Six months ago, a shell company called Lumen View Technology told Santa Barbara startup FindTheBest that it should pay $50,000 for infringing its patent on "multilateral decision-making." Instead of getting a quick payout, it ran into FindTheBest founder Kevin O'Connor and a RICO lawsuit.
The story got wilder after that when Lumen View sought an extraordinary "gag order" to stop FindTheBest from talking to the press, which the judge rejected. Now, the judge has shut down the whole infringement case, finding that Lumen View is trying to patent an abstract idea, and it's invalid.
It's a pretty fast win for FindTheBest. Asking for the gag order probably wasn't a good move. "It never helps to teach the judge early in a case that you utterly lack credibility," said EFF lawyer Daniel Nazer, who has been watching the case.
In her ruling (PDF) issued late Friday, US District Judge Denise Cote noted that Lumen View was trying to patent "matchmaking," a practice that is literally ancient. She cited the patent specification, which included examples like "having a computer match employees and employers whose desired attributes and intensities of preferences mutually align." Another brainstorm from the patent is having a computer match "college applicants and... colleges seeking applicants," according to their preference data.
"There is no inventive idea here," she wrote in her order. "Having two or more parties input preference data is not inventive. Matchmakers have been doing this for millennia... It is merely a mathematical manifestation of the underlying process behind matchmaking: determining good matches. Nothing in the ‘073 patent evinces an inventive idea beyond the idea of the patent holder to be the first to patent the computerization of a fundamental process that has occurred all through human history."
Taking basic practices in human commerce and culture and adding "do it on a computer" language is unfortunately not uncommon. But, as Cote stated, it is still illegal:
Merely directing a computer to perform a function does not transform the computer into a specialized computer. Such a principle would lead to the absurd result of allowing the patenting [of] the computerized use of even the most basic abstract ideas. Given the ubiquity of computers in modern life, adopting such a principle would have enormous preemptive effect. Nothing in Section 101 or the precedents interpreting it allow a party to monopolize the building blocks of innovation in a computerized world.
"It feels good," said FindTheBest CEO O'Connor in an interview with Ars today. "We'll see if they appeal. They haven't shown the best judgment so far."
O'Connor says he will re-focus on building his company, but will press forward with the RICO lawsuit. "If anything this is further proof," he said. "Their methods of extorting money from people are reprehensible and, we believe, criminal." It's a high bar, and previous attempts to pin down patent trolls with RICO have not succeeded.
What continues to frustrate O'Connor is that the US Patent and Trademark Office would allow such a patent at all. "Why is the USPTO granting monopolies to garbage patents?" he asked.
The cost of winning
For companies combating bad patents, winning under section 101 of the patent laws—which is how FindTheBest won—has historically been difficult. But it is among the most cost-effective and quickest ways to win a patent case.
"We were about to start the discovery process, which would have been a huge burden and cost on the company," said Danny Seigle, FindTheBest's (FTB) director of operations.
The company would have had to produce documents, go through depositions, and spend hundreds of thousands on the high-priced experts required in patent cases. O'Connor, who co-founded the early online ad company DoubleClick, had pledged $1 million of his own money to fight the case, which was what allowed a new company like FTB to make the tough decision not to settle.
Even this "efficient" win cost FTB about $200,000 in legal fees, said Seigle; that's four times more than the $50,000 payout that Lumen View was asking for. That's in addition to hundreds of hours of time spent on the issue by Seigle and O'Connor, plus three all-company meetings of FindTheBest's 100 employees.
"They're compensated heavily with equity, so they're owners of the company," said Seigle. "They want to know what's going on."
Now that Lumen View started the fight, though, FTB is going to see it through. "Our goal is to recover our damages and prove this is a racketeering-type enterprise," said Seigle. "This is an extortion scheme."
Lumen View sued 19 other companies in addition to FTB, and all of those cases have ended, presumably with most of them making payments of some sort to Lumen View. This wasn't their first project, either; one of the inventors behind the Lumen View patent, Eileen Shapiro, has been suing small companies since at least 2010 for common business practices, like distributing a press release online.
However, the political climate has become suddenly hostile to the type of lawsuits that Lumen View engaged in. While at least one other attempt to use the RICO statute against a "patent troll" failed, Seigle and O'Connor are hopeful they will pass the high bar required.
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