[1]With several different instances of patent trolls coming to the fore in the last few years, and with the recent racketeering and fraud charges [2] being brought against sometime-accused-troll [3] David Gothard of Activelight Inc., (president of Activision.TV and more), we decided that it was high time that we looked in depth at the digital signage industry and what seems, to date, to be a lack of cohesiveness in fighting (so-called) ‘patent trolls’.
We put a number of questions to Ken Goldberg (shown above), this year’s chairman of the Digital Signage Federation, (and now [4]) the ONLY industry association representing the digital signage industry in the U.S, – Ken doesn’t get paid for this; his daytime job is, of course, as CEO of Real Digital Media [5] based in Sarasota, Florida, Ed.
- Does the DSF have a stance on Patent and Troll issues? The Digital Signage Federation is clear in its mission of education, advocacy and the advancement of our industry. As that relates to patents and the efforts of patent holders to sue alleged infringers of those patents, our stance is equally clear: we understand and support the role of patents in protecting the intellectual property of inventors, but we dispute the claims of those that assert that they invented digital signage or critical components of digital signage, notwithstanding any success they may have had with United States Patent and Trademark Office (USPTO) examiners.
- Why has the DSF been so long in coming up with a defense at all? We’ve heard that question many times before. The simple fact is that fighting Non-Practicing Entities [6] (NPEs) – ie. patent trolls – who are armed with granted patents and hedge fund dollars costs money: lots and lots of money. Given the meager amounts we charge for membership and the many programs DSF must support, funding and administering litigation is not really feasible. Further, where does one draw the line? Should we fight every patent assertion effort, or just some?
- Has the DSF tried to organize any anti-troll activities? Towards the end of 2013, two third parties (two individuals who prefer to remain anonymous for the time being) set in motion a chain of events that would eventually result in what was probably the first ever meeting of those associations who represent – or pretend to represent, depending on your viewpoint, Ed, the digital signage and / or the Out-of-Home industry. Letters from said ‘individuals’ to association leaders initially raised the issue and called for some form of concerted response, followed by an impromptu legal briefing during New York Digital Signage Week. Early in 2014 the executive Committee of the DSF quickly determined that something had to be done with regard the NPEs and were then pro-active in getting the Digital Screenmedia Association (DSA); the Digital Place-based Advertising Association (DPAA); and the Outdoor Advertising Association of America (OAAA), each of whom had members at risk or in court with a particular NPE, together, for a first of its kind meeting in the Manhattan offices of a prestigious law firm, where the basics of the strategy were discussed, and possible actions outlined.It was clear that it would require significant funding.After the meeting, the OAAA and DPAA bowed out immediately, citing different reasons. While we were disappointed, we were both unsurprised and unbowed. We proceeded to solicit two proposals from top shelf firms with significant Intellectual Property (IP) practice groups, and selected the one we felt was best qualified. DSA said that it would join the fight and help us seed the strategy that was recommended by outside counsel. We were pleased by that. In fact, a joint letter went out in August from DSF and DSA to a list of potentially at-risk companies, seeking their support. At the same time, the DSF Board of Directors unanimously approved a significant legal budget to get the ball rolling in good faith. We were assured that our new friends at DSA would match the investment dollar for dollar, but ultimately, they followed the path chosen by DPAA and OAAA. We were on our own.
- What is your take on the validity of these particular Activision.TV patents? I am not an attorney, nor am I an intellectual property expert. One must deal with the fact that the USPTO granted a portfolio of patents to Activelight that were published for opposition in the standard process. My personal, layman’s opinion is that the patents never should have been granted. But they were, and now there are only very specific options for challenging the validity of those patents. We believe that we have an outstanding strategy for taking that on as appropriate.
- Why haven’t other associations done anything about the Troll issue? Mostly money, from what I can gather. Some have members that have settled, who don’t want association dollars used for purposes that no longer benefits them, which I find selfish and short-sighted. We have members who had settled, yet were not opposed to DSF spending money to organize a fight. To me, that is the difference between understanding that you are a part of something larger than yourself, and I respect that.
- What has been the biggest obstacle for the industry that made the big companies give in to the patent trolls? That’s easy: Fear of the cost of litigation and the uncertainty of the outcome of litigation.
- Has DSF come up with any solid plans now re same? We have. With the funds that were approved by the DSF’s Board of Directors and outside counsel’s leadership, we have organized an entity that is separate and distinct from the Federation and its members. That entity will be able to solicit funds, and pursue the very aggressive strategy that has been developed by the prestigious law firm that we engaged. We are actively discussing best next steps. As to Activelight, one particularly active NPE, my fear is that the investigation of Mr. Gothard has more to do with Gothard’s alleged activities than the validity of the patent portfolio. There is a fight to be had. When, where and with whom seems to be in flux, but we are ready.
- Do you personally have some ideas that you’d like to see implemented re same? I do, but they get tempered by the realities of the legal process.
- How are companies supposed to know if trolls are using false representation with regard their patents? This is noted in the third paragraph in this separate post (click here), Ed [2]. What Gothard has been accused of relates mainly to how he funded his activities, not to the validity of the patents. So I am not sure that would be a factor related to a company’s decision whether to settle or fight. That said, it is pretty easy to learn about the track record of anyone these days. I often use Google.
- With regard the above question: Could that be easily detected if a company hired a lawyer or investigator to look into same before paying off a troll? Yes, but it may not change your ultimate action.
- What exactly is a ‘patent assertion entity’? The PAE [6] is an entity that is formed for the sole purpose of taking action to ensure that patents granted covering intellectual property are not infringed. This usually means notifying alleged infringers of the patent, and the PAE’s assertion that they believe there is infringement. From there, it generally gets settled or litigated. You often hear the alternative identifier of Non-Practicing Entity, or NPE, for such entities. NPE hold patents but do not engage in a business that leverages those patents in practice. They exist only to assert rights over other companies. Often the derogatory term ‘Patent Troll’ is used as colorful shorthand for NPEs and PAEs. I find that easier to remember, but less polite to use.
- Does anyone ever look into trolls’ backgrounds before paying off? Again, even a major criminal could hold a patent and his/her illegal behavior would not necessarily invalidate the patent itself. Some digital signage networks would be surprised if they knew how their vendor got started in the business, but that might not impact their decision to use that vendor.
- Where does a product development patent end if a company develops its own product, based on the original product and incorporates changes? This is a legal question that I am not qualified to answer.
- The Digital Screenmedia Association (DSA) originally made plans to fight but nothing was done. Do you have any idea why? DSA talked the talk, but ultimately did not walk the walk. If the DSA were truly independent, I believe they may have had the ability to follow through, but that is apparently not the case.
- It sure looks like Gothard knew the value of each company and knew the approximate amount to ‘charge’ – as opposed to how each might have allegedly infringed on the patents. Their lawyers do a lot of groundwork and have a number in mind before the first threatening letter is sent.
- What is your take on the Florida racketeering charges? I think Pam Bondi has been an excellent Florida’s Attorney General and should be commended for taking very assertive action on behalf of the citizens of Florida, the various investors that were allegedly bilked, and the digital signage industry itself.
- Is the fight over if Gothard is brought to justice in Florida? The Digital Signage Federation, as the only independent and diverse association in place, plans to continue its leadership and advocacy for the entire industry and will continue to keep tabs on patents, and other issues that might affect the growth of the digital signage industry.