With calls for action from nearly all quarters, President Obama issued five executive orders to cut down on trolling, along with seven recommendations to Congress for legislation to continue the fight.  Here’s a quick rundown of those orders:

• The first executive order directs the U.S. Patent and Trademark Office (PTO) to regularly require updated ownership information in PTO patent proceedings, to make clear who has control over the patent.
• The second requires increased PTO training for examiners, particularly regarding examination of functional claims.  The goal is to increase claim clarity and reduce the number of overly broad patent claims.
• The third directs the PTO to offer educational materials for those facing an action with a patent assertion entity.
• The fourth looks toward future improvements, establishing study groups to recommend patent system updates and expanding the PTO Edison Scholars Program to study abusive patent litigation.
• The fifth seeks to improve transparency and efficiency of the standards for Customs and Border Protection, a move that will be overseen by the cabinet-level U.S. Intellectual Property Enforcement Coordinator, currently Victoria Espinel.

While the issuing of these orders has been universally lauded as a good move, it will take legislative action by Congress to dole a serious blow to the problem.  One such piece of legislation could be the bill in the works from Senator Charles Schumer, which we recently touched on here.

The L. Frank Baum novel, The Wizard of Oz, has been in the public domain for over 50 years.  However, Warner Bros. still owns the rights to the famous 1939 film adaptation, including the script, the music, and any “iconic elements” that were original to the movie.  One such iconic element is Dorothy’s ruby slippers, since the slippers of the novel were silver.  This right to the ruby slippers was no matter to Disney, however, as Dorothy does not even appear in Oz: The Great and Powerful.

One character who does appear, though, is Theodora, better-known as the Wicked Witch of the West.  The 1939 film gave the Wicked Witch of the West a distinctive appearance, with her skin a green hue.  Disney’s lawyers, mindful of Warner Bros.’s tendency toward legal action at the mere scent of infringement (being themselves equally litigious), wanted to ensure that Theodora’s appearance would not trigger litigation for copyright infringement.  So to avoid using the particular shade of green used on actress Margaret Hamilton in 1939, Oscar-winning makeup artist Howard Berger came up with a custom green for Mila Kunis’ Wicked Witch of the West, a color he dubbed “Theostein” – a clever conflation of the witch’s first name and the famous monster “Frankenstein.”  The result was a positive and bloodless one for Disney, with no legal action from Warner Bros. and the film a success in theaters (and now, possibly, in homes).

Copyright protection for creative works is a cornerstone of American jurisprudence.  This type of protection was encouraged by the Founding Fathers, who authorized Congress to create copyright law in Article 1, Section 8, Clause 8 of the Constitution, a clause approved unanimously at the Constitutional Convention.

The first Copyright Act of 1790 gave authors a 14-year term of protection for their “maps, charts and books,” with the copyright renewable for an additional term upon expiration of the first if the author was still alive.  The Copyright Act of 1831 extended the initial term to 28 years [with the renewal remaining at 14], and expanded the works covered to include musical compositions, though only in printed form [e.g. any song could be performed publicly royalty-free].  The Copyright Act of 1909 extended the renewal term to 28 years.

The Copyright Act of 1976 radically altered the terms of copyright law in the U.S.  The initial term of protection was changed from 28 years to a term of life of the author plus 50 years, and corporate copyrights were given a term of 70 years.  After considerable pressure from the private sector, Congress in 1998 extended copyright to 70 years beyond the death of the author.  Copyrights owned by corporations were extended to a term of 95 years after publication, or 120 years after creation, whichever is shorter [“shorter” being a very relative term].

The 1998 amendment was spurred on by lobbying on behalf of entertainment companies who own vast numbers of copyrighted songs and publications, and the pejorative term for the 1998 Copyright Term Extension Act is the “Mickey Mouse Protection Act.”  The practical result of these copyright extensions is that the public domain has essentially become frozen.  Works produced as long ago as 1923 [and earlier in some cases] have been given a considerably longer shelf-life than would have been the case prior to the extensions.  As a consequence, many of these publications will not begin to enter the public domain until January 1, 2019.

As we close in toward that day, the ultimate “Public Domain Day,” there will likely be another push to, once again, extend the term of protection.  It comes as no surprise, therefore, that the subject of copyright protection has the attention of lawmakers at this particular time.  We will monitor these developments as they unfold.

On the May 25 program, Attorney Keller gives a recap of the four main types of intellectual property (IP):  Copyrights, trademarks, patents, and trade secrets.  She also discusses some of the ways that local business owners can find themselves in trouble regarding IP matter, albeit unwittingly.  Attorney Keller notes that many people who are starting businesses will try to go the “self-help” route to identify and protect their IP assets to save on some start-up costs, but these decisions can often end up costing more money in the end.  She illustrates these through a few scenarios based on personal experience with various representations.  Of particular interest, she offers a great example of someone who created a fan page website and now this person is facing what could be a multi-million dollar lawsuit for copyright infringement without adequate defenses that may have been available had there been a more comprehensive understanding of the governing law and how it works in such cases.

If you didn’t catch the show, be sure to check it out here [scroll down to the 7:30 – 8:00 timeframe]:  Interview – Part 3.  If you have any questions you want Attorney Keller to address in her next appearance in early July, feel free to send your questions to Michael Parks [his contact info is listed on the page].

Copyright trolls attempt to exploit the gap between actual damages and statutory damages that are itemized in the federal copyright law.  Actual damages are the real damages that compensate for the loss suffered by the copyright owner; statutory damages, by contrast, are dollar amounts stipulated in a statute for specific types of infringement ranging from innocent to willful.  Statutory damages do not take into account actual monetary losses due to an act or acts of infringement.  Sometimes, a request for relief in the form of statutory damages may lead to judgments in which court-ordered penalties are significantly higher than the actual losses sustained due to the infringement.  This was the case in the famed Minnesota copyright infringement lawsuit from 2007 (Capitol Records v. Thomas), in which a single mother was ordered to pay $222,000 in statutory damages for illegally downloading 24 songs (a penalty of $9,250 per song).  In recent years, more copyright trolls have been emboldened by favorable verdicts for copyright owners such as in Capitol v. Thomas, and have made substantial profits through litigation or simply through the threat of litigation.

One well-known copyright troll that has been commanding news coverage for the past few months is the law firm Prenda Law (formerly known as Steele Hansmeier, PLLC, with a new campaign underway to rebrand as Anti-Piracy Law Group).  Prenda’s strategy was interesting – the firm targeted copyright infringement of pornography.  Prenda would send letters threatening suit to individuals who illegally downloaded porn, a threat magnified through the potential for “negative publicity” (e.g. now everyone knows you as the person being sued for downloading porn).  Through this practice, which one federal judge called an “extortion payment,” the firm extracted penalties and settlements of as much as $15 million over an undisclosed period of time.  Having employed a number of questionable (and possibly illegal) business and legal practices along the way, Prenda now faces investigations by the IRS and U.S. Attorney’s Office for the Central District California, and its lawyers face sanctions and possible disbarment.  With this happy ending of sorts for the enemies of trolling, it will be interesting to see whether the Prenda case becomes a cautionary tale dissuading potential copyright trolls in the future.

Notice that in instances such as the Prenda case, as well as in many cases in which the owner or rights manager is not the author, the financial benefit of high statutory damages does not go to the author of the underlying work.  But the purpose of copyright law, and of the enhanced penalties for willful copyright infringement, is to promote the creation of artistic works by protecting the rights of authors; it is not for the purpose of protecting managers and other non-authors.  Thus, although copyright trolls may have the legal right to statutory damages, they are violating the very spirit of the law through their actions.

Thank you for following our blog series, “Tales of the Trolls.”  Trolling is an endemic problem with significant social, legal, and economic implications.  We hope that you will view it as seriously as we do.

MPEG LA™ owns patents to the MPEG-2 technology, which is an industry standard for video formatting for smartphones.  It is a common maxim in the high-tech world that, over time, technology becomes less expensive.  Forbes uses the example of a Motorola RAZR V3 to illustrate this point:  in its infancy, the RAZR V3 was quite expensive, but no one today would pay the original price for the phone.  But this is exactly what MPEG LA™ is doing with the licenses for its nearly-expired MPEG-2 patents – charging high prices that do not reflect the current market value of the technology.

RAND licensing obligations in the U.S. – short for “Reasonable and Non-Discriminatory” – or FRAND obligations – short for “Fair, Reasonable and Non-Discriminatory” – in Europe, are established by standards-setting organizations (SSOs) and are meant to prevent licensing on unreasonable terms when the patents desired to be licensed are integral parts of industry standards, or standards-essential patents (SEPs).  To this point, though, RAND/FRAND obligations have not been precisely defined, e.g. there is dispute over what is “reasonable. 

However, a recent court decision may have a huge impact in establishing a methodology for determining a RAND royalty rate.  On April 25, 2013, U.S. Judge for the Western District of Washington James Robart issued a decision that laid out for the first time the considerations that constitute a RAND royalty rate for SEPs.  If the decision is held up on appeal, it could ultimately determine a framework in calculating rates in many industries that use SSOs.

Another example of overly-broad (and perhaps invalid) patent claims comes from MPHJ Holdings (MPHJ), the owner of patents formerly owned by Project Paperless, a well-known “troll.”  MPHJ, like many trolls, targets small companies least likely to have the resources to successfully fight claims in court, and most likely to settle for large sums.  Rather than sending the cease-and-desist letters requesting payment from the parent company, MPHJ uses several different shell-companies, usually limited liability companies (LLCs), to contact the allegedly-infringing companies, in order to prevent the defendants from sharing information with each other.

One of MPHJ’s questionable patents regards scanners that connect to computers with networking capability.  MPHJ uses this patent to claim that (potentially) any business that uses scanners that connect to a computer network infringe on the patent, and that the companies must pay high licensing fees to continue using the technology or risk being sued.  The patent itself could probably be successfully challenged and invalidated, but invalidating a patent is an expensive process, one which almost no small company can afford.  But the landscape is changing as indicated by the upcoming proposed legislation referenced in Part 2 of this series.  If the USPTO must vet patent lawsuits and review the patents in question, the question of validity/invalidity may be answered before any court action arises.  For the trolls who own overly broad patents, the possibility of having their patents invalidated may prevent them from trolling the patents in the first place.  It is high-time for legislative intervention.

Patent trolling is a predatory practice, whereby a person or business – the “troll” – will acquire one or more patents with no intention of building or developing products, but rather with the hope that others will develop products in violation of the patent’s claims.  Once a violation is suspected, the “troll” generally sends a cease-and-desist letter and request for payment for damages and/or file suit.  Trolls tend to focus on high tech patents, particularly those dealing with software, smartphone, and other fast-moving technologies.

The purpose of the patent system is to encourage creativity and to reward true inventors.  Patents benefit inventors by providing them with the exclusive right to make, use, and sell their patented invention for a limited period of time.  With patent trolling, the entity enforcing the patent and pursuing damages through litigation has often purchased the patent for the sole purpose of profiting through litigation.  So, it is not, in fact, the creator who is being rewarded.

A [very] recent study showed that more than half of all patent litigation cases in 2012 were initiated by patent trolls.  Given the gravity of this situation, it makes sense that the President and many federal agencies have acknowledged the problem of trolling, and are searching for solutions.  U.S. Senator Charles Schumer (D-NY) is preparing to introduce legislation that would allow the U.S. Patent and Trademark Office to vet patent infringement lawsuits before they go to court, a step that would aim to cut down “bogus suits [and] bogus patents” before the alleged infringers are forced into an expensive settlement.  The planned legislation would also introduce a new process for reviewing patents, which may help cut down on overly broad patent claims – the subject of Part 3.  …Stay tuned!

Just like the troll in “The Three Billy Goats Gruff,” most trolls in traditional folklore were portrayed as huge, ugly, and dim-witted, but very dangerous antagonists.  In fact, sometimes, they were even portrayed as people-eating.  If you had the onerous task of reading Beowulf in high school or college, think of the character Grendel, who kills and eats revelers in the mead hall.  Even when not murderous, trolls are consistently portrayed as mean without cause, obfuscatory, and a general nuisance.

Regrettably, the troll has not stayed in its rightful place in folklore, but has jumped out of fairy tales right into the digital age.  In Internet terms, “troll” has taken on a couple of different meanings.  “Troll” is often used to refer to people who leave inflammatory comments on websites, sometimes related to the subject matter of the site or webpage, but often simply off-topic and provocative.  “Trolling” different websites and leaving disrespectful comments and/or “disliking” particular content on a site has become an increasingly frustrating problem.  These “trolls” seem to be motivated by nuisance, and nuisance alone.

When dealing with Internet trolls, consider the following best practices:

1. Don’t dignify their commentary with a response – or at least a defensive response.  Quoting facts or figures to defend your position is probably a waste of time and will not change the mind of a troll.
2. If you feel you must respond, begin with a compliment or humor instead of criticism.  Just beware that your good intentions may be intentionally misconstrued, or you may be misquoted or mocked in response.
3. Contact the website manager or listmaster, who may be able to block the user if they find a pattern of abuse.

And keep in mind that just because you may disagree with what someone may post, that does not make them a troll.

On the April 6 program, Attorney Keller gives a quick overview of intellectual property (IP) generally, and then explains the basics of copyrights, trademarks, patents, and trade secrets.  She focuses on how each of these can pertain to local businesses, giving several examples of well-known cases in Central Pennsylvania.

If you didn’t catch the show, be sure to check it out here [scroll down to the 7:30 – 8:00 timeframe]:  Interview – Part 2.  If you have any questions you want Attorney Keller to address in next month’s program, you can contact Michael Parks [his email is listed on the page].