You frequently hear hand-wringing about how the gentle art of writing letters is dead. Not so, my friends, not so; this is one of the finest missives it has ever been my privilege to read.
After graduating from the University of Pennsylvania Law School in 1985, I spent nineteen years in litigation practice, with a focus upon federal litigation involving large damages and complex issues. My first seven years were spent primarily on the defense side, where I developed an intense frustration with insurance carriers who would settle meritless claims for nuisance value when the better long-term view would have been to fight against vexatious litigation as a matter of principle. In plaintiffs' practice, likewise, I was always a strong advocate of standing upon principle and taking cases all the way to judgment, even when substantial offers of settlement were on the table. I am "uncompromising" in the most literal sense of the word. If Monster Cable proceeds with litigation against me I will pursue the same merits-driven approach; I do not compromise with bullies and I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds. As for signing a licensing agreement for intellectual property which I have not infringed: that will not happen, under any circumstances, whether it makes economic sense or not.I say this because my observation has been that Monster Cable typically operates in a hit-and-run fashion. Your client threatens litigation, expecting the victim to panic and plead for mercy; and what follows is a quickie negotiation session that ends with payment and a licensing agreement. Your client then uses this collection of licensing agreements to convince others under similar threat to accede to its demands. Let me be clear about this: there are only two ways for you to get anything out of me. You will either need to (1) convince me that I have infringed, or (2) obtain a final judgment to that effect from a court of competent jurisdiction. It may be that my inability to see the pragmatic value of settling frivolous claims is a deep character flaw, and I am sure a few of the insurance carriers for whom I have done work have seen it that way; but it is how I have done business for the last quarter-century and you are not going to change my mind. If you sue me, the case will go to judgment, and I will hold the court's attention upon the merits of your claims--or, to speak more precisely, the absence of merit from your claims--from start to finish. Not only am I unintimidated by litigation; I sometimes rather miss it.
I will also point out to you that if you do choose to undertake litigation, your "upside" is tremendously limited. If you somehow managed, despite the formidable obstacles in your way, to obtain a finding of infringement, and if you were successful at recovering a large licensing fee--say, ten cents per connector--as the measure of damages, your recovery to date would not reach four figures. On the downside, I will advance defenses which, if successful, will substantially undermine your future efforts to use these patents and marks to threaten others with these types of actions; as you are of course aware, it is easier today for your competitors to use collateral estoppel offensively than it ever has been before. Also, there is little doubt that making baseless claims of trade dress infringement and design patent infringement is an improper business tactic, which can give rise to unfair competition claims, and for a company of Monster's size, potential antitrust violations with treble damages and attorneys' fees.
I look forward to receiving the information requested and will review it promptly as soon as it is received.
That's just the highlight reel--the rest is just as good, so please read the whole thing.
I'm a pretty strong supporter of intellectual property rights, but it's fairly clear that there's something deeply, deeply wrong at the patent office. Too many garbage patents are being approved in all sorts of fields, and they're too often used as a weapon by large companies against smaller competitors who may not have the capital to bankroll a lawsuit.
Yes, yes, I know: it's our old friend Regulatory Capture carrying a gavel and a slide rule. But unfortunately we have to have patents in order to have inventions, and even more unfortunately, intellectual property is stunningly important to our country's future. Most unfortunately, almost no one cares enough for this to ever become an electoral issue.
A perfect illustration of the old joke: In a town with one lawyer, the lawyer dies broke. In a town with two lawyers, they both die rich.
Ah, that kind of libertarian, the kind who believe in government created monopoly. I hope, at least, that you think current copyright law's elimination of the public domain is a bad idea.
Sorry. Forgot to note that this is indeed a very good letter.
I'm of the opinion that we ought to treat the license to practice law like drivers' licenses. Frivolous lawsuits, claims, filings, etc., cost points on a license. A lawyer could earn a few points back by going to refresher courses (basically defensive driving for the legal profession) but should lose his license after too many offenses. I would hope that would reduce the number of obviously frivolous arguments, nuisance suits, etc. I know it will never happen, though, since lawyers (in the form of regulators and legislators) would have to support such a system, but a guy can still dream, can’t he?
this is, indeed, a very good letter.
X2
I'm of the opinion that we ought to treat the license to practice law like drivers' licenses. Frivolous lawsuits, claims, filings, etc., cost points on a license. A lawyer could earn a few points back by going to refresher courses (basically defensive driving for the legal profession) but should lose his license after too many offenses. I would hope that would reduce the number of obviously frivolous arguments, nuisance suits, etc. I know it will never happen, though, since lawyers (in the form of regulators and legislators) would have to support such a system, but a guy can still dream, can’t he?
Posted by T-web | April 16, 2008 3:51 PM
John Edwards had a similiar, good, idea..
As an IP attorney, I have a couple of thoughts:
Patent reform is before Congress; I believe it has passed at least the House. I'm told that Obama has something on his webpage about it but I'm too busy/lazy to look. It solves none of the major problems in patent practice but it does futz around the edges of them for no particular reason, so I see no reason to follow it closely. But it is on the radar of politicians.
The problem of baseless lawsuit threats will not go away if somehow the PTO issues only gold-plated-impossible-to-invalidate patents. You can assert a good patent against a non-infringer as easily as a bad one. Maybe the problem would go down, but maybe not.
I'm not sure that Regulatory Capture is a good explanation here. It's not like the problems leading to garbage patents (backlogs, high turnover, lack of judicial guidance on what is and isn't patentable) are the CFR brainchildren of evil robber barons intent on maintaining their supremacy. They're systemic problems which frankly most patent applicants and holders would love to eliminate.
MEH,
In principle, such a system exists through lawyer discipline. In practice, it's harder to separate out the "frivolous" stuff from the legitimate stuff, so you have to go very far over the line before anything happens to you.
Now back to my actual job; offline for the rest of the day.
That was great. Life so rarely grants the opportunity to legitimately open a business letter with the phrase, "Dear Monster Lawyers..."
At any rate, while the IP system definitely has its shortcomings, I don't see how it is to blame here. This case is no different than any other circumstance where someone tries to abuse the leniency or intimidating opacity of the legal system in order to extort money. The United States has and maintains a very generous system of remedy in civil law: Witness the consequences.
There are too many junk patents being issued, it's true. While the public at large may not care, but politicians listen to business. Patent Reform is going to be one of the main issues being debated in Congress this year (at least that's what Harry Reid has promised).
Regarding the letter, I don't know whether the accused infringer is right about the frivolous nature of Monster's claims. Even if they are wrong, the infringer still has significant bargaining power. Every time Monster makes an accusation, it opens itself up to a declaratory judgment action, where there is a greater than even chance that the patent will be found invalid or unenforceable (in other words, worthless). These DJs are now much easier to pursue in light of the new MedImmune standard. If that happens, all of Monster's prior licensees will balk and it will lose that revenue stream completely.
The letter writer reminds Monster's counsel, if they're worth anything, of what they already know and are already afraid of.
Again, I don't know the relative merits of the infringement claim. But this type of letter can just as easily be indicative of weakness as of strength. Perhaps, if the atty was as confident as he sounds, he would already have banded together with other competitors to bring a DJ action against Monster. But it's hard to know who's bluffing until they're in district court.
Germany has an interesting way of handling it, at least from the legal fee perspective, which is what makes fighting it out useless, and settling to avoid paying $1million in legal fees the norm. (I'm not sure where the guy who wrote this letter got $50k in fees from, thats extraordinarily low for a drawn out patent battle)
Germany has set fee based on the type of case involved and the lawyer cannot charge more than that.
This kind of price fixing is not ideal, and perhaps a little bit too extreme, but at least it errs on the side of screwing the lawyers rather than screwing society so the lawyers can get rich.
Monster is over-priced crap anyway. Get yourself some nice silver cables and your ears will thank you.
I used to be the kind of libertarian that supported IP as a pillar of our prosperity, but lately I've come over to the Stefan Kinsella/Kevin Carson line. It's pretty clearly an artifical restriction created by the state to enrich the well-connected. That they claim it is for the greater good doesn't make it so.
Btw, that letter may be classified as a witty, sarcastic, well written, by modern standards, rant, but it does not hold a candle to the language and sentence structure of the letters written by our ancestors.
The sad part is that Monster has probably done this to dozens of smaller cable shops and gotten away with it. Blue Jean Cable is a mom and pop shop (literally) that just happened to have a former patent litigation attorney as it's president. How many other cable companies are currently paying licensing fees for non-infringing designes because they didn't have a brilliant former attorney on staff?
sam: The $50k figure is probably the result of Kurt's decision to defend his company himself, not hire a firm to do so.
Megan, this doesn't have anything to do with patents in the way you think it does.
Having a background in IP and having read the full letter, most of the issues concern the trade dress and trademarks of Monster and Monster cables. The response even states early on (my emphasis) "that the connectors on certain Tartan brand products infringe Monster's **design patents** and trademarks". Nowhere are **UTILITY patents**, what you and most people think of as "patents", asserted or at issue in this case.
Feel free to look on wikipedia and the PTO Webpage to learn about the vast differences in scope, purpose, and subject matter between the two.
There isn't even much of a libertarian or classical liberal case against trademarks and trade dress, which comprise the, and the benefits of it are quite clear, so that's a non-issue.
This case has *nothing* to do with "garbage patents" -- and this is the first time I've heard of "garbage patents" or "junk patents" being applied to design, as opposed to utility, patents.
Instead, this has *everything* to do with an aggressive company basically abusing its rightfully granted patent and trademark rights to extort a settlement or a license out of another party. It's no different than any other "nuisance value" lawsuit on a flimsy basis to get a settlement, whether medmal or civil rights.
As for "garbage patents", (and realizing, of course, that the PTO cannot avoid either type 1 or type 2 errors perfectly) what is an acceptable error rate for each, in your mind? Please keep in mind that the PTO receives approximately 450,000 applications per year and currently has a backlog in the neighborhood of 2.5 years on average (and up to 10 years in some art groups).
"Intellectual property is stunningly important to our country's future," huh?
Are you only saying that because we outsourced everything else to Asia?
As for "garbage patents", (and realizing, of course, that the PTO cannot avoid either type 1 or type 2 errors perfectly) what is an acceptable error rate for each, in your mind? Please keep in mind that the PTO receives approximately 450,000 applications per year and currently has a backlog in the neighborhood of 2.5 years on average (and up to 10 years in some art groups).
This is a false argument IMO. The real problem is that the patenting rules are too loosely defined (including the allowance at all of software and process patents, which have been contributing greatly to the recent logjam). This has created the possibility to claim patents over ridiculous little things that have no relationship to innovation in need of an incentivizing protection. The consequence has been an IP landgrab within the past ten years, with the patent office finding itself trapped squarely under the wheels of the wagon train.
Small wonder that anymore one can just about patent anything. Suppose you were a patent examiner, and all day long you encountered nothing but "a means, method, device, and mechanism comprised of a substantially circular assembly having a suitable diameter and width bearing upon a central shaft; whereby the mass of a burdening object is distributed upon at least one and preferably two or more such assemblies; and said asssemblies by virtue of engaging in rotational motion in either preferable direction may allow the aforementioned object to be transported between at least two locations."
That kind of language can prattle on for many pages -- ten for a well written patent describing a simple invention, 25 for a well-written patent over a complex invention, and up to 50 for a poorly-written patent. And the lanugage may be even more obtuse if the lawyer is ornery enough. The patent office, facing 2.5-10 years of backlog as you have noted, is often caught flat-footed trying to decipher that kind of crap, and if it doesn't trigger any alarm bells in the keyword search stage, often the patent will be approved and the courts will be left to sort it out. Voila: A patent on The Wheel.
That is an awesome response.
Sam and CL:
...I would rather spend fifty thousand dollars on defense than give you a dollar of unmerited settlement funds.
I took this to mean he would consider the ratio of $50k attorneys fees to $1 recovery for Monster to be about right; not that $50k was all he would spend on defense costs.
But maybe I just read it wrong.
including the allowance at all of software and process patents
What's wrong with process and software patents, in principle?
My friend 35 USC sec. 101:
Process is right there. Software is considered "nonstatutory subject matter" but computers performing certain functions are certainly "machines" within that definition. What's wrong with, say, a signal processing device or a database searching device or a word processing device?
I grant that there are lots of junk patents out there which claim dubious things, and I also think the standards for enablement applied to software patents are far too weak. Plus, I think you should be allowed to claim an algorithm (which is usually the actual inventive step). But I see no reason why mechanical adding machines should be patentable but software that does the same thing on an electronic computer shouldn't be.
Megan, why do we need patents in order to have inventions? Nonsense! (Incidentally, I have patents to my name and worked for an IP company.)
Whatever lawyer wrote that letter is an idiot. I hope his client didn't actually pay him to write that crap because it's useless. I've been in litigation as long a he has, and I've gotten similar letters and demands threatening me and my clients that if we sue the other side will never, ever settle. We'll have to go to trial. It's a bluff. I'd never sue in the first place unless I thought I could win, and every other attorney thinks the same way.
But do you know what happens after we sue and a year or two passes? Right, the case settles.
Lawyers don't like trials because juries are unpredictable. The idiot who wrote that letter, bragging about his--oh my God--20 years of experience is bluffing.
By the way, judges love settlement--it clears their dockets. Parties who categorically refuse to settle before trial are not treated well by the judge during trial. The letter writer is an idiot who is not acting in his client's best interest--only stroking his own ego. He's a disgrace to the profession.
Posted by Rob Lyman | April 16, 2008 4:09 PM
RL,
personally, I'd like to see all the cases that an attorney has worked on, freely referencable on the Web/Intertubes..
The patent system is fundamentally wrong, even though it is necessary. The incentives are all there to err on the side of too many patents: there is no one with enough power and need to limit other patents.
In this area, we have yet to invent the right market.
I have long thought about this and have yet failed to come up with an alternative with the appropriate checks and balances.
personally, I'd like to see all the cases that an attorney has worked on, freely referencable on the Web/Intertubes..
In federal court you can search by attorney on PACER for 8 cents a page. Not quite what you're after, but it's a start.
Rob,
I'm pretty sure aMouse means "business process" patents. Don't you agree those are absurd and completely contrary to the Constitutional purpose for patents?
Skeptic, the guy who wrote the letter owns the company.
Why do we need patents at all? My understanding is that for a rather long period in the 1920s and 1930s the US issued no aviation patents (because of the dispute over the Wright brothers' attempt to patent the airplane), but this was a time of very rapid progress in aviation technology.
Is there any real evidence to show that the absence of patents retards technological progress?
Yeah, this was big news on slashdot. He might be bluffing, but it was a heart-warming read nonetheless.
And Loweeel is right, in this case they're claiming that his connectors look too much like Monster's, not that he has infringed one of their technical patents. Regarding that, I thought the best part was the opening, where he states:
oh. snap.
The whole IP and software patent issue is so complex, so important, and so unlikely to be resolved in a good way, that it makes me tired just thinking about it.
Is there any real evidence to show that the absence of patents retards technological progress?
That's a very difficult question to answer. The research I've heard about uses whether or not a patent in the field is valuable to the holder as a proxy for whether patents are stimulating innovation (you can't be motivated to innovate by the prospect of something valueless). As I understand it, there is strong evidence that life sciences patents are very valuable and create strong incentives to innovate, but no good evidence that other kinds of patents create much value for their holders, on average.
There's also the question of whether a patent system spurs innovation by encouraging disclosure as companies rely on patent instead of trade secrets, but I don't know how you'd even start to measure that.
Don't you agree those are absurd and completely contrary to the Constitutional purpose for patents?
Yes and no. "Method and system for delivering packages" consisting of placing them in a truck and driving them to the destination would be ludicrous. "Method and system for evaluating the probability of mortgage repayment," maybe not so much.
But don't blame the PTO for business method patents, blame the Supreme Court in State Street Bank.
Megan / The Atlantic
As has happened multiple times in the past the formatting of the quoted text returns to that of the first person speaker before the end of the quote (it happens in the 2nd paragraph here) when reading on RSS. This makes it pretty tough to realize who is speaking. Not so tough with this post, but it's maybe something to look into.
As per Kirk Parker, I was referring to business processes. Unique industrial and manufacturing processes are certainly within the scope of patentable innovation.
My objection to software patents comes from several angles. First, the software itself is protected by copyright; the author's unique creation can be defened against attempts to steal the code outright or to take it and implement it in substantially similar form.
Second, the software patent goes beyond patenting the invention and instead declares protection over a result that can simultaneously be achieved many ways (in computing machines, there are often numerous ways to approach any given application problem) and yet only one way (for a given instruction set architecture, some types of lower-level operations have only one correct procedure). Each way of approaching and solving the problem can be a unique invention with several similar steps, while superficially appearing identical. The patent blows right past the nuances of the innovation by stating that all similar results obtained as "X:BlackBox:Y" are the same thing. It's analogous to arguing that a 3G cell phone and a 1950s intercom station and two tin cans with a string are covered by the same patent because voice can be communicated between them.
Third, consequent of the second, the patents can be construed in ridiculously broad terms and used to bully competitors over aspects of a machine's operation that were never within the spirit of the original invention.
Fourth, the original purpose of the patent was to grant a temporary monopoly to incentivize invention by allowing the inventor time to attempt to recoup his outlay before competitors could move in. Unfortunately, in the modern software business, the development costs for developing a patentable software invention can be as little as five hours of an entry-level coder's time, while the twenty year protection can cover five product lifetimes, so the very justification of issuing a temporary monopoly is destroyed. It is a permanent monopoly for all practical purposes.
Mouse, I have many of the same objections you have to software patents (black boxes, patenting results, possible overbreadth), but I'm not opposed in principle to the idea of patenting useful and inventive software.
And all patents are written as broadly as possible; of course you want to patent things you haven't actually invented. That's not unique to software.
the software itself is protected by copyright
Yes, well, good luck getting a peek at your competitor's source code to check for violations without actually suing first.
Also, as someone who works with professional audio setups, I can say that monster cables are horrendously overpriced. They charge about $50 for what is essentially a copper wire, compared to about $10 for competing cables. Some friends of mine compared monster cables to wire coat hangers on high-end gear and there was NO difference in quality.
Mouse, I have many of the same objections you have to software patents (black boxes, patenting results, possible overbreadth), but I'm not opposed in principle to the idea of patenting useful and inventive software.
I'm not opposed in principle either, but I can't see a way of allowing them that doesn't create the same or equivalent problems to the current situation.
And all patents are written as broadly as possible; of course you want to patent things you haven't actually invented. That's not unique to software.
I realize it's not unique, having analyzed and written up more than a few so people like you and Kate could look at the most relevant parts of a portfolio with the fluff culled out (previous life, interesting story.) However, in the case of software, it makes wild overreach far too easy because software often has many superficially similar functions, and if it goes to civil court, a jury is often going to be very poorly qualified to comprehend the particulars.
Yes, well, good luck getting a peek at your competitor's source code to check for violations without actually suing first.
Yes and no. Outright ripoffs usually occur either wholesale or in specialized modules of an application, either of which provides a reasonable target to start shooting at. After that, good reverse engineering, leaked code snippits, leftover developer comments hanging around and never deleted, etc. can produce a lot of breadcrumbs. That, in turn, can yield enough circumstantial evidence to initiate the suit...and away it goes. No different than finding a software patent infringment, really, except that the broadness of a software patent makes it far easier to bully competitors and claim technically unique inventions as your own IP.
Some friends of mine compared monster cables to wire coat hangers on high-end gear and there was NO difference in quality.
Posted by thompsaj | April 17, 2008 8:46 PM
this is hyperbole, at best, serious BS, otherwise..
Skeptic - the documents we were handed by Monster was a series of line drawings (with no scale or dimensions that looked like NOTHING we sell), along with the actual Cease and Desist order.
I can assure you that Kurt will NEVER settle with Monster. If you actually took the time to read exactly what kind of hornet's nest Monster stirred up for themselves, you may not be saying what you're saying. Then again, you could be one of those litigators that fits the stereotype.
Calling someone an idiot WITHOUT knowing all of the facts is even more idiotic. You don't even have the cajones to put your name on the comment.
My grandfather always taught me that when you begin to insult people with expletives, or words like IDIOT - You obviously have nothing intelligent left to say. Seems you couldn't make it past your first sentence...
MEH,
It's surprisingly true. Consult any electrical engineer textbook on signal theory: audio frequency signal transmissions between very low impedance networks are dominated by simple L,R,C effects and effectively immune to more complex impedance matching, time domain, or shielding concerns.
A coat hanger meets these requirements handily.
Re: The "No Software Patents" comments:
(a) There is no substantive difference b/w hardware and software. If you don't understand or believe this, you don't understand hardware or software.
Here's a historical artifact to get your education started.
http://en.wikipedia.org/wiki/Microcode
And something else for your noggin:
http://en.wikipedia.org/wiki/Hardware_description_language
(b) Even if you deny (a) for the hell of it, making "software" not patentable doesn't prevent patenting software. It just adds another formalistic requirement--where instead of claiming the software, you claim a machine running the software.
(c) If you are stubborn, and say "well, forbid claiming a machine that runs software" -- then you have eliminated patenting just about every mechanical device used today.
(d) "(c)" is the real goal of one half of the anti-software patent folks. The other half are Microsoft & friends, who are getting tired of shelling out hundreds of millions of dollars for infringing good and valid patents for good and useful inventions. (i.e., they don't want to pay for stealing others' inventions).
Re: The "No Software Patents" comments:
(a) There is no substantive difference b/w hardware and software. If you don't understand or believe this, you don't understand hardware or software.
Here's a historical artifact to get your education started.
http://en.wikipedia.org/wiki/Microcode
And something else for your noggin:
http://en.wikipedia.org/wiki/Hardware_description_language
(b) Even if you deny (a) for the hell of it, making "software" not patentable doesn't prevent patenting software. It just adds another formalistic requirement--where instead of claiming the software, you claim a machine running the software.
(c) If you are stubborn, and say "well, forbid claiming a machine that runs software" -- then you have eliminated patenting just about every mechanical device used today.
(d) "(c)" is the real goal of one half of the anti-software patent folks. The other half are Microsoft & friends, who are getting tired of shelling out hundreds of millions of dollars for infringing good and valid patents for good and useful inventions. (i.e., they don't want to pay for stealing others' inventions).