John O'Brien May. 1, 2014, 2:33pm
SEATTLE (Legal Newsline) - Hundreds of home builders in the Pacific Northwest have been put on notice that if they use a dehumidifier to dry rain-damaged projects, they are infringing on a patent recently issued to a father and son who claim they invented the process.
However, a national group representing those home builders says there is nothing original about the process and will be labeling the company a "patent troll" at next week's meeting of the Democratic Attorneys General Association.
"Our view is that we can attack this legislatively through working through Congress on fixes they can make to the patent laws, as well as working at the state level on pending legislation or introducing legislation in those states where it doesn't exist," said Jim Rizzo, senior vice president and general counsel for the National Association of Home Builders.
NAHB will take part in a discussion on patent reform at the DAGA meeting in Seattle that begins May 8. It will be joined by representatives from the financial services, retail and software industries.
One Democratic attorney general likely to be in attendance is Oregon's Ellen Rosenblum. Her state recently passed a patent reform law that penalizes patent trolls - entities that purchase patents with the intent of issuing demand letters seeking license fees rather than marketing or developing a product - by making their practices a violation of the Unlawful Trade Practices Act.
It just so happens that many of the demand letters issued by Savannah IP, which is owned by Robert and Andrew Weisenberger, have gone to home builders in Oregon.
"We certainly think (the new law) will apply, it's a question of how quickly," Rizzo said. "I'll certainly be beating the drum if I see the AG from Oregon to go after this particular entity."
Robert and son Andrew first applied for the patent in 2003 when they were the owners of Home Certified, Inc. They sold mid-construction frame drying to home builders in Oregon and Washington and say they performed that service on over 1,000 new homes.
In October 2013, after a 10-year wait, the U.S. Patent and Trademark Office approved their application for a patent on the process, though they sold Home Certified in 2009.
The original round of letters sent by Savannah IP demanded $150 for a license. Rizzo said more recent letters have reduced the price to $100.
Though no one has paid the fee, litigation has not been instigated, either.
The process that is patented is comprised of the following steps:
-Measuring moisture content using a moisture meter at locations within the space;
-Determining whether the moisture content meets a threshold indication recommending that drying be performed;
-Positioning within the space at least one drying device (dehumidifier, space heater or air moving device) for the purpose of reducing the moisture level; and
-Sealing the space being treated with a vapor barrier.
The patent doesn't specify a brand of dehumidifier, space heater or air moving device.
"I would say that the great majority of people that invent products and processes and then obtain patents do not manufacture the product nor provide the service," Andrew Weisenberger said.
"A good example of this is the man that invented the variable speed windshield wiper for cars. This device is in virtually every car made. Does this man manufacture all of these hundreds of millions of windshield wipers in the thousands of car models manufactured in every part of the world? Of course not, but under the Wikipedia definition this man is a patent troll."
Andrew said he expressed to clients during the years he operated Home Certified that the process was patent-pending. He also claims that builders are wrong when they claim they have been using the process before the Weisenbergers claim to have invented it.
He said Home Certified's service was a hard sell at first because builders had never heard of it. But because the process decreased wall cavity mold, the company grew.
"Prior to filing our patent application, we had two IP law firms search for prior use of our process," Andrew said. "They could find nothing. Based on this research, we filed our patent application."
Rizzo, though, isn't buying it. He doesn't hesitate to call Savannah IP a "patent troll."
"Our members are sort of apoplectic. They feel like they've been drying out houses since they started building houses," he said.
"There's nothing really unique or novel about this method or patent."
As far as the future is concerned, Rizzo said there are a couple of processes that could be undertaken at the PTO to re-exam the issuance of the patent.
Litigation, however, is not in play yet, Rizzo feels, even though no builder has paid the fee.
"If you're the patent troll, I think what you might typically do is to go after what I refer to as 'low-hanging fruit,' - a smaller or mid-size home builder who views the amount as negligible and wants it to go away," Rizzo said.
"Those entities, which might be viewed as easy marks for the patent troll, could be, if they ignore the patent troll, subject to litigation.
"(But) a troll runs the risk of the company taking a stand and being aggressive and defending itself. The patent owner runs the risk of the patent being found to be invalid. Or maybe the patent isn't found to be invalid but the activities of the builder are found to be non-infringing."
This would leave the patent owner with a lot of expense and nothing to show for it, he said.
"Given that it's early in the game, meaning the patent was only issued last October, I don't think a patent owner with this particular patent would jeopardize a potential revenue stream prematurely," Rizzo added.
Andrew said they pulled permits issued to builders for new home construction, and targeted the companies on the permits.
"It's clear that people come up with new ideas every day that get patented and then they license companies to manufacture and sell the product or use the process," Andrew said. "Doing that should not make them a patent troll."
Regardless of how Andrew feels, that's how Rizzo intends to portray Savannah IP at the DAGA meeting.
"We've seen at the outset it was $150 per license, which doesn't sound like much but if you drill down on the licensing agreement and see the reporting requirements that are part of the agreement and how egregious the penalties can be - into the thousands of dollars if the builder does not comply in a timely basis," Rizzo said.
"It just creates a flow of cash for the patent troll, and it's a negative for our builder member.
From Legal Newsline: Reach editor John O'Brien at firstname.lastname@example.org.