[technique] Cisco, Motorola, Netgear Team Up To Expose Wifi Patent Bully

Laurent GUERBY laurent at guerby.net
Mer 10 Oct 12:25:16 CEST 2012


Brevets, wifi & rock'n'roll de l'autre coté de l'Atlantique.



Cisco, Motorola, Netgear Team Up To Expose Wifi Patent Bully (Patents)

by Mike Masnick from the hitting-back-hard dept on Tuesday, October 9th,
2012 @ 12:35PM

Last year, we wrote about a crazy patent troll, named Innovatio, who had
sued a ton of restaurants and hotels, claiming that anyone who used WiFi
was violating its patents. It was even claiming that individuals who use
WiFi at home infringed too -- but that it wouldn't go after them "at
this time." Instead, it preferred to focus on shaking down tons of small
businesses, offering to settle for $2,500 to $3,000 -- which is cheaper
than hiring a lawyer to fight it, no matter how bogus. We noted at the
time that Motorola and Cisco had gone to court to try to get a
declaratory judgment to protect its customers. 

Well, it seems that the effort to stop these lawsuits has been taken to
the next level. Cisco, Motorola and Netgear have now filed an amended
complaint which rips Innovatio apart, and doesn't just seek a
declaratory judgment of non-infringement, but outlines a parade of
lawbreaking by Innovatio, arguing that it's actually involved in
racketeering and conspiracy among other things. The full filing,
embedded below, is fascinating. The filing reveals some background about
Innovatio, which apparently is connected to Noel Whitley, who had been
VP of Intellectual Property at Broadcom... but then left to create
Innovatio, which just so happens to have acquired most of its patents
from... Broadcom. Among the parade of insanity charged against

        Motorola, Cisco and Netgear all have licensed the patents in
question, meaning that users of that equipment are covered by those
patents under the concept of patent exhaustion (basically, if you buy a
licensed product, it's licensed). Innovatio conveniently doesn't mention
this to the people it sends threat letters to.
      * The patents in question are part of commitments to IEEE that
they'll only be licensed on RAND terms, but the threat letters demand
way more than would be considered "reasonable."
      * Incredibly, Innovatio includes some expired patents in the list
of patents it has threatened people over. That's a massive no-no. Once a
patent is expired you can't demand a license for it. At all.
      * Innovatio apparently tells the people it threatens that it'll be
cheaper to just settle, rather than to even investigate the claims that
it's making -- and has told people that the manufacturers in question
aren't defending their customers, which is proven false by the lawsuit,
which, again, was filed soon after Innovatio popped up on the scene. 
      * In an attempt to appear more legit, Innovatio claims that the
patents in question have "generated in excess of $1 billion in
settlements and license fees" to scare small businesses into complying.
It leaves out that it appears to be basing this number on the famous
broad patent fight settlement between Qualcomm and Broadcom, which was a
wide-ranging cross licensing program, that has nothing to do with
Innovatio or its specific patents.
      * There's a lot more in there, but if the allegations by the
vendors are accurate, Innovatio's actions are really questionable. Even
if people agree that the patents in question are legit, the fact that
the vendors have already licensed them makes these actions quite
incredible. The lawsuit claims that Innovatio has sent threat letters to
an astounding 8,000+ businesses, mostly way too small to be able to
understand the details of what's happening. 
Defendants prey upon end users that are not involved in the development
or supply of the accused technologies, demanding exorbitant licensing
amounts that breach numerous obligations on the patents and greatly
exceed any notion of reasonableness. In furtherance of their plan,
Defendants threaten protracted negotiations with onerous burdens on end
users, and offer supposed “discounts” for promptly paying Innovatio
without engaging in such negotiations, while making it clear that
Innovatio will initiate costly litigation with anyone that does not
acquiesce (something it cannot realistically do given the 8000-plus
letters sent throughout the U.S.). Under these circumstances, Innovatio
circumvents its obligations and illegally obtains and seeks to obtain
licensing fees to which it is not entitled, at great detriment to the
Plaintiffs in this action, their customers, and the public generally. 
        Oh yeah, as for that whole "expired patent" thing? That seems
especially egregious: 
To date, at least ten of the Innovatio Patents have expired, yet those
patents continue to be highlighted in Defendants’ threat letters in
furtherance of their licensing campaign. Yet Innovatio states to its
licensing targets that “Innovatio proposes granting [the licensing
target] an upfront, paid-up license for its use under all of 31 of the
issued Innovatio Patents,” when those targets have no liability on and
therefore no need of such a license to expired patents. For example, on
May 9, 2012, almost one year after the ‘771 patent expired and almost
six months after the ‘311 patent expired, Innovatio sent a demand letter
to [redacted] .... Innovatio did not provide notice of these or its
other patents to [redacted] before expiration. Notwithstanding the
expiration of these patents and other patents, Innovatio’s May 9, 2012
demand letter stated “[t]he operation and use of any [WLANs that use the
IEEE 802.11 communication protocols] by [redacted] constitutes
infringement of at least the following Innovatio Patents: . . . U.S.
Patent No. 5,940,771 . . . [and] U.S. Patent No. 6,374,311.” .... Yet
circumstances here including a failure to comply with 35 U.S.C. §287,
confirms that Innovatio cannot assert infringement or recover damages on
at least these expired patent claims. On information and belief,
Innovatio never disclosed that these patents had expired, or that its
remedies were limited, and the purpose behind inclusion of these patents
is to inflate the size of Innovatio’s portfolio, instill fear, increase
fees and costs to investigate, and force its targets to capitulate
promptly to Innovatio’s unlawful demands. 
        The filing also includes standard claims of non-infringement and
invalidity of the patents in question, but the highlighting of these
other behaviors by Innovatio are really quite stunning. Even in cases of
extreme patent trolling it's pretty rare to see such egregious behavior.
Every so often we see RICO claims being used to counter trollish
behavior, but they rarely work. However, the details in this case
suggest that if a RICO charge is going to stick, this seems like a
reasonable case for it to happen.

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