19 Comments

Summary:

A little known company in Hawaii is demanding patent royalties from most of the mobile device industry. Apple is fighting the demands in court, but will not be allowed to call the company a “patent troll.”

two-way pager beeper

In an unusual order, a federal judge last week told Apple that it may not call a Hawaii-based company names like “patent troll” or “privateer” or “bandit,” nor tell a jury that the company is engaged in a “shakedown” or “playing the lawsuit lottery.”

U.S. District Judge Lucy Koh issued the no name-calling rule ahead of a trial in Silicon Valley that pits Apple against GPNE Corp, which is accusing the iPhone maker of infringing old patents related to transmitting data over a network.

So what does GPNE Corp make? As it turns out, nothing at all. Instead, it has a website and a suite in a Honolulu office building, from where it appears to do nothing but make licensing demands for its patents. In other words, it fits the classic definition of a patent troll.

Judge Koh, who is a veteran of the smartphone industry patent wars, has nonetheless agreed with GPNE that the term “patent troll” could confuse or prejudice a jury. She did, however, permit Apple to tell the jury that GPNE is “a company that doesn’t make anything,” or “a company that doesn’t sell anything.”

All this raises the question, yet again, of whether the U.S. patent system is doing more to foster innovation or to award powerful monopolies to those shrewd enough to game the system.

In the Apple case, does GPNE deserve a royalty on the sale of every iPhone — a royalty that will be passed directly on to the consumer? You can decide for yourself.

According to GPNE’s website, one of its owner’s found traditional pagers to be limiting because the recipient had to phone the sender. As a result, “Gabriel’s vision was to invent a system that could transmit data two ways without having to rely on the separate return landline telephone call in response to a standard page message.”

In practice, this meant obtaining patents like US Patent 7555267  which dates from 1996, and explains the “invention” with diagrams like this:

Screen Shot 2014-07-02 at 6.31.38 PM

I don’t pretend to be an authority on the state of pagers and two-way networks in 1996, but it seems unlikely that the iPhone’s operations are rooted in “Gabriel’s vision.” It also seems curious that everyone should pay Gabriel a royalty on many of today’s mobile devices (GPNE is also seeking a payout from Amazon, BlackBerry, Nokia and others.) Apple obviously disagrees, and that it is why it is fighting GPNE in court.

For my part, I would argue that this is yet another example of the Patent Office granting too many broad patents (there are 250,000 covering cell phones alone by some count) that appear to reward clever patent drafters rather than society as a whole. The patent owners, including trolls, can then wield them with devastating effect, knowing that it is much cheaper for companies to simply hand over a licensing tax rather than challenge the patent in court.

I phoned CPNE on Wednesday to get its side of the story. A woman said “hello” and, in response to my question of what the company does, she said she would have to refer my question to her boss. I haven’t heard back.

Here’s Koh’s order, which was spotted by Law360:

Apple and "Patent Troll"

Featured image courtesy Flickr user Hades2k via Compfight cc

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19 Comments

  1. >> … [Judge Koh] last week told Apple that it may not call [GPNE] names like “patent troll” …

    And it would be wise for Apple to not use the term, that is, unless Apple is referring to themselves and their own activity within Rockstar, which does the same thing they will obviously argue that GPNE is doing.

    >> So what does GPNE Corp make? As it turns out, nothing at all.

    And they are not required to. The art of inventing and the art of production are two different and independent disciplines.

    >> Instead, it has a website and a suite in a Honolulu office building, from where it appears to do nothing but make licensing demands for its patents.

    And if they truly have unique and non-obvious claims at the time of the invention, then they are entitled to this. No one should be able to use their patent without permission.

    >> [Judge Koh] did, however, permit Apple to tell the jury that GPNE is “a company that doesn’t make anything,” or “a company that doesn’t sell anything.”

    Again, GPNE is not required to. The art of inventing and the art of production are two different and independent disciplines.

    >> All this raises the question, yet again, of whether the U.S. patent system is doing more to foster innovation or to award powerful monopolies to those shrewd enough to game the system.

    But if Apple could just take any idea from anyone…
    The THIS raises the question, yet again, of whether not damaging patent protection for small inventors would do more to foster strong competition in the market or to award bullying to those corporations shrewd enough to monopolize the system.

    >> In the Apple case, does GPNE deserve a royalty on the sale of every iPhone — a royalty that will be passed directly on to the consumer? You can decide for yourself.

    The answer to this question depends on whether nor not Apple infringed. If so, then Apple needs to stop stealing others’ ideas. and this is the risk Apple takes with its consumers. If they do indeed infringe and then must raise the price, and if that encourages consumers to start looking at cheaper, competitive products, then THIS VERY THING is what us capitalists call “healthy competition at work”. Infringers can either stop stealing, or produce something else.

    >> I don’t pretend to be an authority on the state of pagers and two-way networks in 1996, but it seems …

    This is we have expert witnesses and a jury. Let them decide, based on the evidence, and they can CONCLUDE beyond reasonable doubt. Then there will be no more “seeming”.

    >> For my part, I would argue that this is yet another example of the Patent Office granting too many broad patents (there are 250,000 covering cell phones alone by some count) that appear to reward clever patent drafters rather than society as a whole.

    I would argue your claim that the patent office grants too many “broad patents”. Patent examiners reject more patent claims than they approve. Moreover, if they do indeed get it wrong, the Patent Office provides a solution for that as well. Patents can always go up for re-examination, and if prior art exists that is dated before the date of the invention, then the patent(s) will be deemed invalid.

    Q.E.D.

    1. >> If so, then Apple needs to stop stealing others’ ideas.

      First, ideas cannot be stolen. Second, ideas cannot be patented. Why did you even write this?

      >> Q.E.D.

      I don’t think that abbreviation means what you think it means…

      1. First, no. Ideas *can* be stolen. If not, then what are trade secrets, and why must they remain secret? So they are not … um, stolen?

        Second, did I make the claim that an idea can be patented? You might want to read what I wrote again, because I definitely didn’t “steal” that idea.

        Third, a write whenever I see things that are in need of correction. This blog post was a great example of that. We do not need the blind leading the blind.

        Fourth, in light of the foregoing, I think the abbreviation’s meaning is clearly seen. If not, then there’s google for the inquisitive.

      2. Ideas cannot be stolen? Well that’s new! And odd. So, that case with Samsung, what was that all about? Weren’t the rounded edges a “stolen idea”?
        But maybe you’re just one of those fanboys stating that if someone “borrowed” and “reinvented” something from Apple – that’s stealing. It should be punished!
        But when Apple “borrows and reinvents” something from others… Well, they “reinvented” that, so it’s not stealing. Riiiiiiight?

        1. What was that case with Samsung all about? Hmm…I thought everyone knew by now. It wasn’t about the theft of ideas. It was about the blatant theft of trade dress, intellectual property, and practical implementations of user interface and product design.

          How could you miss that?

          1. What’sWrongWithDesigningThings? Dan Andersen Friday, July 11, 2014

            It was actually both, Dan – including patents, not just trade dress. HOW COULD YOU MISS THAT?

            It doesn’t help you to be overconfident and snide while making no effort to understand the facts and policies of intellectual property. Patents are not just ideas, but they are, at their core, about new, non-obvious ideas (plus, at least constructive reduction to practice). Is that a problem? No. Although many powerful, terrible people have been lampooning the patent system lately, without even a cursory effort to consult an expert, every successful country going back to ancient Greece has had a strong patent system for key policy reasons. But, I’m sure these bloggers in Silicon Valley barely out of college know better. Their bosses at the tech giant that don’t like getting sued by little guys told them so.

            From Wikipedia: “Apple accused Samsung of infringing on three utility patents (United States Patent Nos. 7,469,381, 7,844,915, and 7,864,163) and four design patents (United States Patent Nos. D504,889, D593,087, D618,677, and D604,305). Samsung accused Apple of infringing on United States Patent Nos. 7,675,941, 7,447,516, 7,698,711, 7,577,460, and 7,456,893.”

    2. Jeff >> In the Apple case, does GPNE deserve a royalty on the sale of every iPhone — a royalty that will be passed directly on to the consumer? You can decide for yourself.

      Mike >>The answer to this question depends on whether nor not Apple infringed. If so, then Apple needs to stop stealing others’ ideas. and this is the risk Apple takes with its consumers. If they do indeed infringe and then must raise the price, and if that encourages consumers to start looking at cheaper, competitive products, then THIS VERY THING is what us capitalists call “healthy competition at work”. Infringers can either stop stealing, or produce something else.

      Mike makes an excellent point. And I’ll add this:
      On that note, it looks like APPLE is the entity that must decide for itself. Not the consumer. Apple is the entity taking the risk and making the decisions for their potential consumers here. And I thought they did that anyway with all their products, right? Make the decision for the consumer…

    3. Well, apparently you don’t understand what a patent troll is and what one isn’t.

      1. Well, apparently you don’t understand what bullying by large entities with their theft/infringement and their endless attorney budgets is and what isn’t. Maybe you should realize that patent “trolling” is a legitimate response to this type of corporate bullying. Simply because inventors need to be able to protect themselves and their inventions from these monopolistic corporate Goliaths with their evil tactics.

        It goes both ways.

  2. Rockstar. Apple. Pot calling kettle black?

    Mike makes good points.

    1. Maybe… Has Apple/Rockstar made a similar argument in the past?

      If Apple/Rockstar argued that they should not be able to referred to by what they are “patent trolls” by the companies they were/are suing. If they haven’t then there is no hypocrisy,

  3. mietekmielonka Thursday, July 3, 2014

    Apple is also buying patents on things they only have on paper. It surely wouldn’t stop them from legal actions if someone would use one of their “unused” patents. So saying that ” GPNE “doesn’t make anything” is a worthless statement.
    But at the end of the day, it’s the US patent law that is flawed, for giving patents on theories and not working devices. It should be simple as that – you present a working demo/prototype – you get it patented. Patenting abstracts just blew up their faces.

    1. Good idea, but…

      I’d like to agree with you on your suggestion for working demos/prototypes. However, that’s kind of a difficult feat without infringing on others’ rights. Take the iPhone, for example. When Jobs introduce the iPhone, he claimed 200+ patents were filed for inventions in the iPhone. Creating a working prototype without creeping in on other’s rights might be a difficult feat.

      (And on that note, by Apple filing for all these patents, Apple thus clearly admits that patents have value to their product(s). So why can’t Apple simply license one more patent owned by someone else if they must use it in their iPhone product? That is, assuming they are actually using it, of course, which GPNE claims they are, and this will all be determined in the legal proceeding. But it does bring up an interesting point that Apple shouldn’t have a problem giving credit to GPNE if they are actually using their patent(s), if they put value on patents themselves, and they DO, given that they themselves seek patents.)

      Another problem with such a prototype requirement is that this puts the favor of the market back into the hands of big corporate entities. Creating working prototypes requires time and money — resources that small inventors may not have readily at their disposal as big corporations would. And now that the US Patent System is now a first-to-file, small inventors would really suffer from a requirement like this, simply due to lack of resources in rushing to have their prototype ready before the big guys do.

  4. It is not without a certain amount of glee that I read that Apple Inc has been enjoined from referring to another firm as a «patent troll», «privateer», or «bandit». «For ’tis the sport to have the enginer/hoist with his own petard» – as a certain Danish prince used to say….

    Henri

  5. Judge to lawyer “You may not call Mr Smith a pig”

    Lawyer to Judge “Can I call a pig Mr Smith?”

    Judge to lawyer “I see nothing wrong with that.”

    Lawyer to witness “Good morning Mr Smith”

  6. I think Apple needs to file a motion to get rid of Lucy Koh for the extreme prejudice she exhibits against them. She is not an un-biased judge; she is a PITA.

  7. What’sWrongWithDesigningThings? Friday, July 11, 2014

    “So what does GPNE Corp make? As it turns out, nothing at all.”

    When you design something, you don’t make a finished product, but you still make something that may be valuable — if you’ve done a good job and are original enough. You are creating a design, that can be protected property. Or, should we shame and ostracize the entire fields of architecture, urban planning, engineering, etc? Maybe they’re all “BluePrint Trolls” because they just design and make “nothing at all,” to use the same logic.

    Also, read the back of an iPhone before you judge whether a design, without actually making it yourself, is enough to be constructive. They all say: “Designed in California. Assembled in China.” So, Apple makes “nothing at all,” too — if we ignore the merits of intellectual work.

  8. And @patenttroll101 is a blog troll.

  9. patenttroll101 Saturday, July 5, 2014

    Believe it or not we’re on the same page… Patent Troll 101 loves inventors. An article and video will be coming out soon as to why… Don’t judge a troll by it’s cover :)