Patent trolls getting worse

The Herald reports:

The same week that Alex Haro and Chris Hulls raised $50 million for their mobile app, Life360, the business partners got a letter.

It said they had three days to pay licensing fees to a company they had never heard of because their app violated its patented technology.

Haro and Hulls traced the company, Advanced Ground Information Systems, to a coastal home in Jupiter, Florida, with a phone number that initially went to an anonymous voicemail.

They couldn’t find any employees on LinkedIn.

To Haro, it was “a punch in the gut,” he said.

On the other side of that letter was Malcolm “Cap” Beyer, Jr., a 76-year-old who had filed a decade ago on cellphone mapping.

He said his attorney told him that he had a strong case against the start-up, even though the general technology had been widely used for years.

Beyer insists the mobile app’s $50 million in fundraising had nothing to do with it.

In the end, a jury sided with Life360 on all counts – but not before Haro and Hulls shelled out nearly $1.5 million in legal fees.

Winning can still be losing. They will probably never get their costs back. This is what patent trolls rely on – that it is cheaper to pay them some money, than fight them in court.

The bill has become a top lobbying priority this year for the tech industry, which says it repeatedly fends off frivolous lawsuits because of poorly written software patents and laws that favour patent holders.

NZ has intelligently removed software from being patentable. It can be copyrighted, but not patented. Patents and intellectual property laws are very important, but if the laws are unbalanced, they can cause more harm than good.

“Patent trolls” generally refer to businesses that buy up patents, particularly in technical areas like computer chips, cloud computing and wireless routers, with the sole intention of filing lawsuits or demanding licensing fees from tech companies, particularly start-ups around the time of their public offering.

Not wanting to pay for a protracted legal fight, the defendants almost always settle even if they think they’d win.

Kramer calls it a vicious cycle – the more companies settle, the more lawsuits are filed.

“It’s like a legal version of a mob protection racket,” said Noah Theran, a spokesman for the Internet Association, a coalition of web-based companies.

Patents are meant to protect and foster innovation, but with patent trolls they actually stifle innovation.

Last year, the House passed the “Innovation Act” by House Judiciary Chairman Rep. Bob Goodlatte, R-Va.

The bill would toughen requirements when filing patent challenges in court, such as limiting the amount of documentation that can be demanded before a judge makes an initial ruling.

The bill also opens the door to a requirement that plaintiffs pay legal bills of the defendants if they lose.

Supporters said they suspect trial lawyers with close ties to then-Senate Majority Leader Harry Reid, D-Nev., helped scuttle the bill.

Reid is now minority leader with plans to retire next year.

Likely to replace him as the Senate’s top Democrat is Sen. Chuck Schumer, D-N.Y. – an advocate of patent reform.

President Barack Obama has said he supports patent reform.

So it might happen with Harry Reid out of the way.

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