By Andrew Williams --
There has been a lot of discussion recently in the mainstream press regarding the U.S. patent system and its perceived failings. The current outcries stem from the apparent proliferation of "Patent Trolls," also known by the less derogatory term Patent Assertion Entities (or PAEs). Prompted by this apparent threat, President Obama has proposed a series of legislative recommendations and executive actions, and Congress has introduced several new pieces of legislation, likely precipitated by the remarks of the President earlier this year. In fact, the Chief Judge of the Federal Circuit, Judge Randall Rader, recently wrote an Op-Ed piece for The New York Times, with Colleen V. Chien and David Hricik, suggesting that judges might have the ability to curtail trolls by making them pay for abusive litigation ("Make Patent Trolls Pay in Court," New York Times, June 5, 2013). Judge Rader explained that Section 285 of the Patent Act and Rule 11 of the Federal Rules of Civil Procedure gives judges the authority to shift the cost of litigation abuse from the defendant to the trolls. It will be interesting to see if anything changes based on this response from all three branches of the U.S. government.
Nevertheless, probably no one would argue that there has been in increase in abusive patent litigation in recent history, and that at least some of these problems stem from non-practicing entities. However, it is clear that the mainstream media is not providing a balanced analysis of the issues involved, tending to quickly label any individual or organization that asserts its patent rights as a troll. Lost in this discussion is a presentation of the merits of the patent system and the potential advantages of non-practicing entities (as even President Obama report acknowledged). For example, NPR has mounted what appears to be an all-out assault on the allegedly "broken" patent system. This recent barrage of criticism was anchored by an episode of "This American Life," which aired a little over a week ago and focused almost exclusively on a single patent case stemming from an investigation of Intellectual Ventures (we provided some commentary on this episode; see "'When the Patent System is Attacked!' -- The White House Task Force on High-Tech Patent Issues"). Shorter versions of this episode have been featured on other public radio shows since that time.
One example that this episode touched on briefly was about a patent holder that has been asserting one of his patents against prominent podcasters, alleging that he invented podcasting back in the mid-'90s. To further elaborate on this story, NPR's own podcast, "Planet Money," released an episode on May 31, 2013, entitled "When Patents Hit the Podcast." In this episode, Planet Money host Zoe Chace and correspondent Robert Smith explored the story of inventor Jim Logan and his company Personal Audio LLC ("Personal Audio"). Personal Audio had recently obtained a favorable jury verdict against Apple for infringing patents listing Mr. Logan as an inventor. The parties later settled. Mr. Logan has now turned his attention to podcasters themselves, thereby prompting the story. The podcast did include a disclaimer that Planet Money had not been sued by Personal Audio, nor had it been approached about obtaining a license. However, the clear implication was that if podcasters could be sued, anybody else could also. In fact, during the Podcast, Mr. Logan's licensing attorney, Richard Baker, joked with Ms. Chace that because she had a playlist of summer songs, she owed him 15 cents. "OK, sounds kind of scary, but he was actually joking," Ms. Chace explained.
The episode was crafted to paint Mr. Logan in the worst possible light. Listeners to the podcast unfamiliar with the patent system would definitely come away from the episode believing that Mr. Logan was attempting to hijack somebody else's idea and extort money out of them. This story began in the mid-'90s, when Mr. Logan had the idea to provide audio content to customers in an episodic fashion. He envisioned that this could be accomplished over the internet, but unfortunately the technology had not caught up with him yet. Therefore, he established a business offering magazines on tape, which he named Personal Audio, by which customers could select different stories from different content providers and an audio version of those stories would be delivered on cassette tape. This was mockingly referred to as the first podcast. Mr. Logan applied for a patent, but his business never got off the ground, and all of his attempts at developing a player for digital content failed. Mr. Logan had other ideas, though, such as pausing live TV (think TiVo), deep-tagging in videos (think YouTube), and enhancements to touch screens (which he sold to 3M). But, except for the last one, all were deemed failures by the podcast.
Years later, Mr. Logan and his attorney discovered that Apple was utilizing a playlist in most of their products, and that this playlist functioned essentially how Mr. Logan had envisioned it when he filed his patent application. After successfully suing Apple, Mr. Logan was said to have set his sights on the podcasters themselves. First, he filed a divisional application with claims that could more easily be read on podcasting. Of course, Ms. Chace didn't use the word divisional application, but explained it in a more sinister manner ("[S]o he pulled up the patent and added to it to make sure the part he thought covered podcasting was emphasized"), and Mr. Smith expressed surprise that it was completely legitimate to go back and "tweak" your patent. After obtaining this divisional patent in February 2012, Mr. Logan approached select podcasters, such as Marc Maron of the WTF podcast, to inquire about licensing his patent. When he was asked about these threats, Mr. Maron suggested that his podcast might have to shut down if they were carried out. Personal Audio has filed suit against several podcasting organizations, including ACE Broadcasting Network, LLC, distributors of "The Adam Carolla Show," one of the most successful podcasts. The Planet Money podcast concluded with an interview of Julie Samuels of the Electronic Frontier Foundation ("the EFF"), an organization seeking to invalidate this patent at the United States Patent Office, although it was unclear whether any such proceeding has yet been initiated.
In discussing this podcast, Patent Docs is not commenting on the merits of Mr. Logan's patent or the actions of Personal Audio. For those interested, the asserted patent is U.S. Patent No. 8,112,504, and according to the ACE Broadcasting complaint, Personal Audio is asserting at least claim 31 of this patent. Patent Docs is also not taking a position on the EFF's actions at this time in attempting to invalidate Mr. Logan's patent. In fact, the patent system allows EFF and organizations like it to seek reexamination at the Patent Office if they are able to uncover legitimate invalidating prior art. The problem with the Planet Money podcast is that at best it was misleading, but at worst it got several crucial patent concepts wrong. And, considering the size and make-up of the audience that it reaches, it was unfortunate that this podcast did do a better job at presenting the positive side of the patent system. It is no surprise that public opinion of the patent system appears to be waning.
As a brief refresher, the ability to, and reasoning for, establishing a patent system can be traced back to the beginning of this country. The U.S. Constitution, in Article 1, Section 8, Clause 8, says:
[The Congress shall have Power] [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
Also, as explained on the Patent Office website, "[a] patent is a property right granted by the Government of the United States of America to an inventor 'to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States' for a limited time in exchange for public disclosure of the invention when the patent is granted." In other words, the inventor gets something (a limited period of exclusivity), but the public gets something also, disclosure of the invention. Without the patent system, innovators would be incentivized to keep any new invention as a trade secret, thereby depriving the public of the ability to learn and improve upon the invention. Unfortunately, most accusations that the patent system stifles innovation are based on extrapolations of individual anecdotes and are often unsupported by any data.
The first misconception perpetuated by the Planet Money podcast was that the patent system should only reward inventors if they create a new "thing." For example, Mr. Smith lamented that "patents stopped being about protecting your gizmo from someone else's gizmo and making money off of this protected space." First of all, this completely ignores all of the valuable patents that have been granted for methods of using a "gizmo," or methods of making a "gizmo." But, more importantly, the implication was that if the patent holder did not make the "gizmo" himself, society has not benefited. This is not the case. In order to ensure that the invention is disclosed to the public, the patent must teach those skilled in the art how to make and use the invention (see 35 U.S.C. § 112). For this public disclosure to occur, it is irrelevant whether the inventor ever actually made the invention. In fact, the Patent Office stopped requiring the submission of models in 1880. Ms. Chace was on the right track when she asked Mr. Baker, Personal Audio's licensing attorney, whether "[i]f you have the idea of the thing, don't you have to invent the way to get it?" Of course the answer is yes, but Mr. Baker didn't directly answer the question, but instead stated that the '504 patent provides a roadmap to how to do podcasting. Interestingly, Ms. Chace followed up with the question: "Do you think that the guy that invented iTunes, like, read your roadmap?" Of course, the answer is that it does not matter, but anyone listening to the question would come away with the impression that iTunes developer did not, in fact, read the patent. Now, we do not know either way, but what if they did? Would that matter? If so, it can easily be imagined that the script would flip, and Apple would then be the bad guy for stealing someone else's invention and without providing them any compensation. But this perspective was not provided.
Another issue that was at least misleading in the podcast was the suggestion that podcasters are the "end users" of the technology. The podcasters are not the typical end users that come to mind. Instead, most people would consider the term "end user" to refer to anyone that has ever listened to a podcast. The only reason that this use of the term might make sense here is that claim 13 of the '504 patent covers an "[a]pparatus for acquiring and reproducing media files representing episodes in a series of episodes as said episodes become available." And even though it is incredibly unlikely that podcasters like Mr. Carolla are infringing the patent because they have made such an apparatus, they are still using such an apparatus (whether it is covered by the asserted claim or not). Again, without taking any position on the merits of the case, we find it difficult to believe that ACE broadcasting does not benefit in some way from its podcast offerings. To make the point, Mr. Smith used the example in the podcast that this case was akin to someone having a patent on the automobile, but instead of suing rival manufacturers, they sued the owners that bought and drove the cars. This is not an appropriate analogy. The more apropos analogy for this particular scenario would have been to compare the podcasters to taxi drivers -- sure, the taxi drivers do not make the automobiles that this hypothetical patent covers, but the drivers sure do profit from using them. It is likely that the same can be said of most commercial podcasters.
Probably the most frustrating thing about this podcast was that the term "patent troll" was thrown around without ever truly being defined. In fact, Ms. Chace never referred to Personal Audio as a troll herself, but instead she reported that:
Julie Samuels [of EFF] uses a term for Jim and people like him, she calls them Patent Trolls. It just means someone who doesn't build, doesn't make, doesn't create jobs. A patent troll extracts money from people who do those things.
The problem is that in this case, Mr. Logan was one of the original inventors on the patent at issue. Therefore, this was not a case of a large patent-holding company that buys up other people's patents in an effort to assert them against others. In fact, perhaps unwittingly, the podcast painted Mr. Logan as the quintessential small inventor trying to stand-up against Apple, the large corporation. But, instead of the hero of American ingenuity, he was made to be the villain. And why? Because he was unsuccessful at developing his invention that he envisioned all those years ago. Of course, it is easier to paint Mr. Logan in a negative light now because he is has been targeting podcasters, and that probably hits a little too close to home for Planet Money. But, we must continue to ask ourselves whether there is a place in the U.S. patent system for the small inventor, and if so, what is that place. It is these inventors that may not have the financial or technical resources to compete with the larger corporations without the protection of a patent, but they now risk being labeled a troll for asserting their patent rights, or worse yet, capitalizing on their invention by selling their patents to non-practicing entities that might have more leveraging power to help the patents receive full value. Unfortunately, Mr. Logan might not be the best example, but the on-going debate should present both sides fairly in order to allow the public to come to an informed decision.