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Patent troll sues eBay for asking USTPO for patent re-exam.

Summary: As of late, patent trolls have become more aggressive. They've put a great deal of energy into increasing lobbying efforts and have resorted to ...

As of late, patent trolls have become more aggressive. They've put a great deal of energy into increasing lobbying efforts and have resorted to preemptive litigation -- not just suing companies for infringement, but also suing for contesting their business model.

This year, one patent troll sued the Federal Trade Commission to stop its investigations, claiming that the troll's shakedown letters were protected by the First Amendment. That troll, Landmark Technologies, according to Popehat, has been described as a troll based on its model of demanding payments from businesses that accept credit cards online. Patent trolls usually make money by extorting small companies because it costs too much to litigate with the big companies. But big companies are still interested in the activities of patent trolls and have started to fight back against them.



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For example, eBay has noted Landmark Technologies' activities and said its existence was threatened by a company claiming to hold a patent on online credit card payments. eBay filed a request for reevaluation of Landmark Technologies' patents with the U.S. Patent and Trademark Office (USPTO). Then the USTPO evaluated eBay's application and determined that they raised "substantial new question of patentability affecting any claim of the patent," triggering a re-examination of three Landmark patents. The USPTO rejected eBay's arguments as to two of Landmark's patents, but accepted 16 out of 25 of eBay's arguments about a third patent.

Patent trolls typically rely on vague, ambiguous patents and those that were granted despite the ideas in them being previously public. But a troll like Landmark could not allow these challenges to be used without cost. So, Landmark sued eBay; its complaint against eBay says that by taking advantage of the USPTO's statutory reexamination process, eBay and its lawyer engaged in abuse of process, malicious prosecution, and negligence, and demands over $5 million.

Still, eBay has come back with a strong motion to dismiss Landmark's lawsuit under Texas' new anti-SLAPP statute. eBay's arguments establish that a reexamination request with the USPTO is protected by Texas' litigation privilege. In its brief, eBay points out a fundamental flaw in Landmark's claims -- the USPTO found that eBay's petition had enough merit to raise a question when it agreed to reexamine the patents.

Here's an excerpt of eBay's filing:

Each of Landmark's claims against eBay is subject to dismissal under the anti-SLAPP statute because it is clear on the face of the Complaint that each of those claims is based on, relates to, and is in response to eBay's exercise of its right to petition and right of free speech. See Tex. Civ. Prac. & Rem. Code A* 27.003(a). Specifically, each claim is based entirely on eBay's petitioning of the PTO to review the validity of the Patents through the ex parte reexamination procedure, and eBay's statements to the PTO in connection with those petitions. For example, Landmark's abuse of process claim is based on the allegation that "Defendants made an illegal, improper, or perverted use of process before the USPTO in submitting erroneous and misleading Requests for reexamination of Plaintiff's Patents in violation of federal law[.]" ....

The filing of a request for reexamination with the PTO plainly constitutes an exercise of eBay's right to petition shielded by the anti-SLAPP statute. The statute defines the "exercise of the right to petition" to include "a communication in or pertaining to an executive or other proceeding before a department of the...federal government or a subdivision of the...federal government." .... The PTO is a federal agency in the U.S. Department of Commerce that performs adjudicatory functions.... Patent reexamination proceedings before the PTO are official proceedings established by federal law.... Thus, eBay's reexamination requests constitute communications made in or pertaining to an executive proceeding before a department of the federal government, and fall within the protection of the right to petition under the anti-SLAPP statute.

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Publication:Inside Counsel
Date:Sep 4, 2014
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