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Patent Troll Ordered To Pay For the Costs of Fighting a Bad Patent

We mentioned last year that FindTheBest CEO Kevin O'Connor had taken an unusual step, when confronted with a demand by patent troll company Lumen View that the startup pay $50,000 for what struck O'Connor as a frivolous patent: He not only refused, but pledged to spend a million bucks, if necessary, to fight Lumen View in court. Now, as Ars Technica reports, O'Connor has succeeded on a grand scale. Before trouncing Lumen View in court, Ars reports, "FindTheBest had spent about $200,000 on its legal fight—not to mention the productivity lost in hundreds of work hours spent by top executives on the lawsuit, and three all-company meetings. Now the judge overseeing the case has ruled (PDF) that it's Lumen View, not FindTheBest, that should have to pay those expenses. In a first-of-its-kind implementation of new fee-shifting rules mandated by the Supreme Court, US District Judge Denise Cote found that the Lumen View lawsuit was a 'prototypical exceptional case.'"

37 of 191 comments (clear)

  1. Newegg did that too? by Anonymous Coward · · Score: 5, Informative

    http://soylentnews.org/article.pl?sid=14/05/23/1347205

    "Unlike the other 36 codefendants, Newegg chose to go further and recover its legal fees, an action that most companies choose not to pursue because prevailing defendants were, until recently, required to demonstrate that a plaintiff acted in bad faith."

    1. Re:Newegg did that too? by Sique · · Score: 4, Informative

      This case is mentioned at the end of TFA.

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    2. Re:Newegg did that too? by rmdingler · · Score: 4, Funny

      Per Slashdot's unwritten rule, and there are more of them than in baseball, a poster may be generously moderated for jumping on the grenade that is reading the flocking article.

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  2. Sounds awesome except.... by Anonymous Coward · · Score: 5, Insightful

    The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

    Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

    1. Re:Sounds awesome except.... by jythie · · Score: 3, Insightful

      That is part of the reason that these 'looser pays' rules make me nervous. Truly bad actors like patent trolls have lots of ways around actually paying out, but small shops or inventors generally do not, so all it does is increase the risk associated with taking on companies with more resources.

      When filing a lawsuit you generally only have to consider spending what you can afford, but having to consider what the other party can afford changes the equation dramatically.

    2. Re:Sounds awesome except.... by Anonymous Coward · · Score: 4, Insightful

      The Patent troll will probably just declare bankruptcy and reform under a new name, all in the same day.

      Not even looking at how it is structured I'd blindly wager that they are held by no fewer than two shell companies. So the problem is that the people pulling the strings never suffer any real repercussions.

      What's more important than whether or not this particular company actually pays, is that the precedent is being set and the tides are shifting, hopefully making others think twice before filing frivolous lawsuits.

    3. Re:Sounds awesome except.... by Attila+Dimedici · · Score: 4, Informative

      If FindTheBest is willing to spend the money on lawyers and court costs, that will not protect the patent troll. There exists a legal basis for "piercing the corporate veil". Dissolving the corporation and forming a new corporation with the same assets(in this case, patents) is a classic example of where that can happen and what that very concept was created for.

      --
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    4. Re:Sounds awesome except.... by fuzznutz · · Score: 5, Insightful

      The problem is also that the USPO granted the patent in the first place :/

      Amen. The "experts" who are supposed to know better are accepting these bullshit patents all the time. The courts have to sort it out while the victims get to pay. How about we personally make the patent examiners financially liable for the costs involved in defending one of these bullshit patents. I'd bet that they'd be looking at these patents with a much more critical eye then...

    5. Re:Sounds awesome except.... by fuzznutz · · Score: 4, Funny

      That is part of the reason that these 'looser pays' rules make me nervous..

      Would you feel better if it was 'tighter pays'?

    6. Re:Sounds awesome except.... by alen · · Score: 3, Insightful

      you need money to litigate a patent suit. if you had cash in the bank to pay the bills and it vanishes the day before you file chapter 11, the court is going to start asking questions and auditing your books

    7. Re:Sounds awesome except.... by rapturizer · · Score: 4, Interesting

      FindTheBest probaby will spend the money. The good part of this ruling is that there are law firms that will seek out small businesses to defend them from deep pocketed patent trolls. They will develop the methods to aggressively pursue the money, and will even be happier if they find trolls that send out nearly identical letters to multiple companies and can achieve class action status. In my opinion, this may be one of the few good reasons for these law firms to exist.

    8. Re:Sounds awesome except.... by StripedCow · · Score: 4, Insightful

      The problem is that USPTO is getting paid *more* for every approved patent than for every rejected patent application.

      Like it was said before here, this is like paying fishermen for the fish they *didn't* catch.

      --
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    9. Re:Sounds awesome except.... by Anonymous Coward · · Score: 3, Interesting

      The problem is that there are not enough examiners. Apparently as an examiner you have about 2 minutes to look at a patent and say yay or nay.

    10. Re:Sounds awesome except.... by Greyfox · · Score: 4, Interesting

      If you have a claim to their assets, you could probably still go after all the patents that company owns and presumably any of the licensing fees they had managed to collect. Denying the people pulling those strings as much money as possible still has some value. Now that the precedent has been set, more companies might elect to pursue this course of action, which could put a serious dent in the patent troll business plan. And if you suspect a corporation has just been formed to serve as an alias, you can still go after the assets of the individuals holding that corporation.

      --

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    11. Re:Sounds awesome except.... by deniable · · Score: 4, Interesting

      You're also expected to be a subject-matter-expert on every application that crosses your desk. And remember, you have 2 minutes to review an application written by lawyers paid to write confusing applications.

    12. Re:Sounds awesome except.... by swillden · · Score: 4, Insightful

      The problem is that there are not enough examiners. Apparently as an examiner you have about 2 minutes to look at a patent and say yay or nay.

      Which means we either need more examiners... or fewer patent applications. What's really bad is that the current state is a vicious cycle. If any patent application is likely to be approved, then people will submit more applications, which increases the workload on patent examiners, reducing the time they have to look at a patent, and increasing the likelihood that any patent application that appears on its surface to be novel and to have referenced the appropriate prior art will be approved.

      Further exacerbating the problem is the fact that patent portfolios so often do battle by "weight". If company A has 10,000 patents and company B only has 5,000 patents, it's much easier for B to pay A some money and both to enter a cross-licensing agreement than to actually determine which of the 15,000 patents has value and is relevant. So, companies incent their technical people to patent all sorts of silly crap. More applications, more applications per examiner, less time per application, lather, rinse, repeat.

      IMO, we need to take a big step back and re-examine the whole system. I've been arguing for a long time that there's a very simple test we should be using to evaluate the effectiveness of the patent system which is supposed to be encouraging progress (not paying inventors, note. If that happens, well and good, but it's not the goal). The way patents are supposed to promote progress is by publishing details of the inventions so that other inventors can use the ideas and build upon them. The licensing fees patent owners can receive as a result are their incentive to publish, rather than keeping their ideas as trade secrets.

      So, to see if the system is working well, we just need to look at how often the patent database is used by inventors as a resource when they're looking for solutions to problems they have. If the patent system were working, we'd see the database being mined for ideas, and companies happy to pay licensing fees for useful inventions that help them build their products more cheaply than if they'd had to invent it all themselves.

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    13. Re:Sounds awesome except.... by msauve · · Score: 5, Interesting

      "you have 2 minutes to review an application written by lawyers paid to write confusing applications."

      This.

      Patents are supposed to be provided in exchange for an inventor disclosing the invention for future public benefit. But, they're written in such an obtuse manner that they can't be used that way - they're expected to be used to extract money out of the people who come up with something similar, not provide a workable explanation of how to make something useful.

      The solution is for examiners to simply outright reject any patent which isn't readily understandable. A person "skilled in the art," shouldn't have to learn deliberately obtuse patent-speak to even begin to understand a patent.

      --
      "National Security is the chief cause of national insecurity." - Celine's First Law
    14. Re:Sounds awesome except.... by sjames · · Score: 3, Interesting

      Change that to their boss is fired and it might work.

    15. Re:Sounds awesome except.... by ConfusedVorlon · · Score: 4, Insightful

      Whilst I agree that a lot of bad patents are certainly granted, I actually think the systemic problem here is actually the review process after the initial grant.

      Even if USPO was a lot better, then it is safe to assume that some crappy patents would get through when an examiner was having a bad day.

      It's ok to have errors like that if you have a decent fast review process to fix mistakes.

      This might be something that a judge could request before a case went to trial.
      The patent would be re-reviewed by a senior patent examiner who would make an new judgement:

      1) this probably should not have passed. (Inventor can appeal, but legal process assumes that patent is invalid until the appeal).
      2) this is a solid patent that probably should have passed. (the infringer can appeal, but legal process assumes the patent is valid until the appeal).

      given that only a tiny fraction of patents will ever get taken to court, this isn't adding a huge amount of re-work to the USPO, so they can handle this stream as a high priority.

      This does somewhat reduce the certainty of the initial patent grant, but that is no bad thing.

    16. Re: Sounds awesome except.... by UnknowingFool · · Score: 3, Informative

      "Can be" and "will be" are two different terms. When going into bankruptcy, not all suits and judgements are automatically negated when a company files for bankruptcy. A court still has to determine if the suit can proceed and which debts are still valid. The main thing that bankruptcy does is to stop the suit until a court rules on it.

      --
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    17. Re:Sounds awesome except.... by stealth_finger · · Score: 5, Insightful

      You're also expected to be a subject-matter-expert on every application that crosses your desk. And remember, you have 2 minutes to review an application written by lawyers paid to write confusing applications.

      Well if the examiner cant understand it immediately, they should deny it, if in doubt dent. Yeah I know they get paid for approvals and all that but really, the whole system sucks, it needs pulling out, burning, having the ashes jumped on then started again using common sense.

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    18. Re:Sounds awesome except.... by stealth_finger · · Score: 3, Funny

      Well if the examiner cant understand it immediately, they should deny it, if in doubt dent. Yeah I know they get paid for approvals and all that but really, the whole system sucks, it needs pulling out, burning, having the ashes jumped on then started again using common sense.

      Or if it isn't immediately obviously what the patent is even for.

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  3. Re:but by jythie · · Score: 5, Interesting

    To be fair, it is how our legal system was crafted. The US has a strong streak of 'handle your own problem, power to control your own fate' to it, and the civil suit system was built to support that. There are lots of crimes which in other countries would be prosecuted by one agency or another (for better or worse) but in the US the only redress one has is a civil suit. Even in situations where there are criminal laws on the books, the complaints about the police not doing anything even when supplied with all the evidence they need are significant. Actually convincing a prosecutor to go forward with your case can be an exercise in frustration.

  4. Sounds awesome except.... by Anonymous Coward · · Score: 5, Insightful

    The problem is also that the USPO granted the patent in the first place :/

  5. Re:but by PIBM · · Score: 4, Informative

    There are some places in Canada were the permits cost are huge.. Think about a construction permit fee based on the lot size (multiple $$$ per square feet) where the minimum lot size is required to be at least something close to an hectare...

  6. Re:but by jythie · · Score: 4, Informative

    Ah, that old case. It should be noted that there were actually hundreds of injury cases associated with their coffee. They had really bumped up the temperature to unsafe levels and were fully aware that that the standard accidents people had with beverages were resulting in significant burns compared to normal serving levels. The government should have intervened long before that, but they did not because civil suits were the 'solution'.

    The problem was not that it was 'hot', but that they were serving it much hotter then would be typical since that was cheaper then using cups with marginally more insulation.

  7. Re:but by jythie · · Score: 3, Interesting

    I had a similar thought. Yeah permits and inspection costs are non-trivial, but they are no where near the material or labor costs unless you are stripping an old house for parts (i.e. free materials) and using near-slave immigrant labor. Though at that point the bribes needed would probably be greater then the permit costs too.

  8. Re:but by dbIII · · Score: 5, Insightful

    Before you blow your own trumpet too much consider the very bad US example of moving copyright from civil to criminal law which has spread like a cancer around the world. It would be very nice if it went back to Hollywood lawyers suing people instead of SWAT teams through people's windows for copyright violations.

  9. My favourite sentence by Anonymous Coward · · Score: 5, Interesting

    My favourite sentence from the summary in the first link:

    The patent troll's attorney also made the claim that calling someone a 'patent troll' was actually a 'hate crime' under 'Ninth Circuit precedent' and threatened to file criminal charges — unless they settled the civil case immediately, apologized, and gave financial compensation to the troll.

    1. Re:My favourite sentence by Anonymous Coward · · Score: 5, Insightful

      My favourite sentence from the summary in the first link:

      The patent troll's attorney also made the claim that calling someone a 'patent troll' was actually a 'hate crime' under 'Ninth Circuit precedent' and threatened to file criminal charges — unless they settled the civil case immediately, apologized, and gave financial compensation to the troll.

      That is the worst thing I've ever read!!! It's the kind of thing a lawyer should be disbarred for. The kind of thing that would make me willing to bankrupt myself and my company just to punish the company and attorney. Ugh that's the worst!!!

  10. Re:but by drinkypoo · · Score: 4, Informative

    Even in the most expensive parts of the country, you could barely manage to build an uninhabitable, unfinished shell of a house for the price of a building permit.

    It's over $30,000 in permits to build a small two bedroom house (say, 1000 square feet) in Lake County, CA, counting the water connection fee and other bullshit. You can buy a kit home for $45/ft^2 or less. A seasoned contractor who purchases materials at the right time of year can absolutely get the materials for less. It'll be a little shit-shack of a house like virtually all of them are, made out of chipboard and sheetrock, but that's what at least nine in ten of the houses being built today are like anyway so let's not be discriminatory. And I've got to add that this is one of the cheapest parts of the state, at least, that nominally still has water. Oh, did I mention that people on municipal water are being subjected to restriction? No new wells are being permitted, so you can only build where there is municipal water, which is mostly really bad here?

    Sometimes, I hope I live a long time. Sometimes, I think human lifespans are too damned long. The crusty old fucks holding up progress in this town really get my goat.

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  11. Re:but by Idarubicin · · Score: 4, Interesting

    It's over $30,000 in permits to build a small two bedroom house (say, 1000 square feet) in Lake County, CA, counting the water connection fee and other bullshit.

    So, not just the price of the building permit, then?

    The purpose of development charges is to defray (some of) the costs to local government that they would otherwise incur for doing things like connecting your new home to the water, sewer, electrical, and any other utilities; construction of roads and streetlights; construction and purchase of additional emergency services equipment (fire trucks and fire houses, etc.); construction or enlargement of water reservoirs, sewage treatment plants, and electrical substations....

    In other words, there's a heck of a lot of new infrastructure capital costs associated with new expansion of a community--costs that wouldn't be incurred without the new construction. (The rest of your comment notes how precious a commodity water is, and how difficult it is to secure access to more of it.) Instead of loading those costs on to people already living in town, the municipalities put the costs on the developers, who in turn pass them on to the new home buyers.

    If you were to instead demolish an existing home and replace it with a new one of similar size, the building permit costs would be far less than $30,000, since the home would already have water, sewer, roads, electrical service....

    --
    ~Idarubicin
  12. Re:but by Truth_Quark · · Score: 3, Insightful

    Quite.

    The lady's labia melted to her thigh.

    It was not a frivolous law suit.

  13. Re:but by Hotawa+Hawk-eye · · Score: 4, Insightful

    So John Smith files suit against MegaCorp Inc. (with a legitimate claim) but MegaCorp's army of lawyers buries Smith in motion after motion, draining his coffers dry. When he loses (because he doesn't have enough money left to continue) he's on the hook for the millions of dollars in expenses MegaCorp's army of accountants can somehow link to the case.

    There needs to be some protection for this situation, but there also needs to be consequences for "spaghetti suing" -- filing lawsuits against anyone and everyone and seeing which ones get settled and which ones stick. Maybe a superlinear increase in the cost to file suits based on the number of suits you've filed? If you want to file suit in a given issue against two or three people, you're not going to pay much extra, but if you want to sue a hundred people separately you're going to pay through the nose. [And you're not allowed to "lump together" people without showing a good reason to lump them together.]

  14. Re:but by seebs · · Score: 4, Informative

    That's a vast oversimplification.

    Most significantly, the temperature people generally serve coffee at is, in fact, hot enough go give third-degree burns. The general recommended temperature to store coffee at before serving is 185 degrees (farenheit, obviously). The truth is neither that the lawsuit was totally frivolous, nor that it was totally justified, but that this was a complicated situation with a number of issues that generally get glossed over.

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  15. Re: but by Dishevel · · Score: 3, Informative
    Right from the National Coffee Association USA

    Your brewer should maintain a water temperature between 195 - 205 degrees Fahrenheit for optimal extraction. Colder water will result in flat, underextracted coffee while water that is too hot will also cause a loss of quality in the taste of the coffee. If you are brewing the coffee manually, let the water come to a full boil, but do not overboil. Turn off the heat source and allow the water to rest a minute before pouring it over the grounds.

    So, Umm....

    The real thing to know here is that no one at the time did not know that McDonalds coffee was really hot. Many went there for that reason. Fuck that bitch.

    --
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  16. Re:but by PIBM · · Score: 3, Informative

    Actual specification for that area was, in 2008, 8000 to 9000 square meters per plot; 95$ per square meter of lot size plus 150$ per square meter of habitation for the construction permit. Other requirements were two stories, full masonry, hidden garage entrance and no roof slopes at less than 12-12.

    Needless to say we went somewhere else.. having had that kind of money I really would have liked to build at that place though.