13 Comments

Summary:

The patent troll problem is spreading from the tech sector to media companies. Rather than paying off the trolls, the New York Times is holding its ground in two major patent cases.

Troll
photo: DM7

Patent trolls — shell firms that don’t produce anything but instead amass patents in order to sue real companies — have long been tormenting the technology sector. Now, they are coming for media companies and one famous newspaper is fighting back.

The New York Times Co. is engaged in a pitched legal battle with two such “trolls.” One is Helferich Patent Licensing LCC, a Chicago shell firm that claims to own the process for sending links to mobile phones — basically where a company sends a customer a text message. According to the Associated Press, the firm typically demands $750,000 to go away, a fee that it has already collected from dozens of firms like Apple and Disney.

Such demands place companies like the New York Times in a difficult position. The patents in these type of cases are often spurious but it can cost millions to prove that they are, meaning it’s cheaper to  simply pay up. If a company pays, the troll can then use the money to target other companies.

“In some ways, it’s a tax for being on the Internet. Millions and millions of dollars collectively is going out of the pockets of people who earned it to people who, in my opinion, didn’t do anything,” the Times general counsel Kenneth Richieri told the AP.

Right now, the  Times is paying to have the patents at issue re-examined by the US Patent Office. A Times court filing says the office has already succeeded in knocking down two of the patents, including US Patent 7,499,716 (“systems and method for delivering information to a transmitting and receiving device”). The company is asking a federal court in Chicago to suspend the litigation while the rest of the patents are re-examined.

The Times’ second major troll battle is over “autocomplete,” the function that suggests a word when a user types a few letters. A troll, called Boadin Technologies LLC, is stalking the Times, Bloomberg, USA Today and others for using the autocomplete function to propose stock ticker symbols. Court records show the Times is digging in to contest that suit too.

In the larger picture, the troll cases raise questions about the state of America’s innovation policies. While patents are regarded as a spur to invention, they are increasingly also being used simply as fodder for lawsuits by companies that don’t make anything. The problem has been exacerbated by a US patent office that has issued patents for everything from methods of exercising a cat with a laser to swinging on a swing.

In a highly-publicized editorial in the Atlantic last month, the famous judge Richard Posner called for the system to be reformed.

  1. In fairness, the method of swinging on a swing has been re-examined and the claims cancelled. (http://en.wikipedia.org/wiki/Reexamination I can’t quickly find the USPTO link)

    Admittedly, the patent process has flaws and needs reform, but let’s not throw the baby out with the bathwater.

    Share
    1. they should make the honarary fees for patent trials for advocates soo damn low that none of those bloodsucker lawyers would want to participate in this stupid trolling cases unless they are genuine cases!!

      Share
      1. There are no honorary fees. And how do you know the case isn’t genuine until after the Jury rules?

        Share
      2. I agree with Wei. Whatever is making the court trails costly have to be made cheap. This will encourage companies to afford the patent trails and this will a detrimental factor for the Trolls. The end result could either be that justice will be served, or Trolls cannot pull a fast (illegitimate) one on the companies.

        Share
  2. I believe the patent troll problem can be easily solved. In order for any company holding patents to seek infringement, the company must themselves be actively using the patent, and generating sufficient revenue to reflect any other claims. Simply owning a patent should not be a legal avenue to enforcement.

    Share
    1. So – if you have a truly brilliant invention but suck at business and marketing I can steal it. Or, if I’m Microsoft and I can just put it in my OS and force you out of business, I can steal it.

      Your solution doesn’t work Ronald. Besides – history if rife with important inventors who liked doing just that – inventing important new things. Inventions are different from products. If you invent new things that are important to society you should be encouraged – it moves us all forward.

      Share
  3. “In the larger picture, the troll cases raise questions about the state of America’s innovation policies.”

    I don’t think it raises any questions.

    It simply confirms that there is no question but that current patent law is utterly, barking mad.

    Share
  4. I believe that a preliminary hearing should determine if the owner of a patent should be forced to post a bond equal to the anticipated legal expenses of the one challenging its authenticity. Perhaps that would clear up a lot of spurious litigation and free people up to use “digital common sense” methods without fear of being taxed.

    Share
    1. Well, it certainly would disenfranchise small inventors who have their ideas stolen by large companies. I can see it now – MS will contend that they always spend 10x more than anybody else attacking “spurious” legislation so the independant SW company must but up $10M. I’m sure you can get all of the big companies to sign up.

      Share
  5. I believe a preliminary hearing should determine just cause for requiring a patent holder to post a bond equal to the calculated legal costs of the challenger. This would deter a lot of spurious litigation and allow us all to use “digital common sense” methods without fear of taxation.

    Share
  6. I think one thing that is always missing from this debate is noting the differences between patent troll companies and true IP companies. The fact that an IP company doesn’t actually “make anything” doesn’t automatically make it a patent troll.

    Take X2Y from an earlier post (X2Y v. Intel), from what I’ve about them, they have several licensees that do make products based on their patents. Now they are after Intel because allegedly Intel has incorporated X2Y’s patented technology without paying for the license and suddenly X2Y is a patent troll?

    I’m all for ridding the courts of frivolous suits. but we should be careful not to kill off innovation by these quick judgments on what defines a patent troll.

    Share
    1. Taz – thats an interesting thought but all it would take is for the “troll” to offer a very cheap deal to the first company to sign up (they do this all the time by the way) and thus transform from troll to true IP company.

      Share
  7. Six or so multi billion dollar company’s ban together and pool their money to fight one little guy who was forced to sue each company individually at his cost and you call him a troll because he has a legal right to his inventions?!

    Maybe he should be suing THEM under the Civil Racketeering Influenced and Corrupt Organizations Act.

    Further, I find it very hard to believe that Helferich is claiming he owns the hyperlink. That sounds more like hyper headline reporting to me.

    Share

Comments have been disabled for this post