Even More Patent Reform Bills Being Floated In Congress

Patents

from the it-would-appear-there's-some-appetite dept

Another day, another proposal for patent reform in Congress, once again targeting patent trolls (in part). Already this year, we’ve seen Rep. DeFazio push for fee shifting to make trolls pay legal expenses for bogus lawsuits, Rep. Deutch introduce a bill to force patent trolls to stop hiding anonymously behind shell companies, Senator Schumer seek to make it easier to quickly dump bad patents and Senator Cornyn put a bunch of these ideas together in a bigger anti-troll bill. Most of these have been introduced in the last month or so. We can now add a new proposal from Rep. Bob Goodlatte, head of the House Judiciary Committee, who has released a patent “discussion draft” that includes a number of issues it’s trying to fix.

Goodlatte’s proposal, like many of the others, has some good things in it, but is pretty weak overall, trying to skirt around the overall troll problems. The bill would certainly be a step in the right direction, but hardly a decisive one. Like Deutch’s bill, this one would make it harder for trolls to hide behind shells, and then would do a bunch of things to try to decrease the costs for those who are sued. This would definitely be helpful, because it’s the cost of fighting back, even if a company is sure it doesn’t infringe, that leads many companies to just pay up to settle. The general estimate we hear is at least $1 million for just the district court case.

The good news is that it is increasingly clear that massive patent reform is back on the table, even with the last comprehensive patent reform bill, the America Invents Act, passing less than two years ago. At the time, we pointed out that the bill did nothing to deal with the troll problem, and it seems clear that many in Congress recognize patent trolling is a problem that needs to be dealt with quickly. Having five bills introduced — four within the last few weeks — and many by prominent members of Congress who have the ability to push a bill through, suggests that there really is an appetite in Congress to take on the trolling issue.

The bad news is that the existing proposals could go much, much further, and don’t. There’s nothing like an independent invention defense (or independent development as evidence of obviousness), or any effort to seek out peer review of patent proposals — both of which would cut down on many bad patent trolling shakedowns. Furthermore, having watched the messy debate over the America Invents Act, which went on for about seven years (possibly more, depending on how you count), we saw some good ideas in initial drafts watered down more and more year after year, until the final AIA was effectively useless. If we’re already starting with relatively weak proposals, once they go through the ringer and the pharmaceutical companies (mainly) strip out the parts they don’t like, we may be in for another toothless bill. Hopefully, this is a sequel with a twist ending, and something real and effective can actually become law.

Filed Under: bob goodlatte, congress, patent reform, patent trolls, patents

CBS Tells Court: No One Could Possibly Read Our Statements 'We Will Sue Aereo' To Mean We Will Sue Aereo

Copyright

from the uh,-nice-try dept

You may recall that back in April we wrote about CBS threatening to sue Aereo if it launched in Boston, as announced. We quoted CBS’s Dana McClintock, exec VP of communications, who said on Twitter:

We will sue, and stealing our signal will be found to be illegal in Boston, just as it will be everywhere else.

Seems like a pretty clear and definitive statement. CBS CEO Les Moonves said something similar in a conference call:

If they put up another signal, we’ll sue them again.

Aereo then did exactly what it should: it sued first, seeking a declaratory judgment that its service was legal and that it could launch in other markets without fear of expensive lawsuits from CBS. This is what the whole declaratory judgment setup is for. Exactly cases like this where one party threatens another in an effort to scare them off by the threat of expensive court battles.

However, CBS now, hilariously, is trying to claim that when it made those statements, it didn’t really mean it would sue Aereo, so there’s no controversy and the case should be dismissed. Let me just repeat this one for you. CBS is claiming that when two of its top execs said “We will sue” and “we’ll sue them again,” it didn’t actually mean that it would sue. Wow. That’s a special sort of chutzpah.

Instead, CBS claims that Aereo should sit pretty and wait to be sued:

“If the threat of litigation is as imminent as Aereo claims, it will have every opportunity to defend its actions if and when it launches in other cities and if it is sued in those jurisdictions.”

Um, that’s the whole freaking point of declaratory judgment actions, to avoid having to sit and wait to be sued, so that a company can get on with its business. CBS seems to be admitting here that it’s threatening Aereo just to mess with its business plans. How nice.

How about the direct statements from the execs? Eh, what’s a little public threat of lawsuits between execs and the press? Certainly not a serious threat, right? Concerning the McClintock statement, they claim that his statement was only referencing Boston, so it’s not like it really matters.

Mr. McClintock’s “threat” clearly is contained to Boston; his only reference to other locations is the vague assertion that Aereo “will be found to be illegal” “everywhere else” – hardly a concrete promise that any of the named defendants intends to sue Aereo in some other location.

Er, actually, yes, read the quote again. It’s a pretty clear statement that Aereo will be sued “everywhere.” How about the Moonves quote?

One simply cannot read what Mr. Moonves actually said and say with any certainty – much less with the level of concreteness necessary to sustain a declaratory judgment action – that CBS announced an intention to sue Aereo in any city other than Boston.

Um, again, Moonves’s quote is pretty clear that they will sue anywhere Aereo shows up. He said “if they put up another signal, we’ll sue them again.”

I guess you can give CBS’s lawyers creativity points for trying.

Filed Under: copyright, dana mcclintock, declaratory judgment, les moonves, threats
Companies: aereo, cbs

TV Broadcasters Sue Alki David's TV Streaming Service Once Again, To Establish More Bad Precedents

Copyright

from the ugh dept

For many years we’ve pointed out that the self-promoting Alki David seems to get engaged in a variety of ridiculous lawsuits partly as a publicity stunt to build up his own brand. Nearly everything he does seems to be focused on the publicity value of it — such as renaming his online TV streaming service from FilmOn, as it was known, to AereoKiller and BarryDriller to mock Barry Diller’s Aereo. And, unfortunately, in this case those stupid publicity stunts may lead to some really bad case law. As many people know, despite David claiming that his service (whatever name you want to call it) was no different than Aereo, it is different. Aereo carefully followed various court rulings that indicated how to set up such a service that doesn’t infringe — and so far it’s won the lawsuits filed against it by the TV networks.

“AereoKiller,” on the other hand, has been losing badly, such that the service is currently barred in most of the western US. Now the networks figure they might as well go in for the kill and have sued David’s AereoKiller yet again, this time in the DC Circuit, to try to get a similar ruling on the east coast. The networks could have sued Aereo itself — as they’ve been threatening — but it seems clear they realize that the case against David is much stronger (perhaps, in part, because David himself seems like a goofball who doesn’t take any of this seriously, but also because of the company’s own actions).

But, of course, bad cases make bad law, and the AereoKiller case is a bad case. There are a bunch of issues related to the whole thing, and it seems quite likely David will lose — but that precedent will now be available to be used against Aereo itself (and a variety of other innovative services). The end result could be a disaster, and the TV broadcasters know it, because that’s exactly what they want.

Filed Under: alki david, broadcasters, copyright, dc circuit, transmission rights, washington
Companies: aereo, aereokiller, allbritton, disney, filmon, fox, nbc universal, telemundo

Winning But Losing: Lessons From An Internet StartUp

Legal Issues

from the the-deck-is-stacked dept

“Justice prevails” is often declared when a court case ends, honoring a system that produces the right result. Right, however, is not always just. The judicial system needs to address the exorbitant costs that accompany litigation, or a situation can happen when a company is sued by a deeper pocket plaintiff, wins the case, but has to shut down because the cost of litigation has exhausted its financial capital.

Last month, in a unanimous decision, the Ninth Circuit affirmed, once again, a judgment in favor of Veoh Networks in a widely followed copyright case brought six years ago by Universal Music Group. Veoh, the court held, was entitled to rely on the safe harbors of the Digital Millennium Copyright Act, and was not liable for copyright infringement for user-uploaded videos that Universal alleged contained their copyrights, an important precedent that benefits YouTube and others. Veoh, the company I joined during the early stages of the digital video revolution in 2006, which pioneered long form viewing on user generated content sites, and was the first site to offer premium content from major networks like ABC and CBS, is not around anymore to capitalize on its victory. Three years ago, a few months after Veoh’s win at the district court, its leadership surveyed the war torn company, wounded from a litigation battle designed to inflict the very damage the lawsuit had wrought, wondered, at what price victory and decided to sell the assets and closed the doors. Universal Music lost the case, but achieved victory, shutting down an innovative company that threatened their static business model.

From the outset of the case, Universal Music Group made sure Veoh would suffer financially. They issued many discovery requests, doing their best to make sure Veoh spent money to defend itself. Savvy plaintiffs know how to exert pressure by exploiting our judicial system’s liberal rules regarding discovery. In this regard, advances in technology have not produced economic efficiencies. Millions of documents and casual conversations are stored on computers, readily accessible. These petabytes of data need to be prepared and reviewed by lawyers before being produced in response to a discovery request. The lawyers’ bill increases very rapidly when an army of attorneys is reviewing all this data. Because the bulk of documents and discovery often lie with the defendant, plaintiffs can inflict maximum financial pain on a defendant, while producing relatively few documents themselves. This tilted playing field gives plaintiffs an unfair advantage. In the Veoh case, legal fees on discovery alone were enormous, exacerbated by the magistrate’s decisions to compel the company at its own cost to store every single video on our system, and to even produce Skype conversations. Who suffers? The defendant. Recourse? None.

The company quickly recognized the economics of litigation and the lack of upside to being a defendant and offered to settle. However, Veoh never had meaningful settlement discussions; Veoh did not have the cash to pay the amount Universal was seeking. The company was left with no choice but to litigate, and spend money.

To counter the ticking clock and register, Veoh hoped for a quick resolution to lift the dark cloud Universal had placed on the company that handcuffed it from raising the additional funds the company needed to grow. The case, however, was not resolved in the district court for over two years and is now approaching the six-year anniversary.

Defendants need an option other than to just play defense and wait. It was well documented in the case that Universal never even sent Veoh any takedown notice for their content and was similarly undisputed that every time Veoh received a takedown notice from every other content owner, that Veoh took the content down. Universal could have achieved its goal of having its alleged content removed from Veoh’s website by merely sending the company a letter. Our judicial system gave Universal the right to sue. Shouldn’t Veoh have any rights or recourse, especially when a mere letter could have avoided an entire litigation?

Unfortunately, the only option available to Veoh was to file a motion to recover fees after it won the case, even though this avenue was too little too late; the mortal damage was already inflicted. Six years of combative litigation cannot be undone entirely by recovering legal fees. Yet, the standard for recovering fees is very high and Veoh was not successful. Despite its favorable decision on the merits of the case, the Ninth Circuit denied awarding Veoh its fees, instead remanding to the District Court to consider awarding Veoh its much lower court costs. The Ninth Circuit’s ruling on this point only further weakens an already poor option for innocent companies.

Our judicial system needs a solution to rectify the devastation that unfounded litigation causes companies ultimately proven innocent. Courts need to be sensitive to the new entrant and pay respect to the scales of justice when a deep pocket plaintiff goes after a financially weaker opponent. Instituting “loser pays” into the concept of commercial litigation in appropriate situations improves the chances for defendants, and could reduce meritless litigation. While this concept has been debated for decades, another standard needs to be introduced, one that holds plaintiffs and their lawyers equally accountable. Plaintiffs’ lawyers should be compelled to pay any ‘loser pays’ fee along with their clients. In a world where plaintiffs’ lawyers share in multi-billion dollar settlements, it seems only fair that if they lose a case they should pay. This will force lawyers to think twice about the merits of their clients’ case, as opposed to what strong-armed litigation tactic they can use to extract a settlement. If lawyers are held accountable for their – and their client’s – actions in a manner never before applied, we will see what everyone wants: a precipitous drop in the number of cases in our judicial system. We can even adopt a three strikes policy and ban law firms and their clients for twelve months if they are found guilty of such abusive behavior on more than two occasions. How refreshing that would be.

Fewer litigations will reduce the dockets of federal and state courts, reducing the need for our government to increase the number of judges and court staff, thereby saving taxpayers’ money. Plaintiffs will pay more attention to increasing defendant’s legal fees lest they lose. Legal fees and costs will decline, which will lead to a downward pressure on insurance premiums. Most importantly, productivity will increase. Companies will spend previously allocated monies to litigation on research, development, hiring, and expansion of operations.

Veoh encountered a plaintiff set on its destruction. They were unable to defeat Veoh in the world of technology or in the world of business. With those avenues closed, Universal sued. The judicial system provided Universal with what it could not achieve on a level business playing field. Veoh won the case but is not around to continue to grow. That is wrong. UMG and its lawyers should be required to pay for the damage they have done. Strike one to a plaintiff and its lawyers. Fairness in our judicial systems dictates such an outcome.

Joshua Metzger is an Internet consultant. He was SVP Corporate Development & General Counsel for Veoh Network and before that was chief legal officer for Overture Services, which was acquired by Yahoo!.

Filed Under: copyright, dmca, legal threats, liability, loser pays, online video, statutory damages
Companies: universal music, veoh

DailyDirt: Take The Red Pill, Young People

Studies

from the urls-we-dig-up dept

In the wake of the Great Recession, many young adults are still having a hard time finding jobs. The recent unemployment rates for young adults (age 20 to 24) is about 13%, which is much higher than the rest of the adult population. Even worse, it seems like young workers (even college graduates) are increasingly taking low-wage jobs. Perhaps it’s time for our youth to consider taking a chance and going into business for themselves. Here are a few links that might help convince them to take the plunge.

• Upstart, founded by a team of ex-Googlers, is an all-in-one loan agency, investment fund, mentoring network, and dream factory for up-and-comers in their early 20s. To find the most promising candidates, applicants are screened using sophisticated algorithms that can predict their likely future income based on GPA, educational background, past job offers, etc. Upstart helps them raise enough money to get their startups going, and in return, they pay their backers up to 7% of their future income each year for 10 years. [url]
• Check out these class notes from Peter Thiel’s course on startups at Stanford, written in essay form. In 2010, venture capitalist and entrepreneur Peter Thiel created the Thiel Fellowship, which awards $100,000 to 20 students under 20 years old, with the goal of encouraging them to create their own startups instead of going to college. [url]
• Read the Upstart blog for founder Dave Girouard’s account of how he came up with the idea for Upstart. The blog also has other personal accounts, information about Upstart, and interesting articles and perspectives on entrepreneurship. [url]

If you’d like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.

Filed Under: college, entrepreneurs, indentured servants, mentoring, peter thiel, startups, students, upstart