Legal

Patently Obvious: The U.S. Patent System Needs Major Change

Phillip Nones Business, Uncategorized , , , , , , , , , , ,

Patent lawsuitsAfter reading one too many articles about patent issuance failures on the part of the United States Patent and Trademark Office, I’ve come to the conclusion that the USPTO just isn’t able to keep up with galloping technology.

How else to explain its staff lawyers granting patents for applications they have no business authorizing?

And when that happens, the courts have to step in and fix the problem – as in the recent U.S. Supreme Court case overturning the patents of Myriad Genetics on BRCA1 and BRCA2 human breast cancer genes.

Even worse … through ineptitude, completely obvious ideas get patented, inhibiting innovation and keeping beneficial technology out of the hands of the public – which goes completely counter to the USPTO’s stated aims.

One of the USPTO’s doozies that has made it into the news was issuing a patent for scanning a document and then e-mailing it.

That is correct:  the USPTO viewed this simple function as a “unique” invention worthy of patent protection.

… Never mind the fact that thousands of people had already “invented” this idea before – but never in their right minds would they have thought it was patentable!

So what happened after patent protection was granted in this case?  The patent is now owned by one of those infamous firms that exists only to sue people and extort money from them.  In this case, a company with the deliberately innocuous-sounding and forgettable name of MPHJ.

Today, this firm’s legal counsel is demanding $1,000 in licensing fees from anyone who scans a document and then e-mails it.

At least Hewlett-Packard decided to fight back earlier this year, pointing out that it had been selling printers that could scan and e-mail documents long before the patent in question was ever granted.

But why do we even have to go there?  Is it really appropriate for a patent to be granted to someone who didn’t really invent anything … nor create a new technology … nor develop a unique engineering design or manufacturing process?

Patenting ideas for computer-related functions and programs as falling under the general category of “business methods” – a dreadful practice the USPTO started allowing about 20 years ago – is partially how we got into this mess.

The unfortunate part is this:  There will be major challenges facing anyone who decides to promote patent reform.  Too many “patent trolls” and their partner-in-crime attorneys have a vested interest in a current system which – similar to the cyber-squatting industry – enables them to make a tidy sum for very little effort.

Expect these “upstanding corporate citizens” to obstruct any moves to change the system with the same kind of zeal they employ to go after the citizens and companies who are the hapless targets of their extortion efforts.

In fact, a 2012 study commissioned by the Government Accountability Office found that of ~500 randomly selected patent lawsuits that were filed the previous year, nearly 40% of the cases were brought by “patent monetizers” (trolls).  And that doesn’t even begin to account for the untold numbers of threatened suits that were settled without going to court.

But I’m pleased to see that several states have taken up the gauntlet in the MPHJ saga.  The attorneys general of Nebraska and Vermont have sent letters to the company and its legal counsel, warning them to leave their state residents alone.

Vermont has even passed legislation allowing victims of patent trolls to countersue.  Wouldn’t that be a nice turn of events?

Greed is never pretty – but especially when greed is this transparently obvious.  It would be nice if the USPTO started contributing to the solution by making some much-needed changes of its own.

Personal rights and liberties: Have we reached a tipping point?

Phillip Nones Social Commentary, Uncategorized , , , , , , , , , , , ,

Bill of Rights, being chipped away?As many of you know, I live in Maryland.  Around here, we’re well-familiar with the process by which Chesapeake Bay blue crabs are turned into the delicacy for which our state is so famous.

It’s simple:  We place the live crabs in a pot of water and slowly turn up the heat.  This “slow cooking” does the trick every time … and the hapless crabs are none the wiser.

I wonder if something similar is happening to us right now when it comes to our rights and liberties?

Consider these recent news developments:

And let’s not forget this other news shocker:  “The Supreme Court upholds Maryland legislation allowing law enforcement officials to collect DNA from any person detained or arrested – even before they’re charged with anything.”

Sometimes it’s easier to see what’s happening from the vantage of distance.  My brother, Nelson Nones, writes me the following from outside the United States:

It’s time for Americans of all political stripes to stand up and put a stop to this. 

Conservatives should be alarmed over the plainly obvious violations of our Constitution, the supreme law of our land:

  • Amendment 1:  “Congress shall make no law … abridging the freedom of speech …”
  • Amendment 4:  “The right of the people to be secure in their … papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the … things to be seized.”

Non-conservatives should be just as alarmed.  In fact, every citizen should be alarmed.

Anyone who thinks Chinese censorship and the Great Chinese Firewall are bad things, but supports what our government is doing as described in recent news on account of “security,” is a complete hypocrite.

Resorting to legalistic “workarounds” is no less hypocritical.  For example, some might claim that governments have unfettered legal power to engage in surveillance of electronic data because it doesn’t violate the “right of people to be secure in their … papers.”  However, any such interpretation is plainly contrary to the framers’ intent:  Intellectual property existed only on paper in 1791, when the Bill of Rights came into effect!

Others might maintain that warrantless government surveillance, backed up by gag orders to keep the surveillance secret, is “reasonable” in national security situations involving either domestic subversion or foreign intelligence operations.

This was the argument the Executive Branch put forward to the Supreme Court in Katz v. United States (1967).  But the Supreme Court unanimously overruled the Executive Branch by holding that, at least in cases of domestic subversive investigations, compliance with the warrant provisions of the Fourth Amendment was required.  

Justice Lewis Powell, writing for the Court, said that whether or not a search was reasonable was a question which derived much of its answer from the warrant clause; except in a few narrowly circumscribed classes of situations, only those searches conducted pursuant to warrants were reasonable (refer to Warrantless “National Security” Electronic Surveillance, http://constitution.findlaw.com/amendment4/annotation05.html#1).

In other words, the government attempted to legitimatize warrantless electronic surveillance through the courts, but lost. Case closed.

To Nelson’s comments, I would add that the Supreme Court’s upholding of Maryland’s sweeping DNA law (on a 5-4 decision), means that your and my DNA can be collected and kept on file with the government for the rest of our lives — and who knows what they could do with that information.  Dissenting Justice Antonin Scalia’s arguments in this case are strong, persuasive – and withering.

The question now before us is … what are we going to do about it?  My brother proposes civil disobedience, if necessary, to wipe away these blemishes – even going so far as leaking the contents of National Security Letters.

Would anyone care to offer alternative ideas – ones that work more within the system?  Your thoughts and comments are welcomed – and you can keep them anonymous if you wish!

Internet Lawsuits: Tilting at Windmills

Phillip Nones Uncategorized , , , , , , , , , ,

Court throws out another defamation lawsuit against Google
More of the same: The courts throw out yet another defamation lawsuit against Google.
To the casual observer, it seems like American society gets more litigious with every passing year … with legal judgments handed down in cases that might have seemed totally frivolous in earlier decades.

But one area where the courts don’t appear to be favoring plaintiffs at all is in the realm of Internet defamation lawsuits. No matter how many times someone brings a legal action – and with all sorts of corroborating evidence in hand — the cases are thrown out of court.

The most recent example of this comes from the 9th Circuit Court of Appeals, which has just ruled in favor of Google in a lawsuit involving a family-owned roofing and construction business. The owners of the business had sued Google for defamation, citing an anonymous post that appeared on Google Places.

The anonymous poster claimed that “this company says it will fix my roof, but all I get are excuses.” According to the suit, this post has hurt business prospects, but it’s been impossible for the company to attempt to resolve the customer’s problem due to the anonymous nature of the post – or even to confirm that it represents an actual customer’s experience.

And I don’t doubt at all that business has suffered for this company as a result of the negative review. Results from a new survey conducted by Cone Communications reveals that ~80% of consumers have changed their minds about purchasing a product or service based solely on negative information they encountered online. That percentage is up from ~67% in 2010.

Clearly, online information has more power than ever to “make or break” a product or service these days.

But the appellate court sided with the district court that had ruled earlier that Google was immune from liability. The court wrote: “The district court properly dismissed plaintiffs’ action … because plaintiffs seek to impose liability on Google for content created by a third party.”

As in all the other cases it has successfully checkmated, Google moved to have the case dismissed on the grounds that the federal Communications Decency Act immunizes web sites for libel claims that stem from users’ comments.

I’ve blogged before about courts and the Internet, and it’s always the same: Trying to sue for “transgressions” carried out on the Internet is like banging your head against a wall.

The wall doesn’t budge, and all you end up with is a big headache.

So it bears repeating: If you’re thinking about bringing a legal action against someone because of an online issue, do yourself a favor. Don’t bother.

The Discover Card Discovers … Minnesota’s No Pushover

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Discover cardAs someone who lived in the state of Minnesota for years, long ago I came to the understanding that many people there view themselves as the ethical if not intellectual “umbilical cord” for the nation.

And why not? Minnesota has long been the font of “good government” initiatives many other states have sought to emulate. It’s the state that routinely leads all others in voter turnout, not to mention being the springboard of reformist politicians such as Eugene McCarthy, Hubert Humphrey and Walter Mondale.

So I wasn’t surprised to read last week that Minnesota’s Attorney General Office has filed a lawsuit against the Discover card for “deceptive marketing” practices. Discover is accused of making “aggressive, misleading and deceptive” telemarketing contacts in an attempt to lure customers into signing up for additional services that they didn’t realize carried a charge.

According to the complaint, customers were ostensibly being informed of Discover’s well-known “cash-back rewards” program, but then were told of the fee-based services as if those were regular features of the card’s benefits.

“Discover’s telemarketers employ an array of deceptive tactics to elicit an affirmative response from the cardholder without the cardholder actually understanding that they are supposedly aggreeing to purchase an optional product for a monthly fee,” the lawsuit contends.

According to the suit, Discover allegedly enrolled “tens of thousands of Minnesotans and charged them millions of dollars for enrollment in the plans” which include a “payment protection plan” that allows unemployed or disabled customers to suspend making credit card payments without penalty, an identity theft protection plan that costs ~$13 per month, and a credit-score tracking service that bills at ~$8 per month.

I love the way Lori Swanson, Minnesota’s attorney general, put it. “People expect their credit card company to stop and prevent these fraudulent charges – not be the ones making them.”

Or course, it’s not surprising that credit card companies are attempting to sell customers on fee-based services; the lawsuit claims that Discover earned over $295 million on these optional products during 2009 alone.

But the fact is, consumers are paying for additional services they don’t really need, as much if not all of their risk exposure is covered by other laws on the books. Of course, Discover conveniently left out that bit of information in their sales pitch to consumers.

“The biggest credit card companies make huge amounts of money by getting their customers to sign up for add-ons that are useless,” says Edmund Mierzwinski, a consumer program director at the U.S. Public Interest Research Group.

The Minnesota lawsuit seeks to order Discover not only to cease its aggressive marketing of these services, but also to reimburse customers who signed up for services they no longer want.

Based on how earlier cases of a similar nature against Experian and Providian have turned out … my guess is that Minnesota is going to be successful.

Online Customer Review Sites: Who’s Yelping Now?

Phillip Nones Uncategorized , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The news this week that social networking and user review web site Yelp® will now de-couple the presentation of reviews from advertising programs comes as a rare victory for businesses that have been feeling more than a little pressured (blackmailed?) by the company’s strong-arm revenue-raising tactics.

The web has long had something of a “Wild West” atmosphere when it comes to reviews of businesses helping or (more likely) hurting the reputation of merchants.

Yelp is arguably the most significant of these sites. Since its inception in 2004 as a local site search resource covering businesses in the San Francisco metro area, Yelp has expanded to include local search and reviews of establishments in nearly 20 major urban markets. With its branding tagline “Real people. Real reviews®,” Yelp is visited by ~25 million people each month, making it one of the most heavily trafficked Internet sites in America.

Yelp solicits and publishes user ratings and reviews of local stores, restaurants, hotels and other merchants (even churches and doctor offices are rated), along with providing basic information on each entry’s location, hours of operation, and so forth – with nearly 3 million reviews submitted at last count.

Predictably, user ratings can have a great deal of influence over the relative popularity of the businesses in question. While most reviews are positive (ratings are on a 5-point scale), Yelp also employs a proprietary algorithm – some would say “secret formula” – to rank reviews based on a selection of factors ostensibly designed to give greater credence to “authentic” user reviews as opposed to “ringers” or “put-up jobs.”

Not surprisingly, Yelp hasn’t disclosed this formula to anyone.

So far, so good. But Yelp began to raise the ire of companies when its eager and aggressive advertising sales team began pitching paid promotional (sponsorship) programs to listed businesses that looked suspiciously like tying advertising expenditures to favorable treatment on reviews as a sort of quid quo pro.

Purchase advertising space on Yelp … and positive reviews miraculously start appearing at the top of the page. Decide against advertising … and watch the tables turn as they drop to the bottom or out of site altogether.

Concerns are so strong that three separate lawsuits have been filed this year already, culminating in a class-action lawsuit filed in February that accuses Yelp of “extortion,” including the claim that Yelp ad sales reps have offered to hide or bury a merchant’s negative customer reviews in exchange for signing them up as Yelp sponsors.

“The conduct is an offer to manipulate content in exchange for payment,” Jared Beck, an attorney for one of the plaintiffs, states bluntly.

As for whether Yelp’s announcement of new standards will now curb the rash of lawsuits, it seems clear that this is the intent. But so long as Yelp offers to do any sort of manipulation or reshuffling of reviews in exchange for advertising, the lawsuits will probably continue – even if there’s only the appearance of impropriety.

Oh, and don’t look for Yelp to provide any additional revelations regarding how reviews are sequenced to appear on the page. Too much transparency, and it’ll only make it easier for people to figure out how to “game” the ratings.