The Prior Art

Patent Litigation Weekly: PubPat and "Patent Troll" Make Strange Bedfellows

The view that software patents are an impediment to progress—common among technologists—is rare among patent attorneys. But Dan Ravicher is not a typical patent attorney. He founded the Public Patent Foundation (PubPat), a public interest group that, according to its website, "represents the public's interest against undeserved patents and unsound policy." PubPat recently helped the ACLU launch a major challenge to human gene patents. In the past, PubPat has also challenged broadly asserted software patents, which Ravicher believes "hinder — rather than promote — innovation."

Meanwhile, it's not unusual that a patent-enforcement company recently set up in East Texas would file suit there this week against ten Internet-based and software companies. Nor is it unusual that Texas corporate records show the company is owned by an erstwhile big-firm lawyer, in this case David Garrod, formerly of Goodwin Procter.

What is surprising is that at the same time he is trying to wring licensing fees from such big online names as Google, Yahoo, and Amazon, Garrod is also spearheading a major PubPat initiative: filing lawsuits to rid the marketplace of false patent markings.

The company Garrod owns, Bedrock Computer Technologies, LLC, filed a lawsuit on Monday alleging that the defendants infringe U.S. Patent No. 5,893,120. The list of defendants includes seven big Internet companies—Google, Yahoo, MySpace, PayPal, Amazon, Match.com, and AOL—as well as the world's largest futures exchange, CME Group, and two software companies located in the Eastern District of Texas.

PerfumeBay v. eBay: The Final Chapter

eBay has long fought to keep cyberspace clear of other websites ending in "bay," arguing that sites with "generic plus bay" names infringe its trademark. Most of these lawsuits haven't lasted long, as the defendants quickly settled. The online commerce giant recently concluded its longest and hardest-fought battle of the bunch, against an Orange County-based perfume retailer that, until recently, did business primarily at PerfumeBay.com.

PerfumeBay.com disappeared from cyberspace last week, following a court order. [Order Amending Judgment, PDF] After losing to eBay in district court in C.D. Cal, Perfume Bay president Jacquelyn Tran started blogging her experiences while she appealed to the 9th circuit. That appeal resulted in a strong win for eBay, and Perfume Bay has now changed its name to Beauty Encounter.

I first wrote about this case in October when I worked at the Daily Journal; a reprint of the story is available online. eBay was represented by Cooley Godward Kronish partner John Crittenden, who has shut down several other "generic plus bay" web sites, most recently CoinBay.biz; and earlier sites that were more "colorful," such as KinkyBay, BrickBay, and NaziBay.

"Each one has its own amusing story, and the explanations have often been the same," Crittenden told me last year. "People have said, oh yeah, 'I have a dog named Bay'. Or, 'I meant a bay of water.' Well, what bay are you talking about? The explanations really don't hang together."

Stanford Prof. Mark Lemley, arguing in favor of a federal trademark dilution law, submitted a list of 186 "something-bay-dot-coms" to Congress in 2005. [read Lemley's testimony]

Photo: shabbir / flickr

eBay: punished in Paris, exonerated in Manhattan

The long-awaited Tiffany v. eBay decision came down today—a big defense win for eBay. Judge Richard Sullivan's opinion makes clear that the onus for finding counterfeit goods is on the mark-holder, not the market-maker. His opinion comes just two weeks after a French court made the opposite finding, holding eBay responsible and ordering the company to pay more than $60 million.

In the New York case, the court ruled that eBay's use of the Tiffany marks is "nominative fair use."

An oft-overlooked aspect of both of these cases: they aren't only about fake goods. Both Louis Vuitton and Tiffany exercise tight control over all of their sales; not only do they fight counterfeiters, they also take action to control legitimate markets for new and used goods. The French decision against eBay, which some called a "hometown verdict," wasn't just about fakes; it was about control of the marketplace for the real goods. MarketWatch columnist Therese Poletti notes that eBay was found guilty of "unauthorized sales of certain authentic LVMH perfumes" including Kenzo, Guerlain, Dior and Givenchy, which were sold outside the "approved" channels—and that, she writes, "reeks of protectionism."

In his decision, Judge Sullivan makes it clear that doesn't fly stateside. When it comes to secondary markets, luxury goods makers can't have total control. He writes:

While rights holders such as Tiffany may have obvious economic incentives to curtail the sale of both counterfeit and authentic goods on the Internet — after all, every sale of Tiffany jewelry on eBay potentially represents a lost sales opportunity via Tiffany’s own authorized distribution channels — the law provides protection only from the former, not the latter.  Clearly, eBay and other online market websites may properly promote and facilitate the growth of legitimate secondary markets in brand-name goods.

Selected early responses: Legal Pad quotes Stanford's Mark Lemley, who writes that "the U.S. has a legal system that respects and encourages the development of the Internet, and France, so far, does not.” Santa Clara's cyberlaw expert, Eric Goldman, calls the case "a nice clean win" for online service providers who haven't known what to do about trademark takedown notices; and adds that "the battleground might just shift to the Second Circuit or Congress." More coverage: Law.com, WSJ, NYT, CNET, AP.

Tiffany Inc. v. eBay Inc., 04-cv-04607, S.D. New York, was filed in 2004 and went to a week-long bench trial (no jury) on November 13, 2007. Tiffany was represented by Arnold & Porter; eBay by Weil, Gotshal & Manges. 

Photo: Flickr/liewcf
 

Trademark disputes and the hometown advantage

Of course, I dutifully prepared a post titled "Monday Morning Trademark Notes" over the weekend, only to have the biggest trademark news of all strike... right after the post publishes. I'm referring, of course, to a French court's decision yesterday that eBay must pay $61 million to LVMH Moet Hennessy Louis Vuitton SA.

We're still waiting for a decision on the Tiffany v. eBay case heard late last year in Manhattan. I have reason to believe a lot of folks are waiting on that verdict; I've noticed quite a few hits on my own blog by people searching for terms like "tiffany ebay verdict," despite the fact that I mentioned the Tiffany v. eBay case only once, quite briefly, in December.

Dan Slater at the WSJ raises an interesting question: could the French ruling could be considered a "hometown verdict?"

That's a question that could be asked in plenty of stateside IP disputes, as well. Viacom sued Google in Manhattan, not California; Tiffany's sued eBay in Manhattan.

We're not talking about venue shopping; in both of those examples, plaintiffs sued in their home base. But still, it's interesting to think about what kind of hometown advantage can be reaped. If I were a big mark-holder, I'd like Manhattan. A Manhattan jury is likelier to have folks who, if they don't work for a big fashion brand themselves, might have a brother or aunt or half-sister's dog walker's buddy who is connected to such a company. Similarly, a Northern California jury is likely to have jurors with connections to technology workers. People in Los Angeles are more likely to sympathize with a movie studio.

Maybe I'm stating the obvious here. But I live in San Francisco and spend a lot of time with family and friends in Los Angeles. Both of those regions have large and diversified economies. Despite that, it's surprising to me how much they can both feel, in a way, like "industry towns."

eBay v. lawyers with patents

Google will be headed back to the Western District of Wisconsin to fight off a patent lawsuit it thought it had beat, thanks to yesterday’s appeals court decision in HyperPhrase Technologies v. Google. (Bloomberg News story here; court order is here)

That case is connected, by both venue and attorney, to the Netcraft Corp. v. eBay lawsuit that a Wisconsin federal judge tossed out last week on summary judgment. I wrote about that case in Monday’s Daily Journal, and it’s worth following up on here.

Like the MercExchange case that has dogged eBay for more than six years, the Netcraft litigation involves a patent-wielding lawyer-inventor.

Netcraft Corp. v. eBay Inc., 07-00254 (W.D. Wisconsin)

Andrew Egendorf is a Massachusetts lawyer-inventor who began laying a broad claim to the world of electronic commerce in the mid-90’s. (find a short bio with photo here). In May, he sued eBay for infringing on his patents on “Internet billing methods.”

Netcraft is the patent-holding company set up to assert Egendorf’s patents; in addition to the eBay litigation, he filed a Delaware lawsuit against five cell phone companies in October. Netcraft Corp. v. AT&T, 07-cv-00651 (Delaware). Netcraft’s parent company is called Tradecraft; another entity called Datacraft has popped up in some patent searches).

Netcraft's lawyer is Fish & Richardson partner Frank Scherkenbach—who also represents Google against HyperPhrase, a locally grown Wisconsin patent-holding company. eBay hired an Irell & Manella team led by Morgan Chu, who tells me that Irell started working with eBay in 2006.

Even though he lost this one, Egendorf can’t be too disappointed. After all, it looks like he cashed in a few weeks before he even filed the suit against eBay. He’s one of five named inventors on a “friend finding” social networking patent, number 6,618,593, which was sold for $2.86 million at the April 2007 OceanTomo auction.

Egendorf is a lawyer with deep connections to rise of the Internet. He helped found Symbolics in 1980 with some heavy-hitters out of MIT’s Artificial Intelligence Laboratory, and became the company’s general counsel in 1983.

Symbolics was the first dot-com ever, and the company soon had a famously uncomprising opponent: free software advocate Richard Stallman. Stallman has nothing but disdain for software patents like those Egendorf builds and litigates; he also took a mighty dim view of the folks who founded at Symbolics.

“They would get outside investment, not have scruples, and do everything possible to win,” Stallman said in a lecture transcribed here. Stallman had a bitter falling out with Symbolics, describing its founding as a “stabbing in the back,” but also said the company inspired him to created GNU, his free operating system.

In 1968, Egendorf and a friend wrote to Ralph Nader, describing themselves as "disgusted Harvard graduate students who must endure endless years of drivel in order to mechanically defend the guilty and profitably screw the consumer,” according to this article in the San Diego Union-Tribune. He urged Nader to enlist him in a “judicial jihad” and became one of the original “Nader’s Raiders.” Egendorf is interviewed in the Nader documentary "An Unreasonable Man," which I have not seen.

And file this under interesting timing: the "Andrew Egendorf" entry in Wikipedia was flagged for deletion on May 3, 2007—the same day Egendorf filed his lawsuit against eBay. If I were of a more conspiratorial mindset, I might think that suspicious. But it looks like the Wikipedians who voted to kill the page were mainly annoyed that it was written by his old buddy and former Symbolics president Russell Noftsker. The articlde-deletion debate is nothing special, and can be read here.

Short histories of Noftsker, Egendorf and venture capitalist Jean de Valpine, are on Noftsker's Wikipedia user page. The note on Egendorf mentions that his wife Linda is a well-known sculptor.

She's a would-be inventor, too. Linda Egendorf has her own patent application in the works--it's for a "method of creating a soft sculpture."

An eBay Holiday: Four Lawsuits a-Leaping

Lots of folks are busily buying Christmas presents on eBay these days, but what ends up in company stocking, legally speaking, remains to be seen. The 2007 holiday season is shaping up to be a great one for eBay the plaintiff, and a not-so-great one for eBay the defendant.

One month after eBay’s trademark victory at the 9th U.S. Circuit Court of Appeals against Orange County-based rival Perfume Bay, the online marketplace filed another trademark lawsuit on Dec. 5, this time against CoinBay.biz, an auction and sales site run by a Florida coin collector Bob Martino.

eBay Inc. v. Martino, 07-cv-06172-CRB, N. D. California.

I wanted to ask eBay if there was any relationship between the 9th Circuit win and this new lawsuit. My call to their spokesman went unreturned last week; which is understandable, since the company has some much bigger fish to fry (more below).

The Perfume Bay case that went to the 9th circuit is Perfumebay.com Inc v. Ebay Inc., 04-01358-WDK, C. D. California.

Martino didn’t want to get into specifics about the lawsuit or his negotiations with eBay, which are ongoing. He did say that the coin Web site doesn’t generate much income for him, and that coin collecting is his hobby, not his career.

"The coin dealers aren’t really able to make money with eBay," said Martino. "I wanted a site that offered no listing fees. I don’t care if I don’t make a dime. My grandfather got me into coin collecting 30
years ago."

It may not be a living, but Martino did want eBay to buy the CoinBay.biz site from him, according to the company's complaint. (available here, courtesy Eric Goldman)

He suggested that he could be bought out at a price far lower than eBay's legal team, led by Cooley Godward Kronish partner John Crittenden. eBay thought that was so funny they suggested he could pay their attorney's fees after flying out to meet them in a San Francisco courtroom.

Martino says he's complying with all the company's demands now.

He was busy re-vamping his Web site when we talked last Thursday. CoinBay has become CoinDay, and the CoinBay.biz domain now re-directs to CoinDay.com. (I doubt eBay will be permanently satisfied with that re-direct)

Martino also removed his  "Buy Now" buttons, which eBay said infringed its "Buy it Now" trademark.

Compare:  vs.

eBay has waged a long campaign to keep the Internet clear of commerce sites that end in “Bay,” and such sites often get emailed warnings shortly after they go online. But Martino’s site has been operating under CoinBay.biz since June 2006, and he says he was only contacted by eBay a couple months ago.

In the CoinBay complaint, Crittenden has the usual list of amusing "Generic + Bay" sites, including AlternaBay, EggBay, MexBay, and NaziBay. He has represented eBay in several other domain-name trademark cases, including the Perfumebay.com case.

My piece in the Daily Journal about the 9th circuit decision in that case, "Another 'Bay' Goes Down to eBay's Trademark Punch," is reprinted here.

Perfumebay.com Inc v. Ebay Inc., 04-01358-WDK, C. D. California.

Perfume Bay was ordered to stop using the Perfumebay.com domain name; the company has since asked the 9th circuit for a re-hearing, and has appealed to let it keep the domain name while it appeals. Perfume Bay president Jacquelyn Tran maintains a blog about the lawsuit at www.MakesNoScents.com.

So that’s eBay’s good news; the bad and possibly-really-bad news comes from the East Coast.

The battle royale is a big trademark battle in a Manhattan federal court that should see a decision any day now. Luxury goods maker Tiffany & Co. sued eBay in 2004, saying the online retailer hadn’t done enough to root out counterfeit goods on its site. EBay says it does plenty and that Tiffany should take a bit of responsibility. WSJ Law Blog coverage of that is here.

Tiffany (NJ) Inc. v. eBay Inc., 04-cv-04607-RJS, S. D. New York.

The Tiffany trial is over, but the rhetoric seems to be hitting a post-trial peak. Tiffany filed a brief last week saying eBay was a “rat’s nest” of fakes; eBay says a bad decision could “wreak havoc” on its business and hurt Internet commerce generally. That decision could come any day now.

In Virginia, eBay was ordered to finally pay up the $25 million plus interest it was ordered to pay in 20003 to MercExchange, a tiny company that claims it has patents covering eBay's "Buy It Now" online sales. That case ultimately went to the Supreme Court, and set a new, tougher test for when patent plaintiffs can get an injunction to kick a losing defendant out of a market.

Mercexchange, L.L.C. v. eBay, Inc., et al. 01-cv-00736, E. D. Virginia.

eBay really doesn’t want to pay this one. The patent tide has turned, and it looks like they want complete victory here. The company wants MercExchange’s patents to be re-examined under the harsh new light of a 2007 Supreme Court decision, KSR v. Teleflex, which said court have to apply a stricter test for what patents should be tossed out for being too obvious.

I’ll have more to say about MercExchange v. eBay in the coming weeks.

In the meantime, if the Tiffany case doesn’t go its way, Bob Martino’s new logo for CoinDay.com might be the best thing that happens to eBay this holiday season. Happy Hanukah.