Patent Troll Lodsys Settles for Nothing to Avoid Trial

Isn't it nice to be patent troll in the US.

You can threaten 1000's of entities with legal action to extort money, since just defending against the allegation is very expensive. Then when a few of those threats don't stick, all you have to do is "settle for nothing" to avoid an actual trial. Nice.

The patent trolls are just a symptom, the legal system is the problem.

You leave a legal loophole and you'll find some parasitic scum that will exploit it. Personally I find it hard to believe that the people running these companies can sleep at night... But that is a different story.

England has some useful things that the US should consider.

i) loser pays costs.

ii) if Ann is offered £X out of court, but declines it, and the case goes to court and she's awarded £Y then she has to pay costs if £Y is less than £X.

iii) Costs are controlled.

There are considerable problems with the English legal system, and many people are not able to seek justice through the court system. But this kind of thing would probably prevent some of the abuses of the US system.

i) (http://www.legislation.gov.uk/ukdsi/2013/9780111533291/conte...) (http://www.justice.gov.uk/civil-justice-reforms) (http://www.justice.gov.uk/legal-aid/funding) (http://www.justice.gov.uk/legal-aid/areas-of-work/civil/high...)

ii) There was a case some years ago where two women (sisters?) were accused of swapping eggs. They were accused of taking cheap eggs out of the carton and putting expensive eggs in. They were offered a lot of money, but "wanted their day in court", and although the court said they didn't swap eggs the court offered a smaller amount in damages, which got wiped out by the costs they had to pay.

This is the kind of thing that I find tricky to web search for. It seems like it should be easy - ["legal case" "eggs"] and then various supermarket names. I should try limiting the date range to before 2005. But if anyone has any tips about how to better search for it I'd be grateful. (Of course, Usenet news probably has some discussion about it, but Google is sub-optimal for searching their Usenet archive. It's a great shame.)

  *Joint* motion to settle (with) attorney fees are 
  to be borne by the party that incurred them.

Good for Kaspersky, but effectively Lodsys collected payments on this particular patent from 54 out of 55 companies and then Kaspersky let them keep the patent in exchange for leaving them alone. Not sure if this is worthy of celebration at all.

Settling for nothing should be held against them in a future case. It's clear the value of their property is zero.

If you live in the US, there is a lot of important patent reform legislation being drafted in committee right now, and reform has a lot of support (including from traditional archenemies like the MPAA). Somebody motivated me earlier today to write my congressman about it, and so should you. Remember, constituents who don't complain, don't exist.

The letter I'm drafting is sort of Texas-specific, but you are welcome to adapt it to your state. If so please post a link so others on HN can benefit.

https://www.dropbox.com/s/xkeb6qlnpnkjntn/patent_letter.pdf

I'd like to see a settlement negotiation swing the other way. Someone like Kaspersky Lab with solid footing insists that Lodsys pay them to avoid trial. How much is Lodsys willing to pay to prevent the public exposure and invalidation of their patents?

So, the problem is that when you settle you give away your right to get your money back if the patent it later invalidated. This makes for a perverse incentive.

I wonder if there is some way of credibly signalling that you won't settle, even if you don't have the money for a lawsuit. Can you give away your right to settle? IE, could we set up some organisation whereby you give them the right to veto any settlement you make to a patent troll? And that organisation then insists on a clause whereby any settlement can be undone if the patent is later invalidated.

Of course, the troll would probably insist on getting more money, but even if they do, if the patent is invalid you stand a good chance of get it back.

There's probably a flaw in the above scheme somewhere, but surely there's some way of doing this...

I wonder if at some point it makes sense for someone like Kaspersky to ask the judge to deny the motion to dismiss by Lodsys and force a trial on them. IANAL but I don't think a judge has to dismiss even if the prosecution asks for a motion to dismiss.

Linked from the original article is a case of a judge ruling patent exhaustion[1]:

Helferich's patents cover the delivery of content (alerts with a hyperlink) to a cell phone.

The issue is not with cases like this, the issue is with bullshit patent being granted in the first place. They need to get rid of software patents, and wishy washy crap about how X could do Y if only we had money to build it rather than just dream it up. Invent something, build it and then let it be patentable.

[1] https://www.eff.org/deeplinks/2013/08/judge-sticks-end-users...

What kind of max damages are possible in an IP case like this?

It sounds like if it's a matter of spending about $1mil to fight a troll in court and get the patent invalidated, the victims might do better by pooling the money they would have spent on settlement together on the first case to go to court and get the claims invalidated.

I doubt this really say as much about the merits of Lodsys' case as the EFF proclaims. This is simply an economic decision. As I'll explain below, I think they have a relatively strong case. But going to trial is expensive for both sides, and I think Lodsys simply sees insufficient margins in seeing it through. The problem, as the article says, is that even getting to the stage where you can call their bluff like this is extremely expensive, and statistically very few defendants will take it this far. So for the few folks who do stick it out this far, Lodsys can simply drop out and still stay way ahead of the game.

As to why I think their case is somewhat stronger than the usual troll: Firstly, it's patents partially survived Google's supposedly "devastating" re-examination request. Although the process is still ongoing, the claims that survived are golden. Those now have an "enhanced presumption of validity", which means if asserted at trial, the defendants would be wise to seek stronger alternate defenses besides invalidity.

Secondly, and speaking of alternate defenses: patent exhaustion. Exhaustion is triggered on first authorized sale [1]. I really cannot (and neither can the EFF) comment on this since all the relevant terms on which Apple, Google etc. have a license are secret. Further, since Apple was not allowed to intervene, it seems even less likely a defense.

Thirdly, the claims are "vague" only if you decide not to put much effort into understanding how they work. Much like non-lispers complaining about parentheses. I have seen vague claims, and these are downright straightforward in comparison, despite what the EFF's out of context snippets may imply. Also, mentioning fax machines is a non sequitur. If the main function of fax machines in this patent was to act as network components, by the Doctrine of Equivalents [2] they are functionally equivalent to the Internet of today. Heck, it could be carrier pigeons and still be valid. This is not an abuse of the system, and if you want to make it so, you'd need a lot more reform than is likely to happen.

I cannot comment on the quality (novelty, non-obviousness, etc.) of the claims since I have difficulty evaluating them in context of the state of the art in ~1992, to which these patents claim priority.

(IANAL. Which may also be why I think one solution to this problem is a drastic lowering of attorney fees :-P)

[1] http://en.wikipedia.org/wiki/Exhaustion_doctrine

[2] http://en.wikipedia.org/wiki/Doctrine_of_equivalents

Evidence the patent system is functioning properly.