We really do like the term “Patent Troll”. And we’re surprised that “NPE”‘s (short for Non-Practicing Entities”) don’t embrace it, since it does conjure up some degree of ‘cuteness’ and warm fuzzies. But, we’re keeping Judge Lucy Koh’s admonishment in mind and, for now, we’ll use the term “NPE” instead. In case you haven’t heard, Judge Koh forbade Apple, Inc. from referring to GPNE Corp. (who is suing Apple in a cell phone-related patent suit) as a “patent troll” (Forbes article re is here). So, “NPE” it is.
Last year, an NPE named Personal Audio, LLC filed suit against Ace Broadcasting Network, home of the Adam Carolla Show daily podcast. The Adam Carolla Show launched in early 2009 and is wildly popular. In May 2011, Guinness World Records cited the show as being the most downloaded podcast ever. Ace Broadcasting isn’t Personal Audio’s first victim, though. It has sued Apple and CBS among others. Many of the suits have ended in settlements with Personal Audio.
Ace Broadcasting, however, seems to be still hanging in there. In June of this year, Zach Weissmueller of Reason TV interviewed Mr. Carolla about the case (video link here), which to date, is still pending. In March 2014, Personal Audio tried to dismiss one of the other defendant’s (Lotzi Digital Inc.) counterclaim and affirmative defenses, but the court found no merit to Personal Audio’s argument. Specifically, the Magistrate Judge, Judge Payne, found Personal Audio’s stance to be “unfair and unreasonable” in that Personal Audio was asking Lotzi to “spell out its entire theory of non-infringement at the time of filing its answer before Personal Audio has set forth the substance of any theory of infringement” (emphasis is the court’s). Most recently, other cases, including against defendants Togi Entertainment, Inc. and Fox Broadcasting Company, have been consolidated into Personal Audio’s case against Ace Broadcasting.
While Personal Audio owns other patents that are at issue, an important aspect of the case is the patentability of U.S. Patent No. 8,112,504 (“the ‘504 patent”). According to the Patent Trial and Appeals Board (“the Board”), the ‘504 patent broadly relates to a player for audio programing which includes functions allowing the listener to control many aspects of the playback. Most relevant is how audio program segments are distributed to client subscriber locations.
Not quite as interesting to the media, but equally important, is Electronic Frontier Foundation‘s (“EFF”) request for Inter Partes Review of Personal Audio’s ‘504 patent. Inter Partes Review is a fairly new type of trial proceeding conducted at the U.S. Patent Office that began on September 16, 2012. Its purpose is to allow review of the patentability of one or more claims in patents issued on or after September 16, 2012. One catch, though, is that the Patent Office will consider only issues that could be raised under sections 102 or 103 of the Patent Act (i.e., whether the claims are obvious or anticipated), and only on the basis of prior art consisting of patents or printed publications. In other words, the Patent Office will not consider allegations of prior public use or knowledge or an on-sale bar in these proceedings. Also, the Patent Office will only institute a trial if it determines that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the patent claims challenged. In short, the petitioner has to set out a well-developed theory of its case in the petition before the Patent Office will even allow the trial to begin.
EFF was able to meet this threshold and, in April, the Patent Office granted EFF’s petition for review and trial was instituted. The Board found that EFF had shown a reasonable likelihood that it will prevail with regard to all of the claims it challenged (claims 31-35). EFF’s case isn’t without its glitches, however. For starters, the Board rejected much of the prior art that EFF sought to enter into the record. EFF had initially submitted, among other items, documents and URL’s regarding the National Center for Supercomputing Applications’ radio shows SurfPunk Bubbles and Geek of the Week. Most of the documents and URL’s were dated in early 1993. The ‘504 patent’s earliest priority date is October 1996.
The Board did accept EFF’s evidence designated as “Patrick/CBC” and “CNN” (respectively, Exhibits 1012 and 1022 in the proceeding), which are from either 1993 or 1996 (while the Board refers to 1993, “1996” is on the title page of the Patrick paper). The Patrick paper is published in the Canadian Journal of Communication and discloses an experimental trial to determine if there was any demand for regular radio programing distribution as digital audio files over the internet. CBC radio programming was stored on a server and program files were made available using standard Internet server software. The server was then being used as a source of Canadian government documents. The server could be accessed at a Canadian radio URL. EFF asserted that, in using FTP, Gopher and the WWW, one of skill in the art would have understood that URL’s were used to identify the data file a user was requesting using a remotely located client device as required by claim 31 of the ‘504 patent. Exhibit 1022 is a May 1995 M.I.T Master’s thesis by Charles Compton entitled “Internet CNN Newsroom: The Design of a Digital Video News Magazine.”
According to the Board, the Patrick/CBC documents dispensed with Personal Audio’s argument that, in 1993, adequate technology didn’t exist to download files. The Board also found that those references disclosed technology permitting users to prepare and play audio files, as well as how to download them.
It should be noted that the Board hasn’t made a final determination regarding patentability of the ‘504 patent. To say the least, it will be very interesting to see how Personal Audio’s case against Ace Broadcasting and the pending Inter Partes Review proceeding turns out.