When a patent troll’s business doesn’t go according to plan

Earlier this year, concern spread among users of open source software following claims by an IP licensing business (also known as a non-practising entity (NPE), or, to those on the receiving end of a claim, a patent troll) that use of popular open source components infringed the NPE’s patents.

Sound View Innovations, established in 2013, had acquired a number of the patents of AT&T Bell Labs and Lucent Technologies from Alcatel Lucent at the end of that year. Since then, Sound View has acquired over 1000 patents. It has become well-known as an NPE after commencing proceedings against online platforms including Facebook, Hulu, Twitter, media companies such as CBS and then broadening its claim base to retailers such as Walmart and airlines such as Delta in 2019.

Sound View’s claims involved open source components including:

  • jQuery, a JavaScript Library that handles HTML client side scripting across web browsers,
  • Apache HBase, a database management system real-time read/write access to data,
  • Apache Hadoop, which allows distributed processing of large data sets, and
  • Apache Storm, a distributed real-time computational system.
influence legal troll
Patent trolls may have suffered some setbacks, but they are still lurking.

These components, especially jQuery, are widely used in cloud stacks across a large number of online platforms, media companies and customer-facing organisations.

Sound View’s claims included that use of jQuery to create and process customisable data analysis and processing applications, and use of Apache Spark to perform real-time data stream processing, infringed patents in its portfolio.

The claims were alarming to both software providers and end users, as end users can be liable whether or not they developed the infringing material. Where software providers had accepted liability for open source usages by customers, they would be exposed to potential indemnity claims. Open source components are also often excluded from software providers’ warranties or indemnities, and in those cases the end users would have no recourse under their supplier contracts.

The industry view is that Sound View was targeting end users in the hope that they would pay licence fees rather than engage in the expensive process of defending the claims, which would require significant time in reviewing the technical issues. Both Twitter and LinkedIn settled claims early.

Some defendants, however, filed petitions for inter partes review to invalidate Sound View’s patents. Hulu, Disney, Time Warner and others successfully invalidated multiple claims. Unified Patents, an industry organisation targeting bad faith NPE conduct, also filed petitions for IPRs against several Sound View patents to protect the interests of its members.

Last month, the US Patent Trial and Appeal Board (PTAB) found against Sound View in relation to two further patent claims.

The patent in question involved a technique to enhance existing caches in a network, by employing helper machines to segment streaming media into smaller units according to placement and replacement policies.

This followed successes earlier in the year by Unified Patents, whose membership includes Cisco, Adobe, Red Hat and over 200 other tech companies.

The PTAB decision is a classic illustration of the time and expertise required to defend an NPE’s claim. The decision was based on the prior art, that is, the board found that similar material had been published before the patent was filed, so the patent was not inventive. Many of the Sound View decisions have involved complex evidence comparing the detail of the defendant’s use against the patent claim, or detailed research into the prior art, with arguments about the standard of evidence required to show prior publication.

As yet, there is no overall regulation preventing NPE behaviour, though some US states have regulated against bad faith patent claims. The US Supreme Court ruled in 2017 that legal action must be taken in the state where the defendant is located, rather than the most NPE-friendly forum. Industry bodies are continuing to lobby for greater regulation of bad faith claims. States such as California have called on the US Federal Government to minimise abusive patent litigation. Legislation to address the issue at the US Federal level has hit various hurdles, and there have also been challenges to the inter partes review process on constitutional grounds.

In Australia, patent trolls have not gained as large a foothold as they have in the US. Over the last few years, several reviews of the Australian patent system have focused on whether patents are being used to stifle innovation and creativity. Following those reviews, amending legislation to phase out the innovation patent system was introduced to the House of Representatives earlier this month.

A spokesperson for the Institute of Patent & Trade Mark Attorneys of Australia, however, recently described the justifications for removing innovation patents as “nonsense”.

 

 

 
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