Patent trolls want $1,000—for using scanners An alphabet soup of patent trolls is threatening end users with lawsuits.

http://arstechnica.com/tech-policy/2013/01/patent-trolls-want-1000-for-using-scanners/           have we lost our minds? :)  um i don't know?   ..umm i think hehe  well maybe ? oops    there CAN'T  b  a list for  this?

Patent trolls want $1,000—for using scanners

An alphabet soup of patent trolls is threatening end users with lawsuits.

by Joe Mullin - Jan 2 2013, 9:30am EST

Aurich Lawson / Thinkstock

When Steven Vicinanza got a letter in the mail earlier this year informing him that he needed to pay $1,000 per employee for a license to some “distributed computer architecture” patents, he didn’t quite believe it at first. The letter seemed to be saying anyone using a modern office scanner to scan documents to e-mail would have to pay—which is to say, just about any business, period.
If he'd paid up, the IT services provider that Vicinanza founded, BlueWave Computing, would have owed $130,000.
The letters, he soon found out, were indeed real and quite serious—he wasn't the only person getting them. BlueWave works mostly with small and mid-sized businesses in the Atlanta area, and before long, several of his own customers were contacting him about letters they had received from the same mysterious entity: "Project Paperless LLC."
"I was just mad."
Vicinanza soon got in touch with the attorney representing Project Paperless: Steven Hill, a partner at Hill, Kertscher & Wharton, an Atlanta law firm.
"[Hill] was very cordial and very nice," he told Ars. "He said, if you hook up a scanner and e-mail a PDF document—we have a patent that covers that as a process."
It didn’t seem credible that Hill was demanding money for just using basic office equipment exactly the way it was intended to be used. So Vicinanza clarified:
"So you're claiming anyone on a network with a scanner owes you a license?" asked Vicinanza. "He said, 'Yes, that's correct.' And at that point, I just lost it."
Vicinanza made the unusual choice to fight back against Hill and “Project Paperless”—and actually ended up with a pretty resounding victory. But the Project Paperless patents haven’t gone away. Instead, they’ve been passed on to a network of at least eight different shell companies with six-letter names like AdzPro, GosNel, and FasLan. Those entities are now sending out hundreds, if not thousands, of copies of the same demand letter to small businesses from New Hampshire to Minnesota. (For simplicity, I'll just refer to one of those entities, AdzPro.)
Ars has acquired several copies of the AdzPro demand letter; the only variations are the six-letter name of the shell company and the royalty demands, which range from $900 to $1,200 per employee. One such letter, in which AllLed demands $900 per worker, is published below. The names of the target company has been redacted. Sources that provided the letters are concerned that speaking on the record about their case could result in additional attention or threats from the patent owners.
Led Letter.final.redacted
Vicinanza’s experience puts him at the heart of a type of "patent trolling" that has taken off in the past year. The Project Paperless via AdzPro letter-writing campaign is a kind of lowest-common-denominator patent demand. Patent-licensing companies are going after the users of everyday technology rather than their traditional targets, the tech companies that actually make technology. This year, more than ever, trolls have moved beyond tech in a big way.
Smaller and smaller companies are being targeted. In a paper on “Startups and Patent Trolls,” Prof. Colleen Chien of Santa Clara University found that 55 percent of defendants to patent troll suits are small, with less than $10 million in annual revenue. Even in the tech sector, a full 40 percent of the time, respondents to patent threats are being sued over technology that they use (like scanners or Wi-Fi) rather than their own technology.
Project Paperless and its progeny don’t have any interest in going after the Canons and the Xeroxes of the world. After all, they have patent lawyers on payroll already and are in a far better position to push back. Rather, Hill wanted to collect royalties from BlueWave and its customers.
Project Paperless' spawn—AdzPro, AllLed, GosNel, and the others listed above—exemplify the new strategy. They send out vast quantities of letters, mainly to businesses that never could have imagined they’d be involved in any kind of patent dispute. They send them from anonymous and ever-changing shell companies. And at the end of the day, they either file only a few lawsuits—as Project Paperless did—or none at all, which has been the AdzPro strategy thus far.
“Going after the end users may ultimately be more lucrative for them,” said one patent litigator at a technology company that's closely monitoring the AdzPro situation. “If they extract a small amount from each possible end user, the total amount might well end up being a much larger sum than they could ever get from the manufacturers. The ultimate pot of gold could end up being much bigger."

"Atlanta's Best Workplaces" become a lot less fun

Steve Vicinanza.

As a services provider to other businesses—who often sold scanners as part of his package—Vicinanza was well-positioned to get some sense of the scope of the Project Paperless campaign. He personally had conversations with about a dozen recipients of the letters and he suspects that about 50 to 100 companies in the Atlanta area received a letter. Another batch was sent out in Virginia. Vicinanza noticed a few of his customers who had been threatened had been on the “Atlanta’s Best Workplaces” list published annually by the Atlanta Journal-Constitution. The “best workplaces” list included the number of employees each business had, which would have been useful to Project Paperless lawyers in calculating their demands. These were always on a per-employee basis.
Working backward off the “best workplaces” list, Vicinanza was able to get in touch with several other Project Paperless targets, suggesting that Project Paperless lawyers were indeed targeting companies based on the list.
Reactions to the letters varied. “Without question, some people were livid,” said Vicinanza. “Some of the smaller ones were scared out of their wits, in addition to being livid.”
Some were ready to fight back, while others had no intention of doing so. One mid-sized Atlanta business in the process of being acquired by a major Silicon Valley tech company paid the Project Paperless demand, no questions asked. Some companies just ignored the letters; others talked to an attorney. It isn’t clear the companies that did speak to their lawyers about the situation actually fared better.
“The patent attorneys typically have a whole different set of objectives,” said Vicinanza. “Now they’re in settlement mode. If the company does end up getting sued and the lawyer said ‘ignore them,’ a company could find themselves paying treble damages. Even my attorneys told me, settle it, you’re crazy to fight.”
But that wasn’t Vicinanza’s style. “I’m an IT guy, so I read the patent—and I was just appalled that this could even be called a patent.”
Project Paperless has four patents and one patent application it asserts, all linked to an inventor named Laurence C. Klein. “It was a lot of what I’d call gobbledygook,” said Vicinanza. “Just jargon and terms strung together—it’s really literally nonsensical.”
Readers wishing to judge for themselves can take a look at the asserted patents, numbers 6,185,590, 6,771,381, 7,477,410 and 7,986,426. AdzPro also notes it has an additional patent application filed in July 2011 that hasn’t yet resulted in a patent. The patents may have been useless from a technologist’s perspective, but fighting them off in court would be no small matter.
“My lawyer said, even if you win, this case will cost a million dollars. I said, I don’t think it will—but I’d rather pay a million than pay these guys $200,000.”
In 15 years of being in business, BlueWave had never been involved in a lawsuit of any kind. “This sort of thing is detrimental to the whole industry,” said Vicinanza. “If everybody just rolls over, that just encourages them [patent trolls] to keep going.”
In March, the ball dropped and Project Paperless’ threats against BlueWave turned into an actual lawsuit. As he promised, Vicinanza didn’t settle. Instead, he spent $5,000 on a prior art search and sent the results to the Project Paperless lawyers. He also hired a new lawyer, Ann Fort, who filed a third-party complaint against four of the companies that actually made the scanners—Xerox, Canon, Hewlett-Packard, and Brother. That could have compelled the manufacturers to get involved in the case.
In the end, Hill and his fellow lawyers at his small Atlanta firm, Hill, Kertscher and Wharton, didn’t have a lot of fight in them. Two weeks after he filed the third-party complaint, Project Paperless dropped its lawsuit. No settlement, no deal—they just went away. (As a result, the scanner makers never actually came to court.)
When Project Paperless dropped its suit, that was the end for Vicinanza and Blue Wave. But Vicinanza was proud of standing up. He put out a press release describing his saga as a “small victory in the war against patent abuse.”
BlueWave’s win was hardly the end of the Project Paperless patents, however. Today, those patents are at the heart of an even more expansive campaign to get cash out of America’s small businesses for using everyday office equipment.
Steven Hill declined to comment on Project Paperless, saying only that his firm declined to discuss what was a “client matter.” Hill also refused to comment on the new entities sending out AdzPro letters today, or any links he and his partners have to those companies.

Aurich Lawson

Project Paperless is dead—Long live AdzPro! And GosNel and FasLan!

BlueWave was the company that went most public in its fight against Project Paperless, but Vicinanza was hardly the only business owner upset about the situation. An anonymous defendant put up a detailed website called “Stop Project Paperless,” with detailed information about the patents—and their links to the Hill, Kertscher and Wharton law firm.
The document trail suggests that partners at that law firm, including name partners Steven Hill and Scott Kertscher, may have ownership interests in the patent-trolling project through a network of other shell companies with names like Bonita Sunrise LLC and PCB Intellectual Properties.

Even now, months after its creation, a Google search for “Hill Kertscher Wharton” brings up the “Stop Project Paperless” site as the second link; the site encourages searchers to consider “ending patent trolling.” The site is registered anonymously; an interview request sent by Ars through the site’s contact form received no response. By August, Project Paperless wrapped up its lawsuits against BlueWave and several other defendants as well. In September, the company unloaded its patents to a newly created holding company called MPHJ Technologies. It underwent a dramatic transformation.
Today, no less than eight different licensing companies now send out a nearly identical letter demanding payments over the same patents once owned by Project Paperless.
The goal, in part, seems to be keeping the owners of the new project anonymous. The document trail is murkier, since it isn’t clear who owns MPHJ Holdings. MPHJ is registered as a Delaware company and does not have to disclose any officers or owners. However, it is possible that at least Steven Hill and Scott Wharton don’t have some kind of ongoing connection to the new entities. It was Hill and Wharton who moved the patents from their personal shell companies, Bonita Sunrise and Wexford Holdings, into MPHJ.
Another aim may be to simply make it harder for target companies to find the “Stop Project Paperless” website that condemns the project, invites business owners to get in contact, and links the patent-trolling project to Hill, Kertscher, and Wharton. Searching for "AdzPro" or "GosNel" doesn't produce much.
Still, the links can’t totally be eliminated. Those searching for the patent numbers will still tend to find BlueWave's lawsuit, leading to Steven Vicinanza’s press release. In fact, Vicinanza’s attorney, Ann Fort, has become something of a clearing house for information about the new project.
Through interviews with Fort, independent contact from target companies, and searches at the Delaware Secretary of State, Ars has learned the patent threats are going out under at least ten differently named LLCs. Those entities are named AccNum, AllLed, AdzPro, CalNeb, ChaPac, FanPar, FasLan, FulNer, GosNel, and HunLos.
All the entities send out a letter identical to the one embedded above, with slightly varying licensing costs. AllLed asks for a $900 per employee payment, for example, while AccNum demands $1,200.
The maze of new entities “makes it difficult for the defense community to share information,” said Fort. But beyond the gibberish company names, the tactics appear to be extremely similar to those of Project Paperless: go after small companies least able to pay for legal defense.
“None of these are businesses I would recognize as nationwide—they are regional, at best,” said Fort, who has been contacted by many since her win on behalf of BlueWave.
At least some of the companies receiving an AdzPro threat letter also receive follow-up contact from Meaghan Whitehead, an attorney at Texas law firm Farney Daniels. Whitehead didn't respond to

The AdzPro threat: "Conform your behavior" and pay up

The AdzPro letter itself is like a bizarre five-page missive from an alternate dimension. It suggests a world in which business owners are happily forking over their money in order to “accept the benefits” of the patented technology.
In this brave new world, any office that has a network with a scanner that connects to computers with e-mail software, like Outlook or Lotus, is an office that should be paying for AdzPro’s patents.
The letter continues:

You should know also that we have had a positive response from the business community to our licensing program. As you can imagine, most businesses, upon being informed that they are infringing someone’s patent rights, are interested in operating lawfully and taking a license promptly. Many companies have responded to this licensing program in such a manner. Their doing so has allowed us to determine that a fair price for a license negotiated in good faith and without the need for court action is a payment of $900 per employee. We trust that your organization will agree to conform your behavior to respect our patent rights by negotiating a license rather than continuing to accept the benefits of our patented technology without a license. Assuming this is the case, we are prepared to make this pricing available to you.

The AdzPro demands fly in the face of the real history of innovation in this space. The earliest patent of that bunch was filed in 1997. Modern scanners have existed since the 1980s, and e-mail was widespread by the mid-1990s. The Stop Project Paperless site easily found a Ricoh patent that suggests merging the two technologies and was filed in 1996, predating the earliest Klein patent by a year.
None of that changes the fact that actually neutralizing the Klein patents would be a very costly legal endeavor. Confronted with prior art, the owner of the patents would likely dodge by saying his patents actually cover a very specific kind of network not anticipated by earlier patents or other publications. That’s what makes killing off patents so hard.
It’s a lopsided system. When confronted with prior art in court, patent owners can insist on the narrowness of their patented technology. Yet when they’re sending out demand letters, they can claim a vast array of everyday business practices is their “property.”
One big difference between the AdzPro network and Project Paperless is that the new entities haven’t filed any lawsuits, at least not so far. The plan may be to never file suit, but rather to see how many businesses are intimidated into paying up by letters and e-mails alone.
As problematic as that practice is, it may be a foolproof way for patent owners to score settlements with relatively little effort. “I think this model is something that’s going to recur,” noted Fort.

"This is Legal Department. That's all we can say."

The same address and contact phone number is on every variation of the six-letter entities. The address is just a mailbox in a UPS store in Newark, Delaware. As for the phone number on the letters, 855-744-2360—I called it. The conversation was not enlightening.
“Thank you for calling the legal department,” said a youngish-sounding man. “This is Kevin, how can I help you?”
I was calling about a letter I was holding from AllLed, I explained. Kevin asked for my letter’s “file number,” which was the one thing I couldn’t give him—it would have revealed the source from whom I had received the letter. I told Kevin I was a writer who had been given the letter by someone else. All I wanted to do was contact AllLed, LLC directly—so how could I do that?
“We don’t have any information on the entities that send the letter,” he said. It was just an answering service. “We don’t have their contact information.”
“Well, who are you the ‘legal department’ for?” I asked.
“Hmmm,” said Kevin. “Legal department.”
“I don’t get it—is ‘Legal Department’ a real company?” I persisted.
“Hmmm,” said Kevin again. “We’re just Legal Department.”
“Well, you work for someone, right? What company do you work for?”
“This is Legal Department. That’s all we can say.”
Some of the companies receiving the AdzPro-style letters also received follow-up "reminder" letters from Maeghan Whitehead, an attorney at the law firm Farney Daniels. Whitehead didn't respond to inquiries from Ars about the letters.

Use scanners, Wi-Fi, SSL? We're all infringers now

The tech sector has been seeing a growing flood of patent lawsuits for about a decade now. But in the history of patent trolls, 2012 may go down as the “year of the user.” The AdzPro letters are a particularly alarming example of a practice that has become commonplace in the past year or two—going after the users of basic technologies.
Other examples abound. It was just over a year ago when Innovatio IP Ventures began suing small chain hotels and corner coffeeshops, with damage demands of $5,000 or less. That model inspired a brief stint of negative press coverage, but the lawyers litigating the patents, which originated at Broadcom, didn’t back down. Well-known patent plaintiffs’ lawyer Ray Niro issued a full-throated defense of the patents and the licensing tactics earlier this year. And it is clear who he wants to pay: absolutely everyone.
“Infringement is widespread," explained Niro in an interview with Gene Quinn, a patent lawyer who blogs as IP Watchdog. "Virtually every company in the US operates wireless networks, either for their own internal business operations or as a value-added 'hotspot' service to their guests and patrons."
Other companies that have ramped up campaigns against users of technology in the past year include TQP Development, which is wielding a patent on the SSL encryption protocol that’s ubiquitous on the Web; and ArrivalStar, which is going after public transit systems that increasingly use vehicle-tracking technology of some sort, although cities rarely invent that technology themselves.
“I really think that is a smart strategy from the perspective of a patent owner,” said the patent litigator who is monitoring the AdzPro campaign. “They’re sending letters to mom-and-pop shops, most of whom have zero experience with patents or patent infringement. So, they see the word 'patent' and it causes a little bit of panic.”
The best strategy for target companies? It may be to ignore the letters, at least for now. “Ignorance, surprisingly, works,” noted Prof. Chien in an e-mail exchange with Ars.
Her study of startups targeted by patent trolls found that when confronted with a patent demand, 22 percent ignored it entirely. Compare that with the 35 percent that decided to fight back and 18 percent that folded. Ignoring the demand was the cheapest option ($3,000 on average) versus fighting in court, which was the most expensive ($870,000 on average).
Another tactic that clearly has an effect: speaking out, even when done anonymously. It hardly seems a coincidence that the Project Paperless patents were handed off to a web of generic-sounding LLCs, with demand letters signed only by “The Licensing Team,” shortly after the “Stop Project Paperless” website went up. It suggests those behind such low-level licensing campaigns aren’t proud of their behavior. And rightly so.

Joe Mullin / Joe Mullin has covered the intersection of law and technology — including the world's biggest copyright and patent battles — for a number of years, mostly at The American Lawyer.