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August 2018
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Stupid Patent Of The Month: Upaid Sues 'Offending Laundromats' For Using Prepaid Cards

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When patent trolls threaten and sue small businesses, their actions draw the public's attention to the worst abuses of the patent system. In 2013, a company called MPHJ Technology got called out in a U.S. Senate hearing as a "bottom feeder" engaged in "garden-variety extortion" after it sent out thousands of demand letters demanding payments from small businesses that dared to use printers with "scan-to-email" functions. Lawmakers, understandably, found it incomprehensible that broad, stupid patents were being used to sue burger stands and grocery stores.There's a good reason for that concern. It's hard to see how lawsuits against small businesses using basic technology do anything to "promote the progress of science and the useful arts." By contrast, it is easy to see how these lawsuits harm companies and consumers by increasing the costs and risks of doing business.But the intermittent public attention hasn't stopped this most basic abuse of the patent system. Upaid Ltd., a shell company based in the British Virgin Islands, has been filing patent infringement lawsuits throughout 2018, including 14 against laundromatsyes, laundromatsfrom California to Massachusetts.Upaid says that laundromats are infringing U.S. Patent No. 8,976,947. Claim 1 of the patent describes a computer system that performs "pre-authorized communication services and transactions," after checking an account to see if a user "has a sufficient amount currently available for the transaction." It's essentially a patent on having a prepaid account forwell, anything.Right now, Upaid lawyers are focused on systems run by Card Concepts, Inc., a service provider that markets a system called Laundry Card to laundromats. Many of the Upaid's complaints simply point to online photos of the laundromats and the relevant card dispensers as evidence of infringement.This incredibly broad patent was granted in 2015, but dates to a series of applications stretching back to 1998. Even in 1998, a prepaid account was not an inventive concept. It's a basic and longstanding idea, that isn't improved by adding verbiage about a "plurality of external networks" and a "computer readable medium."And that's exactly the argument that lawyers for Card Concepts Inc. made [.pdf] when they got sued by Upaid last year. CCI has rightly argued that the patent should be invalidated as abstract under the Alice decision. CCI's motion may well succeed in defending their customersat some point.Meanwhile, though, Upaid has unleashed 14 lawsuits against laundromats in different states, and has promised more. Faced with the prospect of paying a lawyer, even if just to buy time, some of those small businesses are likely to pay unjustified licensing fees for this patent.In fact, it has begun to happen. Last week, UPaid put out a press release boasting that a Houston-based facility called 24 Hour Laundry had agreed to pay them. Laundromats in Kansas, Massachusetts, and Monterey, California are next up on the list."When required, we will strenuously enforce our rights through litigation against offending laundromats," warned Upaid CEO Simon Joyce. "Our recent settlement reveals that many parties are not aware that the card equipment critical to their successful laundry business infringes our patents."Upaid's behavior is brazen, but it is not an anomaly. Other patent trolls have waged campaigns against small businesses that merely use off-the-shelf technology. For example, Innovatio IP Ventures sent thousands of letters targeting hotels and cafes that provide Wi-Fi for customers. In Upaid's case, the company's website doesn't list any products or services, but states that it is engaged in "ongoing development" of "intellectual property related to mobile commerce systems."Lawsuits against small, non-technology business show how trolls exploit the patent system. The costs to challenge a wrongly granted patent are highdefending a patent lawsuit through a jury trial can cost millions of dollars. Faced with the possibility of that kind of "winning," small businesses will often fold.Yet this year, patent maximalists are actually talking about rolling back the key changes to patent law that give small businesses a fighting chance. The Alice Corp. v. CLS Bank decision has stopped hundreds of "do it on a computer" style patents in their tracks. Meanwhile, inter partes review, a process that can get wrongly issued patents thrown out at a lower cost, are also under attack.Instead of considering patent bills that move in exactly the wrong direction, like last year's STRONGER Patents Act, Congress should consider legislation focused on how to help the smallest businesses from being roped into unjustified and expensive patent disputes.Reposted from EFF's Stupid Patent of the Month series.

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You Caught A Bullshit 'Photographing The Police' Arrest Too Soon, Federal Judge Tells Plaintiff

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A federal judge in Texas has ruled the right to photograph public officials in public is indeed protected under the First Amendment. The problem for the plaintiff in this case is that the right wasn't clearly established at the time his arrest occurred. The lawsuit survives, but just barely, and the transit cop who engaged in a pretty-much-established violation of the photographer's rights will escape being held liable for abusing their position. (h/t Eric Goldman)Avi Adelman, a freelance journalist, was photographing EMS officers responding to the scene of an apparent overdose. DART (Dallas Area Rapid Transit) officer Stephanie Branch arrived at the scene and placed herself between Adelman's camera and the medical scene. Branch made up something about "establishing a perimeter" and "HIPAA violations" and told Adelman to stop photographing. According to the decision [PDF], Officer Branch also asked Adelman to leave the scene nine times and (for whatever reason -- most likely because Texas cops just don't seem to understand this particular law) for his ID four times. Adelman refused and was arrested, spending 20 hours in jail.An internal investigation by DART resulted in a letter from Chief James Spiller to Adelman telling him the bogus "criminal trespass" charge against him would be dismissed. It also contained an admission of guilt: the letter stated the interaction and arrest were "not consistent with DART… policies and directives." And, just to prove the old adage holds true, DART discovered Officer Branch made twenty-three false or inaccurate statements in her report, including falsely claiming Adelman was only a "few feet" from responding paramedics.So, you'd think an admission of wrongdoing would pave the way towards a successful civil rights lawsuit. Unfortunately, that's not the case. The admission the arrest was not consistent with DART policies pretty much defused any "policy and practice" or "failure to train" claims Adelman might have brought against DART. And circuit precedent shuts down Adelman's attempt to hold Officer Branch directly responsible for violating his rights.

In her motion for summary judgment, Branch argues that the First Amendment right to film the police or by reasonable extension to photograph emergency medical activity, as Adelman was doing, was not clearly established at the time of Adelman's arrest in 2016. [...] In support of her argument, Branch relies on the Fifth Circuit's holding in Turner v. Lt. Drive...
The Turner decision was handed down in 2017. In that case, the Appeals Court went the distance, clearly establishing a First Amendment right to record police activity. But that doesn't help Adelman at all and allows the cop who lied 23 times on her report to duck out this lawsuit.
The Court finds that the holding in Turner applies to the case at hand. At the time that Adelman was arrested for photographing a medical scene attended to by DFR paramedics and DART police, the right to photograph police was not clearly established. Therefore, Branch may assert a defense of qualified immunity.
And, despite DART's admission the arrest was not according to its own policies, Adelman is unable to move forward with his Fourth Amendment claims against Branch. Adelman's claims against DART, however, will move forward. Since a municipal entity is unable to assert a qualified immunity defense against claims like Adelman's, it will have to continue to defend itself against Adelman's First and Fourth Amendment claims. Unfortunately, DART's letter to Adelman seems to indicate his arrest was the work of a rogue transit cop who violated DART policy and lied about it. Ultimately, it may be found DART is not liable for arrests that violate policy, leaving Adelman with nothing but a legal bill for his troubles.

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