Tim Lee

The Poor, Beleaguered Patent Trolls

You may have read Tom Giovanetti’s piece on the plight of DataTreasury Corp. The op-ed is remarkable for its lack of specificity. For example, we’re informed that:

Worse, these banks also are asking Congress to make taxpayers pay the patent holder for their illegal actions. According to the Congressional Budget Office, the bailout would cost the federal government at least a billion dollars.

But Giovanetti never bothers to explain how this “bailout” would work, whose patents would be affected, or who would control the allocation of “taxpayer dollars” to patent holders. I’ve read quite a bit about the major provisions of the pending patent reform bill, and none of the coverage I’ve read mentioned any program that would allocate a billion dollars to pay off patent holders so that banks could infringe their patents. It’s possible that this provision has slipped below the radar. It’s also possible that Giovanetti is describing the debate in a somewhat misleading fashion. Any body know what he might be referring to?

In any event, here is a New York Times article that gives a more nuanced account of DataTreasury’s situation. We learn, for example, that “it is a company whose only business, other than one client, appears to be suing other companies.” It appears that they managed to get a broad patent on fundamental concepts in digital check-clearing, making it impossible for banks to participate in the new “Check 21″ check-clearing process Congress approved in 2003. In other words, the story may not be so much about banks “using” DataTreasury’s “technology” as it is about extortion on DataTreasury’s part.

March 31, 2008 | Comments |

Viewing 8 Comments

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    You can pretty much search and replace "our intellectual property" in news stories with "I CAN HAS CORPORATE WELFARE???" and have it make more sense.
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    Tim,

    You already know this, but the owner of DataTreasury IS the patent claimant. They are not "trolls" in that sense of the word. They didn't just go out and speculatively buy a patent in order to litigate--they are the claimants as well as the owners.

    Though, for the record, I'm not opposed to trolling, either.

    As to your other point about the taxpayer cost of the provision, you already know the answer to that as well from the NYT article.

    You may disagree with the patent itself, but your whining about the lack of specificity in my article is baseless.
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    Of course, now I see that the NYT article you cite is one from 2004!!!!!

    How misleading of you to not share with your readers more updated, more accurate links such as this one. http://www.washingtonpost.com/wp-dyn/content/ar...
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    Tom,

    I wasn't aware that being the original patent holder precluded you from the label "patent troll." They obtained an absurdly broad patent and they pursued lawsuits rather than developing products of their own. I think the shoe fits.

    Thanks for the Washington Post link. I didn't "already know" the information in that story—something I explicitly acknowledged in my post—and I appreciate you bringing it to my attention. I think you'd be a more effective advocate if you spent less time questioning peoples' motives and more time engaging peoples' actual arguments.
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    ***I think you'd be a more effective advocate if you spent less time questioning peoples' motives and more time engaging peoples' actual arguments.***

    Tim, please don't display such Texas sized sophistry:)

    http://www.techliberation.com/archives/040774.php
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    Tim, you're just too funny. Is a patent troll anyone who obtains a patent and then sues those who infringe it? I think you ought to stop writing your nonesense on IP and stick with stuff you know, like PERL scripts. Because the foolishness you write on IP discredits everything else you write to anyone who can think straight.

    By the way, I'm an EXTREMELY effective advocate. I have (directly or mostly indirectly) helped build more good policy in my career than you can possibly tear down in yours.
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    As Tim mentioned earlier: "They obtained an absurdly broad patent and they pursued lawsuits RATHER than developing products of their own. I think the shoe fits." I believe THIS is what qualifies someone to be a 'patent troll'. As I understand it, a patent is supposed to be 'new, inventive and useful'. There's nothing 'new and inventive' about scanning checks, and the company that prints the checks up here in Canada is moving towards exactly that kind of system, because is is an unbelievable waste of banks' time to move the physical checks around the country to their different processing centres.
    It seems to me it's a problem if the american banks are not also able to move into the digital age without paying royalties to this company... Or, if DataTreasury were to provide the check-clearing service, they would effectively be monopolizing this entire industry.
    So instead of doing something 'new, inventive and useful' (off the top of my head: invent some new type of paper to do the job, security features that could be used with the digital check-clearing process, etc.), they took old concepts (scanning of documents, electronic transmission of said documents), combined them, and got a patent on it.
    "Is a patent troll anyone who obtains a patent and then sues those who infringe it?"
    As a way of resting on their laurels, with a patent by their side that can be used to avoid having to do actual work, like improving a service, or even creating a service at all for that matter? And realizing that it just may be more profitable not to compete on the market, but to step back, watch the idea get developed, and then sue all the competitors on the market (who actually invested their time and effort on making the idea industrially applicable) for their 'infringement' on this patented 'idea' than competing on the market at all?
    Absolutely.
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    Perhaps Mr. Giovanetti could describe exactly what product it is that Data Treasury invented? Also, where do they manufacture this product? According to that NY Times article everybody is quoting, it seems that Data Treasury is just two guys in Texas who are suing banks. Maybe that is unfair, but that is how the article reads. It does seem odd. Electronic transfers are not exactly new, so I'm confused as to how this company could patent something like that.

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