Patent Troll Says Anyone Using WiFi Infringes; Won't Sue Individuals 'At This Stage'

from the a-well-thought-out-shakedown dept

Just as some in the copyright trolling business are lowering their settlement fees, but making it up in volume, it appears there’s a similar effort under way on the patent trolling side of the world. The Patent Examiner blog has the incredible story of Innovatio IP, a patent troll that recently acquired a portfolio of patents that its lawyers (what, you think there are any employees?) appear to believe cover pretty much any WiFi implementation. They’ve been suing coffee shops, grocery stores, restaurants and hotels first — including Caribou Coffee, Cosi, Panera Bread Co, certain Marriotts, Best Westerns, Comfort Inns and more.

There are various interesting things in the article worth commenting on. First is the smaller settlements/making it up in volume technique. While its initial lawsuits against coffee shops and restaurants did focus on the central corporations, with the hotels, Innovatio appears to be focusing on individual franchisees. Yes, the small businesses who own individual hotels and probably have no idea how to deal with a patent infringement lawsuit — all because they dared to offer WiFi somewhere in their hotels. To make it “easy” of course, Innovatio’s lawyers will let them settle for between $2,300 and $5,000. In almost every case, that’s going to be cheaper than hiring a lawyer to just get started dealing with this — which I’m sure is exactly what Innovatio intends.

The company is represented by the infamous law firm of Niro, Haller & Niro, which is the firm that originally inspired the term “patent troll.” The lawyer representing the company, Matthew McAndrews, seems to imply that the company believes the patents cover everyone who has a home WiFi setup, but they don’t plan to go after such folks right now, for “strategic” reasons:

“Innovatio has made a strategic and business judgment at this stage that it doesn?t intend to pursue [lawsuits on the basis of] residential use of WiFi,” McAndrews said during a phone conversation last week.

And while that certainly could change, you may be relieved (or probably not) to learn that McAndrews does not “perceive” such a “strategic” decision will change. However, later in the article, he seems to indicate otherwise:

Ultimately, he said, Innovatio?s “plan is to license this portfolio to the fullest extent possible. That would include anyone who’s wireless networking.”

And then there’s this:

“We want you to continue to use this technology, we just want our client to get his due share,? McAndrews said. ?This is not a seat-of-the-pants, fly-by-night shakedown.”

I guess he means this is a well-planned, well-financed shakedown that’s going to stick around for a while. Lovely.

At least there is some firepower arguing against Innovatio. After its first round of lawsuits, Motorola and Cisco went to court, asking for a declaratory judgment that its WiFi products do not infringe… and that Innovatio’s patents are invalid. Hopefully that comes to pass or WiFi may get a hell of a lot more expensive.

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Companies: innovatio

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Comments on “Patent Troll Says Anyone Using WiFi Infringes; Won't Sue Individuals 'At This Stage'”

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94 Comments
MrWilson says:

Re: crazy system

Yeah. There should be some law that indemnifies customers from such threats. Even if a device does actually violate a patent, the violation was in the creation of the device, not it the usage. It’s just another stupid scenario like SCO or Microsoft collecting licensing rents on Linux-based systems.

Mike says:

Re: Re: crazy system

The Uniform Commercial Code (the UCC) does say that manufacturers of goods have an obligation to indemnify the customer. (UCC 2-312).

But, not all scenarios are well suited for the UCC, which deals mostly with goods. IN most cases, software and services are out the window.

More importantly, though, users often agree to waive an indemnification obligation. This is usually part of the sales contract or license agreement. When pressed, many vendors will agree to accept indemnification obligations.

However, the real reason most end users are not sued for patent infringement is because their individual infringement is incredibly small so the damages are very limited. That does always stop a patent holder who might be seeking some leverage over a deeper pocket.

Mike says:

Re: Re: Re:2 crazy system

There is a totally separate uniform code (UCITA) that would like to have a word with you.

More seriously, that’s not really case in most jurisdictions that don’t see the sale of a software license as the sale of a “good.” This issue is all but alleviated when you realize that most software licenses negate any protective features of the UCC even in those jurisdictions that would offer UCC protection.

chris says:

Re: Re: crazy system

Completely agree. There ought to be a single point in the chain where patents can be enforced. Some of the newer H.264 based video cameras come with a note claiming that the codec needs to be licensed if the footage is used for commercial purposes. Rubbish! There was no such stipulation when I bought the camera and it creates the video files not me. The manufacturer should be solely responsible for paying any patent fees.

Anonymous Coward says:

I don't understand

How can the end user be liable? I thought that the manufacturer of the equipment would be the party liable?

As bad as patent law is… it would be 1000x worse if end users were somehow liable… imagine there’s a patent dispute over a car and then everyone who has that car is now liable? That can’t be right

Ted Lemon (profile) says:

Re: I don't understand

It’s a common misunderstanding of patent law that you can’t be sued if you buy a product that violates the patent. This is not the case: anybody who “practices” the technique described in the patent is liable, unless they have a license.

So if the company that sold you the WiFi box paid for a license on your behalf, you’re in the clear. If they didn’t, you’re not. In principle, the patent holder can sue both you and the company who sold you the WiFi router.

Given that these patents hadn’t been enforced in the past, it’s unlikely that your WiFi vendor purchased a license for you. So yes, you are probably liable, if the patents are upheld.

Elijah says:

Re: Re: I don't understand

The reason it’s a common misunderstanding is because the general public being sued and losing for patent infringment has never happened anywhere in the history of the world. It has never occurred, anywhere, that the public was sold an object and then later sued because the IP for said object was not owned by or licensed to the seller.

The reason it has never happened is because it’s easy to make the case that the IP owner forfeited their right by failing to license the technology or sell it themselves, or file a case of IP infringement, for so many years.

Also, I Am Not A Lawyer.

nasch (profile) says:

Re: Re: I don't understand

It’s a common misunderstanding of patent law that you can’t be sued if you buy a product that violates the patent. This is not the case: anybody who “practices” the technique described in the patent is liable, unless they have a license.

I think the doctrine of patent exhaustion says otherwise. Unless you have corrections (with references of course) to the Wikipedia article.

chris says:

Re: I don't understand

Why do think everyone here is so pissed off?

The theory is that if processes are patentable, and you patent the process of sending wireless IP packets, an end user is using that process in the course of their business, hence they need a license. I disagree but I can see how one could come to that conclusion. I disagree because in this scenario, each use of the patented process gets paid for multiple times. What if a businessman stays at the hotel. Is he liable for his usage of that wifi device because he used it to generate revenue? I still don’t see how non-commercial users could possible be liable.

Makoto (profile) says:

Wouldn't Hold...

I would imagine that this would crumble for similar reasons that the Wal-Mart discrimination case did – there’s way too many people for any cause of infringement to be adequately served.

Not just that, but this may also be the wake-up call that senators need to get some actual patent reform through. But only after they’re dragged through this crappy process.

nasch (profile) says:

Re: Wouldn't Hold...

The problem with the Wal-Mart case was not that there were too many people, but that they were too diverse, and didn’t all experience the same harm. If you had 10 million people who all got the same shakedown letter for claimed infringement of the same patent for using the same sort of equipment in the same way, I don’t see why they couldn’t form a class. IANAL though, so there could be some problem I’m not aware of.

Anonymous Coward says:

Re: Might be the perfect wakeup call

Here’s a plan, instead of fighting this in court, how about all those coffee shop chains that got sued get together and have a no WiFi Wednesday. Every cup of coffee they serve should come with a label that explains the situation. Shed some light on this situation. Do this every week until Congress gets its act together. That would make national news and end this whole debaucle in no time.

FM Hilton (profile) says:

Paying off patent trolls

As for the abandoned idea of suing individual WiFi owners, I’m going to do this if any lawyer comes after me with a lawsuit for infringement:

Send them a blank check. Tell them to make it out to themselves and I’ll sign it.

Won’t tell them the account’s been closed for 10 years.

That’ll teach ’em!

That Anonymous Coward (profile) says:

But this is the savior for our entire economy, suing each other for huge amounts of money none of us actually have.

Like that fable about a rich man staying at the hotel in the village, he pays the clerk. The clerk goes and pays the maid, the maid goes and pays the grocer, the grocer pays the delivery boy, the delivery boy pays the repairman, the repairman pays the clerk. The rich man then decides he won’t be staying and takes his money back. Everyone was paid back, but the net change was nothing.

And some people still wonder why some of us keep calling it Imaginary Property.

Daemon_ZOGG (profile) says:

"Patent Troll Says Anyone Using WiFi Infringes"

It would be like telling everyone that uses a microwave oven, infringes. Or stupidly paying licensing fees to micro$0ft for using or distributing linux. It’s another Keystone Cops episode, in the style of SCO. Funny in the beginning. Boring, predictable, and annoying in the end. I doubt inn0vatio will know when to pull its head out of its butt before the gods of Chapter-11 reign fire and brimstone down on their scrawny pencil-necks. So, continue to use wifi and linux and whatever else makes your life easier through technology. Same old song and dance… };P

Daemon_ZOGG (profile) says:

Re: Re: "Patent Troll Says Anyone Using WiFi Infringes"

Daemon_ZOGG is about being free, open-minded, copyleft and highly vocal against copyright/patent abuse. Innovatio seems to be quite the extreme opposite. Of course, if they wish to kneel before Daemon_ZOGG, I’ll be happy to visit them in the unemployment line after their delusion fades. πŸ˜‰

John William Nelson (profile) says:

More attorneys need to flat fee this

I do a good amount of flat fee work because I deal with clients who face these kinds of antics. The problem is, I don’t think I could even touch one of these cases for much less than what the rates appear to be.

Some attorneys (including myself) will represent folks in cases like this pro bono, and maybe that is what needs to happen. The problem is the attorney needs to be able to take the time to do it right. That can be hard to do.

The thing is, if an attorney can get in and play some defense and stall it until the big players, Cisco et cetera, get the patents invalidated (or at least narrowed) then it could save a lot of folks the settlement fees.

fjpoblam (profile) says:

A fortune in tiny settlements...

Sounds as if a troll can make a fortune in tiny settlements too small to justify hiring a lawyer to defend.

[According to Uncle John’s Bathroom Reader, The World’s Gone Crazy:] “To demonstrate flaws in the patent system, in 2001 an Australian lawyer patented the wheel.” There’s a *lot* of folks using the wheel. There’d be a lot of tiny settlements flowing from that, enough to make a troll incredibly wealthy.

Sergio says:

loophole?

I would like to patent a temporal position change system device using articulated extensions from the central system to any surface surrounding the main device. Yeah!! all legged things will pay me fees or I sue them all!!

-99.9% of lawyers give the profession a bad name.

-How do you know if it’s cold watching a lawyer? It’s the only time when they keep their hands in their own pockets.

IAMGOD says:

Pay Me All Your Money Now

I have a patent on light. If you turn on a light then you owe me $; if not you will be sued for having any light emitting from you house.

I have a patent on breathing. If you do not have a license from me you must cease and desist from breathing. I have a court injunction.

I have a patent on intestinal absorbtion of water. You must stop drinking liquids immediately, unless you have a license.

I am God.

You should drag me from my house and kill me and all my heirs. Immediately. Problem solved.

Old Vision Guy says:

Sounds similar to.....

Sounds like another Lemelson with his vision and auto-ID patents – sue the users in hopes of getting big bucks. He even tried and succeeded in extorting money from the Japanese auto makers because they were using vision systems to manufacture cars. If you use equipment that infringes on US patents to manufacture products they can be subject to US customs preventing their entry into the US. His empire was eventually brought down. These guys will also be brought down!

Lygophilous says:

Sounds like someone's trying to control how someone can use something

Seems to me, because of the lack of clarity in exactly what their patents cover, that they’re trying to control the use of something that they absolutely get no credential on. Will definitely be looking into this, and seeing just what ammo I can give the justice system to crush their little ego’s

staff says:

another biased article

?Patent troll?

Call it what you will…patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: ?we?re using your invention and we?re not going to pay?. This is just dissembling by large infringers to kill any inventor support system. It is purely about legalizing theft.

Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don?t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.

All American Citizen says:

Get rid of this guy Masnick

This guy Mike Masnick is a shill for big corporate America which doesn’t like to pay anybody anything they don’t have to. Matt McAndrews is highly professional. And the perjorative ‘patent troll’ is just a means to disparage investors who make high risk investments in new technology, thereby supplying small inventors with sorely needed capital. God knows that they won’t get money voluntarily from the likes of Microsoft (remember the world’s largest antitrust suit ever against Microsof which Bush dropped upon getting into office).

nasch (profile) says:

Re: Get rid of this guy Masnick

And the perjorative ‘patent troll’ is just a means to disparage investors who make high risk investments in new technology, thereby supplying small inventors with sorely needed capital.

A patent troll is someone who holds a patent and uses it to sue people, but doesn’t have any product based on that patent. If you’re trying to sell something based on the patent, you’re not a troll.

aikiwolfie (profile) says:

So what this guy is saying that just by using consumer technologies, bought and paid for from a high street store, consumers are infringing on patents? God help us if this is allowed to set a precedent. Can you imagine how many patents the average consumer could be accused of violating? How many patents are involved in PCs, cars, TVs, mobile phones, land line phones, cookers, microwave ovens, iPods, MP3 players, bues, power tools, toys, trains and planes and any other consumer device or object you care to name?

The Amish life is looking appealing. Although I’m pretty sure someone has a patent on the horse and cart.

Bc says:

Uh oh. I used a plug today. Uh oh I used a cup today. Uh oh I used a shower cap today. GTFO. Any individual or company who is trolled by these losers tell them to get lost. If they actually want you in court hire some 50 buck lawyer for an appearance, and when the judge throws it out, counter sue for damages. These trolls only want to settle. Never ever settle a frivolous lawsuit. Ever. All it does is encourage them to continue with their criminal behavior. A patent must be Non Obvious. Every patent troll suit that’s ever existed is based on the obvious. Patent trolls have never won a case in court and always want to settle. Always always always call these criminals bluffs. And once we have correct laws in place let the lawsuits against them begin. πŸ™‚

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