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We are often told that wicked patent trolls attack vulnerable, naive start-ups in order to make a fast buck. But sometimes it is not that simple, as a case that has recently hit the headlines shows.
Back in May shopping comparison website FindTheBest was on the receiving end of a patent infringement suit from NPE Lumen View Technology. Now FindTheBest has responded by accusing Lumen of extortion and bringing a counterclaim for civil violations of the Racketeering Influenced and Corrupt Organizations Act (RICO).
Lumen originally sued FindTheBest for the infringement of patent 8,069,073, “a system and method for facilitating bilateral and multilateral decision making”. After receiving a demand letter from Lumen’s attorneys FindTheBest decided to counterclaim using RICO and alleging that Lumen and other defendants worked together to extort money from individuals and companies based on false, unreasonable and baseless patent infringement claims. While historically used to prosecute individuals involved in organised crime, RICO has been used in patent litigation twice before; though the most recent time it was done ended in failure.
For a RICO claim against Lumen to be successful, the NPE’s actions must be shown to be not just frivolous, but also corrupt. Although this might be hard to prove, FindTheBest’s CEO, Kevin O'Connor, is optimistic of success; so much so that he has pledged $1 million of his own money to finance the case. Having co-founded digital ad agency DoubleClick, which Google bought for $3.1 billion, O’Connor can easily afford to do this.
O’Connor has gone on the offensive to justify his move. He has described patent trolls as the “parasites” and “evil geniuses” of the tech industry. He has proclaimed that he is determined to “slaughter” the troll, the “scum of the earth”. He has claimed that trolls should be held accountable for “crushing innovation”.
But although O’Connor is no doubt being sincere, there is another way to see the crusade he has decided to undertake. A combination of the use of RICO and the emotive language he uses has resulted in a lot of media attention for both him and, more significantly, for FindTheBest, whose company name just so happens to be its website address.
The story of O’Connor and FindTheBest’s fight against Lumen has resulted in huge amounts of publicity. It has been covered in the likes of Bloomberg BusinessWeek, The Washington Post, InfoWorld and Venture Beat, as well as various blogs and industry websites. The narrative they all have is of a young start-up sticking up for the rest of the tech community against a big bad patent troll, and refusing to settle, regardless of the cost. Perhaps, though, FindTheBest is playing a perfect game of media manipulation.
Let’s remember that NPEs such as Lumen want a licence fee, nothing more. It is not in their interests for any company to be put out of business by their activities. If at the end of this litigation O’Connor loses his counterclaim against Lumen and has to pay for the licence anyway he is still likely to come out way ahead. Whether intentionally or not, by using RICO as his hook O’Connor has very cleverly exploited current troll hysteria in the media to generate millions of dollars worth of free publicity for FindTheBest, and who knows how many extra clicks and sales.
We seem to have reached a stage in the febrile patent troll debate where clever operating companies are able to exploit trolls for their own gain. It is not often that a young start-up like FindTheBest gets the sort of free publicity that it has been receiving over the last few days. How much would a concerted marketing campaign generating the same sort of column inches cost? Almost certainly a lot more than the $1 million O’Connor has pledged to spend. Seen in that light, thinking of RICO was a masterstroke by FindTheBest (or its lawyer) as it provided journalists with a new angle to report the same old story.
O’Connor says that “business isn’t always about making money”. That’s very true: especially when you are getting the sort of publicity that money can’t buy.
IP litigation, Patents