When patent holders attack

Web site operator Tim Beere received a call last week from his attorney telling him that a judge had tossed out most of a defamation lawsuit he has had to fight as a result of one of those absurd patent disputes that are becoming a blight on the industry. You’ll understand in a moment why Beere wasn’t exactly jumping for joy at the news.

Web site operator Tim Beere received a call last week from his attorney telling him that a judge had tossed out most of a defamation lawsuit he has had to fight as a result of one of those absurd patent disputes that are becoming a blight on the industry.

You’ll understand in a moment why Beere wasn’t exactly jumping for joy at the news.

Beere and his wife, Cathy, own DeBrand Fine Chocolates in Fort Wayne, Ind., a modern-day mom-and-pop with four stores, 100 employees and a presence on the Web for about seven years. The site – www.debrand.com – is merely a promising adjunct to the company’s more-established mail-order and foot-traffic channels.

Or at least it was until last year when DeBrand became one of some 50 itsy-bitsy Web operations sued for infringing on two patents covering standard e-commerce credit-check processes that are held by Pangea Intellectual Properties (PanIP) of San Diego.

Beere and the other site operators – all based outside California – were presented with a choice by PanIP: pay a $5,000 “licensing fee” – it was originally $30,000 for some – or get ready for a court fight in San Diego. A few met the demand, mindful that defending against a patent infringement claim can cost hundreds of thousands of dollars even if the venue isn’t half a continent away.

Deciding that he just couldn’t cave, Beere set about mounting a defense. He has so far rallied 15 of his fellow defendants to the cause – one joined just last week – and the team has a lawyer in San Diego.

This is where the defamation suit comes in. Preposterous though it might sound, PanIP sued Beere personally for kicking up a fuss, launching a Web site about the case – www.youmaybenext.com – and using colorful language to describe his plight in press interviews. Beere says he’s not sure whether he actually called PanIP’s tactics “legal extortion” or not, but you don’t need to be a lawyer to know that such a comment would pass muster as protected speech.

“I’ve never accused them of doing an illegal act,” Beere says. “They have legal patents. But even given that, everyone still sees this for what it is.”

The confrontation has generated a fair amount of media attention and PanIP executives have remained steadfast in defending their actions. They insist the patents are being applied properly, the companies they’re suing are in violation, they intend to exercise the full force of their intellectual property rights and their reasons for selecting certain targets over others are really beside the point. A PanIP attorney has suggested millions of e-commerce companies might be in violation of the patents.

“It’s a good strategy if that’s the way you want to make your living,” Beere says.

Independent experts who have examined the patents are in wide agreement that they are too broad to be applied in the manner that PanIP has chosen. And there’s no way for an unbiased observer to look at this situation from Beere’s perspective and see anything other than an outrageous injustice.

However, one intellectual property lawyer I spoke to last week said we all should get accustomed to such hardball tactics on the part of patent holders because they aren’t likely to stop any time soon.

While fending off PanIP’s lawyer, Beere and his fellow defendants also are seeking relief from the U.S. Patent and Trademark Office, which could review the case and decide the patents are being applied too broadly. If that doesn’t happen, the matter will be settled in court.

Everyone else who wants to conduct e-commerce without this kind of threat hanging over their heads ultimately will need relief from Congress.

Don’t hold your breath.

Don’t hold your tongue either. Comments should be directed to buzz@nww.com.