Angry Birds Developer Sued by Patent Troll

On Thursday, July 21, 2011, attorneys for Lodsys LLC, a company rapidly becoming a reviled patent troll, filed an amended complaint in the United States Federal District Court for the Eastern District of Texas. (*) As a result of this amended complaint some big names in the gaming world have been brought into the ongoing patent litigation battles being waged by Lodsys. Lodsys had already sued a number of Apple App developers and others such as Best Buy and the New York Times, see here and here. More specifically, as a result of the filing of this latest complaint Lodsys has brought patent infringement charges against Atari Interactive, Inc. and Electronic Arts, Inc. (NASDAQ:ERTS), among others. But in the mind of the general public the highest profile defendant to date will almost certainly be Rovio Mobile Ltd., the maker of the extraordinarily popular game Angry Birds, which is available for iPhone, iPad and Android, among other platforms.

The amended complaint filed by Lodsys levels nearly identical charges against all the defendants, asserting patent infringement of U.S. Patent No. 7,620,565 and U.S. Patent No. 7,222,078. Illustrative of the charges leveled by Lodsys are the two paragraphs relating to the alleged infringement associated with Angry Birds. Paragraph 23 states:

Defendant Rovio has infringed and continues to infringe, directly, indirectly, literally, under the doctrine of equivalents, contributorily, and/or through the inducement of others, one or more of the claims of the ‘565 patent. Rovio makes, sells, uses, imports, and/or offers to sell infringing applications, including but not limited to Angry Birds for iPhone and Angry Birds for Android, which infringe at least claim 27 of the ‘565 patent under 35 U.S.C. § 271.

Paragraph 36 states:

Defendant Rovio has infringed and continues to infringe, directly, indirectly, literally, under the doctrine of equivalents, contributorily, and/or through the inducement of others, one or more of the claims of the ‘078 patent. Rovio makes, sells, uses, imports, and/or offers to sell infringing applications, including but not limited to Angry Birds for iPhone and Angry Birds for Android, which infringe at least claims 1 and 24 of the ‘078 patent under 35 U.S.C. § 271.

While there is not much to go by with such sparse allegations, by patent infringement standards these allegations are extremely detailed, which speaks volumes about what plaintiffs are allowed to get away with relative to asserting a claim of patent infringement. At least Rovio is told which claims most likely are the claims that are being infringed. Sadly, however, it is frequently (if not typically) enough to start a patent infringement lawsuit with vague assertions, which is why being a patent troll has become such big business in the United States. All you need is a patent, an attorney who will take your case on contingency (**) and a few hundred bucks to file a lawsuit and you too could sue someone for some unspecified activities that together constitute some unspecified type of patent infringement on one or more unspecified patent claims.

Lodsys first appeared on the scene several months ago when it started chasing Apple App Developers and demanding that they take a license to the Lodsys patent portfolio, and then later going after Google Developers who provide Apps for the Android operating system.

Upon learning that Lodsys was chasing its App Developers, Apple entered the fray with a shot across the bow. In a letter from Apple’s Senior Vice President & General Counsel, Bruce Sewell, Lodsys was told in no uncertain terms: “There is no basis for Lodsys’ infringement allegations against Apple’s App Makers. Apple… is fully prepared to defend Apple’s license rights.” According to the letter sent to Mark Small, Lodsys’ Chief Executive Officer, Apple is a licensee of each of the four patents in the Lodsys patent portfolio and the terms of the license allow Apple to grant sub-licenses to Apple App developers. According to Sewell’s letter, “Lodsys’s infringement allegations against Apple’s App Makers rest on Apple products and services covered by the license.”

Based on the limited information available to date, it does seem like there is a generous double-dip approach to what Lodsys appears to be doing at least with respect to Apple App Developers. After all, when Lodsys and Apple entered into a patent licensing deal what did Lodsys think was going to happen? While not impossible, based on what I know about the quality of legal work done on behalf of Apple I find it difficult to believe they would have taken a license that they didn’t have reason to believe would cover their App Developers. After all, Apple facilitates App Development for their various platforms by sharing the technical information necessary to make sure the Apps work properly.

Notwithstanding, Lodsys is becoming a real pain in the neck for App Developers and for those who rely on App Developers. According to The Guardian, “App developers are withdrawing their products for sale from the US versions of Apple’s App Store and Google’s Android Market for fear of being sued by companies which own software patents…”

But why is Lodsys going after App Developers? On their blog Lodsys explains why they are going after Application developers and websites rather than operating system vendors and device manufacturers:

The economic gains provided by the Lodsys inventions (increase in revenue through additional sales, or decrease in costs to service the customer) are being enjoyed by the business that provides the product or service that interacts with the user. Since Lodsys patent rights are of value to that overall solution, it is only fair to get paid by the party that is accountable for the entire solution and which captures the value…

Who knows why they are really going after App developers, but the fact that they are low hanging fruit — easy targets, sitting ducks even — no doubt played a part. It is becoming an increasingly popular troll strategy to sue exceptionally small companies and individuals. When faced with a small payment demanded to license patents versus the large cost of fighting many, if not most, small companies and individuals will simply fold and make the extortion-like payment even when the fully believe (or know for certain) they do not infringe the asserted patents. While that might be a part of the Lodsys strategy it seems that perhaps they are trying to be the biggest pain they can possibly be, thereby forcing the operating system vendors and device manufacturers to enter into an expensive blanket license that covers App Developers.

Of course, Apple believes they have already acquired a blanket license that covers their App Developers. In the aforementioned Apple letter Sewell further explained:

Through its threatened infringement claims against users of Apple’s licensed technology, Lodsys is invoking patent law to control the post-sale use of these licensed products and methods. Because Lodsys’s threats are based on the purchase or use of Apple products and services licensed under the Agreement, and because those Apple products and services, under the reading articulated in your letters, entirely or substantially embody each of Lodsys’s patents, Lodsys’s threatened claims are barred by the doctrines of patent exhaustion and first sale.

Meanwhile, the industry is not sitting still. Article One Partners, who has made a name for itself as the premiere crowd sourcing, prior art locating company in the world, has three different studies aimed squarely at the four Lodsys patents. See Help Article One Save the Angry Birds! The Article One network is extensive, geographically diverse, well educated and tech savvy. They have over 1 million researchers worldwide signed up on their platform, approximately 10,000 researchers have actually submitted prior art references to a study and more than $1.4 million in reward money has been paid out to those finding useful prior art. So if you are a fan of Angry Birds or you just hate the assertion of patents that shouldn’t have been granted in the first place, sign up to be an Article One researcher. You might just help save Angry Birds, or find great prior art for one of their other studies, which could put some extra money in your pocket.

In any event, this patent battle looks like it will be a long one. To use a baseball analogy we are only in the first inning, and the top of the first at that, so stay tuned!

– – – – – – – – – – – – – –

(*) Tip of the hat to FOSS Patents for being the first to notice the Lodsys lawsuit against Angry Birds maker Rovio.

(**) I do not know whether Lodsys’ attorneys are working on a contingency basis, but that does seem to be an increasingly popular model for patent trolls to use.

Gene Quinn Gene Quinn is a patent attorney and a leading commentator on patent law and innovation policy. Mr. Quinn has twice been named one of the top 50 most influential people [...see more]

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

48 comments so far.

Blind Dogma
August 2, 2011 10:27 am
“Those clamoring for “more substance” would be well advised to do their own homework first.”

This rings hollow given the lack of substance to the plethora of questions already asked.

A truce is not in the cards – the ball is in your court Ron and will remain in your court until you care enough to do more than feign indignation at my requests for you to do more than just throw a skeleton of an idea out as a solution.

So it is you that needs to be “well advised.”
patent enforcement
July 31, 2011 10:15 pm
It would be a shame if litigation by patent trolls like Lodsys hindered innovation by small-operation app developers. Unfortunately, reports indicate that this is starting to happen.
http://www.youtube.com/watch?v=LkQELhZeDYQ
Ron Hilton
July 29, 2011 11:41 pm
Far from being newly introduced, it’s been noted repeatedly on this forum that the lower track/tier would have an applicant-controlled delay. In the USPTO three-track proposal it can be up to 30 months. Those clamoring for “more substance” would be well advised to do their own homework first.
Blind Dogma
July 29, 2011 08:54 am
“Bottom line, don’t impute false dichotomies where no either/or proposition was made or implied.

Ron, I have no clue as to what you are implying with this statement .

The three points you put forward immediately above:

Point one: I called you out for the attempt to piggyback your vapid version of “Try the Tier” with the end of fee diversion. It was you that implied that such an end was all that was needed to make your still unsubstantied version of Tiers workable.

Point two: I asked you to clarify your newly introduced “deferred examination” – I will ask again – Is there, then, a time limit on the non-abandonment of a lower tiered registration?

Point three: you present a truism – something that is true regardless of the type of examination system. To this I reply, So what? This point in no way serves your argument for “Try the Tier.”

Step up to the plate Ron – give us some substance.

Why don’t you simply address the problems that I pointed out rather than this constant running around?
Ron Hilton
July 28, 2011 11:50 pm
Success with intellectual property can be enhanced by:

Ending fee diversion AND increasing funding through higher fees for higher tiers

Defering examination AND lowering fees for the lower tiers

Developing a marketable invention AND protecting it with the earliest possible filing date.

Bottom line, don’t impute false dichotomies where no either/or proposition was made or implied.
Blind Dogma
July 28, 2011 05:34 pm
“Fee diversion and underfunding in general are part of the problem here. The higher fees for higher tiers would help to address the timeliness/pendency issue.”

Except they won’t. Simply having higher fees is meaningless without actually ending fee diversion. Ending fee diversion is completely separable from any tier proposal (even empty valued ones).

“to establish an earlier priority date, without the automatic one-year abandonment of provisionals”

At last, a new wrinkle and additional information !! Is there, then, a time limit on the non-abandonment of a lower tiered registration?

“ I don’t think that is at all out of the ordinary. Patent rights are an important check box but not a primary driver of business decisions.”

In essence then, you are gutting the rationale you offer your deal as (even a mistaken) notion that a tiered system’s lower tiers can drive 6 figure transactions. I say mistaken notion as I have previously (but this seems to have been handwaived away) even provisional applications alone (not even to the point of the now admitted part of a portfolio) can still be written to the extent that they are ready for beign a non-provisional patent, and such can be properly evaluated as to a likelyhood of turning into an actual patent – there is a singular process effect in today’s real world, unlike that chimera offered by (incomplete) tier ideas.

Well Ron, one out of three aint bad.
Richard Catalina
July 28, 2011 11:32 am
Gene,

Thought provoking, as usual. Thanks. BTW, what’s so wrong with suing The New York Times? After all, 99.9% of this country is petrified of taking on this bastion of “progressive” ideology!

Best,

Richard
Ron Hilton
July 28, 2011 11:02 am
“I’ve dealt with reexaminations, and although they are “supposedly” done with special dispatch, they still take a couple of years. Your “12 months or less” is a pipe dream in today’s USPTO.”

Fee diversion and underfunding in general are part of the problem here. The higher fees for higher tiers would help to address the timeliness/pendency issue.

“To claim an early priority date??? Really, do you not know what provisional applications are used for?”

A lower tier/track would have a similar purpose, to establish an earlier priority date, without the automatic one-year abandonment of provisionals. One year is often not enough time for the other important business activities involved in commercializing an invention (mariket research, competitive analysis, funding, etc.).

“I bet there was more to the 6 figure amount than you simply transferring a single provisional application to some company.”

Naturally the license was not only for the provisional, but also any future applications claiming priority to it, both domestic and foreign, and any continuations thereof. The company wanted access to the technology, and the state of patent prosecution was secondary. I don’t think that is at all out of the ordinary. Patent rights are an important check box but not a primary driver of business decisions.
Blind Dogma
July 27, 2011 03:39 pm
Gene,

You are mistaken to think that just becuase I bag on Ron that I am not open to new ideas – even ideas of a tiered system. This is not the first time you are making this mistake.

My beef with Ron is that he throws out his idea – without subtance – and has refused to engage in discussing all of the holes that I have poked – in his version of a tiered system.

Above I noted that you are correct in calling out for comments with substance.

But your singling out my comments after that point are a mistake – especially as you let slide the vacuous “Try the Tier – Try the Tier” Ron Hilton Squawking.

As I have stated, I welcome Ron’s actual answers to the questions I have posted – I welcome the sharing and development of that idea. I have a real bone to pick, though, when the proponent of an idea refuses to acknowledge the weaknesses and pretends that such do not exist. Merely repeating, as Ron does, the squawk falls to the very “without substance” that you ask all of us to refrain from.

You need to make sure Ron is aware of this too.
Gene Quinn
July 27, 2011 12:54 pm
BD-

Just because you don’t like the idea of a tiered patent system doesn’t mean that the idea is without merit. I have proposed something similar in the past. It is clear that such a system could be created that would not present any problems whatsoever. Give people the choice. Most patents are useful commercially, so treating them identical from the start seems a bit foolish. We should expend resources in a far more wise manner. Letting applicants decide the threshold of review makes sense. It could be a choice.

I am in favor of the USPTO reviewing patents prior to the initiation of a patent infringement lawsuit. That would have to be done far quicker than reexamination, but if the entire system were streamlined this would be possible. A system could also be put in place that would prevent the redundancies involved in litigating patents. Having the Reexam Unit, the ITC and the District Court doing the same work is a terrible inefficiency.

I think what you need to do is stop thinking about how a particular idea or proposal would fit within the broken system we have and think about how the entire system could be changed to work better from a procedural standpoint.

-Gene
Ron Hilton
July 27, 2011 12:00 pm
“Nobody in there right mind would want anything less than a gold-plated application (for reasons discussed above).”

I have seen no reasons provided for the above statement, only unsupported assertions. I have provided substantiation for the opposite view, that patent rights which have not been fully perfected nevertheless do have commercial value. Specifically, provisional patent applications and pending non-provisional patent applications can be and in fact are licensed and/or assigned in exchange for real money. I won’t leave this point to respond again to any other objections until this key issue has been thoroughly addressed.

“The cost-benefit analysis I spoke of recognizes that it is a lot cheaper to get 90% perfection than it is to get 95%, which is itself a lot cheaper than to get 99%. For the vast majority, getting 90% is good enough.

This is exactly my point. The current one-size-fits-all system does not recognize this reality.

“However, for those that need 95% or 99%, there are other routes to go — reexamination, litigation. In this instance, the people that are most affected pay the bills.”

This is where I disagree. Reexamination is only as effective as the prior art search upon which it is based. Litigation is a much more costly way to establish validity, and much of the cost burden is improperly shifted to the accused infringer of a patent which may turn out to be invalid.
Anon
July 27, 2011 10:53 am
“Yes, that’s exactly the problem.”

That not a problem – that’s not a bug. It is a feature.

Your attempts at obfuscation are as pathetic as they are futile, IANAE.

Your particular strawman of showing up on the doorstop still fails – because you only stated “what I claim” – there was no Government sanctioned evidence in your hypothetical.

So quickly to jumping and changing your hypothetical does not bode well for the position you want to take. Gene has already warned you of your tendency to prevaricate and you are on a a short leash for such shenagans – this is not Patently-O.

Do you really want to push that edge with such a flimsy argument?
Just visiting
July 27, 2011 10:00 am
“The PTO grants patents that sometimes read very broadly on the prior art that people should have every right to practice, and then those people are forced to spend millions of dollars to defend their right to lawfully get on with their lives.”

Oh please, if what you said is true (i.e.,read ery broadly on the prior art) then I’ll get your “bad patent” into reexamination in $20K. If you’ve already found the art, I’ll give you a discount. Again, if what you said is true, then that patent will go “bye bye” and you’ll never have to worry your little head about it again.

What a bunch of chicken littles ….

“I showed up at JV’s door with a strong presumption that I owned his house.”
Don’t know much about real estate either? It’ll cost me a couple hundred dollars to get someone to do a seach of the town’s registry to determine whether or not that deed was properly recorded. If it is, in fact, real, then I’ll have a claim against my title insurance. If your deed is fake, I’ll know it in about 24 hours — make that an hour if I want to do the job myself.

“entirely relevant in this forum to question the presumed validity of patents as granted under the current system”
You can, but as I mentioned before, there is a cost-benefit analysis to perform. There were close to 500,000 US patent applications in 2010. Nobody in there right mind would want anything less than a gold-plated application (for reasons discussed above). Let’s say that the additional cost of “gold plating” is a mere $2,000 (which is an extremely conservative number). This means that we are going to spend $1T a year to increase the percentage of art searched from 80-90% to 85-95%??

The cost-benefit analysis I spoke of recognizes that it is a lot cheaper to get 90% perfection than it is to get 95%, which is itself a lot cheaper than to get 99%. For the vast majority, getting 90% is good enough. However, for those that need 95% or 99%, there are other routes to go — reexamination, litigation. In this instance, the people that are most affected pay the bills.
Just visiting
July 27, 2011 09:40 am
“One of the main points of this article is that the validity of the Lodsys patents was questionable enough to have triggered a prior art search which is much more exhaustive than that undertaken by the USPTO.”

Uhhh … that likely happens with the vast majority of patents that get asserted — regardless. There is nothing special about the Lodsys patents except that they are going after something that many people are familiar with (e.g., the company behind Angry Birds).
IANAE
July 27, 2011 09:24 am
The important point and not even a subtle one is that a patent is presumed valid.

Yes, that’s exactly the problem. The PTO grants patents that sometimes read very broadly on the prior art that people should have every right to practice, and then those people are forced to spend millions of dollars to defend their right to lawfully get on with their lives. What’s worse, they might not even succeed because of the strong presumption of validity.

That’s why, in my hypothetical, I showed up at JV’s door with a strong presumption that I owned his house. Got any comments on that particular fact situation?
Blind Dogma
July 27, 2011 07:28 am
“Hence it is entirely relevant in this forum to question the presumed validity of patents as granted under the current system, and explore possible improvements to that system to help strengthen that key assumption.”

Ron,

No one is saying that certain intelligent ideas are not relevant in this forum, or that possible improvements should not be explored.

However, your vacuous “let’s try my discredited tiered system” does not qualify as relevant or as an improvement – not until you can answer the questions I have put to you.

I am not looking to shut you up in so far as you speak intelligibly and complete your idea. But if you are going to merely squawk “Try the tier, try the tier,” when serious holes have been shot through your tier idea, how do you begin to expect that your irrleavant and non-improvement idea will not be challenged?
Ron Hilton
July 26, 2011 05:42 pm
One of the main points of this article is that the validity of the Lodsys patents was questionable enough to have triggered a prior art search which is much more exhaustive than that undertaken by the USPTO. Hence it is entirely relevant in this forum to question the presumed validity of patents as granted under the current system, and explore possible improvements to that system to help strengthen that key assumption.
Anon
July 26, 2011 04:43 pm
IANAE,

The important point and not even a subtle one is that a patent is presumed valid.

Your attempt here at spinning the table and shilling for infringer’s rights is downright pathetic.

Now after the patent has been proven invalid, and then – and only then, if the invalid patent holder attempts to enforce the invalid patent and forces someone to spend the money – only then would the logic of your mindtrap play out. Until that actual moment – there is everything wrong with infringing a valid patent.

There’s every reason to make people prove that they have a right to violate the government sanctioned patent. Until you actually prove that the patent is indeed invalid, you must be mindful of just who the innocent party is (and it is not the transgressor).

Your little “show a deed… clearly… unless…” word game is duplicitous from the start. Check your assumptions and your agenda, at the door.
IANAE
July 26, 2011 02:47 pm
Again, you want to coddle the allege wrong-doers … poor things, got their hands caught in the cookie jar and you want to rescue them from some pain … next time, don’t infringe and you don’t have to worry about proving invalidity.

JV, you’re missing a very important point here, and not even a subtle one. There’s nothing wrong with “infringing” an invalid patent. An invalid patent claims subject matter that should rightly be in the public domain, and should never have been granted in the first place. There’s no reason to make people pay millions of dollars to defend their right to do what should never have been restricted. These “infringers” are not criminals or tortfeasors or even bad people.

Suppose I knock on your front door and show you what I claim is a deed to your house. You’re clearly trespassing, so you’ll have to get out unless you can show that my deed is invalid. What’s that? Your lawyer will bill you five million dollars to prove I don’t own your house? Well, too bad. Next time, stay out of my house and you won’t have to worry about such things.
Blind Dogma
July 26, 2011 02:31 pm
Ron,

Feel free to so suggest, but just realize that those critical lapses in your explanation would thus doom any part of your suggestion in the current blog article.

Until you come face to face and work through those critical errors, it matters not where you want to apply the concept – it is flawed and will not work – either on its own or as part of any new article.

I may not catch every time you try to slide such slop into a conversation, but be aware that if i am aware of your attempt, I reserve my right to point out your continued lack of response to critical flaws. It is far less “rehash” as it is you answering critical questions for the first time and working through the gaping holes that you prefere that everyone turn a blind eye to. Rehash? Seriously Ron – let’s paint the correct picture.

And I did not “dismiss with no substantive explanation” – funny how the one who refuses to give his own pet idea a substantive once over now claims a lack of substantive discussion. Sorry Ron – that just rings hollow. – especially as you hand waive away in the immediately preceding paragraph with a self-declared fundamentally flawed at its core position. Seriously? At the very least you can point out in detail why the idea is fundamentally flawed and invite the proponent to fill in the holes (you know, like I did with your idea).
Just visiting
July 26, 2011 01:41 pm
“As in both Kristen Osenga’s multi-tier proposal and the USPTO’s multi-track proposal, the top tier/track would receive _accelerated_ examination. 12 months or less. Much faster than the years typically required for litigation to run its course.”

The bill of goods sold to the patent community when we went from 17 years from issuance to 20 years from filing is that all patents will be examined completely within 3 years so there is no loss of term. Today, getting a first office action in 3 years is an achievement. I’ve dealt with reexaminations, and although they are “supposedly” done with special dispatch, they still take a couple of years. Your “12 months or less” is a pipe dream in today’s USPTO.

“The many arguments that boil down to equating _alleged_ infringement with _proven_ infringement are fundamentally flawed at their core and need no further rebuttal.”
Which ones are those???? You swept a whole lot under the rug with no explanation.

“If the right to obtain a property right has no value, then why are provisional applications so widely used?”
To claim an early priority date??? Really, do you not know what provisional applications are used for?

“I could repeat my own experinece in obtaining a 6-figure license agreement with a major corporation for a provisional, but the response to that last time was a high-handed dismissal as being irrelevant with no substantive explanation as to why.”
Congratulations. Most companies won’t even touch a non-provisional application unless there is a notice of allowance (or indication of allowance subject matter). Either you invented some kickazz technology or you found a sucker. FYI, assuming that you are telling the truth, I bet there was more to the 6 figure amount than you simply transferring a single provisional application to some company.
Ron Hilton
July 26, 2011 12:46 pm
As in both Kristen Osenga’s multi-tier proposal and the USPTO’s multi-track proposal, the top tier/track would receive _accelerated_ examination. 12 months or less. Much faster than the years typically required for litigation to run its course.

The many arguments that boil down to equating _alleged_ infringement with _proven_ infringement are fundamentally flawed at their core and need no further rebuttal.

If the right to obtain a property right has no value, then why are provisional applications so widely used? I could repeat my own experinece in obtaining a 6-figure license agreement with a major corporation for a provisional, but the response to that last time was a high-handed dismissal as being irrelevant with no substantive explanation as to why.

If I have reposted the mutli-tier concept several times, it is simply because so many of the excellent articles on this blog have highlighted another useful case in point where it could be part of the solution. May I suggest that a discussion in light of the current blog article would be more worthwhile and interesting than rehasing dissatisfaction with the outcome of past discussions.
Blind Dogma
July 26, 2011 08:21 am
Gene,

You have a point on the substantive replies – however, why should I retype the questions I have already put to Ron, when Ron still has not answered those questions? Shall I tip-toe around the tulips until Ron comes forward with his necessary answers with substance?

Ron’s perpetual insertion of a tiered system that will not work should be the point of your call for substance, as Ron continuously throws out the idea, knowing that he has not provided answers to the questions I have already asked.

Let’s see a call for substance to this shrill contiuous reposting of an idea that has not yet answered the challenge.

The bottom tiers are worth ZERO, because they have no enforceable meaning under the law. Sure , they can be licensed and assigned per Ron’s idea, but there is no penalty for breaking that license, or mistreating the assignment, because without the ability to enforce the right being assigned or licensed, all you have is the equivalent of a future “agreement to agree.” It is unclear just what legal right there is in a “right to try to get a property right” – that righ tbelongs to everybody witout any constraint of assignment or license. Such is equivalent to today’s inchoate patent right, and no assignment or license can legally restrain this inchoate entity. Ron’s idea is stillborn.

In addition, such worthless tiers will run into international dilemmas – how exactly does such worthless lower tier “right to pursue something else” align with the international agreements we have locked ourselves into? I do not expect any answers from Ron in this area either.

As a critical analysis of Ron’s posts though, it appears that the animus is the belief that there are too many “bad” patents getting through the system. These too many “bad” patents cause all the trouble, and the system needs to be ratched down so that there are no “bad” patents. Ron’s ratcheding down mechanism is to merely “highly escalate” the cost of getting an enforceable patent. To Ron, this would prevent “trolls” from getting their hands on patents and causing the havoc we see today.

This is a fallacy in many regards (which I have previously pointed out and to which Ron has provided no answers).

“Trolls” do not generally prosecute patents – generally, they aquire them second-hand. In Ron’s system, “trolls” would still aquire patents – albeit those that have ascended to the top tier – so Ron’s solution simply would not work for the percieved problem.

Ron is also under operating under the fallacy that litigation is out of control.

It is not.

As I have put forth many times (I am sure that you will agree in a substantive manner) the actual rate of litigation – per the number of active patents – and not just per the number of new annual patents – is dropping. The inordinate fearmongering call of “litigate” simply does not wash with the substance of reality.

Another errant point realted to litigation is that only the “worthy” would be litigation proof. But understanding the fallacy of the lititgation threat empties this point as well. I wonder how many of the Nortel bunch were actually llitigated, and we see the value that the market provides for that bunch. The market value control is much more effective than the forced by higher price mechanism that girds Ron’s tiered system. The market knows how to realize value (as in benefit per cost). Ron’s emasculation answer would merely lower the general value of patents by raising the denominator of cost at the same time destroying the value of all those that do not attempt the gold plated tier by driving the numerator of value towards zero. By looking at value thus defined, it is easy to see that the fallacious tiered concept, what little is presented, destroys rather than enhances the notion of patenting. Killing the patient is no way to cure the malady.

Ron assumes that only a truly exhaustive search should yield a patent (I will henceforth call only Ron’s top tier result a patent – the bottom tiers are not true patents and do not deserve to be so labeled). For achieving this actual rank, Ron wants a step fee. Once again, the cannard of the “Sport of Kings” finds its way into the patent system. This is a load of bunk and is anti-patent, as all this achieves is driving the ability to play the game into the reserved domain of those already in control of the market.

Ron appears to have a problem with the presumption of validity. The i4i result must have been depressing for Ron.

However, the answer is not in being anti-patent.

I do not wish to repeat the counter points raised by Just visiting (I do not expect Ron to provide aswers to these points either), but I will offer another critique. I think the underlying issue for Ron is patent Quality. But rather than address the issue of increasing the ability to do a quality job (Ron had de facto thrown in the towel on ever doing a “good enough” job), Ron’s idea is to wreck the system. He speaks of fairness, yet creates a system where only the very rich get actual enforceable rights. Attempting to get perfect quality simply is not living in reality. I would suggest that going down Ron’s path of accepting the fact that “perfect” quality cannot be achieved requires the emasculation of the patent right would lead not to a tiered system, but to a registration system. Why bother at all with the bottom two tiers – any effort there towards even a minimal search and examination is wasted because you have no enforceable result – to be able to enforce your right, you must surrender that which you have and start over. It is but a small step to collapsing the tiered system into such a registration bottom level and an intense (and pricey) actual enforceable level.

Quality should not be looked at as such an all or nothing venture. That simply is not reality. Rather, the Office does the best it can in a deliberate (and if properly completed) realistically meaningful way. There are mechanisms in place to catch errors, but the measure of trust that the system works is the value the market sees in patents. Ron’s gold plate machine has no market forces calling for its enaction except those market forces that want to crush the current ability of the small player to achieve a patent.

Fairness? Really Ron, if you take the time to fill in the missing pieces of your idea you would see that which you continue to push is a fallacy.
Valerie Rose
July 26, 2011 03:40 am
They just don’t know when to give up do they. Sueing other big companies really doesn’t show that you have balls and i really hope Lodsy gets the crap that it deserves from this lawsuit. Here is another article about Angry lodsy suing acting like little girls and sueing angry birds creator Rovio: http://radiomobiletech.com/news/news-news/the-maker-of-angry-birds-sued-by-the-angry-lodsy.html
Just visiting
July 26, 2011 12:01 am
“Only the top tier needs to be “gold plated” as a prerequisite to litigation.”

And how many years is that going to add to the process? It already takes 3-8 years to get a patent. If I get a tin-plated patent and I want to upgrade, do I have to wait another 3-8 years?

“I’m not saying that it’s not costly to the plaintiff. It’s the cost to the defendent that is the issue, and having to prove invalidity is the most costly element of defense.”
They don’t have to prove invalidity …. it is their CHOICE to prove invalidity. They can simply assert “we are not infringing” and be done with it. However, if they are infringing, then why should I care if they have to spend some money to allege invalidty? Don’t infringe, and that’s the end of it.

“the marginal additional cost to “gold plate” the patent is not an undue burden.”
Again, except that it will takes god-knows how many years to get that gold plating. Also, if you are simply negotiating (regarding a license) if you don’t have the threat of a lawsuit, the other side will just thumb your nose at you — this means that all patents that are in play need to be “gold plated.”

Again, you want to coddle the allege wrong-doers … poor things, got their hands caught in the cookie jar and you want to rescue them from some pain … next time, don’t infringe and you don’t have to worry about proving invalidity.

“That risk would be much higher than a traditional reexam, because under the current system, the defendant, for whom cost mostly likely is a major factor, cannot afford the expense of an exhaustive search and opts to settle instead”
BS … over the long run, motivated defendents are going to find better art than the USPTO. First, they are (presumably) experts in the art because that is what they do. Also, as I mentioned before, their azzes are on the line if they cannot find better art. They have better contacts within the industry and know where NPL can be found that the USPTO doesn’t know about.

If an infringer cannot afford the expense of an exhaustive search, then they shouldn’t be infringing.

A “gold plated” patent won’t work the way you want it to work because the USPTO doesn’t care. Its not their money. Its not their livelihood. If they don’t find that magic bullet, they aren’t going to lose sleep over it. As I’ve said before, patents get gold plated when they go through litigation.

“The point is, an exhaustive search takes far beyond the number of man-hours that the USPTO can feasibly afford to devote to every single application.”
The USPTO does the best they can, and then they move on. There is a cost-benefit analysis that is in play here, and ultimately, the cost of doing more extensive searches doesn’t outweigh the benefits in most circumstances. Moreover, the benefit of doing a more extensive search is mostly for the infringer, which is why they should be paying for it.
Gene Quinn
July 25, 2011 11:05 pm
Come on BD. Participate substantively. I don’t mind kook-aid references, they are amusing, but it is the who, what, where, when and how that make for a good debate.

Cheers.
Ron Hilton
July 25, 2011 06:34 pm
I’m not arguing for “gold plating” patents that will never be asserted/licensed! That’s the whole point of multi-tier. Only the top tier needs to be “gold plated” as a prerequisite to litigation.

When I say that it’s too easy to bring a frivolous infringement suit, I’m not saying that it’s not costly to the plaintiff. It’s the cost to the defendent that is the issue, and having to prove invalidity is the most costly element of defense. If the plaintiff is willing and able to go the expense of bringing suit, the marginal additional cost to “gold plate” the patent is not an undue burden. The real deterent to the plaintiff would be the risk of invalidation from the more exhaustive search that would be required. That risk would be much higher than a traditional reexam, because under the current system, the defendant, for whom cost mostly likely is a major factor, cannot afford the expense of an exhaustive search and opts to settle instead.

I will take back my assertion about searching the whole universe. Statistically, maybe it only takes searching _half_ the universe on average to find that one invalidating piece of prior art. The point is, an exhaustive search takes far beyond the number of man-hours that the USPTO can feasibly afford to devote to every single application.
Just visiting
July 25, 2011 03:35 pm
“I reject that the burden of proof for should be on the accused infringer.”

Well, I’m not litigator, but I’m sure the burden of proof is on the patent holder to show infringement. However, if the alleged infringer wants to plead a defense (e.g., invalidity), then the burden should be on the person making the pleading (i.e., the alleged infringer).

“That flies in the face of the presumption of innocence until proven otherwise.”

This isn’t a criminal trial …. next. Besides, the patent holder has to present a prima facie case and establish, by a preponderance of the evidence, infringement … so there is your “presumption of innocence.”

“A multi-tier system shifts that burden of proof and motivation to the patent applicant/holder”
It does … see above. However, if you want to plead a defense, then it is a different story.

“invalidity requires comparing the patent with the entire universe of prior art.”
No … all you need is one good piece of prior art. As I mentioned before, the person MOST MOTIVATED to find that one good piece of prior art is the alleged infringer. The USPTO doesn’t REALLY care if they find that piece of art or not. If an Examiner doesn’t find that piece of art after 20 hours of searching, they aren’t going to be wracking their brain when they go home, trying to figure out what they may have overlooked. This is one of the selling points of our adversarial judicial system – each of the parties are exceptionally motivated to find all the relevant facts and relevant case law. This just doesn’t happen in an ex parte system, such as that at the USPTO.

Sorry … but your call for alleged wrong-doers (i.e., infringers) to get coddled doesn’t resonate. The system is balanced, as it is.

“is too costly and inefficient, not to mention unfair”
It is costly … but then again, the stakes can be extremely high. It is more efficient than trying to “gold plate” thousands or even hundreds of thousands of patents that will never be asserted/licensed. Unfair to whom? The infringer? Again, alleged wrong-doers don’t stir up a lot of sympathy.

“Under the current system, it is simply too easy to bring a false charge of infringement based upon a patent of questionable validity.”
Uh, no. The whole getting a patent (either by your own or buying someone else’s patent can be quite expensive). Moreover, litigating a patent is not an inexpensive endeavor either. Anybody filing a patent suit has to be prepared to spend at least a million if not much more – as such, it is NOT “simply too easy” to file a suit based upon patent infringement (false or not). Also, if you assert a weak patent, then having your patent reexamined is a likely scenario.

Your perspective is skewed because patent infringement suits are well-publicized whereas settlements, although much more common and less expensive, are rarely publicized and oftentimes kept secret.
Blind Dogma
July 25, 2011 02:17 pm
“ I reject that the burden of proof for should be on the accused infringer”

As Ron tries to hide the Kool Aid stains around his lips… (at least we now understand where the gruel is spooned from)

“That’s the root of the “troll” problem.”

Sigh,.. again with the ‘trolls”. Stan, how is the new taste treat of BOO!! Bogeyman Blueberry coming along?
Ron Hilton
July 25, 2011 10:49 am
The current multi-hurdle system (examination, reexam, pre-trial, trial, appeal) is too costly and inefficient, not to mention unfair. I reject that the burden of proof for should be on the accused infringer. That flies in the face of the presumption of innocence until proven otherwise. Both the plaintiff and defendant are motivated. A multi-tier system shifts that burden of proof and motivation to the patent applicant/holder, where it belongs. Under the current system, it is simply too easy to bring a false charge of infringement based upon a patent of questionable validity. That’s the root of the “troll” problem. Granted, a troll could still bring a false charge of infringement based upon a strong, valid patent. But that is much easier, less costly case to argue. Infringement only requires comparing patent with the defendant’s product, whereas invalidity requires comparing the patent with the entire universe of prior art.
Just visiting
July 25, 2011 09:02 am
“But patents still carry the same presumption of validity from an earlier time in history” … when the search was likely less comprehensive than it is today.

“Neither fee-paying patent applicants nor the US tax-paying public at large can afford to hire the number of USPTO personnel that would be required to perform a truly exhaustive search on every single patent application.”
I’ve said this many times, the BEST searches get done by a motivated party — which is 99.99% of the time a person getting sued on the patent. They are they ones that are going to chase every rabbit down every hole in the effort to find a good 102 reference.

In the mean time, we need to find a system that works in the real world. There were approximate 40,000 motor vehicle deaths in the US last year. Almost all of them could have been prevented if everybody was forced to drive in padded tanks that had their speeds limited to 5 MPH. However, that is an unworkable system that would impose much higher costs than is necessary. Of course, we can require that only those people that are going to have a crash need to have those restrictions applied to them — but then again, most people’s crystal balls don’t work well enough to foresee that happening.

We already have a multi-tier patent system. The lowest tier is a patent coming out of USPTO. A “second tier” patent is one that has survived reexamination. The next highest tier is a patent that has survived Markman. After that is a patent that has been full litigated. The highest tier is one that has survived the Federal Circuit.

I can guarantee you that a potential purchaser will look at a patent that has survived both reexamination and the Federal Circuit as being “more gold-plated” than a patent just out of the USPTO.

So … there you go … here is your multi-tier patent system ….
Ron Hilton
July 24, 2011 11:08 pm
The prior art search methodologies and technologies employed by the USPTO have not kept pace with exponential information explosion of modern times. Search engine technology is a step in the right direction, but there is still a great deal of informaiton which is not readily searchable on-line. Maybe the time will come when the internet will become ubiquitous enough and search technology powerful enough that a single examiner can perform an exhaustive world-wide prior art search within the few hours allotted to that task. That day is not yet here. But patents still carry the same presumption of validity from an earlier time in history, when the search problem was more tractable. Neither fee-paying patent applicants nor the US tax-paying public at large can afford to hire the number of USPTO personnel that would be required to perform a truly exhaustive search on every single patent application. Some sort of resource rationing is inevitable. That is why a multi-tier system with a steeply graduated fee structure makes sense. Only that relatively small proportion of patents that are ever likely to be litigated would require and could economically justify the cost of the most extensive prior art search.
Blind Dogma
July 24, 2011 09:38 pm
“A lower-tier patent would have the right to upgrade to the top tier through reexamination based upon a more extensive prior art search. ”

Yes, the joy of submitting to, and paying for, the job that should have been done in the first place. Don’t forget to surrender everything you have in your lower tiered “patent” in order to go through this process – oh wait, that’s easy because it is nothing.

“might deter the holder of a weaker patent (such as a troll)”

Another cannard – the so-called trolls are already interested in strong patents. This cannard was debunked over at Patently-O and Peter Zura’s blogs for quite some time now.

“A lower tier patent could also be assigned, sold, licensed, etc. based upon its potential commercial value, depending on how strong the assignee/licensee believes it to be.”

That and the Brooklyn bridge go cheap. Tell me one thing though ROn, how will this pre-actual patent-that-is-not-a-patent jibe with general public disclosure (existing, especially for those wanting foreign rights, and potentially future versions) of patent law? Silly me, I am asking for another answer to add to all those other questions that you have still left out there.

But don’t let this stop you from putting forth the gruel of your three tiered idea. It’s just a little sad that pretty much any variety of Kool Aid I sell has more consistency.
Just visiting
July 24, 2011 08:47 pm
Interesting patents … quite broad.

They both claim priority back to U.S. Patent Application. No. 07/926,333, filed Aug. 6, 1992. It is going to be tough to find art going back that far.

Then again, not much term left on these patents.
Ron Hilton
July 24, 2011 07:06 pm
A lower-tier patent would have the right to upgrade to the top tier through reexamination based upon a more extensive prior art search. Whatever claims survived the reexam would then become enforceable in court. The cost (of the search) and risk (of invalidation) associated with upgrading might deter the holder of a weaker patent (such as a troll) from bringing a frivolous infringement suit. A lower tier patent could also be assigned, sold, licensed, etc. based upon its potential commercial value, depending on how strong the assignee/licensee believes it to be.
Paul F. Morgan
July 24, 2011 03:33 pm
Re the Apple license and the Apple Apps developer-suppliers being sued, a normal patent license inherently includes a “have made” right even if not expressed, if not expressly excluded. COREBRACE LLC, v.STAR SEISMIC LLC, Federal Circuit. May 22, 2009.
Gene Quinn
July 24, 2011 03:13 pm
Corporate Refugee-

You might be correct on that point. As things unfold that will be something I will keep my eye on. Thanks.

Paul Morgan-

You say: “faster PTO handling of patent reexaminations [as the statute requires] is absolutely vital.”

AMEN!

Scott-

I suspect that if Article One Partners comes up with good prior art you will see, and likely be writing about on your blog, a reexam request for the Lodsys patents. It is not cheap to initiate a search with Article One, so the fact that there are searches ongoing suggest that someone is quite interested in taking out these patents.

Cheers everyone.

-Gene
Gene Quinn
July 24, 2011 03:09 pm
Ron-

Point of clarification. What right would a patent owner have if they didn’t get a top tier patent in your multi-tier patent system? The right to bring an infringement suit in the case of real infringement would seem paramount to any form of exclusive right.

-Gene
Gene Quinn
July 24, 2011 03:07 pm
Robb-

No blatant advertising for Article One Partners at all. In fact, they are not an advertiser on IPWatchdog.com. They pay me nothing presently, have paid me nothing in the past, and I have no reason to expect they will pay me anything for advertising in the future.

Go ahead and question the objectivity of my writings if you want, but that would be foolish on your part. Of course, your comment suggests that you are not beyond being foolish; willing to jump the gun in a public way without any information to back up your hypothesis.

If you want to get mentioned in an article on IPWatchdog.com then do something newsworthy. You could also COMMUNICATE WITH ME IN PRIVATE. I have a host of industry professionals that I communicate with, bounce ideas off and talk to in order to keep my finger on the pulse of the industry. I have never made a secret about the fact that I respect Cheryl Milone of Article One Partners, I have interviewed her in the past, I talk with her regularly, and whenever there is a high profile patent litigation Article One Partners is not far away from the thick of things from a prior art standpoint.

Finally, as far as my objectivity, no one who seriously looks at my body of work or any particular article could in any way question my objectivity. I call them like I see them, plain and simple. At times that has put me at odds with the Patent Office, at times I have been cheering the Patent Office, I have been sued for my opinions, I challenge politicians I like and will likely vote for if they pursue what I believe to be bad policy and I never say anything for the purpose of hoping to be popular.

If you were familiar with IPWatchdog.com you would also know that I have absolutely no love for patent trolls. Yes, those with a valid patent have every right to pursue infringers. Patent trolls are the term I use for those who are in some way bad actors in my opinion. So the fact that Article One Partners is facilitating a search to go after what I personally believe to be troll patents puts them squarely in alignment with my view on the issue.

Had you contacted me IN PRIVATE I would have suggested that when matters of interest or importance cross your desk you reach out to me directly. I can’t write about everything, but when that happens and a story interests me I pursue it. But given your crude, presumptuous comment here I wouldn’t anticipate my being very receptive to you moving forward.

-Gene
Blind Dogma
July 24, 2011 02:55 pm
“That is why I favor a multi-tier patent system in ”

Repeat RH bogus suggestion.

Repeat same call for actual working details and answers to yet another post of the RH bogus suggestion.

Seriously Ron, why don’t you just go back to the original post and give me the answers I requested?
Robb Evans
July 24, 2011 02:03 pm
I guess I haven’t been paying close enough attention lately, but I didn’t realize, Gene, that you’re now doing blatant advertising for companies within the body of your articles. Your pitch for Article One Partners gave me a whole new perspective on the objectivity of your writings. I guess I should be equally overt and ask, How do I get my company likewise spotlighted for the great work we do?
Ron Hilton
July 24, 2011 02:00 pm
No matter how fast a reexam may be completed after the filing of a suit, it is still closing the barn door after the horse. That is why I favor a multi-tier patent system in which only the top tier may be used to bring an infringement suit, AFTER a very thorough prior art search (ala Article One) has taken place.
Jake
July 24, 2011 01:26 pm
Well written article.
Paul F. Morgan
July 24, 2011 09:11 am
The present judicial system for patent litigation provides highly inadequate protection for defendants, especially small ones, by not providing either fast or low cost law suit dispositions even for invalid or non-infringed patents, and providing toothless or trivial sanctions. Thus greatly encouraging highly lucrative patent suits for “settlements” against almost anyone on many such patents. Thus demonstrating why much faster PTO handling of patent reexaminations [as the statute requires] is absolutely vital.

[This is not a comment on the merits of any particular patent, as obviously not ALL suits by professional patent llitgation companies and contingent fee lawyers are invalid or non-infringed, but the above judical problems are rampant. Only 5% of patent suits are terminated by summary judgments, most of those are only for clear non-infringement, and many D.C.’s, including this major one, are notorious for not even considering S.J. motions until nearly the trial date, after defendants have already been stuck with millions of dollars in discovery and other pre-trial requirement costs]
Corporate Refugee
July 24, 2011 08:31 am
“After all, when Lodsys and Apple entered into a patent licensing deal what did Lodsys think was going to happen?”

Maybe I have my facts wrong, but my understanding is that Apple didn’t negotiate the license agreement directly with Lodsys. Apple licensed the patents from IV who then sold the patents to Lodsys (allegedly) subject to Apple’s license.
Scott Daniels
July 23, 2011 05:57 pm
Thanks Gene. I know that you are fan of reexamination. So far, none has been filed against the ‘565 and ‘078 patents.

But if there is a good patent or other printed publication out there, a reexamiantion request would take a good deal of pressure off the accused infringers in this case.

Scott Daniels
Westerman Hattori Daniels & Adrian
patent leather
July 23, 2011 05:34 pm
oh I stand corrected regarding theabove. The inventor in question sold the patents in question to Lodsys, a separate company from the inventor. I guess they are a “patent troll” then.
patent leather
July 23, 2011 04:21 pm
The second patent looks like to me like it has a divided infringement problem (although the en banc Federal Circuit in McKesson may come to the rescue). The claims of the first patent look OK but the independent claims seem too broad to me. I’m guessing there are some video games that predate the filing date (probably not patented) that would anticipate the independent claims.

But some people are characterizing Lodsys as an evil “patent troll”. People are going to disagree with me, but I’m not so sure I see anything objectionable about Lodsys. This is a guy who is a prolific inventor and licenses out his inventions. Is anything really wrong with this? When my clients obtain a patent but have not been able to successfully bring their product to market, I always tell them they should sit tight and be on the lookout for licensing opportunities or infringers. And by not enforcing a patent, over time the patent is subject to a laches defense (and hence devalued). So I don’t fault Lodsys.