By
Andrew Williams —

There
has been a lot of discussion recently in the mainstream press regarding the
U.S. patent system and its perceived failings.  The current outcries stem from the apparent proliferation of "Patent
Trolls," also known by the less derogatory term Patent Assertion Entities
(or PAEs).  Prompted by this apparent
threat, President Obama has proposed a series of legislative recommendations
and executive actions, and Congress has introduced several new pieces of legislation,
likely precipitated by the remarks of the President earlier this year.  In fact, the Chief Judge of the Federal
Circuit, Judge Randall Rader, recently wrote an Op-Ed piece for The New York
Times, with Colleen V. Chien and David Hricik, suggesting that judges might
have the ability to curtail trolls by making them pay for abusive litigation ("Make Patent Trolls Pay in Court," New York Times, June 5, 2013).  Judge Rader explained that Section 285 of the
Patent Act and Rule 11 of the Federal Rules of Civil Procedure gives judges
the authority to shift the cost of litigation abuse from the defendant to the
trolls.  It will be
interesting to see if anything changes based on this response from all three
branches of the U.S. government.

Nevertheless,
probably no one would argue that there has been in increase in abusive patent
litigation in recent history, and that at least some of these problems stem
from non-practicing entities.  However,
it is clear that the mainstream media is not providing a balanced analysis of
the issues involved, tending to quickly label any individual or organization
that asserts its patent rights as a troll.  Lost in this discussion is a presentation of the merits of the patent
system and the potential advantages of non-practicing entities (as even
President Obama report acknowledged).  For example, NPR has mounted what appears to be an all-out assault on
the allegedly "broken" patent system.  This recent barrage of criticism was anchored by an episode of "This
American Life," which aired a little over a week ago and focused almost
exclusively on a single patent case stemming from an investigation of
Intellectual Ventures (we provided some commentary on this episode; see "'When the Patent System is Attacked!' — The White House Task Force on High-Tech Patent Issues").  Shorter versions of this episode have been featured on other public
radio shows since that time.

One example
that this episode touched on briefly was about a patent holder that has been
asserting one of his patents against prominent podcasters, alleging that he invented podcasting back in the mid-'90s.  To further elaborate on this story, NPR's own podcast, "Planet
Money," released an episode on May 31, 2013, entitled "When Patents
Hit the Podcast."  In this episode,
Planet Money host Zoe Chace and correspondent Robert Smith explored the story
of inventor Jim Logan and his company Personal Audio LLC ("Personal Audio").  Personal Audio had recently obtained a
favorable jury verdict against Apple for infringing patents listing Mr. Logan
as an inventor.  The parties later
settled.  Mr. Logan has now turned his
attention to podcasters themselves, thereby prompting the story.  The podcast did include a disclaimer that
Planet Money had not been sued by Personal Audio, nor had it been approached
about obtaining a license.  However, the
clear implication was that if podcasters could be sued, anybody else could
also.  In fact, during the Podcast, Mr.
Logan's licensing attorney, Richard Baker, joked with Ms. Chace that because she
had a playlist of summer songs, she owed him 15 cents.  "OK, sounds kind of scary, but he was
actually joking," Ms. Chace
explained.

The
episode was crafted to paint Mr. Logan in the worst possible light.  Listeners to the podcast unfamiliar with the
patent system would definitely come away from the episode believing that Mr.
Logan was attempting to hijack somebody else's idea and extort money out of
them.  This story began in the mid-'90s,
when Mr. Logan had the idea to provide audio content to customers in an
episodic fashion.  He envisioned that
this could be accomplished over the internet, but unfortunately the technology had
not caught up with him yet.  Therefore, he
established a business offering magazines on tape, which he named Personal
Audio, by which customers could select different stories from different content
providers and an audio version of those stories would be delivered on cassette
tape.  This was mockingly referred to as the
first podcast.  Mr. Logan applied for a
patent, but his business never got off the ground, and all of his attempts at
developing a player for digital content failed.  Mr. Logan had other ideas, though, such as pausing live TV (think TiVo),
deep-tagging in videos (think YouTube), and enhancements to touch screens
(which he sold to 3M).  But, except for
the last one, all were deemed failures by the podcast.

Years
later, Mr. Logan and his attorney discovered that Apple was utilizing a playlist
in most of their products, and that this playlist functioned essentially how
Mr. Logan had envisioned it when he filed his patent application.  After successfully suing Apple, Mr. Logan was
said to have set his sights on the podcasters themselves.  First, he filed a divisional application with
claims that could more easily be read on podcasting.  Of course, Ms. Chace didn't use the word
divisional application, but explained it in a more sinister manner ("[S]o
he pulled up the patent and added to it to make sure the part he thought
covered podcasting was emphasized"), and Mr. Smith expressed surprise that
it was completely legitimate to go back and "tweak" your patent.  After obtaining this divisional patent in
February 2012, Mr. Logan approached select podcasters, such as Marc Maron of
the WTF podcast, to inquire about licensing his patent.  When he was asked about these threats, Mr.
Maron suggested that his podcast might have to shut down if they were carried
out.  Personal Audio has filed suit
against several podcasting organizations, including ACE Broadcasting Network,
LLC, distributors of "The Adam Carolla Show," one of the most
successful podcasts.  The Planet Money
podcast concluded with an interview of Julie Samuels of the Electronic Frontier
Foundation ("the EFF"), an organization seeking to invalidate this
patent at the United States Patent Office, although it was unclear whether any
such proceeding has yet been initiated.

In
discussing this podcast, Patent Docs is not commenting on the merits of Mr.
Logan's patent or the actions of Personal Audio.  For those interested, the asserted patent is
U.S. Patent No. 8,112,504, and according to the ACE Broadcasting complaint,
Personal Audio is asserting at least claim 31 of this patent.  Patent Docs is also not taking a position on
the EFF's actions at this time in attempting to invalidate Mr. Logan's
patent.  In fact, the patent system allows
EFF and organizations like it to seek reexamination at the Patent Office if
they are able to uncover legitimate invalidating prior art.  The problem with the Planet Money podcast is
that at best it was misleading, but at worst it got several crucial patent
concepts wrong.  And, considering the
size and make-up of the audience that it reaches, it was unfortunate that this
podcast did do a better job at presenting the positive side of the patent
system.  It is no surprise that public
opinion of the patent system appears to be waning.

As
a brief refresher, the ability to, and reasoning for, establishing a patent
system can be traced back to the beginning of this country.  The U.S. Constitution, in Article 1, Section
8, Clause 8, says:

[The Congress shall have Power] [t]o promote the Progress of Science and useful
Arts, by securing for limited Times to Authors and Inventors the exclusive
Right to their respective Writings and Discoveries.

Also,
as explained on the Patent Office website, "[a] patent is a property right
granted by the Government of the United States of America to an inventor 'to
exclude others from making, using, offering for sale, or selling the invention
throughout the United States or importing the invention into the United States'
for a limited time in exchange for public disclosure of the invention when the
patent is granted."  In other words, the inventor gets something
(a limited period of exclusivity), but the public gets something also,
disclosure of the invention.  Without the
patent system, innovators would be incentivized to keep any new invention as a
trade secret, thereby depriving the public of the ability to learn and improve
upon the invention.  Unfortunately, most
accusations that the patent system stifles innovation are based on
extrapolations of individual anecdotes and are often unsupported by any data.

The
first misconception perpetuated by the Planet Money podcast was that the patent
system should only reward inventors if they create a new "thing."  For example, Mr. Smith lamented that "patents
stopped being about protecting your gizmo from someone else's gizmo and making
money off of this protected space."  First of all, this completely ignores all of the valuable patents that
have been granted for methods of using a "gizmo," or methods of
making a "gizmo."  But, more
importantly, the implication was that if the patent holder did not make the "gizmo"
himself, society has not benefited.  This
is not the case.  In order to ensure that
the invention is disclosed to the public, the patent must teach those skilled
in the art how to make and use the invention (see 35 U.S.C. § 112).  For this public disclosure to occur, it is
irrelevant whether the inventor ever actually made the invention.  In fact, the Patent Office stopped requiring
the submission of models in 1880.  Ms.
Chace was on the right track when she asked Mr. Baker, Personal Audio's
licensing attorney, whether "[i]f you have the idea of the thing, don't
you have to invent the way to get it?"  Of course the answer is yes, but Mr. Baker didn't directly answer the question,
but instead stated that the '504 patent provides a roadmap to how to do
podcasting.  Interestingly, Ms. Chace
followed up with the question:  "Do you think that the guy that invented
iTunes, like, read your roadmap?"  Of course, the answer is that it does not matter, but anyone listening
to the question would come away with the impression that iTunes developer did
not, in fact, read the patent.  Now, we
do not know either way, but what if they did?  Would that matter?  If so, it can easily be imagined that the
script would flip, and Apple would then be the bad guy for stealing someone
else's invention and without providing them any compensation.  But this perspective was not provided.

Another
issue that was at least misleading in the podcast was the suggestion that
podcasters are the "end users" of the technology.  The podcasters are not the typical end users
that come to mind.  Instead, most people
would consider the term "end user" to refer to anyone that has ever
listened to a podcast.  The only reason
that this use of the term might make sense here is that claim 13 of the '504
patent covers an "[a]pparatus for acquiring and reproducing media files
representing episodes in a series of episodes as said episodes become
available."  And even though it is
incredibly unlikely that podcasters like Mr. Carolla are infringing the patent because
they have made such an apparatus, they are still using such an apparatus
(whether it is covered by the asserted claim or not).  Again, without taking any position on the
merits of the case, we find it difficult to believe that ACE broadcasting does
not benefit in some way from its podcast offerings.  To make the point, Mr. Smith used the example
in the podcast that this case was akin to someone having a patent on the automobile,
but instead of suing rival manufacturers, they sued the owners that bought and
drove the cars.  This is not an
appropriate analogy.  The more apropos
analogy for this particular scenario would have been to compare the podcasters
to taxi drivers — sure, the taxi drivers do not make the automobiles that this hypothetical patent covers, but the drivers sure do profit from using them.  It is likely that the same can be said of
most commercial podcasters.

Probably
the most frustrating thing about this podcast was that the term "patent
troll" was thrown around without ever truly being defined.  In fact, Ms. Chace never referred to Personal
Audio as a troll herself, but instead she reported that:

Julie Samuels [of EFF] uses a term for Jim and people like him, she calls
them Patent Trolls.  It just means
someone who doesn't build, doesn't make, doesn't create jobs.  A patent troll extracts money from people
who do those things.

The
problem is that in this case, Mr. Logan was one of the original inventors on
the patent at issue.  Therefore, this was
not a case of a large patent-holding company that buys up other people's
patents in an effort to assert them against others.  In fact, perhaps unwittingly, the podcast
painted Mr. Logan as the quintessential small inventor trying to stand-up
against Apple, the large corporation.  But, instead of the hero of American ingenuity, he was made to be the
villain.  And why?  Because he was unsuccessful at developing his
invention that he envisioned all those years ago.  Of course, it is easier to paint Mr. Logan in
a negative light now because he is has been targeting podcasters, and that
probably hits a little too close to home for Planet Money.  But, we must continue to ask ourselves
whether there is a place in the U.S. patent system for the small inventor, and
if so, what is that place.  It is these
inventors that may not have the financial or technical resources to compete
with the larger corporations without the protection of a patent, but they now
risk being labeled a troll for asserting their patent rights, or worse yet,
capitalizing on their invention by selling their patents to non-practicing
entities that might have more leveraging power to help the patents receive full
value.  Unfortunately, Mr. Logan might
not be the best example, but the on-going debate should present both sides
fairly in order to allow the public to come to an informed decision.