Patent Shakedown

Posted on 12/20/2012 by Jim Pickerell | Printable Version | Comments (0)

Uniloc USA and Uniloc Luxenburg has sued DepositPhotos, Dreamstime and other stock photo licensors alleging that their business models infringe Uniloc’s U.S. patent number 7,099,848 filed by Russell P. Reeder and Raymond M. Haynes on December 28, 2001 and granted on August 29, 2006.

UniLoc is famous for buying up patents and then suing in an effort to get license fees.

The abstract for the patent says, “The present invention advantageously provides an integrated rights management and licensing system for storing, researching, buying and selling intellectual property rights. In the embodiment, the present invention utilizes a rights owner application, a central repository, and a licensing application to integrate the management, researching and licensing of intellectual property. Accordingly, the present invention optionally allows intellectual property owners and consumers to conduct real-time licensing transactions over a network. Furthermore, the data repository optionally determines availability of intellectual property rights through bi-directional hierarchical navigation and implied data relations.”

This patent basically describes what Getty, Corbis, Alamy, and many other companies had been doing for many years prior to when the patent application was filed. Amazon began selling books online in 1994. It is unclear when Getty began licensing rights to images online, but in their report to shareholders for the fourth quarter of 1999 they reported earning $24.5 million in e-commerce sales and said they expected e-commerce to contribute 50% to 60% of the company’s total revenue in 3 to 5 years.

The purpose of patents is to encourage innovation and they are supposed to be granted to give inventors, “the exclusive right to their respective writings and discoveries” for a limited period of time. The purpose is not to allow people to grab rights to processes that are already well established.

The Patent Office is forbidden from awarding patents for ideas that are insufficiently novel. In the mechanical age it was relatively easy to determine if a physical object was novel or unique. But with software where the end result is not a physical object it is more difficult to determine if what an algorithm will produce is unique, or whether the algorithm described is overly broad.

Add to this the explosion in requests for patents to software ideas and modifications, and the fact that the Patent Office is severely undermanned with people who can properly analyze algorithms, occasionally patents that should not have been granted slip through. Then it becomes the job of courts to settle disputes.

There is an excellent article in the December 2012 issues of Wired Magazine that explains how the patent system has become counter productive and “instead of promoting innovation, patents are used as a weapon to stop it.”

Corporations are spending millions of dollars defending against specious claims. Buying patents and demanding licensing fees has become big business for some lawyers and wealthy individuals. Often the goal of companies like Uniloc is not to win in court, but to put targets in a position where they will agree to a license fee that is less than what it will cost in legal fees to go into court. Unfair as it seems, many small companies end up agreeing to the extortion tactic rather than going to court, even when they are confident they are in the right.

In this case the court date for DepositPhotos has been set for November 2014. Legal fees will continue to mount until then.

Back In 2004 E-Data Corporation claimed that its Freeny Patent entitled them to license fees from stock agencies. The Freeny patent covered the downloading of digital files from the internet and the recording of the information, such as a photograph, onto a tangible object, such as a tape, a CD, or a sheet of paper. (See stories here and here.)

E-Data sued Getty Images and Corbis in the UK but in July 2005 a judge ruled that the two companies did not infringe. After that the industry heard nothing more from E-Data.

If Uniloc happens to win its case dozens of other Picture Archive Council of America (PACA) members will certainly be required to pay license fees or dragged into meritless lawsuits.

See attached patent.

Copyright © 2012 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to:  


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