Apple Ordered to Pay $625M to Patent Troll in FaceTime Lawsuit
techcrunch.com
techcrunch.com
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=H...
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=H...
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=H...
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=H...
"East Texas Jury"...
> But why do patent plaintiffs, especially trolls, see it as such a favorable forum? Partly, the district's relatively rapid litigation timetable can put pressure on defendants to settle. But other local practices in the Eastern District also favor patentees. And, in our view, they do so in a way that is inconsistent with the governing Federal Rules, and work to mask the consistent refusal by the courts in the Eastern District to end meritless cases before trial.
More trials should mean more money for lawyers in the area, judges, ancillary people like stenographers and clerks.
It's like a tourism business except instead of being a nice place that people want to go, you drag them there with $625M blackmail.
The people on these juries know that if they stop being a haven for patent trolls, the cash cow goes away.
If they changed something so caseload fell by 75%, do you think some judges might lose their job?
https://en.wikipedia.org/wiki/United_States_federal_judge#Te...
No Federal judge has ever been fired due to a reduction in the number of positions on the judge's court. (It's quite possible that a decreased caseload could result in fewer new judicial confirmations, but that affects would-be judges, not presently-serving judges.)
Courts in the US are given an extremely high degree of independence, in the goal of limiting corruption.
And exactly the opposite ended up happening in this case, isn't it? Corruption is a world-wide problem, but I don't know how widespread it is in developed countries. And its the same problem, people sitting at the top don't have authority to curb the ground-level corruption. Here in India at least, the government has started implementing something called Lokpal:
https://en.wikipedia.org/wiki/Lokpal
It is an agency which works at the ground-level to curb the corruption both in the private and public sectors (and also the ministry). A question arose, however, that what happens if the Lokpal people itself went corrupt? And that's why the concept of decentralization was introduced. The central Indian agency, CBI can check the corruption in Lokpal, and of course, the courts have authority over both CBI and Lokpal. Thus, decentralization is at least, the present way of stopping corruption here.
The Supreme Court's job is to issue smackdowns on appeals courts, and they have been doing so rather consistently. EFF is lobbying the lower federal courts at the moment. See this story for details: http://arstechnica.com/tech-policy/2015/10/eff-asks-appeals-...
But yeah, the President is actually quite weak. The President can't do shit about this problem.
In fact, Obama has done this, but not to such an extreme degree.
http://www.wired.com/2014/03/obama-legacy-patent-trolls/
Excerpt:
Obama issued five executive orders on patent reform last summer. Among other things, they require the Patent and Trademark Office to stop issuing overly broad patents, and to force patent applicants to provide more details on what invention they are claiming. One of the orders opens up patent applications for public scrutiny — crowdsourcing — while they are in the approval stage, to help examiners locate prior art and assist with analyzing patent claims.
Indeed, it's been a huge bonanza for the local residents as big corporations have rolled into town and spent millions on PR (often as close to the courthouse as they can get). Everyone in town is courted (forgive the pun) to try and see corporations in the best possible light, just in case they turn up on a jury in a case against $BIGCORP at a later date.
<humor>It's the American Way.</humor>
Great place for camping (45 minutes north-west near Gilmer, TX has an awesome OHV aka off-roading park). It's also got fairly mild weather (though doesn't freeze as often as I would've expected): http://www.usclimatedata.com/climate/gilmer/texas/united-sta...
Anyways, no pro-Marshall or anything. The idea of East Texas being a poor-ish "backwater" isn't far off the mark. But if you like nature and goofin' off, it's a real nice place to do it.
The idea isn't just that a win there will discourage an appeal, but that the court will hear cases that most other courts would dismiss out of hand based on obvious prior art, vague claims, or USPTO investigation results. So the defendant is tied up in a court case, which includes an expensive jury trial. Worse still, the jury is so biased that they're all but guaranteed to loose the case. Most savvy defendents would choose to settle in that situation - which is all the patent-holder actually wants.
> somehow a mindset has developed there which is at odds with most other patent cases in the US.
Different courts form slightly different interpretations. There's a reason that the 2nd Circuit is the most liberal court. This court happens to be the most pro-plaintiff patent court you can find. It's not surprising the plaintiffs file there.
> This is a part of the country which has very little
Have you ever been there?
> so big corporations fighting patent cases bring a lot of money into the area and prestige to a court which otherwise would be in a backwater.
Do you think Apple fighting a court case floods money down the street like a river?
> the jury is so biased
Make whatever claims you want about the court, but if as you claim this area is a backwater with nothing going for it, how exactly is the local populace educated enough about the finer points of patent litigation to be biased?
This is a stupid decision but the mental gymnastics you're going through to try to make it fault of the area is impressive.
Yes. Lawyers have to eat, and they get paid enough to eat well. They need a place to stay, and they get paid enough to stay at a nice hotel. They need coffee, they need an airport, they need a rental car that needs gas. Your argument is that having people come to your city doesn't add to the local economy, but the fact that whole cities are built on tourism proves otherwise.
And that was a small company. Multiply that by 1000x and then add the defense payoffs from big corps...
The thing is that East Texas no longer has a monopoly on this - more jurisdictions are opening up to handling patent litigation (not sure what's driving that).
Samsung sponsored an ice skating rink in the town right in front of the courthouse. So, yeah, basically.
First, note that the federal circuit has ruled on these patents before, and upheld them. http://patentlyo.com/media/2014/09/Virnetx-v-Cisco.pdf
Apple conveniently leaves this part out.
(i think it's a BS ruling, but it is a final appeals court ruling on the validity of the patents).
As for the PTO finding them invalid:
If you look at the file wrappers of these patents, you will see what apple means is "someone has requested review of these patents by the PTO, and they have initially been found invalid".
(Apple's request to review validity was in fact, denied)
Go to http://portal.uspto.gov/pair/PublicPair Enter the patent numbers Click "image file wrapper".
So they haven't "been found invalid", instead, they are going to trial before the PTAB to see whether they are invalid.
Note: On a number of these patents, Apple's review requests have been denied a number of times before someone else's review request was granted
They are saying exactly that, at least according to their press statement.
They have been found "likely to have serious questions of validity".
This is basically the standard you must meet to get a review. That's why they were found that way.
Next, an actual trial will occur. But they are not "provisionally invalid" or anything like that.
There is literally no decision yet from PTAB, and in fact, the only reigning decision on validity is the appeals court.
http://virnetx.com/company/virnetx-promise/
"Cutting-edge secure communications technology is only one of the essential elements of our products – another is integrity. ..."
lol, what products?
This is speculative, but these patent filings were probably part of a patent filing strategy that helped justify the employment of a what was likely a decent number of engineers by the original owner.
https://web.archive.org/web/20000511195702/http://www.saic.c...
Not sure if they're actually out there, but at least their website lists one product.
Is it too much to say "live by the sword, die by the sword"?
Seems like what you really want to say is "don't hate the player, hate the game."
More like, "Hate the game, and hate the player for playing it"
Instead of everyone joining in the patent suing racket, these big players should be lobbying for the laws to be changed
Except you have to do both - if you ignore the racket you are much more exposed to lawsuits. Patents are used defensively between companies like Apple and Samsung, and if you give up that defense while trying to change the laws you are severely exposed. Tough balancing act..
The flip side of it is that I don't think we're likely to see these laws change until the current 2 party corrupt system is torn apart. Congress is completely bought and sold on both sides of the aisle and their owners like the current system (more laws = more lawsuits = more $$ for lawyers).
Check this out: https://www.eff.org/deeplinks/2012/06/defensive-patent-licen...
Google and Facebook are playing as well: https://code.facebook.com/posts/1639473982937255/updating-ou..., https://www.google.com/patents/licensing/dpl/non-sticky/
It should be mentioned that both of the above corporations grant this patent license for use and modification of the software they have open sourced.
I think Facebook might have also done it too - wasn't there some kind of anti-trolling pact between several major software patent holders?
With that kind of money it can buy all sorts of other patents and start the whole progress over again.
The problem as I see it is: patents exist to allow innovators to get paid for their inventions (setting aside the USPTO not being able to do its job correctly due to under-funding and granting bad patents), patents therefore have a monetary value, however that monetary value in fact scales with the monetary resources of the company it's held by (i.e. small companies cannot legally afford to enforce patent claims against behemoths that decide to fight), therefore there is a market incentive to create patent trolls (which increase the value of all patents by pooling them and amortizing prosecution cost/risk over a larger number of patents).
It would seem like if you instead pooled patents in a co-op arrangement, retaining ownership by their original creators, but pooling them with others for efficiency / risk purposes and to obtain the necessary scale for optimal enforcement. Then work out some amiable proceed-sharing method on the backend.
Win/win, and reducing the incentive for patent troll companies by providing an alternative. (Caveat: bad patents still need to be fixed at the USPTO source via additional funding / subject matter expert examiner requirements)
Is something like this at all feasible legally? Or does something prevent the batching together of patents from various actual owners under a single legal proceeding?
But that's my entire point. Currently, selling out to a patent troll (ignoring patents obtained from bankruptcies) is honestly the smartest move if you're a small company with a great patent. We should give such a company more socially-beneficial alternatives.
That is not why patents exist. Patents exist for the good of mankind to convince innovators to share their trade secrets with the public. Paying those innovators is not the goal, it is the means by which the goal is achieved, making the inventions public. You've confused the carrot for the end goal.
Anyone wanting to think about how to fix patents needs to first understand what the goal is, and paying inventors is not the goal.
Unless you'd like to offer feasible alternatives?
The way it works now is that most defendants want to settle because the legal costs are too high for the defendant, and the patent trolls know this. If the defendants pooled their money for anyone who took them to court and won (not even a full patent co-op, which has its own challenges) - would that change how the patent trolls did their math - and diminish their ability to sue many parties?
I think the biggest problem with fighting patent trolls after they've acquired the patents is that they're not really businesses. So you win... who's to say they'll pay? They have a lot of organizational options available to them that actual, functioning businesses likely do not.
Aka don't fight a battle on terrain where your opponent has greater flexibility than you
I'd be more inclined to fight the actual trolls politically. A) They don't create jobs, B) they've got relatively small financial reserves compared to a larger functioning business, and C) they probably fly flag-of-convenience corporate registration with minimal interaction with the state (not that that's probably rare)
Of course, caveat about standards being written and covering parents held by larger players.
- A patent troll has no products, which could infringe on a co-op's patents - So they can still sue you without risk of retaliation.
- A patent troll often has a financial structure designed to protect any assets that it wins through lawsuits (For instance, maybe if they win a lawsuit they could immediately pay a dividend to shareholders). So even if you win a lawsuit against them the main assets they hold are dodgy patents.
Or just quit, $625 million is a lot of money. You can only do that much dirty work.
Plus you don't wan't to milk the cow to a point it bleeds and dies.
Why don't they call each other up, declare a truce, and cooperate in lobbying Congress to fix (i.e. largely repeal) patent law?
http://www.wipo.int/export/sites/www/ip-competition/en/studi...
Clearly Patent Trolls adds negative value, harms progress and increases cost of business - how long will this legal racketeering be allowed to continue?
NullPointerExceptions?
Patents ought to be designated a non-transferrable property. Inventors may create a trust that receives patent revenues, and direct those revenues to any entity they please (their own company, their heirs, another company, a charity, etc.) but would not be able to actually sell the patents to any other company or individual.
Then, patent holding companies would evaporate, and the revenue for ideas would go to those who created the ideas. If a company created many patents, say, Kodak, then goes out of business, it would leave behind a trust that would continue to receive revenue on those patents until they expired. If you choose not to, you can forfeit the patent and then it becomes public domain.
But at least, a patent troll would have to buy an entire corporation rather than just its patent portfolio. Kodak, again: if let us say Toshiba wants Kodak's imaging patents, they'd have to buy Kodak in its entirety. At least this would raise the bar to acquiring patents.
Another issue I see is that patent trolls could just represent patent owners in litigation and charge high legal fees (or sign a contract that they receive all revenue for the patent).
1. Patents are a crap shoot.
2. No realistic means to recover legal fees if you do fight.
3. So it's a one-sided crap shoot.
You could say that being a NPE is a part of #2, but there are easier ways to fix it: just require posting a bond when suing for patent infringement. If you lose, some or all legal expenses will be deducted. If you win, you get the whole thing back.
It's normal elsewhere to award costs to the defendant when the plaintiff/complainant is unsuccessful in a civil suit (particularly if the judge finds it lacks merit). AFAIU this doesn't happen in US courts - why on Earth not?
the real problem is that simple & obvious processes are granted patents by the US patent office, and that is what needs to be fixed first.
Fundamentally the courts are today rigged entirely for those who can afford the best lawyers and fight in a quagmire the longest. Even if you do invent something original, these large companies know they can just bleed you dry in court and ignore your patents anyway.
Yet I do not personally see anyone not being inventive or trying new ideas in the absence of a working patent system to protect their monopoly rights to their ideas. Is anyone today waking up the morning thinking "I'm not going to try new ideas because I won't be able to defend patents I file for them against megacorps". I highly doubt that. The people that create the things that are most valuable to us are products of environments that enable them to conduct the research in the first place (IE, they often don't have to do day labor to survive, or can live very comfortably on reduced work hours) rather than incentivizing "inventors" as a discipline that uses the profits of a state granted monopoly to sustain their business.
I mean, even when huge megacorps come up with novel ideas, their competitors will sick lawyers on it and find the closest approximation they can get while having the highest probability of defeating a patent violation lawsuit. And I really hope we are not writing IP law for the sole benefit of international corporations to fund an entire industry of lawyers to waste money arguing about the infringing width of a progress bar.
And drug research & development absolutely relies on patents. If you spend half a billion (or more) developing a drug and generic drug manufacturers can immediately sell it for a few cents a pill, how do you recoup your investment?
I agree the patent system is broken, but abolishing it entirely isn't the answer. Perhaps revoking the business method patent decision is our best hope of regaining some level of sanity: https://en.wikipedia.org/wiki/Business_method_patent#The_cha...
It is important to not just consider the position of a pharmaceutical research corporations impact on the economy but the broader picture. Their research is often subsidized by the dying and suffering, or in the era of the PPACA it might be subsidized in part by a corporation that has to spread out that burden broadly to all healthcare subscribers.
The poor are sicker, on average, than the rich. Their reduced access to medicine makes their complications work, and the environments they are forced into often cause their more illness.
The drug R&D system we have now disproportionately extracts its funding from everyone above medicaid (and even on medicaid you can only get partial drug coverage) and anyone below a reasonable standard of living.
There are multiple ways to intervene into this system to produce as much research as we have now with an alternative funding model.
Since the majority of the consumers of these drugs are on national healthcare programs (usually medicare or medicaid - old or poor) we could simply transition to expansive national funding programs for private research, or public drug R&D. The revenue barely shifts hands then, but the problem becomes that the state is an awful judge of value and as demonstrated by NASA or the DoD is a terrible judge of what deserves funding or how much to give.
This system isn't even theoretical, Bernie and Obama have already proposed such laws: https://en.wikipedia.org/wiki/Prizes_as_an_alternative_to_pa...
The other consequence is that since IP and patents are pure fiction in reality and must be constructed as a state institution to enforce, countries like China and India can just ignore US patents on drugs, instead manufacturing and distributing the fruits of American and European labor (since we end up paying the overpriced patent prices) abroad for no cost.
Is it worth aggressively pursuing research when the least able to afford it often ends up having to pay for it? How do we know that competitive drug research would not be done through institutional and charitable funding, like how a ton of other research works? Even in the absence of patents, there are upstart costs to building and manufacturing drugs. And within the drug industry, people often ignore that the most central reason why pharma R&D needs to spend so much ludicrous money is because of the FDA regulations involving getting their drugs approved. If drugs were more deregulated - less of a problem in the information age, when research can easily be distributed and problems broadcast internationally within minutes of discovery - we could dramatically cut the costs of research such that traditional manufacturing models, that have worked for years, could work the same for making pills.
Personally, I think a combination of substantive deregulation (you could still have FDA approval, and even a law where doctors need to notify consumers when they are prescribing experimental drugs and the risks involved, but they would not be mandatory to start selling and profiting), research prizes, public funding, private charity (a lot of cancer research is charitable, and almost any ailment of great duress also gets incredible amounts of charitable research funding) and the recognition that using a guaranteed monopoly only enforced in the western world disproportionately hurts the sick, and thus hurts the elderly and poor who either have to pay partials under state coverage or have to pay entirely out of pocket.
"It's a massive verdict for VirnetX, a company that has no products and makes its money solely through patent litigation."
That said, to my eyes it's clearly a subversion of the intended purpose of patents, and is societally damaging, so I see no problem with derogatory labeling of this behavior and those that take part in it. It's unfortunate, but it's an important part of getting consensus in a short time frame with a large populace.
- company buys patents for the purpose of seeking rents
- company aggressively pursues others who are independently creating potentially valuable products to shake them down for rents
- company produces nothing of value with the patent except for increased wealth transfer by extracting value from others' work
That they [theoretically] put money in someone's pocket to get the patent in the first place does not change any of these facts. And calling attention to the behavior isn't selectively dealing with the facts. They exist purely for rent-seeking.
Actually, depending on your definition of rent seeking, it either makes it rent-seeking or not, so it may affect those facts. Would inventors be incentivized to create as much if there wasn't a market for these types of patents? Even if you discounts the type of patents that trolls attempt to control as useless, can we say that those crappy patents didn't subsidize better inventions?
Now, I'm not defending patent trolls, just noting that it may be a mistake to assume there is no economic value to what they do, even though the net outcome is likely negative. The positive and negative consequences may not be entirely comparable, making this easy to overlook.
Yes. Yes it is.
Apple has patented, and tried to enforce, the claim that they have the exclusive right to devices with a screen on the front and round corners.[1] They lost, but they're still litigating that.
[1] http://fortune.com/2015/08/19/apple-patents-rounded-corners/
The legal system does not adjudicate reality.
PS: The rounded corners patent is equally offensive as those bought up and profited from by trolls in the courts. Patents don't intrinsically signify authentic invention. They should, but there are far too many counter examples to rely on such a claim.
Point being, something being patented != something being invented. It just means examiners agreed with the claims of a piece of paper then turned that into a piece of intellectual property. The wins then mean courts agreed that claims in that property match some other product to some degree. Neither means someone copied someone. Whether that's true varies on a case by case basis.
I think it's telling that many defendants develop their own, "infringing" tech without ever hearing of the plantiff or their patents. Hard to copy what you don't know exists. In science, we call it independent invention but patent system makes that impossible. Plus, on software patents, what programmers have you met who comb through patent databases to solve their day-to-day problems? I've never met one.
Concluding, patents are legal pronouncements that may or may not cover inventions. Rulings on copying may be right or bullshit. Copying is usually unknowing or independent invention because nobody solves problems with patent databases in our industry. I remember running into maybe 3 or 4 worth looking at in Google search solving a problem. One was novel but others patented ideas already in products or Comp Sci literature. Well-known ideas that were foundational to product success. (sighs)
But it is still a valid patent. Don't say that specific patents are invalid, realize that the very concept of patents are invalid.
Apple has sold maybe 800million iOS devices. Say 400 million that support FaceTime. $1.50 per device. wow.
Or 625,000,000/ 14 employees.
The real issue is small players getting buried under legal fees.
Patents are a fucking joke in the age of technology. Fucking 20 year monopoly for a button, laughable.
When someone calls Apple et al. a patent troll, I think it's from the perception that they 1) apply for overly broad or obvious patents, and 2) enforce the patents offensively. Also a very subjective definition, but it doesn't seem any worse than arbitrary "uses/plans to use" criteria.