Tuesday, April 24, 2007

Neomedia's Mobile Barcode Patent Challenged

Until patents have been proven in court, shouldn't they be used as a defense of a business or application?

When companies wave their patents around, until they have been proven in court, doesn't this stifle innovation?

Last Fall the EFF asked for help in debunking a barcode patent.

Today they announced they would be officially challenging it.

EFF Challenges Bogus Patent Threatening Consumer Awareness Products

llegitimate Patent Inhibits Innovation in Market for Mobile Information Access

San Francisco - The Electronic Frontier Foundation (EFF) took aim today at a bogus patent threatening innovative technologies that enhance consumer awareness, requesting a reexamination by the United States Patent and Trademark Office (PTO).

NeoMedia Technologies, Inc., claims to own rights to all systems that provide information over computer networks using database-like lookup procedures that rely on scanned inputs, such as a barcode. NeoMedia has used these claims not only to threaten and sue innovators in the mobile information space, but also to intimidate projects focused on increasing awareness among consumers about the social and environmental impact of the products they buy. (red print emphasis is mine).

Numerous Physical World Connection (PWC) companies have expressed concern that this company, and their supporters, are doing just that. (my comment separate from the EFF story)

For example, the Consumer Information Lab at the College of Natural Resources at the University of California at Berkeley uses such technology to examine how health, environmental, and social information affects consumers' shopping behavior and decision-making. Were NeoMedia to control the patent rights to this technology, such projects could be severely limited and potentially shut down.

NeoMedia should not be allowed to use this bogus patent to inhibit consumer awareness, education, or research into the impact of information on consumer choice," said EFF Staff Attorney Jason Schultz. "This is the opposite of 'progress,' something the patent laws are supposed to promote."

EFF's reexamination request shows that the functionality covered by NeoMedia's bad patent was repeatedly included as part of prior patent applications from other companies -- demonstrating that the idea of forming a network connection from scanned items was well-known before NeoMedia made its claim. EFF, in conjunction with Paul Grewal and James Czaja of Day Casebeer Madrid & Batchelder, ask the PTO to revoke the patent based on this and other evidence.

For the full NeoMedia patent reexamination request:

Companies interested in this EFF story might also find this of interest.

Who really "owns" the intellectual property in question?

According to NeoMedia's latest financial filing,

On Page 18 ">All Of The Company’s Assets Are Pledged To Secure Certain Debt Obligations, Which The Company Could Fail To Repay

Pursuant to secured convertible debentures, dated as of March 27, 2007, August 24, 2006 and December 29, 2006, in the principal amount of $7,459,000, $5,000,000 and $2,500,000, respectively, issued to Cornell Capital Partners, LP, the Company was required to secure such secured convertible debentures’ repayment with substantially all of its assets. In the event the Company is unable to repay the secured convertible debentures, it could lose all of its assets and be forced to cease its operations. If the Company is found to be in default under the debentures, the full principal amount of the debentures, together with interest and other amounts owing, may become immediately due and payable. As of December 31, 2006, the Company was in default of a covenant contained in the financing agreements due to the Company’s pending registration statement to register the underlying shares of the convertible instruments not becoming effective by the specified date. (bold print emphasis is mine)

On Page 21
At December 31, 2006 and 2005, approximately 57% and 39%, respectively, of NeoMedia’s total assets used in continuing operations were intangible assets and goodwill, consisting primarily of rights related to NeoMedia’s patents, other intellectual property.

This should develop into an interesting story.

Comments are welcome, but before I get bombarded, note I am not a patent attorney.

In this case, judication appears to rest with the courts.


Anonymous said...

This is great news for the field. I hope they succeed.

John said...

The entire point of being awarded a patent is to be able to demonstrate original conception thru practical application of an idea which has not been previously patented. Call it flag waving if you will. This is no way blocks others or "stifles innovation", as those who wish to perceviere in their inventive endeavors will either create a whole new technology to work around it or will simply pay a licensing fee to the patent holder in question. Until then, infringement notices continue to be filed against those who violate the law.

Anonymous said...

Interesting that the EFF would go after patent #6,199,048

System and method for automatic access of a remote computer over a network

"A system and method for using identification codes found on ordinary articles of commerce to access remote computers on a network. In accordance with one embodiment of the invention, a computer is provided having a database that relates Uniform Product Code ("UPC") numbers to Internet network addresses (or "URLs"). To access an Internet resource relating to a particular product, a user enters the product's UPC symbol manually, by swiping a bar code reader over the UPC symbol, or via other suitable input means. The database retrieves the URL corresponding to the UPC code. This location information in then used to access the desired resource."

Hardly the "Mobile Barcode Patent"

NeoMedia's Mobile Barcode Patents are #6,766,363, 6,865,608, and 6,993,573.

As a lawyer, I have objectively read the I even read the PDF document on prior art relating to NeoMedia, and all this document does is describe the patent and the types of prior art needed to "bust" the patent. It contains no prior art itself.

Even if the USPTO grants a request to reexamine a patent, it only means that USPTO has agreed to look at the patent again. It does not mean that USPTO agrees with the requester or that USPTO will invalidate the patent.

Many people wrongly assume that the USPTO is going to invalidate NeoMedia's patent, but the opposite could very well happen: the USPTO could actually re-confirm the patent making it even stronger.

Lastly, doesn't this patent entail exactly what Scanbuy wants to do with their price comparison Scanbuy Shopper application.

Why not respect NeoMedia's prior Art and simply license instead of fight the patent?


brewskih said...

Kevin, or should I say Clawman

If you clicked the link in the article it not only gave the links to all the prior art patents but many more links to info.

As to why the 6,188,048 patent, perhaps because as they explain this patent is related to the initial claim and a part of that claim made in 1995 which was filed as a preliminary application. In other words the way I see it, if this patent is invalidated, then so are the prior claims it relates to as well. Of course thats just my own opinion, and not being a lawyer and all it probably dont mean much. But at least i was able to follow the links provided here to find all the pertinent information that the EFF was alleging, unlike some others.

I see after making the exact same statement in another forum as you made in your comments here, you then decided you had no opine on validity of the claim brought by EFF. Interesting.

Might interest you to note there was also a US patent filed in March 1995, by 5 japanese investors, that dealt with QR codes and an image capture device such as a TV camera and a decoder to decode those QR 2d codes. So the idea of using a camera to take a picture of a 2d code and then decode the contents wasnt a new invention when NEOM filed their patent 3 months later in June 1995. Interesting stuff.

Anonymous said...

There are patents in existence that do describe scanning and reading UPC labels. However, they are in reference to closed systems or simply in reference to hand held barcode scanning equipment.

That seems to be the case here. These previous patents do not seem to reference using UPC codes in an open system, ala NeoMedia's patent, to connect directly to the Internet. That is the key difference between NeoMedia's patent and the prior art provided by the EFF.

In the AirClic vs NeoMedia case, it was deemed that AirClic was connecting barcodes internally in a closed system and was not violating NeoMedia's patents, which cover the process in an open 'direct connect to the Internet' system. Hence, the court already decided and acknowledged that there are two different kinds of patented processes here. Open vs Closed systems.

AirClic did not receive a license to use NeoMedia's patented technology, and the two companies agreed that AirClic's current business model - mobile enterprise solutions - is not in NeoMedia's space because AirClic used a closed system.


Jcavitt said...

The Neo Media Guys are really crazy.They offered Xxtreme Measures XxScan webmasters which I am one of them $3000 dollars to stop working on XxScan website and turn it over to NEO Media to them are these guys serious.The funny part is they sent a email.hmmmm.These guys have been sitting on XxScan website leaving banners talking crazy to our users something needs to be done about these guys....

Anonymous said...

The fact of the matter is, the EFF has ulterior motives. I have never seen a respectable lawyer use the word “bogus” in a press release. That type of language is libelous. The EFF’s whole agenda is inflammatory and attempts to distort their true motives.

Truth be told, they have intentionally left out Virgin Entertainment consistently since 2004 - because it is clear a multi-billion dollar company (that ended up settling and licensing with NeoMedia) doesn’t fit the story they are fabricating about NeoMedia going after only small companies.

The prior patents submitted by the EFF have no true commonality with NeoMedia’s patents.

Scott Shaffer said...

Great debate guys. Keep it clean and factual.

they have intentionally left out Virgin Entertainment consistently since 2004 - because it is clear a multi-billion dollar company (that ended up settling and licensing with NeoMedia)

Do you know what monies were paid for this agreement?
Do you know what Virgin was using this IP for? and how much revenue they are generating from it?

I strongly suggest talking to some of the PWC companies, get their input on what has happened, and continues to happen, regarding this situation.

Anonymous said...

Wow, Scott...what has changed since this previous post of yours:


Interesting comments included as well.

brewskih said...

AJ said
""However, they are in reference to closed systems or simply in
reference to hand held barcode scanning equipment.""

Please show us in any of the patents referenced by the EFF or NEOMs
patents where they use the term closed as opposed to open.

After reading the entire claim by the EFF, it appears NEOMs patents were
only granted after they claimed that there was no prior art to make a
direct connect to a data base using a handheld device. Their claim of
inventive was the fact that a user didnt have to type in the data and
instead could just click and be taking directly to content. Well the
two patents the EFF references do provide a direct content by scanning
an item, and these 2 patents were not even considered when this patent
application was going through the approval process.

The prior art patent discusses a NETWORK where the codes are coded in
various ways, whereas one user will be provided with dats, while another
user(check out etc.) would be provided price as an example. Thus
allowing one code with identifiers to be able to provide different data
based on the users restrictions by the device they are using.

BTW do you have any references to your Airclick comments, because it
directly contradicts any of the public references I personally have been
able to locate regarding that suit. What was said publicly was that
Airclick did in fact have to compensate NEOMedia but that their CURRENT
business model wasnt violating NEOMs patents. Interesting enough at
that time Airclick had a countersuit filed to invalidate NEOMs patents.
Both dropped their cases as a result of the settlement. Interesting.
But here is what Chas said at the time the agreement was reached, so as
was suggested lets keep it to the facts.....
" While terms were not made public, Charles W. Fritz, founder and
chairman of NeoMedia, said the agreement calls for AirClic to compensate
NeoMedia and set a schedule for future compensation by AirClic, with the
companies dropping their respective lawsuits while leaving open the
possibility of future collaborative efforts.

Mr. Fritz said AirClic did not receive a license to use NeoMedia's
patented PaperClick® technology, and that the companies agreed that
AirClic's current business model - mobile enterprise solutions - is not
in NeoMedia's space. "

To keep the facts straight, Airclick also some 6 months or more prior to
this agreement, also agreed to purchase 3rd party end user license
agreements through symbol technologies. NEOM had claimed that the
equipment that symbol made, and that Airclick was reselling required
these 3rd party EULA's. When Airclick agreed to purchase them from
SYMBOL, NEOM commented that this was a positive first step in their
patent infringement. Here are those comments as well....
" Charles T. Jensen, president, COO and acting CEO of NeoMedia, said his
company was notified by an AirClic attorney that an End User License
Agreement (EULA) was executed by AirClic and Symbol on May 27, with
AirClic paying Symbol for the licensed purchased as of that date.

"NeoMedia is extremely satisfied that AirClic has demonstrated that its
end users need a NeoMedia patent license in order to use the AirClic
platform," Jensen said. "AirClic's decision to enter into the EULA is
surely a good start to resolving its infringement on our patents."

Jensen said NeoMedia will file an amended complaint against AirClic in
the U.S. District Court, Eastern District of Pennsylvania, this week
showing that the EULA executed between AirClic and Symbol does not
obviate all of NeoMedia's infringement allegations against AirClic. The
EULA, Jensen said, "merely allows the end user to use a Symbol device
which AirClic has distributed and paid a royalty on, with the license
rights passing through to the end user."

Anonymous said...

What's the latest (as of Feb. 2008) on the NeoMedia / Barcode 'saga'?


Scott P. Shaffer said...

From my understanding, a patent reexamination typically takes as long as a new patent filing.

So my guess it will be at least a year, closer to two, before the reexam process starts.

I'm not a patent attorney, but I have read about enough of these cases to know a ballpark timeline.