James Lee Phillips
Nov 21, 2011

A case of multiple entity

So, I have a great idea for a new product called a “Bi-Cycle” (crazy name, I know, but bear with me). It’s got a wheel in front, a wheel in back, and a frame in the middle. You make it go by ‘pedalling’ a neat little system of gears and chains, and you steer it with these things that I call ‘handlebars’.

I patent the idea and start selling. But wait a sec -- here comes the Uni company, making a wheel with pedals... and the Pushi company making a wheel with handlebars. And now there’s even a store that sells both!

Okay, now I’m upset. I’ll have to go after them with a patent infringement case, and maybe I’ll get a settlement and/or some licensing revenue. Because this is a clear case of “multiple entities” performing the function of the single patent that I hold. Why, it’s a little like  Akamai vs. Limelight and McKesson vs. Epic.

First, I have to prove that the two companies were working together. Hmm, that’s a tough one. The two companies do not sell an assembled version of their products, and they don’t jointly own a store that sells both of their products (we’ll call it “CollusionMart”). So that satisfies 35 USC 271 (a). No direct infringement, alas.

But then there’s 35 U.S.C. 271(b), “contributory infringement”, and that’s where I look VERY hard at Pushi -- because I can’t see where anyone would ever want a Pushi except to turn a Uni into a Bi, so to speak.

Neither company makes a “kit” or even sells plans. Nothing on THEIR websites says anything about Bi-Cycles; Uni especially has lots of picture of people happily riding around on one wheel (often while juggling, which I just don’t get). Of course there are about a hundred websites and message boards and social media groups describing the assembly -- but neither Uni nor Pushi are involved.

According to the standard precedent of Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565 (Fed. Cir. 1985), if neither company is caught encouraging customers to put the Uni and the Pushi together to make a Bi-Cycle, they’re not responsible.

So I guess unless my lawyers can dig up some damning emails  between Pushi and Uni -- or even congratulatory posts by company personnel on the UniPushiModX Facebook page -- it looks like I’m out of luck.

You know who thinks this is a good thing? Apple, Google, eBay, Facebook, Cisco, HTC, Dell, Intel, Yahoo!...all of whom came out to support Limelight (but not my wholly allegorical Bi-Cycle company).

I’ll give you about three seconds to realize why these companies believe that a victory for Akamai would (as they wrote to the court) “stifle commerce and place further upward pressure on product costs by allowing for opportunistic litigation in which more and more market participants that touch a multifeature product or system or network are sued together. Likewise, opportunistic plaintiffs would pursue even more companies to seek cost-of-defense style settlements from each.”

I’ll resurrect the vague and specious claim of smartphones having 250,000+ patents, simply for the sake of pointing out that any given device (from Dell’s laptops to Facebook’s third-party-packed social network) is made up of an extremely long list of patents. The hardware alone is considerable, but at least it’s a fixed number; software patents mean that updating operating systems and downloading apps opens the door to a constant stream of new patents to existing devices. And that’s not even touching the as-yet untested question of liability for distributed models (i.e., do you become a stakeholder when you’re just another part of the cloud?).

As the inventor of the Bi-Cycle, I guess I’d be satisfied (although obviously not happy) if Uni, Pushi, and I were all paying licensing fees to the people who invented the wheel and the pedal and the seat. That would be fair, right? At the very least, it would restrict patent litigation to holders of patents on the individual components -- making the concept of “multiple entities” virtually obsolete.

There’s an obvious danger of reductio ad absurdum in this system -- less so for hardware, where you can usually see the line where ‘components’ become mere ‘materials’. Software patents, on the other hand, can include some pretty basic patentable elements -- buttons, scrollbars, etc -- not to mention vague and simple means of doing things (a patent dispute over who owns CTRL-Z would be very dangerous).

But it would certainly be simpler. Once a ‘building-block’ patent was fully asserted (and licensing reasonably regulated), you would have to accept that there are diminishing returns from having your R&D team constantly looking for loopholes while your legal team tries to prove that yours is ‘different enough’. Just pay the license and use the components as part of your innovative expanded product -- focus more time on innovation rather than litigation (of course, you can still lobby for fair, reasonable, and non-discriminatory terms).

Eventually, some wunderkind will come along and create some sort of futuristic space-age Moto-Cycle, and he or she won’t take me to court when a bunch of hackers decide to slap an engine on one of my Bi-Cycles.