Drew Curtis: How I beat a patent troll

148,985 views ・ 2012-04-17

TED


Please double-click on the English subtitles below to play the video.

00:15
Last January, my company, Fark.com, was sued
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along with Yahoo, MSN, Reddit,
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AOL, TechCrunch and others
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by a company called Gooseberry Natural Resources.
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Gooseberry owned a patent
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for the creation and distribution
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of news releases via email.
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00:35
(Laughter)
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00:38
Now it may seem kind of strange that such a thing can actually be patented,
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but it does happen all the time.
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Take something already being done
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and patent it for an emerging technology --
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like phone calls on the internet
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or video listings for TV shows
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or radio but for cellphones,
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and so on.
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The problem with these patents
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is that the mechanisms are obscure
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01:01
and the patent system is dysfunctional,
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and as a result, most of these lawsuits end in settlements.
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01:06
And because these settlements are under a non-disclosure agreement,
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no one knows what the terms were.
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01:11
And as a result, the patent troll can claim
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that they won the case.
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01:16
In the case of Gooseberry Natural Resources,
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01:18
this patent on emailing news releases
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had sort of a fatal flaw
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as it pertained to myself,
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and that was that in the mainstream media world
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there is only one definition for news release,
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and it turns out that is press release --
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01:31
as in P.R.
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01:33
Now my company, Fark,
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deals with news, ostensibly,
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and as a result
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we were not in violation of this patent.
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So case closed, right?
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Wrong.
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One of the major problems with patent law is that,
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in the case that when you are sued by a patent troll,
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the burden of proof that you did not infringe on the patent
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is actually on the defendant,
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which means you have to prove
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that you do not infringe on the patent they're suing you on.
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02:00
And this can take quite a while.
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You need to know that the average patent troll defense
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costs two million dollars
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and takes 18 months when you win.
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That is your best case outcome
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when you get sued by a patent troll.
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02:15
Now I had hoped to team up with some of these larger companies
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in order to defend against this lawsuit,
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but one-by-one they settled out of the case,
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even though -- and this is important --
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none of these companies
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infringed on this patent -- not a one of them.
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02:30
And they started settling out.
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The reason they settled out
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is because it's cheaper to settle than to fight the lawsuit --
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clearly, two million dollars cheaper in some cases,
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and much worse if you actually lose.
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It would also constitute a massive distraction for management of a company,
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especially a small eight-man shop like my company.
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Six months into the lawsuit,
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we finally reached the discovery phase.
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And in discovery phase,
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we asked the patent troll to please provide
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screenshots of Fark
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where the infringement of their patent
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was actually occurring.
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03:01
Now perhaps it's because no such screenshots actually existed,
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but suddenly Gooseberry wanted to settle.
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Their attorney:
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"Ah, yes. My company's having a reorganization on our end."
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Never mind the fact
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that the address led to a strip mall somewhere in Northern L.A.
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with no employees.
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"And we'd like to go ahead and close this out.
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So would you mind giving us your best and final offer?"
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My response:
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"How about nothing?!"
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03:29
(Applause)
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We didn't have high hopes for that outcome.
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03:36
(Laughter)
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But they settled.
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No counter offer.
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03:42
Now, as mentioned before,
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one of the reasons I can talk to you about this
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is because there's no non-disclosure agreement on this case.
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Now how did that happen?
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Well during the settlement process, when we received our copy, I struck it.
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My attorney said, "Nah, no chance of that working."
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It came back signed.
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Now why? You can call them.
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They're not under NDA either.
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Now what did I learn from this case? Well, three things.
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First of all, if you can,
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don't fight the patent, fight the infringement.
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Patents are very difficult to overturn.
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Infringement is a lot easier to disprove.
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Secondly, make it clear from the beginning
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that either you have no money at all
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or that you would rather spend money with your attorney fighting the troll
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than actually giving them the money.
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04:27
Now the reason this works
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is because patent trolls
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are paid a percentage of what they're able to recover in settlements.
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If it becomes clear to them that they cannot recover any money,
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they become less interested in pursuing the case.
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Finally, make sure that you can tell them
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that you will make this process
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as annoying and as painful
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and as difficult as possible for them.
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Now this is a tactic that patent trolls are supposed to use on people
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to get their way.
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It turns out, because they're paid on contingency,
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it works really, really well in reverse.
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Don't forget that.
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04:59
So what does all this mean?
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Well to sum up,
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it boils down to one thing:
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Don't negotiate with terrorists.
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05:08
(Applause)
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Patent trolls have done more damage to the United States economy
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than any domestic or foreign
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terrorist organization in history
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every year.
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And what do they do with that money?
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They plow it right back into filing more troll lawsuits.
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05:31
Now this is the point in the Talk
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where I'm supposed to come up with some kind of a solution for the patent system.
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And the problem with that
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is that there are two very large industry groups
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that have different outcomes in mind
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for the patent system.
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The health care industry
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would like stronger protections for inventors.
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The hi-tech industry
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would like stronger protections for producers.
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And these goals aren't necessarily diametrically opposed, but they are at odds.
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And as a result, patent trolls can kind of live in the space in between.
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So unfortunately I'm not smart enough
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to have a solution for the patent troll problem.
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However, I did have this idea,
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and it was kind of good.
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And I thought, "I should patent this."
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06:12
(Laughter)
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Behold, patent infringement via mobile device --
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defined as a computer which is not stationary.
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My solution: award me this patent
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and I will troll them out of existence.
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06:28
Thank you.
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06:30
(Applause)
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