A federal jury in Seattle recently ruled for Microsoft in a patent dispute with Google’s Motorola Mobility division, closing off a summer in which patents have been a hot topic. The continuing Apple-Samsung battle has attracted a lot of attention, and President Obama’s proposals for cracking down on patent trolls are being followed closely in the technology, legal and VC communities. It’s the issue of patent trolls that I want to focus on here. These are companies that exist solely for the purpose of buying patents and then suing others for infringing on “their” technology. A few months ago, Quantum had a resounding legal victory against a patent troll, and it’s a good example of how absurd these lawsuits can be.
Before I get into that, I want to be clear that I think patent protection is very important. Advances in all kinds of fields are made possible by innovators being able to protect their intellectual property and get a return on their investment. It’s one of the foundations of our knowledge economy, and at Quantum, we understand it well—really well. As a long-time technology leader, we’ve been issued more than 1,000 patents, including the foundational patent for the most efficient form of data deduplication. And where potential conflicts with other technology companies come up, we work to negotiate cross-licensing or patent protection agreements, with legal action being a last resort. We’ve been doing this for years, most recently concluding a patent protection agreement with Microsoft that included a one-time, multi-million dollar payment to us.
When it comes to patent trolls, however, it’s not about innovation or adding value because they don’t actually make anything. That was certainly the situation in Quantum’s legal win against Compression Technologies Solutions LLC in May. A couple years ago, CTS sued Quantum and six other storage companies for infringing a patent involving the parsing of information streams into groups or packets of information.
Four of the companies that were sued chose to settle, presumably because they didn’t want to incur the legal costs involved in fighting the suit, which is something patent trolls count on to make their business model work. However, three of us – Quantum , EMC and NetApp – each decided to take a stand against CTS.
So it was great when the judge granted our motion to dismiss the case before it went to trial, a big defeat for CTS. The judge agreed with us that CTS was trying to patent an abstract idea, which cannot be patented. In fact, as we pointed out in our legal brief and the judge mentioned in his opinion, the CTS claim would have covered simple activities performed in someone’s mind, like analyzing something you’re reading, and therefore didn’t meet the threshold requirement for patentability.
I’m not going to go into all the details of the claim, but CTS essentially argued that its patent covered any process which involves receiving a stream of information composed of packets and boundaries between the packets, classifying the packets based on intrinsic characteristics or on a comparison of packets, and generating output packets based on the classifications and boundaries.
So let’s compare that to reading. When you read a sentence, you receive information on the page as a stream and that stream includes packets (letters and words) with boundaries (spaces between the letters and words). You can then mentally classify those packets (letters as consonants or vowels and words as nouns, verbs, etc.) according to their intrinsic characteristics (shapes of the letters or the set of letters in the words). Finally, you can mentally generate output packets (organizing letters into words or words into sentences) based on how you classified the input and you can indicate the boundaries of these output packets (where each word or sentence begins and ends).
In addition to reading, we pointed out to the judge other simple activities that the CTS claim would have covered, including looking at five playing cards displayed in a row (think card values, suits and colors with card edges representing boundaries) and even interpreting Morse code (dots and dashes, with boundaries represented by silent pauses).
All these examples demonstrated the absurdity of the CTS lawsuit, and we were very pleased to see the judge cite several of them in his strong ruling against them. Despite this, CTS has appealed the ruling, so we’ll continue the fight and hopefully cause other patent trolls to think twice before coming after us with ridiculous claims.