33 Comments

Summary:

Patent trolls continue to take it to young companies with a vengeance. This time, a shell company that claims to own basic navigation technology wants the maker of a popular location-based “check-in” service to pay up.

Troll
photo: Flickr / puuikibeach

A Nevada-based shell company has filed a lawsuit against Foursquare, claiming the popular app is violating two patents that cover familiar navigation features.

In a complaint filed Wednesday in Las Vegas, Silver State Intellectual Technologies Inc asked for an injunction and damages related to U.S .Patent 7475057 (“System and method for user navigation”) and U.S. Patent 7343165 (“GPS Publication Application Server”).

Both patents describe the process of pushing information from a remote server to a user based on the location of that user and show diagrams like this one:

Silver State’s short legal filing (embedded below) doesn’t describe how exactly Foursquare infringed on the patent. The popular app relies on location tracking technology to offer a service that lets users and their friends “check in” to restaurants, merchants and other physical locations.

The lawsuit comes at a time when so-called patent trolls like Silver State have become aggressive about suing promising young companies. Handcraft site Etsy and travel site Hipmunk, for instance, were “mugged on payday” when they were hit with patent suits earlier this summer.

Patent trolls like Silver State, more politely called “non-practicing entities,” don’t make anything but instead acquire patents in order to sue companies that do. The trolls’ targets often simply fold their cards and pay a licensing fee for the troll to go away rather than risk the expense of  a prolonged lawsuit even though recent research (via The Verge) suggests doing so may be a mistake.

Applications for the two Silver State patents were filed in 2000 and 2001 and were granted in 2008 and 2009. The named inventor, Michael Obradovich, transfered them to a shell company shortly after.

The shell company structure is advantageous to the patent holders because it’s typically impossible to tell who is collecting on the patent payouts and because their lack of assets or a real business makes them impervious to countersuits.

This is the second time Foursquare has been hit by a patent suit. Last year, another shell company sued it for allegedly infringing on a method for mobile shopping.

Silver State v Foursquare

  1. I’m surprised it wasn’t Apple.

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    1. I’m surprised you’d be so willfully ignorant.

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      1. I’m surprised the fan-boys are already fighting.

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  2. gigaom, get over it. if the patent is valid and the claims are being infringed, then they are right to do something about it.

    the problem with articles like this is that you sit back and imply that taking legal action to defend your rights is wrong. it is not wrong.

    tech companies all do what they want and ignore the patent landscape. further, they assume it will all work itself out. this is how it gets worked out.

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    1. Bjorn Stromsness Thursday, July 26, 2012

      Someone defending patent trolls… well… that’s new.

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      1. actually, noone is defending patent trolls

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      2. alex, I actually spat coffee out of my mouth on my computer screen at that. I think my screen is ruined now. Thanks a lot, you jerk.

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    2. Thanks for the comment noone but I’m not sure it’s that simple.. While patent owners are indeed entitled to seek remedies from the courts, the larger question is whether those rights should exist in the first place.. Patents are not like other forms of property — they are a government-awarded monopoly designed to encourage innovation.. The patent troll phenomenon suggests something has gone wrong with the present system.. Do you think the status quo is efficient at promoting innovation?

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      1. right, patent laws are great for startup companies or competing businesses trying venture into new ideas, but we need a way to stop patent hoarders from making money off of other company’s innovation. I bet they were not the first company to think of GSP, and I doubt foursquare is even their competitor.

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      2. Maybe patents shouldn’t be transferable so easily. Or maybe only the inventor who spend the money on the research gets the long term protection.

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    3. joseph arruda Friday, July 27, 2012

      Unless the patent is also a morass of prior art and stupid opportunistic trolling. In that case, destroy the patent troll with profound and extreme prejudice and make sure that ilk of parasitic firm can’t survive well.

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    4. You act like you don’t understand between creating something and simply buying it.

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  3. Reblogged this on txwikinger's blog.

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  4. Reblogged this on Briskin, Cross & Sanford, LLC and commented:
    Sigh!

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  5. @Jeff,
    On the whole I would say technology remains very innovative and in general the process of innovating and creating new business value is proceeding well. I acknowledge that there are abuses of the system. However please consider these points.

    Inventors are do not always have deep pockets. In order to defend rights, partnerships arise. This is a good thing. What you call a patent troll is really just a person with money and no ideas working with someone with established (and patented) inventions (ideas) and no money.

    Innovation is not stalled by the patent process. Companies steam roll ahead with what they want to do and IF they are successful then they can expect a phone call at some point. Innovation occurs, business progresses, and any big issues get sorted out later. The point is innovation occurs.

    Lots of technologies are awarded patents when in fact they probably should not. Talented people work (around) with the USPTO to achieve their goals. Equally talented people find ways to avoid infringing IP. When IP is strong, the claims are both meaningful and commercially important. Furthermore the requirement for reduction to practice should ensure that there has been some effort made to “make it real”.

    As much as it can be frustrating or seem unproductive, not having patents would be a lot worse. I do not think it is good for the technology industry to allow large well funded companies to get away with theft of other people’s IP.

    For the record, I am a named inventor, I have worked to get patents to issue, I have worked to invalidate patents, and I have worked to license IP, but I am not an agent, lawyer or “troll”. After all that, I would say I enjoy creating IP and I dislike the process of IP.

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    1. Yep. Nice. Defending patent trolls.

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    2. “IF they are successful then they can expect a phone call at some point”

      That’s exactly the problem.

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    3. The patent system works in some cases but we cannot assume it is necessary in all fields. Software development is an extremely logical process that almost never involves innovation, just clever solutions. Unfortunately, these solutions appear to be innovation to those who do not understand software engineering. Once a patent is granted, nobody is allowed to use the same process (which is the logical solution to a problem that anyone could arrive at) as part of their software. It hurts software companies and it hurts consumers when products are pulled from the shelves for infringing patents the software makers didn’t even know existed.

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    4. Well thought out spin, “noone”. The bottom line is that these shells create overly broad patents, counting on the fact that an overworked USPO allows them to slide through the system.

      Yes, true IP needs to be protected, but these people are opportunist parasites bent on unjustly enriching themselves. They destroy true innovation and productivity in firms that actually try to produce something. There’s a reason your troll brothers file in East Texas- and it has little to do with legitimacy.

      If you are what you claim (I doubt it) , then you are little more than an apologist for parasites, despite your weasel words. I don’t blame you for not identifying yourself on forums. You and your ilk are a true plague upon society…. but that’s okay if you get yours, right?

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  6. Again, the author has not read the claims, and is probably very uninformed about how patents work. The patents do not claim to “own GPS,” although it certainly makes a very linkbaity title.

    I’m not saying these patents are awesome either, but heck, they were filed in 2000, so they probably were OK at the time. Here’s what the patents claim: The first one simply claims detecting if the GPS position of the device has not changed in a while, and if so, reporting that position to a server and receiving location-based information based on it. The second one claims, amongst other things, a mobile client and a server for sharing location-based information provided by the user with a list of other users, which is also provided by the user.

    Regarding the first one, I’m not sure Foursquare does automated check-ins. The second one could cover sharing your check-in with your foursquare buddies. But neither of them claim to “own GPS.”

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    1. Thanks for the comment, kinkfisher. I did read the ‘165 patent and, while you’re right that it doesn’t say “own GPS,” do the claims it sets out not amount to the same thing? Per your own summary:

      “Detecting if the GPS position of the device has not changed in a while, and if so, reporting that position to a server and receiving location-based information based on it”

      Don’t the majority of GPS applications today include such a feature?

      More broadly, the claims asserted in these patents seem to reflect a triumph of legal drafting more than they do an expression of scientific discovery. I don’t gainsay the intelligence and skill of the lawyers who extract these patents from the USPTO but, in the bigger picture, do you really believe they are furthering science and innovation?

      In the software field, there are a host of other ways beside patents that clever companies can protect their inventions (a combination of trade secrets, trademarks and first mover advantage will almost certainly do the trick). The present patent regime is ruinous and costly — a fact acknowledged by everyone from Richard Posner to Tim Cooke — and now it’s time to try something else.

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      1. “Don’t the majority of GPS applications today include such a feature?”

        I’m not sure, but that would be a feature of applications that make use of GPS, rather than GPS itself, regardless of whether by “GPS” you mean the satellite-based positioning system or the devices that show your location.

        At least until relatively recently, most GPS units had no communication (3G etc.) capabilities, so they could not report locations and receive location based information from an external source. They could only detect GPS signals, determine their location and indicate it based on pre-loaded map data. Nowadays, yes, you do receive location-based information such as weather and traffic data.

        This patent claim however covers a few minor (but sufficiently distinguishing for a patent, apparently) differences from what GPS devices do. It also requires the server to store the location of the user. Also, it requires that immobility be detected by comparing before and after GPS coordinates. One way to avoid that limitation would be to detect immobility based on inertial data, e.g. accelerometers etc. These differences may be why Foursquare is being targeted rather than GPS device makers.

        You can’t look at claims and summarize them (I unwisely did so above, but only to contrast against “owning GPS”). Claims must be considered word for word in their entirety. The claims were not allowed because of “a triumph of legal drafting,” but simply because the examiner could not find enough prior art before 2000 that could knock out *each and every element* of the claim. Consider that in 2000 and before, given the state of mobile devices, apps and wireless connectivity, there probably weren’t many people thinking of things like Foursquare and prior art would be sparse.

        Regarding software, other protections often fall short: Copyright cannot protect against reverse engineering. First mover advantage is hardly sufficient when you look at the number of small firms giants like Microsoft, Apple or Google bullies around. Trade secrets don’t work when a lot of the innovation is readily observable and can be trivially recreated, such as Apple’s revolutionizing the smartphone UX and Android’s rapid “adaptation” of it.

        And Judge Posner’s views really should be interpreted through an economic lens. There are a lot of economics studies about patents, but for industries such as software, there is no concrete consensus that they are more beneficial than harmful or vice versa , which is why he said “it’s not clear” (his exact words) whether patents have economic benefits for many industries. As for Tim Cook, well he may say one thing, but it’s pretty clear he’s doing another.

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  7. Patents were invented to combat corporate secrecy, and to ensure that inventions are put in the public domain; the idea being that society would benefit from the accumulation of knowledge in the form of patent filings; the time-limited monopoly being the bribe to ensure that the information is released.

    This deal has always been strained, as those innovators that file patents never really bought into the sharing-knowledge idea.

    As a result, most patents are written in a manner that is pretty indecipherable to most people. (I am assuming, perhaps foolishly, that patent lawyers actually do understand them).

    As a result, vanishingly few people research how to do things by looking at existing patent filings, so the deal between society and innovators looks (with the benefit of hindsight) pretty one-sided, to say the least.

    I am not claiming that intellectual property law should be dismantled, because it might trigger a return to a world in which excessive secrecy surrounds inventions, but clearly there is quite a lot of room for improvement, even without patent trolls / non-practicing entities to consider.

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    1. wtpayne — very well stated. The trade between the patent owner and society is indeed looking more and more one-sided

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      1. Stephen Adolph Friday, July 27, 2012

        maybe to you. I think you would have a different opinion if your IP had been stolen.

        The point of a patent is to create a government granted monopoly, to create the environment where expensive R&D can be rewarded without having it be stolen.

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    2. Patents are written the way they are because of a variety of technical and legal reason. It’s very much like programming, really… code in a programming language you don’t know looks indecipherable until you learn the language. The same applies to “patentese”. I can read it easily enough these days, and I’m no attorney.

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    3. To clarify my position: I do believe that there is a need for some form of intellectual property law that protects innovators and helps them to gain financially from their innovations. However, If I were being cynical, I might hypothesize that current intellectual property mechanisms benefit lawyers to a greater degree than either consumers or innovators. (I am a trusting, not-at-all cynical sort of person, so I am not for a moment suggesting that anything like the above hypothetical is true.) One further point that is worth mentioning is that the economics surrounding innovation is highly complex and nonlinear, and that a purely utilitarian analysis might sometimes give surprising results.

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  8. hahaha, thats looks so general its not even funny….
    oh god…

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  9. Eric Shelton Friday, July 27, 2012

    I recently filed a patent on the patent-trolling process, so this will all be over soon enough…

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    1. Well, you can hold a patent on a business process, and the law is business (you can invest in legal cases, these days), so it is only natural that lawyers should be able to start taking out patents on novel legal strategies. After all, if a lawyer puts a lot of work into an innovative defensive strategy, it is only right that that he should be able to benefit from that investment of time and effort, isn’t it?

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  10. Stephen Adolph Friday, July 27, 2012

    There are two distinct issues

    * whether or not IP is valid
    * how to prevent it from being used by others without permission.

    It sound like most people are struggling with the former, because the later should be clear. I would suggest that it will be pretty hard to come up with a better system than is in place today. Part and parcel of high tech development is the risk that you ARE NOT AWARE of the PRIOR ART. That is your job, not the holder of the patent.

    How you deal with it is up to you.

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