The patent originally was filed by a company called Ideaflood, which billed itself as an “intellectual property holding company” — the same manner of business as Acacia Media Technologies, the patent holding company that has attempted to enforce a broad patent on sending and receiving audio and video content against a variety of adult entertainment and mainstream companies.
According to EFF, Ideaflood used its subdomain patent to threaten a number of hosting companies, including FreeHomePage.com, and T35 Webhosting, as well as the social networking site LiveJournal.com.
The subdomain patent describes a system for allowing users of a network to create and retrieve information from a personally named subdomain, like News.Google.com. Since being granted to Ideaflood, the patent has been transferred to a company called Hoshiko LLC.
In its request for re-examination of the patent, EFF submitted a series of exhibits that “show that the method Ideaflood claims to have invented was well known before the patent was issued,” according to EFF.
“In fact, website developers were having public discussions about how to create these virtual subdomains on an Apache developer mailing list for more than a year before Ideaflood made its patent claim,” EFF said in a press release.
Jason Schultz, a senior staff attorney for EFF, told XBIZ that invalid patents like the Ideaflood/Hoshiko subdomain patent “create a stifling of innovation, because they give the company with the patent a monopoly.”
“It allows for patent holders to essentially bully companies and organizations into settling and paying money when they shouldn’t have to,” Schultz said. “They tend to target small companies that can’t afford patent attorneys, and say something like ‘You can pay us $100,000 now, or you can pay us millions when we prevail in court.’”
Schultz said the targeting of small companies and individual inventors is particularly troubling because “startups and small companies are really part of the excitement of the technological innovations happening surrounding the web.”
Perhaps the most galling thing about so-called “intellectual property holding companies,” Schultz said, is that they generally innovate nothing on their own, instead keeping an eye out for idle patents that they can snatch up and enforce as a source of revenue.
“Companies like Acacia acquire patents that are sitting there gathering dust,” Schulz said. “They look for patents that are vague enough that they can argue it applies to some broad area, like video streaming, and then they try to get some settlements. They don’t innovating anything, either — God forbid they do a little [research and development].”
Asked what could be done to reform the patent system, Schulz told XBIZ that there are several options that could help.
“The most difficult, politically, is to change the Patent and Trademark Office,” Schulz said. “It’s not really the fault of the people working at the PTO; they are not given the resources, the support or the training to deal with bogus patents.”
Schulz explained that PTO employees charged with reviewing patent applications are given only 15 to 20 hours total to review incoming patents, which he said is not nearly sufficient to properly research possible prior art and other roadblocks to each given patent.
Schulz said another option would be to make the patent speculating business less profitable by limiting the amount of money that patent holders can win through legal action.
A third option, Schultz said, is to reduce the cost and time associated with filing challenges to invalid patents — precisely the thing that EFF currently is doing in its patent debunking project. If the price and complexity of filing such challenges is reduced, more of the technology community could get involved, Schultz said.
“Filing for re-examination has been fairly successful,” Schulz said. “But it is a long and expensive process.”
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