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So, Monster Cable is known for making some...interesting claims with regard to how special their cables are (not always so special) and employs lawyers to send fancy letters to unsuspecting companies that make special cables, too.

Generally, they claim that Company X has infringed upon one of their patents by making cables that might in some way look like Monster's but aren't the same, and hopes that the threat of litigation will compel a settlement, and a licensing agreement. This tends to work when the company on the receiving end is easily intimidated.

Not this time.

In this case, they chose to attack Blue Jeans Cable, a manufacturer of high-end (and American made) audio equipment. What they didn't know is that their CEO is an attorney who graduated from UPenn Law School and spent almost two decades in litigation. The response is hilarious enough to have made it to Slashdot. After systematically deconstructing Monster's claim as frivolous and making it quite clear how unenforceable it is, he lets them know they have messed with the wrong guy, he's mad as hell, and he's not going to take it anymore! First off, he starts by completely deconstructing Monster's claims as facially insufficient for well, anything, and notes that the information they've supplied him with is completely inadequate for him to figure out if he's actually infringed:

I will begin by addressing your trademark/trade dress claim.  You have referred to two trademark registrations, and have attached some printouts from the USPTO system but the depiction of the marks on the drawings provided is small and indistinct, making it difficult to determine exactly what the alleged resemblance is, and I need further information from you.

            First, I need legible, scale drawings of the marks, preferably with dimensions shown on the drawing.  To the extent that drawings are inadequate to show the nature of materials, finishes, print legends, colors and the like, I will also need examples of each of Monster Cable's actual uses of these marks in commerce; actual physical examples would be best, but photographic reproductions might do.  As you will understand, these considerations are essential to any claim arising out of trade dress, as you are alleging in essence that there is a resemblance sufficient to cause confusion over the identity or origin of the goods, and no mere line-drawing can suffice.

            Second, I will need copies of the trademark applications and any correspondence between the applicant and the USPTO in support of the applications.

Translatation: Prove it.

            Third, you have not identified the Monster Cable products in question, in actual use and distribution in commerce, whose trade dress you allege has been appropriated.   I have reviewed Monster Cable's online materials and have examined connectors on various Monster Cable assemblies in local retail outlets and am unable to determine which, if any, of these are thought by Monster to represent use of these particular marks.  I am also unable to determine from this review whether Monster Cable actually offers any product for sale to which the Tartan connectors are alleged to be particularly similar.  My own sense of it, in looking at the connectors, has been that there is no similarity between the Tartan connectors and any of the many Monster Cable connectors beyond the general  functional and conventional characteristics which all or nearly all solder-cup, mechanical-assembly, barrel-style RCA-type connectors share.  It may be that there is some line of products to which you have intended to refer but which I have not found in Monster Cable's marketing materials or displays; but if so, you will need to show me specifically what product it is, and you will need to call to my attention the specific aspects of the connector design which you contend constitute unique Monster Cable trade dress, what the associated secondary meaning of those aspects of the trade dress is, and in what manner and by what characteristics you allege that this trade dress has been appropriated.

            Fourth, if the dimensional characteristics of the connector as used in commerce vary from the dimensions of the scale drawing of your mark, I will need a proper scale drawing, with dimensions, of each version of the actual connector as used in commerce, as well as photographs of the connectors showing actual in-use finishes.   If there is more than one such connector design in actual use by Monster Cable as to which appropriation of trade dress is alleged, of course, I will require this information for each and every such design.

            On the basis of what I have seen, both in the USPTO documents you have sent and the actual appearance of Monster Cable connectors which I have observed in use in commerce, it does not appear to me that Monster Cable is in a position to advance a nonfrivolous claim for infringement of these marks.  There simply is not sufficient resemblance between the Tartan connectors and any mark or any example of the marks' actual use that I can find to support such a claim.  But if you have further information for me on that point, you are welcome to submit it.

Translation: You cannot be serious, but go ahead. I dare you.

            You have also supplied me with partial documentation on five design patents which you claim these connectors infringe.  I will begin by observing, first, that the five design patents are so very much unlike one another that it is very hard to imagine that any product could actually infringe more than one of them at a time; anything close enough to one of them to be deemed an infringement would, by that fact alone, be too dissimilar from the other four.  The dissimilarity of the Tartan connector from each of them is readily evident.

            I should add that, for the purpose of this letter, I am assuming that these patents are valid.  This is in no way a concession of the point.  In fact, this is a very significant and likely inaccurate assumption, and you should expect the patentability of these designs to be under attack if you commence an action for infringement.

Translation: I'm keeping a straight face, but if you really want to dance, let's dance.

For his next trick, he proceeds to rip apart Monster's "patents" even more. By this time, the lawyers have to wonder what is going on...

My sense, in looking at these five patents, is that either you are attempting to present some argument that I simply do not understand or you are arguing for untenably broad coverage of these patents which would sweep every functional aspect of the typical solder-assembly RCA connector within the scope of a handful of mere design patents.  You need to clarify this, and frankly, I think you need to indicate to me which, if any, of these patents you actually contend are relevant to the present discussion.  It cannot possibly be that you believe that more than one of these patents is pertinent, and if you insist that they are, we cannot have an intelligent dialogue on this subject.   Once you have identified the patent which you contend is relevant,  I need to see the file history and the references to prior art; I need copies of the applicant's correspondence with the USPTO; and I need a clear and cogent explanation from you as to exactly what aspects of the Tartan connector design are alleged to constitute the infringement, and how.

            Additionally, if you are able to identify any of these patents as applicable, please let me know whether Monster Cable presently sells, or has at any time sold, any products bearing connectors which are in conformity with the patent drawings or which are otherwise contended to be within the coverage of the patents, and identify those products for me.  Please also provide photographs and/or physical examples of these connectors as manufactured and sold.

            Also,  please provide me all of the information referenced above as it relates to your expired patent D323643, a copy of which I am attaching.  I will need to know what products Monster now offers or at any time has offered for sale which were believed to fall within the scope of D323643, and what claims, if any, of infringement of D323643 were made against others by Monster, whether those claims of infringement took the form of correspondence only, litigation, or otherwise.  Please let me know  which, if any, products Monster has ever sold or offered for sale which were marked with the patent number, or other reference, to  D323643.  Please also advise me whether, in your view, the Tartan connector does or does not fall within the scope of D323643, and if it is your view that it does not, please identify each and every difference between the Tartan connector and the connector represented by D323643 upon which your view is based.  (On that note, let me point out to you that the "turbine cut" feature is irrelevant here as your client makes only functional, not design, claims for that feature in its marketing materials for the product.)  I would assume that you would agree with me that if the Tartan connector is less dissimilar from the D323643 patent than from any of the five patents you cite in your letter, then the Tartan connector is within the coverage of the prior art and cannot, as a matter of law, infringe any of your client's current patents.

            I must also point out that unless there is a good deal of background information you have not provided me which makes the case otherwise, Monster Cable cannot possibly square its patent infringement claim(s) with its own patent history.  Two views of the matter might be taken; the first, which is my view, is that none of the design patents, including D323643, encompass the Tartan connector.  If that is so, of course, the claim for infringement fails.  But if one grants the sort of breadth to these patents that you appear to wish to do, a problem arises for Monster.  D323643 is the least dissimilar to the Tartan connector of any of the patents, and stands as an obstacle to any claim of infringement of the others because it establishes prior art; if its scope, like the others, is granted the breadth you argue for, then the Tartan connector falls plainly under the prior art and cannot constitute an infringement of the later, and more dissimilar, patents.  Read the patents narrowly, and Monster loses; read them broadly, and Monster loses.  You are welcome to point out any error in my reasoning; but I have to say that I will be unreservedly surprised if you are successful in doing so.

            Please also let me know whether Monster Cable or any related entity has brought actions to enforce any of the patents and trademarks referenced in your letter or above, and provide me with the jurisdiction, court and docket information pertaining thereto, along with copies of any decisions or judgments resulting therefrom.  If any such litigation proceeded through discovery, I will need all discovery responses, including document production, issued by Monster, as well as copies of any and all depositions taken and the exhibits thereto.

Translation: I Double Dog Dare You!!! Let's go!!!

Oh, and here's my favorite part when he insinuates that Monster operates an illegal tax shelter (probably true):

Further, if any of these patents or trademarks has been licensed to any entity, please provide me with copies of the licensing agreements.  I assume that Monster Cable International, Ltd., in Bermuda, listed on these patents, is an IP holding company and that Monster Cable's principal US entity pays licensing fees to the Bermuda corporation in order to shift income out of the United States and thereby avoid paying United States federal income tax on those portions of its income; my request for these licensing agreements is specifically intended to include any licensing agreements, including those with closely related or sham entities, within or without the Monster Cable "family," and without regard to whether those licensing agreements are sham transactions for tax shelter purposes only or whether they are bona fide arm's-length transactions.

Now, what Monster could not have known was that this guy was a highly trained and experienced litigator in a previous life, and the ending paragraphs of this response are absolutely the most priceless thing I've ever seen in my life and I assume have caused a few changes-of-underwear at Monster. Translation: You've f*cked with the wrong guy, buddy. You wanna play rough? I'll play rough!

I have seen Monster Cable take untenable IP positions in various different scenarios in the past, and am generally familiar with what seems to be Monster Cable's modus operandi in these matters.  I therefore think that it is important that, before closing, I make you aware of a few points.

            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.

                                                            Sincerely,

                                                            Kurt Denke

I think I have a new hero.

Host Steve Wildstrom is introducing them, and I'm going to take pictures, but I will liveblog as I can. Here we go:

The CongressDaily Capitol Hill stalwart daringly dove into a House office building elevator, risking life and limb to obtain a quote from the second wealthiest man in the world, demonstrating why he is the superior of the two Andrews on the beat (I couldn't even get MZ on the record except for the Q&A). Here is the CongressDaily AM excerpt with his exclusive quote from Gates:

After addressing a closed-door Democratic Caucus lunch, Gates told CongressDaily that one of his companies' legislative priorities this year -- overhauling U.S. patent laws -- was "probably too complicated for a hallway conversation." The House passed a patent bill in September and a Senate version awaits floor action. Microsoft is part of the Coalition for Patent Fairness, which has been leading the charge to change the laws. When asked how much Capitol Hill had changed since Gates himself was a congressional page, he said: "A lot less than you think."

 

Well played, Andrew. Well played. :)

I wrote last night about the guys who are suing Facebook, and this morning did some more digging before I left for work. Gary Stewart pretty much hits what I was trying to say spot on with a few choice quotes:

 

Likewise, if the Winklevoss brothers had paid Zuckerberg for his work -- if he had been their employee -- they would have some claim to it. But given the lack of compensation and/or employee status, Zuckerberg's work all belongs to him.

...

I know that most start-ups think that lawyers are a waste of money, and money is often tight, but as the old saying goes, an ounce of prevention is worth a pound of cure. In other words, it's better to pay a lawyer a few dollars today, than end up like the Winklevoss brothers, watching a former collaborator make billions of dollars off of your idea.

To paraphrase the judge assigned to the case, "dorm room chit-chat" does not a contract make.

Also, there is serious need for patent reform in this country. The USPTO has a well-documented shortage of qualified examiners, and reported here before, has the very case which many of their questionable "software" or "process patents" are based upon being review by the Court of Appeals for the Federal Circuit. For those of you with short memories, NTP, a Virginia company half owned by a dead man which manufactured nothing but applied for a patent on a system for sending email to wireless devices, successfully sued Research In Motion, maker of the ubiquitous BlackBerry device, and won a gigantic judgment from a jury.

Despite the fact that on review, USPTO found the patents to be invalid and obvious, various courts upheld the jury verdict, leading to a massive settlement for NTP, a company which has no products, no employees, no assets except a few pieces of paper in a desk drawer, waiting for someone to come up with a similar idea and do it.

What do the WInklevosses and NTP have in common? They're not do-ers. Mark Zuckerberg and the RIM folks were successful in creating products because they put the time and effort into doing so. The Winklevosses and NTP had ideas, but never put their full force behind them for one reason another, either because it was more important to win rowing races (for the Winklevosses) or because they had other priorities (NTP).

Meanwhile, the U.S. patent system is clogged with inane patent applications for software processes, and things which any idiot could think of in a million different ways. If you invent something new, something real, you patent it. The idea behind patents is to "promote the progress of science and the useful arts" by increasing the depth of human knowledge, since if you patent something, it has to be publicly available and other people can build on your design (after paying a fee, of course).

The worst offenders, though, are pharmaceutical companies. For instance, one medication I get prescribed went down in price from $30 (with insurance) to $10 per month, because the patent expired and companies could make "generic" versions. Keep in mind, the manufacturing process may be different, but the chemical formula at the end is the same. I still do not understand how you can patent a chemical. Perhaps a unique method of producing it, but not the final product. What if you owned the patent for a device that traps and kills mice, and I built a better one using a different idea? You could possibly sue me for patent infringement if any part of my idea was similar to your idea, despite the fact that we both do the same thing but reach the goal by different means. So what if we both use a widget?

People should take a look at the patent reform bill currently bottled up in Congress. It would change many of the ways that damages for patent lawsuits are awarded, and not in a good way.

It's Monday. Wake up.

As per our previous post, Nokia and Qualcomm are in a recently consolidated legal battle over various mobile phone patents since their licensing agreement expired last April.  Nokia just won over some of Qualcomm's arguments.

 

Here are some of the details from mocoNews.net

By Tricia Duryee - Thu 28 Feb 2008 10:24 AM PST

Nokia (NYSE: NOK) checks off another win against Qualcomm (NSDQ: QCOM). The International Trade Commission upheld a ruling in one of their many patent battles on Wednesday, Reuters reported. The agency determined there is no need to review a decision issued on Dec. 12 that found that Nokia did not infringe on three Qualcomm patents at issue in the case and that one of the patents is invalid, a Nokia spokeswoman told the WSJ. Qualcomm said it was disappointed with the ruling and had not yet decided whether it would appeal.

 

Under the Licensing agreement Nokia was paying Qualcomm $500 Million per year in licensing fees, which they were looking to reduce.

We'll update with more details as they become availble.

We can only cross our fingers. Patent Law Blog reports:

    Taking sua sponte action, the Federal Circuit has ordered an en banc rehearing of the In re Bilski case - asking the following five questions:

       1. Whether claim 1 of the 08/833,892 patent application claims patent-eligible subject matter under 35 U.S.C. § 101?
       2. What standard should govern in determining whether a process is patent-eligible subject matter under section 101?
       3. Whether the claimed subject matter is not patent-eligible because it constitutes an abstract idea or mental process; when does a claim that contains both mental and physical steps create patent-eligible subject matter?
       4. Whether a method or process must result in a physical transformation of an article or be tied to a machine to be patent-eligible subject matter under section 101? 
       5. Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

Translation? All 16 Judges who currently sit on the Court of Appeals for the Federal Circuit, which has jurisdiction over U.S. Patent and Trademark Office decisions, are going to get together and decide whether this patent of a method of managing the risk of bad weather through commodities trading, with no specific technology involved, can actually be patented.

Pay special attention to #5. That case is the one that "opened the floodgates" to many, many software and process patents, including "One-Click,"  that whole BlackBerry scare, and so on and so forth.

This could get very, very interesting.