New Low for a Bad Patent: Patent Troll Sues Ventilator Company

Patent trolls don’t care much about innovation. Their lawsuits and threats are attempts at rent-seeking; they’re demanding money from people who make, use, or sell technology just for doing what they were already doing—for crossing the proverbial “bridge” that the patent troll has decided to lurk under.

You might think that, during the Coronavirus outbreak and concurrent economic downturn, meritless patent threats might ease up a bit. After all, a lot of companies—particularly smaller ones—are having a hard time making ends meet. And about 32% of patent troll lawsuits do target small and medium-sized businesses. But that’s not what’s happening. In fact, lawsuits by patent trolls are up this year—20% higher than in last year, and 30% higher than 2018. By the count of one company that tracks them, patent trolls have filed 470 lawsuits in the first 4 months of 2020.

Meritless patent assertions take a major toll on the economy. In boom times, that’s bad enough; during a recession, it can be even more painful. Patent trolls demand money that struggling companies don’t have; and thriving companies will have less to spend on R&D and innovation.

Not only are we seeing a rise in overall litigation, but we can see specific cases that are likely to impact companies involved in direct medical response. Last month, we noted the case of Labrador Diagnostics LLC, a patent troll that sued a company that makes and distributes COVID-19 tests, using patents that it acquired from Theranos, the fraudulent blood-testing company.

Now, a shell company called Swirlate IP has acquired a patent that describes generic data transmission, and has used it to sue five different companies—including ResMed [PDF], a company that makes ventilators. Other targets include Livongo Health [PDF], Corning Optical Communications [PDF], Badger Meter [PDF], and Continental Automotive [PDF].

What is Swirlate? It’s a limited liability company whose address is a “Pack and Mail Shoppe” in a strip mall in Plano, Texas. Unified Patents, which is offering a $3,000 bounty for prior art on one of Swirlate’s patents, has linked Swirlate to IP Edge—a big patent assertion company owned by three IP lawyers, that controls a vast swath of shell companies like Swirlate that it uses to hold its patents and sue operating companies. IP Edge shell companies have been recipients of multiple EFF Stupid Patent of the Month awards, and IP Edge has been linked to some of the most lawsuit-happy patent trolls of all time.

Patenting Generic Data Transfer

Swirlate IP is using two similar patents to sue ResMed, U.S. Patents No. 7,567,622 and 7,154,961. Let’s take a close look at the ‘622 patent. Once you dig through the technical jargon, the ‘622 patent just really describes data transmission. For instance, the first claim of the ‘622 patent talks about “modulating data packets”—a generic and conventional procedure that can be performed with any computer capable of connecting to the internet, not to mention analog technology. It’s done according to a “modulation scheme,” which could be any kind of already-available technical standard—the patent doesn’t describe the scheme.

Subsequent steps describe using a “diversity branch,” using a “receiver,” the “retransmi[ssion]” of data packets when the first transmission wasn’t successfully decoded, and “demodulating,” or decoding, the transmitted data. There’s nothing about how it’s done. The accused products, like ResMed’s BiPAP breathing machine, use standard technology like LTE transmission.

Unfortunately, this is a pattern we’ve seen over and over again with technology patterns. It’s particularly egregious in this situation, because the lawyers who run IP Edge are set to profit from a lawsuit against a company that is directly responding to the COVID-19 crisis.

The patent was originally owned by Panasonic, but was sold in 2015; it ended up in the hands of Swirlate in April. But Panasonic didn’t invent ARQ retransmission, or the various other types of data transmission methods that are often agreed to by international standard-setting bodies. And it certainly didn’t invent LTE, an international data transmission protocol that was finalized in 2008. Yet, in the hands of Swirlate, this patent is being used to sue over products that use everyday LTE technology. This isn’t the first time Panasonic has sold patents to litigious patent trolls; in 2018, it sold a portfolio of patents to Wi-LAN, a Canadian patent assertion company.

What’s the solution to all this? We’ve suggested that the government take immediate action against patent abusers who are exacerbating the health crisis. But that’s only part of the solution here; three of Swirlate’s targets aren’t health care companies. We need to have other protections against patent threats like this. Those include a strong “inter partes review” system to check out already granted patent patents; and strong fee-shifting laws for companies that insist on pushing forward with low-quality patents in court. Ultimately, we need a patent office that will just say no to generic patents like these. That means a patent office that will enforce Supreme Court rulings like Alice v. CLS Bank, that have tightened up the rules on patenting generic ideas.