Stupid Patent of the Month: Digital Verification Systems Patents E-Signatures 

Patent trolls make patents, and argue over them. They don’t have to ever make the thing described in their patents, if it’s even possible to determine what those things are. Instead, they generate legal threats and waste the time and money of companies that do do these things. 

This month’s Stupid Patent of the Month is a great example of that. U.S. Patent No. 9,054,860 has been used by a company called Digital Verification Services, LLC, (DVS) to sue more than 50 companies that provide different types of e-signature software. 

There’s no evidence that the inventor of this patent, Leigh Rothschild, ever created his own e-signature software. But in patent law, that doesn’t matter. He acquired this patent in 2015, by adding a trivial, almost meaningless limitation to an application that the U.S. Patent Office had spent the previous seven years rejecting. 

You can’t learn much about how to verify digital identities from the patent owned by Digital Verification Services. But the breadth of work on actual digital verification can be gleaned by looking at the long list of companies and products that DVS has sued. In fact, DVS has sued more than 50 different companies. Some are large, like NASDAQ-listed DocuSign, but many more of its targets are small companies with less than 50 or even less than 10 employees. They stand accused of offering “hardware and/or software for digital signature services.” 

That’s a pretty big chunk of litigation even for a Rothschild-linked company. Some of Rothschild’s other “inventions” include an internet drink mixer that’s positively out of a sci-fi novel, and a patent on online movies (from the cloud!) that was filed in 2011.  

So what’s described in this patent, which so many companies are accused of infringing? 

The patent’s key claim describes “module generating assembly” that will receive a “verification data element” resulting in a “digital identification module.” This “module” will then “at least partly associate” with an “entity,” and be embedded in a file. 

In his declaration, inventor Rothschild says the “module generating assembly” could be a lot of things—a computer application, a web server, a file server, or “or other computing device.” In a recent deposition, he declined to describe that term any further. In court filings, DVS described a person “skilled in the art” of understanding this patent as someone “having a bachelor’s degree in computer science or electrical engineering,” or the equivalent. Rothschild—whose software patents have been used to sue hundreds of companies—admitted he had no such degree. 

Rothschild’s patent, like the great majority of software patents, includes no code—it simply proclaims it’s made up of “modules,” “assemblies,” and “components.” 

Actual E-Signature Software Rest On Well-Known Standards And Laws 

Innovation in this area—electronic signatures—rests on a bedrock of publicly shared knowledge and publicly known law. There’s no evidence at all that patents on e-signatures (of which Rothschild’s stupid patent is not the only example) have done anything to push forward innovation in the e-signature space. 

The history of e-signatures is long. The U.S. government established standards for digital signatures in 1994, and Congress passed the E-Sign Act in 2000, establishing a general rule of validity for electronic signatures. The E.U. regulated them beginning in 1999. The United Nations published a Model Law on Electronic Commerce in 1996 that has addressed e-signatures. These foundational laws all have been revised multiple times. They are all much older than the claimed 2008 priority date on Rothschild’s patent application. 

Using electronic signals to verify identities and seal contracts pre-dates the internet, as well. A New Hampshire Supreme Court case from 1869 called Howley v. Whipple said that a contract established via telegraph was binding. “Nor does it make any difference that in one case common record ink is used, while in the other case a more subtle fluid, known as electricity, performs the same office,” wrote the justices in that case. 

That’s not to say there isn’t room for new and improved types of electronic signatures. The proof of innovation won’t be found in this stupid patent, however. But it can be found in the ongoing work of the dozens of companies, large and small, that have been sued by DVS. At least one DVS defendant has been providing e-signature services since 2000. As with so many other flourishing areas of software, patents don’t push forward the state of the art—they drag it down. 

Unfortunately, getting software patents based on vague terms like a “module generating assembly” and a “digital identification module” is not uncommon. We need better laws to kick out indefinite patents like these faster, so they can’t be used to harass companies into paying settlements, as most of DVS’ targets appear to have done. We also support a stronger patent review system to weed out patents that courts can’t get to. Finally, we need strong and enforceable fee-shifting in patent cases to penalize repeat litigants like the Rothschild-linked companies, which use some of the stupidest patents we’ve seen to terrorize small companies. 

• Digital Verification Systems v. Kofax Complaint
• Digital Verification Systems v. RPost Complaint
• Digital Verification Systems v. Trustifi Complaint
• Digital Verification Systems v. Encyro, Defendant’s Responsive Claim Construction Brief
• Inventor Leigh Rothschild Deposition Transcript