Patent Cases Hurting Small Businesses

smudge writes "An Information Week article states that multiple small businesses with Web presence are being sued by PanIP LLC. The claims in these patents being asserted in the lawsuits refer to 'a computerized system for selecting and ordering a variety of information, goods and services' and 'an automatic data-processing system for processing business and financial transactions between entities from remote sites.'"

Comments

Vague?

[Manhigh]

I'd think any patent that uses phrases like "a variety of" is too vague.

Re:Vague?

[g4dget]

Obviously, they didn't have a good patent attorney. Good patent attorneys know that they should say "a plurality of"--it makes the patent sound more serious.

don't re-invent the wheel...PATENT it

[babylon93]

Too bad these people seem so be trying to get their money from suing others rather than perfecting the magic of E-commerce, which they basically claim to have invented.

deja vu

[outlier]

PanIP has been mentioned in slashdot before.

It seems that the disease that is PanIP has been spreading...

Is that so?

[neksys]

In that case, I'd like to assert my own patent on 'a physical system for selecting and obtaining a variety of goods and services' and 'a electronically assisted, human-run data-processing system for processing business and financial transactions between entities at a physical location.'"

Namely - any store or business with a cashier.

patent patents?

[technoid_]

Some one needs to phrase the job of the US Patent office really vaguly and then get a patent on it. Then sue the patent office for patent infringement.

hmmm, wonder if i could make this into a business plan and get some VC behind me...

Re:Okay - this is getting stupid

[Soko]

Let's just make it that if you patent something that is reviewed, and sounds like a dug-headslap type thing - you get a toenail pulled out with a pair of pliers. On severe cases - just bring back public stoning (no, not drug induced bliss - bludgeoned to h*ll with big fu***** rocks) for the offending numbskull, and his/her lawyer.

Sorry, but I already have a patent pending on this exact method. You'll hear from my solicitor in the morning (never liked him anyway). :P

Soko

Vague and foolish

[Facekhan]

Can you imagine if this lawyering tactic and blatant abuse of an overburdened patent office had taken place 150 years ago. I could patent things like "a way to use electricity for an artificial light source" and then I could have sued Edison or perhaps I could have patented "a method of towing freight along metal rails" and the railroad and locomotives would have been sued into non-existence. Its insane.

To file a Patent Protest...

[thenextpresident]

Please file a protest for patents 6,289,319 and 5,576,951

"1901.01 Who Can Protest
Any member of the public, including private persons, corporate entities, and government agencies, may file a protest under 37 CFR 1.291. A protest may be filed by an attorney or other representative on behalf of an unnamed principal since 37 CFR 1.291 does not require that the principal be identified."
http://www.uspto.gov/web/offices/pac /mpep/document s/0841.htm#sect1901.01

The whole legal system needs to be changed

[SexyKellyOsbourne]

In the United States, people currently can sue each other for any reason and any thing, and usually win, thanks to the corrupting influence of trial lawyers in Washington, DC.

There is hope, however; tort reform is taking storm in many states, and it's preventing such frivolous lawsuits from taking place.

If you don't want these small businesses to be persecuted, then drop the keyboard and write your state and federal Congressmen by snail-mail and demand that he or she fight in the Capitol for real, meaningful tort reform.

Don't wait until tomorrow -- do it now!

Re:The whole legal system needs to be changed

[jeffy124]

The problem centers around "nothing to lose" cases, where the plantiff has nothing to lose by losing the lawsuit.

In many countries (US is not one of them), if you sue someone and lose (or get caught under perjury or something), you must pay for the defendant's legal fees, and get opened up to counter-suits from the defendant. In the US, unfortunately, the plantiff can just walk away from a lost suit as if nothing happened, despite how much work (and money) a defendant can put in to defend himself. This is especially true for lawyers that hire themselves out on contingency.

Re:The whole legal system needs to be changed

[Billly Gates]

Tourt reform is sponsored by the mega corps to reduce consumers right to sue. ITs all about profit for them. At least that is Bush's version of it. Polluters love tourt reform since its expensive to prove that the pollants they discharge cause damage and to prove it would cost tens of millions of dollars. Insurance companies also love it because they can charge the same price for insurance and rake in more profits.

Re:The whole legal system needs to be changed

[broken_bones]

The idea of "nothing to lose lawsuits" is a double edged sword. On one hand if these suits are allowed then you have to worry about the possibility of having to defend against one. On the other hand if a losing plaintiff is liable for the legal fees of the defendant it provides a severe advantage to large corporations. No little guy in his right mind would ever sue a megacorporation if he had to pay said megacorporations legal fees in the event of a loss. Losing without incurring that liability is already a very expensive proposition.

Personally I think the key to tort reform is to remove the profit insentive to lawsuits by diverting punative damages to education. This would mean that if you sue Huge-Mega-Corp for something and win you would collect actual damages (ie restitution, money to compensate you for what you actually lost/suffered). Any punative damages (punishment, the bazillion dollar sums that are supposed to say "don't do that again") awarded would go to an education trust used to buy books, computers, college scolarships etc. for your state.*

*This is the first time I have ever floated this idea to anyone. If you see holes in it please respond so I can avoid looking like an idiot in the future.

Re:The whole legal system needs to be changed

[cybermage]

Personally I think the key to tort reform is to remove the profit insentive to lawsuits by diverting punative damages to education.

A few of problems with that:

First, as I see it, the truely disenfranchised (i.e., flat broke) victims of Huge-Mega-Corp's actions would not be able to attract lawyers willing to sue on purely contingency basis; and the lawyers who do so would be taking their cut out of the actual damages.

Second, the flow of cash into an education fund like you describe would likely create a government agency to administer it. Give the government a source of money to play with and two things will happen: Much will be allocated as pork, and revenue will be sought to maintain the pork programs when the fund runs low.

Third, restricting the punative damages to a single geographic area, if small enough, may give the tax payers who make up the jury a bias toward the plaintiff as it may reduce their school taxes.

Instead, what might be better, would be a statuatory compensation rate for lawyers who are granted punative judgements (say 10%, up to $500/hour.) The jury could then allocate the balance of the punative judgement to government (local, state, or federal) and/or 501c3 charitable institutions suggested by the plaintiff(s). Obviously, the plaintiff's list would be submitted only after the jury reaches a verdict and determines the amount of the penalty.

Re:The whole legal system needs to be changed

[canadian_right]

The loser should pay the winners legal fees to prevent abuse. It works great in Canada. We also have caps on punative damages. This means there NEVER billion dollar awards for pain and suffering. You can get back whatever is required to make up whtever loss your are suing for, plus reasonable damages (the cap is around $100,000). These two simple rules make silly lawsuits very rare up her in the Great White North.

This in no way stops the little guy from suing - when he is in the right. It makes it easier because when he wins he has NO LEGAL BILLS to worry about. Of course, if you are sure you are going to win you think twice about starting, but that is a GOOD thing.

Big coprs still try SLAPP suits, but many jurisdictions have anti-SLAPP legislation. All in all, this system works very well, not just in Canada, but in many countires whose law is based on English Common Law.

That's it. Call your Uncle Tony...

[certron]

OK, Amazon.com, Buy.com, bn.com, and anyone else who wants in should set up a fund to hire someone to club the kneecaps of everyone involved in this stupid, stupid lawsuit. My usual style would be to hit them in the face with a frying pan, since it is almost impossible to misinterperet that action as anything other than sheer and utter revulsion and hate, but sometimes the frying pan just doesn't do the job.

I mean, seriously. This is one of those 'just when you had accepted the fact that things couldn't get any more stupid or pointless, you were harshly proven wrong' things. I'm going to patent candy and beachballs and start collecting royalty payments from kids, those pathological users of unlicensed intellectual property... (No, don't even try and apply logic to that one. Trust me, don't.)

I'm ready to put in $20 for the hitman. Who is with me? Hey, it worked for the blender source code.

(OK, I'm not an evil person. I really just wish they would drop the lawsuits and grow a spine and some clue. That would be far preferable to having to spend money on a hitman. I mean, uh, I hope nothing bad happens to them. But I'll probably smirk if something does. No, wait... If the police ask, I had nothing to do with it. Yeah, that's the ticket...)

How does he make a living? "I enforce my patents"

[sssmashy]

PanIP's principal owner, Lawrence Lockwood, previously had filed suit against American Airlines in 1994, charging that the company's online reservation system infringed on other patents he holds. Lockwood lost that lawsuit, which went all the way to the U.S. Supreme Court

This Lockwood guy sounds like a real pro. He's been at it for at least 10 years. He sniffs out broad new technological trends in business - the kind of thing you might read about in a Forbes article - and then cynically abuses the weakness of US Patent Law by patenting a vague expression of that trend. He never intends to produce anything with his "ideas"... he just slinks into his hole and waits for the real innovators to come along so he can extort money from them.

He's going to lose any court case--that's almost a given--but in the meantime he's hoping that enough of his small, carefully picked victims cave in and throw him $30k, or at least a few grand to make him disappear.

The key to wiping the smirk off his face is to make sure no more of his victims cave. Sure, lawyers aren't cheap, but the 30 companies have to realize that there is no way they can lose this disgusting and frivolous lawsuit, especially if they work together.

Re:Why not just take out a patent on .....

[Soko]

A system for the disabling of logical, rational thought; a system that creates random decisions and has no method of control or accountability?

Sorry. I really don't think you can patent the U.S. Patent Office itself.

Soko

Re:The patent office has looked stupid for years

[D iz a n k Meister]

I was talking to a friend about a more libertarian or maybe even anarchistic legal system . . .I think there really is a constructive role for government to play, if only they were effective and actually represented the people. . .I forget the technical legal term. . . and he was telling me about an example (which I also forgot).

Yeah, I like smoking weed with my friends too.

Re:Okay - this is getting stupid

[Raw Ostrich]

There is a bright side to this. When it comes to immaterial rights, thigs need to get worse before they get better. The inertia of the status quo has to be overcome by unbearable stupidity and cost of the current legislation. I would urge everyone to seek patents whenever possible, as broad as possible and as harmfull to development as possible. Lets get it over with and move on...

Re:Okay - this is getting stupid

[nemesisj]

I've got a friend who has a friend that works in the USPO and he was telling me how ridiculous it is to work there. Basically, you're supposed to nail predatory patents like these obviously are, but this guy who works there gets creamed by his boss whenever he tries to deny a patent. His boss is involved in all sorts of payoffs and dirt - I literally couldn't believe the stories he was telling. He later got put on a committee that was trying to track fraud and they figured out that some really high percentage (don't remember exactly, but it was over half) of the patents are frivolous and completely bunk. One tactic lots of patent filers like to use is to send in a 25 page document, and the first 24 pages are garbage designed to lull the reviewer to sleep, then they slip in a couple of paragraphs that involve what they're really trying to patent at the end. So to sum things up, its his opinion that the whole system is completely out of control, which is too bad, and he also thinks its so broken it can't be fixed, which is where things REALLY begin to suck.

Re:is it just me or....

[zurab]

businesses were doing web sales for a few years before these yokels said "hey that sales system is not patented..."

Even the article states:

DeBrand, literally a mom-and-pop shop in Fort Wayne, Ind., has been selling its homemade chocolates over the Web "practically from the beginning, probably seven, maybe eight years...

and several paragraphs later:

The patents PanIP bases its lawsuits on were granted-the first in 1996...

This makes no sense. The shop has been selling stuff online since 1994-95. USPTO, with its head buried in the dumpster, approves and hands the patent to PanIP in 1996 on the obvious prior art stuff that had been going on by thousands of companies/individuals for years before. PanIP turns around and sues small companies that can't afford to defend against patent infringement and would probably rather pay $5k.

Note the following:

1. To PanIP: the company that you are suing has prior art to your patent if your accusation is correct that they are infringing in the first place. They have been in business longer and actually *doing* what you patented couple of years later.

2. I hope the judge sees (a) the obviousness and numerous prior art of the patents, (b) the ill intent of PanIP, LLC, (c) the frivolous and wrongful lawsuit brought by PanIP, and dismisses the lawsuit, awards legal expenses plus punitive damanges to the defendants, and orders to close down PanIP, LLC, put all its patents in public domain, and orders its founders/owners and laywers to spend 3 months in community service and 9 months living with GNU/RMS at their own expense!

3. USPTO will approve any patent claim that contains the word "apparatus". It seems like this is one of the qualifying criteria for approval. I can probably get an approval for a patent for an "apparatus that hammers the nails in the wood", or an "apparatus that can roll in a circular motion on any surface". Hey! why not - check out the infamous method of swinging on a swing granted on April9, 2002?

4. This has got to stop! Write to your local corporate representatives in DC and tell them this is devastating for local small and medium size business!

5. USPTO database and website should be turned into a comedy and satire website and public entertainment source (Ok... done already), but remove most of their entries' legal implications. On a side note, when you are bored and have nothing to do try searching patents on your favorite activity. How about a tub for bathing granted on June 25, 2002 solely from the drawings?

PanIP targeting companies not in California?

[richard-parker]

The PanIP Defendants web site mentioned in the article has a list of the 50 companies that have so far been sued by PanIP. Interestingly, despite the large number of e-commerce companies in California, none of the defendants are located in California.

Since the patent holder, PanIP, is located in San Diego the cases are taking place in the U.S. District Court for the Southern District of California. Since all of the companies being targeted are small out-of-state companies they are unlikely to already have an established relationship with an attorney licensed to practice in California. I wonder if PanIP is specifically targeting companies that are not in California, perhaps on the theory that out-of-state companies will be more likely to settle when faced with having to litigate a case far from home?

Re:Okay - this is getting stupid

[mOdQuArK!]

His boss is involved in all sorts of payoffs and dirt - I literally couldn't believe the stories he was telling.

I wouldn't be surprised - our (very small) company has been fighting a huge company over the violation of one of our patents, and they're using the strategy of delaying the reviews of our patent so that we can't go to court (and they are hoping that our little company will eventually die).

We've fought off their challenges to our patent FOUR times (now going on a fifth reexamination), taking over 4 years now. Each time, the primary examiner has revalidated our patent - and then his boss overrides his conclusion & throws our patent out (the same boss each time), usually without a reason.

Needless to say, we've got some questions about the motivations of the patent examiner's supervisor - but there isn't anything we can prove, and due to the rules of the Patent Office, we can't get anyone else to look at the case.