Libel

Accusing Someone of Inadvertent Patent Infringement Is Not Libelous

"Even the most dedicated patent lawyer would have difficulty mustering 'hatred' for a computer user who inadvertently violated a patent."

|The Volokh Conspiracy |

From Sarkisian v. Rooke, decided in 2007 by Judge Thomas M. Golden (E.D. Pa.) but just posted on Westlaw:

The parties to this matter are also involved in a patent litigation before the Court (REAL v. Sarkisian, 05-cv-03573). In the patent action, plaintiff Real Estate Alliance, Limited (REAL) alleges that defendant Diane Sarkisian, a local realtor, violated two of its patents-in-suit by conducting web-based property searches…. [Sarkisian countersued on various grounds, including defamation, based] on a press release about the patent suit issued by REAL in July 2005, and a published interview given by defendant Scott Tatro, an officer of one of REAL's licensees, the company Equias Technology Development.

Sarkisian claims that Equias works in concert with REAL to extort money from realtors. Specifically, once REAL has threatened agents with a patent infringement lawsuit unless they purchase a $10,000 license, Equias moves in to offer them a sublicense at a deep discount. The alleged collusion between Equias, Tatro and REAL plays a central role in the federal counts of Sarkisian's complaint; to resolve the [defamation] counts, however, the Court primarily addresses REAL's press release, Tatro's interview, and the unspecified activities by the defendants to publicize their suit….

Sarkisian's defamation claim fails because the Court concludes that the communication contained in the REAL press release and the Tatro interview could not have a defamatory meaning…. A defamatory statement "tends to blacken a person's reputation or expose him to public hatred, contempt, or ridicule or injure him in his business or profession." Statements that are merely annoying or embarrassing are not defamatory.

Sarkisian argues that "[l]anguage which imputes fraud or want of integrity to one's business, profession, or other occupation is actionable per se" in a defamation claim. She is correct insofar as there are a number of cases in which direct or implied insults to a business have been held to be defamatory. [Such defamatory meaning had been found in] … [an] advertisement implying that a camera shop used inferior materials, inflated costs, and ruined snapshots[,] … [a] letter implying that a travel agency trafficked in stolen tickets and was under criminal investigation[,] … [and a] broadcaster's assertion that plaintiff misrepresented the quality and price of its products …. In a recent case that bears some resemblance to this one, an Eastern District court concluded that when one manufacturer of biomedical devices accused another of patent infringement, the statement might be defamatory because it could mar the plaintiff's reputation and "deter third persons from associating with [plaintiff]."

The Court concludes that REAL's press release and the related publicity could not have defamatory meaning for two reasons: first, because an average reader would not feel hatred or contempt for Sarkisian upon reading the release or related material; and second, because the release and related material does not meaningfully criticize either Sarkisian's work or her character. As to the first reason, even the most dedicated patent lawyer would have difficulty mustering "hatred" for a computer user who inadvertently violated a patent. The Court's analysis thus focuses on the second reason, and why the press release and related material does not impugn Sarkisian's professional reputation to a defamatory degree.

First, the press release does not indicate that Sarkisian is unique in her behavior. Just the opposite is true—the release equates Sarkisian's conduct with that of "real estate agents throughout the United States." Moreover, the press release claims that the "average" real estate agent might owe as much as $50,000 in fees to REAL because of consistent infringement. Although perhaps embarrassing to Sarkisian, this language is not defamatory because it suggests that the patent infringement is typical, and thus cannot reflect a special want of integrity on Sarkisian's part.

Nothing in the release suggests that Sarkisian, or any of her colleagues, would have intentionally violated REAL's patent, which makes Sarkisian's claims of an assault on her integrity weak. In addition, it is difficult to imagine that … REAL's statements could deter third parties from associating with Sarkisian. The press release notes that Sarkisian is similar to the "average" real estate agent; a customer truly deterred by REAL's claims would have to swear off not just Sarkisian, but real estate agents altogether.

Moreover, nothing in the press release and related material reflects on Sarkisian's moral fiber or on the quality of her work. Unlike the defendants in [the precedents cited above], REAL has made no statements that imply Sarkisian is unskilled, dishonest, or involved in a crime. Similarly, nothing in the release implies that Sarkisian is not a good realtor—if anything, REAL hints that she is an industry leader. Because the average reader would not come away from REAL's press release or related materials with a negative impression about Sarkisian's work or character, her defamation claim is dismissed….

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  1. Searching for properties on the web (google maps, the way it sounds) violates a patent? What new hell is that?

    1. It’s patent trolling, a scam where you extort money from legitimate businesses by claiming they’re violating some patent of yours by doing something that’s really common practice. You threaten them with serious legal costs, and offer to settle for a fraction of the legal costs if they agree to pay your “license fee”.

      Sometimes it’s a deep pockets corporation threatening a small competitor, (This was how my last employer went out of business.) sometimes it’s just a pure scammer using the legal system to commit extortion.

      Either way it depends on the tendency of modern patent offices to be really sloppy, and issue patents on things that are already established art, or somebody already has a patent on in another jurisdiction. And it’s highly reliant on the absence of “loser pays”; Even if your victim fights you in court and wins, they know they’re going to be out big bucks.

      1. I don’t think that it is really a question of sloppy, though there is some of it. But rather it is an ex parte system where patent examiners, who are tasked with protecting the public interest, are unionized federal bureaucrats, Who effectively face tight budgets, only able to focus a set amount of resources on examining any given patent application. We are talking maybe 20 examining hours, average, per application, start to finish, which probably leaves less than ten hours for searching. They have good searching tools, and many examiners are good at using them. Nevertheless, the Internet is vast, and they essentially have to find documents showing the invention as a whole (novelty) or in parts, with justification on why it would have been obvious to put the parts together.

        1. The issue, I think, is that they’ve got good search tools, but they’ve got very shallow knowledge of the prevailing art. So somebody, say, proposes to patent a “rotary mechanism for intimately combining two fluids via sheer mixing” (AKA, “stirring”) and their search legitimately comes up with no preexisting patents for this “invention”, so they say, “Sure, why not?”. Because they’re clueless about the fact that nobody in the field would have had the cast iron gall to try to patent stirring.

          1. There are severe problems with the qualifications to become a patent agent/attorney in the first place, since they recognize only a very small number of Computer Science degrees and don’t recognize any degree in IT as meeting the requirements to sit for the exam. So you get a bunch of people with physical science degrees arguing over whether a computer patent is novel, while the people who actually use computer technology are shut out of the process.

            1. While that is true, there are other ways of qualifying to sit for the patent bar. For example, by showing maybe 40 semester hours of STEM classes, that can include most CS classes, but not most math classes. You just need your transcripts and catalog descriptions of the classes.

              I don’t think that there has really been much of a problem in this area for the last quarter century, at least since they changed requirements to allow CS classes and some CS degrees in, I believe, 1991.

              1. I haven’t looked into it since completing my JD in 2010, but at that time I was considered unqualified to sit for the patent agent exam because my undergraduate degree was in liberal arts. I had a Master’s degree in IT at the time, but that didn’t count.nor did any of my undergraduate CS coursework count because I didn’t go to one of the two CS programs that were counted. I was certified as a CISSP at that time, as well. So, no, my complaint that they exclude computer professionals and people with actual IT experience and qualifications from determining whether IT patents are valid, has absolutely not been resolved for a quarter century.

      2. “Either way it depends on the tendency of modern patent offices to be really sloppy, and issue patents on things that are already established art, or somebody already has a patent on in another jurisdiction. And it’s highly reliant on the absence of ‘loser pays’; Even if your victim fights you in court and wins, they know they’re going to be out big bucks.”

        Except for cases where a victim calls the patent bluff, and countersues, and loses on the theory that being threatened with an accusation of patent infringement isn’t actually a threat.

        1. Well, the kind of counter-sued on the wrong grounds. They should have sought a declaratory judgement that the patent is invalid due to prior art rather than claiming libel.

          1. In fairness, it appears that defamation was only one of several claims in the countersuit. I would hope that the other claims were better. The article above does not address the court’s findings on those other claims.

    2. Even after patent protection was weakened by the America Invents Act, patent claims must be novel and nonobvious, as well as being drawn to statutory subject matter (recently again an issue with software patents with the Alice decision). Merely computerizing something done manually is typically considered obvious (and now sometimes nonstutory after Alice, which is someone nonsensical, but it was the Supreme Court that decided the case).

      Which is a long way of saying that, despite the presumption of validity, I question whether the patent claims being asserted could survive a true challenge in court. But there are a lot of patents out there that wouldn’t either. Probably a majority. The patent process is ex parte, and examination is done under a strict budget. The product we get is about as good as you could expect from a bunch of bureaucrats in a two centuries old agency. Throwing more money at it won’t help much.

      The way that the patent owners appear to be making their money is by pricing settlement well below the cost of litigating the patent, which might cost in excess of a half million dollars. Probably more. This is not an uncommon strategy. Their advantage here is that the market is much more diffuse than many, with few potential defendant infringers facing substantial enough settlement costs that litigation of the patent’s validity would be financially advantageous. My thoughts right now is that this suit was an attempted end around the high cost of patent litigation.

      1. “The product we get is about as good as you could expect from a bunch of bureaucrats in a two centuries old agency. ”

        Come on, let’s not pretend that the patent office wasn’t better 2-3 decades ago. They actually used to decently police these things at one time. These days they’re issuing patents that grossly fail the legal criteria: That the invention be novel, and described in sufficient detail that a practitioner of the art could replicate it.

        You’re getting patents issued for things that people are already doing all over the place. (That’s the problem in this instance.) And general patents being issued for blue sky ideas without a clue as to how to make them work, just so that nobody else can get a patent if they DO figure them out.

        I think giving up on the demand for a working prototype was a BIG mistake. Also, I suspect a lot of old examiners who were actually familiar with the state of the art aged out, and never got replaced with similarly qualified people. And now the agency really IS being run by bureaucrats who are clueless about the subject they’re issuing patents on. But that wasn’t always the case.

        1. I really don’t think that it is markedly different. Software patents were hard to acquire 30 years ago, decently easy 20 years ago, and started getting hard again maybe a decade ago. That was where Alice came in – the Supreme Court should have decided the case based on nonobviousness (35 USC § 103), and instead, illogically decided it based on nonstatutory subject matter (§101).

          I would suggest that the big problem is that the cost of examining patents, due to the amount of material that must be searched, thanks to the explosion of information available on the Internet, has gone up faster than the USPTO has been able to push up the prices that it can charge for examining and issuing patents.

          Working prototypes haven’t been required for a very long time. My guess, without looking it up, is over a century now. Indeed, right now, they are mostly only required if the claimed invention would appear to violate the laws of physics. Operability is, of course, a requirement for patent ability. But so are novelty and nonobviousness, that are really the typical problem with issued patents. In patent litigation, patent claims can be invalidated for any of those reasons. The problem, as you noted, is that people can make money licensing their possibly invalid patents at a significantly lower cost than it would take to defend against, and invalidate the patent through litigation.

      2. “Even after patent protection was weakened by the America Invents Act, patent claims must be novel and nonobvious, as well as being drawn to statutory subject matter (recently again an issue with software patents with the Alice decision). Merely computerizing something done manually is typically considered obvious (and now sometimes nonstutory after Alice, which is someone nonsensical, but it was the Supreme Court that decided the case).”

        Of course it’s novel to take a normal business process and request a patent for doing (normal business process) ON THE INTERNET! How could anyone have a doubt about this?

        There was a time when disintermediation was actually novel. That time was more than 20 years ago, so there shouldn’t be any more valid “on the Internet” patents.

        1. “Of course it’s novel to take a normal business process and request a patent for doing (normal business process) ON THE INTERNET! How could anyone have a doubt about this?”

          This crap started with take a normal process (in some cases that were thousands of years old) ON A Computer.

          No, that shit is not novel.

          1. Can you hear me over that “wooshing” sound?

    3. Burkhard, the application for the first of these patents was filed in 1986 when there was no Web, and even the Internet was more of a concept than a reality. The tests for novelty and obviousness are (obviously!) at the time of filing, not decades later.

      1. If the patent was filed in 1986, then it’s not illegal to violate the patent.

        1. Yes James, just don’t go back in time to before 2005 when the lawsuit was filed and the patent had not yet expired.

          1. Not a problem. I hardly ever go back in time.

      2. ” in 1986 when there was no Web, and even the Internet was more of a concept than a reality.”

        The Internet was totally real in 1986, having been invented two decades previously, and built up from the original 5 sites originally connected in 1969. It was also still limited to non-commercial use in 1986, which limited the money-making potential of moving business processes to the Internet.

        1. While that is true, there are other ways of qualifying to sit for the patent bar. For example, by showing maybe 40 semester hours of STEM classes, that can include most CS classes, but not most math classes. You just need your transcripts and catalog descriptions of the classes.

          I don’t think that there has really been much of a problem in this area for the last quarter century, at least since they changed requirements to allow CS classes and some CS degrees in, I believe, 1991.

          1. As of 2010, I was considered technically unqualified to sit the patent agent exam, certified as a CISSP and holding a Master’s degree in IT security, because my undergraduate degree is a BS in a liberal arts field. So, forgive me if I don’t buy into your “everything is peachy” line and stick with my “you get fucked up results in your patent system if you don’t let the people who deal with computer systems on a regular basis decide if proposed computer patents are novel” position.

        2. I remember the latter 1980s very well. The Nternet had not yet taken off because TCP/IP had not yet been ported to run over anything besides the original IMPs. I was involved during that time trying to port those protocols to run over X.25 for the USDA. Sprint had won a contract with that department to provide connection between their offices (mostly via email). The attempt failed, and we fell back on our home grown protocol stack. (Turned out the technical problem was getting X.25 addresses up and down the protocol stack, that would have been trivial after the adoption of DNS a couple years later).

          I think that many forget how quickly and radically things changed in that time period (maybe 1986-1990). In 1987 or so, the USDA had one of the largest computer networks in the world, with a mere 4,000 computers crudely connected together. ArpaNet had a couple dozen, running through their IMPS. This was also the heyday of the OSI ISO model, which was mandated for all new federal IT contracts around then. That is the direction that the experts of the time expected computer networking to go. TCP and IP were considered at the time an interesting proof of concept, but clearly too crude, and not suitable for mass implementation.

        3. No, James, you are wrong. The Arpanet was real but there wasn’t anything “Inter” about it, the basic internet protocols were created only in the late 70’s and the many unwashed institutions outside the chosen connected few were still making do with Uunet. Big telecoms were resistant because Vint Cerf and his friends had made the private enterprise unfriendly mistake of failing to provide protocol support for the exchange of billing information. Maybe the libertarian commenters here would approve but the effect was to delay the development of the Internet by several years.

          1. “No, James, you are wrong”

            In the form of being completely correct, you mean? If you were an academic rather than a businessperson in the 1980’s the Internet was very real, and had already started taking on its natural role of transporting pornography from university campus to university campus. Nobody was making money on it yet, but huge amounts of bits were transferred so that CS nerds could look at naughty pictures. There was a fairly significant archive at UW in Seattle if you knew where (and how) to look for it.

  2. The patents at issue here were filed in the mid to late 1980’s, at least the earliest of which was actually reduced to practice prior to pendency. For those choosing to comment, it would be helpful to actually read the patents before weighing in.

    1. Which interested readers may do here

    2. … and, in conformance with this site’s damned single link rule, here.

      1. So it’s both obvious and expired?

        They’re seriously claiming a patent on organizing information in a geographical fashion, for storing said information on a computer mainframe/server, and for transmitting that information to a terminal. All of which were obvious in 1980.

        (Before personal computers, terminals connected to mainframes were common business computer set-ups, so the idea of connecting to a central data storage and retrieving data was not new in 1986. And though modems were relatively new, downloading data over a modem surely wasn’t patentable beyond the modem patent itself… imagine ‘patent on the use of another good in the expected fashion’… it’s ridiculous and obvious by definition).

        The patent reads like the combination of a bunch of established methods and technologies, none of which are used in an unexpected way, and some of which are just the computer application of otherwise standard methods. Nothing here should have been patentable.

        The first warning sign is that the patent never attempts to demonstrate its methods are unique or non-obvious. The closest this application gets is stating what the ‘standard’ method in the industry is – which doesn’t mean doing it differently is either unique or non-obvious. Especially since the world of relevant methods isn’t limited to what real estate agencies do.

        1. Prior to Alice being applied your arguments found favor before the district court, but were reversed on appeal. Thus, the suit for infringement was brought to an end with the claims passing muster under 102,103, and 112, only to fall prey to the newfound 101 cudgel wielded several years after the patents had expired.

          1. That would be because all patent appeals got to the the Federal District that has been captured by the patent bar and almost never sees a patent it doesn’t like, even after getting its hand slapped several times by the Supreme Court.

            One tech company, Newegg, has a reputation for not settling these things has has gotten a number of dumb “on a computer” patents invalidated. A few years ago one of the trolls sued a small manufacturer Rosewill. Newegg showed up in court as Rosewill is a wholly owned subsidiary of Newggg, something not generally known at the time, the suit was dropped soon afterwards.

            1. No, that would be because the district court committed reversible error when determining the scope of the claims at issue.

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