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Congress Just Threw You Under a Bus

What Just Happened?
Yesterday, the House of Representatives passed a bill entitled Cyber Intelligence Sharing and Protection Act (H.R.3523), or CISPA for short. CISPA is a bill that allows the government to obtain your private information from companies without a warrant. Oddly, under the guise of making CISPA less abusive, the House actually slipped in some language at the last minute that made CISPA even worse. What SOPA was to online censorship, CISPA is to online privacy. Whereas SOPA was about stripping away your First Amendment rights (free speech); CISPA is about stripping away your Fourth Amendment rights (freedom from unreasonable search and siezure).

The House ostensibly passed CISPA to “provide for the sharing of certain cyber threat intelligence and cyber threat information between the intelligence community and cybersecurity entities.” Privacy advocates fear that the government will use CISPA to exploit your private and personal information in unconstitutional ways, far beyond those outlined in CISPA.

What Does CISPA Do?

The language of CISPA is pretty difficult to understand. CISPA states that any business that provides goods or services for cybersecurity purposes to itself may use its cybersecurity systems to identify and obtain cyber threat information to protect the rights and property of such self-protected entity and share such cyber threat information with any other entity, including the Federal Government. But what does that mean? Based upon my reading of the definitions contained within CISPA, it means any business that does anything online can share your private information with the government. It also means no state can enact a law preventing the business from sharing your personal information in this manner. As long as the company handed over your private information in “good faith,” CISPA also prohibits you from suing a company for handing over the wrong information.

What Does That Mean for Me?
CISPA contains no effective oversight of what private information the government is requesting and receiving. This opens the door to companies handing over all of your private information to the government and the government misusing that information once received. According to Rep. Jared Polis, a Colorado Democrat and onetime Web entrepreneur, CISPA will “waive every single privacy law ever enacted in the name of cybersecurity.” Rep. Polis went on to state that “[a]llowing the military and NSA to spy on Americans on American soil goes against every principle this country was founded on.” While addressing online security concerns is a laudable goal, there is absolutely no proof CISPA would result in a net increase in online security. Even if CISPA were to increase online security, it is not worth trampling over the Constitution to reach such a speculative goal.

CISPA guts the Fourth Amendment to the United States Constitution, eliminating the need for the government to show probable cause, or get a warrant to obtain your personal information. The FBI, BATF, Secret Service or any federal agency would simply ask the company holding your private information and the company could hand it over. As long as the exchange has some tangential relationship to the intentionally inscrutable phrase “cyber threat,” the CISPA insulates both the government agencies and the companies from liability as they exchange your private information. Not surprisingly, CISPA does very little in the way of protecting you or your constitutional rights from mistakes, overreaching and lack of oversight in the transaction.

Can I Find Out What Information of Mine the Government Obtains Under CISPA?
No. Cyber threat information shared in under CISPA is exempt from disclosure under section 552 of title 5 of the United States Code. This means that not only will the government not tell you what information of yours they request or receive, but you cannot even get this information pursuant to a Freedom of Information Act (FOIA) request.

Who is Behind CISPA?

The U.S. government, mainly. The government argues that it needs access to your personal and private information to stop online security threats. The government has also brought many large companies on board, companies, not surprisingly, who hold massive amounts of your personal information. Companies like AT&T, Boeing, Facebook, IBM, Intel, Microsoft, Symantec and Verizon are just a few of the 800+ companies supporting CISPA.

Who is Against CISPA?
Dozens of privacy groups, including: The Electronic Frontier Foundation; The American Civil Liberties Union; The American Library Association; The American Association of University Professors, Consumer Watchdog, Demand Progress, Government Accountability Project, Patient Privacy Rights, and the U.S. Bill of Rights Foundation are all strongly opposed to CISPA. Their main concern is that CISPA will allow companies holding our most sensitive and personal information to share that information with the government, and that lack of oversight will lead the government to use this information for purposes completely unrelated to cybersecurity.

What Can I Do?
Time is running short. Once the Senate passes CISPA and President Obama signs it it will be too late. President Obama said he would not sign CISPA, but he said the same thing about NDAA (indefinite detention of U.S. citizens) right before he signed it. Contact your state senators. You can find out their contact information here. Introduce yourself to the person who answers the phone as a constituent of the senator. Ask them about their office’s stance on CISPA. They will ask for yours and report those number to the senator. If you know enough about CISPA to address the particulars, ask to speak with a legislative assistant. If one is not available, leave your number and have them call you back. Ask them about the status of CISPA and the parts of CISPA about which you have a particular concern. If you do not feel up to speaking with a legislative assistant, follow up your phone call with an email and/or letter outlining your objections to CISPA. Most importantly, make your senators aware of your objections to the unconstitutional privacy invasions inherent in CISPA. Do it today.

Brett Trout

Posted in General, Internet Law. Tagged with .

Judge Rules Bloggers Do Not Have to Be Paid

Under American jurisprudence, for a contract to be legal, each side must provide what is called “consideration.” That means that each side promises to do something, or not do something, in return for the other side agreeing to do something or not do something. If I sign a contract agreement agreeing to give you $1,000, that contract is not enforceable unless you promise to give me something in return, or do something in reliance upon my promise. Given that parties to contracts, by definition, value what they are getting more than what they are giving, courts do not get involved with the comparative values of the promises. As long as each side gives at least something, the contract is valid. As Lord Somervell noted in Chappell v Nestlé, half a century ago “A peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn.”

The Huffington Post
The Huffington Post is a news website, distributing posts from over 9,000 unpaid bloggers. As noted in The Huffington Post Terms and Conditions:

(b) By posting or submitting content on or to our site (regardless of the form or medium with respect to such content, whether text, videos, photographs, audio or otherwise), you are giving us, and our affiliates, agents and third party contractors the right to display or publish such content on our site and its affiliated publications (either in the form submitted or in the form of a derivative or adapted work), to store such content, and to distribute such content and use such content for promotional and marketing purposes. Without limiting the generality of the foregoing, with respect to any video submissions to us made by you from time to time, you understand and agree that (unless you and we agree otherwise) we may, or may permit users to, based solely on functionality provided and enabled by our website, compile, re-edit, adapt or modify your video submission, or create derivative works therefrom, either on a stand-alone basis or in combination with other video submissions, and (unless you and we agree otherwise) you shall have no rights with respect thereto and we or our licensees shall be free to display and publish the same (as so compiled, re-edited, adapted, modified or derived) for any period.

Nowhere are the terms, consideration, fee, payment or compensation mentioned in the Terms of Use.

The Lawsuit
On February 7, 2011, AOL announced it had agreed to acquire The Huffington Post for $315 million. In response, a group of The Huffington Post bloggers brought a class action lawsuit against AOL, Inc., asserting the roughly 9,000 Huffington Post bloggers deserved to split $105 million of that purchase price. The lawsuit alleged The Huffington Post engaged in deceptive business practices, deceiving the bloggers as to the popularity of their posts, and was unjustly enriched by the revenue generated therefrom. The lawsuit alleged that “Unlike social networking internet platforms, micro-blogging internet sites, and other digital media sites, such as, selects its content providers and does not allow content from non-vetted providers. [...] Plaintiff and the Classes were not officious contributors to the and, rather, were carefully selected, and in some cases recrutited, by to perform services for it.”

Yesterday, U.S. District Judge John Koeltl dismissed the bloggers’ lawsuit, ruling “No one forced the plaintiffs to give their work to The Huffington Post for publication and the plaintiffs candidly admit that they did not expect compensation.” The Judge went on to note “[t]he principles of equity and good conscience do not justify giving the plaintiffs a piece of the purchase price when they never expected to be paid, repeatedly agreed to the same bargain, and went into the arrangement with eyes wide open.” In response to the dismissal, the bloggers’ attorney stated “We are reviewing the decision and considering our options.”

Content, Content, Content

Social media is all about the content. Bloggers leverage better content to convince bigger content distributors to distribute that content to a wider audience. Most bloggers never attract the eye of a content distributor with a million plus unique visitors a day, like Often, it is only when a content distributor generates large amounts of revenue, that the blogger begins to think about compensation. The bloggers may become indignant “That distributor is generating huge amounts of revenue our work, and we are not receiving any money.” But the bloggers are getting some compensation, at least according to Judge Koeltl. The fact that the bloggers are only getting publication in return for their work does not matter, as long as they are getting something in return, even if that is only a peppercorn.

Negotiate Before, Not After

If you are a blogger, website developer, graphic designer or other content provider, negotiate the terms of your service up front, in writing. You may decide that the opportunity to garner you work some exposure is worth the cost of creating it. If so, that is fine. Just be prepared if your work starts generating revenue for some third party, beyond your wildest expectation. The increased exposure of your work is likely the only additional compensation you will receive, which is nothing to sneeze at.

Brett Trout

Posted in Internet Law. Tagged with , .

Trademark Office Warns of Unscrupulous Companies Requesting Deceptive Fees

The Deceptive Letters
The United States Patent and Trademark Office has just released a warning that unscrupulous companies are attempting to deceive trademark owners into paying unnecessary trademark fees. Using confusing names, like “United States Trademark Registration Office,” these companies send out thousands of letters, attempting to collect necessary “Processing Fees.” The letters use language like: “WARNING: YOUR REGISTRATION WILL BE CANCELLED IF YOU DO NOT FILE THE DOCUMENTS ABOVE DURING THE SPECIFIED TIME PERIOD.” They also incorporate publicly available trademark application and registration information from the United States Patent and Trademark Office, making them appear like official government documents. While the failure to pay certain fees and file certain documents may result in the abandonment of the owner’s trademark, none of the “Processing Fees” requested in these letters go toward paying the government fees required to prevent abandonment of the owner’s trademark.

The Trademark Office
So many of these deceptive letters have gone out to so many trademark owners, that the United States Patent and Trademark Office has stepped in, posting an official warning on its website. The Office of the Solicitor of the United States Patent and Trademark Office even sent a cease and desist letter to the outfit calling itself the “United States Trademark Registration Office.” The United States Patent and Trademark Office is warning trademark owners to be on the lookout for deceptive letters that appear to be sent from the United States Patent and Trademark Office.

What Can You Do?
The most important thing you can do is to not pay these unnecessary fees. If you had a trademark attorney file your federal trademark application for you, the Trademark Office will not send you anything directly. All official correspondence will go directly to your attorney. If you are unsure whether a letter is legitimate, contact your attorney. If you do not have a trademark attorney, contact a local trademark attorney. Trademark attorneys will often give you a few free minutes on the phone to answer questions regarding potential scams. If you have received a deceptive letter requesting fees associated with a trademark, contact your state’s Attorney General. You should also file an on-line consumer complaint with the Federal Trade Commission (“FTC”), at and email the United States Patent and Trademark Office at

Brett Trout

Posted in Trademark Law. Tagged with , .

The New Business Identity Theft

Identity Theft vs. Business Identity Theft
Almost everyone is familiar with identity theft. A criminal obtains your personal information, and uses that information to steal, leaving you to mop up your decimated credit. Business identity theft can also involve criminals using private business information to create fake financial accounts to defraud third parties. Not all business identity theft requires the thief to obtain your private business information or set up fake financial accounts. There is a growing trend of cybercriminals spoofing small businesses, using publicly available information to create look-alike or sound-alike businesses to steal customer information.

The Spoof and the Scrape
Spoofing involves criminals mimicking various aspects of a legitimate business to mislead people into providing the criminal with personal information. A criminal may spoof a legitimate company’s name, its trademark, its website, its advertising or any other public presence the legitimate business has. The criminal may steal, or scrape, the pictures, text and layout from the legitimate business’ website and post that information to a fake website. With a seasoned spoofer, it can be very difficult to distinguish the spoofed website from the real thing. The criminal may even set up a phone number using a local area code or a brick and mortar address to fool the small business’ customers. The criminal relies on lazy customers who might not notice the website they are visiting, or the yellow page advertisement they are reading is just a knock-off. Customers may contact the criminal, thinking it is the trusted business, and provide personal or financial information, that the criminal then exploits. The criminal may even offer to supply sub-standard goods or services under the legitimate company’s name.

Stopping the Spoofing
With ordinary identity thieves, freezing financial accounts usually curtails the ongoing damage. With spoofers, the ongoing damage may not be so easy to stop. Since spoofers are only using publicly available information, and are not using the legitimate businesses’ private information, or creating financial accounts using the legitimate business’ credit, it can be difficult to convince law enforcement to take action. As no private information is being used, law enforcement may view the spoofing as a civil matter, rather than a criminal one. Adding to the problem are privacy laws, that can prevent a legitimate business from finding out who or where the spoofing identity is. This forces the legitimate business to seek out an attorney with experience in this area to bring an end to the ongoing fraud.

Get Your Ducks in a Row

The best time to defend against business identity theft is before a problem arises. Be sure you have the appropriate trademark and copyright registrations in place. If you wait until a criminal starts spoofing your business identity and defrauding your customers, you may have to wait months to obtain a copyright or trademark registration. Registering your trademark prior to an attack allows you to sue in federal court, and to ask a federal judge to order any phone numbers and domain names associated with the spoofer be turned over to you. Registering your copyright prior to an attack and registering your Digital Millennium Copyright Act (DMCA) agent with the Copyright Office allows you to shut down any website using copyrighted material scraped from your website.

Time is of the Essence
As businesses become more adept at addressing existing criminal threats, criminals continue to innovate novel scams, stealing tens of billions of dollars every year. Many businesses are simply not prepared for a scam that law enforcement refuses to pursue. By the time an unprepared business takes remedial action, so many of its customers may have been scammed that the company may never recover from the long-term damage done to the company’s goodwill. Thwarting business identity spoofing theft is not as hard as it seems. Small business identity spoofers tend to prey on the weakest and least knowledgeable victims. Simply protecting your trademarks and copyrights, and indicating the protection on your website, may be enough to convince a cyber identity thief to pursue a less well-prepared and less knowledgeable victim.

Brett Trout

Posted in Internet Law, Trademark Law. Tagged with , .

SOPA and PIPA Are Bad

Update: KCCI just posted a great news story of me, countering arguments by PIPA/SOPA co-sponsor Sen. Charles Grassley. You can watch it here.

SOPA and PIPA Are Bad
There seems to be some confusion on this issue, so let me make it clear. The Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA) are bad. They are bad for you, bad for me, bad for anyone with a blog, a Facebook profile, or any other type of website. SOPA and PIPA are bad for anyone who uses the Internet.

Isn’t Stopping Infringers a Good Thing?

Yes, and ever since the Copyright Act of 1790, United States law has provided copyright owners with the tools they need to stop infringers. Not only that, but the entertainment industry has gotten many additional laws passed. These new laws not only increased the length of copyright protection from 28 years to 150 years or more, but addressed everything from downloading, to file sharing, to circumventing digital rights management (DRM) software. Needless to say, even without SOPA and PIPA, the entertainment industry has more than enough recent laws at its disposal to stop copyright infringers.

So What Are SOPA and PIPA All About?

What Congress and the entertainment industry want you to believe is that SOPA and PIPA are about stopping online piracy. They argue that it is still too difficult to target infringers who have moved their operations overseas. If passed, SOPA would allow the U.S. Attorney General to target the companies providing Internet service to alleged infringers. It would also force search engines and websites to remove links to allegedly infringing websites and allow seizure of advertising and other revenue coming from the United States. The reality is that SOPA would not work. It would do nothing to actually prevent people from accessing the alleged infringing overseas websites. Even if the domain name was filtered, people could just type in the Internet Protocol (IP) Address directly and access the website. Although SOPA will not stop people from accessing overseas websites, SOPA will stifle innovation and generate thousands of new lawsuits. SOPA will take money taxpayers and small companies are currently spending on innovation and redirect that money into the pockets of attorneys, hired by our government and the entertainment industries to stifle that innovation.

Why Have I Not Heard of This?
You might think that a bill that threatens to affect what you do every day (assuming you use the Internet every day) and has nearly 1,000 registered lobbyists working on it, would make the news. Unfortunately, most major news providers, including Fox News and NBC-Universal, are strong supporters of SOPA, and have chosen to keep both SOPA and PIPA out of the limelight while Congress attempts to pass the bills into federal law.

Why Is Congress Supporting SOPA/PIPA?
Individual members of Congress will give you different reasons why they are supporting this innovation-killing legislation. There is no denying, however, that the entertainment industry has spent millions of dollars pushing SOPA/PIPA. Looking at just two of the bills’ sponsors, Lamar Smith (R-TX) and Patrick Leahy (D-VT), they have collectively received nearly two million dollars in campaign contributions from the TV/Movies/Music industry.

What Are the Dangers of SOPA/PIPA?
The danger is that big companies will use SOPA/PIPA to put small companies and websites out of business. Less competition would be great news to large media concerns that have been steadily losing market share to the Internet. While a bigger, broader and more diversified Internet is good for you and me, it is bad for large entertainment companies that refuse to innovate as fast as their smaller competitors.

SOPA/PIPA would also make it easier for large entertainment companies to use automated programs to search the Internet and send erroneous copyright take-down notices. According to Erik Martin, the general manger of the popular Reddit website, “human beings aren’t even looking at this – the potential for abuse is huge.” SOPA/PIPA threatens to place law-abiding small companies in the position of having to redirect innovation resources to pay an attorney to respond to a baseless infringement take-down notice.

Another danger of SOPA/PIPA goes to the heart of Internet security. The Internet is based upon a system of numerical addresses, called Internet Protocol (IP) addresses. The Internet’s Domain Name System (DNS) takes a domain name, like Google, and translates it into the associated website’s unique IP address, such as While typing either or into your address bar will get you to the same place, domain names, such as Google are much easier to remember. By allowing the government and the entertainment industry to filter the Internet, SOPA/PIPA risks opening up the secure DNS system, as well as even more secure systems, such as DNSSEC, to exploitation by cybercriminals. Not only that, but the SOPA/PIPA domain name blocking provisions will do little to cripple offshore infringing websites. Simply typing in the IP address, instead of the domain name, into your address bar makes the SOPA/PIPA domain name blocking provisions worthless.

What Can I Do?
Contact your congressional representatives today. There are already many federal laws in place to prevent online infringement. While SOPA and PIPA will do little to curb future online infringement, they will, if passed into law, stifle innovation, censor the Internet, and make the Internet less secure. On January 18, 2012, websites like Google, Reddit and Wikipedia gave you a small taste of what SOPA and PIPA are all about. If you prefer that SOPA and PIPA not censor thousands and thousands more websites, contact your Representatives and tell them to vote “No” on SOPA, and contact your Senators and tell them to vote “No” on final passage of PIPA. Tell them you will remember their votes on Election Day.

Brett Trout

Posted in Copyright Law, Internet Law. Tagged with , .

SOPA – This New Censorship Bill is a Job Killer

Yesterday, the House Judiciary Committee held a hearing on the deceptively named Stop Online Piracy Act (SOPA). Representative Lamar Smith (R-Tex.) introduced the bill on October 26, 2011 as H.R.3261. SOPA expands the Internet censorship provisions of the Protect IP Act, a bill Senator Patrick Leahy (D-Vt.) shepherded into law earlier this year. These additional restrictions make it easier for large corporations to stop websites from getting paid, not for just allegedly infringing content, but for all content on the website, even if the alleged infringement makes up only a tiny part of the website’s content. SOPA threatens not only to censor a small amount of allegedly infringing content, but a lot of non-infringing online content along with it. The result will be a law much better suited to punishing entities that disagree with the entertainment industry’s vision of a censored Internet than stopping piracy.

Job Killer
Michael O’Leary, representing the Motion Picture Association of America (MPAA), the film industry trade group, argues the motion picture and television industry supports jobs. Google, Facebook, Twitter, venture capitalist, civil liberties groups and trade associations say just the opposite. The Electronic Frontier Foundation (EFF) has even labeled SOPA a “massive piece of job-killing internet regulation.”
Several members of Congress not swayed by entertainment industry contributions have come together in bi-partisan fashion to defeat SOPA, warning that SOPA will result in an “explosion of innovation-killing lawsuits and litigation [...] At a time of continued economic uncertainty, this legislation will result in fewer new businesses, fewer new investments, and fewer new jobs.”

Won’t SOPA Stop “Pirates”

I don’t know what your definition of a pirate is, but my definition does not YouTube, just because one person uploaded a video of their kid playing with a puppy, while a portion of a copyrighted song played in the next room. But SOPA does not discriminate. SOPA does not require a judge or jury to decide what does and what does not constitutes piracy before an alleged “victim” unilaterally shuts down an entire website. As for the pirates? SOPA will do little more to stop pirates. SOPA is like continuing to reduce the speed limit for everyone, because one or two criminals keep driving through town at 100mph. You are only punishing the people already following the law. Large scale pirates depicted in industry advertisements are clandestine and mobile, creating their own closed networks. Even if the industry were to spend time tracking pirates down and shutting off their access, these “real” pirates would be back up and running on a new private network within hours. The entertainment industry knows this and knows it is much easier to target legitimate companies, where alleged infringement may make up less than 1% of their online activity, than to focus on dedicated criminals, where infringement makes up the majority of their online activity.

Won’t SOPA Help Artists
While entertainment industry giants are in favor of SOPA, many individual artists are not. Smaller artists understand “piracy” for what it is, “a symptom of a new technology (the internet) that many haven’t yet understood how to monetize.” SOPA is trying to use twentieth century legislation to thwart twenty-first century technology. SOPA makes the internet more difficult to use, while pirates continue to make content easier to steal. The solution is not to make things harder for the good people. The key is to make it easier for them to obtain content legally. While it is not clear what the new paradigm will look like, services like Spotify, Pandora, Rdio and Grooveshark are embracing new technology and giving us a glimpse of more artist and consumer friendly alternatives.

So Who Do SOPA the The Protect IP Act Benefit?
If campaign donations are any indication, the entertainment industry and certain members of Congress will be the primary beneficiaries of the new internet censorship embodied by SOPA. The MPAA is no longer playing coy. Pushing for the new Internet censorship at yesterday’s House Judiciary Committee hearing, O’Leary tried to address the argument that SOPA would frustrate the implementation of a more secure domain name protocol, namely DNSSEC, stating “this argument conveniently ignores not only the history of the creation of DNSSEC but also the very nature of Internet protocols, which is simply this: when new developments or circumstances require changes to these codes, the codes change,” And just who is responsible for making these changes? Well, the second biggest industry donor to Senator Patrick Leahy’s (Protect IP Act) election campaign committee, and the biggest donor to Representative Lamar Smith’s (SOPA) election campaign committee, are both the TV/Movies/Music industry. So if it turns out you have a problem with the protocols implemented by either SOPA or the Protect IP Act, and the MPAA does not, how likely do you think it is that those protocols are going to change?

What Can You Do?
Do not let this bill pass. Do not let the movie and recording industries punish artists and fans and dictate which websites you can visit. Do not let corporate behemoths use taxpayer resources to shut down taxpayer websites. Tell your Congressional representative this bill is a job-killer, tell them it punishes artists as well as consumers.

You can find phone numbers and email addresses for your representatives here. If you need a script, you can use anything from this post and/or your own version of the following:

“Hello [Representative's name],

My name is [your name] and I am calling from [your city and state] to voice my concern about SOPA, the Stop Online Piracy Act. I do not believe this bill should be passed. The United States already has several laws in place for combating piracy, including the 1998 Digital Millennium Copyright Act, the 2007 PRO-IP Act, the 2011 Anti-Counterfeiting Trade Agreement and others. This bill is a job-killer. I urge you to listen to your constituents, many of whom will be adversely affected by this bill, and vote “No” on the Stop Online Piracy act. Thank you.”

Brett Trout

Posted in General, Internet Law. Tagged with , .

Should I Get A Patent?

What You Say vs. What Your Patent Lawyer Hears
Clients ask me all the time, “Should I get a patent?” While that is certainly the most important question an inventor can ask of a patent lawyer, most patent lawyers answer this question incorrectly. A “Can I” patent question is right in the patent lawyer’s wheelhouse. A “Should I” patent question is not. Patent lawyers therefore tend to hear the question as “Can I get a patent,” which is a much different question. The “Can I” question relates to whether the invention meets the minimum criteria for patentability, namely is it new, useful and non-obvious. Another reason patent lawyers answer “Should I” patent questions as “Can I” patent questions is that the answer to the “Can I” question is “Yes” far more often, and it is a rare patent lawyer that could not use and extra ten thousand dollars. A final reason why patent lawyers often view the “Should I” patent question as a “Can I” patent question is that if the patent lawyer incorrectly answers “No” to the “Should I” question and the client loses millions because they thought the patent lawyer was answering the “Can I” patent question, the patent lawyer could be on the hook for millions of dollars in malpractice damages. Conversely, if the patent lawyer erroneously answers “Yes,” instead of “No,” the malpractice damages are probably more in the tens of thousands of dollar range.

Is It Worth Getting a Patent On Your Invention?
While it is important to get input from patent lawyers, accountants, marketers and business professionals, only you can answer this question. Many new inventors plan on selling their patents to large companies. This is very difficult to do. Unless you have existing contacts in the industry, many large companies will not even meet with a first-time inventor. What most inventors do not realize is that without a great management team, business plan and/or industry contacts, very few businesses or investors will be interested in an invention, even if it is patented. A good place to start to develop a business plan to determine things like your start-up costs, projected revenue, and how much a patent would be worth. Not all patents are created equal. Good patents are worth more than bad patents. What makes a good patent? Market, Breadth and Quality.

Is your patent in a crowded market with low-priced substitutes? How much more can you demand from consumers because of your monopoly in this market? What percentage of this market can you reasonable hope to capture? If you are in a saturated low-margin market, with many viable substitutes, getting a patent on your product would likely be little more than a vanity.

How broad will your patent be? Is your invention similar to what else is out there? Is is an obvious combination of what is out there? How easy would it be for your competitors to “design around” your patent? No one can tell you ahead of time how broad your patent will be. But if there are a lot of similar items already on store shelves and/or already patented, even the best patent lawyer in the world will only be able to get you a narrow patent, one that is easy for competitors to design around and which provides you little value.

The quality of your patent depends a lot on your patent lawyer. If you hire 100 different patent lawyers to draft a patent application on your invention, you will get back 100 different patent applications. No two would be the same. The quality of the patent applications would probably range from great to worthless. While great patent lawyers cannot make a silk purse out of a sow’s ear, bad patent lawyers can certainly make a sow’s ear out of a silk purse. What makes a great patent lawyer? Look for a patent lawyer other lawyers recommend. Look for one with a lot of actual patent writing under his or her belt (search Google Patents for their name) and look for some particular expertise in the field of your invention. Look for a patent lawyer who has sued infringers for patent infringement and won. Patent litigators know what they need to put into a patent to win at trial and to convince infringers to settle.

Can you defend your patent?
The cost of getting your patent is chicken feed compared to the cost of successfully suing an infringer. Just the attorney fees alone average 1-3 million dollars per side for a full patent infringement jury trial. The key for a small inventor is to find a qualified, experienced patent litigator who will take the case on a contingent basis. In a contingent fee case, you do not pay any attorney fees unless you win. Convincing an attorney to take your case on a contingent fee basis means having a broad, high-quality patent, with damages large enough to justify the cost of going to trial. With a bad patent, it will be very difficult to a quality lawyer to take your case on a contingent fee basis.

Do the Legwork First
Determining whether or not you should pursue a patent on your invention takes some time. Find people you trust, attorneys, accountants, successful inventors and/or other business professionals who will sign a confidentiality agreement and help you build a business plan. If your business plan indicates a patent is a good idea, ask your advisers to recommend a patent lawyer. If they don’t know of anyone, ask them who they would ask for a recommendation. Search the patent lawyer’s name on Google Patent to see the kind of technology with which the patent lawyer is familiar. Check ratings agencies like Martindale-Hubble to see how the patent lawyer’s peers rate him or her (an “AV” rating is the best). Ask if the patent lawyer offers a free consultation and take them up on it. Ask them if you should get a patent and see what they say.

Brett Trout

Posted in Patent Law. Tagged with , , .

The Mobile Patent Wars – Google, Microsoft and Apple

“[O]ne of the most effective ways to respond to a threatened patent assertion is to be able to assert patents of your own,” says Google’s patent lawyer, Tim Porter. Porter made that statement in response to a question about why Google was still buying up patents. Despite Google’s recent patent acquisitions, Porter believes “the current system is broken.” Overly-broad software patents, granted during a salad days of software patent grants prior to 2007, says Porter, are fueling litigation. Despite Google’s concerns over software patents, the company paid $12 billion to acquire Motorola and its portfolio of over 17,000 patents. From Porter’s perspective, Google has no choice, but to join in the patent arms race. “But the concern” says Porter, “is that the more people get distracted with litigation, the less they’ll be inventing.

Horacio Gutierrez, deputy general counsel for Microsoft, sees things a little differently. Gutierrez sees Google as “standing on the shoulders,” and reaping the benefits, of predecessors like Microsoft. To Gutierrez, patents are what drive innovation. Microsoft has already negotiated ten license deals with Android partners. For 2012 alone, Microsoft is poised to earn nearly $444 million in Android license fees. You need patent protection, opines Gutierrez, to encourage companies to the spend the millions of dollars, and years of effort necessary to develop new technology.

Up until recently, Apple and Google were in completely separate markets, and the relationship between them congenial. Once Google launched its iPhone-killer Android, the gloves came off. In the last month, Apple, along with Microsoft and Research in Motion, outbid Google to acquire $4.5 billion in patents from Nortel. Instead of suing the leviathan Google directly, Apple is suing the smaller companies that make Android hardware, like HTC. In its lawsuit against HTC, Apple alleges HTC’s android phone is too close to the iPhone. Google is assisting Android partners like HTC, even selling a patent portfolio to HTC, that HTC used to sue Apple. Apple is also attacking Google at its heart, releasing the audible search engine application Siri, that experts say will soon spread across nearly all Apple platforms. Before his death, Steve Jobs told his biographer that Jobs would spend his last dying breath, and every penny of Apple’s $40 billion in cash to destroy Android. Jobs felt Google stole the Android from Apple, and Jobs was willing to go “thermonuclear” to right the perceived wrong.

Small Inventors
As the players continue to wage lawsuit after lawsuit in the mobile platform patent arena, and Congress continues to tweak its rules on allowing software patents, small inventors may end up the losers. The USPTO has come a long way since granting such infamous patents as the Amazon “one-click” patent, but the system still has a few bugs. To address those bugs, and the unprecedented expanse of patent infringement litigation, Congress passed a major change to United States patent law. The Leahy-Smith America Invents Act, (AIA) will add some consistency to the mix, thwarting patent trolls and spurring innovation. Unfortunately, what promises to makes the AIA work more smoothly for behemoth corporations, may harm smaller inventors, who lack the resources necessary to take advantage of the protections the AIA affords. With many provisions of the AIA not taking effect until next year, however, by the time we learn the true cost of Congress’ latest effort to ease the battle of the Titans, it may be too late for many small inventors.

Brett Trout

Posted in Patent Law. Tagged with , , .

What Inventors Need to Know About The New Patent Law

Touted as a boon for inventors, the “Leahy-Smith America Invents Act,” (AIA) the largest patent overhaul in over a century, is looking more and more like a boon for patent lawyers. So what are the key changes, and how do they affect you.

First to file
The first-to-file provision of AIA moves the United States closer toward harmonization with the rest of the world. The AIA is a first-to-file system, but gives inventors a one-year grace period for filing after the public disclosure of details of the invention originating from the inventor. Previously, the United States had a first-to-invent system, giving inventors an opportunity to test their inventions before spending the money for patent protection. This change gives inventors a huge incentive to file a patent application as soon as possible. While this does not add much of a burden to large corporations, it can inflict quite a financial burden on smaller inventors.

Fee Increase
While the AIA promises patent fee reductions for small inventors down the road, the immediate affect of the AIA has been a 15% patent fee increase across the board. At some unknown date in the future, small inventors will ostensibly qualify for a 50% fee reduction (actually 42.5% if you factor in the immediate 15% increase and assume no additional fee increases in the interim).

Prioritized Examination

For $4,800, inventors can move their patent applications to the top of the examination heap and obtain a yeah or nay on their patent application within one year. Given the cost, this new program will likely benefit large corporations more than small inventors. Additionally, it would seem like shifting patent examiners toward these prioritized examinations runs the risk of delaying examination of other inventors’ applications beyond the current twenty-eight month turnaround.

Patent Marking
The AIA revises the old law on marking your invention with a patent number. Previously, anyone could sue you for false marking. Now, only the government and entities actually suffering an injury can sue you for damages associated with false marking. Additionally, the AIA allows you to mark your item with “patented” or “pat.” and provide a URL where the actual patent numbers can be found. Both of these provisions benefit smaller inventors, who often have a more difficult time keeping their required patent markings up to date.

Prior Use Defense
In 1999, the American Inventors Protection Act allowed accused infringers of “business method” patents to use the defense that they had been using the business method commercially more than one year before the inventor filed the patent application. The AIA extends this defense to a much broader array of subject matter, including processes, machines, manufacture, and compositions of matter used in a manufacturing or other commercial process. Given that they are less likely to protect their inventions, this new provision appears to be beneficial to smaller inventors.

Best Mode
While inventors must still describe in their patent application the “best mode” for practicing their invention, the AIA now prevents defendants from invalidating patents on this ground. As smaller inventors are probably more likely to run afoul of the best mode requirement, this change is good for small inventors.

Patent Trolls
Patent trolls are companies that do not manufacture anything, but simply buy up patents and sue people with them. While the AIA was touted as a troll killer, it ended up with very little teeth in this regard. One provision that did make it through was that it is now tougher for a patent troll to group several defendants together into one lawsuit. This makes it more difficult and costly for a patent troll to sue smaller inventors.

Pre-Issuance Attacks
Starting next year, third parties will be able to submit prior art to the Patent Office, along with a concise description of the relevance of the prior art. While these pre-issuance attacks may end up strengthening any resulting patent, a well-funded third-party may be able to use this new system to spend a smaller inventor out of a patent before it even issues.

Post-Grant Attacks

The AIA provides a new supplemental examination procedure. Under this procedure, the patent owner may request the Patent Office “consider, reconsider, or correct information believed to be relevant” to a patent. The main benefit of this supplemental examination procedure appears to be that it allows a patent owner to preemptively address issues relating to allegations of inequitable conduct during prosecution of the patent application.

Third parties will still be able to attack patents post grant. Under the AIA, a third-party can initiate an ex parte (the third-party is not allowed to participate in the review) post-grant examination by submitting to the Patent Office published prior art references, along with details as to why the references raise a “substantial new question of patentability.” If the Patent Office finds the prior art does raise a substantial new question of patentability, the reexamination proceeds without the third-party.

The AIA also provides for a new post-grant review. Any third-party may request the cancellation of one or more patent claims granted within the previous nine months. The Patent Office may authorize the post-grant review if the petitioner presents information that, “if not rebutted, would demonstrate that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.” The petitioner is not limited to using only settled law under this type of reexamination. The petitioner may make also raise “a novel or unsettled legal question that is important to other patents or patent applications.” This appears to be a mechanism to take the interpretation of patent laws out of the hands of courts and place it into the hands of the Patent Office.

For inter partes (the third-party participates in the review) review, the AIA creates a new Patent Trial and Appeal Board (PTAB). Third-parties must wait at least nine months after the patent has been granted to request an inter partes reexamination. Once an inter partes examination is requested, the PTAB determines whether there is a “reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” This is a higher standard than the ex parte “substantial new question of patentability.” If the petitioner fails to raise an issue that could reasonably have been raised, such as a known piece of prior art, the petitioner may be estopped from using that prior art in the future. Such estoppel, however, would not bind any defendant not a party to the inter partes reexamination.

While the AIA changes to post-grant patent examination would appear to generate better vetted patents, the time-consuming and costly procedures could bankrupt a small inventor before they can even bring a lawsuit for patent infringement. Unlike a lawsuit, with the potential of a monetary judgment to entice an attorney to take the case on a contingent fee arrangement, pre-grant and post-grant examinations offer no such enticement. Small inventors will have to finance them out of pocket.

Touted as a boon to small inventors, the benefits the AIA provides to small inventors are tiny, and the detriments large. The main downside to small inventors is the requirement that they race to get their patent attorneys to file patent applications for them as soon as possible to avoid losing their patent to a larger corporation with the finances to file early and often. Only time will tell just how good or bad the AIA is for small inventors. One thing for sure, however, is that the Leahy-Smith America Invents Act will certainly provide patent attorneys with job security for many years to come.

Brett Trout

Posted in Internet Law, Patent Law. Tagged with , , , .

The Flyover Effect – Trademarks, Patents and The Rebel Alliance

If you have never heard my voice, or if you have and you are dying to hear me wax philosophic on the wonders of intellectual property law, check out the latest episode of The Flyover Effect – Trademarks, Patents and The Rebel Alliance.

Posted in Internet Law, Patent Law. Tagged with .