Washington State Has Sued a Patent Troll For Violating Consumer Protection Laws

Landmark Technology, a patent troll that has spent 20 years threatening and suing small businesses over bogus patents, and received EFF’s Stupid Patent of the Month award in 2019, has been sued by the State of Washington.

Washington Attorney General Bob Ferguson has filed a lawsuit claiming that Landmark Technology has violated the state’s Patent Troll Protection Act, which bans “bad faith” assertions of patent infringement. Following a widespread campaign of patent demand letters, more than 30 states passed some kind of law placing limits on bad-faith patent assertions.

These laws face an uphill battle to be enforced. First of all, the Constitution places important limits on the government’s ability to penalize the act of seeking legal redress. Second, the Federal Circuit has specifically held that a high bar of bad faith must be established for laws that would penalize patent assertion.

Washington’s case against Landmark could be a major test of state anti-troll laws, and whether state anti-trolling and consumer protection laws can dissuade some worst-of-the-worst patent troll behavior.

The lawsuit is filed against “Landmark Technology A,” a recently created LLC that appears to be largely identical to the now-defunct “Landmark Technology.” The new company asserts the same patent against the same type of targets. The patent’s inventor is Landmark Technology owner Lawrence Lockwood.

Over 1,000 Demand Letters

Landmark threatens and sues small businesses over U.S. Patent No. 7,010,508, which was issued to Lockwood in 2006 and claims rights to “automated multimedia data processing network for processing business and financial transactions between entities from remote sites.”

The Washington case reveals just how widespread Landmark’s threats are. From January 2019 to July 2020, Landmark sent identical demand letters to 1,176 small businesses all across the country. Those letters threaten to sue unless Landmark gets paid a $65,000 licensing fee. 

Landmark essentially insists that if you use a website for e-commerce, you infringe this patent. In recent years, it’s filed suit against candy companies, an educational toy maker, an organic farm, and a Seattle bottle maker, just to name a few. 

Or as the Washington State Attorney General put it:

[T]he company broadly and aggressively misuses the patent claims, targeting virtually any small business with a website, seemingly at random. Landmark claims that common, near-ubiquitous business webpages infringe on its patent rights — such as small business home pages, customer login pages, new customer registration and product-ordering pages.

“Landmark extorts small businesses, demanding payment for webpages that are essential for running a business,” Washington Attorney General Ferguson said. “It backs them into a corner — pay up now, or get buried in legal fees. I’m putting patent trolls on notice: Bully businesses with unreasonable patent assertions, and you’ll see us in court.”

According to the AG’s press release, four Washington companies settled for between $15,000 and $20,000 each to avoid litigation costs. The lawsuit seeks restitution for those companies.

The patents created by Landmark owner Lawnrence Lockwood patents have been used in well over 150 lawsuits filed by Landmark Technology and Landmark Technology A; as well as at least 40 cases filed by his earlier company PanIP, which sued dozens of early e-commerce websites by 2003. Given what we now know about the more than 1,000 letters sent just in 2019 and 2020, the litigation record seems like just the tip of the iceberg.

The U.S. Patent and Trademark Office found in a 2014 review that the ’508 patent was likely to be invalid because it didn’t actually explain how to do the things it claimed. However, that case settled before the patent could be invalidated.

The USPTO is an office that labors under industry capture. Its fees are paid by patent owners, and in practice it works for patent owners far too often—not users or small business owners. While review processes like inter partes review (IPR) are useful in restoring some balance to the system, it’s critical that the worst abusers of the patent system be treated as a serious consumer protection problem. It’s certainly worthwhile for states to experiment and try to find ways to deter abuse, within the bounds of due process.

Patent owners who demand licensing fees from hundreds or thousands of individuals based on a patent that clearly should be found invalid, for broadly used web technology, are essentially engaging in widespread extortion, as AG Ferguson states. When patent owners won’t let users set up even a basic, out-of-the-box website without facing a demand letter, it’s not just an economic problem—it’s a threat to free expression.

• Washington State Attorney General Press Release
• State of Washington v. Landmark Technology A Complaint
• Washington Patent Troll Prevention Act Bill Text