Apple Ordered to Pay $625M to Patent Troll in FaceTime Lawsuit

http://techcrunch.com/2016/02/04/apple-ordered-to-pay-625m-to-patent-troll-in-facetime-lawsuit

by arbuge • 10 years ago

176 160 10 years ago

mariusz792• 10 years ago

One patent troll has to pay another patent troll.. Good.

ReAzem• 10 years ago

That is what I think. It's not a huge problem for Apple. It seems like to stay competitive in this market you have to play the troll's game and Apple has shown many times that it knows the game very well. In the end, it probably balances out. I'd like to see numbers on this.

The real issue is small players getting buried under legal fees.

mariusz792• 10 years ago

Hopefully if the big boys get burned by trolls, they will finally decide to do something about the current patent system.

TazeTSchnitzel• 10 years ago

Apple getting trolled sucks for the rest of us too sometimes. FaceTime was going to be an open standard.

mcherm• 10 years ago

Perhaps apple ABUSES patents (that's a different discussion I do not want to get into), but I prefer to reserve the term "patent troll" for those individuals or organizations that do not actually perform invention nor manufacture, sales and marketing of actual products.

bryanlarsen• 10 years ago

That's a little bit too narrow. There are lots of companies out there that manufacture products but derive a large percentage of their revenue from patents. For example, the chips that Qualcomm makes have been described by some as a loss leader to hide and justify their very lucrative patent licensing business.

mc808• 10 years ago

That doesn't seem like a very useful distinction. Suppose new patent troll legislation comes along that would prevent enforcing a patent that isn't actively being used or developed (similar to trademarks). The trolls would just produce a cheap gizmo that depends on the patent in some way, and then blame the lack of sales on patent infringement. They'd colloquially still be called "trolls" based on a subjective judgment that they aren't really serious about selling the gizmo.

When someone calls Apple et al. a patent troll, I think it's from the perception that they 1) apply for overly broad or obvious patents, and 2) enforce the patents offensively. Also a very subjective definition, but it doesn't seem any worse than arbitrary "uses/plans to use" criteria.

piyush_soni5• 10 years ago

I use that term for companies judging from how useless the patent they are defending is. Like "slide to unlock", "rounded rectangles of the device" etc.

SCHiM• 10 years ago

Ugh, disgusting. Think of how much damage that troll will now be able to wreak.

With that kind of money it can buy all sorts of other patents and start the whole progress over again.

ethbro5• 10 years ago

What we really need are patent co-ops.

The problem as I see it is: patents exist to allow innovators to get paid for their inventions (setting aside the USPTO not being able to do its job correctly due to under-funding and granting bad patents), patents therefore have a monetary value, however that monetary value in fact scales with the monetary resources of the company it's held by (i.e. small companies cannot legally afford to enforce patent claims against behemoths that decide to fight), therefore there is a market incentive to create patent trolls (which increase the value of all patents by pooling them and amortizing prosecution cost/risk over a larger number of patents).

It would seem like if you instead pooled patents in a co-op arrangement, retaining ownership by their original creators, but pooling them with others for efficiency / risk purposes and to obtain the necessary scale for optimal enforcement. Then work out some amiable proceed-sharing method on the backend.

Win/win, and reducing the incentive for patent troll companies by providing an alternative. (Caveat: bad patents still need to be fixed at the USPTO source via additional funding / subject matter expert examiner requirements)

Is something like this at all feasible legally? Or does something prevent the batching together of patents from various actual owners under a single legal proceeding?

Retric2• 10 years ago

The problem is defecting becomes valuable. If I have a great patent, then selling to a troll let's me 'cash out' without needing actual customers.

gnaritas2• 10 years ago

The problem as I see it is: patents exist to allow innovators to get paid for their inventions

That is not why patents exist. Patents exist for the good of mankind to convince innovators to share their trade secrets with the public. Paying those innovators is not the goal, it is the means by which the goal is achieved, making the inventions public. You've confused the carrot for the end goal.

Anyone wanting to think about how to fix patents needs to first understand what the goal is, and paying inventors is not the goal.

nemild• 10 years ago

Why not a bounty amongst the industry for whoever takes a patent troll to court and wins?

The way it works now is that most defendants want to settle because the legal costs are too high for the defendant, and the patent trolls know this. If the defendants pooled their money for anyone who took them to court and won (not even a full patent co-op, which has its own challenges) - would that change how the patent trolls did their math - and diminish their ability to sue many parties?

maxerickson• 10 years ago

MPEG-LA is pretty much a patent coop.

EarthMephit• 10 years ago

Will membership in a patent co-op protect against a patent troll?

- A patent troll has no products, which could infringe on a co-op's patents - So they can still sue you without risk of retaliation.

- A patent troll often has a financial structure designed to protect any assets that it wins through lawsuits (For instance, maybe if they win a lawsuit they could immediately pay a dividend to shareholders). So even if you win a lawsuit against them the main assets they hold are dodgy patents.

colordrops• 10 years ago

The system is already severely broken, so this wont make things any worse for individuals and small organizations. It's just shifting of power from one patent troll to another. Apple is not a traditional patent troll, in that they actually build and sell things, but they do spend inordinate amounts of money subverting the system and patenting things that never should have been patentable.

kamaal• 10 years ago

>With that kind of money it can buy all sorts of other patents and start the whole progress over again.

Or just quit, $625 million is a lot of money. You can only do that much dirty work.

Plus you don't wan't to milk the cow to a point it bleeds and dies.

Cuuugi• 10 years ago

I don't understand. If "all four of VirnetX’s patents have been found invalid by the patent office" as Apple claims, why hasn't the case been dismissed?

sageikosa• 10 years ago

http://arstechnica.com/tech-policy/2016/02/jury-apple-must-p...

"East Texas Jury"...

bbarn• 10 years ago

I don't get this. Is there some paid off official there? Different standards? Why is it such a great place to win patent troll suits - which seem to get overturned in higher courts? Is the idea that a win there will stop the defendant from trying to appeal?

Oletros3• 10 years ago

I have not found any information about those invalidations.

DannyBee4• 10 years ago

Here's a real answer (unlike the other "corruption" and "blah blah blah" answers):

First, note that the federal circuit has ruled on these patents before, and upheld them. http://patentlyo.com/media/2014/09/Virnetx-v-Cisco.pdf

Apple conveniently leaves this part out.

(i think it's a BS ruling, but it is a final appeals court ruling on the validity of the patents).

As for the PTO finding them invalid:

If you look at the file wrappers of these patents, you will see what apple means is "someone has requested review of these patents by the PTO, and they have initially been found invalid".

(Apple's request to review validity was in fact, denied)

Go to http://portal.uspto.gov/pair/PublicPair Enter the patent numbers Click "image file wrapper".

So they haven't "been found invalid", instead, they are going to trial before the PTAB to see whether they are invalid.

Note: On a number of these patents, Apple's review requests have been denied a number of times before someone else's review request was granted

piyush_soni5• 10 years ago

So as usual, Apple is lying/misleading people here. At least 'technically'.

bobwaycott4• 10 years ago

Exactly what I was going to ask.

dangerlibrary2• 10 years ago

Interestingly, the four patents in question cover ways of initiating a secure connection via DNS - nothing about video transcoding or low latency communication, which was my first guess.

http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=H...

robotnoises• 10 years ago

From the VirnetX website:

http://virnetx.com/company/virnetx-promise/

"Cutting-edge secure communications technology is only one of the essential elements of our products – another is integrity. ..."

lol, what products?

josaka2• 10 years ago

FWIW, it looks like they acquired these patents from a company that actually does make something. https://en.wikipedia.org/wiki/Science_Applications_Internati...

This is speculative, but these patent filings were probably part of a patent filing strategy that helped justify the employment of a what was likely a decent number of engineers by the original owner.

st3v3r6• 10 years ago

I really can't say I care about those jobs. The engineers would have more than likely found other jobs with actual companies that actually do stuff.

piyush_soni5• 10 years ago

http://virnetx.com/virnetxs-gabriel-collaboration-suite-now-...

Not sure if they're actually out there, but at least their website lists one product.

veritas20• 10 years ago

It's actually sad that this company with only patents and no products is a listed public company on a regulated US exchange.

_da_• 10 years ago

Their shareholders probably don't mind - their share price is up 50+% today. http://finance.yahoo.com/echarts?s=VHC+Interactive#{"range":...

pmarreck• 10 years ago

@GabrielSecure is their (inactive, what a surprise) Twitter account, FYI.

Oletros3• 10 years ago

And another case with software patents and a patent troll, how much damages they have done

kbenzle• 10 years ago

If this is the kind of impetus needed to set off patent reform, all the better. I would argue against the "Troll" label, it is a legal firm doing its job very well. The Troll bashers I assume would prefer the companies to just leave this $ to the infringes? Why? Is it somehow immoral to use the legal system for financial gain? No, it is not, not at all. I'd say good on them for finding the loop holes and driving their $600M lorrie straight through it to the bank. Don't say fuck the trolls, fuck the patent system in the US which Apple has used to the detriment of many young companies too, they are all playing the game.

replies_to_all3• 10 years ago

Yep, if the "trolls" are trolls so is Apple, Adobe, Microsoft, Google, all of them, are we saying the US is made up of all trolls?

st3v3r6• 10 years ago

"Trolls" don't do anything with the patents other than sue people. You'd be pretty hard pressed to say those companies don't use their patents.

dangerlibrary2• 10 years ago

Typically the 'troll' label is applied to companies like Virnetx because they produce nothing of value. They are strictly rent seekers - net negative economic value creators.

"It's a massive verdict for VirnetX, a company that has no products and makes its money solely through patent litigation."

kbenson2• 10 years ago

Even that's selectively looking at the facts though. At some point they paid for those patents, and that theoretically put money in the pockets of creators, incentivizing them to create more.

That said, to my eyes it's clearly a subversion of the intended purpose of patents, and is societally damaging, so I see no problem with derogatory labeling of this behavior and those that take part in it. It's unfortunate, but it's an important part of getting consensus in a short time frame with a large populace.

Bjartr• 10 years ago

Wait, what? Since when is exploiting the legal system for financial gain not immoral?

replies_to_all3• 10 years ago

Since lawyers existed?

st3v3r6• 10 years ago

" Is it somehow immoral to use the legal system for financial gain?"

Yes. Yes it is.

blisterpeanuts3• 10 years ago

I have a modest proposal to get rid of these patent trolls and these ridiculous settlements that typically are decided by a jury of West Texas farmers.

Patents ought to be designated a non-transferrable property. Inventors may create a trust that receives patent revenues, and direct those revenues to any entity they please (their own company, their heirs, another company, a charity, etc.) but would not be able to actually sell the patents to any other company or individual.

Then, patent holding companies would evaporate, and the revenue for ideas would go to those who created the ideas. If a company created many patents, say, Kodak, then goes out of business, it would leave behind a trust that would continue to receive revenue on those patents until they expired. If you choose not to, you can forfeit the patent and then it becomes public domain.

ant6n• 10 years ago

So the patent trolls will simply sue on behalf of the owner and collect a 90% 'fee'.

Oletros3• 10 years ago

Are you saying that companies can't bought other companies and take ownership of their patents?

blisterpeanuts3• 10 years ago

Oh well, I guess that's the loophole in my proposal.

But at least, a patent troll would have to buy an entire corporation rather than just its patent portfolio. Kodak, again: if let us say Toshiba wants Kodak's imaging patents, they'd have to buy Kodak in its entirety. At least this would raise the bar to acquiring patents.

stephenhuey• 10 years ago

Small but important quibble from a Texan's viewpoint: these settlements are being decided in East Texas which is over 500 miles from anywhere in West Texas (imagine the distance from Cincinnati to NYC), and I think the juries there have more people in poverty than farmers.

such_a_casual3• 10 years ago

Or how about we hard delete all software patents since they are absolutely ridiculous? Goodbye $600mil flow charts.

blisterpeanuts3• 10 years ago

I'd go with that.

knodi123• 10 years ago

But if we don't have software patents, how else will we incentivize mega-corporations like amazon to invent innovative new technologies like a 1-click checkout button?

jeffdavis• 10 years ago

I think you've misdiagnosed the problems. They have little to do with transferability.

1. Patents are a crap shoot.

2. No realistic means to recover legal fees if you do fight.

3. So it's a one-sided crap shoot.

You could say that being a NPE is a part of #2, but there are easier ways to fix it: just require posting a bond when suing for patent infringement. If you lose, some or all legal expenses will be deducted. If you win, you get the whole thing back.

pbhjpbhj• 10 years ago

2. No realistic means to recover legal fees if you do fight. //

It's normal elsewhere to award costs to the defendant when the plaintiff/complainant is unsuccessful in a civil suit (particularly if the judge finds it lacks merit). AFAIU this doesn't happen in US courts - why on Earth not?

clort• 10 years ago

anyway that won't work because.. you thought you were buying that software eh? Nope, you are just licensing it.. You thought you might buy a john deere tractor? Nope.. you just licensed the right to use it. sure, you might own the axle nuts but not the software that drives the engine. You say they can't sell the patent? Oh thats ok, they will just license it..

the real problem is that simple & obvious processes are granted patents by the US patent office, and that is what needs to be fixed first.

zanny3• 10 years ago

Can we just please abolish patents? Not just software patents, all of them. Can anyone give me an example of a patent issued in the last twenty years for a novel invention that then proved wildly successful and either protected the inventor from competition or even more importantly led to a lawsuit where the creator successfully beat a large company trying to copy their idea? And even if you can - is the exception outweighing the social cost of the insanity that is our immense tumor of IP lawsuits and intellectual creativity restriction that comes with it?

Fundamentally the courts are today rigged entirely for those who can afford the best lawyers and fight in a quagmire the longest. Even if you do invent something original, these large companies know they can just bleed you dry in court and ignore your patents anyway.

Yet I do not personally see anyone not being inventive or trying new ideas in the absence of a working patent system to protect their monopoly rights to their ideas. Is anyone today waking up the morning thinking "I'm not going to try new ideas because I won't be able to defend patents I file for them against megacorps". I highly doubt that. The people that create the things that are most valuable to us are products of environments that enable them to conduct the research in the first place (IE, they often don't have to do day labor to survive, or can live very comfortably on reduced work hours) rather than incentivizing "inventors" as a discipline that uses the profits of a state granted monopoly to sustain their business.

I mean, even when huge megacorps come up with novel ideas, their competitors will sick lawyers on it and find the closest approximation they can get while having the highest probability of defeating a patent violation lawsuit. And I really hope we are not writing IP law for the sole benefit of international corporations to fund an entire industry of lawyers to waste money arguing about the infringing width of a progress bar.

macintux2• 10 years ago

Big pharma, for all its flaws, does in fact provide value.

And drug research & development absolutely relies on patents. If you spend half a billion (or more) developing a drug and generic drug manufacturers can immediately sell it for a few cents a pill, how do you recoup your investment?

I agree the patent system is broken, but abolishing it entirely isn't the answer. Perhaps revoking the business method patent decision is our best hope of regaining some level of sanity: https://en.wikipedia.org/wiki/Business_method_patent#The_cha...

riskneural• 10 years ago

Makes Google's UK tax bill of 130 mill seem small.

collyw• 10 years ago

It was small compared to their profits.

mythz3• 10 years ago

Now this Patent Troll has even more ammunition to shakedown companies in future whilst encouraging creation of even more low-life leeching NPE's.

Clearly Patent Trolls adds negative value, harms progress and increases cost of business - how long will this legal racketeering be allowed to continue?

replies_to_all3• 10 years ago

Or maybe they act to keep the big players honest?

mythz3• 10 years ago

The big players can afford it, their existence just adds a barrier to entry and causes more harm to young/unestablished companies.

st3v3r6• 10 years ago

If these were companies that actually did something, instead of waste everyone's time and resources, you'd have a point.

JackFr2• 10 years ago

low-life leeching NPE's

NullPointerExceptions?

mythz3• 10 years ago

Non Practicing Entities - i.e. trolls.

acomjean• 10 years ago

is it my or does 625 million seem a tad excessive for a feature of the phone that isn't totally central and probably is used by maybe 20% of phone users?

Apple has sold maybe 800million iOS devices. Say 400 million that support FaceTime. $1.50 per device. wow.

Or 625,000,000/ 14 employees.

comex• 10 years ago

Almost as much as the $1B Apple was originally supposed to win from Samsung for equally silly patents. (It's since been slashed down to a tenth of that, but still.)

Is it too much to say "live by the sword, die by the sword"?

rootusrootus• 10 years ago

What would you do if you were Apple? Would VirnetX have refused to go after them just because Apple had not gone after Samsung for "equally silly" patents?

Seems like what you really want to say is "don't hate the player, hate the game."

shawabawa3• 10 years ago

Seems like what you really want to say is "don't hate the player, hate the game."

More like, "Hate the game, and hate the player for playing it"

Instead of everyone joining in the patent suing racket, these big players should be lobbying for the laws to be changed

zanny3• 10 years ago

I believe Google has made numerous pledges not to aggressively attack others with their parents the way Apple and trolls are doing it.

I think Facebook might have also done it too - wasn't there some kind of anti-trolling pact between several major software patent holders?

draw_down• 10 years ago

If you like. But Apple is not a "non-practicing entity"

TallGuyShort• 10 years ago

I'd say that's part of the definition of being a patent troll, but not part of the definition of engaging in patent trolling.

st3v3r6• 10 years ago

Yes. Remember, Apple never started asserting their patents until they were sued by numerous patent trolls and Kodak and Creative.

kelukelugames• 10 years ago

It's not over yet. Apple will appeal.

DannyBee4• 10 years ago

So, virnet is a spin-off of SAIC. SAIC is definitely not a troll (though i could believe virnet is :P).

bitmapbrother• 10 years ago

I must say it's rather funny that Apple is basically passing along their Samsung patent money onto VirnetX.

wnevets• 10 years ago

A patent troll getting patent trolled, great.

chrisgd• 10 years ago

I should totally be a patent troll. Are there any MOOCs that cover this?

Jemmeh• 10 years ago

A MOOC to be a mook.

Animats• 10 years ago

If they won in court against Apple, they're not a "patent troll". They invented something which Apple copied.

Apple has patented, and tried to enforce, the claim that they have the exclusive right to devices with a screen on the front and round corners.[1] They lost, but they're still litigating that.

[1] http://fortune.com/2015/08/19/apple-patents-rounded-corners/

bobwaycott4• 10 years ago

Not at all. With how widely known patent trolling is, there's nothing inherent in a patent dispute victory that signifies the patent protects a valid invention and that the party suing isn't a troll. All it means is that the troll succeeded in their trolling. That's equivalent to suggesting that if a person was found not guilty of a crime they actually committed, they didn't actually commit it.

The legal system does not adjudicate reality.

PS: The rounded corners patent is equally offensive as those bought up and profited from by trolls in the courts. Patents don't intrinsically signify authentic invention. They should, but there are far too many counter examples to rely on such a claim.

nickpsecurity2• 10 years ago

A company patented the concept of making toast well after toasters were on the market. Another patented recurring payments of online service long after that was normal. Another guy modified a patent to cover podcasting after podcasting was invented and in use.

Point being, something being patented != something being invented. It just means examiners agreed with the claims of a piece of paper then turned that into a piece of intellectual property. The wins then mean courts agreed that claims in that property match some other product to some degree. Neither means someone copied someone. Whether that's true varies on a case by case basis.

I think it's telling that many defendants develop their own, "infringing" tech without ever hearing of the plantiff or their patents. Hard to copy what you don't know exists. In science, we call it independent invention but patent system makes that impossible. Plus, on software patents, what programmers have you met who comb through patent databases to solve their day-to-day problems? I've never met one.

Concluding, patents are legal pronouncements that may or may not cover inventions. Rulings on copying may be right or bullshit. Copying is usually unknowing or independent invention because nobody solves problems with patent databases in our industry. I remember running into maybe 3 or 4 worth looking at in Google search solving a problem. One was novel but others patented ideas already in products or Comp Sci literature. Well-known ideas that were foundational to product success. (sighs)

Lawtonfogle• 10 years ago

Point being, something being patented != something being invented.

But it is still a valid patent. Don't say that specific patents are invalid, realize that the very concept of patents are invalid.

nicky0• 10 years ago

Bear in mind that this was a design patent, not a regular (utility) patent.

profeta• 10 years ago

considering that apple is in itself a patent troll of the worst kind (buying companies with interesting patents, such as FingerWorks, and forbiding any and all licensing on those patents) i'm not even mad with this news.

cloverich• 10 years ago

That doesn't fit my understanding of Patent troll -- buying Patents, not making anything, then blanket suing companies to try and make a living. Not defending Apple's behavior as such, but it seems to not be the same thing.

WalterBright2• 10 years ago

The large companies seem to be constantly in patent battles, often with each other, both as plaintiffs and as defendants. They win some and lose some. Since this is unproductive activity, due to lawyer bills and the diversion of attention from their core businesses, it simply must be a net loss for those players.

Why don't they call each other up, declare a truce, and cooperate in lobbying Congress to fix (i.e. largely repeal) patent law?

iraphael• 10 years ago

Truces are declared to some extent with patent pools. Not a lot of action towards lobbying Congress for patent reform, though (which is very needed).

http://www.wipo.int/export/sites/www/ip-competition/en/studi...

bobbles• 10 years ago

Doesn't work when the companies in question exist purely for patent lawsuits

WalterBright2• 10 years ago

Right, but if Google Apple Microsoft Amazon etc. get together and lobby to end software patents, they can overwhelm the trolls.

iwwr• 10 years ago

Large companies are not endangered by patent lawsuits, not even from trolls. They have enough power to fight most suits and even when they lose it's not a big sting. Patent portfolios allow the giants to consolidate their position and defend against competition from smaller companies. Economies of scale in terms of lawyers is what small companies don't have and giants aren't shy about threatening smaller players who may pose a threat (although they usually just buy them out).

azth• 10 years ago

Why doesn't the legal system immediately dismiss such lawsuits by the patent trolls? It is obvious what they're after.

notacoward• 10 years ago

Because courts adjudicate laws, and it's the laws that are broken. The alternative would be courts that just make up their own versions of the law, which has its own problems. Among those is the tendency for patent trolls (or their equivalents in other kinds of cases) bringing suit in whichever jurisdiction is friendliest to them, and there's entirely too much of that going on in East Texas already.

mankash666• 10 years ago

In light of Apple patent trolling the Samsungs & HTCs on curved rectangles, is this just karma?

Apple Ordered to Pay $625M to Patent Troll in FaceTime Lawsuit

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