In an unusual order, a federal judge last week told Apple that it may not call a Hawaii-based company names like “patent troll” or “privateer” or “bandit,” nor tell a jury that the company is engaged in a “shakedown” or “playing the lawsuit lottery.”
U.S. District Judge Lucy Koh issued the no name-calling rule ahead of a trial in Silicon Valley that pits Apple against GPNE Corp, which is accusing the iPhone maker of infringing old patents related to transmitting data over a network.
So what does GPNE Corp make? As it turns out, nothing at all. Instead, it has a website and a suite in a Honolulu office building, from where it appears to do nothing but make licensing demands for its patents. In other words, it fits the classic definition of a patent troll.
Judge Koh, who is a veteran of the smartphone industry patent wars, has nonetheless agreed with GPNE that the term “patent troll” could confuse or prejudice a jury. She did, however, permit Apple to tell the jury that GPNE is “a company that doesn’t make anything,” or “a company that doesn’t sell anything.”
All this raises the question, yet again, of whether the U.S. patent system is doing more to foster innovation or to award powerful monopolies to those shrewd enough to game the system.
In the Apple case, does GPNE deserve a royalty on the sale of every iPhone — a royalty that will be passed directly on to the consumer? You can decide for yourself.
According to GPNE’s website, one of its owner’s found traditional pagers to be limiting because the recipient had to phone the sender. As a result, “Gabriel’s vision was to invent a system that could transmit data two ways without having to rely on the separate return landline telephone call in response to a standard page message.”
In practice, this meant obtaining patents like US Patent 7555267 which dates from 1996, and explains the “invention” with diagrams like this:
I don’t pretend to be an authority on the state of pagers and two-way networks in 1996, but it seems unlikely that the iPhone’s operations are rooted in “Gabriel’s vision.” It also seems curious that everyone should pay Gabriel a royalty on many of today’s mobile devices (GPNE is also seeking a payout from Amazon, BlackBerry, Nokia and others.) Apple obviously disagrees, and that it is why it is fighting GPNE in court.
For my part, I would argue that this is yet another example of the Patent Office granting too many broad patents (there are 250,000 covering cell phones alone by some count) that appear to reward clever patent drafters rather than society as a whole. The patent owners, including trolls, can then wield them with devastating effect, knowing that it is much cheaper for companies to simply hand over a licensing tax rather than challenge the patent in court.
I phoned CPNE on Wednesday to get its side of the story. A woman said “hello” and, in response to my question of what the company does, she said she would have to refer my question to her boss. I haven’t heard back.
Here’s Koh’s order, which was spotted by Law360:
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