Updated, Victory! Cost of Defending Against A Troll Is More Than Just A Bridge Toll
Update (Oct. 29, 2014): Yesterday, the Court granted [PDF] Capstone's Motion for Judgment on the pleadings, finding that all claims were invalid for claiming unpatentable subject matter, applying Alice v. CLS Bank. We're glad Capstone fought against these patents and achieved a total victory, despite the significant costs associated with doing so. We're also happy that the court decided this issue early, sparing the parties and the Court additional needless time and expense. We hope this decision motivates others to challenge stupid patents early.
(Original Post, Aug. 21, 2014) We recently wrote about the end of Adam Carolla’s high-profile patent battle with the troll Personal Audio. We had a guess as to why Carolla settled: patent litigation is expensive. Even Carolla, with the backing of numerous fans and supporters, still likely didn’t have enough money to see his case through to the end. Today, we’d like to highlight the case of another patent troll defendant: Capstone Photography.
You probably don’t know Capstone. Capstone is a small photography business based in Connecticut. Although it works with contractors around the country, it has only three part-time employees other than the owners. On New Year’s Eve, 2013, Capstone was sued by Peter Wolf, the owner of a company called Photocrazy, for infringement of three patents: U.S. Patent Nos. 6,985,875; 7,047,214; and 7,870,035.
Here is claim one from U.S. Patent 6,985,875:
1. A process providing event photographs of a sporting event for inspection, selection and distribution via a computer network, comprising the steps of:
taking photographs of at least one participant of a sporting event along at least one point of a course or field thereof;
associating identifying data with each photograph taken, wherein the identifying data is selected from at least one of: a number corresponding to a number worn by a participant, a participant's name, a code acquired from a component worn by a participant, and a date and time, including hour and minute the photograph was taken;
informing the sporting participants of the identifying data;
transferring the photographs to a computer network server;
cataloging each of the photographs in a web-site server according to the identifying data;
accessing the server at a location other than the sporting event and searching for a photograph of a particular sporting event participant utilizing the identifying data; and
displaying the photograph of the sporting event participant for inspection and ordering.
In plain English: Take photos of a race, tag and sort by bib number and date, and search for photos based on that tag via the Internet. That’s it.
We’re having a hard time seeing how this patent “promotes the progress of the sciences and the useful arts” given that it seems to be a patent on numerical sorting and searching. Indeed, the Supreme Court recently ruled that claims that simply add “do it on a computer” to an abstract idea are not even eligible for patent protection. We think the patent clearly fails this test. (It’s also likely not infringed). But because it can take months (and even years) for the court to even consider those issues, they will likely never be decided. Patent litigation is expensive, so many small businesses can’t afford to fight back no matter how weak the patent. That’s part of the problem. Companies can get 20 year “monopolies” after an average of 19 hours of review by the Patent Office. And because the cost to get a patent can be orders of magnitude less than the cost to defend against it, there is an incentive for people to get patents in order to later force defendants into settlement.
Capstone doesn’t have a widely-distributed podcast that it can use to drum up the backing of thousands of fans and supporters. Its owner’s own attempt to crowdfund the defense raised only about $5,000. And although Capstone’s business has been profitable, the owner tells us that because of the patent lawsuit and the costs his company is facing, his business faces the very real prospect of shutting down.
Recent reforms have been helpful to reduce costs for some defendants. For example, the Inter Partes Review (“IPR”) program now being implemented at the Patent Office promises to be a much cheaper way to determine validity. One problem though, is that it is still too expensive for businesses like Capstone. An IPR costs $23,000 in filing fees alone, and requires paying lawyers and often experts as well.
EFF previously advocated for reduced fees for IPR filings by small businesses and others without the ability to fund patent challenges. Unfortunately, the PTO ignored our request. However, the PTO is currently accepting comments regarding the post-grant challenges such as the IPR process. We encourage the public, especially small business owners, to let the PTO know by September 16 that the costs are still too high for many, and absent a lower cost, patent trolls will continue to assert dubious patents against companies they know can’t afford to do anything but settle.