TECH: Patent trolls and cheating in court–the Crackberry saga

the crackberryScore one for the little guy. RIM the maker of the Blackberry caved in its patent dispute — even though things were going its way at the patent office.

Research In Motion Ltd., the maker of the BlackBerry e-mail device, Friday announced it has settled its long-running patent dispute with a small Virginia-based firm, averting a possible court-ordered shutdown of the BlackBerry system. RIM has paid NTP $612.5 million in a "full and final settlement of all claims," the companies said..The settlement ends a period of anxiety for BlackBerry users. At a hearing last week, NTP had asked a federal court in Richmond, Va., for an injunction blocking the continued use of key technologies underpinning BlackBerry’s wireless e-mail service. RIM, which is based in Waterloo, Ontario, had put away $450 million in escrow for a settlement. It will record the additional $162.5 million in its fourth-quarter results, it said.

So was NTP just a patent troll. Perhaps. There’s no question that the patent system should be fundamentally reformed, or even straight-out abolished for software.

And there are plenty of straight trolls out there who buy up old patents, or worse create nebulous ones and never ever make an attempt to make a business out of them other than suing companies who do succeed. The worst example was Jerome Lemelson who basically gouged US businesses for billions of dollars by patenting ideas he never intended to make into actual products, and then used legal subterfuge to hide the patents until someone else did actually invent the device/technology in question and then forced them to pay him off. This essentially went on till after his death in 1997, when in 2004 the courts ruled against patents he’d created in the 1950s as being valid for products invented in the 1990s. But equally worthless patent cases happen with the big guys fighting over licensing revenue, such as the long running case between Intel and TI over the integrated circuit when it was clearly a case of two independent inventors having the same idea at the same time. Although they finally settled it by cross-licensing the technology.

But there are a couple of differences here.

The first is the this was a real David v Goliath situation in which David (NTP’s late founder Tom Campana) actually did invent a product to go with his patent, and tried (but failed) to make a commercial go of it — being screwed over by AT&T in the process.  In this case it seems that RIM didn’t actually filch anything from him but, unlike Lemelson, Campana did create his version of the product and tried but failed to market it successfully. He had a real company and bad luck/business judgment kept him from being there first successfully. Only after that did he create NTP. And it was only after RIM emerged using what he thought was his technology that he tried to get some real money from his invention, as the rest of his life fell to pieces including an eventually terminal illness. RIM’s predecessor product to the Blackberry was a direct competitor to the SkyTel service that AT&T went with after junking its putative deal with Campana’s company. So even while the technology may not have been identical, the business and the solution that they were aiming at — wireless messaging over paging networks — was clearly visible.

NTP wrote to RIM which did have the opportunity to buy it off cheaply in the early days, an just blew it off. But that wasn’t the real problem with the RIM case. For a start they were happy to use a patent they’d acquired to go after a competitor and keep their monopoly status. So calling NTP a patent troll just because RIM succeeded and Campana’s business failed is a little pot and kettle. Secondly, when NTP came after them seriously, RIM dragged this out in the courts while they hoped that the patents would be disallowed (as they steadily are being, in part to their political influence in DC) again not taking the sensible business decision of settling for a smaller sum. But their real error was that they cheated in court and were busted. (The link is to a long and excellent article summarizing the whole case).

RIM’s case hinged on proving that Mr. Campana’s patents were not valid because other people had already invented wireless e-mail by the time he applied for his patents in 1991. One of RIM’s key witnesses was David Keeney, whose company TeckNow had mastered an e-mail process called System for Automated Messages, or SAM, in 1987. To prove his point, RIM’s lawyers had Mr. Keeney perform a dramatic demonstration for the jury. Using two old laptop computers and a pager, he explained how he could send a text message using SAM. Then he typed "Tommy, the deal is closed" which quickly appeared on the pager. The demonstration was crucial for RIM because it proved that Mr. Keeney’s work had predated Mr. Campana’s by at least four years and it made his 1991 patents invalid.

The only problem was that to get the demonstration to work, TeckNow and RIM had secretly swapped in newer software. NTP’s lawyer spotted the discrepancy and cornered Mr. Keeney and RIM officials during cross-examination. After a few more minutes of struggling to explain how the newer version was installed, Judge Spencer cut Mr. Keeney off and told the jury to leave the room. "I’ll count to 10. I don’t want to yell at you," the judge said, admonishing RIM’s legal team for the deception.

So after that the threats of shutdown and failed settlements got bigger and bigger and started to really threaten RIM’s business, as competitors like Microsoft and Palm jockey to get into the “wireless push email” space. Until today, when apparently the case is really over. A huge business error by RIM has cost them $612.5m plus a whole bunch more. But having said that, and even though his team was damn stupid to try to cheat in court, what RIM’s CEO Mike Lazaridis said is true.

"There’s a tremendous amount of innovation and hard work that goes into taking an idea and realizing it and then making it into a product," Mr. Lazaridis says defiantly. "There are 16 million lines of code in BlackBerry. Sixteen million. It’s hard to imagine 16 million lines of code. They all have to work in harmony and perfection to make this thing do its job. Are you trying to tell me that one little concept is more important than another little concept, and that it didn’t take man-years and man-years of effort to make all that stuff work?"

So eventually the patent system needs reform or abolition. And of course one industry that means a great deal to is biotech and pharma, where similar patent wars are waged everyday. But until then some common sense is still required.

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  1. Pirates in the U.S
    The U.S Patent and Trademark Office, USPTO, has been believed to engage in the counterfeit patent.
    1. The First Patent for Puzzle Applied in Korea
    The sudden financial crisis of Korea made it difficult for me to find a job, so I had no choice but to walk on the street, thinking what I had to do. However, no matter how hard I thought about it, I had no idea to address such circumstance facing me. All of the sudden, I hit an idea which I had learned from a lecture given by an inventor when I was a child. He said that we all needed to think how to invent something out of a brick. I began to reflect on my memories and they were reflected in bricks of streets that I walked on. Then, I hit an idea, ‘Would it be a good idea if I made a picture puzzle from such bricks?’ At that same time, I thought that if I made it with simple triangular, rectangular or hexagonal bricks, there would be no fun at all.
    In addition, I imagined that children played together, jumping across lines drawn on bricks. By doing so, I tried to make a puzzle in which bricks were connected. The problem was that a shape of chains should be specialized to make bricks attach, detach and move around one other. After having conducted several researches to make it happen, I finally developed a structure of triangular, rectangular or hexagonal brick chains.
    On March 21, 2001, I applied for a patent on my idea to the Korean Intellectual Property Office for the first time.
    2. Contract with OOO Company
    Since I did not have any financial resource to apply for a patent abroad, or develop puzzle products or build a new company, I soon started to look for domestic and overseas firms which might show their interest in my puzzle. To this end, I did web searching, directly visited companies at home and consulted them. As a result, I signed a contract with a U.S company, OOO Company, but a contract condition was not satisfactory due to a lack of asset. Since I had contacted OOO Company, 10 month has passed until the contract was completely concluded. Therefore, in that process, I had applied for the PCT patent at my own expense and then had turned over all the rights for patent and sales to OOO Company. That means that OOO Company became obligated to apply for the patent on my puzzle overseas, produce products and sell them on behalf of me.
    3. Process for Prototype Puzzle Products and Application for a Patent in the U.S
    The president of OOO Company continuously sent me emails through which he said he would develop products and display them in toy fairs as soon as possible. Unlike his promises, the pace of work was too slow from a point when the contract was forged. I had a bickering with him given that he often lied to me that such project would be quickly implemented. OOO Company applied for a patent on my puzzle only in the States at a time when the PCT patent was expired. Since then, in February 2004, OOO Company showcased a sample of the products at the New York Toy Fair. Since the contract was concluded, it was so hard and time consuming to showcase samples of my puzzle due mainly to the dishonest president. Samples were not put on a test until 2 years had passed. Until then, I rejected several job offers which had been given to me in a difficult situation to find a job and thought that I should give other people a chance to work as a regular worker. Meanwhile, I was doing part-time jobs and adding further ideas to the initial one. All of that resulted from a lie of the president. Under such circumstances, my puzzle product appeared to yield a fruitful outcome at the Fair. Considering the contract forged with a renowned Japanese puzzle company, the result was somewhat satisfactory.
    4. Patent Found in the U.S
    Despite a success at the New York Toy Fair in 2004, Steven Wong, a U.S patent administrator, refused to accept my claim to the puzzle in the U.S. on June 24 in 2004. The reason was that Lynn Spitzer, a patentee of puzzle, had applied for a patent similar to mine in the U.S. earlier than I did, and that all of my claims could infringe on the patent owned by Lynn Spitzer.
    Patent No: US 6,536,764 B1 Date Of Patent: Mar. 25, 2003 Inventor: Lynn Spitzer, Philadelphia, PA(US) Assignee: The Toy Hatchery, Inc., Philadelphia, PA(US)
    Appl.No:09/496,483 Filed: Feb. 2, 2000 Primary Examiner -Steven Wong
    Attorney, Agent, or Firm- Grimes & Battersby, LLP
    5. The Forceful Demand of OOO Company
    The president said that Spitzer’s patent was applied in the States one year earlier than mine in Korea and it was so similar to my patent that mine was no longer valuable for another application. Consequently, he forced me to make a contract which would be absolutely unfavorable for me. I responded to his claim by demanding that since the U.S patent administration considered a similar patent as a technology if it had even a little difference, he should revive my patent and negotiate with Lynn Spitzer, or he should terminate my U.S patent after making compromise with Spitzer by insisting on technological difference of my patent. However, the president reiterated that my patent did not have specialty more than Spitzer’s. He added that he would have permission from Spitzer if he wanted to sell products in the U.S. For these reasons, he said he would not spend unnecessary money. As a result, my U.S patent was expired after the correction period had passed. Unfortunately, I did not have enough money to revive the patent. To make matters worse, I gave OOO Company all of my rights and responsibility for the patent in conformity to the contract. Nonetheless, failing to enroll my patent in the U.S. did not mean that the contract between OOO Company and me was no longer valid. In accordance with the contract, when the last patent was expired, the contract became invalid. Of course, there was a condition that when OOO Company did not want to renew the contract, it could declare the termination of the contract, but since I had turned over my Korean patent to OOO Company, the contract continued to remain valid. Then, the president, however, gave me an irrational document for contract renewal. According to it, the loyalty for my puzzle would be cut in half, contract might be expired whenever the president wanted and my products would not sell in the U.S. Additionally, he said only if I signed on for the contract, he would negotiate with Spitzer. I did not want to agree on the contract suggested by him. It was because OOO Company had already terminated my patent and did not faithfully engage in the application for my puzzle in other countries, so if OOO Company had declared the expiration of the contract, there would have been no way for me to receive the loyalty in accordance with such a contract. Furthermore, even if I had established a toy company, I would have been ineligible to sell products in the States. He did not deliberate on my situation, but consistently called on me to sign on for the contract renewal.
    6. The Similar U.S. Patent Proved Faked
    Since then, I sent Lynn Spitzer a great deal of emails. At first, she told me she was on vacation. Afterward, she sent me an e-mail through which she said she was not interested in OOO Company and me. Nevertheless, I emailed her in a bid to persuade her as often as I could. But, she replied “I got some plans,” warning of infringement on her patent. If I counted the number of email sent to her, it might be over 1,000.
    Increasingly, I wonder if her patent would be faked.
    The first reason was that Spitzer had not done anything about her patent for 8 years. In order to make money, she should have produced goods or sold products by importing such goods from somewhere else, or had someone sell products to receive loyalty if a right for the patent had been expected to last for 20 years. Taking King Solomon’ judgment as a good example, I concluded that she was not attached to her patent and I confirmed that she was not a real patentee.
    The second reason was that although someone had received my call at Spitzer’s company, The Toy Hachery. LLC, she had never put me though to Spitzer. Considering her attitude to receive a call, she was not an employee for that company. She had just received a phone call for 2 years.
    The third reason was Spitzer said she would work with FarSight Innovations.LLC, but that company’s homepage had only one page. The owner of the domain was a database company, not a manufacturer. I had a strong belief that she was hiding something. Subsequently, I started to examine externally into what the Spitzer’s patent was and what the U.S. Patent and Trademark Office (USPTO) did. Finally, I found out something.
    For Americans who apply for a patent in the U.S., the file repository date (the repository is located in Virginia) comes before the issued date. Of course, a patentee’s address should be the U.S. one. From an application to a correction, a patent is not unveiled until it is stored at the repository in Virginia. There are some patents that can be belatedly stored. Usually, a patent goes public 2 to 3 years after the first application is completed.
    File Repository Date (=Location Date) > (ABOUT WITHIN 5 DAYS) > Issued Date = US Mark or US Address
    Foreigners must apply for a patent in their countries first and then apply to the U.S. When they do so, they must reveal a patent. Therefore, an issued date comes first. In many cases, after the patent administration office confirms that there is nothing wrong in a patent, it restores the patent at the Virginia-based repository.
    Issued Date > (ABOUT 0 MONTH ~ 2YEAR) > File Repository Date (=Location Date) = KR, JP, DE or other national Mark except US mark
    However, in spite of the fact that the Lynn Spitzer’s patent was publicized on March 25, 2003 (an issued date), it was stored on June 15, 2004 (a file repository date) and the address was registered in the U.S. Unlike other patents applied by Americans, her patent’s issued date came before the file repository date. Furthermore, it was put at the repository even after 15 months although Spitzer’s patent had been applied by an expensive patent agency and correction of the patent had taken place several times during a closed period.
    Why was Lynn Spitzer’s patent applied in reverse order? In order to use a fabricated date of application, Spitzer exploited the way foreigners apply for a patent in the U.S. It is because her patent did not exist in 2000 even though Spitzer insisted that her patent was issued for the first time at that time. Put it once again, although Spitzer was an American, for concoction, she took advantage of the way a patent of foreigners is applied in the States. That is why an issued date and a file repository were reversed and files were put at the repository 15 months later. How did she make a fabricated date despite the fact that serial numbers are set for each application document? To find an answer, I examined into application numbers. I confirmed, to my surprise, a lot of vacant application numbers. Why, on earth, does the U.S Patent and Trademark Office make vacant application numbers? Anyway, I obtained sufficient evidences that indicated she fabricated her patent.
    7. Response from the President of OOO Company
    I had not realized for 3 years that Spitzer’s patent was faked. During that period, the president continuously pushed me to sign on for an unreasonable contract while failing to take issue with Spitzer. Spitzer’s patent was about to prove to be faked 3 years after OOO Company found Spitzer’s patent. At that time, a lawyer from OOO Company sent her an email through which he said the company wanted to receive a license from her, but she rejected that offer. After I discovered that Spitzer’s patent was fabricated in 2007, I informed the president of it. According to the contract, he should legally respond to, along with me, an infringement on my patent if there is any. Instead, soon after he had been notified that Spitzer’s patent was faked, he terminated the contract. As a matter of fact, I had asked him to annul the contract, arguing that I would do this business on my own. However, no matter what reason, he wanted to continue the contract so that I could not do anything. Then, when there was the evidence to show that her patent was faked, he terminated the contract. Now, he has stepped down from the presidency.
    8. Talks to Lynn Spitzer on the Phone
    Although I sent the related information to the U.S agencies, they did not take up a positive attitude. They wanted me to give a chance to those associated with the fake patent for an apology and to settle the issue in a good way. Since I had notified many related agencies of the information, every patent agent at Grimes & Bettersby, LLP rejected my emails. Grimes & Bettersby was the company which took care of Spitzer’s patent as I mentioned earlier. Spitzer no longer insisted that she had some plans and just sent emails which she had previously written at her patent agency. In that email, just a few words were corrected. All she did was giving me a few of official answers. I sent her an email through which I said “You just lent your name. It was your patent agency and an examiner of USPTO who fabricated the patent.” I recognized that a patent agency was necessary to fabricate a patent, so I decided to take issue with Grimes & Bettersby on my own. There was a women employee who was in charge of taking a phone and patent agents there did not directly answer a phone. As indicated by telephone counselor, I recorded several voice messages. I asked her if she knew her company was an illegal one. She repeated ILLEGAL, a word I said to her, in order to understand my intention. Then, I talked about file repository date and asked her name. She murmured, “Spit…, Spit…” and she said her name was Spitzer. I became curious about her full name and I asked her if her name was Lynn Spitzer. She said, “Yes” and started to blubber. I was greatly surprised. She said that no one but her was there at office. I did not understand why such a tender-hearted woman was engaged in this matter. However, now, another person receives a phone and soon hangs up the phone. Considering her, I decided to settle this issue in a way to forgive all concerned, but she has yet to provide any solution as if an external pressure prohibits her to do so. Making an illegal patent requires a patent agent and an examiner at USPTO, let alone Lynn Spitzer. Although I tried to forgive them at first, I have made up my mind to file a lawsuit in a bid to find the truth as well as the reason that they have repeatedly avoided. After I wrestled against this adversity, so to speak, I have come to know there would many more fabricated patents in the U.S.
    9. Information for Support Fund to Assist a Lawsuit
    I made a decision for a transparent management for an intellectual property right in every nation.
    I hope that my lawsuit will prevent such a fabrication from reoccurring.
    Bank: Hana Bank in Korea. Depositor: June-ho Yang. Account Number: 365-810015-69907
    I highly recommend you to confirm whether there are problems on your patent applied in the U.S
    10. How to Contact

  2. Sure, abolish the patent system and see what would happen to innovation?
    As if RIM would not aggressively pursue anyone who would have infringed on its propietary idea.