NYTimes leads group defense in mobile patent suit

The New York Times Co. is girding for a legal battle that many larger organizations have avoided.

The Times is leading the defense of a diverse group of companies that use technology they assumed was free: sending text messages with Web links to mobile phones.

The technology was patented by inventor Richard J. Helferich, who filed an outline of how such a system would work with the U.S. Patent and Trademark Office in September 1997. He was granted several patents on the method, giving him the right to sue companies that use it without permission.

Since 2008, his company, Helferich Patent Licensing, has filed 23 suits against companies ranging from Best Buy Co. to the National Basketball Association, claiming they are infringing on his intellectual property.

HPL offers companies the chance to settle by paying a one-time fee of $750,000. Many companies gladly pay, rather than getting bogged down in a court fight that could cost millions. Roughly 100 companies have settled with HPL already, it says, including Apple Inc., The Walt Disney Co. and McDonald’s Corp.

The Times’ general counsel, Kenneth Richieri, says he wants to prevent Helferich’s patents from becoming a burden on activities that are commonplace in the digital age.

“In some ways, it’s a tax for being on the Internet,” Richieri said. “Millions and millions of dollars collectively is going out of the pockets of people who earned it to people who, in my opinion, didn’t do anything.”

If the Times loses, it’s likely it will have to pay more than the $750,000 that HPL initially sought to continue using the technology. The Times has used it to alert readers by mobile phone of breaking news or severe weather.

Steven Lisa, a registered patent attorney who represents HPL, would not comment on the specifics of any settlements.

The U.S. patent system is designed to protect inventors and allow them to profit from their ideas. Where would General Electric be without legal protection for Thomas Edison’s light bulb? What might have become of AT&T if competitors had been free to copy Alexander Graham Bell’s telephone? The patent office views its role as vital to the growth of the U.S. economy, and last year, it issued around 245,000 patents.

HPL’s cases, however, fit into a controversial category. Opponents point out that HPL doesn’t make products or provide services. They say it simply uses patents to seek licensing fees from others who actually do business. Critics label such companies “patent trolls”.

“You really have to wonder what contribution they are making to our economy or our society, or if it’s just a drain,” said Jason Schultz, director of the Samuelson Law, Technology & Public Policy Clinic at the University of California, Berkeley.

Patent trolling is legal. The patent office doesn’t require inventors to put their ideas into action.

In 2011, entities like HPL sued 5,073 companies in the U.S. for infringing on patents that they either got on their own or acquired. That was more than double the number in 2009, according to PatentFreedom, a research organization that offers consulting advice for defendants in patent lawsuits.

PatentFreedom estimates the typical cost of a patent defense is $1 million to $5 million. Taking the low estimate, multiplied by the number of defendants, it sees such suits as a drag on the economy of more than $5 billion a year.

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