The Podcast Patent Problem

from How Stuff Works. So today we're going to explore the story of Personal Audio l l C, the patents that were at the heart of the issue, and what happened as a result. And I've been asked about this story many times, and until the matter was actually put to rest earlier in two thousand eighteen, I couldn't really

talk about it. I'll mention more about being put to rest in a little bit, but I didn't feel comfortable covering the story on my show because How Stuff Works is one of the parties specifically named by Personal Audio LLC and its complaints, and as an employee of How Stuff Works, it would at the very least be unwise

to comment officially on the matter. I might be seen as a real voice of the company, like I was representing the company as a whole, and I wouldn't necessarily mean that I would just be trying to cover the story. I am not the official voice of the company. I am given an awful lot of control over my podcast, and I do appreciate that. But as we understand, with great power comes great something something. As my fictional uncle Ben used to tell me before, I would hustle off

to shoot pictures for the local paper. But now the whole matter is closed and I feel I can at least give an account of what happened and why it took so long to resolve, and I'll try to be as objective as possible. So please remember, this was a case that had the potential to really affect my career, so I am a bit close to it, but I'm gonna try and be unbiased. That's also challenging because a lot of the outlets that reported on this had a

very specific perspective on the matter. So let's begin this discussion by talking about what patents are, because that's at the very heart of the matter. A patent is at least a patent like the kind of talking about in this episode is essentially a license or similar authorized document issued by a government to an applicant for the right

to make, use, sell, or license out and invention. You cannot patent an idea, but you can patent the implementation of an idea as long as it meets certain criteria.

So let's say you've come up with a really cool invention that's going to automatically coordinate all your outfits so that not only are you fashionable, but you also never have to worry about wearing the exact same outfit twice because it will keep a track record of everything you've done, so it will pair different pieces together to consistently keep your look fresh from day to day and fashionable. It's

not gonna pair two mismatched pieces of clothing together. And you feel this invention has real value and you want to protect your idea from people who might steal it, so you have a couple of different options ahead of you. One of those options is you keep your mouth shut about how you invented it. You don't explain how it works,

You create a product, and you go to market. The danger of this method is that you don't really have any protection for your idea if someone goes out and buys your product and then says, I'm going to break this down and figure out how this this person did this. They reverse engineer your process and they figure out how you did it. They could conceivably create a competing product of their own and undercut you, and you don't have any protection in that case. Or you could apply for

a patent for your invention. Now, this involves drafting a patent application to the respective authority in the United States, that's the Patent and Trademark Office. The Patent Office reviews your application and assuming your patent appears to be valid and presents at least a partly new invention that is not obvious, they will most likely approve it. Now, that creates a very interesting trade off because, on the one hand,

your patent is public information. Anyone can pull up your patent and read it and see how your invention works from a very high level. Most patents use fairly vague language so that the intricate details are not on display. They give the general process of how an invention works. And by the way, you can go to and do patent searches online and pull up patents for all sorts of stuff and see how it works. It's actually really really useful if you're trying to, I don't know, do

a podcast where you're explaining how tech works. But the patent also grants protection. If you find someone using your invention and they don't have your permission to do so, you can sue them for infringing on your patent. And if you can prove that they are using your approach, the one that's detailed in your patent, and they don't have your permission, you can put a stop to it. Even if it turns out that other people have come up with the same approach independently after you came up

with it. If they say, look, we never ever encountered your design, you could argue, well, that doesn't matter, because I have the patent, and that patent pre dates your version of my invention. I own that approach to the invention. Effectively, you can choose to license your approach to other people if they want to do the same thing, but they can't do it without your permission. Now. Current lee in the United States patents have a term of twenty years

from the earliest filing date of the patent application. You also have to pay occasional fees to maintain the patent. In the United States, like in some countries, it's an annual fee, but in the US it's not. In the US, you have to pay a fee at three and a half years, seven and a half years, and eleven and a half years after the patent has been issued, and the patent fee increases each time. If the patent holder fails to pay the fee, the patent is abandoned and

the invention is no longer under patent protection. Patent holders will often abandon a patent on purpose if the maintenance fees exceed the value of the patent itself. If you're saying, well, I'm going to be paying x amount, but this is worth less than X, it doesn't make sense to keep maintaining the patent, you might abandon it. The Patent office can take a couple of years to grant patents from

the moment that they've been applied for. After the HERMA protection is up, anyone is free to create inventions based off the information in those patents. So twenty years passes after the filing of a patent or the rather the application for a patent, then anyone can make something and you you have no legal recourse to suthe them for using your approach because the patent has expired. The general logic about this is that you don't stifle innovation. This way.

Other people can take your idea and they can work with it. They can change it up, they can make tweaks to it. But the protection gives you two decades of a head start, so you have a nice solid ground to to start from. Now. Patent holders can make money or exploit their inventions in several ways. And when we say exploit, and it's not like it's being it's not a negative thing. Exploiting in this sense means you're just making use of the invention in a way in

order to profit from it. So patent holders can make their inventions and sell them to customers. They could go into manufacturing and production. They might license their inventions to other parties, which then can go on to exploit those inventions and sell them or otherwise profit from them. So that makes sense. Let's say you're a small time inventor and you've come up with a brilliant invention, but you don't really have the capital to start up a whole

manufacturing system. You might take your idea and license it to a different company that does do manufacturing. And that's why you can. You can profit from your idea, but you don't have to sink in the massive investment to go into the actual production. You could even sell your patent rights to another party entirely. You just sell them

the patent and they become the patent holder. It's it's like a transference of property, which means the company might then go into production, or maybe they just sit on the patents and wait and watch, and if anyone else tries to make anything that infringes upon that patented invention, the patent holder can threaten legal action. They can attempt to take the other party to court, often as a

means to leverage a large settlement from the infringing party. Now, many people call this last group of patent holders a patent troll, and the argument for doing that, to call them a patentrol goes kind of like this. The holder of the patent is not actually doing anything useful with the invention that the patent covers. Instead, what they're doing is effectively acting as a gatekeeper. The patent holder is not protecting their inventions so much as they are lying

in wait to spring a trap. They want other parties to use that invention implementation so that they can jump in with threats of litigation, so you could argue their stifling innovation rather than encouraging it. For many people, it seems unfair that a company or inventor could patent a really cool invention and then refuse to actually do anything productive with it, while preventing anyone else from doing the

same unless they pay an exorbitant fee. Some folks would go so far as to throw the patent holders who license their patents to others in that category. I think that's going too far. I think there are plenty of cases where it's totally legitimate to license out a patent to other companies if you are incapable of producing it yourself. I think that's totally legit. I think the patent holders

should get compensation for his or her idea. But I do get a little uneasy about companies that hold lots of patents but they never do anything with them apart from threatened litigation. That does rub me the wrong way. I find it rather trollish. Next, I'm going to talk about Personal Audio LLC and why many people refer to that company as a patent troll. But first, let's take a quick break to thank our sponsor. Now, before I get too far into this section, let me be clear.

I am not definitively saying that Personal Audio ll C is a patentrol. Lots of other people have done that. If you do any research at all on the various news outlets that have covered this story, patentrol tends to be the phrase most used to describe Personal Audio LLC. But I am going to try and step back from that. I just want to explain the story as it unfolded and let you guys draw your own conclusions, because I actually really do think the story is more complicated than

how it's frequently portrayed. There are critics who said that what Personal Audio LLC did was an extortion racket, and I think it's actually a little more nuanced than that. I think that's not being entirely fair. So let's dial this back all the way to nineteen nine six, which, by the way, was years before the word podcast was a thing. And I can say that authoritatively because podcast comes from the word iPod, and the Apple iPod didn't

hit the market until two thousand one. So this company's beginnings pre date the word podcast, if not the general concept. More on that in a minute. In nine a guy named James Logan got involved in this and made this enormous investment to start up a company. Now, Logan had previously founded a company called Microtouch Incorporated. He was the CEO of that company. He had amassed a you know, good fortune. He would remain the CEO of Microtouch until

two thousand. At that point, another company, three M, would acquire micro Touch. Fun side note, by the way, the U S Securities and Exchange Commissi or SEC would actually file a suit against James Logan alleging charges of insider

trading back in two thousand three. UH. The charges stated that Logan had directed a trust for the benefit of his minor children to acquire Microtouch stock, knowing that Microtouch was engaged in negotiations with both Tycho International Limited and Minnesota Mining and Manufacturing also known as three M, and that he was benefiting directly from this where specifically his children were. Logan would end up settling this matter out of court for more than half a million dollars without

having to admit or deny the charges anyway. In the mid nineties, James Logan says he invested more than a million and a half dollars in a new company with a couple of co founders, and the company's goal was to bring to market a product that would download and play customized audio tracks, and as part of the company's pursuit of this goal, it filed patent applications regarding the

business strategy. But in this process, the company concluded there would be too difficult and expensive to move forward, and they abandoned the plan to make the product, but they still held the patents. This would lead Logan to form Personal Audio LLC in two thousand nine. It served as a holding company and its only purpose was to hold onto those patents that were created back in the ninety nineties.

The company itself is based in Texas, which has led many critics to suggest this was a calculated decision because

Texas courts have a reputation for favoring patent holders. A judge in Texas had established some really strict rules to keep these patent trials short and to the point, creating what was casually known as the rocket docket, and juries tended in Texas to side with patent holders more than others, so it became such a big issue that in two thousand seventeen, a court case caused great upheaval because the courts ruled that patent holders would no longer be allowed

to seek out a friendly court to hear their litigation. That this was in the wake of discovering that Eastern Texas would hear Thousands of patent infringement cases per year were brought to courts by what was called nonpracticing entities. That means companies that did not actually produce anything. They owned a lot of patents, but that's all they did, In other words, patent trolls. According to some critics, one

of the patents that Personal Audio LLC. Was concerned with was titled Audio Program Player Including a Dynamic Program Selection Controller, and the abstract for that patent describes the invention like this, and this is a long quote, but stick with me. An audio program and message distribution system and which a host system organizes and transmits program segments to clients subscriber locations.

The host organizes the program segments by subject matter and creates scheduled programming in accordance with preferences associated with each subscriber. Program segments are associated with descriptive subject matter segments, and the subject matter segments may be used to generate both

text and audio cataloging presentations. To enable the user to more easily identify and select desirable programming, a playback unit at the subscriber location reproduces the program segments received from the host and includes mechanisms for interactively navigating among the

program segments. A usage log is compiled to record the subscriber's use of the provided program materials, to return data to the host for billing, to adaptively modify the subscribers preferences based on actual usage, and to send subscriber generated comments and requests to the host for processing. Voice input and control mechanisms included in the player allow the user to perform hands free navigation of the program materials and to dictate comments and messages, which are returned to the

host for retransmission to other subscribers. The program segments sent to each subscriber may include advertising materials which the user can selectively play to obtain credits against the subscriber fee. Parallel audio and text transcript files for at least selected programming enable subject matters searching and synchronization of the audio and text files. Speech synthesis may be used to convert

transcript files into audio format. Image files may also be transmitted from the server for synchronized playback with the audio programming. Now that's a long summary, but that particular thing would come into play in two thousand nine when Personal Audio LLC. Would bring a lawsuit against Apple for patent infringement. Personal

Audio would win eight million dollars that effort. Other lawsuits against other manufacturers would follow, and you could certainly argue that the iPod and playlists and structure that Apple had created resembled the proposal in the patent, and that other companies that had produced MP three players in their own filing systems and organization systems also kind of fell into that category. But the patent the company would use to go after podcasters was not exactly that same patent. It

was slightly different. And one of the things about patents is that you can actually apply to modify them as technology advances. So you could create an invention that depends, let's say, on a specific type of media. For example, let's say that your invention UH concerns cassette tapes. But then later on, as technology advances and you get compact discs or you get digital media. You want to update

your invention. It's following the same sort of invention process, but now it's dependent upon a new form of media. You can do that. It's subject to the Patent Offices approval, but you can win a new patent that covers the same approach, but now with a new element, like a

new in this case new medium. But on the media distribution side, this patent was was not focused on a model that would resemble subscribing to downloading and listening to a podcast with that Apple one and for that the patent Personal Audio LLC would use against podcasters and which would later get challenged was u S Patent eight million, five hundred four, also known as System for Disseminating Media

Content Representing Episodes in a serialized sequence. Now that patent included claims that would more closely tie to podcasting in general. These sections focused on the host side of the invention, as in the servers on the Internet that would host the audio files that listeners would connect to and download

in order to listen to their shows. This patent was granted in two thousand twelve, and as the site i P Watchdog would put it, The patent quote claimed a media player for acquiring and reproducing media programming files which represent episodes in a series of episodes as those episodes become available. The media player includes a digital memory at communication sport coupled to the Internet for transmitting data requests, and an output unit for reproducing the media files that

would essentially be speakers or headphones. The resulting invention addressed a need among Internet radio sources for a more practical system of delivering content too interested users on request, rather than searching for the radio source via web browser, a difficulty which is exacerbated further when while an interested user is driving end quote. That would be the patent that would be the focus of all the fuss. What fuss? I'll explain more in just a moment, but first let's

take another quick break to thank our sponsor. In two thousand thirteen, Personal Audio began to issue warnings to several different podcasting organizations, including the Corolla Digital Network, home of the Adam Corolla Show. The warnings were all about this

so called podcasting patent that Personal Audio had received. In February twelve, Corolla's company was hit with a lawsuit for patent infringement, and he decided to fight the lawsuit rather than just settle out of court directly, and he argued that the claims in the patent were overly broad and

the suit was without merit. Around this time, podcasters were saying that the notifications sent by a Personal Audio were in the realm of extortion because they didn't include the demand for a licensing agreement or even a firm amount that the company wanted. Those who received the messages said it felt more like an implied threat that Personal Audio held these patents and was ready to bring them to bear in courts, and the podcasters said it felt like

they were the recipient of a shakedown. On the Personal Audio side, the company said that wasn't the case at all. They were just trying to protect the rights that they held, and people like Logan had invested real money into this company and they were eager to get that investment back. They didn't produce the product that they wanted to produce, but they still had the invention patented and they wanted

to make profit off their idea. But no one was really sure at the time how much money was actually in podcasting. It could be hundreds of millions of dollars. It could be very little at all. This was the time of the wild West in podcasting, and you could argue we're still there right now, but podcasting was hardly an established medium at this point. Even years later, it's still a big question as to how profitable the form can be, as different podcasters test out different revenue models.

But the backlash against Personal Audio LLC was quick, and since the targets happened to be podcasters, it was really public. The podcasters happen to have audiences that they could talk to and did talk to on a regular basis, so in the court of public opinion, personal audio had already lost.

Dave Weiner, a software developer, was instrumental in modifying the RSS standard to include a new feature called enclosure, and closure would allow an RSS aggregator to grab the address of a media file and this is the heart of the subscription process. He did this back in two thousand one, and he questioned, how could this patent, which was granted in two thousand twelve possibly apply to a methodology that

was more than a decade older. Adam Carolla launched a crowdfunding campaign to fight the lawsuit and raised more than half a million dollars in the process. However, ultimately he decided to settle with Personal Audio out of court for undisclosed terms. In fact, the terms were word it in such a way that Corolla had a non disclosure agreement. He could not share what those terms were or else

it would invalidate the negotiations on his part. The settlement at the time probably made the most sense for Corolla, as these lawsuits can be incredibly expensive. Defending against a patent infringement suit could cost a couple of million dollars easy. Even with the half million he had already raised for legal fees, he was still way behind. And in Texas, where the lawsuits were filed, patent holders, as I said, had a long record of winds juries tended to favor

them over others. However, by settling, this meant that Personal Audio would have the ability to sue others for that same sort of infringement, and that included companies like how Stuff Works, the one I work for, and at the time we were part of Discovery Communications. The Corolla case was just one of seven district court cases filed in

two thousand thirteen that centered on this particular patent. One of those cases was again CBS, in which Personal Audio argued that quote Several shows podcasted by CBS, including sixty Minutes, Tech Talk and Face the Nation, use servers, data storage, and other Internet hardware which directly infringe claims of the patent.

Personal Audio also alleged that CBS is distribution of episodic video media for shows such as c s I Crime Scene Investigation either literally infringed the band or constituted infringement under the doctrine of equivalence. End quote. This quote, by the way, is coming again from the website i P Watchdog. Then the Electronic Frontier Foundation stepped in or e f F, and I've talked about the e f F and other podcasts.

It's a group dedicated to preserving individual rights and freedoms on the Internet, and it frequently wages courtroom battles against corporations that sees as encroaching on those ideals, as well as government agencies. Does that with those two. Now, since Corrol this case did not go to an in court decision, there was no precedent set, so the e f F filed an Interpartists review or i p R on the

podcasting patent. This is a way for someone to petition the Patent and Trademark Office to re evaluate an already issued patent. With a strong enough argument, it is possible to have the Patent office decision reversed even after they've granted a patent. It's an expedited process that can lead to the office invalidating part or all of a patent,

causing the patent to enter abandoned status. The e f F filed this petition on October or in October two thousand thirteen, and just to be clear, this effort focused on a different argument than the one CBS attempted to make in its defense against the earlier lawsuits. CBS would lose its lawsuit. The e f F was looking at a different part of the patent and arguing that it

was invalid. They argued that the personal audios patent was invalid because there were already pre existing examples of what the patent was claiming from UH that that existed from other people already by the time the patent had been filed. This is what we call prior art. Prior art is evidence that the invention in question is already known. That's an invalidating quality of an invention. So to get a patent, the invention has to be new prior art doesn't have

to exist physically or commercially. There just has to be proof evidence that the idea pre exists the filing of the patent, and that was the tactic the e f F employed in their case, and specifically they pointed at how CNN had made news clips available online and how the radio broadcast company CBC had done a similar thing with radio programs, and these instances pre dated the nine

patent application. It wasn't good enough to predate the two thousand twelve patent, because the two thousand twelve patent was built on top of the patent. They needed to go back further than that and say, here's examples of stuff that existed before even this idea was put forth. Now, these are not the only sources for media that resembled

what Personal Audio laid out in its patent application. Way back in a guy named Carl Malamud launched a show called Internet Talk Radio, and he would interview various computer experts and offer up the files for downloading later, and someone eventually would call it a synchronous radio. We might think of it as radio on demand, because you didn't have to tune in a specific time to catch the broadcast. You could download and listen to it whenever you wanted to.

This happened three years before Logan had even invested money in that initial venture. The e f F successfully argued that the claims in the patent were not valid. The Patent Trial and Appeal Board decided in two thousand fifteen that all the patent claims that the e f had challenged were in fact invalid. Personal Audio would appeal this decision, and the case ended up going to the federal circuit courts.

It took two years, but on August seven, two thousand seventeen, this appeals court ruled that the previous ruling by the Patent Trial and Appeals Board was correct, meaning the patent would remain invalid. Specifically, the Federal Circuit found that CNN and CBC both had implementations of the technology before the filing of the patent, meaning they had in fact established prior art, and that, in addition, the claimed invention was

deemed too obvious. That's another metric you have to meet when you patent something not only has doesn't have to be new, it cannot be obvious. You also, by the way, can't patent stuff like natural phenomena, though that gets kind of tricky when you get into stuff like DNA and and genetics and stuff like that, but that's a topic

for another time. Personal Audio then filed a petition to have this case heard by the Supreme Court, and on May fourteen, two thousand eighteen, the Supreme Court officially denied that petition, which meant the Federal Circuit decision would remain final, it would stand, it would be the official decision on

the matter, and it was laid to rest. Now what this means is that the claims in that patent that relates specifically to the distribution of material in a way that we call podcasting no longer have any real meaning. There's no validity to them anymore from a legal standpoint in the United States. So podcasters do not have to pay a royalty or licensing fee to Personal Audio in order to maintain operations. For a lot of people in the business, this was a huge relief because for many people,

podcasting is not exactly profitable. Uh, you might be breaking even, you might be losing money on it. And if you have to pay a loyal royalty fee or a licensing fee on top of that. Then you would lose significantly more money, so it would be prohibitive for a lot of people if that or the case. And like I said, I didn't feel comfortable talking about it at all because how Stuff Works was a named uh entity in this whole process. But now that it's all over, I figured

I could finish the story. So I hope you guys enjoyed that peek back into the history of podcasting and the the dispute that could have dramatically changed the way podcasting unraveled. It would probably mean that I have a totally different career now if in fact it had gone another way. So very interesting stuff for me personally. If you guys have suggestions for future episodes of tech Stuff, whether it's a technology, a person, a company, whatever it may be, send me an email and let me know.

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