Author Archive

  • New threat from patent trolls

    'Do not make payments': Dr Harvey R. Levenson

    This is a follow-up to my July 2016 White Paper entitled, “A Case Study of Patent Abuse: Printing Industry Faces New Nemesis Impacting Growth and Employment—Patent Trolls.”

    That White Paper received enormous industry press coverage, and to my understanding was used as part of Court proceedings resulting in the dismissal of two long and visible printing industry cases brought on by patent trolls, CTP Innovations (CTP) and High Quality Printing Innovations (HQPI). However, since then, two new cases emerged by patent trolls attempting to threaten and extort funds from printing industry companies and Original Equipment Manufacturers (OEMs) using standard technology common for doing day-to-day business in the printing and related industries.

    This White Paper reviews the outcome of the previous cases and presents a “heads-up” regarding two new plaintiffs: Shipping & Transit LLC and the Freeny Brothers. It also introduces two “Printing Industry Heroes Among Us,” inventor Joyce Vogt and Intellectual Property attorney Nate St. Clair II.

    The advice provided in this White Paper regarding the two new cases are: Do not respond to demands or threats from either of these two patent trolls. Do not make any payments. Continue doing “business as usual.” Band together as a team to pursue dismissal by the Courts.

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    INTRODUCTION

    In July 2016, I published a White Paper: A Case Study of Patent Abuse: Printing Industry Faces New Nemesis Impacting Growth and Employment—Patent Trolls (1)

    Preceding the White Paper were three articles published in the industry press that informed the printing industry and its OEMs about the growing extortionist threats of patent trolls, and what to do about them. (2) (3) (4).  The White Paper was published widely within the graphic communication industry and, I am told, has reached the courts and judges dealing with printing industry troll cases. The industry has responded to the advice provided, and the patent trolls are on the run!

    In review of last year’s White Paper, patent trolls are the epitome of greed, thoughtlessness, and unethical behavior, and are impacting the survival, growth, and development of printing and related companies. Even those users of our industry’s OEM technology that may not even be part of our industry are being affected.

    In last year’s White Paper, I reported that:

    “The printing industry in the United States has been in a state of decline over the past 20 years (from approximately 55,000 companies to under 30,000 today). Traditionally a low-profit industry, printing companies and their suppliers are trying to find ways of increasing products and services focusing on digital technologies and related applications in order to increase profits and to save jobs. Patent trolls are inhibiting such growth and are causing companies to consider closing, downsizing, and laying off employees because they cannot afford to absorb the huge fees being demanded by the trolls, while also maintaining or growing business. The trolls are equivalent to extortionists with no sense of business morals and ethics, or of the nation’s push to grow companies, produce jobs, and keep or bring back as much business as possible to the United States.”

    I advised that companies and individuals faced with the threat of patent troll litigation should not settle by paying license fees, “but should partner in pooling resources to pursue invalidation of the patents in question. Such challenges are often won, and between 35 percent and 85 percent of patents being invalid has been reported.”

    I concluded by advising that printing and related companies, or individuals, sued by patent trolls should not settle by paying the fees requested and should not enter into a single-company litigation that can cost more than a settlement. “Giving in to patent troll license fees or other demands will exacerbate the problem and encourage additional intimidating and threatening lawsuits in an attempt to extort funds from companies [and individuals] doing honest and legal business, working hard to survive and grow, and provide employment opportunities for skilled staff members. A solution is bringing together all of the companies named in a suit that has been filed by patent trolls, and to work as a unit in bringing the matter of alleged patent infringements before the US Patent & Trademark Office (USPTO) for invalidity hearings.”

    Well, a lot has happened over the past two years that has transformed the defendants to the aggressors, and the plaintiff trolls to be the losers. But, to keep this up, we must continue our industry position of not being intimidated and of not responding directly to requests or any communication from attorneys representing shell companies (the trolls), or individuals claiming to own patents teaching technologies that are allegedly being infringed.

    TWO KEY INDUSTRY CASES HAVE BEEN DISMISSED

    Two highly visible printing industry troll cases of the past few years have been dismissed by the courts, freeing up numerous innocent graphic arts companies, large and small, and many of our industry’s OEM’s, from the torment and anxieties caused by patent trolls. (5) (6)

    The two cases are:

    CPT Innovations v. [76 Defendants]

    High Quality Printing Innovations (HQPI) v. [37 defendants]

    Unfortunately, prior to the dismissal of these cases several companies gave into the troll demands and paid huge “license fees” out of fear of being forced out of business if they did not. However, most of the defendants in these two cases did not give in, and unified under the advice of a law firm and attorneys dedicated to exterminating such trolls. This resulted in the legal teams, and the shell companies they represented, the loss of huge amounts of time and money. This is an example that should be held up for all other patent trolls wanting to exploit the printing industry and its OEMs, and for the lawyers and companies supporting those trolls to take notice.

    PRINTING INDUSTRY HEROES AMONG US

    Our industry owes gratitude to two individuals:

    Joyce Vogt, Inventor and Nate St. Clair II, Esq., Partner, Jackson Walker

     Joyce Vogt, Inventor

    Joyce Vogt is one of the inventors named on the two CTP patents:

    Patent No. U.S. Patent No. 6,738,155

    System and Method of Providing Publishing and Printing Services via Communications Network

    This patent was filed on July 30, 1999.

     Patent No. U.S. Patent No. 6,611,349

    System and Method of Generating a Printing Plate File in Real Time Using a Communication Network

    This patent was also filed on July 30, 1999.

    Both patents were assigned to the Banta Corporation, where Joyce Vogt was employed as an engineer. The patents then became the intellectual property of RR Donnelley & Sons who acquired Banta. The law firm Baker Donelson set up a recorded parent company, Media Innovations, LLC, and then a shell company, CTP Innovations, listed as the plaintiff. The parent and shell companies are the trolls.

    The Baker Donelson attorneys wanted Joyce to commit to supporting its infringement lawsuits as a plaintiff against the 76 defendants. If Joyce accepted, the attorneys would have the legal right to claim that they represented her, as one of the inventors named on the patents, and claim that Joyce supported their infringement claims. Not knowing the CTP history, Joyce wisely further explored the matter and came upon my first White Paper, contacted me and, hence, became aware of the background. Upon learning that CTP was a troll supported by the law firm Baker Donelson, Joyce became upset at the immorality of her patents being used to extort funds from innocent users of the technology that she taught through her patent. She decided to discontinue any relationship or communication with Baker Donelson, and to come out against the law firm and the trolls that it represented.

    Joyce Vogt is a hero of the printing industry and should be applauded as such.

    The HQPI patent was also originally issued to Moore Business Forms and, hence, also became the intellectual property of RR Donnelley & Sons:

    Patent No. US 6012070 A

    Digital Design Station Procedure

    This patent was filed on November 15, 1996.

    Interestingly, Baker Donelson was also the law firm representing the plaintiff troll. In this case the recorded parent company was Modern Universal Printing, LLC, and the shell company, listed as the plaintiff, was HQPI.

    As noted in my first White Paper, “Patent trolls are often disguised as “shell companies.” Shell companies have registered names but no employees and no physical address ascribed to them. They are intentionally “invisible” with only a law firm as a point of contact; typically the law firm that registered the ‘shell’ name for the patent troll.”

    Nate St. Clair II, Esq., Partner, Jackson Walker

    Nate St. Clair is an Intellectual Property litigator, counselor, and Partner for the law firm Jackson Walker in Dallas, Texas. He counsels and represents clients in a wide range of Intellectual Property matters, with an emphasis on patent litigation, and patent portfolio licensing and management. Nate has counseled clients in numerous technology areas including digital imaging and commercial printing.

    Nate has embraced the plight of printing industry companies, including OEMs, in the fight against patent trolls with defenses to discredit and eliminate them. Nate is one of the key litigators instrumental in the resulting dismissals of the CTP and HQPI cases, along with partners, John Jackson and Matt Acosta. One might consider Nate St. Clair and the Jackson Walker team to be an “Elliot Ness” of the printing industry, fighting to protect the industry from the threats and extortion of patent trolls. In September 2015, Nate provided a legal perspective during a Graph Expo seminar in Chicago to help bring the growing troll matter to light.

    As a result of his firm’s efforts, all of the CTP and HQPI suits have been dismissed, and Baker Donelson has withdrawn its representation of the plaintiffs.

    Nate St. Clair is a hero of the printing industry and should be applauded as such.

    THE BATTLE CONTINUES—TWO NEW CASES EMERGE

     Shipping & Transit LLC v. [Multiple printers]

    Freeny Brothers v. [Multiple printer OEMs]

    SHIPPING & TRANSIT LLC v. [MULTIPLE PRINTERS]

     Printing industry companies and OEMs have recently received a robot-generated letter indicating that a “patent holder” believes that they are in violation of three patents, and is asking for $30,000 to settle the matter within 30 days. The patents in question cover basic functions such as notifying customers that they have an incoming shipment via email. (7) (8)

    The patent troll owner is called “Shipping & Transit LLC” and considered to be a highly aggressive troll with over 100 defendants. (9) The patents that are alleged to be infringed are:

    6,317,060 – Base Station System and Method for Monitoring Travel of Mobile Vehicles and Communicating Notification Messages

    The patent was filed on March 1, 2000, and assigned to Global Research Systems, Inc.

    6,415,207 – System and Method for Automatically Providing Vehicle Status Information 

    The patent was also filed on March 1, 2000, and assigned to Global Research Systems, Inc.

    6,904,359 – Notification Systems and Methods With User-Definable Notifications Based Upon Occurrence of Events 

    The patent was filed on May 12, 2003, and assigned to Arrivalstar, Inc.

    One defendant, a president of a digital imaging company, sent me an email about Shipping & Transit LLC accusing him of infringing its patents and threatening a lawsuit if he didn’t settle for the $30,000, but was given the 30 days to do so. He wrote, “How nice of them!”

    FREENY BROTHERS V. MULTIPLE PRINTER MANUFACTURERS

     Patent infringement allegations by the Freeny Brothers were filed against six OEMs, and more are likely to follow. Jackson Walker has had substantial experience against the Freeny Brothers, and will again be leading the charge to protect the interests of the printing ‘industry and its OEMs.

     The accused products are manufactured by Ricoh and provide a variety of document processing and reproduction functions, such as document copying, printing, scanning, and/or faxing functions, all basic technology needed for our industry companies to do business and to remain in business. More specifically, the allegations are against companies that manufacture and sell wireless adapter units designed to be combined with the accused Ricoh products to enable communication wirelessly with different types of wireless devices. These are devices such as smartphones, tablets, and laptop computers; devices that nearly all companies require for doing business.

    There are four patents involved and four Counts as follows.

    Count I – Infringement of U.S. Patent No. 6,490,443

    Communication and Proximity Authorization Systems

    Issued December 3, 2002 by the United States Patent and Trademark

    Count II – Infringement of U.S. Patent No. 7,110,744

    Communication and Proximity Authorization Systems

    Issued September 19, 2006 by the United States Patent and Trademark Office

    Count III – Infringement of U.S. Patent No. 6,806,977

    Multiple Integrated Machine System

    Issued October 19, 2004 by the United States Patent and Trademark Office

    Count IV – Infringement of U.S. Patent No. 7,301,664

    Multiple Integrated Machine System

    Issued November 27, 2007 by the United States Patent and Trademark Office

    The named inventor for each patent is Charles C. Freeny, Jr., who is now deceased. The plaintiffs are Freeny’s sons who inherited the patents upon Freeny passing away. Further, the Freeny Brothers, Charles C. Freeny III, Bryan E. Freeny, and James P. Freeny are attorneys and, hence, the plaintiffs. Of significance, and what defines the Freeny Brother as patent trolls, is that their only interests in the patents appear to be extorting funds from users of technology developed by Ricoh. The Freeny Brothers are not part of the printing industry, they are not OEMs, they have not developed the technology taught by the four patents in question, nor do they seem to have any concern for the hardship they are imposing on company survival and jobs of the defendants.

     

    ADVICE TO PRINTING COMPANIES AND INDUSTRY OEMS

     Do not respond to demands or threats from either of these two patent trolls: Shipping & Transit LLC or the Freeny Brothers. Do not make any payments. Continue doing “business as usual.” Banding together as a team could likely lead to the same Court outcome of the CTP and HQPI cases: DISMISSAL at a great loss of time and money to the patent trolls and their legal representatives.

    CONCLUSION

     Threatening letters from patent trolls are intimidating because they are usually received from law firms that represent the trolls. These law firms also benefit greatly from any payments made. Further, understand that the trolls typically have nothing to do with developing technology to improve our industry or to serve our industry’s customers. On the contrary, they work to destroy our industry by extorting funds from innocent companies that are better used to grow companies, to invest in research and development, and to enhance employment opportunities for practitioners and other staff. Heed the advice provided in this White paper!

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    Dr Harvey R. Levenson

    Dr. Harvey R. Levenson is Professor Emeritus and former Department Head of Graphic Communication at Cal Poly State University in San Luis Obispo, California. His research and teaching specialties are communication, intellectual property, media, printing, and technology. He is often called upon as an Expert Witness in these areas.

    This research was not sanctioned or funded by any university, private or public company. It is meant to educate and inform on a matter that is negatively impacting the growth, development, and survival of companies in the printing and related industries, Original Equipment Manufacturers (OEMs), and equipment distributors.

     

  • Good guys win one – patent trolls lose case

    Dr. Harvey R. Levenson

    Print service providers and OEMs, please pay careful attention to this follow-up article. It demonstrates the wisdom of not giving in to greed and extortion meant to decimate your business and industry.

    In an uncertain economy with unpredictable upward and downward fluctuations, businesses should protect themselves through an understanding of forces aimed at disruption, causing companies to decline and employees to lose jobs. The printing industry is particularly vulnerable because such forces come not only from within the industry, but from competing media industries as well as from companies demonstrating unethical business practices and having no interests other than greed.

    This is an update to my previous article on the growing issue of patent trolls attempting to extort funds from print service providers and OEMs by claiming patent infringement, mostly on bad patents that can easily be invalidated through Prior Art. The original article appeared on WhatTheyThink.com and was then picked up by other industry publications.

    An amazing thing happened, and I’d like to think that WhatTheyThink and my article played some role in instigating this. I sense that it was the “power of the press” and investigative reporting that brought to light one of the most devious, unethical, and immoral behaviors aimed at destroying the printing industry and its honorable companies and hardworking employees. This applies not only to small, medium, and large print service providers, but to OEMs as well that invest research and development dollars, and build applications to help improve and build the printing industry.

    In this anecdote, the “good guys” won, and the patent trolls lost.

     The HQPI Cases Was Dismissed

    In one of the latest and most visible cases, High Quality Printing Innovations (HQPI) a shell company, under the troll company of Modern Universal Printing, LLC v. numerous print service providers and OEMs, all of the lawsuits were dismissed. See the following Court Reporter’s Transcript of the Proceedings (March 31, 2016) (see original article for full court transcript) before a United States Judicial Panel on Multidistrict Litigation. This was a six-judge panel.

    Understand that under a condition of “without prejudice,” the Complaint may be resubmitted by the plaintiff within one year. However, this happening is highly unlikely because of the costs that would be imposed on the plaintiff, and the likelihood of failure due to Prior Art that would invalidate the patent in question. There is no doubt that there would be an aggressive push to invalidate the patent should this particular matter reemerge.

    A Little More Background

    The plaintiff, HQPI, through its counsel, Baker Donelson Bearman Caldwell & Berkowitz, P.C., pushed for settlement in all of the individual cases against the print service providers and OEMs. They initially were asking a six-figure amount for the right to use the technology allegedly being taught by Patent No. US 6012070 A – “DIGITAL DESIGN STATION PROCEDURE.” Recall that this was a patent originally assigned to Moore Business Forms, and then became an RR Donnelley patent when RR Donnelly purchased Moore.

    When the six-figure license fee was rejected by nearly all of the defendants, the licensing asking-fee dropped to about nearly one-half. With virtually no takers at this amount, the plaintiff, out of desperation to “extort” at least some funds from the defendants, dropped their asking price to a few thousand dollars. The legal counsel representing the defendants rejected even this on behalf of their clients.

    The plaintiff soon came to realize that they would be receiving nothing from nearly all of the defendants, yet speculation is that they were probably being billed huge legal fees by their counsel for services provided. Hence, all of the cases against existing defendants were dismissed, as further fighting this, with the likely of losing an invalidity contention counter suit, would create further huge expenses. I note “existing defendants” because, unfortunately, a few of the defendants did enter into settlement agreements, likely for lesser amounts than the original asking fee for the licenses. I understand that there were only a few.

    My article, that went “viral” in the printing industry after being published by WhatTheyThink.com, also reached the Courts and was taken into consideration, possibly motivating the judges to let the blanket dismissal sit without allowing the plaintiff to argue its case further. The judges probably now better understand the debilitating and counter-productive behaviors of patent trolls more than ever before. In fact, the Court transcript notes that the plaintiff’s counsel didn’t even show-up at the hearing. This in-and-of-itself is very telling.

    Communications with RR Donnelley

    I have been in communication with RR Donnelley. However, I must honor their request for confidentially in not revealing the names of anyone that I have been in contact with.

    RR Donnelley’s position noted in my article is what I had consent to quote and publish. After my first article was published, first by WhatTheyThink and then by other popular industry publications, I sent it to my RR Donnelley contact, including all of the responses that were received. I pointed out to RR Donnelley that regardless of their published position, the industry was still skeptical of RR Donnelley’s role in supporting and benefiting from the trolls. I asked if RR Donnelley would like to further respond in a follow-up article, further assuring the industry that the company had no financial interest in licensing fees paid to the trolls. I received a polite response as follows:

    Thank you for your message. Hope all is well with you. At this time, I am not authorized to make any further statements on behalf of RR Donnelley.  However, I appreciate your inquiry.

    This too is telling, leaving the sense of skepticism within the industry open regarding RR Donnelley’s role.

    I would like to take the optimistic position and hypothesize that my article inspired RR Donnelley to consider the position that the article laid out and the immense pressure that the lawsuits placed on honorable industry companies, and that RR Donnelley supported the dismissal of the HQPI litigations.

    So What of the CTP Cases?

    I’ve been informed that hearings are pending on the CTP cases. I am of the impression that the CTP matter could conclude in a similar fashion to the HQPI cases. I will report on this once further information becomes available.

    Coming Next

    The next article will include the many responses received from the printing industry including some from companies that have been the subject to patent troll threats and lawsuits. It will also include what to do should a print service provider or OEM receive a letter from a patent troll claiming infringement and demanding license fees.

     – Dr. Harvey R. Levenson is Professor Emeritus and former Department Head of Graphic Communication at Cal Poly State University in San Luis Obispo, California. He is a frequent Expert Witness specializing in communication, intellectual property, media, printing, and technology.

    Author’s note: This article was not sanctioned or funded by any university, private or public company. It is meant to educate and inform on a matter that is negatively impacting the growth, development, and survival of companies in the printing and related industries, Original Equipment Manufacturers (OEMs), and equipment distributors.

     

     

     

  • The Printing Industry and Patent Trolls


    'Patent trolls, the epitome of greed': Dr Harvey R. Levenson

    An Update on the CTP and HQPI Patent Infringement Litigation Cases and their Negative Impact on Industry’s Companies.

    At a time when the printing industry is searching for new growth and development opportunities, it now faces new obstacles: patent trolls, the epitome of greed, thoughtlessness, and unethical behavior impacting the survival, growth, and development of printing and related companies.

    What is a Patent Troll?

    A patent troll is a company or person that purchases a patent and then sues another company claiming that the use of one of its products infringes on the purchased patent.

    Trolls attempt to enforce patent rights against alleged infringers far beyond the patent’s actual value or contribution to the technology or the industry that the patent represents. Patent trolls typically do not manufacture products or provide services based upon the patents in question. They use patents as “legal weapons,” instead of actually creating any new products or coming up with new ideas to improve business, commerce, or society. Trolls are in the business of threatening and creating litigation.

    Further, trolls often buy-up patents cheaply from companies that are looking to monetize patents that have little or no value, or should have not been granted to begin with, because of Prior Art demonstrating that what the patents teach was obvious prior to the time of application for the patent. These patents are subject to an invalidity contention and termination by the United States Patent & Trademark Office (USPTO) when alleged infringers contest the trolls. They are typically very broad, covering generic or well-known types of applications that should never have been patented to begin with.

    In possession of these broad and vague patents, the troll then sends out intimidating letters to those they argue infringe on their patents. It is a scare tactic that preys on innocent companies that are merely providing a service needed by society. These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars. Many who receive infringement letters will choose to pay the licensing-fee out of fear, and because patent litigation is extremely expensive and can involve lengthy and time-consuming court deliberations.

    So what is the troll issue in the printing industry in the United States?

    Printing Industries of America has been attempting to bring the patent troll issue to the forefront so the printing industry understands what it is facing today and will likely face on an increasing basis in the future unless Congress does something to change the situation.

    On its website, Printing Industries of America has established a Patent Listserv for printers seeking advice. In an article entitled, “Patents Infringements Actions in the Printing Industry,” Printing Industries of America wrote, “Printing Industries of America will provide industry firms, especially our members, with current information on infringement accusations. If you have been similarly accused, or know of other actions not listed here, please alert Jim Workman at jworkman@printing.org. You can also participate in our Patent Listserv and seek advice and share information with other printers that have been targeted by trolls.”

    In a December 15, 2015 article, Adam Dewitz at WhatTheyThink.com wrote:

    “A company called High Quality Printing Inventions, LLC, is using a patent initially granted to Moore (now R.R. Donnelley) to file patent infringement lawsuits in the U.S. District Courts in a litigation campaign against several printing companies using common web-to-print functionality.”

    I recently contacted several present defendants and those who were already sued and opted to settle out of fear and intimidation to find out the tactics being used in the litigation campaign in the current batch of patent trolling cases. I focused on two highly visible collections of cases involving patents purchased by two shell companies: CTP Innovations (CTP) and High Quality Printing Innovations (HQPI). A shell company is a business entity having no employees or contact information, only a referral to an attorney, but owned by an unnamed parent company.

    Due to the sensitive nature of the information requested, and agreements that have been reached in some cases, anonymity was promised. Some companies declined to participate out of fear of reprisal unless anonymity was assured. Others were fearful of providing specific responses to some of the questions due to confidentiality promises made when “deals” were given by the trolls.

     How the CTP and HQPI Patent Trolls Have Impacted Specific Companies in the Printing Industry—What Impacted Companies Have To Say

    Here are some examples of the havoc that these patent trolls have caused in the printing industry. Such disruption is not only to printing companies of all sizes, but to Original Equipment Manufacturers (OEMs) and equipment distributors as well.

    One company officer said that when informing the OEM about being sued, he was told that the patents in question:

    “…could not stand since it’s targeting [a] very broad application of what software and web technologies can do for [the] print and publication field.” He said, “…because they now have to defend themselves, they are dedicating resources that are better served for day-to-day operations and for the advancement of the business. As such, this is a waste of resources compromising the ongoing success of the company…We are halting all investments that we believe may be included in future litigation until we come up with a plan to protect our interest or are satisfied with [the] resolution of this case and its future impact.”

    He went onto say, “Unfortunately, patents are being misused and the task of correcting the system that enabled the deterioration of innovation and consumer choices is not an easy one but we must start somewhere.”

    “We believe this patent lawsuit to be frivolous, and the abuse of our legal system by patent trolls hurts consumers. This along with other frivolous suits stifle competition, hurt consumers, and bully innovative companies.”

    When asked if he had any idea who was behind the shell company and benefiting financially, he identified RR Donnelley as the “affiliate.” However, RR Donnelley claims that the patents in question were previously sold, and the company has no ownership interest in the patents and receives no licensing payments. RR Donnelley’s more detailed response follows.

    The officer of another company wrote that the alleged patent infringement lawsuit served on them said that they are in violation of numerous patents, and it went on to name them one by one. The company principal went on to say, “Essentially, we were being sued for a practice most every printer in the industry utilizes.”

    His company was asked to pay a license fee in excess of a six-figure amount.

    In response to a question on the impact on the company, the company principal noted,

    “First, it’s been financially draining and secondly a distraction to running a business on a daily basis. It has affected the morale of the company in an adverse way… Patent trolls are greed mongers who use the tactics of fear and ambiguity of certain patents to intimidate small companies to settle upfront and [the trolls] use these proceeds to continue that pattern of behavior.”

    Yet, a letter from another company noted, “If you are a printer then you are highly likely to be sued for $100k to $300k soon,” referring specifically to RR Donnelley as the accuser working through a patent troll, CTP Innovations. The letter continued, “They are suing the printers first… RR Donnelley is now going after the printers’ vendors… I have never felt such injustice in my life in going through the process that RR Donnelley has put me through.”  Again, the perception was that RR Donnelley, as the previous owner of the patents, is responsible for the infringement lawsuits being imposed on printing companies. As will be noted later, RR Donnelley explains this misperception.

    I received a phone call from a young lady running a small design studio with her husband. She was nearly in tears with fright after receiving an intimidating letter threating a lawsuit if a licensing fee for a small piece of equipment and its application, commonly used by graphic artists, is not paid.

    The scenario of patent troll intimidation is being repeated across the industry. When exploring attorney assistance in these matters, the companies threatened or sued are learning that attorney fees, often starting at approximately $250,000, can be even greater than the license fees being requested. Hence, they are “between a rock and a hard place” and some have paid the trolls out of intimidation and fear.

    In exploring whom these troll “shell” companies are, most of the accused allegedly infringing companies did not know because there are no individuals named or contact information given such as street addresses, phone numbers, etc., only contact information for the attorneys representing the trolls. However, the officers of two of the companies sued suspected that they were set-up by the RR Donnelley Company, as a means for collecting license fees from printers, equipment manufacturers and distributors, and from related companies.

    My impression was that RR Donnelley had sold these patents, certainly a right that they had, and had relinquished any financial interests in them. However, in digging deeper into Corporate Disclosure Statements as part of public documents filed with various United States District Courts, the RR Donnelley name did appear as a company “…having financial interests in the outcome of [these cases.]”

    The following is one example.

    This was a surprising finding, considering that RR Donnelley, as one of the largest commercial printing companies in the world, was perceived by the companies being threatened or sued to be operating as a troll and exploiting resources from companies within its own industry through fear and intimidation tactics.

    Recognizing that RR Donnelley is a long-standing highly respected company within the printing industry, and as an advocate for the industry, I contacted the company for an explanation. This provided RR Donnelley the opportunity to explain any misunderstandings, if there were any, regarding the company’s ownership of the patents and financial interests in them.

    RR Donnelley’s Response

    In a response to a letter requesting clarification of the patents sold to CTV and HQPI, RR Donnelley provided the following authorized statement.

    “RR Donnelley would like to provide feedback…to clarify some apparent misunderstandings regarding the three HQPI and CTP patents that you reference in your letter (the ‘Patents’).”

    1.  RR Donnelley (“RRD”) no longer has any ownership interest in the Patents.

    2.  RRD has no ownership interest in the plaintiffs that are asserting the Patents.

    3.  As RRD no longer owns the Patents, and has no ownership interest in the plaintiffs, RRD has no ability to control the assertion of the Patents.

    4.  RRD has no financial interest in the HQPI patent. We are owed compensation from the purchaser of the CTP patents. We believe this is why RRD has been identified in certain pleadings as having a financial interest.

    5.  RRD retained a license to use all of these Patents. All work that RRD performs for its customers is licensed under these Patents. Similarly, any work that a vendor performs for RRD is likewise licensed under these Patents.

    The companies impacted by the lawsuits imposed by the patent trolls alleging infringement feel torment, fear, and intimidation. Many have never been faced with lawsuits and are inexperienced in knowing how to deal with the matter. Most cannot afford to hire legal counsel and some are small companies attempting to provide a reasonable living for their employees. The sense of many defendants is that if there is valid infringement, it is the original equipment manufacturers (OEMs) that should be held liable, not those to whom the equipment was sold. At best, the three patents are marginal because Prior Art likely exists that was not presented to the US Patent & Trademark Office (USPTO) examiners at the time of patent application.

    With regard to the RR Donnelley allegations, RR Donnelley’s response explains a lot, and particularly why the RR Donnelley name is included under “financial interests” in the Court certificates. It is because the purchasers of the patents still owe RR Donnelley money for the purchases, not for any license fee received. I was always under the impression that RR Donnelley sold all of the patents outright. This confirms my impression. I was assured that RR Donnelley is receiving no money from license fees.

    Recommendation

    Printing and related companies sued by patent trolls should not settle by paying the fees requested and should not enter into a single-company litigation that can cost even more than a settlement. Giving in to patent troll license fees or other demands will exacerbate the problem and encourage additional intimidating and threatening lawsuits in an attempt to extort funds from companies doing honest and legal business, and working hard to survive and grow, and provide employment opportunities for skilled staff members.

    I am proposing that a solution is bringing together all of the companies for which a lawsuit has been filed by patent trolls, and to work as a unit in bringing the matter of alleged patent infringements before the US Patent & Trademark Office (USPTO). It is likely, for example, that the patents in question referenced in this article can be invalidated via Prior Art.

    – Dr. Harvey R. Levenson is Professor Emeritus and former Department Head of Graphic Communication at Cal Poly State University in San Luis Obispo, California. He is a frequent Expert Witness specializing in communication, intellectual property, media, printing, and technology.

    Author’s note: This article was not sanctioned or funded by any university, private or public company. It is meant to educate and inform on a matter that is negatively impacting the growth, development, and survival of companies in the printing and related industries, Original Equipment Manufacturers (OEMs), and equipment distributors.

    This article first appeared in What They Think.