Last year, a small hobbyist photo-sharing website decided to fight back against a lawsuit alleging that it infringed on a bizarre patent covering virtually the entire concept of online voting. The patent-holder plaintiff subsequently dropped the case after a heavy-hitting advocacy organization got involved, but the court has ordered the plaintiff to fork over thousands of dollars in legal fees for its “unreasonable” conduct.
The backstory: Since 2003, a site called BytePhoto.com has been allowing community members to upload photos to compete in “Photo of the Month” contests. This is not some huge Flickr or Instagram pic-sharing site. In fact, court records indicate that its a money-losing labor of love for its owners.
But in 2014, the site was sued by a New Jersey company called Garfum, which in 2012 was granted a patent that could liberally be construed to cover any sort of voting based on a selection of images.
Unwilling to pay the $50,000 “settlement” offer from Garfum, BytePhoto — later supported by lawyers from the Electronic Frontier Foundation — fought back, claiming the patent is not some new invention or system, but merely transfers the generic idea of voting for your favorite photo from the real world to the virtual realm.
The U.S. Supreme Court ruled in 2014’s Alice Corp v. CLS Bank International that existing basic concepts — “the ‘building blocks’ of human ingenuity” — are ineligible for patent protection.
In other words, you can’t take an ages old idea — voting for your favorite from a selection of options — and patent the concept just because it’s being done online or on a computer. As such, BytePhoto filed a motion to dismiss the case, arguing that the patent was unenforceable.
Facing the EFF’s legal experts and new Supreme Court precedent, Garfum (not to be confused with Eau de Garfunk, Art Garfunkle’s short-lived cologne that we just made up) dropped the case in May 2015 with a “covenant not to sue” BytePhoto, saying that the plaintiff had “run out of options.”
Having wasted the time of BytePhoto’s owners and the EFF, the battle then began for legal fees.
The defendants argued that Garfum had litigated the case “in bad faith,” but Garfum countered that BytePhoto had not actually prevailed in the lawsuit and should not be due any attorney fees.
However, the judge pointed out [PDF] that appellate court precedent and the Federal Rules of Civil Procedure say otherwise, and that BytePhoto had indeed prevailed.
Further, when looking at the merits of BytePhoto’s argument that the patent in question only covers an un-patentable generic concept, the judge concluded that this patent is just describing an abstraction — “ranking content by popularity and within a category” — and that “the requirement to involve an online database does not make the claim inventive.”
“[A]ny person with pen or paper could perform the same steps of the method claimed in the patent — tallying votes and organizing content based on those tallied votes,” explains the judge. “It is of no moment that the votes may be numerous or the amount of content to organize voluminous; the patent itself claims ‘a plurality’ meaning only more than one.”
With regard to Garfum’s behavior during the lawsuit, the court agrees with BytePhoto that the case was “not litigated in a manner showing confidence in a strong litigation position,” noting that the initial $50,000 settlement demand was quickly dropped by 90% to $5,000 then an additional 50% to $2,500, then dropped the complaint altogether after the defendant filed the motion to dismiss. The judge says this could be read as Garfum trying to get out before the patent was challenged.
Making things look even worse for Garfum is that BytePhoto rejected Garfum’s walk-away offer because BytePhoto was intent on getting the court to rule on the validity of the patent.
In explaining its decision to quit the case, Garfum said that “pursuing the case further did not make any financial sense in light of the low potential damages and that it did not have the financial wherewithal to engage in protracted litigation.”
But the judge says the timing of Garfum’s exit — immediately after the court decided to hear BytePhoto’s motion to dismiss — “makes it appear as though Plaintiff was running away from any decision on the merits.”
The judge also calls BS on the “run out of options” excuse given by Garfum.
“For Plaintiff to claim that it had no other option but to provide a covenant not to sue to avoid the
attendant consequences of bringing a lawsuit is at odds with the fact that Plaintiff is the one who filed suit,” explains the judge.
In total, Garfum is currently on the hook for just under $29,000 in fees for three attorneys involved in the case. That will increase slightly after the court accounts for the hours put in on the final documents related to the fee dispute.
This only represents costs for the work done by these lawyers since April of 2015. Had Garfum been required to cover the full legal fees, it would have been closed to $64,000.
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