Neiman Marcus is Fighting Back Against a Notorious Dallas-Based Patent Troll

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IP Nav doesn't say what patents Neiman Marcus is allegedly infringing on, but our money's on the driveable cupcakes.
In the decade since it was founded in Dallas, IP Nav has established itself as a global leader in the increasingly lucrative business of "patent assertion," offering clients the ability to "maximize the value of their IP assets." Put more bluntly, it's a patent troll, shaking down companies by threatening them with lawsuits over patents that they or their clients are squatting on. They are a big problem in the tech world, and IP Nav is a big part of it. Rackspace, the San Antonio-based cloud computing firm, recently called the company "one of the most notorious patent trolls in America."

So when Neiman Marcus received a communique from IP Nav in April, the retailer knew the score. Headlined "proposal to negotiate patent license," the letter explains that an analysis reveals that some Neiman Marcus products appear to use patents held by an anonymous client, described only as the owner of "valuable patents in the field of automation of application programs.

"We would very much welcome the opportunity to enter into constructive discussions with your company to determine whether we can agree to a mutually acceptable patent license agreement or that you are not using our client's patents," the letter continues. "We are focused on addressing these issues without the need for costly and protracted litigation."

They give Neiman Marcus two weeks to agree to begin discussions. Instead, the company filed a federal lawsuit against the anonymous patent holder, asking a judge to declare that the retailer has not infringed on any patents, thereby preempting the lawsuit IP Nav suggests it is ready to file. The letter, the company notes, doesn't even hint at what patents it is allegedly infringing upon other than to say they have something to do with "automation."

"Neiman Marcus is now in the intolerable position of being pressured to choose between waiving its legal rights ... or subjecting itself to an ongoing threat of litigation and unspecified infringement allegations," the suit declares. "Neiman Marcus refuses to make such a choice and, instead, seeks declaratory relief as to its rights now."

To support its argument, Neiman Marcus includes an excerpt from a decision against IP Nav issued in 2011 by a federal judge in Wisconson. It's worth quoting.

[IP Nav's letter is] an unmistakable and intentional warning shot across the bow. The actual message is pellucid to any patent litigator, so that IP Nav's use of apophasis is disingenuous and unavailing. Remember Mark Antony's funeral oration in Julius Caesar? That's how an experienced business executive or lawyer would view IP Nav's assertions that 'we are focused on addressing these issues without the need for costly and protracted litigation' and 'our client's preferred approach is to conclude licensing discussions without resorting to litigation. We hope you share this objective.' The implied 'or else!' oozes from this letter like lye from lutefish. To paraphrase an observation attributed to Anton Chekhov, you don't hang a gun over the mantle in Act I unless someone is going to fire it in Act III."

Kudos to the judge for working references to Shakespeare, Chekhov and lutefish into a single opinion about patent litigation. Let's hope U.S. District Judge Ed Kinkeade, to whom the Neiman Marcus case has been assigned, has a pen that is equally sharp.


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13 comments
adamsilber05
adamsilber05

The recent Neiman Marcus data compromise again appears to reveal the desperate state of affairs under Karen Katz CEO. The company claims it doesn't matter if you suffer for a stolen identity from shopping at their store. They had 60,000 notifications their customers  information  was compromised ,They acted on  none of them   .   The company is becoming a poster child for poor and often unethical behavior presents  many dangers that are avoidable by shopping at a more reputable retailer.
Customers and employees are said to "act like Jews"Asian Americans are said to look "extra Asian " by its own Management.Entire Departments may have no Latino employees for years despite having qualified applicants. The company's "HR" department apparently attempts to conceal this by often only considering them for low level janitorial positions. Management has called gay male employees "F**s" ." Fire him he has HIV"  was stated by a different Department MangerThat employee working in one of the N.M. restaurants  would prepare food without gloves. He used unwashed hands and cut fingers to prepare salads and sandwiches.It has a questionable food safety record . It may not have followed food safety laws for many years . It has no public statement to suggest otherwise.  Blood borne pathogens  have not seemed to be of their  concern .A Neiman Marcus employee bled in prepared food through an open wrist bone wound.. When asked by The United States Government to respond, the company stated they are not applicable under the law. OSHA in Washington D.C was notified . The company never directly answered as to why it did not adequately protect its customers. The company shifted the blame to Liberty Mutual Insurance who hasn't ever stated  why it never conducted an investigation despite repeated contacts. In another publicized case Neiman Marcus was implicated in forging fake documents to smear an African American ex employee . Another abusive tactic Neiman Marcus utilizes is to have suspected African American's  shoplifting cases moved to different judges courts. . This according to company Management allows an increase in the time they will spend in jail . The company reportedly pays the Court to honor its request to switch judges it deems as not giving lengthy enough sentences based on their skin color. The United States Department of Justice has been made aware of this.Additional concerns include that the company has failed to pay wages properly and is known for retaliatory issues (Neimanmarcuslawsuit.com)It now has numerous deserved  pending class action lawsuits for the data compromise.The company claimed that one of it's former manager's is a "pedophile". Interestingly they gave him a positive reference to work at Chuckie Cheese Pizza (Owned by Apollo Management). This despite the fact it is a business aimed at children where a danger may be present. It 's present owners  Ares Management  and CCIPB  both have been contacted..  Neither have chose to adequately address anything  perhaps because of buyers remorse.Ms. Katz should consider resigning as it seems her  character is worrisome at best.  Ares  Management and CCIPB  should address the abnormal amount of issues that its retail peers don't seem to be afflicted with.  Sources - DOL, OSHA, U.S Dept. of Justice complaint., EEOC records,  

MikeWestEast
MikeWestEast

These suits are never about actual software. Firms that attract these epitomes of the legal profession always use patent protected code or develop their own code. It is about the asinine patents given out by the Patent Office for business processes in the late 90's and early 2000'ss. These civil service all stars handed out broad patents on things like using UPC on a plastic tab to verify identity or scan an image, put it in a cloud type server, and retrieve it from another place. So called inventors wrote garbage code that did basic functions and the government said they consequently invented the process. Congress eventually eliminated the process, but those stupid patents remain. The only defense is either to have built something that differs in some detail from patent layout or own a patent on same thing issued before the business process patent. Yes, that is right. The bureaucrats had so completely lost control of the process that they issued patents on things covered at least partially by other patents. When you hear about firms like Google or Microsoft spending billions to buy technologically dinosaur, loser firms for intellectual property, that is the reason. They have no desire to use that garbage. Their patents do predate this wacky period at the Patent Office and each one might be key item to end a lawsuit.

What a waste of time and money. All because the bureaucrats did not understand the dot.com surge and bubble. The Federal judge cannot render a summary judgement unless the lawyer troll completely screws up the complaint. The judge has to order a discovery process and the lawyer's cash registers start clicking.

mcdallas
mcdallas

Was that a Federal Judge or a European history/biology professor?

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

A number of years ago the computer software industry asked for patent protection on software rather than copyright protection.  They received what they wanted and now they are reaping the rewards.  It is just that old Chinese curse: "Be careful what you wish for, you just might get it."


Another problematic area that has reared its ugly head is that you only purchase a license to use software; and, not the software itself.

PersistentID2345
PersistentID2345

@ThePosterFormerlyKnownasPaulYou can have both patent and copyright protection on software. They cover different aspects. 

It is at times difficult to distinguish what is hardware and what is software so there is no clear line distinguishing software patents.

There are areas of software research where solutions to difficult problems are attempted, requiring significant resources to be expended. These circumstances seem appropriate for patent protection because the greater expense can be justly incentivized by the protection.

The major problem is that a lot of software patents are granted on systems that any software engineer could trivially build given a few weeks or less of design time (obviousness problems).

Another problem subtly illustrated here is that our legal system is inefficient at handling complex issues and therefore great expense is required to determine patent validity/invalidity infringement/non-infringement.

The use of the term 'squatting' in the article is inappropriate in a basic sense because, by law, the right to exclude others is the primary benefit afforded patent holders. The term is, OTH, appropriate in cases where the patent should never have been issued in the first place and the holder is squatting on IP that should equitably be non-restricted.

In a perfect world  only meritorious innovation would be afforded patent protection, enforcement adjudication would be economically viable, and an efficient market would exist for the purchase/sale of patents.

Because the opposite is mostly true, we have 'Trolls', buying questionable patents on the cheap, doing some vague arm twisting and then collecting on the cheap from a large number of targets. In short, a protection racket. But instead of cops getting paid to facilitate the whole thing we have the legal industry and the Patent Office.

IP NAV was attempting to leverage a desire for litigation expense avoidance while walking a fine line on the intricacies of declaratory judgement law in order to gain a cave-in from the retailer.

The purchase price and quality of the patents and the infringement arguments in this case are not known so one could argue that IP NAV is justly protecting their reasonably acquired patent rights, but they incriminate themselves somewhat as trolls by the measly nature of their assertions.



observist
observist topcommenter

@ThePosterFormerlyKnownasPaul  In many, if not most, cases, the patent isn't even on a piece of software, just a software concept like "including a hypertext link in an sms text message".  The patent system is truly broken when it comes to IT.

ThePosterFormerlyKnownasPaul
ThePosterFormerlyKnownasPaul topcommenter

@PersistentID2345 @ThePosterFormerlyKnownasPaul  

Thank you for a succinct article as to why the patent system should nroot have been used for software.

Many of the software patents are overly broad and never should have been granted based on the broadness of the claims.


It would be like obtaining a patent based on the claim of being able to change the space-time coordinates of an object in physical space and then suing FedEx.


The best example that I think of as to why the majority of these infringement claims are specious are the same arguments as were used against the Selden patent for an automobile.

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