A recent decision by the Federal Circuit Court of Appeals has set an important precedent for future patent infringement claims relating to information technology. In Akamai Technologies, Inc. v. Limelight Networks, Inc., the Court determined that, while Limelight Networks hadn’t directly infringed on every aspect of Akamai’s patented content delivery technology, it was nevertheless liable for infringement because it had been aware of the patent and had instigated outside companies to do the other procedural moves that led to an infringement on the patent.
This is an important development because, until this point, it was considered necessary for a company to infringe on every step of a patented method in order for an infringement claim to be successful. However, as the Court noted, the nature of these types of technological processes often involve interactions between multiple parties, which can easily be induced to violate portions of another company’s patent rights in fulfilling their obligations. This decision, therefore, could have a substantial impact on future decisions relating to process patents and patent law.
The issue of patent trolling, or nonpracticing entities (NPEs) who collect technology patents for the sole purpose of suing legitimate companies while they themselves produce nothing, has long been a limiting factor in American software and technology innovation. According to a study released by James Bessen and Michael Meurer at the Boston University School of Law, defendants suffered $29 billion in direct costs from frivolous lawsuits in 2011, and a previous study indicated that troll lawsuits like this ended up costing tech companies $500 billion in legal fees, out of court settlements, awards, and hits to share value between the years of 1990 and 2010.
New proposed legislation is targeted at forcing the trolls back under the bridge however, as two congressmen have introduced the Saving High-tech Innovators from Egregious Legal Disputes (SHIELD) Act which would require patent lawsuit plaintiffs to pay their defendent’s legal fees should they lose the suit. In the majority of patent lawsuits, NPEs target smaller firms with the objective of forcing a settlement for a few hundred thousand dollars. In cases such as this, the SHIELD Act would be an effective deterrent as the NPE would have more to lose than they had to gain in pursuing a lawsuit. Hopes are high for the bill, but similar legislation such as the America Invents Act was dismantled in Congress by the influence of lobbyists, leaving it largely ineffective.
Non-practicing entities (NPEs) are what we all recognize as patent trolls: individuals and firms who own patent rights to technologies for the sole purpose of suing people with the audacity to actually put said technology to use in innovative ways. These firms do not use the tech which they hold the rights to in any way, but instead rely on the patent rights to generate income by trapping legitimate companies in lengthy and costly lawsuits which siphon resources away from research and development efforts.
In recent years, the litigation costs associated with these types of lawsuits has absolutely skyrocketed, rising from $6.7 billion in 2005 to more than $29.2 billion in 2011. That figure doesn’t even take into account the indirect costs associated with defending against frivolous litigation such as resource diversion, new product delays, and significant losses in market share sustained during the litigation process.
Small businesses are among the most negatively affected by NPE litigation, as they are frequently forced to settle out of court in so-called “nuisance suits” for a few hundred thousand dollars. Small potatoes to bigger tech companies, but these kinds of suits can be absolutely devastating to the viability of a small business. The assistance of a personal injury lawyer can help protect your business against frivolous lawsuits, as a skilled attorney may be able to have baseless claims against your company dismissed.
The pornography industry has long relied on the defense of free speech and internet freedom advocates when facing persecution and prosecution from decency laws and organizations committed to protecting the public from the perceived threat that porn poses to the public. However, these same groups that came begrudgingly to the defense of the pornography industry are being forced to speak out against it as Liberty Media Holdings (LMH) has recently brought a lawsuit against two roommates for the alleged illegal downloading of a pornographic film to which the company holds the rights.
While pursuing a lawsuit against a defendant accused of illegally downloading copyrighted material is nothing new, this case bears the unfortunate distinction of attempting to extend liability to a party which LMH itself acknowledges did not commit any infringement. The case asserts that because the Internet subscription was in the name of the roommate who did not download the material, and he might have known that his roommate sometimes made illegal downloads, he is somehow responsible for the copyright infringement.
While the execution is new, the strategy of attempting to pressure copyright infringement defendants with bogus claims and improper procedures is nothing new. The objective is typically to intimidate the target into settling out of court despite the presence of a strong defense against shaky claims. The ramifications of this particular case are much greater than others however, as it creates the potential for liability for any entity offering free access to a Wi-Fi connection. In the St. Louis area, cafes, libraries, schools, and entire cities have been making huge strides in creating a readily accessible and free to access Wi-Fi network, a development which has benefited the public mightily while arguably promoting public safety.
Access to free and readily usable wireless internet will likely face a sharp decline should the lawsuit be successful, as businesses may be unable to operate networks out of fear for their company’s good name and financial security.