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This Week in Law 267
Denise Howell: Next up on This Week in Law, Stefan Kinsella and Harry Surden join Evan Brown and me. We’ll talk about the FCC getting the soppa treatment, piloting a Nautilus through SCOTUS’ patent wonderland. We’re going to have some other strange boats, too. And talk about the law’s role regarding kids’ cruelty on social media. Much more too on This Week in Law.
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Advertisement: This is TWiL, This Week in Law, with Denise Howell and Evan Brown, Episode 267 recorded July 18, 2014
Eleemosynary, My Dear Watson
Denise: (bagandbaggage.com - @dhowell) Hi folks, I’m Denise Howell. And you’re joining us for This Week in Law, thank you so much for joining us. We are thrilled to have you and we hope you will be thrilled to be here. We have an awesome panel for you today. We haven’t done too much on the Supreme Court’s recent patent decisions and we’re definitely going to get to that today, plus a whole bunch of other great stuff at the intersection of law and technology. And to help us understand it all, we’ve got Stephan Kinsella joining us once again here on the show. Hello Stephan.
Stephan Kinsella: (stephankinsella.com - @nskinsella) Hello. Denise glad to be here.
Denise: Great to have you back. What’s going on with you these days?
Stephan: Well, trying to stay out of the Houston see in the summer, but having a good summer and following all these patent cases and IP developments. It’s interesting to watch, but so far everything is going very well. The good thing about being on your show, I save time I listen to it anyway, so I can save the podcast for a walk.
Denise: That’s wonderful; great, we could save you some time. And make room for somebody else in your podcast lineup. Also joining us a return visitor to TWiL is Harry Surden from University of Colorado law school at Boulder.
Harry Surden: (harrysurden.com - @HarrySurden) Hey, Denise. How are you?
Denise: I’m doing well, thank you so much for joining us. Great to have you back.
Harry: It’s really great to be back.
Denise: So, tell us about Boulder in the summertime; make us all jealous.
Harry: Boulder in the summer is outstanding. I mean, I can’t say enough about it. There’s millions of hikes just within the city’s borders and it’s beautiful. This has been a particularly mild summer. And it’s sunny almost every day and it’s quite lovely, I must say.
Denise: (laughter) I knew that was going to be the case. Just, you know, hoping for. Maybe random thunderstorm shaking things up for you but. Actually, no, we wish you a wonderfully beautiful summer. And also enjoy the lovely summer weather in Chicago, Illinois is Evan Brown. Hello Evan.
Evan Brown: (infolawgroup.com -@internetcases). Hi, Denise. Yes, I am thrilled to be here and as nice as it would be to be in Boulder, I guess the second best place is to be sitting in front of a computer somewhere else on TWiL. Talking with the three of you. This ought to be a lot of fun, so it’s great to be here.
Denise: The weather’s always good on TWiL.
Evan: That’s right, it’s always sunny here.
Denise: Good climate control. All right, well, let’s check out the patent on, the patent climate recently in the wake of a couple important Supreme Court decisions. And some other good patent news. So let’s go there first.
(Advertisement: music playing, black background; white wording: it’s patent time)
Denise: Let’s head into wonderland via Nautilus if we can. The couple of big cases out of the Supreme Court this year. One called Alice, one called Nautilus. And really need to have a better understanding of these because they are already being applied by other courts. So let’s start with Stephan. Stephan can you tell us the significance of each of these cases, and sort of your take on them.
Stephan: Well, I think generally, the significance is a few things. The courts have been pretty much unanimous with its most of its patent rulings. They pretty much reversed the federal court, the Court of Appeals of the Federal Circuit in most of the recent holdings. And it seems like they’re basically, trying to clarify the law. Have it be more certain, which was one of the goals of the Federal Circuit in the first place, which it seems to have not done too good a job of, in recent years. And also to sort of push the rules slowly in a direction towards clamping down on frivolous patents, frivolous patent claims, patent troll assertions, things like that. I don’t think we want to give too much into the boring patent lawyer weeds but, you know, there are different aspects of patent law. One of them is the requirement to have an enabling disclosure another is to have enough specificity your claims. And The Nautilus case, I thought was pretty good, because it’s really going to affect patent trolls a lot in companies that assert patents that have vague claims. It’s basically an attempt to impose certainty on the law. One of the justifications for patent law, is that it’s similar to property law and that the claims sets out the metes and bounds of property. And usually in the case of land, say, you can see the bounds pretty easily, or at least its determinable. And in a patent, you have to use words to describe the metes and bounds of the patent claim. If you don’t clearly defined it, then you have just created a lot of in certainty and this can be used in legal bullying by or even extortion as some call it by the patent owner because the target of the patent assertion is not sure they are not sure if they will win or not, because it’s not clear what is claimed. To be honest, I think patent lawyers and take advantage of this, sometimes they will throw in extra claims which have an intentionally broad, I’m sorry they aspect because they figure they may be can get this past the examiner. And it doesn’t really hurt your client to have a paid claim. The patentee does not suffer any cost what so ever from having a vague claim in the patent as long as some of the other ones are clear. Because you can always theoretically use that vague claim in defense or for offensive reasons. And so, patent attorneys will take advantage of the system and patentee’s will as well. So I think it is good, what the court did was basically they clamped down on the standards that you can use to overturn a claim for being too indefinite, okay? They made it easier to do that, so I think that is a good move. And, some of the other cases they are also ratcheting back on the scope of patentable subject matter. But probably the most import thing is that the fact that most of these rulings are unanimous, and so there is at least a fairly clear ruling. I can’t say the same thing about their copyright rulings, like in the Aereo case, but it’s at least in the patent fields, I think they are basically doing the CAFC job for them. So the idea of whether we need the CAFC is becoming scrutinized. If everything is going too appealed to the Supreme Court anyway. Why do we need a federal appellate court that is effectively the junior Supreme Court for patents? Why not have a diverse multi-circuit system like we have in other federal appellate litigation, where different circuits can approach each other and we can learn? The Supreme Court can decide conflicts if they have to. So, that’s a summary of some of the trends that are going on now in these patent cases.
Denise: Right, and for anyone not to on their lawyerly acronyms; CAFC would be the Court of Appeal for the Federal Circuit. The court that hears patent cases and has jurisdiction over them. Harry how is the Federal Circuit Court of Appeal faring these days?
Harry: Well, let me just, before I answer that. Let me just, comment that I really agree that the single biggest force driving patent law at the Supreme Court for the last 10 years or so has been patent trolls and most of your viewers may know what patent trolls are. But for those who don’t. These are folks who are variously called nonpracticing entities or patent assertion entities, but basically companies that tend not to make actual physical products, but just tend to buy patents and make the money by suing on patents usually against companies that actually make things like technology companies or provide goods and services. So they are, it is a controversial business model to be buying patents for the purpose of suing and monetizing when you’re, tend not to make products that people use. This has been a phenomena of the 2000’s, late 1990s, and it has really dramatically shifted patent laws. So you can read the Supreme Court’s decision in Alice, and in the Nautilus case is really being reactive to this context of patent trolls trying to make it harder for patent trolls and nonpracticing entities to be successful in extracting money using vague overly abstracts patents. So a very common technique for one of these nonpracticing entities is to buy a patent that is quite old. Patents last for about 20 years. So patent trolls will buy a patent maybe in its 15th to 20th year and use the technology that was invented 18 years ago, that was something completely different but whose language can be arguably mapped onto modern-day technology, and approach that modern day company and say, ’Hey, you know, it’s going to cost $5-$10,000,000 to resolve this and in actual patent litigation’s lawsuit. So if you just pay us a couple of hundred thousand dollars. We will go away’ and onto the next guy. So, that’s really the context, I think the best way to understand the reason Supreme Court litigation. So,
Harry: sorry go ahead
Denise: So, we know the innovation act it to go anywhere, we are not getting patent reform coming out of Congress any time soon. So, are these two and there were some other decisions from the Supreme Court sort of helping with that situation, helping flood the tide of patent troll litigation?
Harry: I really think they are. So, Congress is in kind of a stalemate when it comes to significant patent reform because the back story is there are two major industries that are at opposition with one another. On the one side we have the pharmaceutical and life sciences industry, which heavily depend on patent protection and in that area; by and large the patent system is working quite well. So they put a lot of their lobbying efforts to making sure that very little changes in the current patent system for fear of hurting their interest. On the opposite side of the spectrum is the technology industry where the patent trolls are the most active and there’s a lot of criticism of software patents into what extent they are useful and by and large, the consensus is that patents don’t work very well in the technology sector. So they are preaching from the other side advocating or reform. So the upshot is that Congress basically reacts by not doing much because they are caught on either side. So it’s interesting that the courts are kind of coming in and are the entities dealing with these significant problems much more effectively than Congress has over the years. And I think the Supreme Court has done a really, a lot of really good improvements in the patent system in the last 10 years that the Federal Circuit for whatever reason wasn’t able to get to the same results.
Stephan: Denise could I add one more thing?
Denise: Yes, please.
Stephan: We should make clear, I am a patent attorney, but I some people may not know, watching I’m one of the world’s biggest opponent of the whole patent system. So, let me be clear, I want to say something about the patent trolls system. The reason I think these are good decisions are because they slightly week in the patent system in general. But I think, really, there is not much wrong with the patent trolls per se, given the patent system. They are not the biggest problem at all. I think this whole issue is a distraction. There is no requirement in the patent law to make or practice an invention to have a patent on it, that’s been part of it for 200 years. So, the idea of a patent troll a nonpracticing entity is perfectly permitted within the law and most companies that make products or in a sense patent trolls because a lot of the patents they have in their portfolio don’t cover products that they make. The idea is this, if you sue someone for violating one of your patents that might cover one of your products or might not, it’s possible that if your competitor, you’re making similar products and the target of your patent lawsuit may have in their stack of patents a patent that covers something that you are doing. So, it’s a fair fight. In other words. So they can a search a counterclaim against you for infringing one of their patents. So the idea that the patent fight are more fair, although the patent attorneys, of course, make tens of millions of dollars off of this process and usually the companies agree with each other’s to settle. And when they do that they shout out smaller competitors and they maintain their cartel and oligopolies. So, the entire patent system, and I would respectfully disagree with very, I don’t think the patent system works well anywhere unless you mean it works well for entrenched business industries and the patent bar. It’s basically a huge damper on innovation and a huge cost in the economy and it totally distorts the structure of research and development. I think patent trolls are actually the least of our problems because at least the patent troll just wants to take a taste. Right? They’re like the Mafia, threatening a guy that runs a shop down the street, they just want a little bit. They don’t want to kill the business. They just want to tax it. So it’s like a small tax. Whereas your competitor may want to shut you down, right? So, Apple, Samsung, all these smart phone patent wars, so in a way patents help my competitors or a bigger threat than patents held by patent trolls, I would choose to get rid of regular patents for I got rid of patent trolls. And if I could have a system only with patent trolls that would probably be less bad than a system where people can patent their actual products and use them to stop competition.
Denise: Well, Stephan sounds like, what you are saying is Congress to fix this. We need, you know, the courts and businesses are doing what they can based on the laws on the books. We saw Representatives Goodlatte and Eshoo and various others trying to get this patent reform bill through the House and Senate, I think it past the house. It is not yet taken up by the Senate, so folks are trying not to let it die. But at the moment it’s stalled. Do you think, is this going far enough? Stephan, or do we need a heckuva lot more?
Stephan: Well, so my view is, even the best of Congressman on this issue only wants slightly reform to the system. There is no challenge to the fundamental position of IP, and there is no suggestion even among reformists to do anything radical whatsoever. So, any even minor change is called radical by the proponents of the existing system. Again, the patent troll bill, has been watered down already, it’s probably not going to pass any way and even if it does it will only have a very minor effect and pretty much only on patent trolls, which as I said are only a very tiny part of the real problem. The real problem is patent holders. So I think Congress is pretty much firmly controlled by the special interest lobbyists of the pharmaceutical industry and other big tech companies like IBM and Microsoft, which depend upon patents. IBM gets one or $2,000,000,000 a year from patent licenses. They don’t want anything to threaten that income stream. So I think they are basically sucking money out of the American economy, impoverishing consumers, reducing innovation, using Congress to get there as well. The only legislative change that I can think of, ever in American history that has ever improved patent or copyright law was the Obama patent law from a couple years ago when they expanded the prior user rights. That’s it. Every other change that I can think of ever legislative changes, the Supreme Court has made some minor interpreted changes recently that are good, but every legislative change always ratchets up the problem and makes it worse. Terms get longer, enforcement of copyright gets worse, the scope gets expanded. There’s talk about fashion rights. There’s talk about copyright like rights in bartender recipes for drinks. There’s always a pressure for more and more anti-competitive laws like patent and copyright law. So, it would be a surprise to me the way the system is rigged where Congress is basically bought and paid off by the major lobbyists and the patent trolls by the way of pouring hundreds of millions of dollars into DC. I don’t see, and plus the confusion about the whole purpose of the patent system. Everyone thinks it’s for the inventor, and it’s for innovation, they don’t understand its anti-competitive origins, and it’s basically mercantilist and protectionists’ purpose. That’s what it is. It’s basically completely antithetical for free market. But as long as people confuse it with free market. It’s going to survive and I don’t see much or for legislative change. So these small incremental steps of the Supreme Court has made or at least some sign of hope for a slight improvement in the situation.
Denise: Well, this would be a,
Harry: Let me pick up on this.
Denise: Yes, please do pick up on it, but this would be a good time to mention since we haven’t mentioned on the show yet. And just picking up on one of the themes that Stephan is mentioning there. I don’t think we have yet mentioned mayday.US on the show, but this is the organization that Larry Lessig has founded to take some of the money out of politics and it had a funding goal of, it was trying to get to $5,000,000.
(Webpage: mayday.us: we did it!, They said we couldn’t over 50,000 of you did, thanks to everyone for helping us get to $5M on July 4)
Denise: on July 4, which is hit. It has raised over $7.6 million. 110 days left until Election Day. It’s trying to form a superpac, to address some of the frustrating issues. Stephan was just ranting about. I’m sorry, Harry jump in.
Harry: it was Evan,
Denise: go ahead. Evan
Evan: no, that was me. Yeah, I mean, Stephan the things that you say about intellectual property are certainly provocative and had I been hearing them for not the first time they would have been as shocking as they were the first time I heard you say them. And I hope that people are taking it seriously when you say those things, even though they are quite radical to say that IP should be abolished altogether. And so, I wanted to pick up on the thread that you were saying, being against the free market, essentially mercantilism and all of that and tie that into another concept that you were talking about earlier about how it’s never been a part of the US patent system or probably any patent system for that matter, I don’t know. But at least, I heard from you it’s always been this way in the US patent system. That it’s never been a requirement that you practice the art, you can hold the patent, but maybe you just sit and hold it and decide to do whatever, frame it and put it on the wall, and enjoy the fact that you are a patent holder, but not engaged in commerce. Would it change the calculus, notably in your mind and would it temper any of the critical approach that you have towards this if it were a requirement in patent law that you actually do have to practice the art, actually engage in commerce, be part of the free market economy rather than sit back and enjoy these sort of government granted monopolistic rights and use them or abuse them, as the case may be. With that change anything at all, Stephan?
Stephan: Well, so my view is this, if you really want to improve the situation, you have to recognize the problem. And the problem is the very system itself. And so to my mind, anything that reduces the extent and scope and effectiveness of the system is good. So, incompetent enforcement by the government is a good thing in the case. I don’t want competent enforcement, but if I could say, anything that would really help the situation, it would be just the obvious things. Reduce the term, say patent should go from 17, roughly 17 years to 10 years, five years, and three years. That would be a big improvement. Reduce the scope be another thing. Get rid of troubled damages. Those kind of things that just reduce the penalties it exacts on the economy. I would I think I would be in favor of a working requirement. And by the way, so the history of patent is that they arose from the practice of the crown, the monarchs giving monopolies to favored court cronies and others in a certain area to be the only ones who could sell certain product, I think of Sir Francis Drake, one of the first privateers or pirates was given a letter at. Patton just means open in Latin, so it’s an open letter from the King, saying, this guy has a right to do this. That gradually changed from the statute of monopolies in 1623, you see, back in the 1600s; they weren’t afraid to call things what they really were. We used to have the Department of War in the US now it’s the Department Of Defense. We had the statute of monopolies, they knew what these things were. And that formalized the process and restricted it permanently to innovation and technological invention, even then it was a helter-skelter ad hoc process. When the US was founded in 1789, and the patent system was authorized by the Constitution, then you started having a modern system. Ever since then you never had to provide a working requirement. And the reason is because, you have to reduce the invention to practice and theoretically, that means you have to make a working model, but there is a doctrine called constructive reduction of practice; which is when you will a document with the patent office that describes it insufficient and enabling and other retail that’s called the constructive reduction of practice. And I think the idea behind it is that it would be unfair to penalize people who have good enough ideas that they can write it on paper, there’s no requirement that you have to sell the product. So I think I would be in favor of that required only because it would slow down and hamper the process and it would increase the cost of living and patent. But one drawback of that was that I think it would only further skew the process towards the larger companies because they would be able to afford to make working models and smaller inventors would even be less able to do it and so it would only further entrench the cartels and the oligopolies that the patent helps prop right now. So, I would be mildly in favor of it, but it would only be a patch and it might have some unanticipated drawbacks.
Denise: So, Harry tell us than what has happened in the wake of Alice and Nautilus, at least one case out of the Federal Circuit has decided that Acacia Research, and they are probably the biggest patent troll out there. They are also my neighbor here, I was getting my hair cut within a block of them yesterday. And however they got their hat handed to them by the Federal Circuit in a case involving photography.
Harry: Yeah, so I think that the Alice case is is just a third in a string of cases in which the Supreme Court is saying, abstract patents are bad. And as I said before, the thing that is driving that is that patent trolls have been using a variety of patents with a lot of vague or very abstract words arguing that their patent.
(Webpage: arstechnica: Law & disorder/civilization & discontents: Biggest”patent troll” lapped down hard by appeals court).
Harry: covers very general or invention or inventions that had been invented before. But I think actually the Alice case is much less significant than the Nautilus case. Which was the one that Stephan talked about, the definiteness case. That actually dramatically changes patent law. So it used to be the case up until the Nautilus case that patent words should be rejected if they were too indefinite but the federal circuit had interpreted indefinite to mean incapable of any definition. And the Supreme Court said that is too low of a bar, in fact, we’re going to say indefinite means that is, somebody in the art cannot understand what it means. But the upshot of that is that, a whole bunch of words that were previously used by patent trolls to cover inventions that they really didn’t invent, there’s now another arrow in the quiver of the courts to say, ‘hey, this is too indefinite, this word is too vague, this patent is invalid.’ So I think that is going to have a really significant effect. The courts previous to that Federal Circuit’s ruling really had their hands tied and even in the face of very ambiguous or vague words couldn’t do much in the way of invalidating them and now they have a lot more ability in the wake of the Nautilus vision. The Alice decision I think was really nothing new following the Supreme Court’s recent decisions in Bilski and Prometheus. Where they basically said that if you have an invention and it’s too abstract. Then, that’s not patentable if you claim it that way. So, I think, not much has changed there although it does again, It gives the courts a little more ammunition in kind of invalidating these very vague patents. One thing I wanted to just point out to Stephan’s point is your readers, or your viewers might not know, that there is kind of a division between two kinds of nonpracticing entities. Maybe what someone would call the ‘bad’ nonpracticing entities which are the patent trolls and these are the companies whose business model is based upon buying patents and monetizing them. And I say bad in quotes because some people as Stephan said just see it as really this symptom of the patent system, not really the disease. I do actually agree with that to some extent that practicing entities are not morally better or worse. I just want to point out that there’s this other category of nonpracticing entities which are universities. So, universities do a lot of basic research and by in large, when they get patents they don’t practice they are patented inventions in the sense that, MIT or Stanford doesn’t have a factory where they are making things, by and large they license out there patented inventions. So they too are nonpracticing entities. So, I think the biggest position against a requirement to practice your invention would be that to hurt universities; who are some of the biggest engines of research and development in the United States. And I think universities, particularly the University of Wisconsin and other universities have been actively opposing some of these reforms, including the requirement to practice your invention.
Denise: Yeah, that’s an interesting point they don’t come up a lot in the discussion. They, and you guys correct me if I’m wrong, they don’t take their patent portfolios and pursue people who may be infringing. That’s not the University business model. As you said, Harry it’s more about licensing to people who come to them. Do you know of any universities who are out there aggressively enforcing their patents in litigation?
Harry: The University of Wisconsin is notable for being very aggressive in some of its life sciences portfolios, but I think, by in large, you’re right. The universities are not out there aggressively pursuing their patent portfolio.
Stephan: I thought that there was
Denise: So let’s get back to
Stephan: Sorry, I thought there was a recent couple of cases, MIT or Stanford have extracted like $1,000,000,000 in a couple of cases. And those are clearly backed by the threat of litigation. So, they are classic trolls and a lot of their patents are sold to patent trolls and become used by patent trolls. So, the universities are exactly the same as part of the problem as the patent troll problem, I believe.
Denise: Got it, and certainly universities are all about protecting their income streams wherever they may originate, they have to obviously to keep going. But, you know we shouldn’t think of them as somehow above enforcing their patents when it becomes necessary.
Evan: Doesn’t it seem pretty unfortunate, doesn’t it seem unfortunate if the universities are doing too much along those lines, because isn’t there, aren’t there opportunities in, and I just sort of know the contours of this, so I will turn it over to Harry or Stephan, there is the Bayh-Dole act, that gives a real incentive for federal funding of universities projects. Right? Am I even pointing in the right direction of all this stuff, the point being that there could be this problem of their actually being tax payers subsidize research and development going on, and if it’s used in an irresponsible way by universities. It seems doubly bad. Is there anything to that or am I sort of mixing up two things, and missing something here?
Harry: No, I think you’re generally right in. That’s, you’re right about the act, and that is the correct act, that allows universities to share in the benefits of federally funded research. I think that there is definitely a concern with a conflict of interest to some degree in what’s good for society, and what’s for the universities. Stanford is famous for having a very large patent portfolio and income stream based upon patents. And many large research universities, the University of Colorado included, actively encourage their researchers to get patents and, or increasingly becoming dependent on patent licensing fees and revenues. So I think, it’s something to think about, at least if there is some conflict of interest among universities.
Stephan: I would agree too, they are getting tax credit dollars, even if it is state tax credit dollars, even if Bayh-Dole doesn’t come into effect. And the whole purpose of the University is to expand knowledge, and to share knowledge, and the original alleged purpose of the patent act is not to stimulate innovation but to encourage disclosure of information that would otherwise be kept trade secret. Right? And so for universities whose mission is to promote human knowledge, to be using patents and the threat of patent to say stop to the best solution to be used on a research project, to threaten to do that with litigation, I think it’s contrary to the whole educational or eleemosynary purpose of the University in the first place. So I do think there is a conflict. And not only that, I think it’s kind of rich that a company like Twitter, for example. I don’t know if we would get into this today, this was in our rundown. Twitter’s IPA, their agreement, Twitter basically has agreed to shackle itself with an agreement with its inventors so that it can’t use patents offensively. It’s pretty sad that a private, for-profit company like that has a more progressive, pro-technology, pro-sharing, pro-learning policy than most universities do. You would think that that’s one you could appeal to professors and researchers by saying, ‘we are not going to use your patents offensively.”
Harry: And, just as a follow-up, while I would say I am not as dubious about the patent system as Stephan. I’m sorry I said your name wrong earlier, I apologize.
Denise: So, one more time. It’s Stephan.
Harry: Stephan, okay. Thank you.
Denise: Third time’s a charm.
Harry: Stephan. As I’m not as dubious, on the other hand, looking at the evidence that I have looked at. The benefits of the patent system are decidedly mixed so, if you look at the academic evidence you might think that given that we have this elaborate system of intellectual property rights upon which many companies participate that the evidence would be overwhelming that the patent system confers net benefits to society; but the actual benefit is decidedly mixed. That they are possibly some benefits, significant number of costs and some prominent economists have advocated the elimination of the patent system. So, while not everybody agrees with that, the weight of that evidence is that, it is mixed with some benefits and some costs. I think many people find that surprising given how entrenched our patent system is in the marketplace, that it is not clearly beneficial to society.
Evan: I like the idea of something being decidedly mixed. That’s great.
Evan: I’m going to take that one down.
Denise: I’m going to go ahead and jump in here to put our first MCLE passphrase in the show. Several of our listeners and viewers like to watch the show. Because it’s educational and I think all our listeners and viewers watch it for that reason, and if you are a lawyer or another professional in the field where our discussions jive with the, the subject matter, you may be eligible for continuing education credit. We have a wiki, the twit wiki, wiki.twit.tv TWiL has a page there with a bunch of information about applying for professional credit in your jurisdiction if you are a lawyer. So we put these phrases in the show in case your oversight body needs to know that you actually watched or listened, and didn’t just jot down, episode 267 on a piece of paper somewhere. I would like to make eleemosynary our first word. But I think I’m going to go with my, because I don’t think people are going to be able to spell it, I don’t know if they have to spell it, but it is an awesome word. I’m going to go with something a little easier to spell which was my own, sort of Freudian slip in talking about the tide of patent litigation. I believe I said flood the tide rather than stem the tide, which seems to be, at least the past trend, was for the tide to continue to flood. So let’s make it ‘flood the tide’. And let’s make talk next about Alice, and Nautilus, and High Mark and various other decisions out of the Supreme Court this last term. And whether they are stemming the tide or not, really. This all comes down to the Federal Circuit Harry, right? And whether the Supreme Court has given it significant, sufficient guidance and guidelines to on how to handle these cases?
Harry: Yeah, I agree with that, I think, and particular, I focus on the lower District Court’s which are the courts that patent infringement lawsuits are filed. So they take their marching orders about patent law from the Federal Circuit, who in turn takes their marching orders through the Supreme Court. So, I think the federal district courts, the trial courts who hears these patent infringement cases now have a lot more tools to deal with patent trolls or on frivolous litigation. Thanks to the Supreme Court; they are more able to award fees, attorney’s fees against frivolous cases, they are more able to invalidate poor quality patents. So one of the biggest problems that involving patent trolls is, as I mentioned, are for instance, the use of old patents that covered technologies that were 18, invented 18 years ago that has nothing to do with technologies today. So, really infamous example going on right now is, somebody who has a patent on sending audiotapes through the mail, it’s claiming that that patent covers, podcasts, and you know, something that was not even thought about back in the mid-1990s when this invention came about. And is going around suing a lot of purveyors of podcasts saying, ‘hey, if you read my words in very abstract way, you can see that I actually claimed podcasts,’ I actually invented podcast. And everyone knows, you know, the inventor of this patent did not actually invent podcasts, just that the language can be used to cover, and after rising later technology. And in many cases under the Federal Circuit’s earlier case law, a district court’s trial court had their hands tied. When dealing with patents like this because they did not have a lot of tools to deal with it. But now the Supreme Court, increasingly, is giving them more tools, more discretion to deal with somewhat frivolous cases like this.
Denise: Right, and thank you so much for mentioning the podcast patent. It is certainly one that we have covered in the past and have been watching the litigation grind on; close to Stephan’s neck of the woods in the Eastern District of Texas. Stephan do you think that these recent Supreme Court decisions will impact that case?
Stephan: I do, and I agree with Harry. I think another one we didn’t mention, which was another big one. Which was the Limelight case, which had to do with inducing infringement. Which is similar to a doctrine in copyright law. And what’s a little bit interesting to me about this case is how the court made the right decision legally, whereas they made the wrong decision in the Aereo case. In both cases you have someone who you could accuse of taking advantage of a loophole in the law, the patent law, and the copyright law and yet, in one case, it’s okay. And in the other it’s not. In the induced infringement case, the idea that to infringe the patent, one corporate person or one natural person has formed every step listed in the method patent or has to make users sell every element of an apparatus patent claim. So one person has to do everything claimed in the patent claims to be a direct infringer. And inducement infringement can only come after that, you can be guilty of inducement infringement. If there is direct infringement first by some person. And in this case, they held, I think quite properly, based upon the statute and case law up to this time that if one company does A-B-C , and a patent claim has A-B-C-D in it, let’s say, and a customer in the company does D. Then there is no one person performing all four steps. And therefore the company can’t be held liable under induce infringement because there is no direct infringement. So I think that is a good result, actually. And that will give companies the ability to design they are Internet services and products around this by making sure the customer has to do the final step or something like that. If there is a patent that is threatening this method. So that is a loophole, that’s a way to get around the law by complying with the law. Which is a good thing, which is what the law wants to direct people to do and that is what Aereo tried to do in the copyrights context by complying with the way that the statute is written. And the court just totally, they did a Bush versus Gore type analysis, I believe in this one, they did a totally results oriented, one-of-a-kind saying, with they did not want to rule outside this narrow ruling because they knew it was not an honest reading of the law, I believe. But in any case, at least in the patent field the court seems to be better than in the copyright field.
Harry: Let me just way in a little bit on the Federal Circuit. So, I might be the only person in America to slightly defend the Federal Circuit. And I actually disagree with a lot of their decisions. But here’s how I will defend them. The issues in front of them are very hard. And there are no obvious clear answers, one way or another for the vast majority of cases. So the federal court is muddling their way through, patent practitioners disagree on the outcome of these issues, patent attorneys disagree, and patent professors disagree. So, every time you see a 9-0 decision from the Supreme Court overruling the Federal Circuit, which is pretty common; the Supreme Court makes it seem like the Federal Circuit got it obviously wrong, the Supreme Court got it obviously right. But I just want to say, in my belief that is not necessarily the case. I think a lot of these issues are tricky and could have come out either way. And while I have tended to agree with the outcome of the Supreme Court over the Federal Circuit on some of these issues, they were by no means clear cuts in the answers that the Federal Circuit was obviously getting wrong for the most part.
Stephan: Can I make a little comment on that? I actually agree with everything that you said there. Let me just say, that my view, as a libertarian, to waive my libertarian flying; is that the reason for that is that this is not objective law that they are interpreting. That this is just rules written down by bureaucrats called legislators that has nothing whatsoever to do with justice. So, in a way, I agree with the CRITS, the critical legal studies movement. That law, if you interpreted as statutory law, it’s by and large not objective. It has nothing to do with justice, it’s not aimed at justice; the judges’ job in these cases is not to try to get the right results. Their jobs is simply to interpret words, words that were cobbled together by a bureaucratic process, by a bunch of people writing. Words that are all not always consistent with each other, and don’t have objective orders and they are not anchored in justice and property rights. So, I don’t blame the judges on either court for getting it wrong. I don’t think there’s even a right answer. All we can really do in some cases is hope for consistency, hope for certainty, and hope for the right results that comports for justice, even if the statute is not aimed at that. So, the reason I like what the Supreme Court has done it happens to be in the right direction. But I wouldn’t fault the other judges for having a tough time interpreting these t totally non-objective, almost arbitrary statute, legislated words which have ambiguous meanings. Under the American disabilities act, what is a reasonable accommodation, what is obviousness really, what is statutory subject matter really, what is fair use under the copyright act? I don’t think anyone really knows because there is no answer because they are just words written on a paper as an outcome of the political process when people write it are subjected to influences by special interest groups.
Denise: Well, there is a lot to unpack there. Evan, being our philosophical touchstone for the show. Anything you want to add? Before we move on to some market reactions to the patent system.
Evan: Sure, I would hate to stand in the way of getting into the compelling discussion about market reactions in the patent system. But, just to touch on the idea that you were saying there Stephan about it not being related to justice. I mean, that seems, at best, I can just say, I guess, I’d say that’s intriguing. Because, whenever you start talking about critical theorists. It seems, it seems like such a, such a difficult place to be in because it just seems like it’s going to quickly break down because all the critical theorists has to do is say here is the status quo, I’m going to go against it, and I’m just going to say that it is meaninglessness, and how can you argue against that? Does it really have to be really the end game, then once you say that what is written is meaningless, and there is no objectivity to it or what have you. I would tend to think that, yes, statutory law may have been cobbled together by bureaucrats that we call legislators. And that is what it is but does that necessarily mean, though, that it has no ability to at least point towards or tend towards justice. Maybe I’m being way too Thomistic, thinking of natural law. Something trying to permeate through, statues that are propagated here towards, tending toward some objective, justice. And I guess I want to take that side of things as being, sort of a little less hopeless, and sort of less aimless. In the fact that if we are going to legislate something, if we’re going to recognize interest, yes, they do get embodied in statutes that they may be imperfect, but at least it’s tending towards something that’s better than the alternative, which would just be complete anarchy. So I don’t know if I’m formulating a question or sort of put that back.
Stephan: Let me have a quick respond to that. First of all, law didn’t used to be thought of as legislation. It was the customary and developed body of rules that were developed by courts in decentralized processes in the search for justice. And so you wouldn’t have anarchy, even if you didn’t have legislation or if you didn’t have as much legislation. And there may be tendencies for legislation to tend towards some just result just because of the democratic process and our values in society. And furthermore, I do believe that legislators know that judges think of themselves as doing justice and so they factor that in. And judges will try to do justice when they can, but the ultimate problem is that judge’s job when there is a statute issue, their job is simply not to do justice, their job is to interpret the words of the statute. It’s a difference between a common-law situation where the job of the judge is to try to find a fair, equitable or just result in a particular case, given the developed body of justice in the law. So, it’s just the problem. The way law is made by the statute that I think causes these judges, I’m defending the judges in a sense, and I’m saying you can’t blame them for not knowing how to interpret words that were written intentionally vaguely sometimes in order to reach a political compromise. I mean side A and side B may think the word means something different, they do that anyway just to get it passed, and then the judges have to decide. And if the judges decide “wrongly” or “rightly”, I don’t know if you can really blame them in every case. I’m not saying that laws are never objective that statutes are never objectives, that there are better readings of some statutes, but quite often the borders become much fuzzier and vaguer and more ambiguous than customary than centralized law would be.
Denise: We saw and you mentioned the Aereo case, Stephan, how statutory law and considerations helped drive what you characterized as a results driven decision, when the court delved into the legislative history and pulled out comments around various portions of the copyright act to justify its outcome. But we are getting highly theoretical here, I feel like I am back in law school back in some constitutional law, or critical legal studies class. So, I’m going to die for us back to our rundown just a bit. Here. To the question that we were talking about earlier with twitter, and its intellectual property stand towards developers where it’s tightening its own hands as far as patent goes. We talked just a few shows ago about Tesla doing something similar; so I wanted to go around and get all of your respective takes on this kind of approach. Whether this is something where companies are simply playing to a market sentiment or do you think
(Webpage: Tesla: all our patent are belong to you, June 12, 2014)
Denise: that there is bottom-line interests being served here. Do you think there are higher ideals beings search and can we expect to see of this kind of hands off me have patent, but are not going to enforce our rights approach. What you think Harry?
Harry: So, I think this is an interesting development. I think it is a mix of marketing and idealism and actually good business sense. So I think it goes a little bit back to the divide I created between industries and technology with IBM sort of being one of the notable captions. Most technology companies seem to be more harmed by the patent system then they are helped. So consequently they tend to be opposed to patents. They tend to be targeted a lot by patent trolls and have them used against them much more than they derive benefit. But I think there is some idealism here, I used to be a software engineer and there is sort of a current running through the softer engineering community, that there is deliberately anti-intellectual property and anti-patent, for various reasons that, we can talk about. And I think some of this does reflect that idealism. So I think Google is actually a good example where they have implicitly pledged not to use their patents offensively, but only defensively. So, an offensive patent is where you go out and sue or threatened to sue to get licensing fees, defensively in contrast, you only use your patents in litigation after someone sues you first. And then you sue them back in terms of leverage. And I think some of that idealism is reflected in the Tesla announcement. But it’s also a bit of marketing to. So, Tesla got in the front page in the news by releasing their patents by making a pledge and you know
(Webpage: Tesla: all our patent are belong to you, June 12, 2014)
Harry: that is very good publicity for Tesla. And they probably weren’t going to be able to monetize them all that much, their interest is much more in establishing and electric car ecosystem. So I think, it’s hard to disentangle all these different threads.
Denise: What do you think Stephan?
Stephan: I agree with all that, I think it is a mixture of idealism and marketing, which I think is a good thing, they are both good things. I think that, they are recognizing that they need a thriving industry of electric cars, they need competitors. It’s good for them. It’s good for their workers. It’s good to have workers that you can hire that they can change jobs and go to a competitor because then you can get more talented workers in the first place. So they are sort of dimly recognize and the problem with the patent system. And I think more and more companies are sort of doing this thing. Like Google, although Google made this flange yet. Google has offensively started, trademarks and they have of course acquired Motorola, which had ongoing offensive patents against some other companies and they have not quashed those patent suits. So Motorola’s hands are not completely snow white in this area. Which gets to the other problem that I had a little bit at first with the announcement by Tesla, which I admire and I like. It’s a little bit confused in some of its reasoning, but the big problem that I have with it is the question about enforceability. Which some of your rundown links pointed to in which the Twitter deal aims to solve with this agreement. And you had a paper that was interesting too, which I read through, the SSRN paper about the enforceability of these sort of promises. Alternately, I am concerned that are not enforceable agreements, it’s not an agreement, there are no terms that you can’t even read that are really clear, they can be changed at any times, you know, where we buy the company. At most, you could hope for some kind of a stoppable base defense to keep someone from going back on their promise, which is sort of what that article by the law professor argued that you linked to in the show net. I’m also concerned about creative Commons for similar reasons. I may be, a big user of creative Commons, maybe his biggest promoter and supporter. But I may have a mental gap, because I have not seen a convincing analysis that any creative common license is enforceable, there is no consideration, there is no clear way for the customer who gets licensed to prove that he had the license, what if the website just removes the creators Commons notice. Five months later after you have downloaded it and use it in your book, so I’m a little bit concerned about all these things. Which is not the fault of the companies trying to use them, the fault is the copyright and patent system to make it difficult to lead the system. I think you talk last week. Denise about this I arrest ruling, which basically said that open source nonprofits companies can’t get a nonprofit 501C(3) status. If they don’t try to don’t enforce copyrights against people. So, it’s almost like the federal government is punishing you by taxing you if you don’t use their copyright system that they have voiced on the economy as well. I’m not sure which one props up the other one, if the copyright props of the tax system or vice versa, but they obviously are intertwined with each other’s, go hand in hand, and some of my friends have even hypothesized that something like this is happening with Tesla. Tesla has been receiving a lot of criticism lately, partly because refusing to use the patent system. They are announcing they are not going to use any of its, so they are starting to get some pushback from the established players as well because they are not playing the game and they are starting to not use the system. So, as more and more companies are voluntarily renouncing the use of the copyright and patent system. I expect them to get more and more criticism for not being a good team player.
Denise: Have you seen the Model Three, by the way? The model three Tesla?
Stephan: Yes, it looks sweet.
Denise: Good-looking car. Yeah, they may be getting criticism, but I think they’re going to have a product on the market that people want. I’m sorry Harry I digress.
Harry: Oh, no. That’s okay, I thought the model was a cool looking car, although not a particularly creative title.
Harry: but one thing I’ll say is, almost no legal decisions are with zero risks. It’s always on a spectrum between high risk and low risk. So, while I agree it is true that you would have to depend on the good graces of some future judge not to allow people who have pledged not to enforce their patents stop them from later in forcing them. I think, you know your risk is on the lower and of things as compared to the status quo. So it’s definitely not an ironclad risk-free scenario, but few things in law are. So
Denise: Okay, so let’s consider one and whether it is or not. It’s this lotnet arrangements that has been in the news this week. What it is
(Webpage: Engadget: Google, Dropbox, Canon and others. Team up to disarm teacher patent)
Denise: is agreements, I would take it, I would guess, I’m not sure how they are formalizing things, but it is a group of companies getting together. Right now it has Canon, Dropbox, Google, ASUNA, SAP and Newwag and I think others can join if they want. You can find it at, let’s see what’s its website. Lotnet.com and idea behind it is that all of these companies are agree that should they ever sell their patents, should they ever divest themselves of all their patents, they will license all the other lotnet members to use those patents. So, they can never be sued by a patent troll.
(Webpage: Lotnet: Companies of All Sizes Have Been Targeted By Acquired Patent)
Denise: this if it is contractual would seem to be enforceable. Right, Stephan?
Stephan: I think it is enforceable. And that’s what’s good about it. What’s interesting about it is this is another one of several, sort of patent pooling or patent defense league arrangement that I have seen popping up in the last few years. It seems to be aimed at patents troll primarily with an interesting strategy. The main problem with patent trolls is that you can't countersue them because they're not making any product that you might have a patent to cover, so you're pretty much defenseless when a patent troll attacks you. And so the problem with these patent defense leagues is that they're useful against competitors sometimes, but they're not useful against patent trolls because even if you have 10,000 or 100,000 patents in a pool you could draw upon to use defensively, it doesn't do any good to use a patent defensively against trolls. It seems to me like what LotNet's trying to do is they're trying to disarm the trolls ahead of time by basically putting a poison pill, basically, in all the existing patents that are out there, so that in five or ten years when these patents start coming up for sale as start-ups go bankrupt and need to sell their patents that they won't be able to be bought and used by trolls. So what they're trying to do is basically take the thorns off the rose ahead of time, and I think it's a valiant effort; but I'm afraid that it's — it can only have so much effect. You're only going to get a certain percentage of the entire existing number of live patents in the U.S. that are bound up under such an — even if you got 50 percent, there might be another two million live inventions out there, live patents out there, that could be used by trolls.
Stephan: So it could reduce the risk somewhat, and I admire the effort. And I think we're going to see more attempts like this.
Denise: Well, Lot — the "lot" part of LotNet — stands for "license
on transfer." As of today, according to their website, they have seven members; but I could certainly see this being an attractive kind of thing a start-up might want to join to try and protect itself against patent troll lawsuits down the road. What do you think, Harry?
Harry: I really agree with what was just said. I think it's a valiant effort, but it really is a finger in the dam. So 500,000+ patents get issued every year; any one of those might be bought by a troll down the road. And I think agreements like this are probably going to only cover a very small percentage of them. On the other hand, very large companies recently that have either failed or gone belly-up — for instance, Nortel Networks and Polaroid and large companies in the past — have had their patents sold off. So if you can get a bunch of really large players, it might have some impact. But I still think it's sort of just a finger in the dam, given how many — there were something — estimated 2 million live patents plus at any given time; so this will only cover a small percentage of them. But I like the idea, theoretically.
Denise: What do you —
Stephan: Let me say one more thing about this, if it's okay. I think that the value of this could be more against patent competitors than patent trolls because this could have a network effect where people start joining this in an industry to get the right to use the patents in the pool defensively, like in patent defense leagues against people in their industry. And I believe that patent competitors — that is, competitors in an industry with patents — are a bigger threat than patent trolls. I think this is actually more promising than it would seem to be, given that it only could have so much of an effect on patent trolls. So I would expect and hope that these things could snowball and take effect in different industries. I'm a little bit worried that the FTC's going to start saying this is anti-competitive if these companies that are competitors pool their patents with each other just for defensive reasons. So they're trying to get rid of an anti-competitive monopoly the government is forcing them to get to defend themselves.
Stephan: And that might be called anti-competitive. So you have the interplay of anti-trust and patent law in a bad way, I'm afraid. But there's some potential here in that respect, I think.
Denise: I think my head just exploded. We've got the government in your scenario saying, "You're taking monopoly tactics to get out of our monopoly law." (Laughs) It's pretty funny. All right. Evan, what do you think about LotNet?
Evan: Well, it's interesting because it lends itself to so many useful metaphors — cutting off the thorns ahead of time; finger in the dam —
Denise: Yes. (Laughs)
Evan: — poison pill ... I mean, those are all very apt, and I guess we're wont to do that when we're confronted with novel situations, novel approaches like this. And of course I agree with what Stephan and Harry say here about it being of limited utility so long as there are only a few participants in that, which is not to say that it wouldn't work if it were much larger in a larger set of companies and patent holders that were involved in it here. I think, if you actually read the license agreement itself — excuse me. The license agreement that actually gives structure and gives — well, structure — to how it actually works, it's really interesting how it works here because you've got this license that is granted to all the other members of the community. That license doesn't take effect until immediately prior to the transfer actually happening. So it's sort of like this weird thing that happens; and so we start to think of our — Well, where does this actually happen? When does it particularly happen? But if one of the members transfers the patent outside of the network, outside of the membership here, that license is granted, I guess, presumably that moment before the actual assignment is made. So if you start thinking about it too literally, that gets sort of whacky to think about. But, of course, it has to happen that way because it's not a present license. You're not allowing all of your competitors to use the patent right as soon as you become a member; but then, of course, after it's been transferred, you no longer would have the ability to grant the license. So it has to be that way, but it's just sort of a whacky, novel thing to think about, how it's actually done. And the license agreement seems to be really well-written, and it's certainly interesting reading.
Denise: Right. Wasn't there something in a states’ and trusts’ law that was about a springing — I don't know; I'm trying to remember back to states and trusts on the bar —
Evan: Yeah. Right.
Denise: — but something that sprang into life on a contingency. And I remember those being not enforceable, so I don't know.
Evan: Something with —
Denise: Don't trust me on this. I am decades away from the Bar exam at this point, and springing arrangements are not fresh in my mind.
Let's move on to — before we leave U.S. patent law and its various legislative and judicial aspects, let's check in with the patent office, which had a nominee to head it, Phil Johnson, who has now been withdrawn. I guess the Obama Administration took a lot of flak for nominating Phil Johnson. He's someone who was in house with Johnson and Johnson and known as someone who was a very strong proponent of strong patents and patent rights; and the Obama Administration decided, "Nope, we're just not going to nominate this guy." Who knows what their thought process was, but they backed off his nomination. And so Michelle Lee, former Googler, is still the interim head until we have someone nominated to head the patent office. (Laughs) Evan, I saw that. Evan's texting me funny things on our back channel right now along the lines of the name Johnson. So sorry, I just outed you. (Laughs) In any event, let's — yeah.
Denise: Let's talk about whether we think that this says anything about the U.S. PTO and Michelle Lee's tenure there; and if you have any guesses about who the next nominee might be, now would be the time to toss them out. What do you think, Harry?
Harry: Well, I just want to say, I don't know Phil Johnson and his qualification; but I will say I think it is important for the Obama Administration to be putting forth somebody who is committed to really improving the patent office and experimenting and trying to make things better. And I think Dave Kappos, the former head of the patent office, did an excellent job; he was very willing to experiment. So somebody in that mold. I think Michelle Lee would be an excellent choice; I think she's eminently qualified. And as to Phil Johnson, whether or not, he was probably very qualified, but I think appearances are important. I think it's important not to pick somebody who comes to the table kind of with an overhang of a predisposition one way or the other. And I think that was his problem; the assumption was that it was going to be the status quo. That may or may not have been true, but — it reminds me a little bit, at the FDC, Tom Wheeler, who's a former cable lobbyist, may or may not be predisposed towards favoring the cable industry; but the fact that he had that position sort of clouds everything that goes forward.
Denise: Right. Stephan, any thoughts about heading the U.S. PTO?
Stephan: Denise, congratulations. You've finally found a topic about which I have no opinion whatsoever.
Denise: Yay! (Laughs) I didn't think that was possible.
Stephan: I've been a —
Denise: Do I win some kind of prize?
Stephan: I've been a registered patent lawyer for 20 years, and I didn't even know the PTO director had anything to do with policy, so this is obviously not something I care much about. (Laughs.) I did interview Todd Dickenson, though, one time when I was an associate patent attorney in Philadelphia, so I did meet one of the earlier patent directors. But no, I have no — I don't think it matters, to be honest.
Denise: Okay. Evan?
Evan: Yeah, the same thing. I mean, just sort of to take off on that, it seems like it's a very political decision. I don't think there's as much policy making as what there is at the FCC, to tie in with what Harry was saying about the comparison to Wheeler, who brought a lot of political baggage to this as well. So there's certainly something to avoid, inasmuch as this is a political position, a political appointment, these appearances could really detract from that. So I think it only makes sense that things are transpiring the way that they are.
Denise: Okay. I think we have to make "no opinion" our second MCLE pass phrase for this episode of This Week in Law.
Denise: There we go. We've got two of them in there. And before we leave the topic of patents, let's talk about Apple briefly, and the fact that it appears Apple is in a battle for its ability, under Chinese patent law, to be able to put Siri into its phones sold in China because there is a patent holder in China who has a patent it claims covers the Siri technology. So I guess this just kind of highlights that as much as we can try and tinker with the patent system in the United States, all bets are off if you need to sell in an enormous market like China, right?
Denise: Uh-huh? (Laughs) Once again, no opinion.
Harry: Well —
Denise: What do you think, Harry?
Harry: I will say that the intellectual property system in China is very selectively enforced, so I'm very skeptical that — to the extent there was a really objective basis behind this because there's actually, on the one hand, quite rampant intellectual property law violations that happen; but then, occasionally, the law in China steps in, and often it's favoring a Chinese company. Now, I guess the same could be said, to some degree, in the United States, but I think the system in China is much less developed as compared to the United States overall.
Denise: Got it. Stephan, anything to add to this?
Stephan: I think there's a — I put on my blog a while back — there's a Chinese proverb about, "Copying something is a beautiful thing," or something like that.
Denise: (Laughs) Yes.
Stephan: So they kind of have this ancient tradition, which I think is good.
Denise: Right. Mountain villages and such.
Stephan: No, not a lot of comments. Yeah, something like that. But I guess you could have a little Schadenfreude here and say, "Live by the IP sword; die by the IP sword." But I don't think it's a good thing, ultimately, although as a frustrated user of Siri, I don't know how badly this will hurt them, to be honest. I think a more important case is, there's another one — I don't think it's in the rundown — there is a patent troll who I think is poised to collect royalties from Apple for all iPhone sales for, like, the next 10, 15 years, getting one percent of every iPhone sold. And apparently, that's about $400 million a year. So we're talking about a 4 billion, 5, 6 billion-dollar payout, if this patent troll goes — that could be a more substantial patent hit coming Google's way. I think they can probably get out of this one with enough money.
Denise: Apple's way.
Stephan: Yes, Apple's way, sorry.
All right. Well, we've been talking about Aereo and its aftermath. Let's look at a bit of its aftermath over in the area of entertainment law.
(The intro plays.)
Denise: So we mentioned that, immediately after the Aereo decision, Fox went into the Ninth Circuit and said, "Hey, this directly impacts part of our case against Dish." They're suing over Dish's hopper technology but also over some streaming where Fox contended that Dish was doing basically the same thing that Aereo was doing; and if Aereo shouldn't be able to do it, then Dish shouldn't be able to do it either. And what happened here is, they went in asking for an injunction against Dish for this kind of streaming, and the Court said no. No injunction. So all that that means is the court decided, first of all, that — whoops, I just got some feedback there. — decided that Aereo was narrowly decided; at least, it took the Supreme Court's admonition to heart in that regard and said, "Look, we're not going to start granting injunctions based on this. You're going to have to have a trial over whether or not the streaming service is the same thing as Aereo." So any thoughts on this, Harry?
Harry: Yeah. So I think that the — as was said earlier — the Supreme Court took great pains in Aereo to try to limit it to the facts of Aereo. Now, just because they tried doesn't mean it's always going to happen. So I think this is one example where you have a different technology, and the Court recognized that they didn't apply — that Aereo didn't apply. I think sort of the larger commentary with Aereo is that we have laws that were developed in the 1970s that are being applied to the technology of 2014; and that is the major problem. So I don't think there was actually a clear outcome one way or another on the Aereo case for this very reason. Because back in the 1970s, an antenna was a several-foot thing that attached to a CRT TV. Fast-forward 40 years, and antennas are a fifth the size of a dime, and you have a hundred of them attached to a computer card broadcasting Internet — or broadcasting TV — over the Internet. These are ideas that just simply didn't exist 40 years ago. So I think it speaks to the fact that maybe the Supreme Court and the Courts are going to continue to struggle with new technologies that were not anticipated, kind of an antiquated legal framework. But the other point, I'd say, in Aereo's defense: the Supreme Court was sort of critical that they were taking advantage of loopholes; but Aereo was very much following the state of the law in their circuit, the Second Circuit. So I think it's hard to say that they were taking advantage of loopholes when what they were doing was actually the law of the land in their circuit until the Supreme Court found otherwise.
Denise: Evan, would you have been stunned if Ninth Circuit had decided to go Fox's way here and grant an injunction?
Evan: Well, I think that would have been sort of an unusual thing for the Court to do in that stage, a preliminary injunction here. Because when you actually read the Ninth Circuit's opinion, it doesn't talk about Aereo; it talks about just the real analysis that's going on here as to whether Fox had shown an irreparable harm. So there were plenty of other reasons for the Court to deny a preliminary injunction other than just the simple narrow fact that it is or is not a lot like Aereo. There were other factors here besides the likelihood of success on the merit. So given the fact that this litigation over Dish's technology has been going on for a long time and the technology has been out since January of 2012, it comes as no surprise that there is no preliminary injunction at this point, which, I think, is pretty clear by implication here. It doesn't mean that, ultimately, this technology won't get Aereoed. It could. That's not what the holding is here — or that's not what the conclusion is here from the Ninth Circuit having done what it did.
Evan: So there's plenty more to be written about this — the way that Aereo may or may not apply to Dish Network's technology.
Denise: Right. And this case is scheduled to go to trial next January. Stephan, any thoughts on the role of Aereo in this case or on Aereo's sort of wholehearted adoption of its new cable company moniker?
Stephan: Well, I think Aereo's playing it smart. They may still find a way to survive by doing five, ten minutes of time-shifting at the customer's request so there's not a transmission to the public. I don't know if they can make it. I wasn't surprised by this. I think that there was no irreparable harm shown. I'm afraid Dish will ultimately lose. There are some differences between Dish and Aereo, but according to the Supreme Court's new test, they look a little bit like Aereo; although the word "Dish" doesn't sound like Aereo, so I don't know if that would make a new difference in the new way Supreme Court thinks about things.
Stephan: But I'm afraid they're going to be imperiled in what they're doing, but maybe Aereo will find another way to get out of this with the time-shifting idea.
Harry: Aereo's also —
Denise: All right — go ahead.
Harry: — trying to reclassify itself, somewhat unsuccessfully, as a cable service as a way to survive.
Denise: Right. And I mentioned that a second ago. What do you think, Harry? Is that going to fly?
Harry: I'm a little dubious about whether they'll be able to do it, but I think they're going to give it their best effort.
Denise: All right. Well, we will stay tuned to the Fox case coming up in January. We'll certainly watch what happens with Aereo as they continue to try to have a business.
Right now, I want to switch over to a story having to do with the social web.
(The intro plays.)
Denise: A couple of stories. And I've got to warn you, they're depressing as anything. Usually, we think of the social web, we think of grumpy cats being the most depressing thing that might come your way; and we think of the great things that the web becoming more social has done. People are getting funded; people are able to reach audiences they never could. I don't think anyone would argue that the social web has been a huge social boon in many, many ways. But it also — as we can see in a couple of stories, one of which was tweeted to me by our very loyal listener TotallyFried, who is great about tweeting us stuff and putting stuff on our radar. A couple of stories showing how when you add a social component to an already terrible situation — a bullying, harassment kind of situation — it can become exponentially worse. And in this particular case, there was a 14-year-old boy in San Diego attending public school who got sent out of his classroom for eating sunflower seeds in class. Not allowed. So he's wandering the halls — apparently he was not told to go anywhere else — and had some time on his hands. And very soon he had other things on his hands — in his hands —
Evan: Oh, my.
Denise: — in the restroom at school. And although the poor guy thought he was alone, he apparently was not because another schoolmate was in there, captured the events that transpired on video and then shared them with the public, including many, many students. Members of his school knew what had happened. Unfortunately, the kid's parents never knew what happened, didn't know what was coming their way because they went on a family trip for Thanksgiving, and — this was just a couple of weeks after this all went public — and the poor guy killed himself. So — and left a suicide note saying how he just couldn't handle school, and it had all spun out of control. So the parents are now in this horrific situation, obviously. The poor kid. What a terrible place to find yourself in as a child. As a mom, it just — this story just breaks my heart. So the social media component of it, I think, is interesting. Just — it would have been awful just to have stories like this being told around school; but because it — who knows why the kid didn't tell his parents? Maybe they could have done something to make the situation better — but really, the fact that everyone saw this video is what made it so awful for the guy. And then, in an even worse kind of situation, up in Northern California, there was an episode involving a high school girl who passed out at a party, and some boys who decided to physically take advantage of her and filmed themselves doing it. I'm not sure if it was photographs or video, but —- what have you. And then, again, went viral; and the girl reacted badly, and once again there was a suicide. We have a law that may get enacted in California called Audrie's Law as a result of the latter case; and among the things that it would do is if, indeed, a minor is convicted for some sort of sexual crime, if they have taken the step of sharing pictures or texts of that crime to harass or humiliate the victim, they would have a year added to their sentence. This Audrie's law also would have court proceedings for teens under it — teens prosecuted under it made public. Ordinarily, minors' court proceedings in this kind of case would not be. So that is pending. And I wanted to toss it out to you guys just to talk about the aggravating role of social media in these kinds of situations and whether the law should play a role in it. In the San Diego case, the reason it's in the news right now is the parents are going to sue the school district, it sounds like, for not taking more steps to protect their son, I think, when the video was going around. They haven't filed the lawsuit, so I'm not sure what their claims are at this point. But there's also the aspect of, what do you do to the boy who posted everything, made it public? According to the article in our rundown — you can access all these links at delicious.com/thisweekinlaw/267 for this show. The San Diego County District Attorney's Office declined to say whether the boy who the claim says took the video might face charges under the state's anti-bullying law; however, a spokesman for the district attorney said a hearing is set for July 23 in juvenile court on the matter. So there are a couple of aspects there to consider. If you're going to make something like this widely public and you're a minor, what sort of consequences should there be, and what sort of consequences should there be for a school to police all this? Stephan, I'll start with you. What do you think about all this?
Stephan: Well, it's obviously horrible; both cases are horrible.
Stephan: In the first case, the boy case, it's hard to find an actual tort that should be recognized under law. It's obviously a reprehensible act. I guess you could pin it on some kind of trespass. There was a use of property and violation of, say, the implicit contract of the owner, which was the school district, not to use property in certain ways. So you could probably find a type of trespass that was done by the guy that videoed it. And of course, in the case with the girl, we already have laws against assault and rape, which sounds like is what happened. And so I see no problem with the law enhancing the penalty or the damages to be awarded if there's a violation of rights. And then, if it's exacerbated by, say, publishing photographs, which make the injury done to the victim even worse, I see no problem with those kinds of things being taken into account; and I think they should be. Whether the extra year is the right way to go, I don't know. But these are obviously horrible things; and I think, in these cases, prevention is of course more important than how we deal with it after the fact. But they're sad cases.
Denise: Yeah. I'm really hoping that schools, in the aftermath of these kinds of events, will — hopefully they already are, but even more so — spending a lot of time with kids discussing social media and its responsible use. Evan, what do you think about penalizing people who take something embarrassing or horrific and make it public?
Evan: Well, I mean, with social media, that has the ability to enable someone to inflict greater harm than other methods. It's much worse than an idea or a rumor, just going from person to person in the context of actual talking to people in the hallway or what have you. With social media, it has the potential for wider distribution, and there's also this idea of the permanence of it as well. This digital evidence could be around on the web in some form for a long, long time. So no doubt it has the ability and the capacity to aggravate the circumstances. And for that reason, it ought to form a basis on where to enhance the sentence or somehow raise the level of culpability that actually happens, or the responsibility of what actually happens here. Make it a worse kind of crime, a higher form of criminal liability is what I'm trying to say, whether I'm saying it artfully or not. The concern that I have is that, when you single out a certain mode, like social media, to be that which should be the basis for that enhancement, I think what it can lead to is ideas of zero tolerance. And because they're social media, well, this is inherently much worse; and so therefore, there shouldn't be any mitigation going on because of this aggravation. Any aggravational aspect of this would offset any kind of mitigation that may be present because of other things going on in the context. The best comparison I can make of it is the ridiculousness that you see in a lot of situations now with zero tolerance for guns in schools. Of course, guns in schools are a terrible thing; it's one of the worst things that is present in our society today. But there are these stories of, like, seven-year-old kids getting expelled from school because they've formed their fingers in the shape of a gun like this and pointed it at another student. That's ridiculous. That's dumb. That doesn't address the concern and the aggravation that comes from having carried an actual gun to school and murdered classmates and all of that stuff. So what I guess I'm really trying to articulate here is, yes, the social media aspect of this can indeed be aggravating. The law ought to do that; but we've got to be really careful to do it in a way that doesn't lead to absurd results merely because there is a social media component to it. It's got to be a pretty broad analysis, and there's got to be an evaluation of the entire circumstance before you start adding years onto kids' sentences just because they happen to have tweeted about it.
Denise: Yeah. I totally agree with you, Evan, and think that it's so — and I know because I'm a mom, and these stories impact me very viscerally. And it's so possible. (Laughs) It's probable, even, in that kind of situation, that people will overreact and want to take measures that may be over broad in trying to make sure that something like that doesn't happen again and specifically does not happen to their child. So I think it's a really dicey kind of situation that we have to watch carefully. We are talking about minor kids in all of these situations, both the victims and the cyber-bulliers, if we want to use those terms. And I should mention, in the Audrie's Law case too, that when I first heard about this case, the word "rape" was used as to what happened to the girl. And maybe technically, under the law, that's what this was; but, without getting too graphic here on the show, there was no penetration. It was more of a touching than anything else. And actually — I'm not going to go too much into the details; you can read the story and get what I'm talking about. The reason I'm going into the details is, I could see where the boys involved — first of all, the boys involved, obviously, terrible, terrible thing that they did, should have been parented better to make better decisions, etc. But I could see, in a situation like that, where they're maybe just kind of not thinking they're doing anything too terribly bad, that they're just kind of messing around, that they — rape is not a word in their head as they're doing this. So again, maybe that's an educational issue; but I think it has to factor into, what do you do with a child who has done this? Obviously, you don't want to be dealing with it after the fact; you want to be taking proactive measures to make sure that it doesn't happen. But if you try to put yourself into the shoes of the parents of the boys in the Audrie's Law case, you might find that all of a sudden you think the law is getting pretty harsh here. Harry, what do you think about all this?
Harry: I certainly agree with all that's been said; it's a really tragic circumstance. And I want to echo something you and Evan said, that I think we're living in a world now where social media has the ability to magnify harms of the past that may not have been so problematic. And we're living in a new world where we have to deal with these situations which might in the past, thirty years ago, might have been just a harmful rumor, now can explode on the Internet in a video or posting that really drive these drastic circumstances. And technology brings benefits, but it also has its costs. I think, similarly — and really, to echo a theme you just said, which is, I think the social media allows teenagers to make bad decisions much worse than they would have been in the past. So — not to defend the bullies in this case who I think did a terrible thing. But teenagers have underdeveloped impulse control and risk-taking, and social media allows them to turn bad decisions into really bad decisions that lead to tragic results. So it's something we just need to be aware of in this new world, and it's not really going away. From a larger level, I would say, as a law professor, I'm definitely skeptical about any law that tends to be a reactive law, that reacts to a particular incident. So without having looked at the details of Audrie's Law, I just want to say in general, laws that get passed in response to a particular incident have a tendency to have unintended consequences down the road. And I'm really not a fan of sort of emotional, reactive law-making this way, generally speaking.
Denise: Yep. Something to be very, very cautious of as you try to deal with these situations and make policy decisions around them.
Let's lighten things up substantially, maybe jarringly. (Laughs) Let's go to our resource of the week first so it's not too jarring. The Net Neutrality debate has somewhat SOPAed. The FCC site, as it was trying to deal with all the comments it was getting this week — it had an initial deadline of July 15 to close the initial comment period on the pending open Internet proposal. They've gone ahead and extended that to tonight at midnight Eastern Time. If you have not gotten in your comments to the FCC, now would be the time. If you need some refreshers on Net Neutrality, of course there are lots of resources out there for it. But if you wanted a more light-hearted one, the people at College Humor have done one. So I just wanted to point you toward that briefly.
(A video begins.)
Male speaker on video: Bruce, I am your father.
Hi, I'm Adam.
Female speaker on video: And I'm Emily.
Adam: We make funny videos on the Internet.
Emily: But soon, we might not be able to.
Adam: That's because Net Neutrality is in jeopardy.
Emily: Net Neutrality's the principal that says that ISPs — you know, these ... [audio fades] ... can't discriminate between different types of traffic.
Adam: That means that whether you're a bedroom music producer, a couple with an amateur porn site —
Denise: Aaaaaaah! (Laughs)
Adam: — just someone with a great start-up idea ...
Female speaker on video: It's like Dropbox for your food.
Adam: Great idea. Hope it works out.
Denise: (Laughs) We'll end on "Dropbox for your food."
(Video fades out.)
Denise: It goes on for quite some time going through, obviously, one side of the Net Neutrality debate. So I would encourage you to seek out more detailed and serious resources on Net Neutrality; but every now and then, you have to lighten things up.
Denise: And the main point here is that Friday, tonight, is the first deadline; and then September 10 will be the deadline for reply comments to the FCC —
Harry: Let me also —
Harry: Let me also give a shout-out to, if you haven't seen John Oliver's hilarious and brilliant take on Net Neutrality, you can find it on YouTube, I think. Really funny and just a brilliant piece of social commentary. I think it's a nice complement to the video you just showed, both informative and humorous as well.
Denise: And he just seems to nail that informative and humorous milieu, so good for him. Or [unintelligible], maybe, is what I'm thinking of for John Oliver. So yes, definitely check those out; and once again, pay attention to Net Neutrality. Get those comments in. Oh, and bears mentioning here, too — they've topped a million comments to the FCC and are closing in on the record number of comments on any issue that the FCC has ever received. That was 1.4 million, and guess what that was on? That was for the Janet Jackson clothing malfunction at the Super Bowl. (Laughs) So arguably, this is a far more important issue, so hope you're paying attention.
And our tip of the week would be for anyone wishing to make a boat in the country of Japan that is a digitally accurate rendering of their vajayjay. That has been found to be illegal in Japan. So there's a really hysterical YouTube video on this that highlights the poor artist who wanted to make — it was sort of like a kayak. And she had digital scans done to make it an accurate representation of her nether regions. And the whole point of this artist's work is to demystify the pussy, as she calls it. (Laughs) And she makes iPhone cases and various other things. Here, she sought to make a boat, but no, it violated the country's obscenity laws. So our tip would be, I guess you can't do that in Japan. Sorry, anyone who had similar designs. (Laughs) The irony of all this is, too, that apparently, fertility parades in Japan are very common, with full three-dimensional renderings of the male genitalia; but that, apparently, is not problematic under the law at all. So bit of a double-standard going on there. Our tip would be not to make your vajayjay a boat in Japan.
Denise: So I hope I've sufficiently livened things up here at the end of the show. It's been so fun talking about both heavy and light-hearted issues with Harry Surden from the University of Colorado at Boulder. Harry, so great having you back!
Harry: Thank you so much for having me. It's really been a pleasure; always enjoy doing this, so thank you.
Denise: Good. Well, we'll definitely have you back again. Tell us, though, in the meantime, what you have coming up, if anything, folks in the area could come by for or keep an eye out for, or anything folks online could.
Harry: Absolutely. So once the semester starts up, which for us is late August — it's coming up — University of Colorado Silicon Flatirons has a series of really interesting conferences on privacy, patent law, Internet law — open to the public, so come on. There's a lot going on at the University of Colorado in terms of entrepreneurship, intellectual property law, computers and law. So come on down if you're in Boulder. We're always happy to see you.
Denise: Great. Would love to do that when we're in town. Obviously great to get to Colorado whenever you can. Stephan, I love getting to Houston, too. I was reminiscing with a friend who has a youngster about the age of mine that pretty soon we're going to have to get on over to NASA and take them on the tour. Other than interesting space tourism, what else is going on in your neck of the woods?
Stephan: Well, I'm working on a collection of my law review articles and essays called Law in a Libertarian World, which should be coming out as a book in the next six to nine months, whenever I finish it up. So I'm working on that, and another IP monograph called Copy This Book; so that would be another year or so. So I'm working on those things in the background while I'm doing my legal practice and raising an 11-year-old and trying to keep the fort under control here; but everything is good.
Stephan: And I really appreciate the show. Nice to meet you, Harry.
Harry: Nice to meet you as well.
Stephan: And it's enjoyable as ever.
Denise: So great to chat with you again, Stephan. And yes, raising an 11-year-old in addition to everything else you have going on is definitely a lot to juggle, so good luck with that. And Evan, you've got your hands full, too, in that regard.
Evan: Yeah — are you done with that Japan story yet?
Denise: I'm done with the Japan story. (Laughs)
Denise: Once again, you can blame — I think it was, again, TotallyFried, or it was someone else on Twitter who pointed me toward that; and I went, "Okay, that's going to be our tip."
Evan: Okay, good. I can't believe you were getting after me for the things I was Skyping you when you were —
Denise: I know, I know.
Evan: Yes, great fun. Yeah. Has certainly lived up to the expectations. I knew this would be a fun conversation with you, Harry, and with you, Stephan. Lots of fun. So great way to spend a Friday afternoon, especially in the summertime. So good times. And it was great to be here.
Denise: Wonderful to see you as always, Evan, and enjoy the rest of your weekend here at the end of the summer. We don't have any breaks coming up anytime soon. We'll let you know if we do as the summer winds down. So we're just going to keep on chugging away. We're going to keep on posting shows at twit.tv/twil and at youtube.com/thisweekinlaw. If you've missed any of our other recent shows, that's where you're going to find them. What else? You can watch us on Roku — that's always a fun way to go — and in iTunes, etc., etc. And if you want to send us just completely face-palm stories that you'd like us to put on the show — (Laughs) — the way to do that would be to send us a tweet. Evan is internetcases and I'm dhowell on Twitter. Or if you have a more lengthy exposition you'd like to give us, head on over to our Facebook or Google+ page, and we'll chat with you there. Or you could email us. Evan is email@example.com; I'm firstname.lastname@example.org. We love hearing from you however you decide to get in touch with us because really, we couldn't do the show without you. You give us so many great ideas and suggestions, keep us up to speed on things that we haven't been paying attention to; so we really, really appreciate all the help. And with that, we'll go ahead and wrap up this episode of This Week in Law, and we'll see you next week! Thanks for everything. Take care.