496: When Patents Attack... Part Two!

Ira Glass

OK. I listen to a lot of podcasts. I host a radio show that is distributed as a podcast. So I had a special interest in some interviews that one of my colleagues, Zoe Chace, did recently. She's one of the reporters for Planet Money, which itself is a podcast.

Zoe was interviewing these two guys, Jim Logan and Richard Baker, who say that their company, Personal Audio, holds the patent on podcasts. And basically, anybody who makes a podcast owes them money. Zoe pointed out to them that their interview was going to be used on a podcast that has not paid them.

Ira Glass

Jim Logan says that he is one of the inventors of podcasting, even though he has never made a podcast himself. Here's how he figures. His company Personal Audio, back at the dawn of the internet age in 1996-- this is before the iPod existed-- it's before most homes were on the internet-- they decided to manufacture an MP3 player that would do all kinds of stuff that nobody seemed to be doing just yet, like downloading sound from the internet. And Jim says they filed for a patent.

Ira Glass

They tried to design and manufacture their newfangled MP3 player for about a year, he says. And they failed. They gave up.

So they never actually succeeded in making a device that could download audio off the internet and play it. They never made a podcast. Instead, they switched to a different technology-- an earlier technology. They decided to distribute magazine articles on cassette tapes.

Ira Glass

In this version of the history of podcasting, this right here would be one of the very first podcasts. And there is nothing digital about it at all. This is one of those old cassette tapes. These guys brought a stack of them to the interview.

Ira Glass

This business also failed. But the way our patent system works, even though these guys never successfully created a system that took podcasts from the internet and put them into a portable audio player, they patented the idea that such a thing could happen. And now that other people have figured out how to do it, they want to get paid. It's only fair, Jim Logan told Zoe.

Ira Glass

These guys say that for now, they're not asking nonprofit podcasters, like our program, to pay them licensing fees-- just for-profit podcast businesses, like Adam Carolla and The Stuff You Should Know podcast, which is owned by Discovery Communications, and Marc Maron's comedy podcast, WTF, which Maron produces literally in his garage.

Ira Glass

--which means he probably has to pay, though the letter he got doesn't specify a price.

Ira Glass

I found Richard Baker of Personal Audio to ask the price myself. He wouldn't tell me, either.

Ira Glass

Settlements that Personal Audio has made in the past with Apple Computer and with some cellphone companies are also not public information. And the fact is most patent settlements are not public. And you might think, OK, well, so what? But these patent lawsuits are huge. And they're on the rise.

The number of patent lawsuits climbed 50% in one year from 2011 to 2012. Entrepreneurs and engineers say these suits hurt and sometimes destroy young companies. They have an effect on the economy, on what we can and cannot do. But it is very hard to find out exactly what is going on.

A good example-- two years ago, we devoted an episode of our program to the patent system. And we tried to explain what was going on by focusing on the company that some people say is the biggest patent troll out there. A patent troll is a company that uses patents mostly to sue other companies and ask for licensing fees.

And in that show, we investigated this one patent that the company was involved with. The inventor whose name was on that patent was Chris Crawford. And we learned all kinds of things in that investigation.

But the world of these lawsuits is so secretive there were basic questions we could not answer, like how much money was involved. What did Chris Crawford think of what was being done with his patent? There were 18 companies being sued for infringement on the patent. What was their opinion? How were they handling it?

Well, two years have passed since then. And I am pleased to say that today-- today-- we can bring you a show where we actually answer the questions that usually in these kinds of cases go unanswered. It is a rare look inside this world.

That litigation from two years ago has finished. The silence has been broken. Many, many facts have emerged that, frankly, kind of stunned us.

And so today on our show, what we're going to do-- in the first half of the program, we're going to return to that old episode from 2011 explaining the patent and the lawsuit. And then in the second half, we're going to have the answers to many of the mysteries that were still unsolved two years ago.

From WBEZ Chicago, it's This American Life, distributed by Public Radio International. I'm Ira Glass. Stick around.

Ira Glass

And with that, I'm going to turn things over to This American Life producer and Planet Money co-host Alex Blumberg and NPR Digital Culture Correspondent Laura Sydell, who report the story.

Alex Blumberg

Intellectual Ventures, that firm that people in Silicon Valley point to as a quintessential patent troll, was founded by a guy named Nathan Myhrvold.

Laura Sydell

Nathan Myhrvold used to be the chief technology officer at Microsoft, where he made a lot of money-- hundreds of millions of dollars. Even if you haven't heard of Intellectual Ventures, you might have heard of Nathan Myhrvold.

Alex Blumberg

This is Myhrvold on the television show The Colbert Report, talking about another one of his ventures-- an opus on the science of cooking, which teaches you how to do things like make ice cream with liquid nitrogen. Myhrvold is the kind of guy the press loves to profile.

Laura Sydell

But this image of Nathan Myhrvold, who gives TED Talks and generally plays the role of an avuncular elder statesman for the tech industry, is at odds with the image of his company, Intellectual Ventures.

Alex Blumberg

--because Intellectual Ventures has amassed one of the largest patent portfolios in existence. There's an influential blog in Silicon Valley called Techdirt, which regularly refers to Intellectual Ventures as a patent troll. Another blog, IPWatchdog, called Intellectual Ventures "patent troll public enemy number one." And The Wall Street Journal's Law Blog had an article about Intellectual Ventures titled "Innovative Invention Company or Giant Patent Troll?"

Laura Sydell

I put the question to Nathan Myhrvold.

Alex Blumberg

Intellectual Ventures says Myhrvold is anything but a patent troll. They're on the side of inventors. They pay inventors for patents. They gather these patents together into this huge warehouse of invention that companies can use if they want. Sort of like a department store for patents. Whatever technology you're looking for, Intellectual Ventures has it.

Laura Sydell

And when reporters come to visit Myhrvold to underline this idea that IV is all about invention, he takes them to see this.

[MACHINERY NOISE]

Laura Sydell

I'm on a tour with Geoff Deane, who runs the Intellectual Ventures Invention Lab. About 100 people work here. The lab is massive.

There are people walking around in white lab coats mixing chemicals in beakers and looking at stuff under microscopes. There's a machine shop, a nanotechnology section. It's like a playground for scientists and engineers.

Alex Blumberg

And if you ask them what they've invented so far, there's a couple things they point to. A nuclear technology, they say, is safer and greener than existing technologies, a cooler that can keep vaccines cold for months without electricity, and the world's most high-tech mosquito zapper, which senses mosquitoes hundreds of feet away by detecting the speed of their wings.

Laura Sydell

But the fact is this lab is a tiny fraction of what the company does. Intellectual Ventures has received a little over 1,000 patents on stuff they've come up with here, which pales in comparison to the more than 30,000 patents they've bought from other people. In fact, nothing that's come out of this lab-- not the mosquito zapper, not the nuclear technology-- nothing has made it into commercial use.

Alex Blumberg

That doesn't matter, executives here say. That's not the biggest part of our business, anyway. The main thing we do is help inventors-- make sure inventors are probably paid for their work.

They say there are inventors out there doing brilliant work, holding patents, but not making money off of those patents. Companies are stealing their ideas. And these inventors don't have the legal savvy or deep pockets to stop them. And that is where Intellectual Ventures steps in to protect the little guy.

Laura Sydell

A lot of people I met at IV told me some version of this story. I heard it over and over. And so finally, I asked for an example. If Intellectual Ventures isn't just a patent troll, give me an example-- someone with a breakthrough who wasn't being paid for it-- who Intellectual Ventures helped out and got paid. Two separate people pointed me to the same guy.

Laura Sydell

This is one of the people who mentioned Chris Crawford-- Joe Chernesky, a vice president at Intellectual Ventures.

Laura Sydell

So I figured, I want to talk to this guy-- not so simple. It turned out trying to talk to Chris Crawford took us on a five-month odyssey where things didn't exactly fit the story that Intellectual Ventures was telling us.

It started when I called Intellectual Ventures to get Chris Crawford's contact info. I got a strange email back in response. I was told they no longer own Chris Crawford's patent. And I was told he probably wouldn't want to talk to me right now because he was in the middle of litigation.

Alex Blumberg

So we started digging around. We found Chris Crawford in Clearwater, Florida. But as predicted, he never responded to our many emails and phone calls. We were able, though, to locate his patents. There were four of them, all pretty similar. And we focused on one.

Laura Sydell

--patent number 5,771,354. He got it in 1998, back in the relatively early days of the internet. And the way IV explained the patent to us, Chris Crawford invented something that we all do all the time now. He figured out a way to upgrade the software on your home computer over the internet. So in other words, when you turn on your computer, and a little box pops up and says, click here to upgrade to the newest version of iTunes, that was Chris Crawford's idea.

Alex Blumberg

But when we looked at the patent, it seemed to claim a lot more than that. The patent says this invention makes it possible to connect to an online service provider to do a bunch of stuff-- software purchases, online rentals, data backups, information storage. The patent makes it seem like this one guy, Chris Crawford, invented a lot of what we do on the internet every day. We weren't sure what to make of this. So we turned to an expert.

Laura Sydell

This is David Martin, who runs a company called M-CAM. They're hired by governments, banks, businesses, to assess patent quality, which they do with this fancy software program.

Laura Sydell

We asked him to assess Chris Crawford's patent.

Alex Blumberg

The software program actually scans through millions of patents and analyzes them to see if any of them overlap.

Laura Sydell

An idea being patented is supposed to be non-obvious to a person of ordinary skill in the art. What that means is that you shouldn't be able to get a patent for just a common-sense good idea. It has to be a breakthrough.

Laura Sydell

And what we're seeing on David Martin's computer screen does not look like a breakthrough.

Laura Sydell

David Martin may be exaggerating a little here for effect. But as we look through some of the patents that are on the screen, the resemblances are pretty clear. Remember, Chris Crawford's patent is for, quote, "an online backup system."

Alex Blumberg

We asked a second patent expert to evaluate Chris Crawford's patent. And he told us that everything in it was already being done on computers in the 1980s, long before Chris Crawford even filed the patent. He thought the patent never should have been granted in the first place.

Laura Sydell

Patents are so fundamental to the American way of life that they're in the Constitution. Their purpose is, quote, "to promote the useful arts and sciences." If there were no such thing as a patent, Eli Whitney, the inventor of the cotton gin, would have had to keep his invention hidden in a dark room with no windows so nobody would steal the idea.

But with a patent, he could publish the blueprints. People would have to pay him if they wanted to manufacture their own cotton gins. And we would have thousands of cotton gins everywhere. Patents make it safe to share and to innovate.

Alex Blumberg

But people in Silicon Valley will tell you the problem with software patents today is that all kinds of things are getting patented that aren't breakthroughs and don't deserve a patent. They're too broad or too obvious. And a lot of the people that tell you that are the people that software patents are supposed to protect-- software engineers.

Laura Sydell

This is Stephan Brunner, a programmer. He said something we heard from a lot of software engineers. His software patents don't even make sense to him.

Alex Blumberg

Stephan Brunner, patent 7,650,296-- quote, "a configurator using structure and rules to provide a user interface." One sample section interests me. The whole thing is like this.

"According to one embodiment of the invention, a customizable product class is created. A component product class is added to the customizable product class where the component product class is a subclass of the customizable product."

Laura Sydell

The patent system, the way it works now, can actually hinder innovation because patents can be used as weapons against new businesses. Engineers say patents don't help them create new products. Often, they get in the way.

Laura Sydell

This is Chris Sacca, a Silicon Valley venture capitalist who's helped lots of companies, including Twitter and Uber, get off the ground.

Alex Blumberg

Which brings us back to that patent that Intellectual Ventures pointed us to as an example of the system fundamentally working well-- not being broken-- patent 5,771,354, Chris Crawford's patent. As we've said, this patent seems to cover a remarkable chunk of what's happening on the internet-- upgrading software, buying stuff online, cloud storage, storing data on the internet. If you have a patent on all that, you could sue a lot of people, make a lot of money.

Laura Sydell

And in fact, that's what's happening with Chris Crawford's patent. Intellectual Ventures sold it to another company, a company called Oasis Research, in June of 2010. Less than a month later, Oasis Research used the patent to sue 16 different tech companies-- companies like Rackspace, GoDaddy, and AT&T-- companies that do cloud storage.

Laura Sydell

I called the number on Oasis's website numerous times. But an actual human being never picked up. For a while, the message directed all questions to a lawyer in New York named John Desmarais. He also didn't return our phone calls.

Alex Blumberg

There is hardly any public information about Oasis Research-- minimal corporate filings, no way to know who owned it, how many employees it had, if it even had employees at all. One of the few details that was available-- an address in Marshall, Texas-- 104 East Houston Street, Suite 190.

Laura Sydell

This is Michael Smith. He's an attorney in Marshall, Texas, who does mostly patent cases. He agreed to show us the offices of Oasis Research. They're in a nondescript, two-story building on the town's main square, two doors down from the federal courthouse. He led us into a narrow corridor lined with doors with gold and black office name plates.

Alex Blumberg

It was late morning on a weekday, not a holiday. But the door was locked. Through the crack underneath, you could see there were no lights on inside.

Marshall is a very small town-- 24,000 people. Michael was born and raised here. So we started quizzing him about Oasis.

Alex Blumberg

I know this is kind of a cliche at this point-- knocking on the door of the suspected fake office.

Alex Blumberg

But we'd flown a long way.

Laura Sydell

But I will say, standing in that corridor was eerie. All the other doors looked exactly the same-- locked, name plates over the door, no light coming out. It was a corridor of silent, empty offices.

Alex Blumberg

And we're standing in a whole corridor of them, it seems like.

Laura Sydell

So what's going on here? It turns out a lot of those companies in that corridor-- maybe every single one of them-- are doing exactly what Oasis Research is doing. They appear to have no employees.

They're not making new inventions here. They're filing lawsuits for patent infringement. Patent lawsuits, says Michael Smith, are big business in Marshall, part of the Eastern District of Texas.

Alex Blumberg

Smith told us there are about 2,000 patent cases in the courthouse in Marshall. And we got lots of explanations for why-- why all these New York and San Francisco-based companies come to tiny Marshall. One theory-- the juries are friendly to people doing the suing. Another-- medical malpractice attorneys switched careers after Texas passed malpractice tort reform.

My favorite theory, though-- all these patent cases are in Marshall because of the drug war. The flood of drug cases made it impossible for patent suits to get in front of a judge in big cities like Dallas or Houston. So the patent cases moved to sleepy little Marshall.

Laura Sydell

We'd come to Marshall to figure out which story about Intellectual Ventures was true. Are they a patent troll? Or are they out there protecting the rights of struggling inventors everywhere? So we went back to Intellectual Ventures for answers and talked to the company's vice chairman, a guy named Peter Detkin.

Alex Blumberg

One interesting footnote about Peter Detkin-- he's actually the person who coined the phrase "patent troll." This was years ago. He was one of the top lawyers at the computer chip maker Intel.

They got sued by a company claiming patent infringement. And Detkin called the lawyer who filed the claim a, quote, "patent extortionist." The lawyer turned around and sued Peter Detkin for libel. So Detkin says he held a contest at Intel to come up with a better name.

Laura Sydell

Of course, the name stuck. After leaving Intel, Detkin teamed up with Nathan Myhrvold to start Intellectual Ventures, the company that many people call the biggest patent troll out there. Peter Detkin obviously disagrees with this characterization.

Alex Blumberg

So anyway, we went to Peter Detkin to ask our questions. But even the most basic question about the story Intellectual Ventures had told us, he couldn't answer. Like, for example, when did they buy Chris Crawford's patent?

Laura Sydell

There's a document that's publicly available on the US Patent Office website. It traces a patent's ownership history. In the case of Chris Crawford's patent, though, the ownership history was really hard to understand.

Alex Blumberg

The first owner is clear. It's Chris Crawford, who was granted the patent in 1998. And then it's clear that a company named Intellectual Ventures Computing Platforce Assets, LLC-- no one can actually tell us what a platforce is-- bought the patent in July of 2010.

But in between those two dates, there are two other owners, a company called Kwon Holdings and another one named Enhanced Software, LLC. And what was odd-- Kwon Holdings, Enhanced Software, and Intellectual Ventures all have the same address.

Laura Sydell

We showed this document to Peter Detkin for explanation. But this simple question-- when did you buy the patent-- completely threw him off and led the PR woman, who was in the room with us, to jump in and try to shut down the interview. You'll hear her voice in the background.

Alex Blumberg

We were honestly surprised at this response. It wasn't like this was a secret document or something. What was the big deal about answering the seemingly simple question?

Laura Sydell

Part of it certainly was that we took him a little bit by surprise. I take him at his word that they do a lot of deals. And he doesn't know the details of every one.

Alex Blumberg

But part of it is that Intellectual Ventures does a lot of its patent deals through shell companies-- hundreds of them-- shell companies owned by Intellectual Ventures but registered under different names, where it's very difficult to tell that Intellectual Ventures is the actual owner. So what was their relationship with Oasis and Chris Crawford?

Laura Sydell

Well, we uncovered a document. It's called a Certification of Interested Parties. The court in Texas required that Oasis list all the entities who have a financial stake in the outcome of the case.

This is a standard form that pretty much all parties in civil cases have to file. Oasis listed the parties that most people list-- the plaintiff, the defendants, the attorneys involved. But it added one other name-- Intellectual Ventures.

So we went back to Intellectual Ventures one more time to talk to Peter Detkin. We picked up where we left off the last time. When did Intellectual Ventures actually buy Chris Crawford's patent? And this time, he had no hesitation about explaining it.

Alex Blumberg

We showed Detkin that court document from the Oasis case listing Intellectual Ventures as an interested party.

Alex Blumberg

So just to spell this out, Peter Detkin is saying it's likely that Intellectual Ventures is taking a cut of whatever money Oasis gets from its lawsuits. Oasis, a company with no operations, no products, and as far as we can tell, no employees, whose only activity seems to be taking a very broad patent from 1998 and using it to sue over a dozen internet companies today.

Laura Sydell

And so we asked him, how does it feel making money from an entity which is behaving a lot like the patent trolls that he once condemned?

Alex Blumberg

In other words, we try to license these patents in a friendly way. But sometimes you have to sue.

Laura Sydell

Peter Detkin then repeated the company line that we'd heard from a lot of people at IV-- that the mission of Intellectual Ventures is to help inventors bring great ideas into the world, that lots of inventors, they're like great artists-- brilliant, but not brilliant at business. So their patents languish. IV gets their ideas into the hands of companies who will actually build what they've invented.

Ira Glass

Coming up, Chris Crawford speaks, and more secrets of Oasis Research revealed. That's in a minute from WBEZ Chicago and Public Radio International when our program continues.

Ira Glass

It's This American Life. I'm Ira Glass. Today on our program, "When Patents Attack, Part Two"-- the sequel-- the squeekquel. Today we return to a story we first reported on two years ago about our patent system-- how it sometimes seems to be discouraging rather than encouraging innovation.

A quick review of where we are so far-- OK, there's this company called Intellectual Ventures. Its executives told our reporters that if they wanted to understand what the company was all about-- if they wanted proof that their company is not a patent troll but out there helping the little guy inventor just get fair payment, then they should talk to this inventor that Intellectual Ventures helped out, a patent holder named Chris Crawford.

But when our reporters tried, Chris Crawford would not talk to them. His patents were now in the hands of a company called Oasis Research. And they were being used to sue over a dozen different tech businesses.

And back in 2011, we didn't learn much more than that. We didn't know who was behind Oasis Research. We had no idea how much money was at stake in the case. We suspected that some companies had settled with Oasis. But we had no idea how many or for how much.

And most significantly, we had no idea how the guy at the center of the whole mystery, Chris Crawford, felt about it all. We had no idea if he knew what was being done with this patent-- if he approved, or if he was like some of the software engineers we talked to who didn't like that their patents got sold to companies that only used them to threaten lawsuits. Well, I'm please to say now we have answers to all of those questions-- every one of those questions. Here again is Alex Blumberg and Laura Sydell.

Laura Sydell

There ended up being 18 defendants in the Oasis case-- 18 tech companies it claimed were infringing on Chris Crawford's patents. Many of those 18 companies in the beginning pooled legal forces to figure out what to do.

Alex Blumberg

But that pool got smaller and smaller as companies decided to just cut a deal with Oasis-- pay them a licensing fee in exchange for being dropped from the suit. At a certain point, an online backup company called Carbonite was one of two companies remaining in the case. In full disclosure here, Carbonite is an underwriter of National Public Radio news programs. Carbonite CEO David Friend says it was tough to be one of the last men standing, especially with the advice that they were getting from the lawyers they'd hired.

Laura Sydell

Friend says he'd done a patent search when he started his company and never came across Chris Crawford's patents.

Laura Sydell

What they hadn't counted on was a patent that was so broad, it covered anyone backing up any data over the internet using any system at all.

Alex Blumberg

The problem is, defending a patent case is really hard. Patents are complicated. So is technology. Trying to explain which part of a patent should or should not apply to which part of a computer program-- it's a trick just to get the jury to understand, let alone go along with your point of view.

Laura Sydell

But there is an easier way to win a patent case, a way where you don't have to force a jury to second guess the experts at the patent office. If you can demonstrate that the inventor wasn't telling the truth when he filled out the application-- if, for example, he wasn't the only inventor. So lawyers for Carbonite and the other company that had chosen not to settle-- EMC-- started to dig into Chris Crawford's history, looking for clues that might invalidate his patent.

Alex Blumberg

Carbonite's Chief Counsel Danielle Sheer says one of the first places they went looking was the company where Chris Crawford was working at the time he claimed to have come up with his idea.

Laura Sydell

Lawyers described Chris Crawford's patents to Chuck Campos and asked if he knew anything about the circumstances where he developed those ideas. And he told them, yes. I was with him when those ideas were developed. And they weren't only Chris Crawford's ideas.

Alex Blumberg

Chuck Campos told the lawyers that the ideas mainly came from two other guys, Jack Byrd and Don Atwood.

Alex Blumberg

But then, the disk drives are just sitting at your house, so not safe from a fire or some other natural disaster.

Alex Blumberg

That was their backup system-- driving 15 miles each way, meeting in the middle, getting out of their cars, and exchanging a pair of floppy disks.

Laura Sydell

Naturally, being idea guys, they thought, there has to be a better way. Phone modems were just becoming ubiquitous around this time. And they thought, how about a business backing up data remotely over the phone line using a modem?

A little bit later, Jack Byrd meets Chuck Campos, tells him about the idea. And he joins the group. They decide they need a specific type of computer to back up all the data-- something called an AS/400.

Alex Blumberg

The group met regularly Saturdays at Jack Byrd's apartment over the course of a couple months. And during these meetings, they discussed all sorts of things, from the technical details of how this backup system would work to details about the company itself-- how they'd split ownership four ways-- 25% each. And also what the new company they were forming way back in the early '90s would be called. The name they chose-- PC Oasis.

Laura Sydell

That's right. The name of the company that Chris Crawford was invited to join in the early 1990s had the same name as the shell company in East Texas that was suing people two decades later.

Alex Blumberg

And apparently, the name had also been Jack Byrd's idea. Remember, he was the acronym guy.

Alex Blumberg

For the record, Offsite Archival Software and Information Server-- Oasis.

Laura Sydell

So how did this same name come to be given two decades later to a shell company in East Texas? Well, back in the '90s, the first Oasis never got off the ground. The problem was they couldn't figure out a way to get consumer online backup working using the technology that most people had available in their homes in the early '90s-- phone lines and modems. So they disbanded the company and went on their way.

Alex Blumberg

But all those meetings where they'd been sketching everything out, figuring out the technology, solving the problems-- Chris Crawford had been the main note-taker at those meetings.

Laura Sydell

The problem was Chris Crawford had sold something for $12 million that wasn't his to sell. If Chris Crawford's three former business partners had also developed the idea, they should have at the very least been listed as co-inventors on Crawford's original patent applications.

Alex Blumberg

So the lawyers for EMC and Carbonite now had something like a smoking gun to use at trial-- these three men with a very compelling story about how the patent had been mostly their idea, not Chris Crawford's. But at trial, it would still be just their word against Crawford's. The lawyers wanted proof-- something in the documents that Crawford filed with the patent office that mentioned the other inventors.

There were lots of these documents from those Saturday meetings that mentioned the three partners. Chuck Campos had a box in his attic full of them. But none of those documents mentioning the others made their way into Chris Crawford's patent application. Well, almost none.

Laura Sydell

And here he is, the man we've been looking for, Chris Crawford, the man who was granted patent number 5,771,354, one of the patents used to sue 18 companies. This is sound from a videotaped deposition he gave as part of the Oasis trial. He's polished-- crisp white shirt, paisley tie, tortoise-shell reading glasses. He's got sandy brown hair, a tan. The lawyer continues to question him.

Alex Blumberg

Chris Crawford then launches into a rather surprising explanation for how the sentencing that this business was, quote, "Jack Byrd's idea," doesn't actually mean that the business was Jack Byrd's idea. His explanation? He was using the apostrophe S incorrectly.

Alex Blumberg

Of course, what would a sentence reading, "in response to Jack Byrds idea" even mean if the S was plural?

Alex Blumberg

This explanation, apparently, did not convince the jury, and Oasis lost the case. The jury concluded that the patents were indeed invalid for failing to name the correct co-inventors. Yet this victory just shows how difficult it is to defend yourself against a patent infringement claim. The lawyers for Carbonite believe that without that one document-- that one apostrophe S-- they might have lost.

Laura Sydell

Because here's how tough the jury was. The jury verdict said that the patents were improperly filed because Jack Byrd's name should have been listed as a co-inventor. Just Jack Byrd-- not Chuck Campos and Don Atwood, the other men who testified under oath that they too had been involved in developing the ideas. Only Jack Byrd's name had been on that document. And only Jack Byrd got credit from the jury as a co-inventor.

Alex Blumberg

And for the 16 companies that did settle, the verdict may not change anything. In most cases, these licensing agreements have language that makes them nearly impossible to get out of, no matter what happens with the patent later on. This week, we heard back from a spokesman from one of the companies that chose to settle.

The spokesman wrote in an email, quote, "We were hit hard by this lawsuit. Infringement on our part seemed completely bogus, but we could not afford to fight it. Even with the settlement, we were forced to lay off employees. We are still--" and "still" is in all caps-- "still paying out on the settlement agreement. We were unaware that the patent had been invalidated. We will be contacting our attorney to see what recourse we may have."

Laura Sydell

Like we've been saying, because so many of these cases settle with nondisclosure agreements, we almost never find out how much money changed hands.

Alex Blumberg

But because of the Oasis case, we now have a sense of how much money that can be. Because Carbonite won their case and didn't settle, they weren't bound by a nondisclosure agreement. And they were happy to reveal how much money Oasis wanted from them.

Laura Sydell

And remember, Carbonite was one of the smaller companies being sued. We don't know what they were asking from the other guys. But a lawyer named Tom Ewing says you can make an educated guess.

Ewing runs a small side business tracking and identifying Intellectual Ventures' shell companies. And he says, assuming Oasis was asking for settlements in rough proportion to the size of the company being targeted, you can put together a pretty good estimate of their total take from this lawsuit.

Alex Blumberg

$100 million. And who would have gotten that $100 million? Some of the money went to the lawyers who prepped the case and negotiated the settlements for Oasis. Some of it went to the owner of Oasis Research, a mysterious figure named Gordon Jumonville, who showed up in court every day but never testified and never returned our phone calls. But most of the profit went to Intellectual Ventures.

Laura Sydell

Remember Peter Detkin? When we spoke with him, he explained the financial arrangement with Oasis this way.

Laura Sydell

And because of documents filed with the court, we now know what the percentage was-- 90. Intellectual Ventures sold Chris Crawford's patents to Oasis Research on the condition that it get 90% of the net profit. That's 90% of tens of millions of dollars.

Alex Blumberg

Chris Crawford didn't make out too badly, either. Documents also say that Chris Crawford gets 17 and 1/2% of the money that Intellectual Ventures makes. Now, let's just pause to consider that $100 million for a second. That's $100 million off of one guy's patents. That is a lot of money.

And other people see that money. And they want in on that action. They think that's a good business-- getting a hold of patents-- using them to sue people.

Laura Sydell

Tom Ewing, the lawyer who tracks Intellectual Ventures, says that's getting easier because every year more patents are issued than the year before. According to a Yale study, it's 100 software patents a day.

Laura Sydell

And the more patents are issued, the less careful the patent office seems to be. According to a study by the Organization of Economic Cooperation and Development, quote, "The rush to protect even minor improvements in products or services is overburdening patent offices. This slows the time to market for true innovations and reduces the potential for breakthrough inventions."

Alex Blumberg

Case in point--

Laura Sydell

Not long ago, I was at a meeting in San Francisco put on by the Electronic Frontier Foundation, an advocacy group that's been critical of the patent system. It was an open meeting. And this guy you hear talking, Nick Desaulniers, had decided on the spur of the moment to drop in. And after hearing a couple of other people tell their stories, he got up to tell his.

He's an engineer. And his father's death had spurred him to invent a low-cost heart monitor, which he believed might have saved his dad's life. He developed a prototype in a graduate school class. And he'd started dreaming a bit.

Laura Sydell

But then he started a patent search to see if anyone else had come up with something resembling his idea already.

Alex Blumberg

And that is the current state of things. Something as dry as the US patent system can move somebody to tears.

Laura Sydell

Since our last broadcast, we've gotten used to front-page stories about huge tech companies in multimillion dollar battles over patents. But what hasn't been making the front page as often-- patent cases spreading to the rest of us. Over the last couple of years, there have been numerous stories about small businesses-- individuals even-- getting hit with patent infringement lawsuits.

Alex Blumberg

A group called Innovatio has been going around suing coffee shops and grocery stores for violating its patent on providing Wi-Fi in a public space. They say they own that idea. And if your coffee shop is providing Wi-Fi, you owe them money. They say they've made a strategic and business judgment not go after people using Wi-Fi in their own homes, quote, "at this stage." Another company called Boadin Technologies, LLC, has sued a bunch of media organizations, saying that one of its patents is infringed every time a word or phrase on your computer autocompletes.

Laura Sydell

And a company in Vermont called MPHJ Technology has sent licensing letters to hundreds of businesses in Vermont, saying, any time an employee scans something to be emailed, that employee is infringing on MPHJ's patent. They say they own the idea of scanning a document and then emailing it. They're asking for around $1,000 per employee in damages. One of the companies they've approached is a nonprofit serving disabled people.

Alex Blumberg

There are five bills in Congress co-sponsored by Republicans and Democrats aimed at overhauling the patent system. This is still in the very early stages. And of course, it's hard to get any bill passed ever. But this issue has attracted one thing you need to get action in Washington, DC-- powerful people in business interests who want change-- the tech industry, the supermarket industry, the Consumer Electronics Association, Google, and of course, the mighty podcast lobby.

Laura Sydell

That's one difference between now and when we first reported on this story two years ago. Now when we talk to people who are trying to reform the system, they seem hopeful.

Ira Glass

Laura Sydell and Alex Blumberg. This story was a co-production with NPR News. Planet Money, which Alex co-founded, is also a co-production of our program and NPR News. Its website and free podcast is at npr.org/money.

[MUSIC - "NO IDEA'S ORIGINAL" BY NAS]

Well, our program was produced today by our senior producer, Julie Snyder, Alex Blumberg, and me with Ben Calhoun, Sarah Koenig, Miki Meek, Jonathan Menjivar, Brian Reed, Robyn Semien, Alissa Shipp, and Nancy Updike. Production help from Phia Bennin; Seth Lind, our operations director; Emily Condon, our production manager; Elise Bergerson, our administrative assistant. Music help from Damien Graef and Rob Geddes. Research by Michelle Harris and Julie Beer. Special thanks today to Leslie Ogrodnick, Krish Gupta, and Uri Berliner.

Our website, thisamericanlife.org. This American Life is distributed by Public Radio International. WBEZ management oversight for our show by our boss, Mr. Torey Malatia, who I just caught eating food I had in the fridge, even though I had written clearly on the bag, "Ira's lunch."

Ira Glass

I'm Ira Glass. Back next week with more stories of This American Life.

Announcer

PRI-- Public Radio International.