Category Archives: Internet

How the STRONGER Patents Act Would Send Innovation Overseas

by News on June 23, 2017, no comments

Senator Chris Coons introduced a bill this week called the STRONGER Patents Act [PDF]. The bill contains many terrible ideas. It would gut inter partes review (a valuable tool for challenging bad patents). It would overturn the Supreme Court’s decision in eBay v. Mercexchange (thereby allowing patent trolls to get injunctions to shut down productive companies, even though the patent infringed is only on a tiny piece of the larger product). Perhaps most strikingly, the bill includes a provision that would discourage companies from doing research and development in the United States. The STRONGER Patents Act shows how far the certain patent owners are willing to go to serve their narrow interests at the expense of everyone else.

The general rule in patent law is that each country has its own patent system. This means that companies can only be found liable for infringing a U.S. patent for manufacturing or sales that occur within the United States. The Supreme Court has issued a number of sensible decisions affirming this rule. Senator Coons’ bill would upend this principle by making companies liable for foreign sales whenever they conducted the research and development for that product in the U.S.

Section 108(3)(A) of the bill says:

Whoever, without authority, supplies or causes to be supplied in or from the United States a design for a product embodying a patented invention in such manner as to actively induce the making of that product outside the United States in a manner that would infringe the patent if made in the United States, shall be liable as an infringer.

In plain English, this means that if you design a product in the U.S., you can be sued for sales around the world. Worse, by a separate provision the bill would have this rule apply even if you independently invented your product, and had no idea you were infringing a patent.

To see the impact of this provision, we can consider how it would apply to fabless semiconductor companies based in Austin, Texas or Austria. The Austin company designs chips in Texas then has them manufactured in Taiwan and sold around the world. The Austrian company designs chips in Salzburg then has them manufactured in Taiwan and sold around the world. If these chips are found to infringe a U.S. patent, the Austin company would be liable for all of its global sales. The Austrian company, however, could be found liable only for its U.S. sales. In this way, Coons’ proposal punishes the Austin company for investing in research and development in the United States.

You might think that the STRONGER Patents Act balances this big disincentive to innovate in the U.S. by making U.S. patents stronger. But that is wrong. You do not need to perform research and development in the U.S. to get a U.S. patent. As long as you meet the criteria for getting a patent, it doesn’t matter if your laboratory is in Austin or Austria. Indeed, in recent years more than half of issued U.S. patents were of foreign origin.

Under Chris Coons’ proposal, the most sensible business model is to do research outside the United States. Foreign companies will have their overseas sales protected. Yet they can still get U.S. patents and use those patents to attack the global sales of U.S.-based companies. As Josh Landau suggests at Patent Progress, it’s hard to think of a more effective way to use patent policy to convince companies to shift their investment in research and development overseas.

Patent owners often insists, without evidence, that “stronger” patents will always mean more innovation. The STONGER Patents Act shows why that is not true. The bill would “strengthen” the U.S. patent system in ways that actively discourages doing research and development here. It makes this choice solely to benefit patent owners. We hope that Congress rejects the terrible ideas in the STRONGER Patents Act and turns to patent reform that would actually promote innovation.

How the STRONGER Patents Act Would Send Innovation Overseas

by News on June 23, 2017, no comments

Senator Chris Coons introduced a bill this week called the STRONGER Patents Act [PDF]. The bill contains many terrible ideas. It would gut inter partes review (a valuable tool for challenging bad patents). It would overturn the Supreme Court’s decision in eBay v. Mercexchange (thereby allowing patent trolls to get injunctions to shut down productive companies, even though the patent infringed is only on a tiny piece of the larger product). Perhaps most strikingly, the bill includes a provision that would discourage companies from doing research and development in the United States. The STRONGER Patents Act shows how far the certain patent owners are willing to go to serve their narrow interests at the expense of everyone else.

The general rule in patent law is that each country has its own patent system. This means that companies can only be found liable for infringing a U.S. patent for manufacturing or sales that occur within the United States. The Supreme Court has issued a number of sensible decisions affirming this rule. Senator Coons’ bill would upend this principle by making companies liable for foreign sales whenever they conducted the research and development for that product in the U.S.

Section 108(3)(A) of the bill says:

Whoever, without authority, supplies or causes to be supplied in or from the United States a design for a product embodying a patented invention in such manner as to actively induce the making of that product outside the United States in a manner that would infringe the patent if made in the United States, shall be liable as an infringer.

In plain English, this means that if you design a product in the U.S., you can be sued for sales around the world. Worse, by a separate provision the bill would have this rule apply even if you independently invented your product, and had no idea you were infringing a patent.

To see the impact of this provision, we can consider how it would apply to fabless semiconductor companies based in Austin, Texas or Austria. The Austin company designs chips in Texas then has them manufactured in Taiwan and sold around the world. The Austrian company designs chips in Salzburg then has them manufactured in Taiwan and sold around the world. If these chips are found to infringe a U.S. patent, the Austin company would be liable for all of its global sales. The Austrian company, however, could be found liable only for its U.S. sales. In this way, Coons’ proposal punishes the Austin company for investing in research and development in the United States.

You might think that the STRONGER Patents Act balances this big disincentive to innovate in the U.S. by making U.S. patents stronger. But that is wrong. You do not need to perform research and development in the U.S. to get a U.S. patent. As long as you meet the criteria for getting a patent, it doesn’t matter if your laboratory is in Austin or Austria. Indeed, in recent years more than half of issued U.S. patents were of foreign origin.

Under Chris Coons’ proposal, the most sensible business model is to do research outside the United States. Foreign companies will have their overseas sales protected. Yet they can still get U.S. patents and use those patents to attack the global sales of U.S.-based companies. As Josh Landau suggests at Patent Progress, it’s hard to think of a more effective way to use patent policy to convince companies to shift their investment in research and development overseas.

Patent owners often insists, without evidence, that “stronger” patents will always mean more innovation. The STONGER Patents Act shows why that is not true. The bill would “strengthen” the U.S. patent system in ways that actively discourages doing research and development here. It makes this choice solely to benefit patent owners. We hope that Congress rejects the terrible ideas in the STRONGER Patents Act and turns to patent reform that would actually promote innovation.

How the STRONGER Patents Act Would Send Innovation Overseas

by News on June 23, 2017, no comments

Senator Chris Coons introduced a bill this week called the STRONGER Patents Act [PDF]. The bill contains many terrible ideas. It would gut inter partes review (a valuable tool for challenging bad patents). It would overturn the Supreme Court’s decision in eBay v. Mercexchange (thereby allowing patent trolls to get injunctions to shut down productive companies, even though the patent infringed is only on a tiny piece of the larger product). Perhaps most strikingly, the bill includes a provision that would discourage companies from doing research and development in the United States. The STRONGER Patents Act shows how far the certain patent owners are willing to go to serve their narrow interests at the expense of everyone else.

The general rule in patent law is that each country has its own patent system. This means that companies can only be found liable for infringing a U.S. patent for manufacturing or sales that occur within the United States. The Supreme Court has issued a number of sensible decisions affirming this rule. Senator Coons’ bill would upend this principle by making companies liable for foreign sales whenever they conducted the research and development for that product in the U.S.

Section 108(3)(A) of the bill says:

Whoever, without authority, supplies or causes to be supplied in or from the United States a design for a product embodying a patented invention in such manner as to actively induce the making of that product outside the United States in a manner that would infringe the patent if made in the United States, shall be liable as an infringer.

In plain English, this means that if you design a product in the U.S., you can be sued for sales around the world. Worse, a separate provision the bill would have this rule apply even if you independently invented your product, and had no idea you were infringing a patent.

To see the impact of this provision, we can consider how it would apply to fabless semiconductor companies based in Austin, Texas or Austria. The Austin company designs chips in Texas then has them manufactured in Taiwan and sold around the world. The Austrian company designs chips in Salzburg then has them manufactured in Taiwan and sold around the world. If these chips are found to infringe a U.S. patent, the Austin company would be liable for all of its global sales. The Austrian company, however, could be found liable only for its U.S. sales. In this way, Coons’ proposal punishes the Austin company for investing in research and development in the United States.

You might think that the STRONGER Patents Act balances this big disincentive to innovate in the U.S. by making U.S. patents stronger. But that is wrong. You do not need to perform research and development in the U.S. to get a U.S. patent. As long as you meet the criteria for getting a patent, it doesn’t matter if your laboratory is in Austin or Austria. Indeed, in recent years more than half of issued U.S. patents were of foreign origin.

Under Chris Coons’ proposal, the most sensible business model is to do research outside the United States. Foreign companies will have their overseas sales protected. Yet they can still get U.S. patents and use those patents to attack the global sales of U.S.-based companies. As Josh Landau suggests at Patent Progress, it’s hard to think of a more effective way to use patent policy to convince companies to shift their investment in research and development overseas.

Patent owners often insists, without evidence, that “stronger” patents will always mean more innovation. The STONGER Patents Act shows why that is not true. The bill would “strengthen” the U.S. patent system in ways that actively discourages doing research and development here. It makes this choice solely to benefit patent owners. We hope that Congress rejects the terrible ideas in the STRONGER Patents Act and turns to patent reform that would actually promote innovation.

Small Business Fights for its Life, Wins with Alice

by News on June 22, 2017, no comments

Michael Skelps was celebrating on New Year’s Eve with family and friends when he got a strange email from a lawyer. It said that Michael’s company, Capstone Photography, had just been sued for patent infringement. Michael went from celebrating to worrying about whether his small company would survive.

Capstone is a photography business based in Connecticut. With a network of contractors, it serves athletic events around the country. When Capstone was sued on New Years Eve in 2013, it had only three part-time employees other than the owners. It was sued by Peter Wolf, the owner of a company called Photocrazy, for infringement of three patents: U.S. Patent Nos. 6,985,875; 7,047,214; and 7,870,035.

Michael felt that he could win the case if he had the resources, but litigating it might bankrupt his company.

Wolf’s first two patents claimed common sense processes for using computers to help sort event photographs. A typical claim covers taking photos of a race, tagging and sorting by bib number and date, and searching for photos based on that tag via the Internet. In other words, the patents apply generic computer features to help with tasks that event photographers had been doing for decades. Wolf’s third patent was perhaps even more abstract. It claimed the idea of adding advertising to photographs taken at sporting events.

Patent litigation quickly began to drain Capstone’s resources. Michael felt that he could win the case if he had the resources, but litigating it might bankrupt his company. And he faced even greater stress: since Wolf had sued him as a defendant personally he could even lose his house. The stress and distraction of the case completely took Michael away from growing his business. As long as the case continued, the main question was whether his company would survive at all.

Fortunately, the Supreme Court decided Alice v. CLS Bank before Capstone went under. About six months after Capstone’s ordeal began, the Supreme Court held that an abstract idea (like sorting photos or placing ads on photos) does not become patent eligible simply by being implemented on generic computers. The holding offered a lifeline as it likely applied to Wolf’s patents.

Capstone’s lawyer filed a motion for judgment on the pleadings arguing that Wolf’s claims should be dismissed under the new standard. The distict court ruled for Capstone on every claim, giving it total victory in the case. Although Capstone prevailed, its win had come at significant cost. Months of litigation expenses meant that Michael had to let some of his employees go.

Alice likely saved Capstone Photography from bankruptcy. But if Congress overturns Alice, we should expect more cases like this one. We should expect more abstract software patents to issue and more wasteful litigation to be filed. Alice is good for innovation and we hope Congress leaves the Supreme Court’s decision alone.

The Patent Troll and the Scavenger Hunt

by News on June 22, 2017, no comments

Ken Cooper runs a small business out of his home. Unfortunately Ken’s business was not so small that it avoided the notice of a patent troll.

Ken has been writing code since 1973. His life in programming has ranged from small personal projects to founding a software company that was acquired by Microsoft. Today he runs a company called Coopercode. The company’s main project is a mobile scavenger hunt app for the iPhone and iPad called Klikaklu. Ken created the app to do scavenger hunts with his kids. It ended up being featured by Apple as a ‘New and Notable’ app and became popular with teachers. The app has been used at conferences, college orientations, and institutions like the Smithsonian and the National Gallery of Art. What began as a hobby project turned into a real business.

Ken’s first thought on reading the patent was: “Wow, you can patent that?”

But Ken’s new business hit a roadblock. On January 6, 2017, a patent troll called Locality Leap, LLC, sued Coopercode alleging that Klikaklu infringed U.S. Patent No. 6,320,495 (the ‘495 patent), entitled “Treasure Hunt Game Utilizing GPS Equipped Wireless Communications Devices.” The patent claimed a method of playing a game that involves receiving a message, generating a message, and then having a player move to a location based on those messages. It didn’t involve any new technology. Rather, it suggested using messaging and GPS technology to assist with the age-old pastime of treasure hunts.

Ken was stunned by Locality Leap’s patent. He’d had some experience with the patent system from his time at Microsoft. In fact, Ken is a named inventor on six patents. But his first thought on reading the ‘495 patent was: “Wow, you can patent that?” The patent seemed trivial. All it did was combine things Locality Leap didn’t invent – like GPS and wireless messaging – with an ancient game.

Even though the patent seemed frivolous, Ken faced the prospect of ruinous costs from the litigation. Locality Leap filed its suit in the Eastern District of Texas. That made no sense to Ken. Coopercode is based in Washington State and Locality Leap is incorporated in California. Then Ken learned that the Texas forum had a reputation as being both patent-friendly and expensive for defendants. Instead of spending time growing his business (with marketing or creating an Android version of the app), all of Ken’s time was sucked into the litigation. Ken soon realized that the case might force him to close his business entirely.

Fortunately, thanks to Alice v. CLS Bank, Ken was able to fight back. Locality Leap’s patent was likely invalid under Alice because it simply applied well-known computer functionality to an old practice. Since Alice can be raised early in a case on a motion to dismiss, it also offered Coopercode a way to defend itself without going through ruinous discovery and trial. As Ken described it, Alice was “manna from heaven.”

With EFF’s help, Ken was able to find an experienced patent litigator who took the case for a reduced fee. Ken’s lawyer wrote to Locality Leap explaining that its patent claims were invalid under Alice and also invalid as obvious. She explained that if Locality Leap didn’t dismiss the case voluntarily, Coopercode would file a motion to dismiss raising Alice and would also seek attorney’s fees.

Facing a defendant willing to fight back, Locality Leap folded completely. It dismissed its claims with prejudice and Ken did not have to pay any money. Instead of closing his company he could return to it full time and work on growing the business. Without Alice, he likely would have faced a very different result.

A Startup Runs Into A Patent on Picture Menus

by News on June 22, 2017, no comments

If you’ve ever seen a picture menu, you’ve seen the supposed ‘invention’ claimed by U.S. Patent 6,585,516. Although it had a complex-sounding title (“Method and system for computerized visual behavior analysis, training, and planning”), the patent simply claimed using picture menus on a computer. Patent troll DietGoal Innovations, LLC, sued over 70 companies for supposedly infringing this ridiculous patent.

DietGoal sued over 70 companies for supposedly infringing its patent on picture menus.

Beginning in 2011, DietGoal began a nationwide litigation campaign, suing restaurants ranging from Dunkin’ Donuts to Sweetgreens. It also attacked media companies like Time and Seventeen Magazine.

Even companies that weren’t sued felt the impact of its litigation campaign. For example, although it was not named directly, a company called Nutritionix was dragged into the dispute when DietGoal sued one of its customers for using a calorie counter app. Nutritionix offers its nutrition calculator and database to restaurants, so that they can offer their guests more accurate nutrition information. At that point, Nutritionix was a tiny startup with only seven employees. It found its entire business threatened by the litigation.

As DietGoal’s litigation dragged on, Nutritionix found it increasingly difficult to grow its business. Matt Silverman, Nutritionix’s managing partner, explained that many restaurant chains decided not to offer a nutrition calculator at all rather than face a risk of a lawsuit. Other companies became reluctant to adopt a nutrition calculator without a promise of indemnification against patent suits. This is an overlooked way that patent trolling threatens smaller businesses. Companies fearing patent suits chose large vendors because they are more likely to be able to afford expensive patent litigation. This cuts out small businesses and startups.

Fortunately for Nutritionix, the Alice v. CLS Bank decision arrived before it was too late. Before Alice, DietGoal had been able to drag out its lawsuits for years. But just days after Alice was decided, a district court judge in New York threw out DietGoal’s patent. The court ruled that DietGoal’s patent claimed nothing more than the “conventional and quotidian tasks” of selecting meals. It found that using a generic computer to display options on a picture menu did not add anything that transformed the abstract idea into a patent-eligible invention. DietGoal appealed to the Federal Circuit but lost there too. This was a straightforward application of Alice and it finally ended a massive campaign that surely cost millions in legal fees.

With the patent threat over, Nutritionix grew from 7 to 15 employees. It has expanded beyond app development to collecting and licensing nutrition data. Matt explained that Alice helped not only with putting the DietGoal litigation behind it but reduced the risk of future suits. When patents can be as broad as abstract as a picture menu on a computer, the only way to avoid infringement is to avoid software development altogether. After Alice, startups like Nutritionix have a better chance to thrive.

Saved by Alice: How a Key Supreme Court Decision Protects Businesses from Bad Patents

by News on June 22, 2017, no comments

In 2014’s Alice v. CLS Bank, the Supreme Court ruled that an abstract idea does not become eligible for a patent simply by being implemented on a generic computer. Since then, Alice has provided a lifeline for real businesses threatened or sued with bogus patents.

This week, on the third anniversary of Alice, EFF is launching a new series called Saved by Alice where we’ll collect these stories of times when Alice came to the rescue. Over the next few weeks, we’ll be sharing stories of business owners large and small. You’ll meet an app developer who was sued over a bogus patent on computerized treasure hunts, a software company whose customers were targeted by a patent troll, and a photographer sued for practices that had been common in the field for years. These stories all have one thing in common: someone with a patent on an abstract idea sued a small business, and that business could have lost everything. But Alice came to the rescue.

Why are we telling these stories? Because Alice is under attack. A few loud voices in the patent lobby want to amend the law to bring back these stupid patents. It’s time to tell the stories of the individuals and businesses that have been sued or threatened with patents that shouldn’t have been issued in the first place.

Saved by Alice

An Attack on Net Neutrality Is an Attack on Free Speech

by News on June 22, 2017, no comments

Several US senators spoke out this week on the importance of net neutrality to innovation and free speech. They are right. The Internet has become our public square, our newspaper, our megaphone. The Federal Communications Commission is trying to turn it in something more akin to commercial cable TV, and we all have to work together to stop it.

What makes the Internet revolutionary is the ability of every user to create news and culture and participate in conversations with people all across the globe. Mass consumption of entertainment products may be big business and may even help drive adoption, but it’s not new and empowering like the opportunity to participate in speech on an infinite variety of topics. As the Supreme Court recently observed, Internet platforms “can provide perhaps the most powerful mechanism available to a private citizen to make his or her voice heard.” Seven in ten American adults regularly use at least one Internet social networking service. Facebook alone has more than 1.79 billion monthly active users around the world. Twitter has over 310 million monthly active users who publish more than 500 million tweets each day. Instagram has over 600 million monthly users who upload over 95 million photos every day. Snapchat has over 100 million daily users who send and watch over 10 billion videos per day. And that’s just a small sampling of the commercial Internet platforms many of us use everyday. Millions more log into sites like Wikipedia, the Internet Archive, news outlets, government services and local libraries to access a wealth of information and culture.

FCC Chairman Ajit Pai is threatening to eliminate net neutrality protections altogether by dismantling the legal structure on which they depend

Most importantly, the Internet has played an increasingly vital role in political expression and organizing. Conservative activists from around the country coalesced over various social networking platforms to form the Tea Party movement. The Black Lives Matter movement used Twitter to help spark a national conversation on racial inequality. The Standing Rock Sioux used Twitter, Facebook, Instagram, and YouTube to galvanize national support for their protests against the Dakota Access Pipeline and its threat to their drinking water. Earlier this year organizers used Facebook and Twitter to share information, plan events, and motivate participation in the Women’s March.

What does this have to do with net neutrality? Simple: all of these services depend the existence of open communications protocols that let us innovate without having to ask permission from any company or government.

The Internet was built on the simple but powerful idea that while you may need to pay a service provider for Internet access, that provider doesn’t get to shape what you access – or who has access to you. Anyone who wants to offer a new Internet service can, without paying extra fees to any provider. Users, in turn, can make their own choices about which services they want to use – including the next Twitter/Facebook/Snapchat that’s being created in someone’s basement right now.

In 2014, that powerful idea motivated millions of Internet users to band together and demand that the FCC enact clear, legally sound rules to prevent broadband providers from taking advantage of their power as gatekeepers to engage in unfair practices like paid prioritization, blocking, and other forms of data discrimination. We know that such practices could transform this extraordinary engine for civic discourse into something more like cable TV, where providers and content owners bargain over what content will be available at full speed and what will be throttled.

In 2015, the FCC answered our call and adopted the Open Internet Order to protect net neutrality. In 2016, the DC Circuit Court of Appeal upheld it – in contrast to the efforts of prior FCCs that operated on shaky legal theories. But the new FCC Chairman, Ajit Pai, wants to reverse course. He’s calling on the public to comment on whether we even need open Internet rules in the first place, and threatening to eliminate net neutrality protections altogether by dismantling the legal structure on which they depend, despite widespread public support for those protections and despite the fact that net neutrality has been the rule of the Internet from its inception, backed by a combination of legal requirements and cultural norms that are now in danger of being eliminated.

We can’t let that happen. We still have an open Internet that lets us make ourselves heard, so Let’s Make. Ourselves. Heard. The millions of Internet users who fought for Net Neutrality in 2014, and the millions more who have been mobilized in the intervening years, need to send a simple message to Chairman Pai and his backers in Congress and the Trump Administration: Don’t let big cable mess with our Internet.

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