14 ms·
Patent trolls want $1,000 per employee for using scanners
- jrockway 14y ago$1,000 per employee is the most bogus request I've ever heard in my life. Even if the concept were patentable, I'd say a reasonable demand would be $1 per Internet-capable scanner sold. The patent trolls should really read Joel Spolsky's guide on pricing enterprise software. Saving $200,000 is worth hiring some lawyers to fuck you up. Saving $75 isn't.
- angdis 14y agoThe people behind these scams have to use legal services as well. They do have to pay in some way for each letter that goes out. There's definitely a "sweet-spot" in the pricing which maximizes the ratio of intake to expenditures. I would bet that they and other patent trolls have found that sweet spot long ago.
- scott_s 14y agoI was under the impression that some of these patent trolls are really just a collection of lawyers. If they're doing their own work, instead of getting an outside firm to do it, their costs should be much less.
- rhizome 14y agoI've long had the opinion that situations like this (as well as Intellectual Ventures) are the lawyerly version of hacking. They're just trying to find free lunches in the system the same way that MIT computer heads 50 years ago were trying to disable timeshare accounting for their usage.
- angdis 14y agoEven so, if they hit up the victims for $100 instead of $10000, they'll need to send out far more letters, and deal with far more targets who simply ignore the letters. IANAL, but I believe it does cost money and time to actually file a lawsuit and/or compel the targets to do things like pay up under penalty of law.
- scott_s 14y agoNote that in the majority of cases, they don't file a lawsuit. Their business model almost certainly depends on that. You're right, of course, that their volume would have to increase, but I'm not ready to immediately dismiss the notion that their current tactic is not the most efficient.
- corin_ 14y agoBy defining costs that way you do bring down the overhead, i.e. what they have to pay up-front, but not necessarily the actual costs. If I am a lawyer doing my own patent trolling, and that takes up 10 hours of my time that I could otherwise have sold to someone for $x/hour, then $10x is a cost associated to the patent trolling, even if I didn't actually have to transfer that money to someone else.
- crusso 14y agoIANAL, but I'd guess that the license pricing in their demand would play into the potential damages assessed by a suit later. Once they admit that the patent is only worth $75 to a business, then how would they sue for $200,000 later? Treble damages? $225?
- fusiongyro 14y agoI think the point Jon's making is that a business is a lot more likely to swallow a $75 fee than a $200,000 fee. If you hit me with a $200,000 licensing fee I'm a lot more likely to hire lawyers to retaliate and really make you work for it.
- crusso 14y agoOh, I get his point - but you can't forget that there would be two sides to that coin. If I get hit with a $75 licensing fee, I throw it away knowing that the worst that can happen is that I'll owe $225 down the road. The fee has to be small enough so that someone will pay it, yet big enough so that the victim company thinks you might sue them to collect it.
- fusiongyro 14y agoI would be surprised if the majority of people follow your example.
- wpietri 14y agoSure, but now you're anchored [1] at $1000/per. Some fools might pay it, and many more will be relieved when the law firm offers to settle for something much lower. That lower amount being how much they were really intending to shake you down for all along. http://en.wikipedia.org/wiki/Anchoring http://en.wikipedia.org/wiki/Anchoring
- lutorm 14y agoI find it extremely dubious that you could actually infringe on a patent merely by using a consumer product. Disregarding this particular patent, is that sort of claim actually grounded in fact?
- rst 14y agoWell, if the product's manufacturer has licensed the patent, then the "exhaustion doctrine" generally keeps the patent holder from taking a second whack from people who bought it. That's what ordinarily shields end-users of consumer products from this kind of nonsense. If the manufacturer hasn't licensed the product, though, the users may well be fair game, in the eyes of the law.
- lutorm 14y agoBut end users generally don't know and have no way of knowing what technology is inside a product. That seems pretty sketchy. While it's true that unintentionally infringing on a patent is not an excuse, if I'm liable for someone else's infringing without my knowledge my potential liability is completely unlimited.
- ihsw 14y agoWhether it's grounded in fact has never been relevant because the in-court legal costs will far outweigh settlement -- that is the business model of patent trolling.
- zalzane 14y agoI'm on the edge of my seat waiting for them to send one of these extortion notices to the wrong guy who will get enraged enough to shoot up their office. I wonder if a chain of such shootings would set a precedent for change.
- pavel_lishin 14y agoThat would be way too expensive, I'm sure they hold a patent on a method on expressing customer dissatisfaction via chemical reactions to convert chemical energy into kinetic motion.
- jetti 14y agoHow would that one individual even find them? PO boxes and a "legal department call center" are all that seem to be given and it would seem difficult to track them down.
- johnnymonster 14y agoCrazy people... they get crazy. Camp out at the PO box and wait for someone to pick up the mail. Get a job at that UPS store location. Pay off one of the kid employees that work there to give you the name and address on file. Follow the person that picks up the mail home. Look up his information based on his home address. Collect all his trash, find out where he works. follow him to work. then wreak havoc on all his coworkers! you are really not all that creative are you... :)
- jetti 14y agoWell...it looks like I'm not going to be sending you any patent infringement paperwork (whether it is legit or not)! Although, for somebody who has just snapped and is going to wreak physical vengeance, I wouldn't put a normal thought process behind it. Which means you may not be able to count on logically thinking and finding these people.
- ill_throw44 14y ago
- pavel_lishin 14y ago> the only variations are the six-letter name of the shell company and the royalty demands This sounds a lot like the automated, python-scripted corporations in Stross's Accelerando.
- unimpressive 14y agoWould that make these literal shell companies?
- jetti 14y agoThe article mentions that it is hard to invalidate patents with prior art and that the patent holders will say that it is a narrower scope than previous patents. If that is the case, I can't see how this isn't extortion. There is no way that these "companies" could know the kind of network that the companies they are sending letters to use. They may be just guessing that they are even using a scanner. They are just mass mailing threats and hoping for money back. Also, how is it even legal to target the users of technology in a patent infringement case like this? Wouldn't the manufactures (of hardware AND software) be the ones that would need to license the patent, not end users? I get why you would target the end user but is that legal/valid?
- scott_s 14y agoI agree that it is extortion in spirit. But I wonder if patent trolls can be prosecuted on current extortion laws, as their defense would be "We're just trying to enforce our lawful patents." If prosecutors would not want to try, then I wonder how we could change extortion laws to include this practice.
- jetti 14y agoI agree with you on what their defense would likely be. But with something like this, there is no real way of knowing for sure if companies are infringing on their patents without knowledge of their network and what devices they have. It is entirely possible that they sent this to companies who haven't used these features. The problem is that I can't see prosecutors taking these companies on. I would imagine that a Federal prosecutor would be the one taking them on, which to me, makes it even less likely that it will happen.
- neurotech1 14y agoAgreed. Sending out these demand letters without a good faith belief of actual infringement, especially bulk-mail form, which could be considered as evidence of not taking reasonable care in preparation, should be considered extortion. IANAL but one option might be a federal civil RICO suit, and see if the DoJ will get involved.
- DanBC 14y agoNow we know the format of the letters I'm waiting for anonymous to send a bunch of letters to every member of US legislature.
- olefoo 14y agoActually, it should be sent to their re-election campaign committees; legislators themselves are considered members of the government, and would not be considered businesses in their own right. Whereas their campaign comittees are heavily regulated businesses that get lots of financial scrutiny and are very short of cash usually. Although that is a dangerous precedent to set; once you start using that sort of tactic, it will become yet another way for big business to lock out candidates they don't like and would have an overall chilling effect on participation in the political process.
- astrodust 14y agoOne simple reform to the patent system would be to force an automatic review of any patent involved in a lawsuit where the patent might be rendered invalid before the court needs to weigh in on the matter. Right now the court needs to decide if the patent is enforceable, which seems like it's basically doing the job the patent issuing entity should've done in the first place.
- krickle 14y agoYes! I love this. If we can reduce the cost of defending these we would eliminate them without needing anything else.
- jasimq 14y agoI don't know about the different kinds of patents, but shouldn't the printer manufacturers be paying up licensing fees?
- drstewart 14y agoThe letter from the patent trolls actually explains why they don't do that (the real reason is probably because it's easier to get a 30 person small business to pay up instead of a giant corporation with a retainer of lawyers).
- arbuge 14y agoIt strikes me that one root cause of the patent troll problem, besides unscrupulous trolls and their evil lawyers, is idiot patent examiners who would allow patenting the process of drinking a cup of coffee of morning if there was no prior art on file on the subject. It all comes down to incentives. Good patent lawyers know they can make big bucks working in private practice (possibly for trolls), whilst mediocre ones happy with a government salary go ... where else? ... the USPTO.
- wpietri 14y agoDo you have any facts to back this up? The one patent examiner I know is very smart. But he's also part of a rigid system with very clear criteria. If there's a problem, I suspect it's a systemic problem.
- krschultz 14y agoMajor root cause that could be fixed without hurting anyone other than patent trolls: the relatively anonymous registration of patents. If I'm being threatened with a lawsuit for patent infringement, how can I not find out the owners of the patents? That is crazy. If you want to leverage a patent, you should have to be registered with the patent office so that you can be held accountable. Anyone using a patent for legit reasons wouldn't be hampered by this, but it would make hunting down patent trolls a whole lot easier.
- crusso 14y agoPlus if these patents are so valuable, then it would be nice if their sale from one shell company to another had tax implications. Once a licensing campaign has been initiated for one shell company, that should put some idea of a value on the patent(s). If you can be assessed taxes for options in a company that isn't public that you have no way to exercise, selling assets from one shell company to another should have tax implications as well. Maybe that would limit the creation of mazes of ownership of these patent portfolios.
- krschultz 14y agoI really like the idea of relating the value of a patent to the registration cost. If the patent is giving you $10 million a year in income, you should have to pay more for that right than if it brings you $10,000 a year in income. At least then we would have a list of patent holders and how much they are making from licensing.
- JackFr 14y agoCouldn't someone end this by gettingt a business process patent on patent trolling?
- h4pless 14y agoCould someone (or has someone already tried to) patent the process of patent trolling? I know that such a patent shouldn't be granted because the idea obviously isn't original but it seems as though there are so many bogus patents sneaking through the cracks that it could be possible. It would be nice if there was someone you could call to troll the trolls.
- cschmidt 14y agoStrangely Halliburton seems to have done this: http://blogs.wsj.com/law/2008/11/12/halliburton-patenting-patent-trolling-to-block-patent-trolls/ http://blogs.wsj.com/law/2008/11/12/halliburton-patenting-pa...
- kaliblack 14y agoSimple patent sending paper-based communication that is enveloped in a paper casing.
- zem 14y agoObUserfriendly: http://ars.userfriendly.org/cartoons/?id=20030301 http://ars.userfriendly.org/cartoons/?id=20030301
- neurotech1 14y agoMaybe I should do an AMA on my work for a patent attorney. It would get boring because his MO seems to be to only sue companies that negotiate license deals in "bad faith", and nowhere near the frivolous action seen in here. Most of his work is in filing patents. The last conversation we had was actually about supporting the EFF, so I'm sure that is quite telling to what direction we're heading.
- hdj 14y agoI'm not fully certain and I would love some verification/counter-argument, but wouldn't the new Public Use Anywhere in the World aspect invalidate atleast some of the garbage patents like the one discussed in the article? http://www.forbes.com/sites/forbesleadershipforum/2012/11/15/a-powerful-new-weapon-against-patent-trolls/ http://www.forbes.com/sites/forbesleadershipforum/2012/11/15...
- mcherm 14y agoNot really. The difficulty of invalidating the patent isn't the real barrier to standing up to these sorts of legal threats. The real barrier is that whether you win or not, it costs $100,000 or more to be sued in a patent lawsuit. Here are your choices: (A) Pay up. The extorting patentholder charges you $80,000. (B) Hire a lawyer to defend you in court. The lawyer charges you $100,000. You also might lose and have to pay damages. (C) Defend yourself in court without a specialist patent lawyer. Unless you ARE a specialist patent lawyer, you are guaranteed to lose. Pay triple damages plus lawyer fees -- actually, just pay everything you own and go live on the street. Which would you choose?
- edouard1234567 14y agoYet another patent troll nonsense. Who needs scanners anyway... maybe people will come to their senses and stop printing signing & scanning... a waste of paper, energy and precision!
- edouard1234567 14y agoThe clock is ticking for these patent trolls, scanners will soon become completely useless (posted on HN yesterday) http://techcrunch.com/2013/01/02/google-expensify-paperless-2013/ http://techcrunch.com/2013/01/02/google-expensify-paperless-...
- ChuckMcM 14y agoIt would be interesting to see if you could pursue a case of legal malpractice against the firm which took this case to the patent office in the first place.
- api 14y agoThe present-day patent office is a joke. They basically just rubber stamp whatever you send them, and do so in priority order of who knows how to play their elaborate and bizarre game of approval queue gaming.
- mcherm 14y agoOn what grounds? That law firm successfully obtained a patent which (even if later invalidated) resulted in revenues for their client (the extortion money). That is not malpractice, it is SUCCESSFUL practice -- and more so if the patent is highly questionable, as it may have been the legal firm's skill that resulted in the patent being issued.
- ChuckMcM 14y agoOn the same grounds that lawyers are sanctioned for bringing frivolous or extortionate lawsuits. I think you bring a poor strawman to the debate, its not a question of whether or not the lawyer was successful, its a question of whether they were working toward the betterment of the system. For example. doctors may be sued for malpractice for performing surgeries that are unneeded even though the surgery is completely successful. They violate the terms of their licensing in the state where they practice by doing so. My point is that there are many ways to mitigate the perils of the patent system without destroying it. One is to make abuse of it to have some cost. So a proposal might be like this [1]: To prosecute a patent (represent an inventor as their attorney in the application process) requires licensing by the patent licensing bar. That license states that willfully bringing a patent before the commission that is found later to be invalidated, and such invalidation shows negligence on the part of the prosecuting attorney, that attorney or their firm, is co-liable for any charges or court costs incurred by the folks who invalidated the patent. It would also be interesting in public shaming of people who claim to have 'invented' such preposterous things. That is a much more social thing though. [1] I'm not a lawyer, and I know it doesn't work like this today, its a proposal to make it 'painful' to try to game the system as a lawyer.
- api 14y agoI personally hope the patent law abuse gets to the point that it destroys the entire patent system. So go for it. Sue schools, the elderly, whatever.
- vertis 14y agoAnd then what? We'll have nothing at all? I'm certainly not in favour of these patent trolls but you have to have a more nuanced approach to intellectual property than 'Burn down the House' It's a balance between encouraging innovation by protecting intellectual property, and discouraging it because of patent abuse (etc). Destroying the patent system completely would most certainly have a negative effect.
- pyre 14y agoI'm beginning to believe that reforms are not possible and "burn down the house" may be the only option to escape the current mess. There are too many vested interests, and the problems are too abstract/complex for normal people to care (and put pressure on representatives). Even if the general populous put pressure on Congress to do something, Congress would pass some law that at best did nothing, and at worst went in the opposite direction, all while politicians proclaimed 'victory' in reforming the system, and the general populous settles down because 'something' happened, and the technicalities of why it's bad are too hard to understand in a 10 second sound-bite.
- drcube 14y agoNo, these trolls show that the entire basis for patents is absurd. The only difference between "patent trolling" and normal patent litigation is that they target individual users who are ignorant of the process. Big businesses have been doing this to each other for decades. Knowledge simply cannot and should not be owned.
- FuzzyDunlop 14y agoFrom the sounds of it, and in reference to everyone using the term 'patent troll' here, I think this particular instance could be more appropriately labelled as 'patent scamming'.
- storf45 14y agoThis is just disgusting. Well, here's their contact, facebook, and twitter information if anyone wants to get in touch with them for services! Contact: http://www.hkw-law.com/contact http://www.hkw-law.com/contact Facebook: http://www.facebook.com/hkwlaw http://www.facebook.com/hkwlaw Twitter: https://twitter.com/atllawfirm https://twitter.com/atllawfirm
- padseeker 14y agoWhy the heck aren't the hardware manufacturers stepping up on this one? Why should I pay HP/Xerox/Canon/Ricoh thousands for using their manufactured hardware when it does not cover the ability to use it? I realize being a hacker news reader/tech person means I would know better, but wouldn't some of these people think to themselves "Why isn't this cost included into the hardware?". And why aren't the manufacturers that profit from this type of hardware stepping up as it has the chance to discourage people from buying their stuff.
- mesozoic 14y agoSo who has the patent on patent trolling?
- gefh 14y agoIBM: http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=1&f=G&l=50&co1=AND&d=PG01&s1=20100332285.PGNR.&OS=DN/20100332285RS=DN/20100332285 http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Se...
- downandout 14y agoIn my experience, these places don't actually make any money, so fear not. I did some database consulting work for a company that was in a similar business a few years back. They wound up shutting down after about six weeks because no one bothered paying them. Out of more than $12 million in demands, they received less than $4,000 after sending their first batch. That was when they decided to shut down. I suspect something similar will happen with these guys and anyone that follows them.
- pixl97 14y agoOb. SMBC http://www.smbc-comics.com/index.php?db=comics&id=2761#comic http://www.smbc-comics.com/index.php?db=comics&id=2761#c...
- zem 14y agohonest question - does the united states not have barratry laws? why do they not cover cases like this?
- jonkelly 14y agoWe got hit with one of these letters. I read through it and it was clear that we weren't actually infringing -- it only applied to the use of distribution to employees via the scanner. Luckily that functionality is pretty much impossible to make work on the Brother MFC that we have. We had our lawyer send back a note saying that we weren't infringing and that was the end of it. My guess is that showing that you are actually paying attention and have a competent attorney is a good way to avoid getting victimized (at least some of the time).
- hexagonc 14y agoPoliticians aren't going to do anything about patent trolls until politicians start getting threatened and/or sued by patent trolls.
- veidr 14y agoIt would help in cases like this if: a.) the litigant was not allowed to dismiss the suit without the consent of the defendant, and b.) there was some mechanism whereby anybody who was subsequently sued on the basis of the same basic claims of infringement of the same patent could use the result of the first case as part of their defense. (E.g., unless the original verdict was overturned on appeal, the plaintiff would have to make some new novel claims that were not part of the original case when suing their next victim.) This would require changes to the law, but not nearly such drastic change as abolishing the patent system entirely (which I think is scheduled to happen right around the time the USA switches to the metric system). I was the victim of a very similar shakedown tactic at the hands of DirecTV in 2002. They had hired (sorry, "successfully lobbied to obtain the services of") the US Marshals to raid some small companies that sold smart card programming gear. DirecTV then got their marshal pals to copy the companies' customer databases, and then systematically went after the end users, threatening to sue unless the users paid up $5k to 'settle'. In my case, our company had indeed bought some smart card programming gear, but I was incensed and inclined to fight (as it sounds like the protagonist of this Ars story was). But the only "fight" we were able to effect was to have our lawyers write a letter (basically, "fuck you, we program smart cards, bring it on") to make them go away for us. They abandoned their threat to sue us, but this didn't affect any of the thousands of other people they were going after with the same exact scam. Our patent system would be better if the law forced the litigant to a conclusion once a patent suit was brought, and also made it much harder to repeat the same shakedown once one victim had successfully fought it and won. That's not to say it would fix the problem of patent trolls, but since it would weaken the patent itself (once somebody had the balls and money to fight a bullshit patent shakedown and win) we wouldn't have to give a shit how many shell companies Myrvhold and similar parasites have. (We'd only have to give a shit that they have millions of unique B.S. patents.)
- astrodust 14y agoUntil the US courts have a loser pays (http://en.wikipedia.org/wiki/English_rule_(attorneys_fees) http://en.wikipedia.org/wiki/English_rule_(attorneys_fees)) system, this will never happen.