FindTheBest Finds Possible Secret Weapon Against Patent Trolls

Patent trolls are non-practicing entities created for the sole purpose of targeting vulnerable start-up companies. These entities bring patent infringement suits with the expectation that the cash-strapped company will take the relatively low settlement offer as opposed to costly litigation. The purported good faith intent of non-practicing entities is that they are merely licensing patents to other companies and offering protection for the use of those patents, which happens to occasionally require them to bring patent infringement lawsuits. Because this is normally considered a positive purpose, courts are reluctant to limit their abilities to protect their patents. But when one start-up, FindTheBest (FTB), found itself caught in a patent troll battle, it decided to fight back by filing a racketeering claim against Lumen View Technology, a patent troll whose intent seems anything but in good faith. What would otherwise have been Lumen’s 20th settlement is now a burgeoning lawsuit.

FTB owns and operates findthebest.com, a comparison shopping website which has users input their preferences for goods or services and matches them with the most suitable choices. After being served with a complaint on May 29, 2013 from Lumen, FTB’s founder, Kevin O’Connor, decided to take the road less traveled and refuse settlement. Not only was FTB going to face Lumen in litigation, but they also filed a separate claim against Lumen and other entities related to this patent trolling endeavor, accusing them of violating the Racketeer Influence and Corrupt Organizations Act (RICO). An act normally used against the mafia, RICO is currently FTB’s best, and arguably only, weapon to make patent trolls sleep with the fishes.

Although the RICO case is still pending, a Southern District of New York Court has already thrown out Lumen’s original patent infringement suit, granting FTB’s motion for summary judgment. On November 22, 2013, Judge Denise Cote held Lumen’s claim invalid under Section 101 of the Patent Act for three reasons. First, the Court questioned the eligibility of Lumen’s supposed patent, one that protects the “invention” of matchmaking, because it is an abstract idea, a categorical exception to patent eligibility. Second, the patent lacks meaningful limitations, making it difficult for anyone to ensure they are not infringing. Lastly, the patent demonstrates no genuine human contribution to the subject matter because there was no evidence of an inventive idea beyond the computerization of matchmaking. The Court declared matchmaking “as old as humanity itself” and therefore not something that is patentable. FTB’s bold choice of challenging Lumen’s patent infringement claim and incurring the risk of a burdensome litigation has already proven financially successful on two fronts: they did not pay Lumen the settlement money it demanded and, they avoided the more costly aspects of patent infringement litigation.

Ultimately, this decision may also bolster FTB’s RICO claim against Lumen. To find a patent troll liable under RICO, the accusing party must show that the asserted patent infringement claims are “objectively baseless.” Previous claimants have had a tough time showing that the actions of patent trolls meet this objectively baseless standard based on the evidence of the patent troll’s actions alone. Evidence of the typical patent troll pattern, which consists of sending threatening letters to vulnerable start-up companies, falls short of the key facts necessary for an infringement claim. The court dismissing Lumen’s claim before trial may become the differentiating factor from previous failed attempts to use RICO claims against patent trolls.

As the law currently stands, small businesses and start-ups have few, if any, other options than RICO to protect against patent trolls. If FTB succeeds in finding Lumen liable under RICO, this outcome could provide start-up companies with a viable deterrence and defense method. Congress is aware of the negative impact patent trolls have in the technology industry. However, until they can provide a solution that adequately addresses the problem without restricting legitimate patent holders’ ability to protect against infringement, companies like FTB are hoping the outcome of the FTB v. Lumen RICO claim will present at least a temporary solution.