Massive Patent Troll Lodsys Drops Its Bogus Patent Lawsuit Which Was Filed To Silence A Critic

from the what-happens-when-they-can-defend-themselves dept

Back in July, we wrote about how notorious patent troll Lodsys — a “company” (and I use that term very, very loosely) that was set up with some patents from Intellectual Ventures, and has been going around threatening and suing a ton of app developers — sued Todd Moore’s company TMSOFT. The incredible thing here was that Lodsys’s lawyer actually admitted to Moore’s lawyer that the reason Lodsys had targeted Moore was that Moore had called Lodsys a patent troll on his podcast. In other words, the patent lawsuit had almost nothing to do with patent infringement, but rather was pretty clearly a SLAPP suit, designed to shut up a critic. And, incredibly, Lodsys more or less admitted this.

Moore was lucky to team up with Dan Ravicher from PUBPAT who represented him pro bono. While I don’t always agree with Ravicher on a variety of patent issues, I respect the work he’s done over the years to fight bad patents, and he is one of the few patent lawyers out there who will work on cases like this. Because he didn’t have to pay legal fees, Moore could actually fight back, and Lodsys and its lawyers must have known that they were going to lose big time, and with Texas’ strong anti-SLAPP law on the books, it was going to cost them. So, it’s little surprise to see that Lodsys quickly agreed to dismiss the case with prejudice without Moore having to pay anything. They did get three concessions out of him, though. He had to agree not to sue to invalidate Lodsys’ patents, to dismiss his own counterclaims against Lodsys (i.e., the anti-SLAPP stuff) and then make a donation to charity.

The charity bit seems weird, but the guess from Ravicher is that if Moore had turned down the offer, it would be used by Lodsys in court to suggest that Moore wasn’t being reasonable, since the case could be ended with just a small donation to a charity (in this case, the Make-a-Wish foundation, after Lodsys rejected both EFF and PUBPAT).

But the latter part of Moore’s discussion of what happened reveals why patent trolling is such a big business: this whole thing cost Lodsys next to nothing. Moore fought back because it cost him next to nothing too, but that was only because Ravicher was willing to work pro bono. If Ravicher had charged regular rates, just this month or so of activity would have cost a significant amount:

The total costs to my company would have been $190,000. And that’s just for the initial response to this lawsuit. We hadn’t even gotten to court which would have increased that amount into millions. Remember that it only cost Lodsys about $450 to file the lawsuit. This is why small businesses will usually always settle. It’s just not worth it to fight. And even if you could win and get awarded your attorneys fees and costs, which are very rare, you probably won’t see a dime of that money.

Many of the lawyers representing patent trolls do so on a contingency basis — they get paid a cut of whatever comes in — so the costs to the trolls really is basically just the actual filing costs, while the cost to do even the most minimal defense, as was the case here where it was a slam dunk, quickly jumps into the six figures and beyond. That’s a pretty graphic demonstration of why the system is completely and totally broken.

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Companies: lodsys, tmsoft

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Comments on “Massive Patent Troll Lodsys Drops Its Bogus Patent Lawsuit Which Was Filed To Silence A Critic”

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9 Comments
out_of_the_blue says:

OKAY, we KNOW it's broken! Now tell us how to FIX it!

You’ve been nattering on about lawyers and The Rich abusing the system for how long? Surely it’s about time you have some slight notion of fixes.

“cost to do even the most minimal defense” — Mmm, no, anyone in business should be able to write up a credible defense in an afternoon. This is just incompetence abdicating to lawyers as if you MUST have members of the basically corrupt medieval guild speak for you. — But for “minimal” all one really need do is get a jury trial and yell like hell.

The Red Jaguar says:

You wrote:

The charity bit seems weird, but the guess from Ravicher is that if Moore had turned down the offer, it would be used by Lodsys in court to suggest that Moore wasn’t being reasonable, since the case could be ended with just a small donation to a charity (in this case, the Make-a-Wish foundation, after Lodsys rejected both EFF and PUBPAT).

Settlement offers are generally not admissible in court. See FRE 408.

Ninja (profile) says:

A fairly simple solution would be to have the legal expenses paid by taxpaying money, specially for the defending party, and the losing side would have to return that spent money – or part of it, I’m not sure what are the guidelines judges use in those cases. It could also be limited to an average that’s usually spent so if any of the parties wanted top level lawyers they could cover the rest by themselves or something (to avoid abuses).

This would greatly level the playing field and actually make the justice system just.

Anonymous Coward says:

Marco Arment summed up this result quite nicely on his blog:

There are no winners in this case. Nothing has changed for the better. If anything, the system has been strengthened and validated.

We?re all losers ? except patent trolls like Intellectual Ventures and Nathan Myhrvold, who continue to steal time, money, and willpower from thousands of hard-working people and make the world a worse place, with no repercussions for themselves.

Anonymous Coward says:

Re: Re:

Strange thing to do….to make MILLIONS of people hate you with a passion.

Lets assume that IV etc have made several 10s of millions of people very very angry (or cost them employment etc).

1 in 5 americans suffer from some sort of mental illness.

Big question is…how many of those would be prepared to go after these parasites for revenge?…………..

Not a good idea to make that many enemies.

DB (profile) says:

Claims Invalid

Lodsys might not be giving up much. On June 18, 2013 in a Reexamination, Claims 1-6, 10, 11,1 6, 22, 25, 30-32, 38, 46-48, 50-53, 69 and 71-74 of the Lodsys 7,222,078 patent were rejected in Reexam 95-000639.
This patent, and the 7,620,565 patent had terminal disclaimers, which indicate that they expired when patent 5,999,908 expired — which looks like August 6, 2012. And Lodsys is still sending out communications “offering” to “license.” (You can’t license an expired patent)

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