Recent patent litigation unveils greed and need for reform

A plethora of patent infringement case action this week. When will reform begin?

If there were ever a week where anyone could see just how remarkable stupid patent infringement litigation had become, this would certainly be it.

First, there was the $5 million jury decision against Google in the patent infringement case filed by Bedrock Computer Technologies, LLC.

The suit alleges that a patent that Bedrock owns, US 5,893,120, is infringed by Google and the other defendants in the suit (Yahoo! Inc., MySpace Inc., Amazon.com Inc., PayPal Inc., Match.com, Inc., AOL LLC, CME Group Inc, Softlayer Technologies, Inc., and CitiWare Technology Solutions, LLC) because such a method is employed by the Linux operating system and as major users of Linux, the defendants are liable for damages.

On April 15, after a five-day jury trial, the Federal jury in Tyler, Texas found in favor of Bedrock and specified that Google owed the company $5 million in damages. Looking at the court dockets, it looks like Yahoo! is next up at bat. Google is expected to appeal.

A bit of an update: in a separate lawsuit Red Hat filed against Bedrock in December 2009 to declare the patents invalid and unenforceable in the first Bedrock case, Red Hat just yesterday filed a motion for summary judgment, going through all the different ways Red Hat believes Bedrock's patents are invalid. The big reason? Bedrock's patents claim a methodology, but Red Hat is asserting that there's no declared algorthm in the patents, so how can they be valid?

On Wednesday, Barnes & Noble, the big-box bookseller that also licenses and produces the Android-based eReaders Nook and Nook Color, filed a counterclaim in the patent infringement suit Microsoft launched earlier this year against B&N, Foxconn, Inventec, and Hon Hai Precision Industry Ltd. Unlike the usual responses of this nature, B&N--apparently unencumbered by any non-disclosure agreement that Microsoft tried to get them to sign before even telling B&N what or how they were infringing--fired off what has to be the funniest legal document I have seen in a while.

In the response, posted in full on Groklaw, B&N ripped into Microsoft, detailing how Microsoft allegedly tried to shake B&N down by demanding patent license fees for supposedly infringing Nook devices for more money per device than Microsoft charges vendors of Windows Phone 7.

Well, we all knew Windows Phone wasn't worth much, but really, Microsoft, you shouldn't have such a low opinion of your mobile products. The marketplace can do that for you.

Snide commentary aside, there are only two reasons I can think of why Microsoft would tried to bilk exhiorbitant license fees from B&N or any other Android vendor: they are trying to make up for the lost revenue of weak Windows Phone 7 sales or (more likely) they are trying to kill off any competition from Android.

Hello, Department of Justice? 1998 is calling. They'd like their antitrust suit resurrected.

In a funny bit of timing, the US Department of justice announced this week that "after May 12, Microsoft will no longer be the subject of antitrust oversight as U.S. Department of Justice lawyers have agreed to let the 10-year-old settlement between the United States and Microsoft expire," according to this PCWorld story.

Gee, you mean Microsoft was pulling stunts like the one with B&N while under DoJ oversight? I can't wait to see what they will do after May 12.

And, if all of that wasn't ridiculous enough, today I was surfing around and noted a press release that Red Hat had entered into a confidential settlement agreement in another patent infringment lawsuit.

After the events of this week, I was fully prepared to fire off a scathing blog entry against the big Linux vendor for caving in when they should be fighting tooth and nail. Then I looked at the suit in question: Site Update Solutions LLC vs. Accor North America Inc et. al. The "et al." in this case is Latin for "anyone Site Update Solutions could troll."

Check out the full list of Red Hat's co-defendants: Accor North America Inc, Adobe Systems Incorporated, Amazon.com Inc, Aweber Systems Inc, CBS Corp, CDW LLC, Choice Hotels International Inc, Daily News LP, Electronic Arts Inc., Enterprise Rent-A-Car Company, Facebook Inc., Gannett Satellite Information Network Inc, HSN Inc, Intuit Inc., Jasons Deli Corp, LinkedIn Corporation, Monster Worldwide Inc, MySpace Inc., NBC Universal Inc, Newegg Inc., Nissan North America Inc, Office Max Inc, Overstock.com Inc, Salesforce.com Inc, Sears Roebuck and Co, Staples Inc, Starwood Hotels & Resorts Worldwide Inc, Target Corporation, Thomson Reuters Holdings Inc, Ticketmaster Entertainment Inc, Time Inc, Turner Broadcasting Systems Inc, Wal-Mart Stores Inc, The Walt Disney Company, and Wyndham Worldwide Inc.

That's a very broad range of companies, so what was the patent allegedly infringed? US Reissue Patent No. RE40,683 "Process for Maintaining Ongoing Registration for Pages on a Given Search Engine." And how did the defendants allegedly infringe? They all had web sites, it seems, and had the audacity to create XML-based sitemaps and submitting those sitemaps to search engines.

The horror. While it would have been nice to see Red Hat stand up to this kind of trolling, I can clearly see where paying off Site Update Solutions was a better option for the bottom line, especially for such a trivial patent claim that does not effect Red Hat's core business model.

Site Update Solutions, and its parent company Acacia Research Corporation, are--like Bedrock Technologies--purely in the business to hold patents and earn revenue through litigation and licensing, so really none of this kind of behavior is surprising. But Red Hat has to fight Bedrock as hard as it can because Bedrock's patent could damage the heart of Red Hat's business.

Microsoft, because it does produce actual products, is not a true patent troll, though it seems to be acting like one. Microsoft has only filed seven patent infringment suits, a fact they like to tout to make themselves look benevolent. But if the allegations from B&N are true, the actual reason may be that Microsoft has been very successful bullying companies to go along with its licensing terms and settlement offers, all the while keeping parties involved gagged with non-disclosure agreements.

This is something people have long suspected, of course, and B&N's allegations seem to confirm these long-held suspicions. It will remain to be seen which side comes out on top, of course.

This week has been an eye-opening look into the business of patent litigation, that's for sure. The question is, will reform ever come?

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