MaxwellKennerly

I'm the author of that. It's dated, though to my knowledge none of the issues there have yet been resolved, and the trial is scheduled for February 2013. Seth Finkelstein noted < http://sethf.com/infothought/blog/archives/001476.html > that a new indictment has been filed, though it is not, at least in my brief skimming, substantially different, it just fills out the details.

There is a much bigger issue in this case, one that comes up surprisingly often: criminal prosecution for "exceeding authorized access." Should we prosecute people who use online services in violation of their Terms of Service? Of employees who, without installing malicious software, snoop around their networks for stuff they shouldn't be seeing? Is any of that worthy of criminal penalties?

Of course not, and it bears repeating that this patent doesn't cover any of the underlying technology that makes the iPhone actually work as a phone, it merely covers part of the appearance of the UI, an appearance that any competent programmer can replicate on a whim.

I am contending that you can't patent a user interface you see in a sci-fi movie, which is what Apple did here. What they patented is no different from patenting the way the command module looks on the Enterprise. Do you think that Apple should be able to patent, say, the use of oval icons?

Look at the prior art cited by the patent: http://www.google.com/patents/US7469381

Read the file wrapper and the notice of allowability. Here is Apple's great triumph in claiming an invention as compared to prior art:

"The following is an examiner's statement of reasons for allowance: In regards to the independent claims 1, 19 and 20, the prior art found does not teach in response to an edge of the electronic document being reached while translating the electronic document in the first direction while the object is still detected on or near the touch screen display: displaying an area beyond the edge of the document, and displaying a third portion of the electronic document, wherein the third portion is smaller than the first portion; and in response to detecting that the object is no longer detected on or near the touch screen display, translating the electronic document in a second direction until the area beyond the edge of the electronic document is no longer displayed to display a fourth portion of the electronic document, wherein the fourth portion is different from the first portion; in combination with all of the other claim limitations."

Do you consider that extremely narrow tweak to a user interface a novel and useful invention worthy of patent protection?

But it had occurred to other people, and lots of them. You can even watch Tom Cruise pinch-to-zoom, and scroll by waiving his hands.

Look at the prior art in the patent itself, e.g.:

US5844547 May 9, 1995 Dec 1, 1998 Fujitsu Limited Apparatus for manipulating an object displayed on a display device by using a touch screen

US6567102 Nov 25, 2001 May 20, 2003 Compal Electronics Inc. Touch screen using pressure to control the zoom ratio

US20050168488 Jan 31, 2005 Combination tool that zooms in, zooms out, pans, rotates, draws, or manipulates during a drag

All Apple did was jumble these same longstanding into some arguably-new form, and, viola, they had a patent for something everybody was doing.

I doubt you really contend that, in late 2007, Apple invented scrolling and zooming with your fingers, or that you contend that Apple's implementation was substantially different (and both novel and useful) from those prior forms. If you don't contend either of those, then why, exactly, should Apple have a patent over their implementation, which was at best modestly different from prior implementations?

How hard do you think it is to implement scrolling, the rubber band effect, and pinch-to-zoom on a display screen?

Answer: not hard at all. In fact, it has been trivial for years. The hard part is implementing it in a cost-effective, reliable manner — something that Apple did with industry-leading industrial design/manufacturing efforts, not through patented technologies. But that's not what this case was about.

If this case involved Samsung bribing Apple employees to reveal the secrets at the Foxconn plants in China, then I would completely agree with you that that is wrong and that Samsung has broken the law by stealing a competitive technology. But that's not what's happening here; ironically, Apple is deriving part of its competitive advantage from using Samsung!

What's happening here is that Apple is suing Samsung over silly, trivial, and peripheral issues that played a modest (if any) role in the iPhone's success, silly, trivial, and peripheral matters that, unfortunately, have been granted the strongest property right in American law, which is a monopoly of their direct or indirect use by anybody.

The patent system is supposed to encourage the commoditization of inventions by using a trade-off: if you invent something novel and useful, you can get a patent that gives you a complete monopoly for a limited amount of time, but in return you have to completely disclose how your invention was made, so that, first, others can see if the intention would be useful for them right now (and thus negotiate a license with you) and, second, once you're patent expires society can easily reach for and utilize your invention.

Unfortunately, that process has been turned on its head, so that patents are routinely granted for designs, devices, and methods that are already effectively commoditized or simply don't work patent protection. The iPhone's design is undeniably visually appealing and user-friendly, but it is by no means an "invention." It is a form of user interface, something that has already been held to not be patentable, and it is a form of branding, something that is protected, but through trademark law, not patent law.

I find this situation disturbing for the same reason I find it disturbing that pharmaceutical companies spend more on advertising than they do on research and the belt. Consumer electronics companies should not be investing the bulk of their resources playing legal games with one another over non-disruptive "inventions" like the idea to use asynchronous processing to make sure video and audio lines up. They should be using their resources making phones that are better and more alluring than one another.

Bear in mind that Congress hasn't done anything to change the types of things that can be patented; under the Act, the patent for thermal refreshing of bread would still be appropriate. Software patents are still all the same.

The critical part there is how, as you noted, "most troll patents come from small entities." Raising the cost and time of obtaining a patent will have only a modest effect in stopping people from attempting to file for these weak patents, but will have a major effect in compelling them to assign the patents to larger, better-capitalized entities with greater capabilities in pushing the patents through the process, like IV.

It is counterintuitive. I wouldn't have thought this would be the result had I not seen the same thing happen in securities litigation: Congress attacked the nuisance suits and ended up making the biggest securities law firms far stronger and more profitable. Counterintuitive, but demonstrated empirically in another field.

Thanks for the link. One very notable part of the Facebook dilution is that Eduardo signed on to a shareholder agreement authorizing it, at least in part. We unfortunately don't have the agreement in question to see how it worked, though it seems that, by way of the agreement, Eduardo was not invested in the new entity as fully as he should have been.

The interesting question is if he ended up with roughly the same share he would have if Facebook had simply taken on the new investors and not tried any "dirty tricks."

IANYL, but I'd say this: if you're at the point where you have more than a basic agreement with co-founders, you want a thorough, diligent lawyer working with you on these issues.

The point is that both lawyers and clients should understand their roles. The lawyer's primary job is to explain to the client the legal consequences of a given course of action. Preferably, the lawyer will have the clients non-legal interests in mind that the same time, so that they can have an intelligent discussion about weighing the risks and benefits of a given course of action.

Correspondingly, clients should understand that lawyers are there to give advice. They are not there to give direction; they are there to give advice. It's always better if the client and lawyer both understand the clients strategic goals, so that they can have, as described above, an intelligent discussion about weighing the risks and benefits of a given course of action, but the overall purpose of the lawyer is merely to give advice.

That's a valid point. I discussed the suit as a single invention; Stark could indeed patent parts of it while treating other parts as trade secrets.

The post has been updated to incorporate your comment.

You're putting a couple carts before your horse there.

First, you presume there's a trade secret. There's no indication that is correct; all I see is a new soon-to-be-sold product that Apple intentionally let off of its campus and into the wild.

Second, you presume Gawker criminally misappropriated or otherwise misused the trade secret. Gawker bought a lost phone. Did they have a duty under California law to seek out its owner? Possibly -- but that's an entirely different question from if they criminally violated trade secrets laws. There's no indication that Gawker had any duty at all to protect Apple's secrets; it's not like Gawker is an employee at Apple. You can't just say that, because a person committed a lesser crime, they necessarily committed all greater conceivable crimes. Same goes for the person who found and sold the phone.

Third, you presume the government had probable cause to believe that each of the items seized from Chen had information relating to a crime. Two problems with that: (a) as noted above, it's unclear a crime even was committed and (b) the warrant was patently overbroad, and its doubtful the government had more in mind than a fishing expedition. That's a plain violation of the Fourth Amendment.

Fourth, where's the fire? There's no on-going crime here. There's no criminal enterprise. There's an isolated, public incident. So why the high priority? Why the extremely aggressive measures of seizing all of a journalists' computers?

Compare and contrast that situation to one of the cases listed on the DOJ website you linked to:

"In support of his plea, Mitchell acknowledged that on September 5, 2007, he emailed much of the contents of a DuPont proprietary spreadsheet document entitled “Denier Economics” to an official with Kolon. “Denier” is a term used to describe the weight per unit length (linear density) of a continuous filament or yarn. The Denier Economics spreadsheet contained highly sensitive business trade secret information related to DuPont’s production capacity for Kevlar® yarn in a variety of denier types. Included in the information for each denier type were specific figures relating to annual production, unit capacity, spin speeds, and several factors relating to line efficiency (such as percentage yield and percentage up time). The Denier Economics spreadsheet was closely held and distributed to a small number of DuPont personnel on a need-to-know basis only."

Now that's a trade secret, and it's a clear misappropriation of it by someone with a duty to keep it secret.

And what did the DOJ do there? Did they start seizing the property of third parties covered by shield laws?

No. They slowly started building a case.

The exact opposite of what REACT did here.

Shoot first, ask later, for high profile crimes is not just the wrong approach, it's unconstitutional and inappropriate. And it demands an explanation.

No doubt, counterfeiting deserves policing. And that's a big part of my point: Gawker posting pictures of a prototype iPhone that Apple lost in the wild isn't counterfeiting. Why, then, should REACT give the case such a high priority to the Gawker case -- and use such aggressive measures -- when it could be out dealing with, as you say, the "quarter-billion dollars a year in lost revenue" from counterfeiting?

The analogy you give about my firm is close, but let's make it exactly on point. Let's presume I have some major class action against Apple and, weeks before a major brief is due, I leave a copy of it on the train and some intrepid blogger posts the whole thing, thereby giving Apple a window into my strategy.

Would this be embarrassing? Of course. Would it prejudice my clients? It could.

Would the police care? Of course not.

The police would tell me that, if I had a problem with it, I should sue the guy. End of story. And, indeed, as I wrote before, if Apple wants to sort out its legal remedies, there is a civil justice system ready and waiting for it.

What's so disturbing here is the aggressive response by criminal law enforcement authorities. If you or me or thousands of other technology companies had complained to the police about an identical incident, we would've been told to seek remedies elsewhere. Apple, however, got the full lawful power of the state and then some in the form of an overly broad and potentially illegal seizure of a journalists' computers.

That's a problem, and its one that deserves some degree of explanation from REACT.

As I put in the post, "A trade-secret claim based on readily observable material is a bust." IDX Systems Corp. v. Epic Systems Corp., 285 F. 3d 581, 584 (7th Cir. 2002).

The most Gawker revealed was (1) features readily observable on the outside and (2) information printed on the components when the device was opened. Obviously, none that would be considered a "trade secret" once the iPhone was up for sale on the market.

Can a feature list be considered a trade secretly few months before the items released? That's a tough one, particularly because Apple itself released this iPhone into the wild, where it was found by a third party. It's not like Gawker snuck into Apple's campus and found some research for products contemplated way in the future, product so far off that Apple had not yet filed a patent on the technology. (By way of background, the whole purpose of trade secret law is to protect things that a person doesn't want to disclose publicly by patenting. Almost by definition, a trade secret has to be something that was patentable, and so far nothing on the prototype iPhone looks like it was patentable.)

All of which brings us back to the central point: it's debatable if Apple even suffered a legally-cognizable injury by virtue of someone bringing publicity to a device Apple, through its employee, left out in the wild. In light of that, and in light of the serious concerns about journalistic shield, REACT should have shown caution. Instead, they took the most aggressive approach they could have.

"Selectively enforcing high-profile offenses is a valid strategy if you want the increased awareness to be used as a dissuader for similar offenses, so, I understand when the prosecution wants to be "overzealous" when it comes to a valuable prototype."

I can respect that. But that also raises a number of questions. Does REACT believe that this incident will create a wave of prototype thefts by journalists? Do they believe that public reaction and civil lawsuits arising from such incidents will be insufficient to deter future individuals contemplating such a crime?

The bigger problem is that we're all doing a post hoc analysis that REACT likely didn't do at all. Maybe it saw a hot story in the news and so dashed off the broadest subpoena it possibly could. Maybe Apple made a few calls. The situation is concerning enough to warrant, at a minimum, an explanation from REACT as to what they thought they were doing. Depending on that explanation, an investigation or sanctions could be warranted.

Frankly, that might happen sooner than we think. I wouldn't be surprised if the EFF or ACLU filed suit on behalf of Chen for the unlawful seizure of his property. Of all places, California is the last state in which you want to start seizing a journalist's computers on a mere hunch that a crime was committed by someone else.

Maybe so. But that doesn't answer the question as to why this stolen phone -- apart from the millions of other items stolen in California and reported to the police -- deserved special treatment by law enforcement, and warranted the use of unusual and aggressive measures to obtain information about it.

It's still just a single phone, a phone that's been returned to its owner. Maybe Apple was damaged by the loss in a way the law recognizes. If so, then they can file a civil lawsuit just like everyone else with a grievance against someone else.

The part that's troubling here is how, if anyone else reading this post reported to the police that an employee had lost a ready-for-market prototype and that a blog had published pictures of it and then returned it, the police would politely file the report at the bottom of the pile and then get back to pursuing real crimes. Apple, however, gets an unannounced seizure of a journalist's home and work computers.

Such preferential treatment demands an explanation.

That's, by and large, what most district attorneys and police departments do, and that's what's so troubling about this action and the priority it was given.

No one seriously believes that Gawker Media poses a continuing threat to anyone, including Apple. There's also no question about the disposition of the property; it's in Apple's hands. Further, the damage done is questionable. (I don't mean "frivolous." By "questionable," I mean that there's a legitimate dispute as to whether or not anyone suffered legally-recognized damages from the leak, as compared to, say, someone running a counterfeit-iPhone operation.)

In such a situation, most cops and DAs would put the investigation at the bottom of their pile, tell the victim to file a civil lawsuit, and then focus their resources at on-going criminal activity or crimes with substantial damages to the public.

Here, however, REACT raced into action with a particularly aggressive maneuver: a subpoena and unannounced seizure of a journalist's property. That's among the most aggressive actions they could have taken, and the decision-making behind it deserves an explanation.

Maybe so. But if so, then REACT shouldn't have any trouble explaining why the investigation of this single phone was so important. There are thousands of IT businesses that have been cheated, defrauded, stolen from, and counterfeited, and yet Apple's already-returned single phone gets preferential treatment.

Why? Your explanation might be perfectly valid, but it's not the explanation REACT has given. They haven't explained anything at all.

The problem in both cases is the absence of any standards governing the exercise of the prosecutor's and investigator's discretion. The appearance of impropriety in both cases magnifies the problem.

If REACT wants to make it a high priority to issue subpoenas to recover information from third parties that might relate to someone else's wrongful possession of a phone for a brief amount of time, then so be it. Last I read they were focused on major counterfeit software operations.

At the moment, though, it appears REACT suddenly developed a zeal for prosecuting a trivial offense merely because the offense is high profile and involved an influential victim. That's a problem, and it's the same problem in the Gonzales case: the improper exercise of discretion. The public is entitled to know how and why REACT is utilizing its limited resources.

I'm a lawyer (and the author of the post), though I've never discovered any genes.

IMHO, although the court would likely have found a use of a knockdown assay to have been a sufficiently descriptive method of modulating the protein, that does not end the analysis. First, patent protection in such a situation would likely have been limited solely to the use of a knockdown assay to modulate the protein. Second -- no offense intended, of course -- but apparently the use of a knockdown assay is so obvious that it took some fellow on the Internet who read a blog post only a few minutes to think to do that. Such "obviousness" would likely cause even the limited patent to be invalidated.

Of course, there's still considerable room in the law, particularly patent law, to "game" things, but this ruling is at least a step in the right direction.

An adherent of "originalism" would have supported Lessig in the Eldred case; your "original" view is at odds with the understanding of copyright at the time of the Constitution, yet oddly consistent with the understanding of copyright by the RIAA and MPAA.

More importantly, your objection is ridiculous. Of course Congress has ample authority to regulate copyright. That doesn't mean unfettered authority to impose excessive punitive damages in civil cases in violation of the due process clause.

You act like a clash of constitutional clauses has never occurred in the history of the Republic. The constitution was designed with "checks and balances," a phrase you may have heard before. The bill of rights (including the due process clause) is a check on the powers of the government (including to regulate copyright).

See my response above. "Statutory" does not equal "solely compensatory," particularly not where the statute includes a punitive element for "willful" conduct.

Speaking of checking your case law, you should look into the statutory damages. If there is no punitive element, then why are damages elevated for "willful" conduct?

There's nothing novel about applying due process limitations to statutory prescriptions. "Always upheld" isn't remotely true; the issue of due process restrictions on punitive elements in statutes has barely been considered even by District Courts (much less appellate courts) in the wake of the Gore and Campbell cases.

"You conveniently assume that by not providing evidence as to the size of this figure, the plaintiffs, defendants and jury have valued it at zero."

It's irrelevant what they valued it at: no evidence means no damages. Period. Cases are dismissed every day for failing this fundamental requirement.

But, you say, there's a statute that presumes some level of damages. That's true. What's also true is that the statute authorizes punitive damages, lumped together with actual damages.

That's a problem under recent due process / punitive damages jurisprudence. Per the Campbell case, you cannot have punitive damages that grossly exceed the actual damages. Here, actual damages appear to be a single person's use of 30 songs, yet the jury awarded $675,000. There is, quite obviously, a large punitive element.

You are not in a position to argue these punitives were only a small fraction of the award, since, as noted above, actual damages proven were, at most, $30.

Your argument is that Congress can simply sweep these issues aside, lump them together in a statute, and be done with it.

That's not how constitutional law works.

See my reply above. The record companies did indeed prove unauthorized use of the songs by Tenenbaum, and thus the approximately $0.99.

Your "cannot separate" argument completely misses the point: just because Congress lumps compensatory and punitive damages together in one statute doesn't mean constitutional protections don't apply. If that were the case, Congress would easily legislate its way around every Supreme Court ruling by lumping issues together.

Are you arguing there is no punitive element at all to the statutory damages? If so, then why are the damages raised for the exact same conduct if it is "willful?"

You're making my argument: "neither he nor any of the plaintiffs witnesses contributed any proof of the "actual damages.""

That's not entirely true, as the record companies did briefly call their own lawyers to testify as to ownership of the songs, thereby establishing Tenenbaum's wrongful (i.e., unpaid) use of them. Ergo, $0.99 actual damages.

Otherwise, that's the whole point: we have a $22,500 award (per song) on $0.99 proven damages. That means the vast majority of the award -- over 20,000-to-1 -- is for punitive damages, triggering Gore/Campbell due process concerns.

What part of that don't you get? The fact that a statute says this is okay is meaningless: the constitution prevails.

I was referring to the unproven damages you wrote about above, the unproven distribution damages. Fact is, at trial, the only actual damages proven was the unauthorized personal use of a $0.99 song.

"Had there been more of an onus on the record companies to provide more evidence of actual damages, they would almost surely have been able to provide at least rough estimates ..." Yet, it looks like they didn't, likely because they would have been much, much lower than the $150,000 per infringement available under the statute, and they wanted the jury to think big numbers. It was a tactical gamble, the same type made daily in trials across the country.

Like I wrote in the post, Congress can't simply call a duck a goose and get around the due process protections established by the Gore, Philip Morris, and Campbell cases. The statute's language does not trump due process and the fundamental fact that we have actual damages proven at trial (~$0.99 per song) and a grossly excessive award ($22,500.00 per song) awarded by way of a punitive element ("willful"). They are "punitive" damages by any measure.

That undoubtedly triggers due process protections.

See my response to you below. You're confusing multiple issues. For purposes of my discussion about the constitutionally-permissible compensatory-to-punitive ratio, the sole question is what actual damages were proven. At trial, the defendants only proved $0.99 actual damages for each song.

Your argument about other unproven damages has already been rejected by the 'Philip Morris' Supreme Court case, which explicitly said jurors could only consider, when deciding on punitive damages, actual damages proven in court. (In that case, the jurors had considered damage to other smokers in the state who weren't plaintiffs in the actual case.)

Obviously, you shouldn't "trust" my "opinion" at all. It's just an opinion on the internet from someone you never met.

You should, however, think about the underlying issues. Fact is, the plaintiff proved only $0.99 in actual damages per song from Tenenbaum's use and apparently (I write "apparently" because I have not seen the transcripts, just the report I linked to in the post) chose not to present any evidence of actual damages arising from distribution. It's in the court order, but the actual damages (which is the relevant issue for a 'Campbell' due process analysis) proven were solely from his personal use.

Your "hard to measure" argument is a good one, and the one that the RIAA will raise on appeal. Yet, damages in every case are "hard to measure" and that doesn't stop courts from routinely limiting those damages on constitutional grounds. Can Congress grant copyright holders a presumption in court -- without proving anything at all -- that, for each song made available online for any amount of time in any capacity, the defendant suffered up to $15,000 in actual damages? That's not so clear to me. And you haven't said why it's clear to you.

(I chose "$15,000" because it's the only way the statutory $150,000 could be constitutional under the Campbell case's "single-digit" punitive ratio.)

It's not as "off" as you think. Punitive damages limitations have already been applied to common law copyright cases, and numerous courts have considered, but not ruled on, their application to the statutory regime.

But there's a more basic issue: it doesn't matter if the damages arise by statute or common law, the constitution protects the defendant all the same. Congress has no power to override a due process protection.

Please see my reply below -- your distinction isn't relevant, because the record company elected statutory damages, thereby eliminating the need to prove any actual damages from "sharing." The downloading itself is all they needed.