Software Patent of the Week: NTP is Baaaack

by on November 10, 2006 · 4 comments

This week I’m going to consider NTP’s patents on wireless email. Fresh from its settlement with Research in Motion (makers of the BlackBerry), NTP has sued Palm on Monday over the same patents:

Apparently, the $612.5 million that patent holding firm NTP got out of RIM for its questionable patents wasn’t enough. The company (really, a group of lawyers) has filed a lawsuit against Palm as well. Apparently, the firm is claiming patent violations on the same five patents it used against RIM, as well as two additional ones. However, considering that the US Patent Office has given final rejections to two of the patents in the RIM case and indicated it’s likely to reject the rest, it would seem like NTP doesn’t have much of a leg to stand on. It’s unclear what the other two patents are, though they could be from some new deals NTP has cooked up to get its hands on more patents for the sole purpose of squeezing money out of companies. As for the rejected patents, NTP has indicated that it will appeal the patent rejections–so perhaps they hope to cause enough trouble for Palm while they drag out the process that it’s forced to settle as well.

This is a horrible misuse of the patent system, and is simply taking hundreds of millions of dollars away from what should be a developing market and putting it in the hands of a bunch of greedy lawyers who have done nothing to help move the technology forward in the market place. If you don’t recall, NTP was a holding company that owned some disputed exceptionally broad patents on a concept that was basically “wireless email.” An earlier company had tried to do something with the patents, but failed in the marketplace. RIM came along and successfully innovated in the marketplace (while being a bit of a patent menace itself), and suddenly NTP claimed that no one could do wireless email without paying them for the privilege. The patents were incredibly broad and perfectly obvious and never should have been granted (something the USPTO later would admit in rejecting them). Yet, due to the increasing uncertainty over the lawsuit, and the pressure that put on RIM’s stock, the company was forced to settle, taking money away from R&D efforts and sales and handing it over to the lawyers at NTP so they could turn around and sue more companies that were actually successfully innovating and building products and services people wanted.

Mike’s analysis is exactly right. Here is the original patent. It’s important to emphasize here that there was never any allegation that RIM or Palm ever copied anything from NTP or its anyone else associated with these patents. By all accounts, RIM and Palm developed their products completely independently. But that’s irrelevant in patent law: once one company “invents” something–even something as broad as “Hey, maybe we could transmit emails wirelessly!”–and gets a patent for it, no one else is allowed to build that invention without permission from the patent holder.

That’s clearly absurd in a case like this, where the scope of the patent is so broad as to encompass an entire industry. Yet despite the evident absurdity of these patents, and despite the fact that the patent office is now scrambling to correct its mistakes, NTP is still able to extort hundreds of millions of dollars from other companies. And, as Mike points out, it’s truly perverse that our patent system is transferring hundreds of millions of dollars from innovative companies to a pack of greedy lawyers who have never developed a useful product in their lives.

  • http://weblog.ipcentral.info/ Noel Le

    Tim, this case is less an issue with the patent system as it is about some judge (and every patent lawyer I talk to says “THATS JUDGE!) who decided to curtail incoming evidence (from the USPTO) that would change the very basis of the case to begin with.

  • http://weblog.ipcentral.info/ Noel Le

    Tim, this case is less an issue with the patent system as it is about some judge (and every patent lawyer I talk to says “THATS JUDGE!) who decided to curtail incoming evidence (from the USPTO) that would change the very basis of the case to begin with.

  • Joe Smith

    I’ll disagree with Noel Le. The main problem was the original grant of the patent. The Judge failed to correct the problem but was not the root cause. The Judge did err in excluding evidence he did not understand. The CAFC test for injunctions (pre eBay and MercExchange) contributed to the ultimate travesty.

  • Joe Smith

    I’ll disagree with Noel Le. The main problem was the original grant of the patent. The Judge failed to correct the problem but was not the root cause. The Judge did err in excluding evidence he did not understand. The CAFC test for injunctions (pre eBay and MercExchange) contributed to the ultimate travesty.

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