February 29, 2016 | By Daniel Nazer

Stupid Patent of the Month: Phoenix Licensing Trolls Marketers

This month, we feature another yet another patent that takes an ordinary business practice and does it on a computer. Our winner is US Patent No. 8,738,435, titled “Method and apparatus for presenting personalized content relating to offered products and services.” As you might guess from its title, the patent claims the idea of sending a personalized marketing message using a computer.

Claim 1 of the patent is representative (the claims are supposed to describe the boundaries of the invention). It claims a “method of generating a set of personalized communications … with a computer system.” The steps are described at an extremely high level of abstraction, including things such as “accessing a computer-accessible storage medium” using “identifying content to distinguish each person from other persons.” The patent plainly proposes using ordinary computers to achieve this task. In fact, the “preferred embodiment of the apparatus” is illustrated in Figure 1 and includes fascinating, non-obvious details like a “display,” a “keyboard,” and a “mouse or pointing device."

Attentive readers have probably already concluded that the claims of US Patent No. 8,738,435 are almost surely invalid under Alice v. CLS Bank, the 2014 Supreme Court decision which held that abstract ideas implemented on a generic computer are not patent eligible. We agree. But this has not stopped a company called Phoenix Licensing, LLC, from suing more than 100 targets with this and other highly questionable patents from the same family (a patent family is the group of issued patents that come from the same application).

Phoenix Licensing has filed at least a dozen lawsuits just this month against companies ranging from CVS to Credo Mobile. Unsurprisingly, given that its patents are so vulnerable to challenge under the Alice standard, it has filed all of these lawsuits in the Eastern District of Texas. Recent data shows that the Eastern District of Texas is much less likely than other federal courts to invalidate patent claims under Alice. This helps explain why a dispute between Phoenix Licensing (principle place of business in Scottsdale, Arizona) and Credo Mobile (headquartered in San Francisco) would end up way out in East Texas.

In its complaint against Credo Mobile, Phoenix Licensing boasts that its original 1996 patent application has grown into a patent family of 19 patents with more than 1,500 issued claims. But this is not evidence of inventiveness. Rather, it simply shows that the Patent Office is asleep at the wheel. The Patent Office has allowed Phoenix Licensing’s mundane idea—using a computer to send personalized marketing messages—to grow like a Chia pet into a thicket of patent claims.

We have seen similar strategies from other patent trolls who exploit the permissiveness of the Patent Office to get an absurd number of nearly identical claims, which can then be used to force defendants to play an expensive game of whack-a-mole in court. This creates enormous settlement pressure. Indeed, most of Phoenix Licensing’s cases settle quickly after filing. The Phoenix Licensing story shows that we still need reform both in the courts and at the Patent Office—to stop abusive patent litigation and to stop these stupid patents from issuing in the first place.


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