“They’re terrorists. They terrorize the end user.”
That’s BTA General Counsel Bob Goldberg’s take on patent trolls at a BTA-sponsored industry summit on March 14 to address this escalating industry issue. These patent trolls are actually attorneys who are out to extort money from end users who use their MFPs for network scanning and scan-to-email.
Summit attendees were mostly legal representatives from the OEMs who have been seeing more of these letters from their end users and are looking to BTA to provide a sense of direction as to how to handle this issue.
“Patent trolls are people who enforce patents but don’t produce a product or perform a service under the patent,” explained Goldberg. “Basically, all they do is walk around trying to enforce these patents.”
These letters are going out in the thousands from what Goldberg describes as “an alphabet soup of companies” with names like Project Paperless and GanPan, LLC. In Illinois where Goldberg is based, he looked into where they’re getting the names of the companies they’re targeting only to find there’s no rhyme or reason.
Project Paperless, for example, simply used a listing of Best Businesses in Atlanta. Companies across the country are receiving similar letters even though Goldberg doesn’t believe that the patent trolls have any information about these patent violations at all. It’s phishing plain and simple.
Some companies have even received multiple letters, including draft lawsuits. Without going into minute detail on the four patents the patent trolls are looking to enforce, the two most prominent are U.S. Patent No. 7,986,426 (Distributed Computer Architecture and Process for Document Management) and U.S. Patent No. 7,477,410 (Distributed Computer Architecture and Process for Virtual Copying).
For many of the attorneys in the room who have seen these letters, and some are quite detailed, Goldberg and others acknowledge that they’re difficult even for patent attorneys to decipher.
An attorney from Atlanta who Goldberg invited to the Summit (attendee names with the exception of Goldberg’s remain confidential), because she has gone up against one of these patent trolls, has spoken with about 100 people who have received these letters. She presented her research on some of the organizations doing the patent trolling. What she discovered was that many of these firms have been created with what appears to be the sole purpose of trolling for patents, mostly by targeting smaller businesses even though some Fortune 500 companies have been approached as well and asking for a licensing fee, in some instances up to $1,000 per employee, to use the technology. If they don’t pay, they threaten legal action.
At this point no legal action has been taken by the patent trolls and Goldberg and BTA, and some of the attorneys from the OEMs in the room, would welcome that challenge. “It would be a tremendous opportunity for us to see what’s behind it and put an end to it perhaps forever,” states Goldberg.
To be clear, the patent trolls are not going after the OEMs or the dealer and saying that the equipment itself violates the patent, but the process of scanning a document over a network and sending it as an e-mail does. “Some say these processes are obvious and there are all sorts of claims that can be made to them, so getting our ducks in a row would be helpful,” notes Goldberg.
Reportedly, some companies who have received these letters have paid the licensing fees even if it wasn’t for the original asking amount. As Goldberg points out, they’ll go to their local attorney who isn’t sophisticated about patent laws and who tells them it could be a tremendous settlement, so they settle for some fee, which then allows the patent trolls to tell other targets that other companies like them have recognized the claim and settled. “And the cycle goes on,” states Goldberg. “The more money you give these trolls the better financed they are to continue. It’s up to BTA to educate and stop it before it grows.”
Some end users receiving these letters contact their dealer, who in turn contacts the OEM, looking for answers. “That’s a problem for the dealer community and the manufacturer,” says Goldberg. “Our images are being tarnished by this whole process. The villains are the lawyers who are out there trolling for dollars.”
“If they bring suit against somebody, we’re in it, like it or not,” adds a legal rep from one of the OEMs.
While Goldberg says the industry can’t give legal advice to end users, it must come up with ways to help them.
Although various courses of action were discussed at the Summit, the initial course of action is the creation of an industry white paper by BTA, which will be distributed to dealers and OEMs to provide to customers, educating them about the patent trolling issue. This is similar to what BTA did with the data security issue a couple of years ago. Other actions are still under discussion.
For now Goldberg doesn’t expect the patent trolls to initiate any litigation. “But if there is, BTA will step up to the plate and take this on hook line and sinker to the nth degree,” emphasizes Goldberg.
In the meantime, WNBC News is putting together an investigative report from a consumer perspective on this issue, following a company that received one of these letters. It will be interesting to see if that piece has the same impact as the news story on data security.
