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January 2, 2006

Rates Gone Ape

Immodest New-York based Rates Technology Inc. (RTI) is suing Google for five billion dollars for its VOIP Google Talk, as well as going after other companies, for infringing telephone billing patents 5,425,085 & 5,519,769. RTI is going to give patent trolls a bad name.

RTI is headed by Jerry Weinberger, inventor. In a blog posting by Rich Tehrani, who interviewed Jerry, RTI claims to have license agreements with over 700 companies, and "have litigated 25 times in the past 15 years". Jerry's earlier patents are 4,122,308, 4,209,668, & 4,888,822. Jerry boasts that RTI has inked license agreements with 120 companies, including Lucent, Cisco, IBM, Yahoo and Microsoft.

RTI prefers to target large companies, as the extortion is actually easier: larger companies have in-house legal counsel sufficiently knowledgeable about patents to know when it's cheaper to fold, at a figure less than the cost of a protracted court fight, but which still amounts to a tidy sum for RTI. The RTI licensing modus operandi is a one-time pinch of around $5 million for large companies, not ongoing royalties, thus making it a short con. It can easily cost $5 million for a drawn-out court battle, not to mention the potential for bad publicity. What's more, with large company executive pay in the stratosphere, $5 million is chump change.

'085 and '769 claims are focused on telephone billing. '769 method claim 1 includes the limitation of "connecting at a predetermined time and date via a data transfer line the call rating device to a rate provider having billing rate parameters for a plurality of calling stations". Google Talk is free, so non-infringement seems a no-brainer. Also, other claim limitations seriously limit claim scope for infringement. '085 has apparatus claims, including a limitation for a telephone device, so the worst Google might face is inducing infringement. Also, to have much hope of any infringement sticking, RTI would probably have to mount a doctrine of equivalents (DOE) argument, something the courts have been touchy about letting fly.

Google Talk is both free and in beta, so the damages model for infringement, if it had any merit, seems to be, shall we say, a wee south of $5 billion. Google licenses some its VOIP technology from Stockholm-based Global IP Sounds, which may offer some legal defensive cover.

RTI is reportedly talking about license agreements with both eBay, now owner of Skype, and Time Warner, wished-they-weren't owner of AOL.

Posted by Patent Hawk at January 2, 2006 12:25 PM | Patents In Business


2005 was the "Year of the Troll" (http://271patent.blogspot.com/2005/12/2005-year-of-troll-this-was-year-that.html). I'm personally hoping that '06 reaches new heights of extortion and ridiculousness. Nothing like a few RTIs to finally get the patent system reformed.

Sure, some of the cure could be worse than the disease (as is certainly the case with '05's dead proposals for reform). But the patent-system has reached such levels of absurdity already that it is hard to imagine making it much worse.

And, worst case, making it worse only means that we'll have to reform again next year, and this time with something that truly fixes key problems -- not a bad prospect at all.

Posted by: joey5 at January 2, 2006 9:02 PM