Originally published March 26 2014
Why is East Texas home of all the patent troll parasites?
by J. D. Heyes
(NaturalNews) They are not inventors. They do not create anything. They don't produce anything. Rather, they are litigators, primarily, and their goal is to get rich off of other peoples' successful ideas.
They're called patent trolls, and like other scammers, they try to use the legal system to carry out their assault on creators.
If you haven't heard about patent trolls, here's a little background on who they are, what they do and how their deceitfulness is destroying one of the pillars of American innovation: the patent.
"The U.S. Patent System is supposed to represent a bargain between inventors and the public. In theory, it is simple: in exchange for dedicating a novel invention to society, along with a clear explanation of how to practice that invention, a patent applicant gets a 20-year monopoly," explains the Electronic Freedom Foundation (EFF), a non-profit group that defends civil liberties in the digital age.
"But, lately, we've watched as the system appears to fall apart, harming innovation, the very thing it was designed to foster," EFF explained. "Many factors contribute to the problems we've seen with the patent system, but perhaps none so much as the rise of the patent troll. To be sure, the patent troll problem is not a new one... but recently, we've followed a troubling new trend: more and more small developers and companies targeted by trolls."
Settlement is cheaper than fighting
To the patent troll, patents are merely legal weapons, and they are used as such; the troll doesn't come up with anything new or creative. Rather, trolls are strictly in the business of litigation (many of them are lawyers), or even the threat of litigation. Oftentimes, trolls will buy up patents very cheaply from hard-luck companies looking to monetize whatever they have left to stay afloat, including their patents.
Over the years, however, the U.S. Patent Office has had a habit of issuing patents for ideas that are neither new nor revolutionary. Many times, these patents can be overly broad and inclusive, covering many everyday or common-sense types of things, like podcasting or computing. These are things that should never have been patented at all, EFF says.
With these overbroad patents in hand, trolls then send out letters to those enterprising individuals whom they accuse of infringing on the patents they hold. The letters threaten legal action unless the alleged infringing party either agrees to pay a license fee -- which can amount to tens or hundreds of thousands of dollars -- or risk being sued. Many companies agree to the fees or to a settlement, even if they believe that the allegations of infringement are bogus; they know that litigation over patent infringement can be very cost-prohibitive and can involve years of legal wrangling.
Here is just one example, per EFF:
In particular, we've watched with dismay as Lodsys, a company that neither makes nor sells a product, targets small app developers, claiming the use of in-app purchasing technology (usually provided by Apple or Google) infringes Lodsys' patents.
It's impossible to know how many app developers Lodsys has actually threatened, but we do know that it has sued at least 11. Apple has moved to intervene in that suit, claiming that the license it took from the patents' former owner covers its app developer's uses of that technology, and Google has filed a Notice of Reexamination with the Patent Office challenging the validity of Lodsys' patents. But Apple's and Google's actions -- while noteworthy -- will take years to reach resolution. In the meantime, app developers are faced with an unenviable choice: either take a license from Lodsys or live with the fear that they could be the next party facing a lawsuit.
See how patent trolls stifle innovation while at the same time making a mockery of our patent and court systems?
"The nation's legal dockets are littered with patent cases with varying degrees of merit, challenging everything from mobile phone push notifications and podcasting to online payment methods and public Wi-Fi. Some 2,600 companies were targeted in new patent lawsuits last year alone," writes David Kravets at Wired.com.
The Carolla Factor
Comedian and top podcaster Adam Carolla (20 million downloads a month) is fighting back; his podcast has been targeted by a troll corporation in East Texas, home to many such corporations.
At an event next week at the Redondo Beach Performing Arts Center in Redondo Beach, Calif., Carolla plans to raise litigation defense funds aimed at protecting his and other podcasts from the trolls targeting them.
In 2013, Adam was sued in the Eastern District of Texas Federal Court by a company claiming ownership of a patent for "the carriage of serialized episodic content" on the Web. This same company has sent demand letters to prominent podcasters for payment, but currently has only sued Carolla.
Why East Texas? Because juries there have a long history of favoring patent holders, no matter how frivolous or ridiculous their claims, according to TechDirt.com [http://www.techdirt.com].
"What's at stake for them is everything that they think is free that they currently listen to may not be free if these guys win because most shows, your show I'm guessing included, ends up on the Internet," Carolla told Dennis Prager on the latter's radio and podcast program. "And if they can take us down, they can take anyone down and they will just go after everybody. So we need to win to set a precedent."
"Once you try to sue Adam Carolla's podcast, you can't go to Joe Wootchie Scootch's podcast and sue him if you just lost to me with the same patent, obviously," he added. "It's precedent. It's not going to work."
"They set up in East Texas. I mean, it's all the things you hate about lawyers and where this country is going. They find a town that is friendly to them with judges and folks like that and they start their little cottage industry, which is not producing anything -- just getting in between somebody that produces and somebody that consumes and wetting their beak. I say all the time, 'How long are these guys going to sit around and watch people have an open exchange on the Internet and have money go back and forth without them going, 'How do we get involved with this?' You know there's a whole segment of our society that does nothing but get in between people -- that I have an idea, you have a wallet. Somehow this person is going to insert themselves -- I mean, this is what the state does. This is what our government more and more is doing and now it's what attorneys are doing."
Some good news
Even as Carolla plots his defense, there are some things happening in the nation's capital that could put a great many of the patent trolls out of business.
As Wired reported, President Obama, members of Congress and the Justice Department are working to put integrity back into the Patent system.
"The president is a strong leader on these issues. We haven't really seen that before," Julie Samuels, the executive director of startup advocacy group Engine, told Wired. "I do think that this could be one of the legacies of this administration."
Because patents are good for 20 years, the effects of these reform efforts won't be immediately felt. But "the supply of overly broad, vague patents will start to dry up as new rules get put into place," Joe Gratz, a San Francisco-based patent lawyer who is representing Twitter in a patent dispute, said.
During his State of the Union Address in January, Obama elevated the issue of patent reform, calling on Congress to "pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation."
Shares of these patent-troll corporations have been dropping ever since.
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