Stupid Patent of the Month: Attorney “Inventor” Games the System

The worst patent trolls bring weak cases and use the cost of defending a lawsuit as leverage to force settlements. A company called Joao Bock Transaction Systems LLC (“JBTS”) has elevated this business model to an art form. The company is associated with patent attorney and prolific “inventor” Raymond Joao. Apparently not content with drafting patents on behalf of others, Joao began to file his own patents. His companies have since launched dozens of lawsuits against technology ranging from streaming video to financial transactions. Of course, if you talk to the people who actually pioneered real-world technology, they’ve never heard of Joao or his companies. From all indications, Joao is solely in business of filing paper patents and forming companies to sue.

While all of Joao’s patents are contenders, we’ve chosen US Patent No. 7,096,003 (the ’003 patent), titled “Transaction Security Apparatus,” as our Stupid Patent of the Month. This patent, part of a family that includes US Patent No. 6,529,725 (the ’725 patent), relates to electronic financial transactions. The patent purports to describe a new system for secure transactions that includes a step of obtaining authorization from the account owner. The claims are drafted in vague, functional terms with language like “a processing device” that “processes information regarding a banking transaction” and “generates a signal containing information for authorizing or disallowing the transaction.” JBTS has been asserting the patent against dozens of banks and financial services companies, essentially saying that the patent covers any electronic transaction with a confirmation step.

What makes Joao’s patent extra special, however, is the staggering number of patent claims. All patents end with at least one claim (the claims are the part of the patent that are supposed to alert the public to the boundaries of the invention). The average number of claims per patent is around 20. The ’003 patent, however, has an astonishing 424 claims: a seemingly endless list of small, indeed mostly trivial, variations on the same idea. The related ‘725 patent has another 340 claims, bringing the total to over 750 claims all based off the same application.

We do not believe there is any legitimate reason for Joao to include so many claims in his patent applications. In fact, it appears this is done solely to allow him to game the system. First, it allows him to raise the cost of defending a lawsuit—for example, in its complaints, JBTS doesn’t identify a single claim that’s allegedly infringed, likely to prevent a motion to dismiss. More disturbingly, JBTS has used the duplicative claims to continue asserting the patents despite multiple defeats in court. Each time the company loses, it picks out some new claims and asserts those, even though they are largely identical to claims already thrown out.

Link (EFF)

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