Or so says FolNer LLC and more than a dozen other shell companies, all claiming to own four patents allegedly covering the act of scanning a paper document and sending that scan by email. As reported by NBC Connecticut, a collection of LLCs with six–letter names (like FolNer) continues to target small businesses, like Southeastern Employment Services of Old Lyme, Connecticut. The LLCs are all Delaware entities associated with a company called MPHJ Technologies, to which the patents were assigned by an outfit called Project Paperless, which got them in turn from Renaissance Group. And, well, you get the picture. Hidden behind the screen of Delaware corporate law is a real party–in–interest behind this letter–writing campaign that cannot readily be identified from public records.

The pattern is familiar—indeed, so familiar we’ve discussed it before. FolNer sends a threatening letter alleging infringement of its patents, and demands that the recipient take a license that might cost upwards of $75,000. That’s a large sum of money to a small business, but not nearly as much as it would cost that company to defend any potential lawsuit to a final resolution in federal court. And businesses like Southeastern Employment Services don’t make or sell scanning technology; they’re just users with no particular connection to their scanners, software, and servers. It takes determination to stand up and fight a potentially expensive battle to defend a business tool made by someone else that has nothing to do with your core business competency. But there can be strategic value to taking a strong stand against this kind of intimidation. Not every company has Newegg’s appetite or resources for litigation; but that doesn’t mean there aren’t smart, effective, and cost–efficient defensive strategies that even small businesses can employ to resist demands like this one.

We look forward to seeing which cowboy Newegg will unhorse next.

While we welcome the news of academic inquiry into the causes and consequences of patent trolling, we can’t help but wonder whether something is missing from this discussion with its focus on improving patent quality. There is a growing body of empirical evidence that patent troll litigation is on the rise, now exceeding 50% of all cases filed, and that patent trolls are increasingly suing non–technical companies (like retailers) under technical patents (relating to their websites, for example). The pattern of increased assertion against those who use, not produce, accused products or instrumentalities may suggest a class of plaintiffs who are simply indifferent to the quality of their patents, however measured. And that is quite a different kettle of fish.

We are still in the process of reviewing the seven different opinions issued by the ten-member panel (for a total of over 130 pages), but all of the judges seem to acknowledge that the test for patent eligibility under Section 101 should be “a consistent, cohesive, and accessible approach” that provides guidance and predictability.

Unfortunately, none of them can seem to agree as to the best way to get that result.

The leading five-member opinion written by Judge Lourie provides several insights into the Court’s approach to analysis, gleaned from prior precedent:

First and foremost is an abiding concern that patents should not be allowed to preempt the fundamental tools of discovery—those must remain “free to all . . . and reserved exclusively to none.” . . . [T]he animating concern is that claims should not be coextensive with a natural law, natural phenomenon, or abstract idea; a patent-eligible claim must include one or more substantive limitations that, in the words of the Supreme Court, add “significantly more” to the basic principle, with the result that the claim covers significantly less.

Next, the cases repeatedly caution against overly formalistic approaches to subject-matter eligibility that invite manipulation by patent applicants. . . . Thus, claim drafting strategies that attempt to circumvent the basic exceptions to Section 101 using, for example, highly stylized language, hollow field-of-use limitations, or the recitation of token post-solution activity should not be credited.

Finally, the cases urge a flexible, claim-by-claim approach to subject-matter eligibility that avoids rigid line drawing.

In dissent, Judges Linn and O’Malley offer their opinion that the competing analyses by members of the Court suffer from a similar flaw – they are “divorced from the record to which we are bound.” Specifically citing the amicus we filed on behalf of the Internet Retailers, among others, Judges Linn and O’Malley comment that they do not “discount” concerns as to the proliferation and aggressive enforcement of low quality software patents. Their disagreement lies with the fact that they believe that Congress, not the Court, is the appropriate mechanism for addressing these issues. “Congress can, and perhaps should, develop special rules for software patents.”

The paper – which affects the Patent Bill pending before parliament – proposes language that a computer program is “not an invention and not a manner of manufacture for purposes of this Act.”

That wouldn’t mean that software could not be protected by other means, for example, through copyright law, and it seems that representatives of New Zealand’s IT industry have similar views.

We’ve long advocated pruning so called ‘business method patents’ from the patent family tree in the U.S., as well as urged the principle that “add computer” is not a recipe to make an otherwise unpatentable idea patentable. New Zealand, it seems, may be one step ahead of us.

The first, courtesy of Patently-O, relates to a rather breathtaking letter by an obviously frustrated patent attorney who evidently couldn’t help venting to a patent examiner after his client’s application was denied.

REMARKS: Are you drunk? No, seriously…are you drinking scotch and whiskey with a side of crack cocaine while you “examine” patent applications? (Heavy emphasis on the quotes.) Do you just mail merge rejection letters from your home? Is that what taxpayers are getting in exchange for your services? Have you even read the patent application? I’m curious. Because you either haven’t read the patent application or are… (I don’t want to say the “R” word) “Special.”

Numerous examples abound in terms of this particular Examiner not following the law. Clearly, the combination of references would render the final product to be inoperable for its intended use. However, for this Special Needs Examiner, logic just doesn’t cut it. It is manifestly clear that this Examiner has a huge financial incentive to reject patent applications so he gets a nice Christmas bonus at the end of the year. When in doubt, reject right?

Since when did the USPTO become a post World War II jobs program? What’s the point of hiring 2,000 additional examiners when 2,000 rubber stamps would suffice just fine? So, tell me something Corky…what would it take for a patent application to be approved? Do we have to write patent applications in crayon? Does a patent application have to come with some sort of pop-up book? Do you have to be a family member or some big law firm who incentivizes you with some other special deal? What does it take Corky?

Perhaps you might want to take your job seriously and actually give a sh.t! What’s the point in having to deal with you Special Olympics rejects when we should just go straight to Appeals? While you idiots sit around in bathtubs farting and picking your noses, you should know that there are people out here who actually give a sh.t about their careers, their work, and their dreams.

Your job is not a joke, but you are turning it into a regular three ring circus. If you can’t motivate yourself to take your job seriously, then you need to quit and let someone else take over what that actually wants to do the job right.

Evidently the author does not intend to practice with the PTO again, but, if so, perhaps there is an opening with the recently-sanctioned attorneys in mass BitTorrent lawsuits, who used the copyright laws as an attempt to shakedown settlements from those who had illegally downloaded pornography:

“The federal agency eleven decks up is familiar with their prime directive and will gladly refit them for their next voyage. The Court will refer this matter to the United States Attorney for the Central District of California. The will also refer this matter to the Criminal Investigation Division of the Internal Revenue Service and will notify all judges before whom these attorneys have pending cases.”

Star Trek references aside, let’s hope these lawyers boldly go where no one will again.

More than 90 percent reported that patent claims from PAEs had affected them financially or distracted from their core businesses.

More than 80 percent said their customers had received PAE demands because the customers used or implemented products that were accused of violating a patent, and almost 40 percent said the claim had resulted in a change to the product.

About one-quarter of the companies surveyed said claims from PAEs lost them revenue or customers, or caused a delay reaching an operational milestone. About 12 percent said they had to tweak their business strategy as a result of a claim.

Around 8 percent said claims had caused them to delay hiring, or to exit a business line or business altogether.

At any rate, today Senator Schumer of New York—no friend of patent trolls—announced he’ll be introducing a second bill in Congress, to act as a sword in connection with his formerly–proposed SHIELD Act.

Citing the monetary costs of patent trolls to the New York (and U.S.) economy, Senator Schumer proposed an addition to the anti–troll armory. By way of background, we let Senator Schumer speak for himself:

In September of 2011, the America Invents Act (AIA) updated the way patents are issued and prosecuted, and included the Schumer–Kyl program for business method patents related to financial products and services. The Schumer–Kyl provision is a temporary program that established a post grant review by experts at the PTO of covered business method patents and allows a petitioner to request that the PTO review a covered patent; if they find it more likely than not to be invalid, the PTO can take a second look and return a decision promptly. Since the provision began, approximately twenty patents have been challenged through the PTO.

Schumer today introduced legislation that would expand the Schumer-Kyl provision to include more businesses, specifically among technology start-up companies. The legislation would also remove the provision’s temporary status. Schumer explained that a PTO prosecution system will provide patent holders and accused infringers with an alternative to court, which can be extremely costly.  This will not only help resolve existing suits in a low-cost way, it will also deter trolls from filing suits in the future because it provides a cost-effective option to knock out bad patents. 

For more coverage, read here:

http://www.schumer.senate.gov/Newsroom/record.cfm?id=341612

Not news of tremendous note, but the term “troll” is hitting the mainstream – sufficiently so as to be included in pleadings.