A newly formed patent troll is looking for big money from small business websites, just for using free, off-the-shelf login verification tools.
Defenders of the American Dream, LLC (DAD ), is sending out its demand letters to websites that use Google’s reCAPTCHA system, accusing them of infringing U.S. Patent No. 8,621,578. Google’s reCAPTCHA is just one form of a Captcha test, which describes a wide array of test systems that websites use to verify human users and keep out bots.
DAD’s letter tells targeted companies that DAD will take an $8,500 payment, but only if “licensing terms are accepted immediately.” The threat escalates from there. If anyone dares to respond that DAD’s patent might be not infringed, or invalid, fees will rise to at least $17,000. If DAD’s patent gets subject to a legal challenge, DAD says they’ll increase their demand to at least $70,000. In the footnotes, DAD advises its targets that “not-for-profit entities are eligible for a discount.”
The DAD demand letters we have reviewed are nearly identical, with the same fee structure. They mirror the one filed by the company itself (with the fee structure redacted) as part of their trademark application. This demand letter campaign is a perfect example of how the U.S. patent system fails to advance software innovation. Instead, our system enables extortionate behavior like DAD’s exploding fee structure.
DAD Didn't Invent Image Captcha
DAD claims it invented a novel and patentable image-based Captcha system. But there’s ample evidence of image-based Captcha tests that predate DAD’s 2008 patent application.
The term “Captcha” was coined by a group of researchers at Carnegie Mellon University in 2000. It’s an acronym, indicating a “Completely Automated Public Turing test to tell Computers and Humans Apart.” Essentially, it blocks automated tools like bots from getting into websites. Such tests have been important since the earliest days of the Internet.
Early Captcha tests used squiggly lines or wavy text. The same group of CMU researchers who coined “Captcha” went on to work on an image-selection version they called ESP-PIX, which they had published and made public by 2005.
By 2007, Microsoft had developed its own image-categorization Captcha, which used photos from Petfinder.com, then asked users to identify cats and dogs. At the sime time, PayPal was working on new captchas that “might resemble simple image puzzles.” This was no secret—researchers from both companies spoke to the New York Times about their research, and Microsoft filed its own patent application, more than a year before DAD’s.
There’s also evidence of earlier image-based Captcha tests in the patent record, like this early 2008 application from a company called Binary Monkeys. Here's an image from the Binary Monkeys Patent:
And here's an image from DAD's patent:
So how did DAD end up with this patent? During patent prosecution, DAD’s predecessor argued that they had a novel invention because the Binary Monkeys application asks users to select “all images” associated with the task, as opposed to selecting “one image,” as in DAD’s test. The patent examiner suggested adding yet another limitation: that the user still be granted access to the website if they got one “known” image and one “suspected” image.
Unfortunately, adding trivial tweaks to existing technology, such as small details about the needed criteria for passing a Captcha test, can and often does result in a patent being granted. This was especially true back in 2008, before patent examiners should have applied guidance from the Supreme Court’s 2014 Alice v. CLS Bank decision. That’s why we have told the patent office to vigorously uphold Supreme Court guidelines, and have defended the Alice precedent in Congress.
Where did DAD come from?
DAD’s patent was originally filed by a Portland startup called Vidoop. In 2010, Vidoop and its patent applications were purchased by a San Diego investor who re-branded it as Confident Technologies. Confident Tech offered a “clickable, image-based CAPTCHA,” but ultimately didn’t make it as a business. In 2017 and 2018, Confident Tech sued Best Buy, Fandango Media, Live Nation, and AXS Group, claiming that the companies infringed its patent by using reCAPTCHA. Those cases all settled.
In 2020, Trevor Coddington, an attorney who worked on Confident Tech’s patent applications, created Defenders of the American Dream LLC. He transferred the patents to this new entity and started sending out demand letters.
They haven’t all gone to large companies, either. At least one of DAD’s targets has been a one-person online publishing company. Coddington’s letter complains about how Confident Tech failed in the marketplace and suggests that because of this, reCAPTCHA users should pay—well, him. The letter states:
[O]nce Google introduced its image-based reCAPTCHA for free, no less, [Confident Technologies] was unable to to maintain a financially viable business… Google’s efficient infringement forced CTI to abandon operations and any return on the millions of dollars of capital investment used to develop its patented solutions. Meanwhile, your company obtained and utilized the patented technology for free.”
Creating new and better Captcha software is an area of ongoing research and innovation. While the lawyers and investors behind DAD have turned to patent threats to make money, other developers are actively innovating and competing with reCAPTCHA. There are competing image-based Captchas like hCaptcha and visualCaptcha, as well as long lists of Captcha alternatives and companies that are trying to make Captchas obsolete.
These individuals and companies are all inventive, but they’re not relying on patent threats to make a buck. They’ve actually written code and shared it online. Unfortunately, because of their real contributions, they’re more likely to end up the victims of aggressive patent-holders like DAD.
We’ll never patent our way to a better Captcha. Looking at the history of the DAD patent—which shares no code at all—makes it clear why the patent system is such a bad fit for software.