAD’s letter tells targeted companies that DAD will take an $8,500 payment, but only if “licensing terms are accepted immediately.” The threat escalates from there. If anyone dares to respond that DAD’s patent might be not infringed, or invalid, fees will rise to at least $17,000. If DAD’s patent gets subject to a legal challenge, DAD says they’ll increase their demand to at least $70,000. In the footnotes, DAD advises its targets that “not-for-profit entities are eligible for a discount.” 

The DAD demand letters we have reviewed are nearly identical, with the same fee structure. They mirror the one filed by the company itself (with the fee structure redacted) as part of their trademark application. This demand letter campaign is a perfect example of how the U.S. patent system fails to advance software innovation. Instead, our system enables extortionate behavior like DAD’s exploding fee structure. 

DAD Didn't Invent Image Captcha

DAD claims it invented a novel and patentable image-based Captcha system. But there’s ample evidence of image-based Captcha tests that predate DAD’s 2008 patent application. 

The term “Captcha” was coined by a group of researchers at Carnegie Mellon University in 2000. It’s an acronym, indicating a “Completely Automated Public Turing test to tell Computers and Humans Apart.” Essentially, it blocks automated tools like bots from getting into websites. Such tests have been important since the earliest days of the Internet. 

Early Captcha tests used squiggly lines or wavy text. The same group of CMU researchers who coined “Captcha” went on to work on an image-selection version they called ESP-PIX, which they had published and made public by 2005. 

By 2007, Microsoft had developed its own image-categorization Captcha, which used photos from Petfinder.com, then asked users to identify cats and dogs. At the sime time, PayPal was working on new captchas that “might resemble simple image puzzles.” This was no secret—researchers from both companies spoke to the New York Times about their research, and Microsoft filed its own patent application, more than a year before DAD’s. 

There’s also evidence of earlier image-based Captcha tests in the patent record, like this early 2008 application from a company called Binary Monkeys. Here's an image from the Binary Monkeys Patent: 

And here's an image from DAD's patent:

So how did DAD end up with this patent? During patent prosecution, DAD’s predecessor argued that they had a novel invention because the Binary Monkeys application asks users to select “all images” associated with the task, as opposed to selecting “one image,” as in DAD’s test. The patent examiner suggested adding yet another limitation: that the user still be granted access to the website if they got one “known” image and one “suspected” image. 

Unfortunately, adding trivial tweaks to existing technology, such as small details about the needed criteria for passing a Captcha test, can and often does result in a patent being granted. This was especially true back in 2008, before patent examiners should have applied guidance from the Supreme Court’s 2014 Alice v. CLS Bank decision. That’s why we have told the patent office to vigorously uphold Supreme Court guidelines, and have defended the Alice precedent in Congress.  

Where did DAD come from? 

DAD’s patent was originally filed by a Portland startup called Vidoop. In 2010, Vidoop and its patent applications were purchased by a San Diego investor who re-branded it as Confident Technologies. Confident Tech offered a “clickable, image-based CAPTCHA,” but ultimately didn’t make it as a business. In 2017 and 2018, Confident Tech sued Best Buy, Fandango Media, Live Nation, and AXS Group, claiming that the companies infringed its patent by using reCAPTCHA. Those cases all settled.

In 2020, Trevor Coddington, an attorney who worked on Confident Tech’s patent applications, created Defenders of the American Dream LLC. He transferred the patents to this new entity and started sending out demand letters. 

They haven’t all gone to large companies, either. At least one of DAD’s targets has been a one-person online publishing company. Coddington’s letter complains about how Confident Tech failed in the marketplace and suggests that because of this, reCAPTCHA users should pay—well, him. The letter states: 

[O]nce Google introduced its image-based reCAPTCHA for free, no less, [Confident Technologies] was unable to to maintain a financially viable business… Google’s efficient infringement forced CTI to abandon operations and any return on the millions of dollars of capital investment used to develop its patented solutions. Meanwhile, your company obtained and utilized the patented technology for free.” 

Creating new and better Captcha software is an area of ongoing research and innovation. While the lawyers and investors behind DAD have turned to patent threats to make money, other developers are actively innovating and competing with reCAPTCHA. There are competing image-based Captchas like hCaptcha and visualCaptcha, as well as long lists of Captcha alternatives and companies that are trying to make Captchas obsolete. 

These individuals and companies are all inventive, but they’re not relying on patent threats to make a buck. They’ve actually written code and shared it online. Unfortunately, because of their real contributions, they’re more likely to end up the victims of aggressive patent-holders like DAD. 

We’ll never patent our way to a better Captcha. Looking at the history of the DAD patent—which shares no code at all—makes it clear why the patent system is such a bad fit for software. 

Originally posted to the EFF Deeplinks Blog

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Changing Section 230 Won't Make The Internet A Kinder, Gentler Place

from the stop-expecting-it-to dept

Tech platforms, especially the largest ones, have a problem—there’s a lot of offensive junk online. Many lawmakers on Capitol Hill keep coming back to the same solution: blaming Section 230.

What lawmakers don’t notice is that a lot of the people posting that offensive junk get stopped, again and again, thanks to Section 230. During a March hearing in the House Committee on Energy and Commerce, lawmakers expressed concern over some of the worst content that’s online, including extremist content, falsehoods about COVID-19, and election disinformation.

But it’s people spreading just this type of content that often file lawsuits trying to force their content back online. These unsuccessful lawsuits show that Section 230 has repeatedly stopped disinformation specialists from disseminating their harmful content.

Section 230 stands for the simple idea that you’re responsible for your own speech online—not the speech of others. It also makes clear that online operators, from the biggest platforms to the smallest niche websites, have the right to curate the speech that appears on their site.

Users dedicated to spreading lies or hateful content are a tiny minority, but weakening Section 230 will make their job easier. When content moderation doesn’t go their way—and it usually doesn’t—they’re willing to sue. As the cases below show, Section 230 is rightfully used to quickly dismiss their lawsuits. If lawmakers weaken Section 230, these meritless suits will linger in court longer, costing online services more and making them leery of moderate the speech of known litigious users. That result could make it easier for these users to spread lies online.

Section 230 Protects Moderators Who Remove Hateful Content

James Domen identifies as a “former homosexual,” who now identifies as heterosexual. He created videos that describe being LGBTQ as a harmful choice, and shared them on Vimeo, a video-sharing website. In one video, he described the “homosexual lifestyle” this way: “It’ll ruin your life. It’s devastating. It’ll destroy your life.”

In at least five videos, Domen also condemned a California bill that would have expanded a ban on “sexual orientation change efforts,” or SOCE. Medical and professional groups have for decades widely recognized that efforts to change sexual orientation in various ways, sometimes called “conversion therapy,” are harmful.

Vimeo removed Domen’s videos. In a letter to Domen’s attorney, Vimeo explained that SOCE-related videos “disseminate irrational and stereotypical messages that may be harmful to people in the LGBT community,” because it treated homosexuality as “a mental disease or disorder” that “can and should be treated.” Vimeo bans “hateful and discriminatory” content, and company officials told Domen directly that, in their view, his videos fell into that category.

Domen sued, claiming that his civil rights were violated. Because of Section 230, Domen’s lawsuit was quickly thrown out. He appealed, but in March, the federal appeals court also ruled against him.

Forcing a website to publish Domen’s anti-LGBTQ content might serve Domen’s interests, but only at the expense of many other users of the platform. No website should have to face a lengthy and expensive lawsuit over such claims. Because of Section 230, they don’t.

Some lawmakers have proposed carving civil rights claims out of Section 230. But that could have the unintended side effect of allowing lawsuits like Domen’s to continue—making tech companies more skittish about removing anti-LGBTQ content.

Section 230 Protects Moderators Who Remove Covid-19 Falsehoods

Marshall Daniels hosts a YouTube channel in which he has stated that Judaism is “a complete lie” which was “made up for political gain.” Daniels, who broadcasts as “Young Pharaoh,” has also called Black Lives Matter “an undercover LGBTQ Marxism psyop that is funded by George Soros.”

In April 2020, Daniels live-streamed a video claiming that vaccines contain “rat brains,” that HIV is a “biologically engineered, terroristic weapon,” and that Anthony Fauci “has been murdering motherfuckers and causing medical illnesses since the 1980s.”

In May 2020, Daniels live-streamed a video called “George Floyd, Riots & Anonymous Exposed as Deep State Psyop for NOW.” In that video, he claimed that nationwide protests over George Floyd’s murder were “the result of an operation to cause civil unrest, unleash chaos, and turn the public against [President Trump].” According to YouTube, he also stated the COVID-19 pandemic and Floyd’s murder “were covert operations orchestrated by the Freemasons,” and accused Hillary Clinton and her aide John Podesta of torturing children. Near the video’s end, Daniels stated: “If I catch you talking shit about Trump, I might whoop your ass fast.”

YouTube removed both videos, saying that they violated its policy on harassment and bullying.  

Daniels sued YouTube, demanding account reinstatement and damages. He claimed that YouTube amounted to a state actor, and had thus violated his First Amendment rights. (Suggesting that courts treat social media companies as the government has no basis in the law, which the 9^th Circuit reaffirmed is the case last year.)

In March, a court dismissed most of Daniels’ claims under Section 230. That law protects online services—both large and small—from getting sued for refusing to publish content they don’t want to publish.

Again, Internet freedom was protected by Section 230. No web host should be forced to carry false and threatening content, or Qanon-based conspiracy theories, like those created by Daniels. Section 230 protects moderators who kick out such content.

Section 230 Protects Moderators Who Remove Election Disinformation

The Federal Agency of News LLC, or FAN, is a Russian corporation that purports to be a news service. FAN was founded in the same building as Russia’s Internet Research Agency, or IRA; the IRA became the subject of a criminal indictment in February 2018 for its efforts to meddle in the 2016 U.S. election.

The founder and first General Director of FAN was Aleksandra Yurievna Krylova, who is wanted by the FBI for conspiracy to defraud the U.S. Later in 2018, the FBI unsealed a criminal complaint against FAN’s chief accountant, Elena Khusyaynova. In that complaint, the FBI said that Federal Agency of News was not so different than the IRA. Both were allegedly part of “Project Lakhta,” a Russian operation to interfere with political and electoral systems both in Russia “and other countries, including the United States.”

Facebook shut more than 270 Russian language accounts and pages in April of 2018, including FAN’s account. Company CEO Mark Zuckerberg said the pages “were controlled by the IRA,” which had “repeatedly acted deceptively and tried to manipulate people in the U.S., Europe, and Russia.” The IRA used a “network of hundreds of fake accounts to spread divisive content and interfere in the U.S. presidential election.” Facebook’s Chief Security Officer stated that the IRA had spent about $100,000 on Facebook ads in the United States.

At this point, one might think that anyone with alleged connections to the Internet Research Agency, including FAN, would lie low. But that’s not what happened. Instead, FAN’s new owner, Evgeniy Zubarev, hired U.S. lawyers and filed a lawsuit against Facebook, claiming that his civil rights had been violated. He demanded that FAN’s account be reinstated, and that FAN be paid damages.

A court threw the FAN lawsuit out on Section 230 grounds. The plaintiffs re-filed a new complaint, which the court again threw out.

Small Companies And Users Can’t Afford These Bogus Lawsuits 

Weakening Section 230 will give frivolous lawsuits like the ones above a major boost. Small companies, with no margin for extra legal costs, will be under more pressure to capitulate to bogus demands over their content moderation.

Section 230 protects basic principles, whether you run a blog with a comment section, an email list with 100 users, or a platform serving millions. You have the right to moderate. You have the right to speak your own mind, and serve other users, without following the dictates of a government commission—and without fear of a bankrupting lawsuit. 

Innovation, experimentation and real competition are the best paths forward to a better internet. More lawsuits over everyday content moderation won’t get us there.

Reposted from the EFF's Deeplinks blog.

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15 Universities Have Formed A Company That Looks Remarkably Like A Patent Troll

from the feeding-the-trolls dept

Imagine this: a limited liability company (LLC) is formed, for the sole purpose of acquiring patents, including what are likely to be low-quality patents of suspect validity. Patents in hand, the LLC starts approaching high-tech companies and demanding licensing fees. If they don’t get paid, the company will use contingency-fee lawyers and a litigation finance firm to make sure the licensing campaign doesn’t have much in the way of up-front costs. This helps give them leverage to extract settlements from companies that don’t want to pay to defend the matter in court, even if a court might ultimately invalidate the patent if it reached the issue.

That sounds an awful lot like a patent troll. That’s the kind of entity that EFF criticizes because they use flimsy patents to squeeze money from operating companies, rather than making their own products. Unfortunately, this description also applies to a company that has just been formed by a consortium of 15 large research universities. 

This patent commercialization company has been secretly under discussion since 2018. In September 2020, it quietly went public, when the University of California Regents authorized making UC Berkeley and UCLA two of its founding members. In January, the DOJ said it wouldn’t challenge the program on antitrust grounds. 

It’s good news when universities share technology with the private sector, and when startup companies get formed based on university research. That’s part of why so much university research is publicly funded. But there’s not much evidence that university patenting helps technology reach the public, and there’s a growing body of evidence that patents hinder it. Patents in this context are legal tools that allow someone to monopolize publicly-funded research and capture its promise for a private end.

While larger tech companies can absorb the cost of either litigating or paying off the patent assertion entity, smaller innovators will face a much larger burden, proportionately. That means that that the existence of this licensing entity could harm innovation and competition. When taxpayers fund research, the fruits of the research should be available for all. 

With 15 universities now forming a consortium to license electronics and software patents, it’s going to be a mess for innovators and lead to worse, more expensive products.

Low-Quality Patents By The Bundle 

Despite the explosion in university patenting and the growth of technology transfer offices (essentially university patent offices), the great majority of universities lose money on their patents. A 2013 Brookings Institute study showed that 84% of universities didn’t make enough money from their patents to cover the related legal costs and the staffing of their tech transfer office. Just a tiny slice of universities earn the majority of patent-licensing revenue, often from a few blockbuster pharmaceutical or biotech inventions. As many as 95% of university patents do not get licensed at all.  

This new university patent licensing company won’t be getting any of the small number of impressive revenue-producing patents. The proposal sent to the UC Board of Regents explains that the LLC’s goal will be to get payment for patents that “have not been successfully licensed via a bilateral ‘one patent, one license’ transaction.” The universities’ proposal is to start by licensing in three areas: autonomous vehicles, “Internet of Things,” and Big Data. 

In other words, they’ll be demanding licensing fees over lots and lots of software patents. By and large, software patents are the lowest quality patents, and their rise has coincided with the rise of large-scale patent trolling.  

The university LLC won’t engage in the type of patent licensing that most actual university spinoffs would want, which are typically exclusive licenses over patents that give it a product or service no one else has. Rather, “the LLC will focus on non-exclusive sublicenses.” In other words, they’ll use the threat of litigation to attempt to get all competitors in a particular industry to pay for the same patents. 

This is the same model pursued by the notorious Intellectual Ventures, a large patent troll company that convinced 61 different universities to contribute at least 470 different patents to its patent pool in an attempt to earn money from patents. 

What about the Public Interest? 

The lawyers and bureaucrats promoting the UC patent licensing scheme know how bad this looks. Their plan is to use patents as weapons, not tools for innovation—exactly the method used by patent trolls. In the “Pros and Cons” section of the memo sent to the UC Regents, the biggest “Con” is that the University of California “may incur negative publicity, e.g., allegations may arise that the LLC’s activities are tantamount to a patent troll.” That’s why the memo seeks to reassure the Regents that “it is... the expectation that no enforcement action will be undertaken against startups or small business firms.” This apparently nonbinding “expectation” is small comfort. 

The goal of the patent-based LLC doesn’t seem to be to share knowledge. If the universities wanted to do that, they could do it right now. They could do it for free, or do it for a contracted payment—no patents required. 

The real goal seems to be finding alleged infringers, accusing them, and raising money. The targets will know that they’re not being offered an opportunity—they’ll be under attack. That’s why the lawyers working with UC have promised the Regents that when it comes time to launch lawsuits against one of the “pre-determined targets,” they will steer clear of small businesses. 

The university LLC isn’t going to license their best patents. Rather, the UC Regents memo admits that they’re planning to license the worst of them—technologies that have not been successfully licensed via a “one patent, one license” transaction by either UCLA or UC Berkeley. 

To be clear, universities aren’t patent trolls. Universities are centers for teaching, research, and community. But that broader social mission is exactly why universities shouldn’t go off and form a patent-holding company that is designed to operate similarly to a patent troll. 

Patents aren’t needed to share knowledge, and dealing with them has been a net loss for U.S. universities. Universities need to re-think their tech transfer offices more broadly. In the meantime, the UC Regents should withdraw from this licensing deal as soon as possible. Other universities should consider doing the same. The people who will benefit the most from this aren’t the public or even the universities, but the lawyers. For the public interest and innovation, having the nation’s best universities supply a patent-trolling operation is a disaster in the making. 

The fifteen members of the University Technology Licensing Program are expected to be: 

• Brown University
• California Institute of Technology (Caltech)
• Columbia University
• Cornell University
• Harvard University
• Northwestern University
• Princeton University
• State University of New York at Binghamton
• University of California, Berkeley
• University of California, Los Angeles 
• University of Illinois
• University of Michigan
• University of Pennsylvania
• University of Southern California
• Yale University

Republished from the EFF's Deeplinks blog.

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Washington State Has Sued A Patent Troll For Violating Consumer Protection Laws

from the state-ags-stopping-trolls dept

Landmark Technology, a patent troll that has spent 20 years threatening and suing small businesses over bogus patents, and received EFF’s Stupid Patent of the Month award in 2019, has been sued by the State of Washington.

Washington Attorney General Bob Ferguson has filed a lawsuit claiming that Landmark Technology has violated the state’s Patent Troll Protection Act, which bans “bad faith” assertions of patent infringement. Following a widespread campaign of patent demand letters, more than 30 states passed some kind of law placing limits on bad-faith patent assertions.

These laws face an uphill battle to be enforced. First of all, the Constitution places important limits on the government’s ability to penalize the act of seeking legal redress. Second, the Federal Circuit has specifically held that a high bar of bad faith must be established for laws that would penalize patent assertion.

Washington’s case against Landmark could be a major test of state anti-troll laws, and whether state anti-trolling and consumer protection laws can dissuade some worst-of-the-worst patent troll behavior.

The lawsuit is filed against “Landmark Technology A,” a recently created LLC that appears to be largely identical to the now-defunct “Landmark Technology.” The new company asserts the same patent against the same type of targets. The patent’s inventor is Landmark Technology owner Lawrence Lockwood.

Over 1,000 Demand Letters

Landmark threatens and sues small businesses over U.S. Patent No. 7,010,508, which was issued to Lockwood in 2006 and claims rights to “automated multimedia data processing network for processing business and financial transactions between entities from remote sites.”

The Washington case reveals just how widespread Landmark’s threats are. From January 2019 to July 2020, Landmark sent identical demand letters to 1,176 small businesses all across the country. Those letters threaten to sue unless Landmark gets paid a $65,000 licensing fee. 

Landmark essentially insists that if you use a website for e-commerce, you infringe this patent. In recent years, it’s filed suit against candy companies, an educational toy maker, an organic farm, and a Seattle bottle maker, just to name a few. 

Or as the Washington State Attorney General put it:

[T]he company broadly and aggressively misuses the patent claims, targeting virtually any small business with a website, seemingly at random. Landmark claims that common, near-ubiquitous business webpages infringe on its patent rights — such as small business home pages, customer login pages, new customer registration and product-ordering pages.

“Landmark extorts small businesses, demanding payment for webpages that are essential for running a business,” Washington Attorney General Ferguson said. “It backs them into a corner — pay up now, or get buried in legal fees. I’m putting patent trolls on notice: Bully businesses with unreasonable patent assertions, and you’ll see us in court.”

According to the AG’s press release, four Washington companies settled for between $15,000 and $20,000 each to avoid litigation costs. The lawsuit seeks restitution for those companies.

The patents created by Landmark owner Lawnrence Lockwood patents have been used in well over 150 lawsuits filed by Landmark Technology and Landmark Technology A; as well as at least 40 cases filed by his earlier company PanIP, which sued dozens of early e-commerce websites by 2003. Given what we now know about the more than 1,000 letters sent just in 2019 and 2020, the litigation record seems like just the tip of the iceberg.

The U.S. Patent and Trademark Office found in a 2014 review that the ’508 patent was likely to be invalid because it didn’t actually explain how to do the things it claimed. However, that case settled before the patent could be invalidated.

The USPTO is an office that labors under industry capture. Its fees are paid by patent owners, and in practice it works for patent owners far too often—not users or small business owners. While review processes like inter partes review (IPR) are useful in restoring some balance to the system, it’s critical that the worst abusers of the patent system be treated as a serious consumer protection problem. It’s certainly worthwhile for states to experiment and try to find ways to deter abuse, within the bounds of due process.

Patent owners who demand licensing fees from hundreds or thousands of individuals based on a patent that clearly should be found invalid, for broadly used web technology, are essentially engaging in widespread extortion, as AG Ferguson states. When patent owners won’t let users set up even a basic, out-of-the-box website without facing a demand letter, it’s not just an economic problem—it’s a threat to free expression.

Republished from the EFF Deep Links blog

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

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

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

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

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

Camera Plus Generic Terms

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

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

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

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

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

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

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

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

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

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

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How Oregon's Top Wildlife Official Got Sued Over His State's Hunting App

from the can-you-patent-following-state-laws? dept

What if you could get a patent on a new government program? Then, you could ask for the government to pay you royalties just for running that program. Nice work, if you can get it.

Oregon resident Iiley Thompson is the named inventor on U.S. Patent No. 10,257,651, “Mobile electronic device for identifying and recording an animal harvest.” Shortly after his patent issued in 2019, Thompson’s lawyers sent a letter to the Oregon Department of Justice, suggesting that the Oregon government take a license to his patent.¹

Thompson claims that the Oregon Department of Fish and Wildlife’s MyODFW app, which allows hunters and anglers to complete their licensing paperwork on a mobile device, infringes his patent.

Claim 1 describes:

• Entering animal harvest data (i.e. how many fish of a certain type you caught) into a computer

• Uploading the harvest data, together with location data, to a second computer (operated by someone else)

• Checking the data against the maximum allowed by the user’s license

In other words, Thompson patented following state laws, and filing the appropriate paperwork, but you know, connected to a powerful computer network. Claim 2 describes the same system, but specifies a mobile device as the first computer and a server as the second.

On January 22, Thompson filed a lawsuit claiming that MyODFW infringes his patent. But he didn’t sue the state or any of its departments—he sued Curt Melcher, the Director of the Oregon Department of Fish and Wildlife, personally.

Making it Personal

Because of a legal concept called sovereign immunity, you generally can’t sue a state government, or any of its departments, for patent infringement. When I saw the Thompson v. Melcher case as I was going through this year’s first patent lawsuits, it struck me as a possible attempt to do an end-run on sovereign immunity.

I ran this hypothesis by Joshua Landau, patent counsel at Computer Communications & Industry Association, who agreed that it did look like a way to put legal pressure on a state when you can’t sue the state. He pointed me to a 1908 Supreme Court case called Ex parte Young, which suggests just this method to get around sovereign immunity. Plaintiffs can sue a state official who they believe is in violation of a federal law. In this case, because Thompson is barred from arguing that the State of Oregon is violating his patent, he’s saying Melcher personally has contributed to the infringement of his patent.

The Ex parte Young route doesn’t provide a way to get damages, only an injunction, and indeed Thompson doesn’t ask for damages in his lawsuit. If Thompson’s extremely broad claims are valid, in my view, that would basically mean shutting down the MyODFW app.

"It certainly looks like an attempt to put pressure on the state, both through legal expenditures, and by threatening to enjoin a service they provide," Landau said. "Suing an individual official is a plausible strategy to try to get around state sovereign immunity in some cases, but there are significant open questions."

Among those questions would be whether or not Melcher has a significant enough connection to the allegedly infringing app. Melcher is a longtime public servant who has served as ODFW’s director since 2015.

Patenting A Government Service Is Pretty Bad

Regardless of who is being sued, Thompson’s patent on e-tagging wildlife is very problematic in and of itself. Most government services aren’t really “inventions.” So there really shouldn’t be patents on collecting benefits, or getting a certain type of state-granted license, or reporting your taxes. And because of the Alice v. CLS Bank Supreme Court case, similar “do it on a computer”-style patents should be banned, as well. We shouldn’t be seeing patents that cover “requesting benefits plus a powerful computer network” or “sending your paperwork to the government oh but on a smartphone.”

But we do see them all the time, because it’s a broken system. Patent examiners have, on average, 19 hours to prove applicants like Iiley Thompson should not get a patent.² Applicants get an unlimited number of do-overs, as long as they can keep paying for them.

Thompson’s patent application was filed in 2015. At that date, it was utterly predictable that government services like hunting licenses would continue to move online, as they already had been for many years.

And it wasn’t just predictable in a general sense—it was specifically predictable that Oregon regulators would move their hunting licenses to smartphones. They were already moving other ODFW services to smartphones, and were being as public about it as possible. By late 2014, about a year before Thompson filed his patent application, the Department linked smartphones to its hunting map. This was reported in The Oregonian, the state’s largest newspaper. By mid-2015, ODFW had come out with a fishing-specific app, which was reported in the Klamath Falls Herald and News.

So it’s hardly shocking that in March 2016, ODFW got started thinking about how they could improve their licensing process. The timeline for Oregon’s creation of electronic licensing is laid out in this ODFW PowerPoint.

Notably, Thompson never actually created his own app, at least not one that’s ever been made publicly available. As his complaint states, “Thompson has never offered nor sold, and has never authorized nor licensed any other to offer or sell, a system or method covered by the claims of the ‘651 patent.”

Thompson runs a footwear business in a town just south of Portland, and has an extensive resume of work in that industry, including stints at Adidas and Nike. I asked Thompson to talk about his case to get his side of it, but he declined an interview. I also emailed the public information office at the Oregon Department of Fish and Wildlife, but didn’t hear back.

¹ Patent demand letters frequently do not make explicit “demands,” but rather couch the language in terms of making an “offer” to license or buy a patent. But, it’s generally understood to be a demand for payment. It puts the recipient officially on notice, which can have other effects, like increasing damages. More examples of demand letters are at trollingeffects.org.

² Frakes, Michael and Wasserman, Melissa F., The Failed Promise of User Fees: Empirical Evidence from the U.S. Patent and Trademark Office (December 2014). Journal of Empirical Legal Studies, Vol. 11, Issue 4, pp. 602-636, 2014. For something free and more readable, see this 2014 piece in The Washington Post, “Inside the stressed-out, time-crunched patent examiner workforce.”

Originally posted to the Letters Patent blog.

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How Landmark Technology's Terrible Patent Has Survived

from the stupid-patent-of-the-decades dept

Stupid Patent of the Month

There’s an increasing insistence from the highest echelons of the patent world that patent abuse just isn’t a thing anymore. The Director of the U.S. Patent Office, Andre Iancu, has called patent trolls—a term for companies that do nothing but collect patents and sue others—mere “monster stories,” and suggested in a recent oversight hearing that it was simply name-calling. 

But whatever you call them—trolls, non-practicing entities, or patent assertion entities—their business model, which involves stockpiling patents to sue productive companies rather than making goods or services, continues to thrive. It’s not hard to find examples of abusive patent litigation that make clear the threat posed by wrongly-issued patents is very real.

Take, for instance, the patents that Lawrence Lockwood owns. These patents have been used to sue companies, large and small, for nearly 20 years now. Through his company Landmark Technologies and his earlier company PanIP, more than 100 lawsuits have been filed against businesses—candy companies, an educational toy maker, and an organic farm, to name a few. Because these companies engage in “sales and distribution via electronic transactions,” or use an automated system “for processing business and financial transactions,” Landmark says they infringe one of its patents.

Those lawsuits don’t account for the other companies that have received licensing demands, but have not been sued in court. The numerous threats made with Lockwood’s patents are made clear both by news accounts of Lockwood’s activity, as well as the several small business owners that have reached out to EFF after being targeted by Lockwood’s patents. 

Patent Office records show Lockwood first applied for a patent in 1984, but his litigation ramped up after he acquired U.S. Patent No. 6,289,319 back in September 2001. The document describes an “automatic business and financial transaction processing system,” which Lockwood has interpreted to give him rights to demand licensing fees from just about any web-based business. Upon receiving that patent, Lockwood promptly sent 100 letters to various e-commerce businesses, demanding $10,000 apiece. When that didn’t work, he started filing lawsuits.

For more than 15 years now, some companies have been paying thousands of dollars to license Lockwood’s patents rather than pay the legal fees required to defend themselves. Hiring attorneys to fight the patents would have cost far more, and Lockwood was keenly aware of this leverage.

“Do they really want to spend $1 million and two years of their life to invalidate a patent they can license for a couple thousand dollars?” Lockwood said in 2003, speaking to a Los Angeles Times reporter about his lawsuits. “People get divorced over this stuff. They have strokes over this.”

Sixteen years and more than 100 lawsuits later, stress and the expenses continue to mount for Lockwood’s targets. Through Landmark, Lockwood continues to demand money from businesses that provide basic e-commerce, although his price has gone up. Companies targeted by Landmark Technology patents in recent years have shown demand letters [PDF, PDF] indicating the company now demands around $65,000 to avoid a lawsuit. 

Not a single court has ever weighed in on the merits of Lockwood’s patent claim, according to court papers [PDF] filed in 2017 by one of his targets. 

Despite some court rulings that have helped cut back patent trolling over the years, nothing has slowed down Lockwood’s broad assault on Internet commerce. This year, through a newly created company called “Landmark Technology A,” Lockwood’s patent no. 7,010,508—related to the ‘319 patent that came before it—has been used to sue two more companies: a specialty bottle-maker in south Seattle, and an Ohio company that sells safety equipment. 

Based on Landmark’s history, it’s unlikely these two lawsuits will be the last. 

Continuations and Consequences

How did this happen, and how does it continue? Lockwood applied for his first solely-owned patent in 1984, getting it two years later. It describes a network of “information and sales terminals” that could “dispens[e] voice and video information, printed documents, and goods,” accepting credit card payments. There’s no evidence Lockwood developed any such network or even had the ability to do so. In fact, Lockwood, a former travel agent, reportedly admitted during a deposition that he had never used a personal computer “for any length of time,” according to the 2003 Los Angeles Times profile.  

In the mid-90s, Lockwood sued American Airlines for patent infringement, seeking to collect royalties on its SABRE flight reservation system, which he claimed infringed three of his patents. He lost that case when, in 1997, an appeals court agreed with the district court that his patent claims were not infringed and were invalid.

That wasn’t the end of Lockwood’s efforts to make money through patent litigation, though. He continued to get more patents, acquiring Patent No. 6,289,319 in 2001, and 7,010,508 in 2006. Both patents have been used in more than 85 lawsuits, according to the LexMachina legal database. He was able to get those patents despite the fact that they were based on a patent that had been found invalid. Even better for Lockwood, he was allowed to use the “priority date” of the earlier patent. That means the only prior art that could be used to invalidate the patent would have to be from earlier than that priority date—May 24, 1984. 

Led by a family-owned chocolate shop, a group of small businesses banded together to share legal costs and fight Lockwood’s PanIP. When they put up a website about PanIP’s abuse of the system, Lockwood sued the owner of the chocolate shop for defamation and trademark infringement.

The ‘319 patent, which is richly deserving of our “Stupid Patent of the Month” award, was issued because of a problem we’ve spoken about before—abuse of the continuation process.

The Patent Office allows applicants to file “continuation” applications with new claims, as long as they’re based on what was disclosed in previously-filed applications. This creates opportunities for applicants to game the system and get patents on advances they could not have developed. For example, even though Lockwood applied for the ‘319 patent in 1994, it’s a continuation of the original 1984 application—which means that only prior art from 1984 or earlier can be used to invalidate it. 

Landmark’s complaints demand money from operating businesses, claiming that because their systems process “business and financial transactions between entities from remote sites,” they infringe the ‘319 patent. Their recent complaint [PDF] against Illinois-based Learning Resources, Inc. includes a claim chart [PDF] explaining the alleged infringement, which is a 42-page detailed chart that describes using a computer to order a toy on the defendant’s website. 

That chart makes clear that Landmark’s patent doesn’t claim any particular technological advance—just the basic idea of transmitting data between networked computer terminals.  

This patent should be invalid under Section 101 of the patent laws for failing to claim an actual invention. At best, it describes basic computer technology—like an “on-line means for transmitting said information, inquiries, and orders”— to exchange information, and respond to orders. That is a ubiquitous and essential part of e-commerce, not a patent-eligible invention.

Right now, lobbyists are pushing for a wholesale re-write of Section 101, which is the best chance of stopping patents like this one early enough in a case to avoid spending hundreds of thousands of dollars on lawyers and expert witnesses. Drastic alterations to Section 101 could leave targets of Landmark in an even worse position—in order to get out of a multi-million dollar lawsuit, they’ll have to find published, pre-1984 prior art describing the precise, nearly indefinable contours of Lockwood’s “invention,” and invest huge sums on prior art investigations as well as expert witness reports. 

Before lawmakers distort Section 101 so that it’s nearly useless, they should consider campaigns like Landmark’s. It involves an “inventor” who’s long been focused on litigating patents, not creating new innovations—and who admits to leveraging the high cost of litigation defense against small businesses. Lowering the bar for patent-eligibility even further will do far more to threaten innovation than encourage it.

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

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Stupid Patent Of The Month: IBM's Software Patent On Texting And Driving

from the distracted-patent-approvals dept

In the smartphone era, "distracted driving" is a serious, and well-known, problem. Official warnings about poor driving habits are as old as the automobile itself. The New York Times published a Pulitzer-winning series on distracted driving back in 2009.

Increasingly, technological assists are available for those seeking to manage their smartphone's distractions while in the car. Apple integrated a "do not disturb while driving" mode into iOS 11, and Google has long had similar functionality in its Android Auto app. Multitudes of third-party smartphone apps exists to address the issue. Finally, more than 50 companies are working on what may be the ultimate solution to distracted driving: autonomous vehicles.

Unfortunately, the U.S. patent system creates warped incentives for emerging software fields like road-safety features. Rather than competing in a challenging space, some players are seeking broadly-worded patents, then hope to sit back and extract profits later.

That may be the strategy of the International Business Machine Corp., which has acquired more U.S. patents than any other company for decades now. This week, IBM was awarded U.S. Patent No. 10,191,462, describing a "Vehicle electronic receptionist."

IBM likely has the resources to make technology to manage communications while driving. But the '462 patent describes nothing of the sort. Instead, IBM's patent simply describes a computerized decision-making process.

The patent's Claim 1 describes a computer system that determines the "driving context" of a vehicle; analyzes an incoming communication; and then determines an "electronic action" in response, considering various weights and risk factors. The electronic action could be "taking a message, providing a silent or audible notification… [or] providing an automated response."

Other claims add more layers to the analysis, like considering road conditions, doing voice analysis on a voicemail, or considering whether a passenger is sleeping before deciding to put a call through.

Essentially, IBM has described a futuristic car computer system that will analyze the driving conditions and the context of an incoming text or call, then use some unspecified type of AI to decide what to do about the communication. The specification is filled with empty platitudes typical of software patents, like "[t]he computer system may be described in the general context of computer system executable instructions, such as program modules, being executed by a computer system." Aside from hand-waving like this, the patent has essentially no information about how one would actually create the claimed system.

IBM: Ignore the "Troll Scare"

Some of the claims describe good ideas that could be useful parts of automotive software in the future. But the patent is just that—a list of ideas, not instructions for executing the ideas or creating anything. IBM's patent offers no code, no algorithms, not even a vague description of how the rules might work.

We've seen this problem before, in which the Patent Office awards a patent not to the first proven inventor, but to the first applicant who describes a task using technological and legal jargon that patent professionals respect. The Patent Office and the Federal Circuit have been far too willing to approve patents that merely state the idea of applying rules without even specifying what those rules are. The public gains nothing from companies getting patents on the mere idea of using an algorithm to solve a particular problem. Patents like the '462 patent leave all of the hard work—actually writing, debugging, and deploying software that solves the problem under real-world conditions—as an exercise for the reader. And they allow IBM to exclude the public from making or creating any of the wide range of algorithms that these broad patent claims could ensnare.

In our view, IBM's new patent should fail under the Supreme Court's Alice v. CLS Bank decision, which holds that you can't patent basic decision-making processes by adding references to generic computer hardware and software. Given that, it may come as no surprise that IBM is lobbying to throw out the Alice precedent. In a recent interview, top IP executives from IBM explained their plans to demolish Alice by getting Congress to re-work Section 101 of the patent laws, which bars abstract patents. "Every time we try to enforce a patent, we get a 101 defense that comes back at us," said IBM Chief Patent Counsel Manny Schecter. IBM VP Mark Ringes said he's hearing "positive messages from Congress" about changing Section 101 to better suit big patent owners.

Ringes went so far to claim that the "troll scare is largely just noise now." That assertion flies in the face of the patent litigation landscape. By one estimate, about 90 percent of patent lawsuits filed last year in the tech sector were filed by non-practicing entities. IBM appears to be downplaying the damage done by patent trolls because its business interests have become aligned with them. IBM collected more than 9,000 patents in 2017 alone. It uses that massive storehouse of IP to fuel a licensing business that earns more than $1 billion per year

In some cases, that means IBM can let other companies battle for dominance in a particular sector, then step in and demand licensing payments when it's clear who can pay. There's less need for IBM to build new social media apps, when the company can use a patent threat to collect $36 million from Twitter right before its IPO. There's less need to build an e-commerce business, when IBM can sue Amazon over an "electronic catalog" patent that dates back to 1994.

Make no mistake: IBM has an incentive to pile up overly broad patents like this one because these patents might allow it to extract revenues from other companies' future products. A broken patent system encourages companies to use patents, rather than products, to assure dominance in key sectors like driving communications and autonomous driving. Getting rid of Alice would only make the system worse and lead to another flood of do-it-on-a-computer patents. We hope Congress agrees.

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

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Stupid Patent of the Month: Trading By Tweet

from the uspto-messing-up-again dept

We've written many times about how the patent system is a poor fit for software. Innovation in the U.S. software industry happens despite, not because of, the thousands of software patents that are granted each year.

But software is not the only industry where patents make very little sense. In the 1990s, the Federal Circuit opened the door to patents on methods of doing business. While the Supreme Court tried to undo some of that damage, financial institutions are still hit with patent lawsuits. Many of these suits come from trolls that don't produce anything. And yet, just as in the tech sector, there are some financial companies that keep heading back to the U.S. Patent and Trademark Office seeking a 20-year monopoly on some tactic or another.

This month, we're highlighting U.S. Patent Number 10,147,140, which was recently granted to BNY Mellon Bank. The first claim of the '140 patent uses a lot of financial jargon to describe an extremely simple process: checking social media for a particular event or statement, then making a trade based on that "investment triggering content." One example of that: making a trade because someone put a hashtag in a tweet.

Even if this was a new product idea or investment strategy, it is not a new invention. The trend of stock market trading has been clear now for decades: automated trading has become faster and more computerized each year. BNY Mellon Bank did not invent computerized trading, social media, or anything else remotely technical. Rather, its patent proposes the idea of trading based on a social media event.

In the patent prosecution documents, the patent examiner even starts out by admitting that "the concept described in claim 1 is not meaningfully different than the economic concept… found by the courts to be an abstract idea." Appropriately, the examiner cited Alice v. CLS Bank, which forbids "do it on a computer"-type patents. Similarly, Alice should clearly forbid patents on very old practices, like trading stocks, and simply adding in "social media monitoring.

But then the examiner goes on to agree with the applicant's specious argument that just because the claim has additional limitations—such as "using a processor to withdraw[] funds from a customer financial account and then purchase shares," and an interface that shows social media information—it becomes eligible. "When viewed as an ordered combination, the additional limitations amount to significantly more than the abstract idea," the examiner concludes, "[t]he idea is patent eligible."

Adding generic computer processes shouldn't have made this patent eligible. So how does it happen? One big problem is that incentives in the patent application process line up to favor the granting of patents. Patent examiners are graded through a "count" system that gives them progressively less credit as persistent applicants file new amendments, arguments, requests for continued examination, and continuation applications. This system makes it impossible for the Patent Office to ever finally reject an application. There is only one way for the Patent Office to get rid of a persistent applicant: give them a patent.

In this case, the BNY Mellon's lawyers essentially just pounded their fists on the table. They offered nothing more than the bare insistence that the patent included an "ordered combination," and that should negate the Alice rules. "There was no showing that the combination as a whole failed to provide an inventive concept," wrote the applicants. The examiner simply gave up and issued a patent that is plainly ineligible under Alice and many other cases.

We've written before that the Patent Office needs to do a better job applying Alice. Unfortunately, the new Director appears to want the opposite. Other lobbyists are pushing for legislation to undo Alice entirely. If they get their way, we can expect another flood of silly patents on business methods and software.

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

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Stupid Patent Of The Month: Upaid Sues 'Offending Laundromats' For Using Prepaid Cards

from the offending-laundromat? dept

When patent trolls threaten and sue small businesses, their actions draw the public's attention to the worst abuses of the patent system. In 2013, a company called MPHJ Technology got called out in a U.S. Senate hearing as a "bottom feeder" engaged in "garden-variety extortion" after it sent out thousands of demand letters demanding payments from small businesses that dared to use printers with "scan-to-email" functions. Lawmakers, understandably, found it incomprehensible that broad, stupid patents were being used to sue burger stands and grocery stores.

There's a good reason for that concern. It's hard to see how lawsuits against small businesses using basic technology do anything to "promote the progress of science and the useful arts." By contrast, it is easy to see how these lawsuits harm companies and consumers by increasing the costs and risks of doing business.

But the intermittent public attention hasn't stopped this most basic abuse of the patent system. Upaid Ltd., a shell company based in the British Virgin Islands, has been filing patent infringement lawsuits throughout 2018, including 14 against laundromats—yes, laundromats—from California to Massachusetts.

Upaid says that laundromats are infringing U.S. Patent No. 8,976,947. Claim 1 of the patent describes a computer system that performs "pre-authorized communication services and transactions," after checking an account to see if a user "has a sufficient amount currently available for the … transaction." It's essentially a patent on having a prepaid account for—well, anything.

Right now, Upaid lawyers are focused on systems run by Card Concepts, Inc., a service provider that markets a system called Laundry Card to laundromats. Many of the Upaid's complaints simply point to online photos of the laundromats and the relevant card dispensers as evidence of infringement.

This incredibly broad patent was granted in 2015, but dates to a series of applications stretching back to 1998. Even in 1998, a prepaid account was not an inventive concept. It's a basic and longstanding idea, that isn't improved by adding verbiage about a "plurality of external networks" and a "computer readable medium."

And that's exactly the argument that lawyers for Card Concepts Inc. made [.pdf] when they got sued by Upaid last year. CCI has rightly argued that the patent should be invalidated as abstract under the Alice decision. CCI's motion may well succeed in defending their customers—at some point.

Meanwhile, though, Upaid has unleashed 14 lawsuits against laundromats in different states, and has promised more. Faced with the prospect of paying a lawyer, even if just to buy time, some of those small businesses are likely to pay unjustified licensing fees for this patent.

In fact, it has begun to happen. Last week, UPaid put out a press release boasting that a Houston-based facility called 24 Hour Laundry had agreed to pay them. Laundromats in Kansas, Massachusetts, and Monterey, California are next up on the list.

"When required, we will strenuously enforce our rights through litigation against offending laundromats," warned Upaid CEO Simon Joyce. "Our recent settlement reveals that many parties are not aware that the card equipment critical to their successful laundry business infringes our patents."

Upaid's behavior is brazen, but it is not an anomaly. Other patent trolls have waged campaigns against small businesses that merely use off-the-shelf technology. For example, Innovatio IP Ventures sent thousands of letters targeting hotels and cafes that provide Wi-Fi for customers. In Upaid's case, the company's website doesn't list any products or services, but states that it is engaged in "ongoing development" of "intellectual property related to mobile commerce systems."

Lawsuits against small, non-technology business show how trolls exploit the patent system. The costs to challenge a wrongly granted patent are high—defending a patent lawsuit through a jury trial can cost millions of dollars. Faced with the possibility of that kind of "winning," small businesses will often fold.

Yet this year, patent maximalists are actually talking about rolling back the key changes to patent law that give small businesses a fighting chance. The Alice Corp. v. CLS Bank decision has stopped hundreds of "do it on a computer" style patents in their tracks. Meanwhile, inter partes review, a process that can get wrongly issued patents thrown out at a lower cost, are also under attack.

Instead of considering patent bills that move in exactly the wrong direction, like last year's STRONGER Patents Act, Congress should consider legislation focused on how to help the smallest businesses from being roped into unjustified and expensive patent disputes.

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

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Stupid Patent of the Month: Alleged Cult Leader Wants to 'Improve Performance'

from the can-we-improve-the-performance-of-the-uspto dept

In April, Mexican federal police arrested Keith Raniere, taking him from the $10,000-per-week villa where he was staying and extraditing him to New York. According to the NY Daily News, Raniere, leader of self-help group NXIVM (pronounced "nexium"), is now being held without bail while he awaits trial on sex-trafficking charges. Through NXIVM, he preached "empowerment," but critics say the group was a cult, and engaged in extreme behavior, including branding some women with an iron.

This was not the first controversial program Raniere was involved in. In 1992, Raniere ran a multilevel marketing program called "Consumer Buyline," which was described as an "illegal pyramid," by the Arkansas Attorney General's office. More recently, he has collected more than two dozen patents from the U.S. Patent Office, and has more applications pending—including this one, which is for a method of determining "whether a Luciferian can be rehabilitated."

The USPTO has granted Raniere protection for a variety of curious inventions, including a patent on "analyzing resonance," which eliminates unwanted frequencies in anything from musical instruments to automobiles. Raniere also received a patent on a virtual currency system, which he dubbed an "entrance-exchange structure and method." He applied for a patent on a method of "active listening," and received patents on a system for finding a lost cell phone, and a way of preventing a motor vehicle from running out of fuel. NXIVM members reportedly identified their levels with various colored sashes, which helps explain Raniere's design patent on a "rational inquiry sash."

Today, we're going to focus on Raniere's U.S. Patent No. 9,421,447, a "method and apparatus for improving performance." The patent simply adds trivial limitations to the basic functioning of a treadmill, like timing the user and recording certain parameters (speed, heart rate, or turnover rate.) Since most modern treadmills allow users to precisely measure performance on a variety of metrics, the patent is arguably broad enough that it could be used to sue treadmill manufacturers or sellers.

Given Raniere's litigation history, that's not such a remote possibility. NXIVM has sued its critics for defamation—enough that the Albany Times-Union called NIXVM a "Litigation Machine." And Raniere sued both AT&T and Microsoft for infringement of some patents relating to video conferencing. The latter suit ended very badly for Raniere, who was ordered to pay attorneys' fees after he couldn't prove that he still had ownership of the patents in question. So it's worth taking a look at how Raniere got the ‘447 patent.

Raniere's Law ™

Raniere has never been shy about proclaiming how special he is. His bio on a website for Executive Success Programs, a series of courses run by NXIVM, explains that he could "construct full sentences and questions" by the age of one, and read by the age of two. Raniere was an East Coast Judo Champion at age 11, recruits are told, and he entered college at Rensselaer Polytechnic Institute by age 16. The honorifics continue:

He has an estimated problem-solving rarity of one in 425,000,000 with respect to the general population. He has intellectual patents pending in the areas of human potential and ethics, expression, voice and musical training, athletic performance, commerce, education and learning, information processing and human modeling. He also holds several technological patents on computer inventions and a sleep guidance system.

Raniere may be able to convince NXIVM followers that he is a one-in-425 million level genius. A new article from Vanity Fair explains that, inside NXIVM, Raniere's patents were often used as evidence of his brilliance. But how did Raniere convince the US Patent and Trademark Office of his inventing abilities?

Ultimately, he didn't really have to. Taking a close look at the history of Raniere's patent application shows how the deck is stacked in favor of a determined, well-funded applicant. For someone who's determined to prove they're a great inventor, and is reasonably well-funded, the patent office can ultimately be cowed into compliance.

In this case, Raniere's original patent application claimed a "performance system" with a "control system" and a sensor for monitoring "at least one parameter." His examples went beyond exercise: he intended to patent humans making mathematical calculations at increasing speed, or a weightlifter decreasing the time between repetitions.

Appropriately, the examiner rejected all 13 of his proposed claims. But nothing stops patent applicants from coming back and trying again—and again—and that's exactly what Raniere did. To his bare-bones description of a "performance system" he added this dose of jargon:

Wherein said control system includes a device to determine a point of efficiency, said point of efficiency occurring when the linear proportional rate of change in [] at least one parameter of the subject being trained varies rapidly outside of the state of accommodation and the range of tolerance.

Whew! That's a lot of verbiage just to explain that the same "performance system" is measuring how fast changes occurs. The patent would be infringed by any treadmill that could measure a changing variable. Even though earlier patents had described essentially the same thing—Raniere's lawyers insisted that his idea of measure the "rate of change" was "completely different" from a system that used a "precalculated range."

The examiner rejected Raniere's application again, noting that an older patent for an exercise bike attached to a video game still fulfilled all the elements of Raniere's new, jargon-filled patent.

But Raniere simply paid $470 to file a "request for continued examination," and kept pounding his fist on the proverbial table. Raniere, or his lawyers, bloated Claim 1 up with yet more language about the point of efficiency occurring "just prior to the subject no longer being able to accommodate additional stress" and entering a state of exhaustion, and claimed now that it was this more narrow description that was his stroke of genius.

"Nowhere in [earlier patent] Hall-Tipping is it suggested that the user be exercised to the point of exhaustion," pointed out Raniere's lawyers, this time around.

Rejected again, they had an interview with the examiner before coming back with yet another $470 "continued examination" request. Then Raniere loaded up Claim 1 with almost twice as much language about the system repeating itself, and re-measuring new "points of efficiency."

This went on and on [PDF], with Raniere continuing to change language and add limitations. Eight times, the examiner threw out every single one of his claims. Finally, after he added language about the "range of tolerance" being plus or minus two percent, his claims were allowed.

In his specification, Raniere was typically un-self-effacing. He crowed that he had created "Raniere's Maximal Efficiency Principle™" or "Raniere's Law™." (The guy is clearly into branding.)

Unfortunately, this is par for the course. Determined patent applicants get an endless number of chances to create a piece of intellectual property that just barely avoids all the other patents and non-patent art that overworked patent examiners are able to find. The strategy is: find a basic process, and slowly add limitations until you get a patent. That's how we get patents on filming a yoga class and Amazon's patent on white-background photography. The fault lies not so much with the examiner here, but with the Federal Circuit for interpreting patent law's obviousness standard in a way that effectively prohibits the Patent Office from relying on common sense.

So what's the solution? We need the Federal Circuit to apply the Supreme Court's decision in KSR v Teleflex more faithfully and allow the Patent Office to use common sense when faced with mundane claims. We also need to defend the Alice v. CLS Bank ruling so that examiners can reject patents that claim abstract ideas implemented with conventional tools (like treadmills). Patent law should also be changed so that applicants don't get an endless number of bites at the apple.

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

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Stupid Patent Of The Month: Facebook Joins The Online Dating Arms Race

from the social-dating-is-patent-protected dept

Earlier this month, Facebook announced that it will wedge its way into an already-crowded corner of online commerce. The social networking site plans to use its giant storehouse of personal data to create a dating service, promising to help users find "meaningful relationships," not just "hookups," as Facebook CEO Mark Zuckerberg put it.

It remains to be seen whether Facebook's new service will be a "Tinder-killer" that users flock to, or a flop for a company that's long been beset with privacy concerns. But there's one thing Facebook, its competitors, and its detractors should all be able to agree on. When a new dating service launches, it should rise or fall based on whether it can win the trust of users—not an arbitrary race to the Patent Office.

Unfortunately, well before it built and launched an actual dating service, Facebook engaged in just such a race. The company applied for a stupid patent on "social dating" back in 2013, and earlier this year, the Patent Office granted the application.

Take Established Methods, Add One "Social Graph"

Online dating is a perfect example of a software-based business that truly doesn't need patents to be innovative. Companies have built such services based on what they hope will be useful or attractive to different groups of users, rather than engaging in arguments over who did what first. Patent tiffs are particularly pointless in a space like online dating, which builds on a long history of pre-digital innovation. Placing personal ads in newspapers has a history that dates back more than a century.

The first claim of Facebook's US Patent No. 9,609,072 describes maintaining a "social graph" of user connections, then allowing one to request "introductions" to friends-of-friends. Subsequent claims are variations on the theme, like allowing users to include "preferences" and rank their possible matches.

This application should have been rejected under the U.S. Supreme Court's 2014 decision in CLS Bank v. Alice. In that case, the high court made it clear that simply adding "do it on a computer"-style jargon to long-established ways of doing business wasn't enough to get a patent. Unfortunately, here, the Patent Office allowed Facebook to pull a similar trick. The company essentially took the idea of introducing available singles through friends-of-friends, added graphics, profiles and the "social graph," and then got a patent on it.

The idea of finding good matches is positively ancient, whether people have been looking for the right lover, the right product, or the right business partner. It doesn't warrant a patent, and when patent trolls have claimed otherwise, they haven't fared well in court.

"Having two or more parties input preference data is not inventive," wrote U.S. District Judge Denise Cote in 2013, as she dismantled the patent of a shell company called Lumen View Technology LLC. "Matchmakers have been doing this for millennia."

Patently Pointless

To be fair to Facebook, the company may have felt compelled to get its own stupid patent because there are so many other stupid online dating patents out there. In a phenomenon that's the patent equivalent of "mutually assured destruction," many tech companies have stockpiled poor-quality Internet patents simply to have a threat to fight off other companies' poor-quality Internet patents. This arms race, of course, costs many millions of dollars and benefits no one other than patent system insiders.

In the world of online dating, wasteful, anti-competitive patent litigation isn't just theoretical. Earlier this year, Match Group sued up-and-comer Bumble for patent infringement. The suit was brought shortly after Match reportedly tried to purchase Bumble. And in 2015, Jdate sued Jswipe, accusing their competitor of infringing U.S. Patent No. 5,950,200, which tried to claim the idea of notifying people that they "feel reciprocal interest for each other." It was a basic patent that sought to encompass just about the whole concept of a dating service.

This growing web of stupid patent claims won't stop Facebook from getting into online dating. It won't stop Facebook's giant competitors, like Match Group or IAC. But for an entrepreneur who wants to start a new business, the costly dueling patent claims will be a barrier. The battle to win the hearts and minds of online daters should be won with apps and code, not with patents.

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

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Stupid Patent Of The Month: Suggesting Reading Material

from the how-about-reading-the-alice-decision? dept

Online businesses—like businesses everywhere—are full of suggestions. If you order a burger, you might want fries with that. If you read Popular Science, you might like reading Popular Mechanics. Those kinds of suggestions are a very old part of commerce, and no one would seriously think it's a patentable technology.

Except, apparently, for Red River Innovations LLC, a patent troll that believes its patents cover the idea of suggesting what people should read next. Red River filed a half-dozen lawsuits in East Texas throughout 2015 and 2016. Some of those lawsuits were against retailers like home improvement chain Menards, clothier Zumiez, and cookie retailer Ms. Fields. Those stores all got sued because they have search bars on their websites.

In some lawsuits, Red River claimed the use of a search bar infringed US Patent No. 7,958,138. For example, in a lawsuit against Zumiez, Red River claimed [PDF] that "after a request for electronic text through the search box located at www.zumiez.com, the Zumiez system automatically identifies and graphically presents additional reading material that is related to a concept within the requested electronic text, as described and claimed in the '138 Patent." In that case, the "reading material" is text like product listings for jackets or skateboard decks.

In another lawsuit, Red River asserted a related patent, US Patent No. 7,526,477, which is our winner this month. The '477 patent describes a system of electronic text searching, where the user is presented with "related concepts" to the text they're already reading. The examples shown in the patent display a kind of live index, shown to the right of a block of electronic text. In a lawsuit against Infolinks, Red River alleged [PDF] infringement because "after a request for electronic text, the InText system automatically identifies and graphically presents additional reading material that is related to a concept within the requested electronic text."

Suggesting and providing reading material isn't an invention, but rather an abstract idea. The final paragraph of the '477 patent's specification makes it clear that the claimed method could be practiced on just about any computer. Under the Supreme Court's decision in Alice v. CLS Bank, an abstract idea doesn't become eligible for a patent merely because you suggest performing it with a computer. But hiring lawyers to make this argument is an expensive task, and it can be daunting to do so in a faraway locale, like the East Texas district where Red River has filed its lawsuits so far. That venue has historically attracted "patent troll" entities that see it as favorable to their cases.

The '477 patent is another of the patents featured in Unified Patents' prior art crowdsourcing project Patroll. If you know of any prior art for the '477 patent, you can submit it (before April 30) to Unified Patents for a possible $2,000 prize.

The good news for anyone being targeted by Red River today is that it's not going to be as easy to drag businesses from all over the country into a court of their choice. The Supreme Court's TC Heartland decision, combined with a Federal Circuit case called In re Cray, mean that patent owners have to sue in a venue where defendants actually do business.

It's also a good example of why fee-shifting in patent cases, and upholding the case law of the Alice decision, are so important. Small companies using basic web technologies shouldn't have to go through a multi-million dollar jury trial to get a chance to prove that a patent like the '477 is abstract and obvious.

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

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Stupid Patent Of The Month: Buying A Bundle Of Diamonds

from the assignor-estoppel dept

This month's Stupid Patent shows what happens when the patent system strays outside its proper boundaries. US Patent No. 8,706,513 describes a "fungible basket of investment grade gems" for use in "financial instruments." In other words, it's a rating and trading system that attempts to turn diamonds into a tradeable commodity like oil, gold, or corn.

Of course, creating new types of investment vehicles isn't really an invention. And patents on newfangled financial techniques like this were generally barred following Bilski v. Kappos, a 2008 Supreme Court case that prevents the patenting of purely financial instruments. Since then, the law has become even less favorable to abstract business method patents like this one. In our view, the '513 patent would not survive a challenge under Bilski or the Supreme Court's 2014 decision in Alice v. CLS Bank.

Despite its clear problems, the '513 patent is being asserted in court—and one of the people best placed to testify against the patent may not be allowed to.

The public's right to challenge a patent in court is a critical part of the US patent system, that has always balanced the exclusive power of a patent. It's especially important since patents are often granted by overworked examiners who get an average of 18 hours to review applications. 

But there are two types of persons that, increasingly, aren't allowed to challenge problematic patents: inventors of patents, and even partial owners of patents. Under a doctrine known as "assignor estoppel," the Federal Circuit has barred inventors from challenging patents that they acquired for a former employer. Assignor estoppel was originally meant to cover a narrow set of circumstances—inventors who engaged in fraud or bad dealing, for instance—but the nation's top patent court now routinely applies it to prevent inventors from challenging patents.

Patent scholar Mark Lemley flagged this problem in a 2016 paper, noting assignor estoppel could be used to control the free movement of employees or quash a legitimate competitor. "Inventors as a class are put under burdens that we apply to no other employee," he wrote. "If they start a company, or even go to work for an existing company in the same field, they will not be able to defend a patent suit from their old employer."

In this case, the Federal Circuit's expansive view of assignor estoppel may prevent a person who owned just a fraction of a patent from fighting back when that patent gets used in an attempt to quash a competing business.

Despite the fact that this gemological trading system should never have been granted a patent, so far, it's being successfully used by its owner to beat up on a competitor—and the competitor could be barred from even challenging the patent by assignor estoppel.

Competing Diamond Companies

GemShares was created in 2008 to market "diamond investment products." The original partners were joined in business by a man named Arthur Lipton, who bought 20% of GemShares in 2013. He struck a deal not to compete with GemShares.

GemShares says [PDF] Lipton broke that deal in 2014, when he started working on his own project, a "secure diamond smart card," and filed for patents related to it. But in addition to breach of contract, GemShares sued for patent infringement. They said Lipton's new business violated the '513 patent.

The litigation also involves breach of contract claims, and allegations of fraud from Lipton's former partner. Without getting into the weeds on all that, the defendant in this case may not even be allowed to argue that the "gem financial product" patent is invalid. Earlier this month, the judge overseeing the case issued an order [PDF] noting that "the Federal Circuit has upheld the doctrine of assignor estoppel, which precludes an inventor-assignor of a patent sued for infringement from arguing the patent's invalidity."

The Federal Circuit has made assignor estoppel so powerful, in fact, that Lipton's 20% ownership contract with GemShares may be enough to stop him and his lawyers from mounting an invalidity defense.

It's bad policy to stop the public from challenging bad patents, and assignor estoppel should only be used in narrow cases, like outright fraud. As it's been applied by the Federal Circuit, it's destined to be used in exactly the way that Lemley warned it would—as an anticompetitive cudgel.

We agree with the brief signed by Lemley and more than two dozen other law professors [PDF] in EVE-USA, Inc. v. Mentor Graphics Corp., arguing that the Supreme Court should take up this issue and keep assignor estoppel within the narrow limits it originally intended.

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

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