We've argued before that it often seems that operating companies that decide to go down the path of suing others for patent infringement are really just opening themselves up to being hit with similar patent lawsuits themselves. It's a complete waste of time and money (all of which could be going towards actual innovation). With Apple launching patent nuclear wars all over the place, now it's been getting hit back with suits from others. The latest is that Apple has lost a patent dispute with MobileMedia, a company that Sony and Nokia dumped some patents into for the sake of shaking down getting "licensing" revenue from other companies. The whole thing is silly, and Apple, Sony, Nokia, Samsung, HTC, Motorola, Microsoft and everyone else would be better served by not having to fight off all these silly lawsuits, but by being focused on making better products and competing in the marketplace.

I recently heard a story of yet another startup which had been hit by a bogus patent troll lawsuit. As always, it would be cheaper to just settle the lawsuit than to fight it in court, even though they knew that they would win. In this case, the CEO said he was going to fight it anyway because it was "the right thing to do" and to ward off future trolls. That, of course, is the worst part of troll lawsuits: the reason they work so well is that it's cheaper to "lose" and pay the troll than to "win" in court. Obviously, the SHIELD Act looks to change some of that calculus by making trolls have to pay up for bogus lawsuits. However, in general, plenty of startups can tell stories (beyond just patent trolls) in which they "settled" some sort of legal dispute, rather than did what's "right" and to win in court. Frequently, this is driven by the pressures from investors and venture capitalists, who don't want to fund lawsuits but high growth companies.

Of course, many realize that settling or foregoing a legal response in such cases can often make the situation worse, because it attracts more such activity from companies who know they can get away with it. I'm thinking of that after reading this fascinating story by famed venture capitalist, Josh Kopelman, in which he discusses why he and another investor in the startup TechForward financed a lawsuit against Best Buy. You should read the whole thing, but the short version is that Best Buy approached TechForward about using its system to create a "buyback" program. They signed some non-disclosure agreements, leading TechForward to share a bunch of confidential info about their model with Best Buy. Best Buy proceeded to take that info, and then tell TechForward "no thanks." Of course, it came out that the plan all along had been to get access to TechForward's model to build Best Buy's own. Due to the amount of resources (over a year) that went into trying to get the deal, having Best Buy pull it out from under them left TechForward in a bad position, and its assets were sold off. But the VCs kept funding the lawsuit:

Best Buy's last minute actions posed a fatal blow. Techforward sued Best Buy – but it would take a very long time before the case made it through trial. And since Techforward had invested so much money working on the Best Buy deal, the cash position of the company was not looking good. The board ultimately had to make a horrible choice – they sold Techforward's assets to a third party. BUT – they did not sell the lawsuit. Instead, First Round Capital (along with our co-investor, NEA) decided to keep funding the lawsuit. And over the last 18 months, we and NEA gave the lawyers hundreds of thousands of dollars to keep the suit going. This wasn't an easy decision. We are in the business of funding companies – not lawsuits. But my partner, Howard Morgan, was a board member of Techforward – and he sat in those board meetings. And Howard was convinced that Best Buy shouldn't get away with their behavior. We needed to send a message to Best Buy – and every other large company – that they can't blatantly violate agreements and steal ideas from startups. And if big companies believe they can violate agreements with immunity because a startup can't afford to sue them, it is bad news for every startup in the ecosystem.

The end result is that a jury sided with TechForward, awarding it a $22 million award, along with an additional $5 million in punitive damages as response to the action being willful and malicious. The details show that Best Buy employees were pretty blatant about their plan to lead TechForward along, get access to its model, and then copy it. In one email exchange between employees, they even said directly "...remove the Techforward reference in the file names..."

A couple of thoughts on this. It is incredibly rare and surprising to see VCs like Josh and Howard agree to do this kind of thing. I can't recall a single instance of VCs agreeing to fund a lawsuit like this. However, as with the CEO fighting the patent troll, there's an important signalling aspect to this decision. Letting companies know that they can't just rely on VCs not wanting to fund such a lawsuit might lead some big companies to think twice before trying to take advantage of smaller companies. Hopefully more venture capitalists will agree to do similar things.

The second interesting tidbit: this kind of lawsuit got figured out without using a patent. We always hear about how patents are "necessary" to stop big companies from just copying small companies -- but what this showed was that (1) it's not always so easy to copy without more detailed knowledge and access and (2) even if such access is granted, it can be done so conditionally (such as with an NDA, as in this case) allowing for the sharing of information, without having to use a tool like a patent or a copyright. Hopefully more investors will do similar things, recognizing not just the wider social benefit, but in scaring off other companies from either filing bogus lawsuits of their own, or just taking questionable actions towards the companies.

There's some bad news on the copyright front in Canada, but at least it's tempered with some, if not actually good news, reasonable news. The bad news is that file sharing lawsuits are returning to Canada, assisted by forensic software companies like Canipre, which has been collecting information on infringing users for the past several months.

A forensic software company has collected files on a million Canadians who it says have downloaded pirated content.

And the company, which works for the motion picture and recording industries, says a recent court decision forcing Internet providers to release subscriber names and details is only the first step in a bid to crack down on illegal downloads.

“The door is closing. People should think twice about downloading content they know isn’t proper,” said Barry Logan, managing director of Canipre, the Montreal-based forensic software company.

Logan said while last week’s court case involved only 50 IP addresses, his company is involved in another case that will see thousands of Canadians targeted in a sweep aimed at deterring Internet users from illegally downloading movies and other digital content.

Logan said his company has files on one million Canadians who are involved in peer-to-peer file sharing and have downloaded movies from BitTorrent sites, identifying them through Internet Protocol addresses collected over the past five months.

Moving beyond the obvious problem with identifying infringers through an IP address, it looks as if Canadian citizens are going to be on the receiving end of lawsuits brought by members of the content industry. Whether this results in a corresponding sales boost to the industries involved remains to be seen, but the tactics involved (mass lawsuits, IP addresses) seem to have been taken from the copyright trolls' handbook. In short, there's nothing remotely "good" about this news.

Even though the tactics are familiar and the companies involved state that they're modeling their actions on their American counterparts, there's one aspect that trails far "behind" the US system: statutory damages. Michael Geist reminds us of the reasonable news, which is as close to "good" as this situation gets:

While it is possible that many will receive demand letters, it is important to note that recent changes to Canadian copyright law limit liability in non-commercial cases to a maximum of $5,000 for all infringement claims. In fact, it is likely that a court would award far less - perhaps as little as $100 - if the case went to court as even the government's FAQ on the recent copyright reform bill provided assurances that Canadians "will not face disproportionate penalties for minor infringements of copyright by distinguishing between commercial and non-commercial infringement."

Compared to the US statutory damage laws, which allow for up to $150,000 per infringement, Canada's limits bring personal liability down to something more in line with the "damages" of non-commercial infringement. Even commercial infringement is treated more realistically, capping out at $20,000 per infringement.

This would be the small bit of "good" news contained within the unwelcome return of file sharing lawsuits. Geist theorizes on the mass lawsuit process, lending more credence to the idea that the represented industries are heading out for a bit of trolling. Fortunately for Canadian citizens, a low cap on damages means very few of those swept up in mass filings will end up in court.

The lawsuits will likely follow a three-step process. First, rights holders will seek a court order requiring Internet providers to disclose customer name and address information. Second, should the court order the disclosure, rights holders will use the information to send settlement demand letters to subscribers. The letters will allege infringement and likely offer to settle the case for several thousand dollars. If subscribers refuse to settle - perhaps they believe the allegation is inaccurate or the settlement demands unfair - it will fall to rights holders to follow through with a lawsuit. Given recent changes to the law, there is reason to doubt those cases will be filed as the individual liability is very limited.

If you can't keep rights holders from casting a wide net in hopes of swift settlements, the next best thing is to keep them from seeking outrageous statutory damages. With the very real possibility of showing up in court only to walk out with a $100 bill, one would suspect that settlement requests will stay at more realistic levels.

Apple may be happy it won the first round of its patent fight against Samsung in the US (it's not faring quite so well elsewhere around the globe), but these things have consequences. Besides being a competitor, Samsung is also a key Apple supplier... and it appears that Samsung is now using that to its advantage, jacking up the price on a mobile processor supplied to Apple by 20%. The report notes that Apple pushed back initially, but after realizing it couldn't find a reasonable replacement, agreed to the new prices.

According to the report, Apple buys all APs used for production of iPhone and iPad from Samsung Electronics with the volume estimated to be 130 million units last year and more than 200 million units this year.

Samsung Electronics has a long-term contract to supply APs to Apple until 2014, the report added.

So even if Samsung has to pay Apple for patent infringement, perhaps it'll be financed by the higher prices on processors Samsung sells Apple.

Maybe, next time, instead of suing each other, they could just focus on building products people like and letting the market sort the rest out.

2012 has been yet another year filled with meritless lawsuits filed solely to chill First Amendment free speech rights -- so-called Strategic Lawsuits Against Public Participation (SLAPP). As websites relying on user-generated content continue to increase in popularity, we also see a rise in SLAPPs targeting online speech, from the everyday blogger to the one-time online reviewer. Some of the most talked about SLAPPs this year include:

The Oatmeal SLAPP -- Matthew Inman wrote a blog post condemning FunnyJunk for posting hundreds of his comics without crediting or linking back to his website, The Oatmeal. Through attorney Charles Carreon, FunnyJunk sent Inman a threat letter over the blog post, claiming it was defamatory and demanding $20,000. Inman’s response? To publicly post the letter with a hilarious critique and start an online fundraising campaign to raise $20,000. Yet, instead of reaching his $20,000 goal and sending the money to FunnyJunk, he raised over $200,000 and gave all of the money to charity. Carreon couldn’t let it go and filed a lawsuit to try to derail the fundraising campaign, but later voluntarily dismissed it.

SLAPP 4 Jesus -- Even churches are SLAPP happy, as evidenced by a SLAPP filed by Beaverton Grace Bible Church in Oregon against former church members who had blogged and written online reviews of their experiences at the church. The judge ruled that the case was a SLAPP and ordered the church to pay the defendants' attorneys fees.

Rachel Maddow SLAPPed 4 Jesus -- A defamation suit against Rachel Maddow was filed by Bradlee Dean, an anti-LGBT preacher from Minnesota. Dean sued Maddow after she ran a story on The Rachel Maddow Show, where she aired a segment from Dean's radio show where he said that Muslims were "more moral than even the American Christians" because they were "calling for the execution for homosexuals." Luckily for Maddow, Washington D.C. enacted a strong anti-SLAPP law last year. The judge ruled that the case was a SLAPP and ordered Dean to pay Maddow's attorneys fees.

"The Pink Slime" SLAPP -- Beef Products, Inc., a South Dakota beef producer, recently filed a defamation lawsuit against ABC News, seeking at least $1.2 billion in damages, claiming the broadcaster unfairly disparaged its beef additive by labeling it "pink slime." The Complaint was filed last month and ABC has not yet responded.

Fortunately for Inman, the church SLAPP defendants and Rachel Maddow, California, Oregon and Washington DC have all enacted anti-SLAPP statutes. Unfortunately for ABC, Beef Products filed their defamation lawsuit in South Dakota, which does not have an anti-SLAPP law. What this means is that they will not be able to bring an anti-SLAPP motion and potentially get the case dismissed early and have their attorneys’ fees awarded. However, South Dakota is not alone -- almost half of the states have not enacted anti-SLAPP laws, demonstrating the need for a federal law to protect against meritless SLAPPs.

2012 marked the second time federal anti-SLAPP legislation was introduced in Washington DC. In 2009, Congressman Steve Cohen introduced the Citizen Participation Act in the House of Representatives, which ultimately died when it was referred to committee. This year, retiring Senator John Kyl introduced the Free Press Act of 2012. Unfortunately, Sen. Kyl's bill has a very narrow anti-SLAPP provision that only applies to representatives of the news media. But hopefully Senator Kyl's bill can be a starting point to build bi-partisan support for strong and robust federal anti-SLAPP legislation after the November elections. With a recent endorsement of federal anti-SLAPP legislation from the American Bar Association, a national association of attorneys and the world's largest voluntary professional organization, a fresh session of Congress in 2013 looks promising for the future of anti-SLAPP legislation protecting all Americans' right to speak out.

Evan Mascagni is an Organizer with the Public Participation Project, the only organization in the country whose sole mission is to enact federal anti-SLAPP legislation.

With story upon story upon story (upon story) of how patent trolls, those non-producing entities that derive income solely through litigation and threat thereof, are enormous leeches on innovation and progress, you may have noticed something. You possibly thought to yourself, "it sure seems like we're hearing more about these vampiric bastards these days". Guess what? You are, because there's more of them. Vastly more.

According to a recent study by Robin Feldman of UC Hastings College of Law and Lex Machina, the percentage of patent cases finding their way to court jumped from 22% in 2007 to 40% in 2011. Note that the following graph is a corrected graph issued after the initial report by the authors.

The study was inspired by the America Invents Act, last year's largely toothless overhaul of the patent system. In it, Congress asked the Government Accountability Office (GAO) to study the impact of non-practicing entities—a more clinical term for patent trolls—on the economy. Because Lex Machina already had a database of patent litigation, the GAO asked it to produce a random sample of 100 patent lawsuits for each year from 2007 to 2011. In addition to supplying the GAO with the data it needed for its forthcoming study, Lex Machina decided to publish its own interpretations of the sample.

As the Ars Technica piece notes, that shocking statistic above doesn't even tell the whole story. When you consider that patent litigation as a total has jumped in volume, coupled with the number/percentage of patent troll threats settling well outside of the courtroom, experts figure that the size of the patent troll leeches are roughly double the size of your average adult kraken.

"From all appearances, lawsuits filed are only the tip of the iceberg (editors note: kraken-sized leeches often hide under iceberg tips), and a major operating company may face hundreds of invitations to license for every lawsuit," the authors write.

The America Invents Act was enacted in the final months of the study period. And there was at least one minor change designed to deter troll behavior: the law made it harder to name many defendants in a single lawsuit. But the law's main provisions, such as the switch from a "first to invent" rule to "first to file" is unlikely to affect the volume of troll litigation.

Hell, this all sounds like promoting the progress to me. That, or some flavor of patent abuse. Surely it's one of the two...

There have been numerous attempts by various parties (including, in a few cases, the EFF) to sue the US government concerning various aspects of its warrantless spying on Americans. Pretty much all of these cases end up failing, often for reasons that are suspect. However, it appears that the EFF is going to try again. As you may recall, back in July, the feds admitted to Senator Wyden that their own analysis discovered that they had violated the 4th Amendment on occasion in carrying out surveillance under the FISA Amendments Act.

In response to this, the EFF filed Freedom of Information Act requests, asking for documents concerning the situation in which such searches were deemed unreasonable under the 4th Amendment. The feds more or less ignored the FOIA request. So the EFF is suing for violations under the FOIA. It may not be as sexy as suing about the actual spying, but that path has already been shut down plenty of times. I'd guess that this approach won't succeed either (though I hope it does!). But, at the very least, hopefully it can call some attention to the massive secrecy by the feds as Congress gets ready to re-approve the FISA Amendments Act without bothering to understand how it's being used.

The Hollywood Reporter has a story on Warner Bros. filing a lawsuit against a bunch of individuals who use Amazon's marketplace offering to sell DVDs that Warner Bros. claims are counterfeit. The lawsuit is pretty weak on details so far. The THR report speculates on whether or not this is about packaging up downloaded or camcorded movies and pretending they're official.

However, if you look at the Amazon profile of the named defendant, Todd Beckham, you see that he has very good reviews. Currently, he has a 4.9 star rating with over 2,000 reviews. If he were selling inferior counterfeit products, you'd think people would complain, because his listings certainly suggest they're new official copies. So buyers seem to feel they're getting what they thought they bought. It's possible that he's just a really good counterfeiter, but THR wonders why WB doesn't just use Amazon's existing internal controls to terminate service for users who sell infringing works.

WB apparently told THR that this isn't a case of going after used product sales (where it would have a tough case, given the first sale doctrine -- and, again, would likely lead to negative reviews, since the offerings don't seem to indicate "used" conditions), but it's unclear how or why the company thinks these DVDs are counterfeit. Again, given the sparseness of detail, it's entirely possible the targets are creating (apparently high quality) counterfeit flicks and selling them. But it would be nice to see a bit more evidence that that's the case, and this isn't just a case of being worried about being undercut by the secondary market. What's a little worrying is that, according to THR, WB is claiming that the sellers are violating its "distribution rights" to the films, not reproduction rights. That raises at least some questions over whether or not the concern is just competition, or actual unauthorized copies. At the very least, this will be a case worth following...

When Craigslist sued PadMapper and 3taps, we questioned the legal basis for much of the lawsuit, in particular the claim that Craigslist even could sue over copyright, when any copyrightable content is created by the end-users and not Craigslist itself. It appears that someone at Craigslist realized that it was somewhere very close to the Righthaven line in claiming a bare right to sue over someone else's work, and made a tweak, demanding "exclusive" rights.

I first saw this via Slashdot on the Baligu blog, and was trying to go through the legal implications, but thankfully, Tim Lee over at Ars Technica did all the heavy lifting for us in speaking to IP lawyers James Grimmelmann and Mark Lyon who are quite skeptical of this move.

What's odd is that this "change" isn't even to its terms of use, which don't actually claim an exclusive license. Instead, the company has just added text to the posting page saying that you are granting the company such a right:

Clicking "Continue" confirms that craigslist is the exclusive licensee of this content, with the exclusive right to enforce copyrights against anyone copying, republishing, distributing or preparing derivative works without its consent.

The theory, as Lee notes, is probably that by more forcefully claiming exclusive rights, perhaps it can get over the hump and have the right to actually enforce those copyrights -- but that legal theory is speculative at best.

It's kind of interesting, because someone could also potentially argue that this statement contradicts the company's own terms of use since they're different but perhaps more interesting are the wider legal questions raised by this -- including what happens if you, the user, post your classified ad to any other site. Craigslist seems to be claiming that it can go after those other sites (and, um, potentially you, I think...) for reposting "its" work. That's crazy and something that completely goes against Craigslist's standard "user-friendly" approach to everything.

Once again, this is showing how Craigslist's pursuit of these kinds of legal issues really seems to go against what made Craigslist so successful, turning the company into much more of a cranky legal bully. Lots of companies that start out innovative and open, do later change and flip sides on things like this, but Craigslist always seemed like the kind of company that would stay on the right side of the "evil line." It's too bad to see that it seems to be so aggressively diving over to the copyright bully side of the line.

We see this every single time the music labels (usually RIAA or IFPI) "win" a big case against an alleged "pirate" site. They're awarded a bunch of money... and none of it goes to the artists. We've heard about it happening with Limewire and YouTube (though that was payoff to prevent a lawsuit, rather than the result of a lawsuit). And, once again, that appears to be happening with The Pirate Bay. TorrentFreak has the leaked document from the IFPI showing that it plans to reinvest whatever it gets... in the IFPI to continue its "anti-piracy efforts," such as going after other sites to get similar settlements for the same reason.

To be clear, the IFPI notes that it's unlikely to collect much, if any, of the money in this particular case, because (contrary to what it claimed all along), it certainly doesn't appear that TPB made very much money -- and the people sued "have no traceable assets." However, the ruling was clear that the money being awarded to the labels was "to compensate artists and rightsholders for the losses they suffered. But that's not how it would be used:

“There is an agreement that any recovered funds will be paid to IFPI Sweden and IFPI London for use in future anti-piracy activities,” IFPI writes.

TorrentFreak quotes Peter Sunde, one of the four who was convicted, noting that this is a case where money was directly promised to artists and not delivered. That seems a hell of a lot more like "theft" than anything that he did:

“They say that people who download give money to thieves – but if someone actually ends up paying (in this case: three individuals) then it’s been paid for. So who’s the thief when they don’t give the money to the artists?”

According to Sunde the news doesn’t come as a surprise.

“As far as I know, no money ever won in a lawsuit by IFPI or the RIAA has even gone to any actual artist,” Sunde says.

Indeed. I am unaware of any of the proceeds from any such lawsuits ever making it back to artists.