Digeo patent action against Audible makes New York Times

The patent fight between Digeo (Paul Allen CEO) and Audible attracted the attention of the New York Times on September 16. ComputerWorld wrote:

There's a great Joe Nocera column in Saturday's New York Times business section, "Tired of Trolls, a Feisty Chief Fights Back," about Audible.com, a company Digeo sued for patent infringement, asking for $400,000, and Audible's resistance to the suit. If you care at all about the festering mess that is the United States patent system you should read it (even though it requires access to the restricted Times Select area of the newspaper's Web site).

In about 2003, Digeo claimed that Audible was infringing Patent No. 5,734,823, which Digeo had bought in a bankruptcy proceeding. Digeo initiated a lawsuit in 2005. ComputerWorld wrote:

Audible, however, is fighting back, and so far it's winning because it turns out Digeo was suing under false pretenses -- it didn't own the patent it was accusing Audible of infringing. It's not giving up, though. It's going back to the bankruptcy court where it bought the patent and meanwhile keeping Audible in its sights.

The '823 patent, issued on March 31, 1998, is titled Systems and apparatus for electronic communication and storage of information and was initially assigned to Microtome. The '823 is based on a continuation of U.S. patent application Ser. No. 08/367,056 filed Dec. 30, 1994, now abandoned, which is a continuation-in-part of the U.S. patent Ser. No. 08/296,120 filed Aug. 25, 1994, now abandoned, which is a continuation-in-part of Ser. No. 07/787,536 filed Nov. 4, 1991, now abandoned.

The first claim of the '823 states:

A system for providing information to electronic storage media of system users, said system comprising:

a central computer comprising a central information storage bank;

at least one local unit communicatively coupled to said central computer, said local unit comprising a memory for storing, in electronic form, information transmitted to said unit from said central computer, and a processor for controlling transfer of information stored in said unit to the electronic storage media of system users, said local unit configured to encrypt the information when the information is to be transferred to the electronic storage media.

To date, the '823 patent has been cited by 105 U.S. patents.

Digeo is backed primarily by Vulcan, which is the investment vehicle of Paul Allen, the co-founder of Microsoft, and Allen is the CEO of Digeo.

Although Jim Blaisdell, the executive at Digeo who manages the patent, said, "It is not patent trolling when you have a real business to protect," Nocera wrote:

But it is difficult to see how trying to extract $400,000 from a company that sells digital books is "protecting" Digeo's struggling DVR business. Indeed, as Audible saw it, the '823' simply didn't apply to Digeo's technology. The inventors had in mind a system where, say, cash-strapped college students would come to a kiosk with a handheld device and download a textbook. But the patent was written very broadly part of the game in modern patent applications and it said next to nothing about the technical details.

The last paragraph in the ComputerWorld article talks about patent madness:

So how about it, Paul Allen. Nocera says 10 or more companies have paid Digeo off. Are you going to reimburse them, now that it turns out you didn't have a legal leg to stand on? Are you going to rein in Blaisdell and Digeo? Are you going to help stop the patent madness? Have you got what it takes to actually be a leader? Or are you a patent troll?

Someone earlier talked about "madness" and patents: the Harvard Law Review. See Note, Stopping the Madness at the PTO: Improving Patent Administration through Prosecution History Estoppel, 116 Harv. L. Rev. 2164, 2165 (2003)[“The PTO grants approximately 97% of patent applications…”] Only trouble is that the PTO does not grant approximately 97% of all applications.


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