Commentary & Analysis
A Case Study of Patent Abuse: Patent Trolls on the Run — The Printing Industry Is Winning
This is a follow-up to my July 2016 White Paper entitled, “A Case Study of Patent Abuse: Printing Industry Faces New Nemesis Impacting Growth and Employment—Patent Trolls.” This article reviews the outcome of the previous cases and presents a “heads-up” regarding two new plaintiffs: Shipping & Transit LLC and the Freeny Brothers. It also introduces two “Printing Industry Heroes Among Us,” inventor Joyce Vogt and Intellectual Property attorney Nate St. Clair II.
By Harvey R. Levenson, Ph.D.
Published: April 5, 2017
This is a follow-up to my July 2016 White Paper entitled, “A Case Study of Patent Abuse: Printing Industry Faces New Nemesis Impacting Growth and Employment—Patent Trolls.”
That White Paper received enormous industry press coverage, and to my understanding was used as part of Court proceedings resulting in the dismissal of two long and visible printing industry cases brought on by patent trolls, CTP Innovations (CTP) and High Quality Printing Innovations (HQPI). However, since then, two new cases emerged by patent trolls attempting to threaten and extort funds from printing industry companies and Original Equipment Manufacturers (OEMs) using standard technology common for doing day-to-day business in the printing and related industries.
This White Paper reviews the outcome of the previous cases and presents a “heads-up” regarding two new plaintiffs: Shipping & Transit LLC and the Freeny Brothers. It also introduces two “Printing Industry Heroes Among Us,” inventor Joyce Vogt and Intellectual Property attorney Nate St. Clair II.
The advice provided in this White Paper regarding the two new cases are: Do not respond to demands or threats from either of these two patent trolls. Do not make any payments. Continue doing “business as usual.” Band together as a team to pursue dismissal by the Courts.
In July 2016, I published a White Paper: A Case Study of Patent Abuse: Printing Industry Faces New Nemesis Impacting Growth and Employment—Patent Trolls (PDF)
Preceding the White Paper were three articles published in the industry press that informed the printing industry and its OEMs about the growing extortionist threats of patent trolls, and what to do about them. The White Paper was published widely within the graphic communication industry and, I am told, has reached the courts and judges dealing with printing industry troll cases. The industry has responded to the advice provided, and the patent trolls are on the run!
In review of last year’s White Paper, patent trolls are the epitome of greed, thoughtlessness, and unethical behavior, and are impacting the survival, growth, and development of printing and related companies. Even those users of our industry’s OEM technology that may not even be part of our industry are being affected.
In last year’s White Paper, I reported that:
“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.”
I advised that companies and individuals 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.”
I concluded by advising that printing and related companies, or individuals, 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 [and individuals] 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.”
Well, a lot has happened over the past two years that has transformed the defendants to the aggressors, and the plaintiff trolls to be the losers. But, to keep this up, we must continue our industry position of not being intimidated and of not responding directly to requests or any communication from attorneys representing shell companies (the trolls), or individuals claiming to own patents teaching technologies that are allegedly being infringed.
TWO KEY INDUSTRY CASES HAVE BEEN DISMISSED
Two highly visible printing industry troll cases of the past few years have been dismissed by the courts, freeing up numerous innocent graphic arts companies, large and small, and many of our industry’s OEM’s, from the torment and anxieties caused by patent trolls. (5) (6)
The two cases are:
CPT Innovations v. [76 Defendants]
High Quality Printing Innovations (HQPI) v. [37 defendants]
Unfortunately, prior to the dismissal of these cases several companies gave into the troll demands and paid huge “license fees” out of fear of being forced out of business if they did not. However, most of the defendants in these two cases did not give in, and unified under the advice of a law firm and attorneys dedicated to exterminating such trolls. This resulted in the legal teams, and the shell companies they represented, the loss of huge amounts of time and money. This is an example that should be held up for all other patent trolls wanting to exploit the printing industry and its OEMs, and for the lawyers and companies supporting those trolls to take notice.
PRINTING INDUSTRY HEROES AMONG US
Our industry owes gratitude to two individuals:
Joyce Vogt, Inventor
Nate St. Clair II, Esq., Partner, Jackson Walker
Joyce Vogt, Inventor
Joyce Vogt is one of the inventors named on the two CTP patents:
Patent No. U.S. Patent No. 6,738,155
System and Method of Providing Publishing and Printing Services via Communications Network
This patent was filed on July 30, 1999.
Patent No. U.S. Patent No. 6,611,349
System and Method of Generating a Printing Plate File in Real Time Using a Communication Network
This patent was also filed on July 30, 1999.
Both patents were assigned to the Banta Corporation, where Joyce Vogt was employed as an engineer. The patents then became the intellectual property of RR Donnelley & Sons who acquired Banta. The law firm Baker Donelson set up a recorded parent company, Media Innovations, LLC, and then a shell company, CTP Innovations, listed as the plaintiff. The parent and shell companies are the trolls.
The Baker Donelson attorneys wanted Joyce to commit to supporting its infringement lawsuits as a plaintiff against the 76 defendants. If Joyce accepted, the attorneys would have the legal right to claim that they represented her, as one of the inventors named on the patents, and claim that Joyce supported their infringement claims. Not knowing the CTP history, Joyce wisely further explored the matter and came upon my first White Paper, contacted me and, hence, became aware of the background. Upon learning that CTP was a troll supported by the law firm Baker Donelson, Joyce became upset at the immorality of her patents being used to extort funds from innocent users of the technology that she taught through her patent. She decided to discontinue any relationship or communication with Baker Donelson, and to come out against the law firm and the trolls that it represented.
Joyce Vogt is a hero of the printing industry and should be applauded as such.
The HQPI patent was also originally issued to Moore Business Forms and, hence, also became the intellectual property of RR Donnelley & Sons:
Patent No. US 6012070 A
Digital Design Station Procedure
This patent was filed on November 15, 1996.
Interestingly, Baker Donelson was also the law firm representing the plaintiff troll. In this case the recorded parent company was Modern Universal Printing, LLC, and the shell company, listed as the plaintiff, was HQPI.
As noted in my first White Paper, “Patent trolls are often disguised as “shell companies.” Shell companies have registered names but no employees and no physical address ascribed to them. They are intentionally “invisible” with only a law firm as a point of contact; typically the law firm that registered the ‘shell’ name for the patent troll.”
Nate St. Clair II, Esq., Partner, Jackson Walker
Nate St. Clair is an Intellectual Property litigator, counselor, and Partner for the law firm Jackson Walker in Dallas, Texas. He counsels and represents clients in a wide range of Intellectual Property matters, with an emphasis on patent litigation, and patent portfolio licensing and management. Nate has counseled clients in numerous technology areas including digital imaging and commercial printing.
Nate has embraced the plight of printing industry companies, including OEMs, in the fight against patent trolls with defenses to discredit and eliminate them. Nate is one of the key litigators instrumental in the resulting dismissals of the CTP and HQPI cases, along with partners, John Jackson and Matt Acosta. One might consider Nate St. Clair and the Jackson Walker team to be an “Elliot Ness” of the printing industry, fighting to protect the industry from the threats and extortion of patent trolls. In September 2015, Nate provided a legal perspective during a Graph Expo seminar in Chicago to help bring the growing troll matter to light.
As a result of his firm’s efforts, all of the CTP and HQPI suits have been dismissed, and Baker Donelson has withdrawn its representation of the plaintiffs.
Nate St. Clair is a hero of the printing industry and should be applauded as such.
THE BATTLE CONTINUES—TWO NEW CASES EMERGE
Shipping & Transit LLC v. [Multiple printers]
Freeny Brothers v. [Multiple printer OEMs]
SHIPPING & TRANSIT LLC v. [MULTIPLE PRINTERS]
Printing industry companies and OEMs have recently received a robot-generated letter indicating that a “patent holder” believes that they are in violation of three patents, and is asking for $30,000 to settle the matter within 30 days. The patents in question cover basic functions such as notifying customers that they have an incoming shipment via email. (7) (8)
The patent troll owner is called “Shipping & Transit LLC” and considered to be a highly aggressive troll with over 100 defendants. (9) The patents that are alleged to be infringed are:
6,317,060 – Base Station System and Method for Monitoring Travel of Mobile Vehicles and Communicating Notification Messages
The patent was filed on March 1, 2000, and assigned to Global Research Systems, Inc.
6,415,207 – System and Method for Automatically Providing Vehicle Status Information
The patent was also filed on March 1, 2000, and assigned to Global Research Systems, Inc.
6,904,359 – Notification Systems and Methods With User-Definable Notifications Based Upon Occurrence of Events
The patent was filed on May 12, 2003, and assigned to Arrivalstar, Inc.
One defendant, a president of a digital imaging company, sent me an email about Shipping & Transit LLC accusing him of infringing its patents and threatening a lawsuit if he didn’t settle for the $30,000, but was given the 30 days to do so. He wrote, “How nice of them!”
FREENY BROTHERS V. MULTIPLE PRINTER MANUFACTURERS
Patent infringement allegations by the Freeny Brothers were filed against six OEMs, and more are likely to follow. Jackson Walker has had substantial experience against the Freeny Brothers, and will again be leading the charge to protect the interests of the printing ‘industry and its OEMs.
The accused products are manufactured by Ricoh and provide a variety of document processing and reproduction functions, such as document copying, printing, scanning, and/or faxing functions, all basic technology needed for our industry companies to do business and to remain in business. More specifically, the allegations are against companies that manufacture and sell wireless adapter units designed to be combined with the accused Ricoh products to enable communication wirelessly with different types of wireless devices. These are devices such as smartphones, tablets, and laptop computers; devices that nearly all companies require for doing business.
There are four patents involved and four Counts as follows.
Count I – Infringement of U.S. Patent No. 6,490,443
Communication and Proximity Authorization Systems
Issued December 3, 2002 by the United States Patent and Trademark
Count II – Infringement of U.S. Patent No. 7,110,744
Communication and Proximity Authorization Systems
Issued September 19, 2006 by the United States Patent and Trademark Office
Count III – Infringement of U.S. Patent No. 6,806,977
Multiple Integrated Machine System
Issued October 19, 2004 by the United States Patent and Trademark Office
Count IV – Infringement of U.S. Patent No. 7,301,664
Multiple Integrated Machine System
Issued November 27, 2007 by the United States Patent and Trademark Office
The named inventor for each patent is Charles C. Freeny, Jr., who is now deceased. The plaintiffs are Freeny’s sons who inherited the patents upon Freeny passing away. Further, the Freeny Brothers, Charles C. Freeny III, Bryan E. Freeny, and James P. Freeny are attorneys and, hence, the plaintiffs. Of significance, and what defines the Freeny Brother as patent trolls, is that their only interests in the patents appear to be extorting funds from users of technology developed by Ricoh. The Freeny Brothers are not part of the printing industry, they are not OEMs, they have not developed the technology taught by the four patents in question, nor do they seem to have any concern for the hardship they are imposing on company survival and jobs of the defendants.
ADVICE TO PRINTING COMPANIES AND INDUSTRY OEMS
Do not respond to demands or threats from either of these two patent trolls: Shipping & Transit LLC or the Freeny Brothers. Do not make any payments. Continue doing “business as usual.” Banding together as a team could likely lead to the same Court outcome of the CTP and HQPI cases: DISMISSAL at a great loss of time and money to the patent trolls and their legal representatives.
Threatening letters from patent trolls are intimidating because they are usually received from law firms that represent the trolls. These law firms also benefit greatly from any payments made. Further, understand that the trolls typically have nothing to do with developing technology to improve our industry or to serve our industry’s customers. On the contrary, they work to destroy our industry by extorting funds from innocent companies that are better used to grow companies, to invest in research and development, and to enhance employment opportunities for practitioners and other staff. Heed the advice provided in this White paper!