Patent Risk Digest – April 2017

26,000 Patents Ripe for Litigation Against Banks

Banks have been getting sued for patent infringement since 2002, when DataTreasury Corporation targeted large and small institutions over use of image-based check-processing technology. Now, banks are still getting sued for patent infringement, but over a much wider range of technologies.

In fact, about 26,000 patents covering technologies commonly cited in patent litigation against banks are now in the hands of the most litigious plaintiffs—those that acquire patents solely for the opportunity to sue for infringement. Some of the most recent litigation against both national and regional banks has focused on:

Text messaging

Banks increasingly use text messaging to communicate information to customers about transactions. Anuwave LLC began suing banks in November 2015 over this technology, and continued in January this year to file new suits against smaller banks. First-Class Monitoring LLC has filed similarly focused suits against banks this year.

QR codes

QR codes—the machine-readable labels you see on consumer products—are often used in payment processing, advertising, and tracking. Most recently, campaigns by Kaldren LLC targeted larger banks (with new suits in March this year) and Symbology Innovations LLC, which, through 2016, had named about 10 banks in its lawsuits in such cases.

Image transfer

Image-transfer technology has been crucial to the move away from paper processing, resulting in a major transformation in the banking space. Plaintiff Ruby Sands LLC has sued about two-dozen banks since 2015, with the latest case filed in January.

Transactions security

Nearly three-dozen banks have been sued in the past 24 months as part of two separate campaigns related to such technology: one plaintiff, Plano Encryption Technologies LLC, also has targeted insurers; the other, Verify Smart Corp., has been filing suits since 2014.

Suits over Streaming Media Reach Across Industries

Plaintiffs that have acquired patents related to streaming technology—which enables web downloading of media and playback before it fully loads—are asserting them broadly. These cases fall into a more expensive category of patent litigation suits. At risk are not only entertainment companies that offer music and movies online, but also media service providers, makers of consumer electronics, and Internet and social media companies, among others. Even sports leagues and dating sites are at risk—virtually any company that puts video on their websites.

Litigation by Blue Spike LLC is an example of a campaign that has reached many sectors. Its sprawling digital watermarking campaign started back in 2004 and has since named more than 180 defendants. Recent cases have targeted various manufacturers of mobile devices, set-top boxes, and smart TVs capable of accessing streaming media services including Netflix, YouTube, Google Play, HBO Go, and Fox Now. Defendants have also included providers of streaming media services themselves, and many other companies offering products and services in enterprise networking, other types of consumer electronics, software, and social networking sites. Other notable campaigns:

The patent that Blackbird Tech LLC is currently using to sue media services companies was previously owned by Innovative Automation LLC in a campaign that named 70 defendants.
Post Media Systems LLC has sued online music providers alleging infringement of five patents generally related to managing media files for playback over a computer network. The accused products have included the defendants’ music and radio online services and related apps.
Publicly traded Straight Path IP Group, Inc. has targeted companies whose products included various computing devices having streaming media apps and services.

Patent Tracker: Indications of Future Litigation

When patents change hands, it’s usually an indication that the acquiring companies see potential for enforcing those patents. From these transactions or “patent assignments”, lawsuits—at some point—often follow. For example:

Last year, Virtual Immersion Technologies LLC acquired a single patent generally related to virtual reality entertainment. Within months, it had launched a campaign with its first defendants including purveyors of online adult entertainment.
Catonian IP Management LLC—an entity formed just last July—picked up three patents generally related to content management. Last month, it filed suits against cable providers over the subscription and pay-per-view services.
Blue Sky Networks LLC recently filed lawsuits over seven patents it acquired last year related to devices capable of communicating over both short- and wider-range cellular networks. The accused products are certain mobile phones that use Bluetooth to discover nearby devices (e.g. a headset) for communication.

Recently, Empire IP LLC picked up a family of three patents from XathRas Group LLC, related to technology on “producing custom merchandise from a virtual environment”. This is an example of a transaction that suggested litigation to come. Empire IP has launched over three-dozen litigation campaigns targeting a broad variety of technologies since September 2011.

Patent Insurance: Closing A Dangerous Gap in Coverage

Companies insure against E&O, Cyber, and D&O claims as a matter of course. But that still leaves a potentially lethal gap in legal protection against the thousands of patent infringement suits filed every year. Just a single patent suit can take years to resolve, with costs into the millions or even tens of millions.

Can patent litigation insurance close that gap? Is it affordable, effective, and easy? The short answer is yes—in most cases at a cost much lower than you think or have seen in the past. But only if the product has the right components:

Comprehensive patent litigation, market, and cost data—constantly updated to reflect the most recent trends
A data-driven actuarial model that produces accurate, customized risk profiles
A product suite that addresses all levels and types of risk
Proactive risk- and cost-management services that reduce per-case costs and resolution time
Claims management that is comprehensive and effective

In the next editions Patent Risk Digest, we’ll explain each of these essentials—beginning with why robust patent litigation and cost data—and the expertise to interpret it—is rare but critical to the foundation of effective and affordable patent litigation insurance. See RPX’s patent litigation insurance page for more in the meantime.

Contact Us

Contact patentriskdigest@rpxcorp.com to request more detailed information on patent litigation risk in your sector, as it applies to your particular business or clients.