CALIopolis

News of BlackBoard’s pledge is still pinballing around the blogpsphere. I subscribe to a stored search for the term ‘blackboard patent’ and it retrieves dozens of blog posts every day since they made the Pledge. The great majority of these posts have not been positive or grateful to BlackBoard.

I have really been trying to get my head around this whole quagmire that BlackBoard is in. Clearly they did not expect the storm of response that they got from the patent. Perhaps they were hoping for a quick settlement with Desire2Learn? If not, then Plan B surely has to be making them re-think this strategy.

On the plus side, they have a patent. It took them 6 years and probably a hundred thousand dollars in legal costs, but they got it.

On the minus side, they have a whole bunch of people - many of them their customers - real upset with them.

They have the largest consortium of higher education institutions telling them to just drop it.

They have a lawsuit that is going to cost 7 figures before its over and it might result in an invalidated patent. Imagine the blogstorm after that! I gotta believe that the accountants weren’t consulted on this one.

They have emboldened a competitor and given them untold free, positive press. Before this lawsuit, I had hardly ever heard of Desire2Learn.

They have poked a stick at the larger open source community and woken the GPL giant in the manifestation of Professor Eben Moglen. Take a listen to Eben’s lunchtime remarks and you realize that he is not going to back down one iota. He cannot be bluffed or bought. He is your worst legal nightmare - a lawyer with a cause and a law professor with all the time in the world to devote to it.

Let’s say they win this patent suit.

They either put D2L out of business or they force a hefty payment/royalty. If they make it too hefty, D2L will declare bankruptcy and all of their customers will rush into BlackBoard’s loving arms .... uh .... I don’t think so.

An now the Pledge which is the biggest boon to open source LMSes since the Internet. BlackBoard doesn’t just want to go out of business themselves, they want to kill the commercial LMS market for everyone. If the Pledge wasn’t such a lawyered-up, weasly-worded, condescending piece of crap, I would almost thank them. Did it clear the air or straighten things out? Ohhhhh, NOW we understand, all is forgiven? Not according to EDUCAUSE and Sakai. And BlackBoard's careful and misleading excerpting of the Sakai response didn't win them any friends either. Did they think we wouldn't read it for ourselves?

Open Source is where all D2L customers are going if they are forced into bankruptcy, methinks. With all the money saved by not purchasing a commercial/proprietary system like BlackBoard’s, schools can hire more programmers to contribute to Moodle, Sakai, et al.

This is NOT rocket science.

Read all about here.

I'm still digesting, but a couple of things pop out.

Last week, after the news that the USPTO had agreed to re-examine the '138 patent, the number of blogs and news sources that ran the story was huge and noisy.

They want to own the commercial CMS market. I haven't read the other patent applications that they list, but it seems like it would be hard to be a commercial LMS vendor and not deal with Bb on their terms.

They miss the point about "Free" in Free Software. It's not the price, it's the freedom to do what you want.

EDUCAUSE's and Sakai Foundations endorsement of this action did not exactly say "All is forgiven" and I am a little disheartened with the response by these two organizations. Updated: BlackBoard's selective quoting from the Sakai/EDUCAUSE response was misleading ...

"...As a result, the Sakai Foundation and EDUCAUSE find it difficult to give the wholehearted endorsement we had hoped might be possible..."

I feel better.

The FAQ is long and detailed, but I think you can drive trucks through the loopholes and since they reserve the right to litigate if they think you are in violation of the pledge, there is a segment of the community that is chilled.

Some people will be satisfied with this, others will not and the litigation will continue on its merits.

It's still a bad patent, IMHO.

More later.

This is my second interview with a law professor who teaches patent law. Professor Vince Chiapetta teaches at Willamette University College of Law and has been involved in patent litigation in the past.

The first podcast was with Professor Mary LaFrance of UNLV Boyd School of Law.

Vince was kind enough to entertain my questions and enlighten in me in many aspects of patents, patent law and patent litigation. He clarified many issue for me in regards to the BlackBoard v. Desire2Learn litigation.

I had the benefit of speaking with Vince the day after my return from EDUCAUSE in Dallas where one of the sessions I attended was the BlackBoard Town Hall which others have blogged about here (Chronicle article) and here (Al Essa's blog). This session left me with more questions than answers and these were fresh in my mind during my talk with Vince.

We talked about many legal issues and so I will come back to this post later and add some links to legal definitions or other articles to help us non-lawyers follow the bouncing ball.

UPDATE: I ran the audio file through Gigabox's excellent free tool Levelator to make it more listen-able (my voice boomed while Vince sounded distant) to good effect. The link is to the new version.

Click to listen to the podcast or right-click to download - Chiapetta2.mp3

As usual, none of the information in this podcast should be construed as legal advice.

UPDATE:

We covered a lot of technical territory in this podcast. Here are some links that relate to some of the topics covered...

• KSR v. Teleflex - a current patent case going before the Supreme Court soon. This is a link to a blog that talks about the case.
• The term I was searching for about 10 minutes into the podcast was "Skilled Artisan" and here is a link to the USPTO website that helped me. Use your browser (Ctrl-F) to search for "skilled artisan".
• Definition of Mens Rea from LII's Wex.
• More about the Sherman Act from Wex
• Walker Process Supreme Court case that ties together inequitable conduct and antitrust (link to Findlaw)
• Here's an article on "inequitable conduct" in patent litigation. I have not read this yet.
• Here's an article about the US District Court in Texas often referred to as the "Rocket Docket" for patent cases.
• Cost of patent litigration from Wikipedia..."...A typical patent infringement case in the US costs 1 - 3 million dollars in legal fees for each side. This is despite the fact that 99% of all patent infringement cases are settled. Legal fees in pharmaceutical cases can run 30 million dollars or more due to the fact that billions of dollars may be at stake...."
• Wikipedia article on software patents
• Article on "Markman Hearings" with this quote... "...While the form, timing and scope of "Markman" hearings vary from district to district and from judge to judge, the outcome is often dispositive of the entire case. This occurs because the interpretation of a patent claim, or "claim construction", is the central issue in most patent litigation. Whether the litigation focuses on patent infringement or validity, the core issue is often whether there is a narrow or broad interpretation of the patent claim...."

Like so many ed-tech folks who are not lawyers, I have been struggling to understand the implications of the BlackBoard patent and their law suit against Desire2Learn.

Being in the legal education business, I happen to know some really smart law professors who teach patent law and so I am in the process of recording conversations with them about this topic.

Professor Mary LaFrance teaches at the Boyd School of Law which is part of the University of Nevada-Las Vegas and she was kind enough to entertain my questions.

The conversation was far-ranging and of necessity, somewhat speculative as to the tactics and intent of the parties.

It is important to note that none of the material in this blog and in this podcast in particular should be construed as legal advice.

Here is the podcast - MaryLaFrance.mp3. Click to listen or right-click to download the MP3.

Matthew Small, BlackBoard's General Counsel is quoted today in a Chronicle for Higher Education article (subscription required)...

"..."We don't claim to have invented the course management system," said Matthew Small, senior vice president and general counsel for Blackboard. "This is about specific functionality."..."

That's correct, they don't and some of the hyperbole about their lawsuit has been over the top .... but I would claim not unjustified.

You see, patents are tricky and complex things and no one can really really tell you if something is infringing a patent without the full-on mess of a lawsuit. Everything else is a calculated risk.

This doesn't cause a complete meltdown of all commerce for several reasons.

1. The patent holder doesn't want to kill off everyone who wants to use the patented technology, they want people to use it and pay them a royalty. If they set the royalty price too high, no one buys and the patent holder gets bupkis. This is even true for patent trolls.
   
   
2. In the case where multiple patents are held by multiple companies, they will sometimes agree not to sue each other - either formally or informally. Patent portfolis are like nuclear weapons in that they provide mutually assured destruction to anyone who launches first.
   
   
3. Patent litigation is expensive and a calculated risk for both sides. A company could pay a lot of money just to get the patent and lose it all in the first infringement suit. You place your bets and roll the dice...

The educational technology area hasn't seen many patent lawsuits. There are patents out there for educational processes and related technologies, but so far, no seems to have pulled the trigger.

BlackBoard is the first to pull the trigger. They launched without warning, they did the equivalent of yelling 'Fire' in a crowded theatre and everyone is wondering if they have to scramble for the exits or not.

Mr. Small's comments seem to indicate that there is a fire, but it's a small one and it's only going to burn down one company's house, but the problem with yelling 'Fire' is that everyone else is afraid of it spreading. We panic. This is why it is against the law to yell 'Fire' when there isn't one.

BlackBoard has done the social equivalent. They have created fear and panic in the educational technology community and brought down untold vitriol on their good name. They are still acting surprised by this and I am wondering if this is calculated or plain cluelessness. Either one is not good for BlackBoard.

If they have a real beef with Desire2Learn, they should have worked it out quietly amongst themselves. Companies do this all the time. By making a federal case out it (literally), they invite the court of public opinion to the party.

Desire2Learn is not safe either. If they decide to settle because BlackBoard makes a reasonable offer of settlement (happens all the time), then the whole ed tech community will think we have been shafted by the greedy for-profit companies. It will looked on as a slimy, deal cut in a smoke-filled backroom amongst cigar-chomping corporate barons. It will look like us against them. BlackBoard and Desire2Learn are part of our community, but these activities make us question their allegiances. That's real bad for everyone. We get nowhere when we can't trust our community members.

BlackBoard should have seen this coming. There are numerous examples in other parts of the technology world (Microsoft, Rambus, SCO, etc.) and it's not like them to be so clueless.

Inside HigherEd has recently posted an article about the BlackBoard patent issue and in it BlackBoard's General Counsel Matthew Small opines...

"...Blackboard has no plans to challenge open source projects on patent issues, and he said that such challenges “wouldn’t make good business sense” for the company..."

That's great to hear, but it seems that BlackBoard is struggling to get people to believe them when they say this. There is a simple solution.

Put it in writing.

What I mean is that now that BlackBoard has the patent, they can license it to the Sakai Project or Martin Dougimas (aka "Mr. Moodle") or others. We know they have lawyers, so it should be a simple matter to draft up a license agreement that gives sufficient rights to Sakai and others so that they can stop worrying.

It would go a long way towards assuaging the communities fears.

I went in search of information that would help me understand how the BlackBoard v. Desire2Learn case might play out and want to share the results of my research with you.

It is important to point out that I am not a lawyer and that none of what I write or say should be interpreted as legal advice or the creation of a lawyer/client releationship.

I found an excellent article at The Minerals, Metals & Materials Society's website in JOM: The Member Journal of TMS written by A.B. Silverman at Eckert Seamans Cherin & Mellott, LLC. The title of the article is "I'll See You In Court" and it describes the general steps that take place in a patent infringement litigation. I highly recommend all of the articles written by Silverman. They are short and easy to understand and provide a great summary of the issues surrounding patent litigation.

Silverman writes...

"...Because patent litigation can be very time consuming, expensive, and uncertain as to the result, it is generally initiated only after a thorough evaluation of the case and reasonable efforts to resolve the matter amicably have failed..."

Emphasis mine.

As we already know, BlackBoard seems to have skipped this step. From the August 2, 2006 Chronicle of Higher Education article...

"... John Baker, president and chief executive of Desire2Learn, said it was unfortunate Blackboard had decided to go to court before trying to negotiate the dispute..."

Silverman then explains that once the suit is filed, it will usually include an injunction from the patentee (i.e. BlackBoard) to require the infringer (i.e. Desire2Learn) to stop the infringing activity. BlackBoard has done just that (here's the complaint in PDF from Desire2Learn's website)

Silverman tells us that the infringer can file a suit against the patentee to have the patent declared invalid. This is a likely strategy for Desire2Learn and will probably be the next step in the case. They have 20 days to respond to the 7/26/06 complaint filed by BlackBoard (that's this coming Tuesday, August 15).

Silverman goes on to explain what happens in the trial, but we are very far from that step.

The case will likely start out with a war of motions to limit claims and stipulate points of agreement (if any exist) between the two parties. This is expensive litigation for both sides.

The Burdick Law Firm has a article describing the costs of Discovery and Trial at $100,000 and $300,000 respectively with the caveat that discovery will be ...

"... typically much higher if large monetary value involved..."

...which seems to be the case here. Desire2Learn is a private company, so it's financials are not generally available, but I would assume that this patent threatens their core business and that this represents millions of dollars for them.

This is an incentive for Desire2Learn to settle the case before discovery gets too expensive and before the trial actually starts. BlackBoard's General Counsel, Matthew Small is quoted in the same Chronicle article...

"...We are seeking a reasonable royalty..."

I don't know whether Desire2Learn will settle, but that has to be the math they are doing right now. The cost of settling and paying a royalty to license the patent versus the cost of litigating the patent.

The ed-tech community would like to see the patent invalidated because it might threaten open source projects like Moodle, Sakai and others, but Desire2Learn doesn't have to serve this community. After all, they are competing with open source as much as BlackBoard.

Lawsuits can be expensive distractions for growing companies, but there is another angle for both BlackBoard and Desire2Learn to consider here and I covered it in my first post this topic.

The response from the ed-tech community has been to cast BlackBoard as the "black hat" (pun intended) in this dispute and so that naturally assumes that Desire2Learn can be the "white hat". I call this litigation as marketing. By championing this cause, Desire2Learn can gain goodwill from the community. This has to be part of the math they are doing regarding this case.

I have been following the reaction to the BlackBoard patent closely and I am struck by the fact that I can't find anyone defending BlackBoard's actions.

I have seen some people explain why they understand that patents are important and why they think BlackBoard feels compelled to patent their work, but I haven't seen a single instance of someone saying...

"...BlackBoard did the right thing by getting this patent and suing Desire2Learn..."

... except BlackBoard, of course.

Now, they're a big company and they don't need anyone to stick up for them, but when you own 80% of a marketplace and have over 3000 customers, you would think that someone would stand up and say something nice about you.

I did some Google searches for "defending BlackBoard" and such and most of the hits were along the line of "I'm not defending BlackBoard...".

This is very telling. Even SCO and Microsoft have their defenders, shills, syncophants and lobbyists.

Is BlackBoard's customer base that tepid?

I'm stunned.

Back in 2000, I was reserching content management systems for a legal aid website project I was working on and did some pretty heavy digging into ArsDigita's ACS system. (that might be redundant as I believe the 'S' stands for system).

Anyhow, this system was developed by Phillip Greenspun of "Phil and Alex's Guide to Web Publishing" and was used at MIT for some of the courses that he taught. If you have not read this book, it is well worth the time. Even after all these years (published originally in 1998), it has great insights and is enjoyable reading for website developers. The link leads to the free online version of the book, but buy the full-color, paper version - it's full of beautiful photos taken by Greenspun.

I found a blurb from April of 1998 at the WayBack Machine on Archive.org that describes some functions of ACS and refers to version 1.4 (which would imply that it goes back further).

"...

example: participants in a class

If you have a bunch of people taking a high school or university course, the ACS can serve as the hub for distributing course materials, collecting questions, and fostering discussion. It has in fact been used this way at MIT, Harvard, and lots of schools that aren't in Cambridge!

Anyway, the lessons from our experience are that the ACS works as well as any other collaboration software for supporting folks in a class. Just be sure that they have a reason for using a Web service in the first place.

Architecturally you could set up everyone at a university in one big ACS. Then use the user-groups module to define various group types. The most important structures in a modern university are committees. So you'd have those sorts of groups to accrete administrators. Then you'd probably want to think about a group of type "course". Students and teachers in a particular course would be lumped together in a user group and could have a private discussion group...."

Emphasis mine.

Instead of "various group types" think "roles" which seemed to figure prominently in many of the claims in the BlackBoard patent.

I will get this into the Wikipedia History of VLE's later this week. That's where the community seems to be coalescing for a single location for this kind of stuff.

Phillip Greenspun blogs here. I'll bet he would make an excellent expert witness.

The Inquirer had a story today about Rambus' run-in with the Federal Trade Commission.

"...THE US FEDERAL TRADE COMMISSION (FTC) is to file an antitrust case against Rambus Inc, a company which licenses its intellectual property to others. The basis of the case, according to commissioners, is that Rambus allegedly persuaded the JEDEC standards group to take up technology that it was filing patents for without telling it..."

Emphasis mine.

What does this have to do with BlackBoard?

Probably nothing, but it made me think about the timing of BlackBoard's patent and the evaluation being done by the Department of Justice on the BlackBoard/WebCT merger.

From the patent, it looks like it was published on January 17, 2006.

From a press release on BlackBoard's website dated February 6, 2006 (three weeks later), they announced...

"...Blackboard Inc. (Nasdaq: BBBB), announced today that it has been given clearance by the U.S. Department of Justice to complete the merger of Blackboard and WebCT, Inc. The United States Department of Justice has terminated its review of Blackboard's proposed acquisition of WebCT, Inc. ..."

The merger between BlackBoard and WebCT deserved federal scrutiny because it was reported that it would result in a single company having up to 81% of the Course Management System market.

So my question is ... Did BlackBoard tell the DOJ about the patent that they got three weeks before the DOJ terminated its evaluation?

If not, then the story from the Inquirer which started this line of thought becomes rather relevant, I believe. The Feds don't like it when you forget to tell them something.

There is another aspect to this as well.

BlackBoard originally applied for their patent back in 1999, I assume the work they were doing before that went into the patent application.

On BlackBoard's website, under a description of the company's history, is this quote...

"...Blackboard was founded in 1997 with a vision to transform the Internet into a powerful environment for the education experience. Originally, the Company provided consulting services to the IMS Global Learning Consortium..."

Emphasis mine, again.

So, about the time they were consulting with IMS, they might also have been working on the software that they eventually came to patent.

Here's a description of IMS from their website...

"...IMS/GLC is a global, nonprofit, member organization that provides leadership in shaping and growing the learning industry through community development of standards, promotion of high impact innovation, and research into best practices.

... IMS includes more than 50 Contributing Members and affiliates..."

Emphasis mine, again.

According to the Inquirer story, Rambus was working with the JEDEC memory standard committees and applying for patents as the same time, but they never told the Federal Trade Commission about it.

BlackBoard was consulting with IMS, which "...provides leadership ... through community development of standards,..." at approximately the same time they were working on the software that they later patented.

Did they tell the DOJ?

I don't know.

The Inquirer has the PDF (no story yet) of the law suit filed by BlackBoard on July 26, 2006 (same day they got their patent) for patent infringement. So much for goodwill, it's going to be war and Desire2Learn is the front line.

This lawsuite has huge ramifications for the educational community - NOT just he ed-tech crowd either. On the front page of BlackBoard's website is this blurb...

"...The Blackboard Academic Suite™ enables institutions to embrace the full power of the Internet with access to any learning resource at any time from any place..."

They should probably add a qualifier now. How can you access the "full power of the Internet" if you are dealing with litigation fears and limitations of choice as a result?

This is just plain bad for everyone including BlackBoard and they really should re-think their strategy.

Well, the clock is ticking for BlackBoard and whether they are going to come out with cease and desist letters blazing or do something intelligent that will endear them to the edu-blogosphere.

By the way, here is the link to the actual patent on the USPTO website.

Evidence of searches for prior art are starting to popup. Here's a quote from the comments to a FortnightlyMailing post...

"...There is certainly clear prior art from the very early 1990s. Details follow.

From the historical perspective I date the development of "modern" bulletin board systems in e-learning from 1991. When we started to use FirstClass at the Open University on the JANUS project, within a few months many of the so-called "standard" features had been developed - quasi-geographical virtual campus representation, assignment submission, student-only areas, chat, etc..."

The patent seems to have been applied for in 1999 which would make anything in 1998 fair game for prior art. I am not a lawyer, but I recall doing some work with a couple of companies doing similar things around that time.

A very little digging around in the Internet WayBack Machine finds this website from MadDuck Software - makers of Web Course In A Box...

It's dated June 12, 1998 and MadDuck was certainly doing a lot of the same things mentioned in the patent. Here's the link.

A little closer to my legal education home, I could swear that West, Inc. had launched TWEN (The West Education Network) that far back and sure enough...

This is dated January 10, 1998. Here's the link.

If I recall, West launched TWEN as a competitor to MadDuck which had a deal to distribute their software to law schools via Lexis. That means MadDuck goes back to 1997 and maybe even 1996.

I would guess that the evidence will mount quickly since things like this move in Internet time and so if BlackBoard is going to salvage any goodwill out of this, they better say something soon.

From Wikipedia, we learn...

"...Goodwill is ... an important accounting concept that describes the value of a business entity not directly attributable to its tangible assets and liabilities..."

So Goodwill is something that a company wants to nurture, grow and be able to claim on its bottom line.

When goodwill is negative, it's a liability - literally and it looks like BlackBoard has not handled it's recent patent acquisition in a very value-generating way.

Some quotes from around the edu-blogosphere...

David Carter-Tod writes...

"...Frankly, they should be ashamed. It’s a tissue of fabrication..."

Stephen Downes writes...

"... This would be funny if it weren't so ridiculous:..."

Rick's Cafe Canadien writes...

"...BlackBoard or Dr. Evil?..."

Peter Schilling writes...

"...Blackboard seems to have a long-term strategy of ... trying to keep others out of the field by getting an absurdly broad patent for common uses of technology..."

Now, it may be that BlackBoard will soon come out with a press release saying that they are not going to enforce this patent or not going to go after Moodle, Sakai, Drupal, TWEN or any of the other open-source or commercial Learning Management/Course Management Systems (LMS/CMS) out there.

If so, they should have done that first. Many of the comments around the blogosphere are especially upset with the USPTO and they are couching their reaction to BlackBoard with careful terms to see if they do the right thing. There is a possibility for a big payoff in goodwill yet.

But time is running out. The mere announcement of this patent has drawn considerable vituperation on BlackBoard and as the meme spreads, it gets harder to reverse. Badwill is kind of sticky.

I surely see the need for a large corporation to patent its intellectual property. Heck, BlackBoard may have gotten this patent to defend against patent trolls who would pull the same thing against them that the educational community fears BlackBoard is going to pull now.

So the question for stockholders is whether the value of the patent is greater than the lost goodwill demonstrated by the comments above?

I doubt it.

The patent may not even withstand prior art and validity challenges and you can bet it will be challenged if BlackBoard gets all aggressive in this space. If they lose the patent, they lose twice - no patent and no goodwill.

Will Bb be heros or chumps? Stay tuned.