Sunday, March 19, 2006

Newark Star-Ledger tackles patent troll issue

On Sunday, March 19, the Star-Ledger tackled the patent troll issue in an article about former New Jersey resident Mitchell Medina. Medina has filed at least 60 lawsuits in federal court during the past several years, alleging infringement on some of the 17 U.S. patents he holds.

The article notes: The recent claims by Medina revolve around computer technology used in dealing with data scanned into a computer from a hard-copy document. He also asserts his patents apply to technology allowing customers of online retailers to enter information into Web sites and have it transferred to company computers. he inventor and evangelist, who lived in Essex Fells and Roseland before moving in 2000 to Nairobi, Kenya, didn't respond to questions sent via e-mail. His attorney, Jean-Marc Zimmerman of Westfield, didn't respond to several calls. Medina's companies, Millennium LP and more recently, Eon-Net LP, have sued large businesses such as Linens'n Things and Hewlett- Packard, as well as smaller ones such as Cedartech and the Wine Messenger.

The article got into a specific case. Sargur Srihari, a professor at the University of Buffalo, is fighting a June 2005 lawsuit by Medina and Millennium. Srihari is president of Cedar tech, a corporation the university established to transfer technology developed by its employees. Medina claims in court records that software developed by Srihari and his colleagues infringes on his patents.

[IPBiz note: This example is of an alleged troll suing a company implemented through Bayh-Dole. In Eolas v. Microsoft, the alleged troll is a company created through the Bayh-Dole Act, and utilizing the services of other professors (e.g., Professor Felten of Princeton University) to sustain the alleged troll patent.]

The article continues: "On it's face, it seems to be an effort to weaponize a patent," said Chicago trademark attorney Christopher Renk, who recently moderated a teleconference on questionable patent assertions. "I've responded to letters like that and many others have, too."

One of those others was Richard Samuel, CoolAnimalStuff's at torney. He wrote in court papers the company was "unwilling to succumb to Eon-Net's questionable tactics."

The article also noted: One business, Internet retailer BabyAge, discovered technical problems with Eon-Net's patent, which attorneys said rendered Me dina's claims invalid. A judge re fused to dismiss the case, however, and the two sides settled earlier this year.

[IPBiz note: this reminds one of NTP v. RIM, wherein the problems RIM discovered with NTP's patent came "too little, too late." The moral is simply: "accused infringers" have to take this stuff seriously, early on in the process.]

[The author of the Star-Ledger article is Greg Saitz.]

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* A curious note: B-D is "inverted" to foster trollism? [IPBiz: In Eolas v. Microsoft, the alleged troll obtained a patent through Bayh-Dole. In the case in the Star-Ledger (lawsuit by Medina and Millennium against Professor Srihari, president of Cedar tech), the defendant is a Bayh-Dole company.]

A curiouser analogy:
I've heard of a couple guys, "advocates for the disabled", who visit all sorts of small businesses, see a violation of the Americans with Disabilities Act (ADA), and then sue the business to make the improvements (ramps, wider doors to bathroom, etc.) Usually, the business and advocate "come to an agreement" (ie, the business pays off the advocate to go away, so the suit became "blackmail"). The advocate does have "a legal leg to stand on", yet what results is just an exchange of money. [IPBiz has no information on this allegation.]

Likewise, the troll "has a legal leg to stand on", but what results is just an exchange of money- no productive work or better mousetrap.

*Thanks to proposed changes to the IRS' privacy regulation of tax preparers, everyone from H&R Block to your local tax-prep shop may be allowed to sell their clients' tax return information to any third party, including marketers and data brokers.

Mind you, they would need to get your consent, according to the proposed regulations.

But why on earth would you ever give it? The firm may try to sell you on the idea that by letting them "share" your sensitive financial information, you will benefit by getting pitched products and services that you really want.

That would be some serious tripe. How many times have you ever gotten a solicitation in the mail and said, 'Oh that's exactly what I need. Sign me up.'

Or, as consumer advocates fear, you may not even know you're giving consent because it may be buried somewhere in the middle of all the documents you'll be asked to sign when filing your returns.

Either way, when you give consent, "you're basically signing a blank check," said Chris Hoofnagle, senior counsel for the Electronic Privacy Information Center.

That's because the proposed regulations don't restrict how the third parties may use your information.
Who's profiting?

However they use it, I'm sure they'll do their level-best to profit from it.

It's not clear just how much a company can make. Typically, Hoofnagle said, businesses "rent out" their lists, getting a small amount for every name – maybe 10 cents. But they also may sign on for a 30 percent commission of any sale that results.

Then there's your retail value on the data market.

A group called SWIPE created a calculator that prices different pieces of personal information that you can buy from a data broker. I added up just 15 pieces of fairly common information (e.g., address, phone numbers, driver's license, Social Security number, a relative's name, employment history, etc.). Total retail value: $206.30.

Call me crazy, but I always thought the only one who has the right to sell something is the rightful owner.

I asked Hoofnagle who "owns" personal information. "Whoever who possesses it," he said.

So you, the data brokers, the department store where you applied for a store card and now possibly your tax preparer are co-owners of your data.

If the law gave you exclusive property rights, critics contend that those rights "would be meaningless because you'd bargain it away" just to get things like cable or some other service from a business, Hoofnagle said.

Okay. But if I and Choicepoint and Saks can "own" information about me simultaneously, then I think as a co-owner I should get a cut of the profits.

And if consumers demanded a cut, maybe businesses would think twice before spreading your good name wherever they can collect a dollar bill.

For that to happen, lawmakers would need to give consumers at least as much power over their information as they've given to businesses and government agencies.

But I'm not holding my breath. "That business and government are profiting off of our information is a huge public policy question," said Rob Douglas, founder of who has often testified on such matters before Congress. But, he said, it's a question largely ignored by lawmakers so far.

In the meantime, why not let the IRS know that your tax preparer shouldn't be allowed to sell your tax return information to others. (Here's a sample letter you can send, courtesy of the National Consumer Law Center.)

And be sure to ask your tax preparer whether he or she has included a consent form in your tax documents this year. Even though the regulations regarding information sharing aren't final, tax preparers are allowed to use them as guidance and therefore could request your consent this tax season.

H&R Block, the largest tax preparation firm, has always complied with IRS privacy regulations and doesn't sell information, a company spokesperson told me. The firm hasn't implemented any changes as a result of the proposed regulations, she added, further noting that it continues to ask for clients' consent before sharing their information with H&R Block financial and mortgage advisers and the bank HSBC, which offers refund anticipation loans.

Personally, I wouldn't give my consent for any of those things either, especially given the company's recent legal troubles regarding their express IRAs.

For more on privacy advocates' concerns about the IRS proposed regulations, click here and

[IPBiz note: on a separate point about disclosure of information, note that in New Jersey, under the short-lived McGreevey administration, a bill passed the N.J. legislature requiring doctors to disclose settlements in medical malpractice cases. A tangible result of the law is a website listing doctors in New Jersey. An intangible, and probably unintended, result of the law is that doctors will NOT settle lower value medical malpractice cases, because the perceived damage done to reputation as a result of settlement posting frequently exceeds the value of small cases. Between this law on listing, and an earlier law on affidavit of merit, the net result in New Jersey is fewer malpractice cases, but a greater amount of money going to the cases. This is a curious illustration of what can be the difference between a "number average" and a "weight average" result. The number of cases is down, but the amount of dollars is up, because (dollars per case) is way up.]

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