Bottom-Feeding Patent Trolls Troll On

Categories: Tech

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The year that we somehow just made it through has been dubbed "the year of the patent troll." But given that our patent system is still broken, 2013 promises to take that title for itself, and succeeding years will make their own claim unless laws are changed. And we see how good Congress is at changing laws, or enacting sensible ones.

See also: The New Cold War: The Tech World Is Fighting a Costly Battle

Just one case will be enough for now to highlight the problem: Ars Technica reports on a very trollish troll (but not an unusual one): a law firm in Atlanta that is sending letters to companies demanding that they pay license fees for scanning documents in order to send them via e-mail. The "company" that owned the patent on this "distributed computer architecture" was called Project Paperless LLC. It existed only to threaten lawsuits.

Patent trolls are entities (often lawyers) who haven't actually invented anything, but simply have secured the rights to a patent (often a dubious one) in order to sue people. They are the bottom feeders of the technology industry.

The attorney representing Project Paperless was Steven Hill of HIll, Kertscher & Wharton. One of his intended victims, Steven Vicinanza, an owner of a small IT services firm, got a letter demanding $1,000 per employee for scanning documents in order to e-mail them. Vicinanza told Ars he called Hill and found him "very cordial and very nice." But he asked Hill to clarify: "So you're claiming anyone on a network with a scanner owes you a license?"

Indeed, yes, Hill responded. At which point Vicinanza understandably "lost it." He took the matter to court and won, but that hasn't stopped other entities from filing lawsuits based on the same patent. A network of eight shell companies are now doing the same thing to small businesses across the country. Ars couldn't confirm whether Hill, Kertscher & Wharton are pursuing those claims: Hill wouldn't comment.

Two trends are on display here: one, toward threatening companies for using technologies as opposed to selling patented tech (as in the Apple vs. Samsung case); and two, toward targeting smaller companies because they are less likely to spend big to fight off lawsuits, and more likely to settle. Nice.

It's all just as sleazy and awful as it sounds. Not only that, but it hurts the economy: a study by the Boston University School of Law released in June found that the "direct costs" of patent trolling is about $29 billion a year. And that doesn't even count the many indirect (but just as real) costs such as the loss of innovation, delayed product launches, the diversion of resources from, for example, engineering departments to the legal departments, etc.

Those costs will only be more burdensome for small companies just trying to do business. Scanning-and-sending is just one common office task that the trolls are targeting. Ars notes that threats and suits have targeted the use of wi-fi, basic Web processes, and other routine technologies.

Next thing you know, some lawyer is going to storm into Milton Waddams' office space and demand that he pay up to license the technology for "jointing two or more sheets of paper together by means of a stapler."

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