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Dr.HarveyR.LevensonisProfessorEmeritusandformerDepartmentHeadofGraphicCommunicationatCalPolyStateUniversityinSanLuisObispo,California.Hisresearchandteachingspecialtiesarecommunication,intellectualproperty,media,printing,andtechnology.HeisoftencalleduponasanExpertWitnessintheseareas.Thisresearchwasnotsanctionedorfundedbyanyuniversity,privateorpubliccompany.Itismeanttoeducateandinformonamatterthatisnegativelyimpactingthegrowth,development,andsurvivalofcompaniesintheprintingandrelatedindustries,OriginalEquipmentManufacturers(OEMs),andequipmentdistributors.

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ABSTRACT

Patent trolls, the epitome of greed, thoughtlessness, and unethical behavior, are impacting the survival, growth, and development of printing and related companies. The printing industry in the United States has been in a state of decline over the past 20 years (from approximately 55,000 companies to under 30,000 today). Traditionally a low-profit industry, printing companies and their suppliers are trying to find ways of increasing products and services focusing on digital technologies and related applications in order to increase profits and to save jobs. Patent trolls are inhibiting such growth and are causing companies to consider closing, downsizing, and laying off employees because they cannot afford to absorb the huge fees being demanded by the trolls, while also maintaining or growing business. The trolls are equivalent to extortionists with no sense of business morals and ethics, or of the nation’s push to grow companies, produce jobs, and keep or bring back as much business as possible to the United States. The hypothesis of this study is that companies faced with the threat of patent troll litigation should not settle by paying license fees, but should partner in pooling resources to pursue invalidation of the patents in question. Such challenges are often won, and between 35 percent and 85 percent of patents being invalid has been reported. The research methods used in this study include a review of the related literature, a case study of three patents of questionable validity claimed by two patent troll plaintiffs to be infringed upon by printing industry companies, and a survey of present defendants and those who were already sued and opted to settle out of fear and intimidation. This study concludes that printing and related companies sued by patent trolls should not settle by paying the fees requested and should not enter into a single-company litigation that can cost more than a settlement. Giving in to patent troll license fees or other demands will exacerbate the problem and encourage additional intimidating and threatening lawsuits in an attempt to extort funds from companies doing honest and legal business, working hard to survive and grow, and provide employment opportunities for skilled staff members. A solution is bringing together all of the companies named in a suit that has been filed by patent trolls, and to work as a unit in bringing the matter of alleged patent infringements before the US Patent & Trademark Office (USPTO) for invalidity hearings.

WHITE PAPER

ACaseStudyofPatentAbuse:PrintingIndustryFacesNewNemesisImpactingGrowthandEmployment—PatentTrollsHarveyR.Levenson,Ph.D.

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TABLEOFCONTENTS PageINTRODUCTION 3WhatisaPatentTroll? 3HYPOTHESIS 3REVIEWOFLITERATURE 4TheNationalandInternationalPicture 4ThePatentTrollIssueinthePrintingIndustry 6RESEARCHMETHODS 9RESULTS 10CaseStudies–CTPInnovationsandHighQualityPrintingInnovations(HQPI) 10HowCTPANDHQPIPatentTrollsHaveImpactedSpecificCompaniesinthePrintingIndustry—WhattheImpactedCompaniesHaveToSay 10ThePatentTrollsLoseandthe“GoodGuys”WinOne–TheHQPICasesDismissed! 16SoWhatoftheCTPInnovationsCases? 38ThePrintingIndustrySpeaksOut—ImpactonCompaniesandMajorConcerns 38WhattoDoandNottoDoIfFacedwithanAllegationofPatentInfringement?ThereisPowerinNumbers 44CONCLUSION 45CaseStudy 45TheSolution 45ENDNOTES 46

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INTRODUCTIONAtatimewhentheprintingindustryissearchingfornewgrowthanddevelopmentopportunities,itnowfacesnewobstacles:patenttrolls,theepitomeofgreed,thoughtlessness,andunethicalbehaviorimpactingthesurvivalofcompaniesandjobs.

WhatisaPatentTroll?

Apatenttrollisacompanyorpersonthatpurchasesapatentandthensuesanothercompanyclaimingthattheuseofoneofitsproductsinfringesonthepurchasedpatent.Trollsattempttoenforcepatentrightsagainstallegedinfringersfarbeyondthepatent'sactualvalueorcontributiontothetechnologyortheindustrythatthepatentrepresents.Patenttrollstypicallydonotmanufactureproductsorprovideservicesbaseduponthepatentsinquestion.Theyusepatentsas“legalweapons,”insteadofactuallycreatinganynewproductsorcomingupwithnewideastoimprovebusiness,commerce,orsociety.Trollsareinthebusinessofthreateningandcreatinglitigation.Further,trollsoftenbuy-uppatentscheaplyfromcompaniesthatarelookingtomonetizepatentsthathavelittleornovalue,orshouldhavenotbeengrantedtobeginwith,becauseofPriorArtdemonstratingthatwhatthepatentsteachwasobviouspriortothetimeofapplicationforthepatent.ThesepatentsaresubjecttoaninvaliditycontentionandterminationbytheUnitedStatesPatent&TrademarkOffice(USPTO)whenallegedinfringerscontestthetrolls.Theyaretypicallyverybroad,coveringgenericorwell-knowntypesofapplicationsthatshouldneverhavebeenpatentedtobeginwith.Inpossessionofthesebroadandvaguepatents,thetrollthensendsoutintimidatingletterstothosetheyargueinfringeontheirpatents.Itisascaretacticthatpreysoninnocentcompaniesthataremerelyprovidingaserviceneededbysociety.Theselettersthreatenlegalactionunlesstheallegedinfringeragreestopayalicensingfee,whichcanoftenrangetothetensofthousandsorevenhundredsofthousandsofdollars.Manywhoreceiveinfringementletterswillchoosetopaythelicensingfeeoutoffear,andbecausepatentlitigationisextremelyexpensiveandcaninvolvelengthyandtime-consumingcourtdeliberations.Theprintingindustryisonthedecline,andpatenttrollsaremakingmattersworse.WiththeprintingindustryintheUnitedStatesinastateofdeclineoverthepast20years(fromapproximately55,000companiestounder30,000today),andtraditionallybeingalow-profitindustry,printingcompaniesareclamoringtofindwaysofincreasingproductsandservicesfocusingondigitaltechnologiesandrelatedapplicationsinordertoincreaseprofitsandtosavejobs.Patenttrollsareinhibitingsuchgrowthandare,infact,causingcompaniestoconsiderclosing,downsizing,andlayingoffemployeesbecausetheycannotaffordtoabsorbthehugefeesbeingdemandedbythetrollswhilealsomaintainingorgrowingbusiness.Thetrollsareequivalenttoextortionistshavingnosenseofbusinessmoralsandethics,orofthenation’spushtogrowcompanies,producejobs,andkeeporbringbackasmuchbusinessaspossibletotheUnitedStates.

HYPOTHESIS

Thehypothesisofthisstudyisthatcompaniesfacedwiththethreatoftrolllitigationshouldnotsettlebypayinglicensefees,butshouldbandtogetherandpoolresourcestopursueinvalidationofthepatentsinquestion.Challengestoinvalidatepatentsareoftenwon,andupto85percentofpatentsbeinginvalidhasbeenreportedataCongressionalSenateJudiciaryCommitteeaddressingthematter.(1)

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REVIEWOFLITERATURE

TheNationalandInternationalPicture

TheissueofpatenttrollsisnotonlydomesticintheUnitedStates.ItisinternationalaswellwithChina,asoneexample,beingarecentbutprominentplayer.Thefollowingarticleshaveappearedinthepopularandprofessionalpressoverthepastfewyears,andtheyarejustafew.SeeEndnotesforlinkstothefulltextofeacharticle.

“EveryoneHatesPatentTrolls,buthere’stheRootProblemwithourBrokenSystem,”TheWashingtonPost,5/4/15.(2)“LessonsfromEuropeonHowtoTameU.S.PatentTrolls,”CornellInternationalLawJournal,Spring2009.(3)“PatentTrolls/FriendorFoe?”WorldIntellectualPropertyOrganization(WIPO),April2014.(4)“ROFF/TheFrighteningEmergenceofGovernmentPatentTrolls,”TheWashingtonTimes,8/31/14.(5)“TheEvidenceIsIn/PatentTrollsDoHurtInnovation,”HarvardBusinessSchoolPublishing,November2014.(6)“WhyNoOneLikesThem—AbuseofthePatentSystemBenefitsNeitherInventorsNortheEconomyatLarge,”TheEconomist,5/3/15.(7)“WhySupremeCourt’sAliceRulingDoesn’tSolvePatentTrollProblem,”CongressBlog—TheHill’sForumforLawmakersandPolicyProfessionals,11/12/14.(8)“ChinaDeclaresWarOnU.S.IntellectualProperty,GetsIntoThePatentTrollingBusiness,”TheDailyCaller,10/8/14.(9)“ChinaTurnsFrom'Pirate'NationtoGiantPatentTroll,”Techdirt,10/20/14.(10)“IntelligentMailBecomesAnotherStompingGroundforPatentTrolls,”MULTIBRIEFS,9/25/13.(11)“GrayhairSettlesPatentTrollSuit,”DIRECTMARKETING,5/14/14.(12)“ThePatentTrollwithaLawFirmBehindItAttackingPostalMail,”TROLLINGEFFECTS,12/18/13.(13)“FromtheEditor:RiseoftheTrolls,”In-plantGraphics,8/1/13.(14)“PatentTrollsTargetingPrinters,”In-plantGraphics,6/28/13.(15)“PatentInfringementActionsinthePrintingIndustry,”PrintingIndustriesofAmerica.(16)

Inathree-yearstudy,IresearchedallgraphicartspatentsdocumentedbytheResearch&EngineeringCounciloftheGraphicArts(R&ECouncil)issuedinternationallyovera30-yearperiodfrom1968through1997.Therewere22,552patentsissuedby42nations.Ofthe22,552patents,19,498(or86percent)camefromtheUnitedStates,3,580wereissuedinGermany,and3,118wereissuedinJapan.Theremaindercamefromallothernationsthatissuedgraphicartspatents.(17)However,today’sdistributionhaschanged,withChinabecomingamajorpatentproducerin2004andwiththelargemajorityofgraphicartpatentsrepresentingdigitaltechnology.AccordingtotheWorldIntellectualPropertyOrganization(WIPO),between1998and2013,theUnitedStatesandJapancontinuedtheirdominance,withtheUnitedStatesproducing39percentofsuchpatentsandJapan22.7percent.Forthemostpart,Germanydroppedoutofgraphicartspatentproductionwithonly2.2percent.However,Chinaproduced36.1percent.(18)

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Today’sGreatestAreasofPatentActivityinDigitalCommunication–1998-2013•UnitedStatesandJapancontinue

•Chinaemerges

Source:WorldIntellectualPropertyOrganization(WIPO)

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ThePatentTrollIssueinthePrintingIndustry

Softwareandpharmaceuticalsarethetwomostactiveareasofpatentproductioninternationally.Nearlyallofthegraphicarts,i.e.,printingindustry,patentsoverthepast15yearsinvolvesoftwareworkflowsand,hence,isthefocusoftroll-controlledpatentstoday.Whysoftware?Softwareisthe“invisibletechnology.”Itisintangible.Itcannotbefelt,viewed,orcomparedinaphysicalway.Itinvolvesdigits,notatoms.Itisdifficulttodisputeitsclaimedattributesandapplicationswhenchallengingitssimilaritiesordifferencestoothersoftware.Itis,therefore,easyfortrollstoraisechallengesandclaiminfringementoneventhemostesotericpartsofsoftware,anddifficultfordefendantstocounterinfringementclaimsunlesstheyarehighlyversedinsoftwarecoding,workflow,andotherstructuralattributes.Thisisnotthebusinessoftheprintingindustry.SowhatisthetrollissueintheprintingindustryintheUnitedStates?Thefollowingaresomearticlesthathaverecentlyappearedinthegraphicarts(printingindustry)press.FROMPRINTINGINDUSTRIESOFAMERICA,December17,2013PrintingIndustriesofAmericaTakesonPatentTrollsinWashington,DC.“PrintingIndustriesofAmericaPresidentandCEO,MichaelMakin,testifiedbeforetheSenateJudiciaryCommitteeonthetopicof“ProtectingSmallBusinessesandPromotingInnovationbyLimitingPatentTrollAbuse.”MakinspokeonbehalfofprinterswhohavebeenthreatenedwithabusivepatentlitigationforusingsoftwareproductsthatallowforCTP,Web-to-print,andQRcodetechnologies,amongothers.”(19)FROMCOMPUTERWORLD,May20,2015Patenttrollsmaybepreparingtotarget3Dprinting“Whilepatentlitigationhasbeenontheriseforanumberofyears,ithasn'tbeenbetweencompetingcompaniesbutfrompatenttrollswhoseektobuy-uppatentportfoliosinordertosueindustryplayersforinfringement.Oneofthefastestgrowingarenasforpatentsoverthepastdecadehasbeen3Dprinting,makingitalikelytargetforthosetrolls.”(20)FROMIN-PLANTGRAPHICS,June21,2013RiseoftheTrolls“Youmayhaveheardsomethingabout“patenttrolls”—shellcompaniesthatexistonlytoenforcetheirpatentsandseekmoneyfromallegedinfringers.Butyouprobablythoughtonlyhigh-techcompanieswerebeingtargetedbytheseguys,right?Hardly.They’recomingafterprinterstoo…PrintingIndustriesofAmericarecentlywarneditsmembersofan“alarming”increaseinthenumberofprintersaccusedbytrollsofinfringingpatentsfortechnologiesascommonplaceasprepressworkflow,computer-to-plateandWeb-to-print.”(21)FROMPRINTINGIMPRESSIONS,March1,2014PatentTrollsStillTargetingPrinters“Asifcommercialprintersaren’thavingenoughtroubletryingtosurvive,andhopefullythrive,inourrazor-thin-marginindustry,itappearsthatpatenttrollsarefindingthegraphicartsindustrytobefertilegroundforlitigation.”(22)FROMARSTECHNICA,January2,2013Patenttrollswant$1,000—forusingscanners“WhenStevenVicinanzagotaletterinthemailearlierthisyearinforminghimthatheneededtopay$1,000peremployeeforalicensetosome“distributedcomputerarchitecture”patents,hedidn’tquitebelieveitatfirst.Theletterseemedtobesayinganyoneusingamodernofficescannertoscandocumentstoe-mailwouldhavetopay—whichistosay,justaboutanybusiness,period.Ifhe'dpaidup,theITservicesproviderthatVicinanzafounded,BlueWaveComputing,wouldhaveowed$130,000.”(23)

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FROMWHATTHEYTHINK,December15,2015PatentTrollTargetingPrintingCompaniesthatuseCommonWeb-to-PrintFunctionality“AcompanycalledHighQualityPrintingInventions,LLC,isusingapatentinitiallygrantedtoMoore(nowR.R.Donnelley)tofilepatentinfringementlawsuitsintheU.S.DistrictCourtsinalitigationcampaignagainstseveralprintingcompaniesusingcommonweb-to-printfunctionality.”(24)PrintingIndustriesofAmericahasbeenattemptingtobringthepatenttrollissuetotheforefrontsotheprintingindustryunderstandswhatitisfacingtodayandwilllikelyfaceonanincreasingbasisinthefuture,unlessCongressdoessomethingtochangethesituation.Onitswebsite,PrintingIndustriesofAmericahasestablishedaPatentListservforprintersseekingadvice.Inanarticleentitled,“PatentsInfringementsActionsinthePrintingIndustry,”PrintingIndustriesofAmericawrote:

Hundredsofprintexecutivesopenedlettersthisyeartodiscovertheircompanieswerebeingaccusedofinfringingpatents.OwnersofpatentscoveringQRcodes,scanning,computer-to-plateworkflow,andon-lineorderingallapproachedprintersdemandinglicensingfees.Mostbutnotalloftheseownersare“patenttrolls,”entitiesthatpurchaseunusedpatentsforthepurposeofintimidatingcompaniesintopayingfees.PatenttrollsnowaccountforthemajorityofinfringementlawsuitsintheUnitedStates.Companiesareoftenshownnoevidenceofinfringement,i.e.,“Giventhescopeofourpatentsandwhatwereadonyourwebsite,webelievethereisahighlikelihoodthatyouareinfringing.”Companiesarethreatenedwithlitigationiftheydon’tpaythefee(morethan40printershavebeensuedthisyear).Trollschoosetoapproachprintersusingtechnologiesallegedlyinfringingtheirpatents,ratherthandobattlewithequipmentandsoftwareproviders.HereisthepatentinfringementactivitythatPrintingIndustriesofAmericaisawareof.Intwoofthesecases—SkipPrintandCTPInnovations—printershavebeensued.Inallbutoneoftheothercases,weknowofonlyafewprintersthathavereceivedaccusatoryletters.Byfar,thegreatestnumberofprinterswereaccusedbyMPHJTechnologyInvestments(anditsrelatedshellcompanies).

PatentOwner(Lawfirm):StandardRegister,Markzware,LykesBrothers(SkipPrint/MaschoffBrennan)U.S.Patents:5,666,493,5,963,641,6,076,080,7,050,995,7,058,596(SkipPrintistheexclusivelicenseeofthepatents.)Technology:Web-to-print,fulfillment,preflightingDescription:Thecombinedpatentsdescribetheuseofanon-linesystemforcreatinganelectroniccatalog,pricingandacceptingorders,acceptingpayment,checkinginventory,examiningandcorrectingfiles,sendingfilestoaprintstation,andpreparingshipments.-------------------------------------------------------------------------PatentOwner(Lawfirm):MPHJTechnologyInvestments(FarneyDaniels)U.S.Patent:6,185,590,6,771,381,7,477,410,7,986,426Technology:ScannedImagestoEmailDescription:UseofscanningequipmentthatsendsscannedimagesdirectlytoemailonaninternalnetworkoranFTP/SFTPsite.PetitiontoinvalidatepatentsfiledwithUSPTObyXeroxandRicoh.LetterssenttoprintersbyMPHJreferencesagreementwithCanonandwithdrawsclaims.-------------------------------------------------------------------------PatentOwner(Lawfirm):CreateAds(Bayard,P.A.)U.S.Patent:5,535,320Technology:Web-to-printDescription:Template-basedvisualdesigngenerationforcreationofwebtoprintmaterials.

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-------------------------------------------------------------------------PatentOwner(Lawfirm):NeoMediaTechnologies(GlobalIPLawGroup)U.S.Patent:6,199,048,8,131,597Technology:QRCodeDescription:Useofan“indirectlink”—usingashortURLsuchasgoo.gl,TinyURL,bitlyoranyothershortenerinaQRCode.-------------------------------------------------------------------------PatentOwner(Lawfirm):RAHColorTechnologies(GlobalIPLawGroup)U.S.Patent:19patentsTechnology:ColormanagementDescription:Techniquesforthepreservation,automatedmeasurement,control,manipulation,andreproductionofcolorindigitalsystems.AllinventedbyDr.RichardHolub.-------------------------------------------------------------------------PatentOwner(Lawfirm):CTPInnovations(BakerDonelson)U.S.Patent:6,611,349,6,738,155Technology:Prepress,computer-to-plateDescription:Prepressworkflowsutilizinginternalandexternalnetworkstogenerate"plate-readyfiles"and"plate-readyPDFfiles."PetitionstoinvalidatethepatentsfiledwithUSPTObyPrintingIndustriesofAmerica.-------------------------------------------------------------------------PatentOwner(Lawfirm):SMS(O'Melveny&Myers)U.S.Patent:8,260,629,8,429,093Technology:QRCodeDescription:GeneratingapersonalizedQRcode,affixingthepersonalizedQRcodeontoamailobject,storingrelatedelectronicdatainastoragedevice,andprovidingtheelectronicdatatoareceptiondevice(e.g.,smartphone,etc.)inresponsetothereceptiondevicescanningthepersonalizedQRcodeonamailobject.-------------------------------------------------------------------------PatentOwner(Lawfirm):ADgiants(LockeLord)U.S.Patent:8,271,507Technology:MarketingmanagementDescription:Web-basedmarketingandmanagementsystemthatconnectsprinterwithcustomersandagenciesviaInternet.PrintingIndustriesofAmericawillprovideindustryfirms,especiallyourmembers,withcurrentinformationoninfringementaccusations.Ifyouhavebeensimilarlyaccused,orknowofotheractionsnotlistedhere,pleasealertJimWorkmanatjworkman@printing.org.YoucanalsoparticipateinourPatentListservandseekadviceandshareinformationwithotherprintersthathavebeentargetedbytrolls.(25)

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RESEARCHMETHODSTheresearchmethodsusedinthisstudyincludeareviewoftherelatedliteraturepreviouslynoted,acasestudyofthreepatentsclaimedbytwotrollplaintiffstobeinfringeduponbyprintingindustrycompanies,andasurveyofseveralpresentdefendantsandthosewhowerealreadysuedandoptedtosettleoutoffearandintimidation.Thesurveyincludedthefollowingquestions.OVERVIEWWhatdidtheletterannouncingyourallegedpatentinfringementsay?PAYMENTSREQUESTEDHowmuchwasaskedofyourcompanyinthewayoflicensefeesorotherpayments?Wereyouaskedforaone-timepayment,monthlypayments,quarterlypayments,annualpayments,orsomeotherarrangement?Ifyousettled,howmuchdidyouwindupsettlingfor?THE“SHELL”COMPANYIftheplaintiff(thecompanysuingyou)isa“shell”company,whatothercompanyorcompaniesdoyoubelievearebehindthislawsuitandarebenefitingorwillbenefitfromyourpayments?ORIGINALEQUIPMENTMANUFACTURERS(OEMS)DidyoudiscussthismatterwithanyoftheOEMsfromwhomyoupurchasedtheallegedfringedequipmentorsoftware?IfyoudiddiscussthiswiththeOEMs,whatwastheirposition?IMPACTONYOURCOMPANYWhatoverallimmediateimpactdidthismatter,orwillthismatter,haveonyourcompany?Whatwilltheimpactbeinthefuture?AQUOTEFROMYOUPleaseconsidersharingaquoteforpossibleuseinthearticle.OTHERIsthereanythingelsethatyouwouldliketoshareaboutthismatter?Duetothesensitivenatureoftheinformationrequested,andagreementsthathavebeenreachedinsomecases,anonymitywaspromised.Somecompaniesdeclinedtoparticipateoutoffearofreprisalunlessanonymitywasassured.Otherswerefearfulofprovidingspecificresponsestosomeofthequestionsduetoconfidentialitypromisesmadewhen“deals”weregivenbythetrolls.

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RESULTS

CaseStudies–CTPInnovationsandHighQualityPrintingInnovations(HQPI)

Thereweremultiplelawsuitsinvolvingthreepatents,broughtonbytheCTPInnovationsandHQPIpatenttrolls.Thelawsuitsraisedgraveconcernsacrosstheserviceprovider(printers),originalequipmentmanufacturer(OEM),andequipmentdistributorsegmentsoftheindustry.ThethreepatentswerepreviouslyacquiredbytheRRDonnelley;oneofthelargestprintingcorporationsintheworld,afterRRDonnelleyacquiredtwocompanies,theBantaCorporationandMoore,Inc.Thepatentsare:(1)PatentNo.U.S.PatentNo.6,738,155SYSTEMANDMETHODOFPROVIDINGPUBLISHINGANDPRINTINGSERVICESVIACOMMUNICATIONSNETWORKPatentIssuedto:BantaCorporationPatentFilingDate:July30,1999(2)PatentNo.U.S.PatentNo.6,611,349SYSTEMANDMETHODOFGENERATINGAPRINTINGPLATEFILEINREALTIMEUSINGACOMMUNICATIONNETWORKPatentIssuedto:BantaCorporationPatentFilingDate:July30,1999(3)PatentNo.US6012070ADIGITALDESIGNSTATIONPROCEDUREPatentIssuedto:MooreBusinessFormsPatentFilingDate:November15,1996Patenttrollsareoftendisguisedas“shellcompanies.”Shellcompanieshaveregisterednamesbutnoemployeesandnophysicaladdressascribedtothem.Theyareintentionally“invisible”withonlyalawfirmasapointofcontact;typicallythelawfirmthatregisteredthe“shell”nameforthepatenttroll.The“shellcompany”plaintiffs(thetrolls)andparentcompanies(alsotrolls)recordedasthepresentownersoftheCTPandHQPIpatentsare:Forpatents6,738,155and6,611,349SHELLCOMPANYIS:CTPInnovations(Plaintiff)RECORDEDPARENTCOMPANYIS:MediaInnovations,LLC.ForpatentUS6012070ASHELLCOMPANY:HighQualityPrintingInnovations(Plaintiff)RECORDEDPARENTCOMPANYIS:ModernUniversalPrinting,LLC.HowCTPANDHQPIPatentTrollsHaveImpactedSpecificCompaniesinthePrintingIndustry—

WhattheImpactedCompaniesHaveToSay

Herearesomeexamplesofthehavocthatthesepatenttrollshavecausedintheprintingindustry.Suchdisruptionisnotonlytoprintingcompaniesofallsizes,buttoOriginalEquipmentManufacturers(OEMs)andequipmentdistributorsaswell.SurveyResultsInthesurveyofsomeoftheimpactedcompanies,onecompanyofficersaidthatwheninformingtheOEMaboutbeingsued,hewastoldthatthepatentsinquestion“…couldnotstandsinceit’stargeting[a]verybroadapplicationofwhatsoftwareandwebtechnologiescandofor[the]printandpublicationfield.”Hesaid,“…becausetheynowhavetodefendthemselves,theyarededicatingresourcesthatarebetterservedforday-to-dayoperationsandfortheadvancementofthebusiness.Assuch,thisisawasteofresourcescompromising

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theongoingsuccessofthecompany…Wearehaltingallinvestmentsthatwebelievemaybeincludedinfuturelitigationuntilwecomeupwithaplantoprotectourinterestoraresatisfiedwith[the]resolutionofthiscaseanditsfutureimpact.”Hewentontosay,“Unfortunately,patentsarebeingmisusedandthetaskofcorrectingthesystemthatenabledthedeteriorationofinnovationandconsumerchoicesisnotaneasyonebutwemuststartsomewhere.”“Non-practicingentities,akaPatentTrolls,arecostingjobsandhurtingoureconomy.A2011research[study]showsthatPatentTrollscostdefendantfirms$29billionperyearindirectout-of-pocketcosts;inaggregate,patentlitigationdestroysover$60billioninfirmwealtheachyear.Thishaslikelygrowntobemuchlargerandmuchmoredamagingtotheeconomy,businessanddisproportionately[to]smallbusinesses,whicharethebackboneofAmerica.”“Webelievethispatentlawsuittobefrivolous,andtheabuseofourlegalsystembypatenttrollshurtsconsumers.Thisalongwithotherfrivoloussuitsstiflecompetition,hurtconsumers,andbullyinnovativecompanies.”Whenaskedifhehadanyideawhowasbehindtheshellcompanyandbenefitingfinancially,heidentifiedRRDonnelleyasthe“affiliate.”However,RRDonnelleyclaimsthatthepatentsinquestionwerepreviouslysold,andthecompanyhasnoownershipinterestinthepatentsandreceivesnolicensingpayments.RRDonnelley’smoredetailedresponsefollows.Theofficerofanothercompanywrotethattheallegedpatentinfringementlawsuitservedonthemsaidthattheyareinviolationofnumerouspatents,anditwentontonamethemonebyone.Thecompanyprincipalwentontosay,“Essentially,wewerebeingsuedforapracticemosteveryprinterintheindustryutilizes.”Hiscompanywasaskedtopayalicensefeeinexcessofasix-figureamount.Inresponsetoaquestionontheimpactonthecompany,thecompanyprincipalsaid,“First,it’sbeenfinanciallydrainingandsecondlyadistractiontorunningabusinessonadailybasis.Ithasaffectedthemoraleofthecompanyinanadverseway…Patenttrollsaregreedmongerswhousethetacticsoffearandambiguityofcertainpatentstointimidatesmallcompaniestosettleupfrontand[thetrolls]usetheseproceedstocontinuethatpatternofbehavior.”Yet,aletterfromanothercompanynoted,“Ifyouareaprinterthenyouarehighlylikelytobesuedfor$100kto$300ksoon,”referringspecificallytoRRDonnelleyastheaccuserworkingthroughapatenttroll,CTPInnovations.Thelettercontinued,“Theyaresuingtheprintersfirst…RRDonnelleyisnowgoingaftertheprinters’vendors...IhaveneverfeltsuchinjusticeinmylifeingoingthroughtheprocessthatRRDonnelleyhasputmethrough.”Again,theperceptionwasthatRRDonnelley,asthepreviousownerofthepatents,isresponsiblefortheinfringementlawsuitsbeingimposedonprintingcompanies.Aswillbenotedlater,RRDonnelleyexplainsthismisperception.Ireceivedaphonecallfromayoungladyrunningasmalldesignstudiowithherhusband.Shewasnearlyintearswithfrightafterreceivinganintimidatingletterthreatingalawsuitifalicensingfeeforasmallpieceofequipmentanditsapplication,commonlyusedbygraphicartists,isnotpaid.WhatTheyThink,theprintingindustry’sdailynewslettercirculatedworldwide,addressedthepatentsinquestion:“Thehistoryofthepatentstartsin1996whenMooreBusinessForms,Inc.,(nowR.R.Donnelley)filedthepatentapplication.ThepatentwasgrantedJanuary4,2000.InMarchofthisyear,thepatentwasupdatedtoformallyassigntheownershiptoR.R.Donnelley.ThechangeofassignmentfromtheMoorebusinesstoR.R.DonnelleywasmostlikelyinpreparationforasaleorlicensingofthepatenttoHighQualityPrintingInventions,LLC.Atthetimeofpublication,R.R.Donnelleyhasnotrespondedtorequestsforcommentonthecurrentownershipofthepatent,itsrelationshiporbusinessdealingswithHighQualityPrintingInventions,LLC.”“Accordingtolegaldatabasesearches,HighQualityPrintingInventions,LLChasfiledatleast32patent

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infringementcasesagainst35printingcompaniesthathaveweb-enabledprintcapabilitiesasaprimaryoutletfortheirbusinesses…thecurrentlistofdefendantsislikelyaninitialphaseinaschemetoshakemoneyfromprintingcompanies.Thecurrentdefendantlistappearstobeastrategicmixofsmall,mediumandlargeprintingcompanies.”(26)InfoTrends,aleadingresearchorganizationfortheprintingindustrywrote,“Whenapatenttrollsendsaclaimforpatentinfringementtoasmallerorganization,companysurvivalcanbeatstakebecauseofthefinancialimpact.Thesetrollscanaskupwardsofonehundredthousanddollarsforthecompanytojustusethetechnologythatthepatentaddresses.Thisisahugeissueforanycompany,butitisparticularlyonerousforsmallcompaniesastheygenerallydonothavethefundsforalegalbattle,andhavefewoptionsbuttopaythesettlement…Inthegraphicsandprintindustry,patenttrollsareprovingtobeadauntingproblem.Aprintserviceprovidermaynothaveevenheardaboutpatenttrollsuntiltheyarehitwithapatentinfringementsuitonatechnologythattheyuseeveryday,includingprintingtechnologies,software,andsolutionsthattheythemselveshavepurchasedfromreputablecompanies.”(27)Thescenarioofpatenttrollintimidationisbeingrepeatedacrosstheindustry.Whenexploringattorneyassistanceinthesematters,thecompaniesthreatenedorsuedarelearningthatattorneyfees,oftenstartingatapproximately$250,000,canbeevengreaterthanthelicensefeesbeingrequested.Hence,theyare“betweenarockandahardplace”andsomehavepaidthetrollsoutofintimidationandfear.Inexploringwhomthesetroll“shell”companiesare,mostoftheaccusedallegedlyinfringingcompaniesdidnotknowbecausetherearenoindividualsnamedorcontactinformationgivensuchasstreetaddresses,phonenumbers,etc.,onlycontactinformationfortheattorneysrepresentingthetrolls.However,theofficersoftwoofthecompaniessuedsuspectedthattheywereset-upbyRRDonnelley,asameansforcollectinglicensefeesfromprinters,equipmentmanufacturersanddistributors,andfromrelatedcompanies.MyimpressionwasthatRRDonnelleyhadsoldthesepatents,certainlyarightthattheyhad,andhadrelinquishedanyfinancialinterestsinthem.However,indiggingdeeperintoCorporateDisclosureStatementsaspartofpublicdocumentsfiledwithvariousUnitedStatesDistrictCourts,theRRDonnelleynamedidappearasacompany“…havingfinancialinterestsintheoutcomeof[thesecases.]”Thefollowingisoneexample.

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---------------------------------------------------------------------------------------------------------------------Thiswasasurprisingfinding,consideringthatRRDonnelley,asoneofthelargestcommercialprintingcompaniesintheworld,appearedtobeoperatingasatrollandexploitingresourcesfromcompanieswithinitsownindustrythroughfearandintimidationtactics.RecognizingthatRRDonnelleyisalong-standing,highlyrespectedcompanywithintheprintingindustry,andasanadvocatefortheindustry,Icontactedthecompanyforanexplanation.ThisprovidedRRDonnelleytheopportunitytoexplainanymisunderstandings,iftherewereany,regardingthecompany’sownershipofthepatentsandfinancialinterestsinthem.RRDonnelley’sResponseInaresponsetoaletterrequestingclarification,RRDonnelleyprovidedthefollowingauthorizedstatement.“RRDonnelleywouldliketoprovidefeedback…toclarifysomeapparentmisunderstandingsregardingthethreeHQPIandCTPpatentsthatyoureferenceinyourletter(the‘Patents’).”1.RRDonnelley("RRD")nolongerhasanyownershipinterestinthePatents.2.RRDhasnoownershipinterestintheplaintiffsthatareassertingthePatents.3.AsRRDnolongerownsthePatents,andhasnoownershipinterestintheplaintiffs,RRDhasnoabilitytocontroltheassertionofthePatents.4.RRDhasnofinancialinterestintheHQPIpatent.WeareowedcompensationfromthepurchaseroftheCTPpatents.WebelievethisiswhyRRDhasbeenidentifiedincertainpleadingsashavingafinancialinterest.5.RRDretainedalicensetouseallofthesePatents.AllworkthatRRDperformsforitscustomersislicensedunderthesePatents.Similarly,anyworkthatavendorperformsforRRDislikewiselicensedunderthesePatents.

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ThePatentTrollsLoseandthe“GoodGuys”WinOne–TheHQPICasesDismissed!

PrintserviceprovidersandOEMs,pleasepaycarefulattentiontothefollowing.Itdemonstratesthewisdomofnotgivingintogreedandextortionmeanttodecimateyourbusinessandindustry.Inanuncertaineconomywithunpredictableupwardanddownwardfluctuations,businessesshouldprotectthemselvesthroughanunderstandingofforcesaimedatdisruption,causingcompaniestodeclineandemployeestolosejobs.Theprintingindustryisparticularlyvulnerablebecausesuchforcescomenotonlyfromwithintheindustry,butfromcompetingmediaindustriesaswellasfromcompaniesdemonstratingunethicalbusinesspracticesandhavingnointerestsotherthangreed.PatenttrollsattemptingtoextortfundsfromprintserviceprovidersandOEMsbyclaimingpatentinfringement,mostlyonbadpatentsthatcaneasilybeinvalidatedthroughPriorArt,isagrowingissue.However,thereisnowastrategyworthconsiderationtocurtailpatenttrolls.Anamazingthinghappened,andI’dliketothinkthatWhatTheyThinkandaseriesofthreearticlesIhadpublishedonthepatenttrollmatter,alsoadoptedbyotherleadinggraphicartspublications,playedaroleininstigatingthis.Isensethatitwasthe“powerofthepress”andinvestigativereportingthatbroughttolightoneofthemostdevious,unethical,andimmoralbehaviorsaimedatdestroyingtheprintingindustryanditshonorablecompaniesandhardworkingemployees.Thisappliesnotonlytosmall,medium,andlargeprintserviceproviders,buttoOEMsaswellthatinvestresearchanddevelopmentdollars,andbuildapplicationstohelpimproveandbuildtheprintingindustry.TheHQPICasesWasDismissed!Inoneofthelatestandmostvisiblecases,HighQualityPrintingInnovations(HQPI)ashellcompany,underthetrollcompanynameofModernUniversalPrinting,LLCfirstthreatenedlitigationandthensuednumerousprintserviceprovidersandOEMsfortheallegedinfringementoftechnologyinvolvingdigitaldesignstations.Allofthelawsuitsweredismissedwhenthetargetedcompaniesrefusedtopaylicensefeedemandedbythetrollcompanies.SeethefollowingCourtReporter’sTranscriptoftheProceedings(March31,2016)beforeaUnitedStatesJudicialPanelonMultidistrictLitigation.Thiswasasix-judgepanel.

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Seethefollowingfourfilesof“SupplementalInformation”declaringthedismissalsandlistingalldefendantsthatarenowdismissedfromthelegalactiontowhichtheyweresubjected.

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Understandthatunderaconditionof“withoutprejudice,”theComplaintputforthbytheplaintiffmayberesubmittedwithinoneyear.However,thishappeningishighlyunlikelybecauseofthecoststhatwouldbeimposedontheplaintiff,andthelikelihoodoffailureduetoPriorArtthatwouldinvalidatethepatentinquestion.Thereisnodoubtthattherewouldbeanaggressivepushtoinvalidatethepatentshouldthisparticularmatterreemerge.ALittleMoreBackgroundTheplaintiff,HQPI,throughitscounsel,BakerDonelsonBearmanCaldwell&Berkowitz,P.C.,pushedforsettlementinalloftheindividualcasesagainsttheprintserviceprovidersandOEMs.Theyinitiallywereaskingasix-figureamountfortherighttousethetechnologyallegedlybeingtaughtbyPatentNo.US6012070A–“DIGITALDESIGNSTATIONPROCEDURE.”RecallthatthiswasapatentoriginallyassignedtoMooreBusinessForms,andthenbecameanRRDonnelleypatentwhenRRDonnelleypurchasedMoore.Whenthesix-figurelicensefeewasrejectedbynearlyallofthedefendants,thelicensingasking-feedroppedtoaboutnearlyone-half.Withvirtuallynotakersatthisamount,theplaintiff,outofdesperationto“extort”atleastsomefundsfromthedefendants,droppedtheiraskingpricetoafewthousanddollars.Thelegalcounselrepresentingthedefendantsrejectedeventhisonbehalfofitsclients.Theplaintiffsooncametorealizethattheywouldbereceivingnothingfromnearlyallofthedefendants,yetspeculationisthattheywereprobablybeingbilledhugelegalfeesbytheircounselforservicesprovided.Hence,allofthecasesagainstexistingdefendantsweredismissed,ascontinuingtofightthis,withthelikelyoflosinganinvaliditycontentioncountersuit,wouldcreatefurtherhugeexpenses.Inote“existingdefendants”because,unfortunately,afewofthedefendantsdidenterintosettlementagreements,likelyforlesseramountsthantheoriginalaskingfeeforthelicenses.Iunderstandthattherewereonlyafew.Myarticlesontheimpactofpatenttrollsontheprintingindustrywent“viral”afterbeingpublishedbyWhatTheyThink.com.TheyreachedtheCourtsandweretakenintoconsideration,possiblymotivatingthejudgestolettheblanketdismissalsitwithoutallowingtheplaintifftoargueitscasefurther.Thejudgesprobablynowbetterunderstandthedebilitatingandcounter-productivebehaviorsofpatenttrollsmorethaneverbefore.Infact,theCourttranscriptnotesthattheplaintiff’scounseldidn’tevenshow-upatthehearing.Thisin-and-of-itselfisverytelling.CommunicationswithRRDonnelleyIhavebeenincommunicationwithRRDonnelley.However,ImusthonortheirrequestforconfidentiallyinnotrevealingthenamesofanyonethatIhavebeenincontactwith.RRDonnelley’sposition,previouslynoted,iswhatIhadconsenttoquoteandpublish.Aftermyfirstarticlewaspublished,firstbyWhatTheyThinkandthenbyotherpopularindustrypublications,IsentittomyRRDonnelleycontact,includingalloftheresponsesthatwerereceived.IpointedouttoRRDonnelleythatregardlessoftheirpublishedposition,theindustrywasstillskepticalofthecompany’sroleinsupportingandbenefitingfromthetrolls.IaskedifRRDonnelleywouldliketofurtherrespondinafollow-uparticle,furtherassuringtheindustrythatthecompanyhadnofinancialinterestinlicensingfeespaidtothetrolls.Ireceivedthefollowingresponse.

Thankyouforyourmessage.…Atthistime,IamnotauthorizedtomakeanyfurtherstatementsonbehalfofRRDonnelley.However,Iappreciateyourinquiry.

ThisleftthesenseofskepticismwithintheindustryopenregardingRRDonnelley’srole.However,ItaketheoptimisticpositionandhypothesizethatbringingthemattertotheforefrontoftheindustrymayhaveinspiredRRDonnelleytoconsidertheimmensepressurethatthelawsuitsplacedonhonorableindustrycompanies,andthatRRDonnelleysupportedthedismissaloftheHQPIlitigations.

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SoWhatoftheCTPInnovationsCases?

ThesecasesalsohavelonglistsofdefendantscomprisedofprintserviceprovidersandOEMsallegedlyinfringingonpatentsfocusedonprintingcommunicationnetworksandgeneratingprintingplates.I’vebeeninformedthathearingsarependingontheCTPcases.IamoftheimpressionthattheCTPmattercouldconcludeinasimilarfashiontotheHQPIcasesifalldefendantsdonotgiveintothetrollsanddonotagreetosettlements,regardlessofwhatthetrolliswillingtosettlefor.Iwillreportonthisoncefurtherinformationbecomesavailable.Asanexampleofhowdeviouspatenttrollsare,CTPInnovationshasabsolutelynothingtodowiththeprintingindustry.Theyarenotprinters,OEMs,distributors,ordealers.Theyareashellcompanywithnoaddressandnoemployees.Yettheyhaveselectedaname,CTP,toleadthoseaccusedofpatentinfringementtobelievethattheyareacompanythatdevelopsprintingindustrytechnology.ThoseofusintheprintingandrelatedindustriesknowthatCTPstandsfor“Computer-to-Plate.”Theonlycontactinformationprovidedisthatofalawfirmthatlikelyregisteredtheshellcompanynameonbehalfofitselfand/oronbehalfofotherswithfinancialinterestsinreceivinglicensefees.ItisnoteworthythatthelawfirmBaker,Donelson,Bearman,Coldwell&BerkowitzistheplaintiffcounselforboththeCTPandHQPIcases.

ThePrintingIndustrySpeaksOut—ImpactonCompaniesandMajorConcerns

Unfortunately,companiesthreatenedbypatenttrollsareofteninexperiencedindealingwithlawsuits,areintimidatedbybeingservedlegalwarrants,cannotaffordtoretainattorneys,andsomegiveintothedemandsoftrolls.Iamagainurgingthoseintheprintingandrelatedindustriestonotgiveintothedemandsofpatenttrolls,buttocontactattorneysandotherexpertsworkingdiligentlytoprotectbusinessesandindividualsfrompatenttrollextortion.Aspreviouslynoted,suchextortiontypicallycomesinthewayofdemandsforexpensivelicensefeesforusingsomeverybasicofficeorproductionequipmentneededtoconductday-to-daybusiness.Someexamplesarescanners,copymachines,web-to-printtechnology,andthelikes.Alsoaspreviouslynoted,thelicensingfeesbeingaskedcouldbeinthesix-figurerangeand,hence,veryscarytothesmall-businesspersonworkinghardtoekeoutalivingtosupportafamilyandtosupportjobsforemployees.Theclaimtypicallymadebytrollsisthattheaccusedisusingequipmentthathasoneormorepartsdescribedinanobscurepatentthatwassoldtoatrollinanattempttomonetizeit.Theassigneetothepatentatsomepointmayhavecometorealizethatthepatentisofquestionablevalueandsoughtatrolltointimidatepeopleandbusinessesusingtechnologyorapplicationsthatareevenremotelytaughtbythepatent.Thetrollthenclaimsinfringementandthreatensalawsuitifalicensefeeisnotpaidbyacertaintime.ThedismissaloftheHQPIcasesshowthattrollsrepresentmoreofathreatthanactiononathreat,andthatallegedinfringersshouldnotgiveintotrolldemands.IndustryResponsesThefollowingprovidessomeoftheresponsesreceivedbythosethreatenedandsued,withadviceonhowtoproceedshouldaprintserviceproviderorOEMbefacedwithapatentinfringementclaim.Itisobviousfromtheresponsesthatthepatenttrollmatterintheprintingindustryhaselicitedsomehighlyemotionalreactionsandmajorconcerns.----------------------Excellentarticleinsummarizingacomplex,challenging,andtomanyaveryfrustratingtopic.Withourindustrybeingalargeandfragmentedone,wehaveatarget-richenvironmentforthesefirms.Asyouhavestatedinnumerousinstances,ajointeffortmaybethebestapproach,butit'salsonotassimpleand/orinexpensiveassomemightdesire.

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Regardless,youhaveraisedtheissue,andmoreimportantlyclarifiedtheRRDonnelleyquestionsthathadmanyintheindustryconcerned.Astothequestionposted[above]--ifonefindsthemselvesinthetargetingsightsofa"Troll,"contactanattorneywhoisKNOWLEDGEABLEregardingintellectualproperty.Eachcaseisdifferentandrequiresanattorneytoassist.Harveyisagreatresource,butnooffensetohim,anattorneyistheplacetostart.-------------------------------Ijustfinishedreadingyourarticleonthepatenttrollissue.Itisverywellwrittenandcomprehensive.RRDonnelley’sexplanationdoesnotquitewash.HQPIdisclosedinfilingsthatboththeirhiredlawfirmandRRDonnelleyretainafinancialinterestinthelitigation.Inthecaseofthelawfirm,thatcertainlymeansacontingencyfee.IbelieveitmeansthesameforRRDonnelley,whichiswhytheyhadtobelistedasretainingafinancialinterestinthelitigation.Iftheyweremerelyowedafixedamountforlicensingthepatents,theywouldnothaveafinancialinterestinthelitigation,becausetheywouldbeowedthatamountregardlessofoutcomes.Wewereapproachedbyatrollafewyearsagoaboutoneofourpatents,whichbroadlycoverse-commercesalesofcommercialprinting.Wegotitfordefensivepurposes,andwouldneverassertitagainstafellowprinter.Nonetheless,weaskedthemtoprovidetheirdraftagreement.Undertheagreement,wewouldhaveassignedownershiptothem,retainedalicensetouseourselves,anditgavethemtherighttoassertthepatents.Theywouldhavepaidusnothingupfront,butwewouldhavereceivedacutofanysettlementstheyextractedorwereawardedattrial.ItislikelythisisexactlywhatRRDonnelleysigned,whichiswhytheyretainafinancialinterestthathadtobedisclosedincourtfilings.Andreally,doyouthinkRRDonnelleywouldassignapatenttoabrandnewshellcompanywithoutreceivingacashpayment,ifthesalepricewerefixed?Patentsarelikedomainnames,themoneygoesintoescrow,thetransferoccurs,andthenthefundsarereleasedfromescrowtotheseller.OncetheUSPTOhasrecordedanewownerofapatent,ownershipcanonlybetransferredbythelistedowner.RRDonnelley’scarefulwording,‘WeareowedcompensationfromthepurchaseroftheCTPpatents,’leaveswiggleroom.Tryaskingthemwhatistheamountofcompensationowed,isitfixed,andwhywouldtheytransferavaluableIPassettoabrandnewshellcompanywithnocredithistory,andnotgetcashpaymentupfront?Ithinktheyarebeingdeceitful.Askthemtoprovethattheyhavenofinancialinterestbyshowingyouthecontractbetweenthemandthetroll.Thankyouforyourworkexposingthisissue.

--------------------------------Yousaytocontactalawyer,butthearticlesaysthatfeesoftenstartat$250K,whichisbeyondtherangemanyprintshopscanafford.Below,asanexample,isaredactedandeditedforbrevitytrollextortionletter.Notethevagueness(‘likelyreasontobelieve,’etc.).-IMHOthere'salotoffishinggoingonthatusesintimidatingwordstogettheinfotheydon'tactuallyhave.They'regettingyoutoselfincriminatebyprovidingthemtheinformationtheydon'thave.Infact,thewayit'swordedseemstoallowyoutoignoretheletterifyoudon'tthinkyou'reinfringing!(YouhavetoansweryestoALLthequestionsinanyoneofthefourchoicespresented.Ifyoucan'tanswerYEStoALLthequestionsinanyoneofthechoicesthenyoucanprobablysafelyignoretheletter.

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April19,2013FORIMMEDIATEATTENTIONRe:NoticeofLikelyInfringementofU.S.PatentNos.6,611,349and6,738,155OurReferenceNo:…………..ToWhomItMayConcern:OurfirmrepresentsCTPInnovationsLLC("CTP").YouarereceivingthisletterbecauseCTPhasreasontobelievethatyouareusingitspatentedtechnologywithoutalicensetodoso.ThepurposeofthisletterisopenaconversationwithyouregardingyourobtainingalicenseandavoidingthenecessityofCTP'sfilingalawsuitinfederalcourtforpatentinfringementagainst…Thisletterdescribes(1)thesubjectmatterofthetwopatents-at-issue;(2)howyoulikelyhaveaninfringingsystem;(3)whyyouneedalicense;and(4)thetermsofaproposedlicensetoresolvethismatterinanon-adversarialmannerassoonaspossible.Pleasenotethatthisisnotanadvertisementorothermaterialthatshouldbediscarded.Weaskthatyoureadthisletterinitsentirety.Wehavedirectedthislettertoyouspecificallybecausepubliclyavailableinformationsuggeststhatyouarethecorrectpersonatyourcompanywithwhomtoopentheconversation.Ifthisisincorrect,wewouldgreatlyappreciateyourdirectingthislettertotheappropriatepersonwithinyourorganizationand/orprovidingthatperson'snameandcontactinformationtous.Thetworelevantpatentsareasfollows,andyoucanreviewthesepatentsatwww.google.com/patentsbyenteringthenumbers:(a)U.S.PatentNo.6,611,349("SystemandMethodofGeneratingaPrintingPlateFileinRealTimeUsingaCommunicationNetwork")and(b)U.S.PatentNo.6,738,155("SystemandMethodofProvidingPublishingandPrintingServicesViaaCommunicationsNetwork").Oneaspectthatthesepatentsrelatetoisnetworkedcomputer-to-plate("CTP")workflowtechnology.OurinitialinvestigationindicatesthatyourcompanygeneratesandusesCTPfilesinanetworkedenvironment.Tohelpyouconfirmthatyoucomewithinthescopeoftheaforementionedpatents,belowareabriefsetoffactchecklists.Ifyouanswer"YES"toalloftheboxesinanyoneofChoiceAthroughD,itishighlylikelythatyouinfringeoneorbothofthepatentsandyoushouldpromptlycontactus.CHOICEA-Haveyoustoredviaanetworkhighresolutiondocumentsorfiles?-Haveyougeneratedlowerresolutionfilescorrespondingtothehigh-resolutionfiles?-Haveyouprovidedthelowerresolutionfilesoveranetworkfordesigningapagelayout?-Haveyougeneratedaplate-readyfilefromthepagelayout?-Haveyouprovidedtheplate-readyfiletoanetworkedprinter?CHOICEB-Haveyouprovidedaccess(e.g.,sendormakeavailableoveranetwork)toimagesoveranetworkandthoseimagesareusedtodesignapagelayout?-HaveyoulinkedtheimagesincreatingathinPostscriptfilefromthepagelayout?-HaveyoureplacedthelowresolutionimageswithhighresolutionimagesinthePostscriptfile?-HaveyoucreatedaPDPfilefromthePostscriptfile?-HaveyouconvertedthePDPfiletoaplate-readyformat?CHOICEC-Haveyoustoredhigh-resolutionfilesonacomputerserver?-Haveyougeneratedlow-resolutionfilesthatcorrespondtothehigh-resolutionfiles?-Haveyouprovided(e.g.,sendormakeavailableviaaccessoveranetwork)thelow-resolutionfilesfordesigningapagelayout?-HaveyougeneratedPDFfilesfromthepagelayout?-Haveyouprovided(e.g.,sendormakeavailableviaaccessoveranetwork)thePDFfile?-Haveyouprovidedaplate-readyfiletoanetworkedprinter?

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CHOICED-Haveyoustoredfilessuchasimages,text,ordataonacomputerserver?-Haveyouprovided(e.g.,sendormakeavailableviaaccessoveranetwork)thesefilesoveranetworkfordesigningapagelayout?-HaveyougeneratedPDFfilesfromthepagelayout?-Haveyougeneratedaplate-readyfilefromthePDFfile?-Haveyouprovidedtheplate-readyfiletoanetworkedprinter?PleasenotethatChoicesAthroughDabovedonotcompriseanexhaustivelistofinfringingworkflows,anditmaybedeterminedthatyouneverthelessrequirealicenseevenifyourworkflowdoesnotexactlyfitwithinChoicesAthroughD.Mostbusinesses,uponlearningthattheyareinfringinganother'spatentrights,desiretooperatelawfullyandenterintoalicensepromptly.Weanticipatethatyouwillrespondlikewise.Assuch,wearewillingtoofferafullypaid-up,one-timelicenseforacostofatotalof$75,000forbothpatentsifweareabletoreachanagreementinthenexttwoweeksandalicenseof$95,000ifweareabletoreachanagreementinthenextthreeweeks.Thislicensewouldincludepast,present,andfutureusesofthetechnology.RecipientsofaletterofthisnaturecommonlyaskwhywearenotcontactingthemanufacturersinvolvedintheCTPprocess.TheansweristhatCTPInnovations'patentrightsmostdirectlyaddressaprinter'sworkflows.Inthisparticularcontext,weexpectifyoureviewyouragreementswithamanufacturer,youwillfindthatthemanufacturerdoesnotoweyouanyindemnificationduty.Evenifitdoesexist,theindemnificationobligationdoesnotshiftanycaseagainstyou;instead,itcreatesaseparatematterbetweenyouandthemanufacturertoresolve.Itwillnotstayanylegalactionagainstyou.Weinviteyoutoconsultwithapatentattorneyregardingthismatter.Therecanbeseriousconsequencesforpatentinfringement.Infringerswhocontinuetoinfringedespitehavinganobjectivelyhighriskofinfringementofavalidpatentcanbeliablefortripletheactualdamagesandthepatentowner'slitigationcosts,includingallattorneyfeesandexpenses.Pleasecontactuswithintwoweeksofthisletter'sdate,sowecanagreeuponalicense,ifoneisnecessary.Pleasefeelfreetocontactbyemailat…orbytelephoneattodiscussfurther.Welookforwardtoresolvingthismatterpromptlywithyou.Sincerely,…

--------------------------------FollowingupontheextortionletterIposted.Theletterreferstotwopatents:USpatent6611349B1Filingdate30Jul1999published26Aug2003SystemandmethodofgeneratingaprintingplatefileinrealtimeusingacommunicationnetworkUSpatent6738155B1Filingdate30Jul1999published18May2004SystemandmethodofprovidingpublishingandprintingservicesviaacommunicationsnetworkNotethefilingdates.IMHOCtP/workflowvendorsweredoingthethingscoveredbythosepatentsyearsbeforethosepatentswerefiledletalonepublished.Idoubtthosepatentshaveanyvalidity-butI'mnotapatentlawyer.Ithinkanorganization,likethePIA,couldaffordtohirethelawyersneededtoinvalidatethosetwopatents.---------------------------------Thereisplentyofpriorarttoquellthisproblem.YearsagoIwroteaseriesofarticlesforHighVolumePrinting--averypublicdomainpublicationatthetime--thatdescribeaworkflowthatweweredevelopingfora

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customer.Directlygoingtoplateviaanetworkfromadatastorewasclearlydefinedinthatarticleseries.Indeed,imposingaformontheflywithmetadatafromadatastorevianetworkwasclearlydefined.Ihavecopiesofthearticlessomewhereandwouldbegladtosupplythemifanyoneneedsthem.---------------------------------Patentlawisnotfortheweakofheart.It'stechnicalasallgetout,andisamassivelyeffectivesleepingaid.PrintCofolksshouldnotgoitalonehere.Ihirepatentfirmsformyclients’patentneed;itissimplynotmybailiwick.Havingsaidthat,IhavetoldDr.LevensonprivatelythatIamawareofapatentfiledin1997thatcertainlyconstitutespriorart.IwillreachouttoHarveyandNateSt.Clairwiththeparticulars.---------------------------------IfRRDonnelleymerelysoldthepatentinquestion,whywouldtheyhaveafinancialinterestintheoutcomeofthelawsuitunlesstheyarealsocollectingacutofanymoneyawardedthroughlitigation.Inthis,theynotonlycollectmoneyfromthesocalledpatenttrollsbutalsoallowsthemtokeeptheirnamefromgettingdraggedthroughthemud.-------------------------------------Isincerelyappreciatetheworkyou'veputintobringingmoreofthisstorytoawideraudience.ButIthinkyouletRRDonnelleyoffthehooktoolightly.Here'swhy...FromtheRRDletter:Weareowedcompensationfromthepurchaser...SoRRDonnelleyDOEShaveafinancialinteresthere.Ifthetrollsdon'tbleedenoughcashoutofenoughprinters,fastenough,theywon'tbeabletopayRRDonnelley.Asidefromextortion,thereISnoothersourceofrevenuewithwhichtheycanpayRRDonnelley.AlsofromtheRRDletter:RRDonnelleyretainedalicensetouseallofthesePatents...ThisensuresthatRRDonnelleyhasanunfaircompetitiveadvantageagainsteveryotherprinterintheUSA,butonlyaslongasthetrollspersistintheirextortionscheme.Finally,thefactthatRRDonnelleysoldtheVDPpatentwithlessthantwoyearsofprotectionremaininginthepatentterm,pointstointentonbehalfofRRDonnelleytoprofitquicklyatthedirectexpense(emotionalandfinancial)ofALLofit'sdomesticcompetitors.TheVDPpatentexpiresonNovember15,2016.

-----------------------------------------Thequestionisnotreallywhetherthese"trolls"aretheepitomeofgreed,thoughtlessness,andunethicalbehavior.Thatisirrelevant.Almosteveryonehasbeenviewedthiswayonceinhislife.Theproblemisthatour"intellectualproperty"conceptinlawishorriblymalleableandwasdesignedasanacademicexercise.Itisalegaltheoryletoutofthelaboratory.Bearinmindthatthephrase"intellectualproperty"wasnotincommonuseinthelegalfieldbefore1975.Priortothattime,issuanceofpatentswasviewedasaCONCESSIONtoprivateintereststoencouragedevelopment,apublicgood.Fromthe1700'stothe1900'stherewasanerosioninpractice,butthefundamentalprinciplewasclear.

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Thelegalprinciplewasclearlythatmonkey-see,monkey-dowaslegalandpermissibleunlessgovernmenthadseenanexceptionalsituation.

----------------------------------------AsaprintingcompanyCEOthatisinlitigationrightnowwithCTPInnovations,Iwanttoapplaudyourcontinuingreportingonthisunfortunatepracticethatisadverselyimpactingourindustry.Congrats,Ithinkyou’retheonlyonethatisopenlytakingRRDonnelleytotaskontheirongoinginvolvementatthispoint.RRD’sclaimthatthey“arenotgettinglicensefees”isaninterestingchoiceofwords.Thatis,themoneytheyreceiveisnotthetotalmoneypaidbydefendants,so,itisnottechnicallya“licensefee.”Theyalsonotethattheyare“stillowed”moneyfromCTP.Inotherwords,thesalesofthesepatents(yearsago)werestructuredsothatthepricepaidbyCTPwouldbeapercentageofthelitigationrecovery.Whyelsewouldtheybe“owed”moneyonasalefromyearsago?Whataracket.Anyway,Idolookforwardyourfuturearticlesandamavailableifyoushouldneedtheperspectiveofsomeoneonthefrontlines.--------------------------------------IjustreadanupdateinPIworldthatyouwrote.ThearticlewasaboutyourresearchregardingpatenttrollsandthoughtIwouldsharewithyouonethatcametomyattentionlastsummer.OneofourcustomersisaverylargedirectmailandInternetcompanythatsellsshippingsupplies.Theirattorneycontactedmeafewmonthsagobecausetheyreceivedaletterfromalawfirmrepresentingacompanythatclaimedtohaveapatenton“creatingbackgroundcolorsonthermaltransferprintingmaterials.”Inotherwords,apatentonflexographicfloodcoatingoflabelsusedinthermaltransferprinters.Thiswasanobviouspatenttrollseekingtoextractmoneyfromthislargecorporationintheformofalicensingagreement.ThepackagingcompanyattorneyandIdiscussedthe“patent”andourprocessofflexographicprinting.Duringourcall,hedeterminedthathewasgoingtoignoretheletter.Ithoughtyoumightfindthisinterestingasitrelatestoyourthesis.-------------------------------------That’swonderfulnewsHarvey!AndTHANKYOU!YourinvestigationandreportingwerecertainlyahugefactoringettingthisAmazingresult,fasterandcleanerthanmosteverimaginedpossible.You’reaRockStartomeandmany,manyotherPrintersaroundtheUSA!-------------------------------------Itisclearfromtheresponsesthatthepatenttrollmatterfacingtheprintingindustryhasevokedmajorconcerns.Itfurtherpointstotheneedtomobilizeandworktogether,printserviceprovidersandOEM’salike,toconfrontthesetrollshead-onandtoalsokeeptheCourts,theUSPTO,andourlegislatorsawareofthisgrowingissueimpactingbusinesses,jobs,andtheeconomicwell-beingandgrowthofanentireindustry.

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WhattoDoandNottoDoIfFacedwithanAllegationofPatentInfringement?ThereisPowerinNumbers

First,WhatNottoDoIreceivedanumberofrequestsaskingwhattodoifacompanyissuedorthreatenedbyapatenttroll.Myfirstadviceis,donotsettleorpayanything.Youarelikelynotalone.Also,donotenterintoasinglepartylitigation.Thiswouldbequiteexpensive.RecalltheanecdoteaboutthedismissaloftheHQPIcases.Ifallormostcompaniesthatarethreatenedbypatenttrollsrefusetopayanything,itbecomesanexpensiveburdenforthetrolltocontinuefilinglawsuits.Thereispowerinnumbers!WhattoDoInaWallStreetJournalarticlebyColleenChien,associateprofessoratSantaClaraUniversitySchoolofLaw,andformerWhiteHousesenioradvisor,intellectualpropertyandinnovation,attheOfficeofScienceandTechnologyPolicy,professorChiensuggests:Donothing.Shesuggeststakinganylettersclaiminginfringementandsimplyfilingthem.(28)Iagree.However,IfurtherrecommendthatanyonebeingimpactedbythismattercontactanIntellectualPropertyattorneyforadviceonly.OnelawfirmtoconsiderisJacksonWalkerLLP,inDallas,TexasandspecificallyattorneyNateSt.Clair,aPartnerinJacksonWalker’spatentlitigationpracticegroup.Mr.St.ClairandtheJacksonWalkerfirmhaverepresented,andarecontinuingtoworkwith,alargenumberofimpactedcompaniesinourindustrytopursuethepatenttrollmatterasateam,therebygreatlyreducingthecostforanyonecompany.Mr.St.Clairishighlyknowledgeableaboutthematterandcanbereachedatnstclair@jw.comor(214)953-5948.ExplorePriorArtTheidealsituationwouldbetopursueinvalidationofthepatentsthattrollsattempttomonetize.SuchinvalidationcanbeachievedthroughthediscoveryofexistingPriorArtnotpreviouslysubmittedtotheUSPTO,butshouldhavebeen,atthetimeofpatentapplication.StartdevelopingacollectionofPriorArtdemonstratingthatthetechnology“taught”inthepatent(s)inquestionisnotnewbutobvioustoapersonofordinaryskillinthefield.OnesourceofPriorArtdiscoveryistherecentlyinstalledRaymondJ.PrinceGraphicArtsCollection(RJPGAC)atCaliforniaPolytechnicStateUniversityinSanLuisObispo,California.Thisisthelargestgraphicartslibraryofitskindintheworldfeaturingover30,000publicationsfocusedonprintingtechnology,includingsoftware,hardware,andrelatedareas.Thedocumentscontainedwithinthelibraryrangefromover200yearsagotothepresent.ContacttheGraphicCommunicationInstituteatCalPoly—GrCI(www.grci.calpoly.edu)orphone805-756-2645forinformationonhowtoaccessthecollectionforPriorArtsearches.

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CONCLUSION

CaseStudy

Thecompaniesimpactedbythelawsuitsimposedbythepatenttrollsalleginginfringementfeeltorment,fear,andintimidation.Manyhaveneverbeenfacedwithlawsuitsandareinexperiencedinknowinghowtodealwiththematter.Mostcannotaffordtohirelegalcounselandsomearesmallcompaniesattemptingtoprovideareasonablelivingfortheiremployees.Thesenseofmanydefendantsisthatifthereisvalidinfringement,itistheoriginalequipmentmanufacturers(OEMs)thatshouldbeheldliable,notthosetowhomtheequipmentwassold.Atbest,thethreepatentsownedbytheshellcompaniesCTPandHQPIaremarginalbecausePriorArtlikelyexiststhatwasnotpresentedtotheUSPatent&TrademarkOffice(USPTO)examinersatthetimeofpatentapplication.WithregardtotheRRDonnelleyallegations,RRDonnelley’sresponseexplainsalot,andparticularlywhytheRRDonnelleynameisincludedunder“financialinterests”intheCourtcertificates.ItisbecausethepurchasersofthepatentsstilloweRRDonnelleymoneyforthepurchases,notforanylicensefeereceived.IwasalwaysundertheimpressionthatRRDonnelleysoldallofthepatentsoutright.RRDonnelley’sresponseconfirmedmyimpression.IwasassuredbyRRDonnelleythatthecompanyisreceivingnomoneyfromlicensefees.

TheSolution

Printingandrelatedcompaniessuedbypatenttrollsshouldnotsettlebypayingthefeesrequestedandshouldnotenterintoasingle-companylitigationthatcancostevenmorethanasettlement.Givingintopatenttrolllicensefeesorotherdemandswillexacerbatetheproblemandencourageadditionalintimidatingandthreateninglawsuitsinanattempttoextortfundsfromcompaniesdoinghonestandlegalbusiness,andworkinghardtosurviveandgrow,andprovideemploymentopportunitiesforskilledstaffmembers.Iamproposingthatasolutionisbringingtogetherallofthecompaniesforwhichalawsuithasbeenfiledbypatenttrolls,andtoworkasaunitinbringingthematterofallegedpatentinfringementsbeforetheUSPatent&TrademarkOffice(USPTO).Itislikely,forexample,thatthepatentsinquestionreferencedinthisstudycanbeinvalidatedviaPriorArt,aswouldbethecaseofotherpatenttrollallegationsofinfringement.ForAdditionalInformationHarveyR.Levenson,Ph.D.hrlevenson@thegrid.net805-801-6025

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ENDNOTES1.PrintingIndustriesofAmericaPresidentMichaelMakinAddressesCongressionalSenateJudiciaryCommittee.https://www.youtube.com/watch?v=2nh2DHaWdV02.“EveryoneHatesPatentTrolls,buthere’stheRootProblemwithourBrokenSystem,”TheWashingtonPost,5/4/15.https://www.washingtonpost.com/news/innovations/wp/2015/05/04/everyone-hates-patent-trolls-but-heres-the-root-problem-with-our-broken-system/3.“LessonsfromEuropeonHowtoTameU.S.PatentTrolls,”CornellInternationalLawJournal,Spring2009.http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1746&context=cilj4.“PatentTrolls/FriendorFoe?”WorldIntellectualPropertyOrganization(WIPO),April2014.http://www.wipo.int/wipo_magazine/en/2014/02/article_0007.html5.“ROFF/TheFrighteningEmergenceofGovernmentPatentTrolls,”TheWashingtonTimes,8/31/14.http://www.washingtontimes.com/news/2014/aug/31/roff-the-frightening-emergence-of-government-paten/6.“TheEvidenceIsIn/PatentTrollsDoHurtInnovation,”HarvardBusinessSchoolPublishing,November2014.https://hbr.org/2014/07/the-evidence-is-in-patent-trolls-do-hurt-innovation/7.“WhyNoOneLikesThem—AbuseofthePatentSystemBenefitsNeitherInventorsNortheEconomyatLarge,”TheEconomist,5/3/15.http://www.economist.com/news/business-and-finance/216456048.“WhySupremeCourt’sAliceRulingDoesn’tSolvePatentTrollProblem,”CongressBlog—TheHill’sForumforLawmakersandPolicyProfessionals,11/12/14.http://thehill.com/blogs/congress-blog/technology/223656-why-supreme-courts-alice-ruling-doesnt-solve-patent-troll9.“ChinaDeclaresWarOnU.S.IntellectualProperty,GetsIntoThePatentTrollingBusiness,”TheDailyCaller,10/8/14.http://dailycaller.com/2014/10/08/china-declares-war-on-u-s-intellectual-property-gets-into-the-patent-trolling-business/10.“ChinaTurnsFrom'Pirate'NationtoGiantPatentTroll,”Techdirt,10/20/14.https://www.techdirt.com/articles/20141015/11492128839/china-copies-us-as-it-turns-pirate-nation-to-patent-maximalist.shtml11.“IntelligentMailBecomesAnotherStompingGroundforPatentTrolls,”MULTIBRIEFS,9/25/13.http://exclusive.multibriefs.com/content/intelligent-mail-becomes-another-patent-troll-stomping-ground12.“GrayhairSettlesPatentTrollSuit,”DIRECTMARKETING,5/14/14.http://www.dmnews.com/postal/grayhair-settles-patent-troll-suit/article/346806/13.“ThePatentTrollwithaLawFirmBehindItAttackingPostalMail,”TROLLINGEFFECTS,12/18/13.https://trollingeffects.org/blog/patent-troll-law-firm-behind-it-attacking-postal-mail14.“FromtheEditor:RiseoftheTrolls,”In-plantGraphics,8/1/13.

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http://www.inplantgraphics.com/article/patent-trolls-targeting-printers-lawsuits-alleging-patent-infringement-using-common-technologies/all/15.“PatentTrollsTargetingPrinters,”In-plantGraphics,6/28/13.http://www.inplantgraphics.com/article/patent-assertion-entities-patent-trolls-targeting-printers/16.“PatentInfringementActionsinthePrintingIndustry,”PrintingIndustriesofAmerica.http://www.printing.org/page/1151517.Levenson,HarveyRobert,"GraphicCommunicationPatents:TheInternationalPicture,"VisualCommunicationsJournal,(Refereedpaper),2001,pp.8-19.http://www.calpoly.edu/~pkbennet/PDF%27s/2001VCJ.pdf18.WorldInternationalPatentOrganization(WIPO),frompiechartshowingpercentbreakdownofdigitalcommunicationpatentsissuedbyChina,Germany,Japan,andUnitedStatesfrom1998to2013.http://www.wipo.int/portal/en/index.html19.PrintingIndustriesofAmerica,“PrintingIndustriesofAmericaTakesonPatentTrollsinWashington,DC.,”December17,2013.http://www.printing.org/makintestimony20.Computerworld,“Patenttrollsmaybepreparingtotarget3Dprinting,”May20,2015.http://www.computerworld.com/article/2923949/3d-printing/patent-trolls-may-be-preparing-to-target-3d-printing.html21.In-PlantGraphics,“RiseoftheTrolls,”August1,2013.http://www.inplantgraphics.com/article/patent-trolls-targeting-printers-lawsuits-alleging-patent-infringement-using-common-technologies/22.Michelson,Mark,“PatentTrollsStillTargetingPrinters,”PrintingImpressions,March1,2014.http://www.piworld.com/article/patent-trolls-like-ctp-innovations-target-commerciual-printers/23.ArsTechnica,“Patenttrollswant$1,000—forusingscanners,”January2,2013.http://arstechnica.com/tech-policy/2013/01/patent-trolls-want-1000-for-using-scanners/24.WhatTheyThink,“PatentTrollTargetingPrintingCompaniesthatuseCommonWeb-to-PrintFunctionality,”December15,2015.http://whattheythink.com/articles/76818-patent-troll-high-quality-printing-inventions/25.PrintingIndustriesofAmerica,“PatentInfringementActionsinthePrintingIndustry.”http://www.printing.org/page/1151526.WhatTheyThink,“PatentTrollTargetingPrintingCompaniesthatuseCommonWeb-to-PrintFunctionality,”December15,2015.http://whattheythink.com/articles/76818-patent-troll-high-quality-printing-inventions/27.Hanlon,James,“PatentTrollsHarassPrintServiceProviders,”InfoBlog,InfoTrends,January12,2016.http://blog.infotrends.com/?p=2071728.Chien,Colleen,“ColleenChienontheBestWaytoFightaPatentDemand:DoNothing,”TAPStaffBlogger,December11,2015.http://www.techpolicy.com/Blog/December-2015/Colleen-Chien-on-the-Best-Way-to-Fight-a-Patent-De.aspx