ACE Broadcasting’s stand against Podcast Patent Troll

April 1, 2014

Adam Carolla is a well-known media personality.  Known for his brash—and often crude—brand of humor, he originally made a name for himself on MTV’s “Loveline” and Comedy Central’s “The Man Show” alongside Dr. Drew and Jimmy Kimmel, respectively.  After leaving more conventional media platforms behind, Carolla was one of the pioneers of Podcasting.  A Podcast is a digital medium consisting of an episodic series of audio, video, PDF, or ePub files subscribed to and downloaded through web syndication or streamed online to a computer or mobile device. The word is a neologism and portmanteau derived from “broadcast” and “pod” from the success of the iPod, as audio podcasts are often listened to on portable media players.
Carolla is not known for moderation.  His penchant for epic rants enabled him to quickly climb to the top of Apple’s iTunes download list as the most frequently downloaded Podcast.  Accordingly, Carolla chose to forego the normal course of settling patent litigation when faced with a suit brought by Personal Audio.  He believes, likely accurately, that the pending suit against him may be only the first of a series involving Personal Audio.  He has stated, “They’ll just find the top 100 most popular podcasts on iTunes. They’ll start with me and just work down the line.”
Personal Audio is a non-practicing entity (a “patent troll”).  It was founded in the 1990s by James Logan to produce customized analogue cassette tapes with current news.  Logan ran the firm until it went bankrupt in 1998.  It holds a patent issued in 2012 that covers, according to Logan, the production of serialized or episodic content that can be downloaded from a specific URL that client software can retrieve and store—effectively the definition of a podcast.  Mr. Logan summarized his position as, “[W]e are deserving of the rewards from having spent all that time and money back then inventing that stuff and patenting it.”
Patent defenses are inherently expensive prospects.  Mr. Carolla estimates his legal fees may exceed $1.5 million.  He has launched a crowd sourcing campaign, which has currently raised close to $200,000, to help fund his defense.  Meanwhile, non-practicing entities—like Personal Audio—typically have a war chest of funds, often won from other suits, to create an asymmetrical benefit.  Moreover, the plaintiffs often enjoy an economy of scale in litigation fees and services because patent trolling firms are sometimes founded by lawyers or in a partnership with lawyers.  Lastly, plaintiffs aren’t required to provide a standard fee sheet to those from whom it might demand payments.

The outcome of this case could present broad implications for patents, generally, and dictate the future of Podcasting, specifically.

The firm’s podcast lawsuit was filed in 2009.  The filing contained a description of podcasting as an outcome of the main portion of an earlier 1996 patent, which remained unchanged.  Notably, Personal Audio headquartered its operations in a district of Eastern Texas known to be favorable to patent plaintiffs.  Plaintiffs prevail nearly 60% of the time in the Eastern Texas venue, compared to just over 30% across all jurisdictions, according to a PricewaterhouseCoopers report. So-called non-practicing entities like Personal Audio prevail 47% of the time in the Eastern District of Texas compared with 24% of cases tried overall.
It is unlikely that any decision in this matter will come quickly.  Whatever the merits of Personal Audio’s claims, they undoubtedly fit the definition of “patent troll,” or an entity formed for the basis of prosecuting patent lawsuits and licensing without manufacturing products or services.  In light of the Obama Administration’s efforts to clamp down on such entities, the outcome of this case could present broad implications for patents generally.  Moreover, the case will likely dictate the future of Podcasting, specifically.   As such, Mr. Carolla’s efforts to fight patent trolling are worth watching.