New Variations on the Patent Scam

Here’s a new wrinkle on an old con:

Delaware company Innovatio IP Ventures, LLC is scaling up its patent litigation assault against businesses that offer wireless Internet to customers, filing six infringement lawsuits this month against individual branches of some of the country’s largest hotel chains.

Innovatio is also suing Caribou Coffee, Panera Bread and other stores offering free Wi-Fi because they claim that they have some kind of patent that covers Wi-Fi. They’re looking for settlements in the range of $2,300-$5,000 — in other words, they’ve priced their lawsuit at nuisance value and hope that these companies will just pay them to go away, and do so before their whole scam gets tossed out of court. The arrogance of these grifters is astonishing:

Contemplating the company’s approach – suing the users of the technology rather than its manufacturers – a logical question emerges: Will the onslaught reach the front doors of average, WiFi-using, American households?

At least not “at this stage” of Innovatio’s “systematic campaign,” said Matthew McAndrews, a partner at Chicago-based law firm Niro, Haller & Niro, and the lead litigator for Innovatio in its infringement lawsuits. […]

Niro, Haller & Niro is the firm that inspired the term “Patent Troll“. The theory of their case is that someone who bought a toaster from Kitchen Aid that included a patented Samsung design owes Samsung a royalty on each piece of toast.

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35 replies
  1. 1
    debit says:

    I once knew a guy who demanded twenty five cents every times someone used the word “scruples.” Why? Because he said so. I wonder if he grew up and went to work for that law firm.

  2. 2
    Ash Can says:

    IANAL (that’s an understatement), but it seems to me that this opens up an opportunity for law students to get a little hands-on pro bono experience. It should be a no-brainer to get the suits these ticks file thrown out, so couldn’t the students handle the paperwork, for course credit?

  3. 3
    WereBear says:

    They are simply being Friedmanesque, no?

  4. 4
    Chrisd says:

    America’s best manufacturing days may be behind it, but its legal product continues to flourish.

  5. 5
    John PM says:

    But, they are innovators! It says so right there in their name. It would be unfair to deprive them of their hard earned capital.

  6. 6
    EconWatcher says:

    Judges have the power to punish lawyers who bring frivolous lawsuits (or assert frivolous defenses). But very, very few of them do. The rationale often offered is that they don’t want to stifle innovative lawyering.

    It’s true that a common-law system like ours develops through lawyer arguments that sometimes interpret old precedents in new ways. But every lawyer who’s spent much time in the courts can see the difference between innovative lawyering and frivolous abuse. For one thing, you have to actually mention adverse precedent and offer some plausible way to distinguish it in order to make a good-faith argument to modify or extend the law.

    The truth, of course, is that it’s an old-boy system, and lawyers (including judges) protect their own. If you actually try to call out a fellow lawyer for abuse (as I once did as a naive young lawyer), you’ll be treated as the skunk at the garden party.

    No great solution to offer. It’s one of the biggest flaws in the system.

  7. 7
    JGabriel says:

    Robert Frost:

    Fire and Ice
    __
    Some say the world will end in fire,
    Some say in ice.
    From what I’ve tasted of desire
    I hold with those who favor fire.
    But if it had to perish twice,
    I think I know enough of hate
    To say that for destruction ice
    Is also great
    And would suffice.

    Physicists answer Frost’s implied question (Ice), and win this year’s Nobel Physics Prize.

    ETA: Actually, the world will probably still end in fire, engulfed by the sun’s expansion as it runs out fuel. It’s the universe that’ll end in ice.

    .

  8. 8
    arguingwithsignposts says:

    This American Life had an episode recently about Patent Trolls. Pretty good stuff.

    I know Congress recently changed some of the patent rules, but I don’t think that will have much impact until the patent office stops granting patents on stupid shit like “waving your hand in front of a screen.”*

    *not an actual patent, but typifies the type of thing that gets approved.

  9. 9
    deep cap says:

    @EconWatcher: Ugh. I hear ya dood. That’s why I don’t practice law anymore. I hated every judge whose bench I appeared before. (Well, except one, but sadly he was just a lowly associate district judge, and probably ne’r to be promoted.)

    I got blacklisted quickly by those assholes because well, I actually cared about bringing good-faith lawsuits.

  10. 10
    BruinKid says:

    Heh, this patent troll news even got picked up in Taiwan, where it got the animation treatment.

    That they knew to use the troll face is hilarious and disturbing at the same time.

  11. 11
    4tehlulz says:

    @arguingwithsignposts: You better patent that shit.

    I’ve already patented shit, so you can’t grab that.

  12. 12
    PIGL says:

    “Lord Barrek Dunderian.”

    “My lord.”

    “You shall the have the command. Assemble one hundred men and ride to the troll’s keep.”

  13. 13
    Belafon (formerly anonevent) says:

    There once was a little company that tried to do that to Linux, as documented here. IBM decided it wasn’t going to play that game, and turned it’s lawyers on SCO. Someone needs to do the same here.

  14. 14
    JasonF says:

    I have a patent in posting comments to a blog. Every one of you owes me $6 for each post you have ever made to Balloon Juice.

  15. 15
    Odie Hugh Manatee says:

    I hold the patent on ass scratching. Pay me $50.00 for a lifetime ass scratching release from me and all is cool. I tried to get the patent on ball scratching but that’s covered under the Ball Cupping Patent, which is held collectively by the M$M.

    Bastards.

  16. 16
    J.D. says:

    “The theory of their case is that someone who bought a toaster from Kitchen Aid that included a patented Samsung design owes Samsung a royalty on each piece of toast.”

    Don’t forget they also owe royalties to the guy who patented toast:
    http://www.google.com/patents/.....wDAAAAEBAJ

  17. 17
    rdldot says:

    Why don’t we just get rid of the patents altogether. No reason to have a govt patent office. It’s just more big government. Somehow the conservatives never demand that one.

  18. 18
    PeakVT says:

    @JasonF: Feel free to sue our trolls first.

  19. 19
    JGabriel says:

    @JasonF:

    Every one of you owes me $6 for each post you have ever made to Balloon Juice.

    Uh-oh. Let me check Google on that:

    http://www.google.com/search?q.....m+JGabriel
    __
    About 5,350 results (0.25 seconds)

    $6 * 5,350 = $32,100.

    Holy fuckballs.

    .

  20. 20
    BGinCHI says:

    Check it out. They have an associate named Tahiti Arsulowicz.

    http://www.niroip.com/document.php?Id=131

    There goes the heroine name for my new South Pacific Jewish hard-boiled detective. Crap.

  21. 21
    gaz says:

    I hope they try to take my wifi.

    I really do.

    =)

  22. 22
    gaz says:

    also, since I patented “Patent Trolling” I’m going to sue them for not paying me royalties.

  23. 23
    Villago Delenda Est says:

    These assholes need to be disbarred, and ruined.

    It’s as simple as that.

  24. 24
    KG says:

    @Ash Can: nope. one of the rules regarding corporations is that they must be represented by an attorney in court. So, the law student thing wouldn’t work. Plus, big corporations have big legal departments and firms on hand to deal with this kind of thing (unless they’re going after franchisees).

    And IP, especially patent litigation, is not my area of practice, but I wouldn’t be surprised to see an attorney’s fees provision in the law. The feds have a lot of those, though sometimes they are one way fees provisions.

  25. 25
    Judas Escargot says:

    @JasonF:

    I have a patent in posting comments to a blog. Every one of you owes me $6 for each post you have ever made to Balloon Juice.

    Fortunately, I’ve been charging you $6 per post (just you– everyone gets it for free). So we’re even.

    Didn’t you read the EULA?

  26. 26
    Nutella says:

    The sad thing is what this patent BS does to the software industry, one of the few where the US does well globally.

    This guy, an American who lives in Amsterdam, suggests that the smart thing for a software company to do is move out of the US and start a non-US company and either avoid selling software in the US or construct multiple US companies (like the construction industry) so any one attacked by lawsuits can quickly go out of business and stop selling in the US.

    This shit is NOT what a weak economy needs.

  27. 27
    Pongo says:

    Susan B. Komen Race for the Cure trademarked ‘for the cure’ in 2010 and is suing other non-profits for using it (and for using the color pink) http://tinyurl.com/4yq6dky. Doesn’t matter what disease these groups are representing or whether there is any direct competition with Komen or not (pretty sure no one has ever confused vasculitis or Prader-Willi syndrome for breast cancer, yet both were among the small groups who have received threats). They have a staff of attorneys who threaten legal action any time another group uses ‘for the cure’ in any manner to advertise an event or on promotional materials.

    Have to wonder about the governance of a non-profit whose board were apparently unable to assess the PR nightmare this policy would be if it were widely publicized. Of course, as media outlets often partner with Komen (and other big, equally bullying non-profs) they may have just rested securely in the knowledge it would not be widely publicized.

    Guess it just proves that you don’t have to be a for-profit to be a corporate asshole. Just remember when you donate to them, a portion of your donation goes to keeping trademark troll lawyers employed.

  28. 28
    Ruckus says:

    @JasonF:
    I have a patent that supersedes yours. My patent charges anyone demanding money for violating any patent a fee of $20.

    You owe me $14.

  29. 29
    Captain Goto says:

    Ummm…wow.

    I used to be, um, legally entangled with a relative of one of the principals there. Never knew about Niro’s association with the “patent troll” term. I do know that he is an absolute bulldog. His standing with the rest of his family is, shall we say, “problematic.”

    Small world…

  30. 30
    EconWatcher says:

    @Pongo:

    I read about this a while back. You’re right that it’s very offensive, and also that they don’t seem to be paying a price for it.

  31. 31
    G says:

    Until recently, I was an in-house lawyer for a restaurant chain that got threatened by Innvatio with a wi-fi suit.

    To say “It should be a no-brainer to get the suits these ticks file thrown out, so couldn’t the students handle the paperwork” is — sadly — completely incorrect. Patent trolls don’t file suits if they don’t have at least a semi-decent claim to own valid patents.

    Innovatio’s threat letter lists dozens of patents that are allegedly being infringed by Wi-Fi. To hire the legal & technical experts to make even a vague guess about their validity would have blown own entire legal budget for the year.

    My ex-company hired the same law firm that is representing dozens of other restaurant chains against the patent trolls. I don’t know what happened after that.

  32. 32
    grumpy realist says:

    Heh. At some point they’re going to piss off someone who will go rummaging through some old issues of Japanese electronics magazines, pull out some prior art (in Japanese) and clobber the patents they’re crying infringement on. Trust me, they do NOT want to get started down this road.

    Hell, I’d argue for a 102 right off the bat now….

  33. 33
    Nutella says:

    @grumpy realist:

    Unfortunately that will take a lot of work by a lot of expensive lawyers so it’s only when they piss off someone like IBM that that will happen. In the meantime a lot of productive companies will be damaged or destroyed.

    The toaster plan is being used by another bunch of patent trolls against software developers. They claim to own the idea of in-app purchases and got Apple to pay them to license it. All in-app purchases on iPhone go through the Apple appstore so all of them are covered by Apple’s license but the trolls are going after tiny iPhone app developers companies claiming that they ALSO have to get a license for what Apple is doing. This will dry up iPhone app development soon if it’s not killed by Apple fighting back. They’re trying to do it with Android, too.

    All these lawsuits are a sideshow. What we need is for the US Patent Office to shut down all software patents. Software should be no more patentable than any other form of writing.

    They can start by throwing out Amazon’s ‘one-click’ patent which claims that they own the number of buttons you have to click to complete any order anywhere on the internet. They also have a patent on their completely original idea of an Internet-based customer referral system, or what is commonly called an “affiliate program”. And another one on “Method and system for conducting a discussion relating to an item on Internet discussion boards” which means they’re retroactively claiming UseNet.

    The whole system has to go. It’s really bad for the software industry and the economy.

  34. 34
    William Hurley says:

    IP is a crucial matter to be fixed – but in the end, the Chinese don’t care about your “stinking” patents.

  35. 35
    William Morriss says:

    Just to be clear – I am a patent attorney, but I am not your patent attorney, so nothing in this comment should be treated as legal advice. With that said…

    If you buy a toaster that’s covered by a Samsung patent, then, unless the person you bought it from was a Samsung licensee, you are infringing the Samsung patent every time you use the toaster to make toast. See 35 USC 271(a). This means that Samsung is entitled, as a matter of law, to at least a reasonable royalty from you. See 35 USC 284.

    The patent act does include a provision for shifting fees in extraordinary cases. 35 USC 285. As you’d imagine, it very rarely results in fees actually being shifted.

    The days of the PTO granting everything that gets pushed through the door, to the extent there ever were days like that, are gone. See here.

    I think I’ll stop before delving into the general topic of software patents. I will note though, that the patents being asserted by Innovatio appear to be directed to various types of hardware used in WiFi networks, not software per se. See, here (complaint in Innovatio v. ABP Corp. et al).

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