The Prior Art

App Backwards: Lodsys, Texas Troll, Targeted in Patent Suit

By Andrew Goldberg

Lodsys, the litigious patent-holding company that filed suit in the Eastern District of Texas last week alleging that several independent developers of software applications used on mobile devices infringe its patents on in-app purchasing, is now on the defensive and facing a patent infringement suit of its own.

ForeSee Results, a Michigan-based company that designs online customer-satisfaction surveys used by many businesses, brought an action Tuesday in the U.S. District Court for the Northern District of Illinois seeking a declaratory judgment that its product does not infringe Lodsys's patents.

In its complaint, the company contends that Lodsys’s patents are invalid and argues that the patent-holding company, which has threatened to sue ForeSee customers including Best Buy and Adidas over their use of ForeSee's surveys, should be enjoined from pursuing such legal action [Download Foresee Results Complaint].

Although ForeSee's lawsuit is not directly related to mobile device apps, it does implicate two of the same patents at issue in Lodsys's suits against Apple iOS app developers. As a result, a decision by the Illinois district court to invalidate Lodsys' patents could potentially throw a wrench into the holding company’s strategy of hauling app developers into court in Texas.

For its effort, ForeSee has tapped the kind of legal firepower that small app developers most likely can't afford in their fight with Lodsys. The survey company is being represented by lawyers at McDermott, Will & Emery. For its East Texas suits, Lodsys, which is based in Marshall, Texas, is being represented by the Seattle-based firm of Kelley, Donion, Gill, Huck & Goldfarb and The Davis Firm in Longview, Texas.

Among those presumably rooting for ForeSee to prevail in Illinois are the seven iOS app developers--including the makers of such iPhone apps as Twitterific and QuickOffice and the games Mega Poker Online Texas Hold ’Em and Hearts and Daggers--that have already been sued by Lodsys in East Texas [Download Lodsys v. App Developers]. That dispute hinges on the functionality that enables users to make purchases from within an app.

Lodsys claims it's litigating in Texas against the little guys in lieu of going after Apple directly because the tech giant already licensed the patent at issue as part of a mass licensing deal it struck with Intellectual Ventures, the patent-holding company that owned the patents in question prior to Lodsys.  App developers, according to Lodsys, are not covered by that licensing agreement.

In a blog post on its website about Apple, Lodsys wrote: “The scope of their current licenses does NOT enable them to provide ‘pixie dust’ to bless another (3rd party) business application," adding,  "From Lodsys’ perspective, it is seeking to be paid value for rights it holds and which are being used by others.” Specifically, the company is demanding .575% of all U.S. revenue from any app that uses its patents.

But Apple general counsel Bruce Sewell disputes Lodsys' contention, arguing in a letter, sent two weeks after Lodsys's notice to developers, that "there is no basis for Lodsys' infringement allegations against Apple 's App Makers."

"I believe that your letters are based on a fundamental misapprehension regarding Apple's license and the way Apple's products work," wrote Sewell. "Under its license, Apple is entitled to offer these licensed products and services to its customers and business partners, who, in turn, have the right to use them."

For anxious app developers, of course, Apple's letter is only a start. Indeed, as the Electronic Frontier Foundation put it, "Even careful developers who hire lawyers to do full-scale patent searches on potential apps surely would not expect to investigate the technology that Apple provides. Instead, they would expect (with good reason) that Apple wouldn't provide technologies in its App Store that open its developers up to liability – and/or would at least agree to defend them when a troll like Lodsys comes along."

For the developers' sake, it's worth wondering whether there's an app for indemnification.

 

Paul Allen v. The Internet

Former Microsoft executive and billionaire Paul Allen sued several major Internet companies and three large retailers for patent infringement today, asserting that four patents originating at Interval Research, Allen's dot-com era think tank, cover basic web browsing and e-commerce technologies.

The lawsuit [PDF] was filed by Interval Licensing LLC, a patent-holding company owned by Allen, and names eleven companies as defendants: AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax, Staples, Yahoo, and YouTube.

Interval Research was founded in 1992. It closed its doors in 2000, but the lawsuit is necessary to monetize the investment that Allen made in the organization, said David Postman, a spokesman for Allen.

The patents cover "a variety of key processes in e-commerce," said Postman. "Interval Research was early—and right—on key pieces of the Internet," said Postman. "It's important now to protect that investment. We believe these companies are using that technology, in both e-commerce and search."

Allen is one of the world's richest people, with a fortune that Forbes magazine estimates as over $13 billion.

A Wired magazine profile of Interval Research suggests that by 1999, the institute was struggling, with Allen having spent upwards of $100 million on research and not much to show for it. "Interval always had a special buzz and a collection of talent that, even in the annals of technological genius, stands out."

The four patents-in-suit were filed between 1996 and 2000.

They are:

• No. 6,263,507, "Browser for Use in Navigating a Body of Information, With Particular Application to Browsing Information Represented By Audiovisual Data."
• No. 6,034,652, "Attention Manager for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device."
• No. 6,788,314, "Attention Manager for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device."
• No. 6,757,682, "Alerting Users to Items of Current Interest."

The suit was filed in the Western District of Washington. Interval Licensing is represented by Susman Godfrey, a Texas-based law firm that focuses on contingency-fee patent lawsuits, and Heim, Payne & Chorush is a smaller patent firm based in Houston.

More documents:

• Interval Licensing press release on the lawsuit
• Interval Licensing v. AOL et al. complaint [PDF]
• Coverage from Wall Street Journal

Cross-posted at Corporate Counsel.

 

 

Law360 Calls Lawyer-Owned Shell Company a "Public Interest Group"

Our competitors are never afraid to call a spade... a public interest group.

Law360 seems to have a pretty flexible definition of that term. Last month, it included Americans for Fair Patent Use. Who is so concerned about such fairness? That would be F&B LLP, the Texas law firm that owns Americans for Fair Patent Use, which is a limited liability company set up to prosecute a false marking lawsuit filed in East Texas on July 14. The suit, against Apple, Sprint, Samsung, and Verizon, alleges that various smartphones made by those companies have false patent marks.

Did AFPU magically transform into a "public interest" group because  false marking is a qui tam action? Is it because the plaintiff has the word "fair" in it? Since the plaintiff's name actually ends with "LLC" we're at a loss as to how you spin this one.

Only Law360 used the term "public interest group" in its reporting. But—at the risk of sounding like we're tooting our own horns here—could one of the many web publications that obsess over lawsuits against Apple have bothered to correctly name the plaintiff here? Not only is the law firm clearly named in the corporate disclosure document [PDF] filed the same day as the complaint, but F&B actually fesses up to its ownership of AFPU on the fourth page of the complaint itself [PDF].

As we've discussed in an earlier column, a majority of false marking suits are being filed by lawyers themselves, along with a few serial plaintiffs.

Photo via Wikimedia / Snek01

Patent Litigation Weekly: MobileMedia's Unusual Patent Infringement Campaign

This week: A closer at the holding company behind recent suits against smartphone makers Research in Motion, HTC, and, most interestingly, Apple.

MobileMedia Ideas LLC didn't create a big stir when it launched in January. Instead, the holding company simply issued a press release in which it let the world know that it would "make available" its innovations, (which is, of course, generally considered to be patent-speak for, "We will be suing people shortly"). MobileMedia, which holds 122 patents it acquired from Sony and Nokia, was even quieter when it acted on its euphemistic pledge in March by filing separate infringement suits against three leading smartphone makers.

There's nothing new or unusual about a patent-holding company tossing a few lawsuits against the wall to try to wring some cash out of the smartphone industry, which has lately become crowded with lawsuits filed by holding companies and competing companies alike. 

What is unusual is who owns MobileMedia: MPEG-LA, the private company that oversees a total of eight patent pools covering important digital video standards—MPEG-2 and MPEG-4 being the most common—used in DVD players and pretty much every other device that supports digital video. Contributors to those pools, whose contents MPEG-LA has licensed to literally hundreds of companies, include Hewlett-Packard, Panasonic, Sony, and Cisco subsidiary Scientific Atlanta (see full list). MPEG-LA's CEO Larry Horn also heads MobileMedia. 

Patent Litigation Weekly: Digging Beneath the Surface of Apple v. HTC

This week: Good luck getting any lawyers in Silicon Valley to talk--even on deepest background--about this week's hot patent litigation story. That doesn't mean there isn't plenty of history and context to consider when assessing Apple's risky gambit.

Apple's lawsuit against HTC comes well into the Internet age, after a 10-year run of "troll" lawsuits has transformed the patent litigation landscape to the point that such suits now make up the bulk of many Silicon Valley litigators' practice.

It's fairly unusual in the modern era for a market leader to initiate a patent suit. Which is not to say large operating companies don't sue for patent infringement. They do. But on the relatively rare occasions when they do launch such litigation, it tends to fall into a couple of categories.

Patent Litigation Weekly: Revealed! How Much Money a "Patent Troll" Makes

This week: a motion filed by a convicted felon/inventor spills the details of how he, patent-holding company SP Technologies, and the Niro Scavone law firm divvied up the loot from a set of suits against top tech companies—including one over Apple's iPhone.

One thing that can make reporting about civil litigation frustrating is that so much of it ends in confidential settlements. Occasionally, though, a ray of light pierces the shroud of secrecy, and it's possible to find out how much money changed hands when a case settles before going to trial. Thanks to an unlikely source—an Iowa ear, nose, and throat doctor currently residing in a federal prison in Wisconsin after being convicted of insurance fraud—we now know how much patent-holding company SP Technologies collected as a result of filing suit against four leading tech companies: $2.17 million.

That information is contained in a motion to intervene filed in July by otolaryngologist Peter Boesen in connection with a pending suit brought by SPT against GPS makers Garmin and TomTom in the Northern District of Illinois. In addition to being a convicted felon, Boesen happens to be the inventor on the patent SPT has asserted in the suit—and in previous suits against Apple, Magellan, and Samsung—as well as a second patent asserted in a suit against LG Electronics.
 

Patent Litigation Weekly: Upstairs, Downstairs in Marshall

This week: Both floors of the best little courthouse in Texas have been busy—producing very different results.

Taking A Big Bite Out of Apple

OPTi, Inc. v. Apple, Inc.
07-cv-00021, E.D. Texas (Marshall), filed 1/17/2007.

OPTi Inc. is a Palo Alto company that used to manufacture chipsets for computers. In 2002, after Intel decided to stop using OPTi’s chipsets, the company shuttered its operations and moved into the patent-licensing business. Since then, as OPTi said in its SEC filings, the company has been “engaged in perfecting its intellectual property position" by investigating the unlicensed use of its technology, and filing lawsuits against alleged infringers. As of now, OPTi—still a public company, although it's not traded on any major exchange—has only one full-time employee: CEO Bernard Marren. (The OPTi we discuss here should not be confused with OPTI Canada, an operating energy company.)

Last week, OPTi wrapped up the first jury trial of its new incarnation—and wound up a winner. In ruling for OPTi and against Apple, a Marshall jury awarded the former more than $19 million for willfull infringement. It's a remarkable victory, in part because the jury gave the plaintiff exactly what it had asked for and accepted its testimony on damages wholesale. OPTi's lawyers interviewed by TPA said Apple’s expert witnesses suggested that—if the computer maker had infringed—it only owed OPTi about $300,000.

The Week in Patent Litigation (March 23-27)

This week: an inventor files nearly 20 lawsuits just months before his patent expires; a pair of patent-holding lawyers go after the iPod and iPhone; and two weeks after complaining to Congress about patent trolls, a tech company is sued by... a patent troll.

On A Bender

Last week we briefly mentioned inventor Gregory Bender and his suits alleging that several technology companies had infringed his patent 5,103,188. Bender filed the patent, which describes a type of electrical circuit, in August 1989.

On March 23, a week after filing his initial batch of 11 suits, Bender filed eight more in federal district court in Oakland. His targets this time: IBM, Agilent, Cirrus Logic, Siemens, Nokia, Sony, Motorola, and ST Microelectronics. Add those names to the others he’s already accused of infringement, which include Freescale, National Semiconductor, and AMD, and you’re looking at a pretty nice chunk of the tech sector. (Is it just us, or is Intel notably absent from the list?)

The (mis)reporting of patent lawsuits

One patent lawsuit that got a little buzz recently was Glasgow-based Picsel Technologies' lawsuit against the Apple iPhone.

CNN Money carried a short piece on the Picsel v. Apple lawsuit that used terminology that's pretty typical in reporting on patent lawsuits. According to CNN, Picsel claimed "that Apple's hot-selling iPhone and iPod Touch devices incorporate Picsel-patented technology that facilitates rapid redrawing of content displayed on devices' screens."

Now, that sentence is literally true and accurately reported. But there's a kind of breezy vocabulary around reporting on patent litigation that is quite problematic. It allows the patent-holder to strongly imply they've been copied, even though most of the time there's no copying even being alleged. Picsel is not claiming that Apple copied its patents or products, even though it's got a big incentive to put whatever evidence it has on the record.

Since there's evidence that most people believe—incorrectly—that patent lawsuits are about copying, shouldn't reporters go out of their way to clear about just what is being alleged?

Rembrandts: out of the attic! attack! attack!

Patent consultancy Ocean Tomo wants to convince big companies that its patent auctions will help them deal with the problem of patent trolls, or at least lower the cost. Might be a tough sell right now, though, since a patent bought at Ocean Tomo has just been used to demand royalty payments from 13 companies that use—drum roll—social recommendation systems. "If you like X, you might like Y," and don't forget to send a check to Quito Enterprises, LLC. What?

• Quito Enterprises LLC bought patent 5,890,152 at last April's Ocean Tomo patent auction for $1.07 million. Quito, a company that maintains a Delaware address that seems to include a few different law offices, used that patent to file an infringement lawsuit against 13 companies on Dec. 30. All defendants are companies that offer some type of social recommendation system. The patent, filed in 1996 and issued in 1999, describes a system of offering users media files based on their personal tastes and preferences.  Defendants accused of infringing the '152 patent include old-school media companies, Internet heavies, Internet radio sites, and one pure social recommendation engine: Netflix, Amazon, Yahoo, RealNetworks, last.fm, Pandora Media, Slacker Inc., Veoh, Hulu, NBC Universal, CBS, News Corp., and Strands, Inc. Quito filed suit in Miami and is represented by Florida personal injury lawyers Philip Holden and Alex Alvarez, Heninger Garrison & Davis of Birmingham, as well as John Ward and David M. Hill from the very active New York patent shop of Ward & Olivo, likely a key player here. Who exactly is Quito Enterprises? Not to give anyone ideas, but some state record offices are not as transparent as they should be... But I look forward to learning more about Quito shortly. Quito Enterprises, LLC v. Netflix, Inc. et al, 08-cv-23543, S.D. Florida. [complaint on Justia]