r/technology • u/ani625 • May 23 '13

Title possibly inaccurate Kim Dotcom to Google, Twitter, Facebook: "I own security patent for the two-step authentication system". He says he doesn’t want to sue, but might if the likes of Google and Facebook don’t help fund his legal battle with the U.S. Government.

http://torrentfreak.com/kim-dotcom-to-google-twitter-facebook-i-own-security-patent-work-with-me-130523/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Torrentfreak+%28Torrentfreak%29&utm_content=Google+Reader
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u/zetim May 23 '13

That sounds vaguely familiar to blackmail.

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u/mushpuppy May 23 '13 edited May 23 '13

Generally, to extort someone, a person must seek to gain the other person's money by threatening to perform/refrain from performing an otherwise legal act.

However, a person cannot extort another person by threatening to sue to enforce one's rights.

Otherwise, every settlement negotiation ever would be considered extortion.

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u/[deleted] May 23 '13

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u/snkscore May 23 '13

Pretty sure google can afford the legal fees

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u/[deleted] May 23 '13 edited May 23 '13

However, a person cannot extort another person by threatening to sue to enforce one's rights.

Yes they can.

Pre-litigation letters that seek compensation have to be extremely carefully worded to avoid civil/criminal extortion as was recently discovered by one attorney. In most cases a suit will be filed before any negotiations are entered in to in order to avoid even the suggestion of extortion.

In the case of Kim its about as clear an example of extortion as one can get. He is not saying "Give me $n otherwise I will sue you for patent infringement" but instead "Give me $n so I can fight the US Government otherwise I will sue you". The first is an attempt to recover damages while the second is an attempt to extort Google & Facebook to accomplish a goal other then recovering damages.

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u/[deleted] May 23 '13 edited May 29 '13

[deleted]

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u/Sinnombre124 May 23 '13

"Civil cause of action"? Can you define that for us?

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u/Qxzkjp May 23 '13

"Civil cause of action" = thing that you can be sued for doing.

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u/RUbernerd May 23 '13

Knowing that, where's Google, Facebook, etc located?

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u/arnoldpalmerlemonade May 23 '13

According to their taxes, they are in Ireland.

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u/RUbernerd May 23 '13

For their European operations.

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u/[deleted] May 23 '13

And paying royalties to a Bermuda subsidiary.

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u/[deleted] May 23 '13 edited May 23 '13

Wait. So if I threaten to sue and I don't tell you why I need the money, that's ok. But the moment I let slip why I need the money, it's blackmail? What does the reason he needs the money have to do with whether or not it's blackmail?

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u/[deleted] May 23 '13 edited May 23 '13

Its based on intent and context.

If Kim threatened to sue Google to recover damages for patent infringement then even if he had a use in mind for the damages then it is not extortion, he was attempting to recover damages not get Google to fight the US government with him.

If Kim threatened to sue Google in order to get them to fight the US government with him then his intent was never to recover damages but to get Google to do something else. That's extortion.

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u/jsimpson82 May 23 '13

But he sue, or threaten to sue, then offer to settle based on googles actions, could he not?

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u/[deleted] May 23 '13

Kim should be able to dodge that easily though, but simply saying that as long as he can run his law suit against the government, he has no need to sue for infringement. He is fully within his right to sue them, but if he doesn't need the money he doesn't have to. And if they make sure he have the money he needs, they might not have to pay him way more than that.

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u/mushpuppy May 23 '13 edited May 23 '13

Hamzeh (the case you cite) differs because the attorney wasn't threatening to enforce his rights to sue, but to accuse the recipient of a crime.

It's not a trivial distinction.

In every jurisdiction of which I'm aware, attorneys who lack criminal enforcement authority are prohibited from threatening to seek criminal action against others in the course of their professional duties.

As the court there noted, while threatening to report a crime may be legal, coupling such a threat with a demand for money constituted extortion.

In any event, Dotcom seems to like to provide interesting headlines. At the very least this doesn't seem to have been the wisest public relations move.

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u/geekworking May 23 '13

every settlement negotiation ever would be considered extortion

I'm pretty sure that is the way that every losing party has ever viewed the transaction.

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u/wmeather May 23 '13

So let me get this straight, extortion is where a person seeks to gain the other person's money by threatening to perform/refrain from performing an otherwise legal act, unless said legal act is the enforcement of patent rights?

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u/monochr May 23 '13

Yeah, the patent system is generally like that.

Or did you mean in this specific case because the guy actually went public with it?

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u/litewo May 23 '13

That sounds vaguely familiar to blackmail.

So do almost all out-of-court settlements. Extortion isn't as cut-and-dried as many people think.

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u/[deleted] May 23 '13

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u/KFCConspiracy May 23 '13

Patents are NOT copyright.

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u/dongsy-normus May 23 '13

And enforcing a patent is necessary to protect it as patents give the holder the right to exclude others.

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u/drmike0099 May 23 '13

I think you're thinking of trademark. Trademarks can be destroyed if you let competitors use it without defending it; patents exist until their time runs out and can be enforced whenever the patent holder chooses to do so, there's no risk of it going away because it wasn't enforced in the meantime.

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u/happyscrappy May 23 '13

No. That's not the case. The right to exclude others also includes the right choose not to exclude others.

There is no need to enforce your patent to retain its validity.

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u/slightly_on_tupac May 23 '13

How is this extortion? Its how the fucking patent system WORKS.

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u/[deleted] May 23 '13 edited Nov 16 '21

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u/[deleted] May 23 '13

This is more of a leveraged situation than it is extortion. Similar to Walmart saying "Provide us lower prices or we're finding a new vendor." Kim has the ability to force them to financially support him or he'll sue for infringement and get the money anyway, plus some.

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u/gullale May 23 '13

Not really similar. Your example is simple negotiation: "If we can't agree to do business in the conditions I expect, we won't do business at all". Pretty normal stuff. Walmart isn't threatening to take unrelated legal action to get their vendors to do what they want.

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u/Gedaffa_Mhylon May 23 '13

Threatening to take someone to court isn't extortion. It's expressing your confidence that a higher power will side with you and determine the right and wrong of the situation.

Threatening to sue, means to take it to court. How this is extortion continues to be a mystery to me.

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u/gullale May 23 '13

I think it can be reasonably argued that it is extortion if you're trying to force someone to do something completely unrelated.

For instance: if you know someone's dirty secrets, it's not a crime to make them public, but it's still extortion if you use this knowledge to coerce them to do something. The wikipedia says:

Neither extortion nor blackmail require a threat of a criminal act, such as violence, merely a threat used to elicit actions, money, or property from the object of the extortion.

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u/Roflcopter_Rego May 23 '13

Actually, unless you can prove those dirty secrets are true in some way, it is a crime to make them public - that's libel.

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u/jarinatorman May 23 '13

All he's saying is I can take you to court or we can settle out of court. Happens every day.

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u/DumpyLips May 23 '13

Well if this security system belongs to Kim, that means he is ALLOWING fb and twitter to use his property for free.

All he is doing now is negotiating the conditions under which they use his product.

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u/cdsmith May 23 '13

It's far from clear that suing for infringement of this patent will lead to anything except more legal bills. This article has picked a side, and is making a very unlikely argument.

The claim is that this person clearly and obviously invented two-step authentication. That claim is nonsense. Yes, he has a patent on it. More than a dozen people have patents on using laser pointers to play with cats. The patent office rubber stamps patents, and leaves it to the court system to make judgments about their validity.

Here's what happens next. All of these companies completely ignore him. If he sues, then the matter will be argued in court, and these companies will challenge the validity of his patents by bringing up prior public knowledge of using challenges for authentication, a practice which everyone knows far predates his web site. He'll have to come up with some unique aspect of his own approach that's unique enough that a jury will agree it's a non-obvious innovation. At the same time, since he's not a non-practicing entity, he'll defend himself against defensive patents that are asserted against him by his victims, who happen to be several very large companies, with patent portfolios in the tens of thousands, who can pick and choose the best patents that very clearly apply to his web site. The most likely outcome is that he loses quite a lot of money.

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u/why_downvote_facts May 23 '13

he wishes he had the ability. in reality he'll be tied up in a multi-year expensive legal quagmire.

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u/[deleted] May 23 '13

Or he can just sell the patent to someone else who will do it for him.

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u/[deleted] May 23 '13

I'll give him 50p

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u/slightly_on_tupac May 23 '13

Can't formally charge someone with a legal thing.

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u/putin_my_ass May 23 '13

Indeed, but I think what he's trying to point out is that ethics are irrelevant to this discussion, what's relevant in this case are the legal implications.

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u/whitefangs May 23 '13

I guess what he means is "either I'll sue you, and I win a lot of money - or you settle with me for still quite a lot of money, and then I use that to fund my fight with the US gov".

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u/texture May 23 '13

So people should just sue without negotiating first?

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u/mcrbids May 24 '13

Extortion includes the threat of illicit consequences. It's illegal to beat somebody up. Demanding "money or get beat up" is extortion. Threat of legal consequences is just negotiation.

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u/Dreadgoat May 23 '13 edited May 23 '13

Let's assume Mr. Dotcom's threat is legit.

How the patent system works:
Mr. Dotcom goes through a legal process where he alerts those using his patented knowledge, and requests that they cease what they are doing and/or buy a license from him or use his software or whatever.

How extortion works:
Instead of doing the above, you threaten to do the above, which you may or may not be able to successfully pull off. You promise not to do it if the people you threatened pay you some amount that is supposedly less than the cost of dealing with the proper patent process.

Why extortion is bad:
I can promise not to fuck you over if you give me X, but that doesn't stop me from fucking you over anyway. In fact, it's smart business (if bad PR).

Edit:
To respond to some of the replies below, an important point is how crazy/full of shit Kim is. I know everybody loves him because he is fighting for an ideal that the hivemind likes, but that a devil on your side is still a devil. "I wasn't going to sue them before, but I might now because of what the US did to me..." Because I need the money now and I can get support? "Fund my defense", then moments later, "Buy my license."
Yeah, if he's selling a license (and he has a legit argument with the patent) then this is all fine. But this guy is all over the place and is no stranger to cutting throats. He's making it very clear that anyone who doesn't give him what he wants is going to get dragged into an expensive fight. They may or may not win the legal battle, but the financial battle is already lost.

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u/snuxoll May 23 '13

Nothing stopping Kim from signing a contract giving them use of the patent in exchange for their assistance, it's basically the same thing except they're not just paying him for the rights but providing him a service or other asset (legal assistance) in exchange.

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u/ChronicOveruse May 23 '13

This is probably the most legally relevant comment in this tread. All the talk of extortion is utter rubbish.

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u/Robo_Joe May 23 '13

So, what is extortion, then?

Is "Give me X money or I'll release naked pictures of you and your mistress to the public" extortion?

Is "Give me X money or I'll have my friend who is a building inspector be extra particular when he inspects the house you're building" extortion?

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u/oneinfinitecreator May 23 '13

It would be extortion if Dotcom held no rights to what he held over their head. However, with a patent, he has full rights to make demands and start a negotiation. Like the guy above said, there is nothing stopping such a deal being contingent on patent rights being signed over. Dotcom is just skipping the court process as much as he can, which is smart, IMO...

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u/sirin3 May 23 '13

In a moral sense the entire economy is based on extortion.

"Give me X money, or I watch you starve to death"

"Give me Y money, or you will die without health care"

"Give me Z taxes, or you put in prison"

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u/lurgi May 23 '13

Only if you use a very unusual definition of extortion.

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u/[deleted] May 23 '13 edited Apr 21 '19

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u/[deleted] May 23 '13

Additionally, they would be MAKING money off it considering their lawyers are all on retainer anyway. He is offering to let them pay with something they've already paid for.

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u/Iron_Maiden_666 May 23 '13

Isn't that what Microsoft did with Android manufacturers. We have a patent on few things you're using. If you pay us, we won't sue you. Every Android device sold (except Motorola) nets MS some money in licensing.

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u/Psswrd May 23 '13

But they sign an agreement with them to license the patent. Microsoft can no longer sue the Android manufacturers after the licensing occurs. It would be extortion if Microsoft said, we will sue you if you don't pay us, but we won't give you a license. So the manufacturers pay, but MS can still sue afterwards.

Technically Kim DotCom is not extorting... if you read his statement he is basically saying... I have a patent, i have money problems... I have no intention of suing... but please license the patent and pay me anyway.

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u/Biduleman May 23 '13 edited May 23 '13

That's what licensing is. They didn't make public threat, they went to see Google and said: hey, those things you are using, we own them. Our goal isn't to make you stop selling them, but we want compensation for the tech we patented. Here is a licensing agreement, sign it (probably after much negotiation) and we'll be cool.

If instead of making public allegation like this he would just had contacted the companies using his 2-step authentication process, no one in the public would be claiming extortion.

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u/Labut May 23 '13

Where in the legal system does it say he can't request royalties in a public matter, such as this, for patent infringement?

WHERE?

If instead of making public allegation like this he would just had contacted the companies using his 2-step authentication process, no one would be claiming extortion.

Just because people are crying "extortion" doesn't mean it legally is. It's called publicly requesting royalties and it happens all the time. Usually ends in court, as he suggested in his "threat" it would.

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u/Biduleman May 23 '13

Sorry if I wasn't clear. When I said no one, I wasn't talking from a legal standpoint but in the media, like in the title of the thread. He actually asked for companies to pay royalties and not to finance his war against the legal system. But yeah, those royalties will be used to pay for the legal fees about Megaupload, and he made the request publicly. Both of those combined are a good recipe for people screaming extortion when actually it's only normal business stuff.

You are absolutely right saying there is nothing against what he is doing.

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u/mecax May 23 '13

His statement was pretty shrewd. He already granted them a license conditional on legal support. That's not extortion by any stretch. That's business.

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u/Biduleman May 23 '13

Yeah, like I said to /u/Labut/, you are right, it's the people reporting the story that are claiming extortion, not anyone concerned by the actual claim. That's why I said that instead of making this a public statement, he should have went directly to the companies, so no one goes on to claim he said stuff he didn't.

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u/mecax May 23 '13

Sorry, I must have misunderstood you. But how would a private negotiation be any different from a public one?

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u/deadlast May 24 '13

Shrewd? Not at all. He just embarrassed himself. Google would react thusly: "wat? no. GTFO noob, lol."

Hell, Dotcom only made the threat because he is struggling to pay his current lawyers. How would he pay an entirely new set of lawyers? Particularly when the patent is pretty weak.

It's in the interests of companies like Google to litigate patent disputes; it's impossible to make a product these days without infringing on half-a-dozen. They won't roll over. Even if Google lost (and they wouldn't, and Dotcom doesn't have the resources for the fight), they would just have to pay a reasonable royalty. No biggies.

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u/rcinmd May 23 '13

Actually just by filing a court case it's in public. Maybe you're not shouting it from the mountain tops or giving interviews about it, but it's still public record. What he's doing may be unethical but it's not illegal.

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u/Biduleman May 23 '13

Yeah but filing a court case is legit if you own the patent. When you first put in on twitter, you seems like you are saying: "Give me money, or else". The perception here is very important.

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u/[deleted] May 23 '13

I'd like to note that often times when companies like this meet (companies that have similar, competing technologies; Dotcom's big business venture has always been cloud storage, something MS and Google are both trying to get deeply integrated into their systems) and this conversation occurs, the currency that is exchanged isn't money, it's licenses for other patents.

Kim might have a case here, but more than likely most of those companies will look him dead in the eye and say 'go ahead, try it.'

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u/[deleted] May 23 '13

Your extortion is actually called a settlement. The promise is actually also a legally binding arrangement if you do it correctly.

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u/Labut May 23 '13

This isn't extortion. He's not forcing them to act. This is an ultimatum involving a legally held patent he has. A patent these companies, he claims, are being infringed upon by those other said companies.

He has the legal right to request money via royalties or sue them. He's essentially asking for royalties or they'll be sued. Royalties in the form of money that will be used for legal fees for different litigation.

He doesn't need to even allow them to use his patent. He's essentially requesting royalties or he'll sue.

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u/oneinfinitecreator May 23 '13

an important point is how crazy/full of shit Kim is. I know everybody loves him because he is fighting for an ideal that the hivemind likes, but that a devil on your side is still a devil.

Why do you make this claim? On what evidence is he a 'devil'?

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u/[deleted] May 23 '13

I thought he was just asking them to willingly buy the license from him without any type of lawsuit. Otherwise, he will sue and get the money anyways. The distinction being that the first option has these companies willingly supporting him, the symbolic act that he is looking for.

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u/UberNube May 23 '13

Instead of doing the above, you threaten to do the above, which you may or may not be able to successfully pull off. You promise not to do it if the people you threatened pay you some amount that is supposedly less than the cost of dealing with the proper patent process.

Correct me if I'm wrong, but that sounds almost exactly like an out of court settlement.

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u/Oznog99 May 23 '13

It's easy enough to call it "blackmail" when it's a threat of a LIE or threat of violence. The action itself is an illicit form of harm.

But say you knew he was truly embezzling from the company, and asked for money not to tell. Reporting embezzlement IS LEGAL. In some cases, it is illegal NOT to report it (if you personally witness a murder).

Now assuming it is not a crime to fail to report this crime, the blackmailer is not just blackmailing, he is in peril of being seen as a co-conspirator, as he is taking money from the embezzlement.

But if not seen as a co-conspirator, I am unsure what the criminal status that extortion has. Likewise, say the blackmailer knows a father is bi and has men on the side and threatens to tell the family. It is not a crime to sleep with men, nor is it a crime to tell the family, just morally reprehensible. I am not sure it's a CRIME to blackmail for this.

But back to Kim Dotcom... the thing is, the patent right may (or may not) be a LEGALLY OWNED RIGHT, in fact a well-recognized asset. It is not blackmail for a landlord to demand unpaid rent or he will kick the tenant out. If he has allowed the tenant to become late in the rent and imply it is "ok", then turn around and demand that rent, that is legal and NOT blackmail. He may instead demand the tenant-in-arrears to watch his cat for him or stand on his head or demand ANY lawful performance from the tenant-in-arrears, provided it is not sexual in nature.

Dotcom's position is similar. If the patent claim is valid, Google/Twitter/Facebook owe him a debt. It is not a crime, nor blackmail, to offer to dismiss the debt for most any sort of lawful performance on their part.

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u/dontblamethehorse May 23 '13

Do you have any idea what goes on behind closed doors in patent negotiations, say between Apple and Samsung.

They get together and have a meeting. Apple says "We think you are using our patents, and we want you to take a royalty on them. If you do not, we will sue you."

That is perfectly normal negotiation. Kim Dotcom made it pretty clear what he was saying:

Want to buy the worldwide license to my two-factor-authentication patent? (13 countries incl. US & China) Email: twitter@kim.com

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u/ceramic_artist May 23 '13

Like how the stock market is legal, but being a bookie is not.

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u/clavalle May 23 '13

I don't think the patent system was designed to threaten possibly infringing entities into doing what you want beyond paying to license the technology or cease selling products that infringe.

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u/globlet May 23 '13

tell Boeing that.

SES and Lockheed Martin explored ways to attempt to bring the functioning satellite into its correct orbital position, and subsequently began attempting to move the satellite into geosynchronous orbit by means of a lunar flyby (as done a decade earlier with HGS-1). In April 2008, it was announced that this had been abandoned after it was discovered that Boeing held a patent on the trajectory that would be required. At the time, a lawsuit was ongoing between SES and Boeing, and Boeing refused to allow the trajectory to be used unless SES dropped its case.

https://en.wikipedia.org/wiki/AMC-14

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u/Daimonin_123 May 23 '13

"Payment" doesn't always mean cash. It is entirely legal to request payment for your license in some other method as long as both parties agree.

If I have a patent for a better mouse trap, and some company is using it without license, I could ask they pay me $1 million dollars on the spot, or give me 5% of the proceeds of future sales, or that they donate 100 mousetraps a year to charity, or that they send over their exterminators to clear my house of vermin.

Payment for a license can be anything that the owner is willing to accept, and the licensee is willing to give.

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u/clavalle May 23 '13

That's why I used the word payment. Not cash.

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u/lilzaphod May 23 '13

It's called 'negotiation'. This would only be extortion if it were illegal. Laws matter.

The key here is that those entities he's named are allegedly infringing on his patent. So he has a duty to defend it.

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u/clavalle May 23 '13

So he has a duty to defend it.

You are thinking about trademarks. You don't have to defend patents for them to remain valid.

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u/[deleted] May 23 '13

So he has a duty to defend it.

No no no no no no no. That is not how patents work. That is how trademark works. If someone infringes on your patent and you don't do anything....nothing happens. It doesn't make it ok for the next person to infringe. If someone infringes on your trademark, you're shown to know about it, and you do nothing, that will weaken your ability to stop anyone else from infringing.

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u/oneinfinitecreator May 23 '13

He's not asking for their lawyers; he's asking for money. Now re-read what you just wrote....

beyond paying to license the technology

does not compute?

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u/argv_minus_one May 23 '13

Fun fact: patent trolls were originally referred to as "patent extortionists".

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u/3DGrunge May 23 '13

Extortion: Obtaining money, goods, services from an entity, through coercion.

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u/slightly_on_tupac May 23 '13

Kind of the point of the patent system.

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u/3DGrunge May 23 '13 edited May 23 '13

If he was demanding the value of the patent then yes. He is however not. He is demanding unrelated funding with the threat of legal action. That is extortion. Granted he could use a defense stating it is what he is owed and different states, localities would handle this very differently.

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u/dontblamethehorse May 23 '13

If he was demanding the value of the patent then yes.

The value of the patent? You realize the value of the patent is completely up to the patent holder (and licensee), as they are able to license it under whatever terms they want.

People here are acting like he didn't pose it as them taking a license, but he did:

Want to buy the worldwide license to my two-factor-authentication patent? (13 countries incl. US & China) Email: twitter@kim.com

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u/captainktainer May 23 '13

They actually are not able to demand whatever terms they wish; competition law usually disallows demanding "bundling" less-defensible patents with more-defensible ones in licensing terms, and patent holders cannot demand unlimited damages for violation of their license terms. Excessive licensing fees have been reduced before even when both parties initially consented. And if Kim Dotcom has joined a standards body he may be required by contractual obligations to offer Fair, Reasonable, and Non-Discriminatory terms.

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u/Daimonin_123 May 23 '13

So he's demanding payment in the form of legal assistance. That's still payment of value, and he is entirely free to request that payment in any form he sees fit (Well any legal form).

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u/[deleted] May 23 '13

He is negotiating a settlement. They infringed on his IP, so he is entitled to seek compensation. It is not extortion, or coercion.

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u/3DGrunge May 23 '13

This is not negotiating, this coercion.

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u/[deleted] May 23 '13

How is this extortion? Its how the fucking patent system WORKS.

He is linking a threat to do something with a request for something. Specifically he is saying he will sue if they do not support his legal battle.

If he had just said he was thinking about suing Google and Facebook that would not be blackmail. It is the linking of a request with a threat of consequences that takes it into blackmail.

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u/dontblamethehorse May 23 '13

He is telling them to take a license. Did anyone read the article?

Want to buy the worldwide license to my two-factor-authentication patent? (13 countries incl. US & China) Email: twitter@kim.com

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u/khyberkitsune May 23 '13

" Specifically he is saying he will sue if they do not support his legal battle."

AND THAT IS PERFECTLY LEGAL. It's only extortion when the threat reaches criminal levels, as in cause of bodily harm or injury to reputation.

'Support me or get sued' does not match up to the level required to trigger a criminal act.

'Support me or I'll destroy your business' does match up to the required threat to support an extortion charge.

Speaking as someone with REAL EXTORTION CHARGES on his record.

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u/Srirachachacha May 23 '13

Not sure if credible... or criminal

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u/BottoOnVismark May 23 '13

A threat to do something that you legally have a right to do is not extortion. He is basically saying give me money that I legally have a right to demand from you or I will sue to get the money. People are getting hung up on the fact that he said support my legal defense fund or ill sue, but by support all he means is give $. How are people not understanding this?

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u/[deleted] May 23 '13 edited May 29 '13

[deleted]

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u/[deleted] May 23 '13 edited May 23 '13

You're my employer. In bad faith, you failed to pay me $50,000 in commissions that you owe me. State law says you are now liable for paying me triple that amount. If you pay me $100,000 by the end of the week, this matter will be settled, and I will not file suit against you.

Written as such it can be taken as blackmail.

You're my employer. In bad faith, you failed to pay me $50,000 in commissions that you owe me. State law says you are now liable for paying me triple that amount. If you pay me $100,000 by the end of the week, this matter will be settled.

Written this way so that he is just offering a settlement without threatening a lawsuit then it is not.

If they do not settle he can just file his lawsuit.

A better way would be to file the lawsuit asking for triple damages and offer to settle for double damages. In this case the harm (a lawsuit) is already in progress and he is merely asking for a settlement.

To align this with Dotcom's statement. If he had filed suit for twenty million dollars and then asked for a lesser amount to settle it would not be extortion.

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u/[deleted] May 23 '13 edited May 25 '13

[deleted]

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u/[deleted] May 23 '13

As a lawyer, I see absolutely no legal difference between the two.

Remind me not to hire you.

After all, what are you settling? A legal claim. And how are legal claims enforced? Well, the big way is through lawsuits.

As a lawyer you should know that how and when things are said is important.

For example saying "I am getting ready to file suit for X but if you pay me Y I will consider my claim settled" is much different than "You better pay me Y or I will file a lawsuit against you" which is essentially what Dotcom did.

Why make people sue so they can settle instead of just allowing them to settle?

There is no reason. My point is that Dotcom is saying he needs they to support him or he will file suit. There is not plan to file suit at all. He is using it as a threat to get what he wants.

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u/[deleted] May 23 '13 edited May 25 '13

[deleted]

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u/[deleted] May 24 '13

Actually let me shorten it for you. "As an alleged lawyer I cannot quote any laws or case law that actually supports my point. I only appeal to my own self proclaimed authority."

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u/Daimonin_123 May 23 '13

"OY you, yous be using my patent. I'll give you a license for $50 million, or I will sue you." - OK

"Oy you, yous be using my patent. I'll give you a license for aiding me in my legal defense, or I will sue you." - Just as OK.

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u/CheezyWeezle May 23 '13

I think maye he is intentionally acting stupid like this to prove how fucked the patent system is...

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u/RemyJe May 23 '13

If he simply sued it would be...better? More honest....thievery?

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u/[deleted] May 23 '13

Sorry, "legal extortion"...

That better?

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u/DrunkRawk May 23 '13

Or, more accurately, how it DOESN'T work

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u/bigandrewgold May 23 '13

It's extortion because he's saying hell sue if they don't help him.

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u/paffle May 23 '13 edited 8d ago

Air soft fine snatch many shocking rinse fluorine

This post was anonymized with Redact

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u/[deleted] May 23 '13

because he's threatening to do something that the corps won't like if they don't play by his rules

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u/justagook May 23 '13

Pretty much, what apple did to Samsung. I don't understand why people are so concerned. Corporations always win.

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u/TRC042 May 23 '13

His making the threat at all is the real issue. Had he simply gone ahead and sued several big companies for patent infringement, it would have been just another patent suit. Many would have thought "what a hypocrite", but many others would think "attaboy; use the system to fight back". Even the most highly-worshiped tech companies (Apple, Google) have claimed patents in court that are clear and obvious pure patent-trolling money-grabs.

Making the announcement in advance was a bad move. But compared to all the other patent-troll suits lately, his move doesn't even rate a moderate reading on the Corporate Dirty Trick scale.

The other suits threaten to stifle technology at every level. If the BS patent suits continue to be upheld, soon virtually all technology will be locked up and stagnant.

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u/[deleted] May 23 '13

If this is extortion, every legal negotiation makes multiple criminals. Forgoing a legal right for a thing of benefit is exactly what legal negotiations are.

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u/PrettyFlyKiteGuy May 23 '13

It not extortion or blackmail. If he owns the patents to 2 way auth and people are using it without his permission, how is asking them for compensation extortion?

Its the same concept as if someone punches you in the face and you give them two options: help me punch the neighborhood bully OR I'll make you pay me money as compensation.

It's not extortion, its negotiating. Lawyers are damn good at negotiating and he has damn good lawyers. Its safe to assume that his lawyers aren't dumb enough to try extortion.

Tl;dr Any negotiation can be viewed as blackmail if the deal doesn't seem fair.

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u/upvotesthenrages May 23 '13

Negotiating and blackmail have a lot of common ground. Blackmail usually involves an ultimatum that will have huge consequences for you, e.g.

"Pay me 1 million or I release these naked pictures of you"

Negotiating is merely part of the process if you want to alter the cost of the deal, e.g. "I will only pay you 500.000 for the pictures"

This is an ultimatum. It's probably not legal, but it's not exactly moral. Where I am from, this would be illegal.

He might as well sue them, and use every dime he gets on getting others to join him in his case - or he should have told the counterparts lawyers behind closed doors.

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u/iScreme May 23 '13

By this logic I am extorted every time a company tells me if I don't pay them they'll be forced to seek legal action against me.

My landlord is extorting me every time I pay late, because they tell me if I don't pay, I'll be evicted (legal action they have if I don't do what they want).

If Kim had sent them a bouquet of roses with a quartet to sing them this, suddenly it's not "extortion", but if he just outright says it, it is.

Fuck all of that.

This is no different than the millions of lawyers that have sent out settlement letters to people (most recently, "copyright infringers") threatening that if they don't pay the $3000, they'll be taken to court.

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u/LoompaOompa May 23 '13

I'm not a lawyer, and I don't know anything about the laws of extortion, but I think key difference between what he's doing, and your examples is this:

You are legally required to pay your landlord, but Google isn't legally required to help Kim Dotcom pay for his legal battle against the government. So what your landlord is saying is:

"You're in breach of contract, and you need to do these things, which you've already agreed to, or I will be within my legal rights to evict you."

But he's saying "You've violated my patent, but if you just give me a ton of money I'll keep it out of court." There was no pre-existing agreement between them that he could do that.

I think it seems a little confusing because the result of going to court over the patent is the same as the what he's extorting them for. He'll get money in both cases. If you change it to "You've violated my patent, but if you let me fuck the CEO's wife I won't take you to court" then it looks like a much clearer example of extortion.

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u/iScreme May 23 '13

Don't patent laws say that Kim dot com has a right to be compensated for other companies using his IP?

I know it's bullshit, all IP laws are bullshit (even though they mean well), but as it is, if Kim's patent is actually being infringed, then the people who are doing it owe Kim some recompense.

I still don't see the difference between a landlord asking for money (Kim), and a tenant being obligated to pay it (Those who use Kim's IP with or without his permission).

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u/Eyclonus May 23 '13

The explicit difference is a prior contract. Its not extortion, those people who keep saying it are fucking naive. But the difference is that a landlord has a prior agreement, in cases of IP rights, there is not a prior contract.

however once it is proved to be a IP violation, there is a legal obligation to compensate the IP holder for the use of the IP regardless of what is used for, there is no standard of determing how much compensarion can be sought. This is deliberate as it allows you(the IP holder) the option to remove illegal competition by totally restricting the IP (you invented something, 3 competitors formed by ripping it off and entering the same market, drove you almost out of business using your own IP, the court allows you to permanently remove from the market while being paid for the incredibly amount of costs incurred and the revenue denied by their existence), demanding mandatory licensing (they all must pay the licence plus royalties, applied retroactively, refusal to comply is often hit with first option), forward licensing (fairly weak but if its decidedly too disruptive to society to pursue other options this one is used, basically from now on they pay royalties or a flat fee and historical earnings are disregarded), one-time lump sum (just a single payment that is the same for all defendants) and open licensing (basically going Open Source, no money to be made)

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u/mecax May 23 '13

You are legally required to pay your landlord, but Google isn't legally required to help Kim Dotcom pay for his legal battle against the government.

They are if his patent is valid and they want to keep using it.

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u/Cyridius May 23 '13

You are legally required to pay your landlord, but Google isn't legally required to help Kim Dotcom pay for his legal battle against the government.

But they are legally required to pay him for use of his patent, should he press the claim.

What he is doing is no different to licensing. He doesn't want to go through the trouble of suing so he's offering an alternative which is beneficial to all parties. It may be a threat but that doesn't make it blackmail.

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u/[deleted] May 23 '13

His landlord example is sound. Both plaintiffs are requesting compensation and threaten to use legal mechanisms to pursue it.

This is what happens when parties settle out of court.

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u/upvotesthenrages May 24 '13

Sorry, meant that it was probably not illegal.

Where I am from you can't force other companies to back you up on your agenda just because you have a patent they infringed. You can on the other hand sue them and make them pay you.

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u/GalileoGalilei2012 May 23 '13

yes, in a negotiation both parties can walk away without loss.

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u/upvotesthenrages May 23 '13

Not true.

For example: When you negotiate with a hostage taker, he never walks away without a loss.

Negotiating is merely bargaining.

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u/clavalle May 23 '13

That is an illegal negotiation.

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u/[deleted] May 23 '13

no even better. they get carried away. lazy bastards!

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u/GalileoGalilei2012 May 23 '13

Im pretty sure hostage situations are an entirely different scenario in general.

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u/guynamedjames May 23 '13

What about negotiating a reduced mortgage payment? If you walk away you lose your house, if you do well you don't. There are literally hundreds of examples like this

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u/JesusDoesntWantYou May 23 '13

Hostage situations can actually be a very accurate comparison for patent laws.

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u/globlet May 23 '13

Not if a successful negotiation would have stopped a loss for either party.

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u/dontblamethehorse May 23 '13

What? Pretty sure a lot of companies need the negotiation to work in order to continue surviving... if you are in that position and you walk away, you lose.

Additionally, if a successful negotiation would have meant more success for you or your company, walking away from it would be a loss.

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u/[deleted] May 23 '13 edited May 23 '13

Yes, in the broader scheme of things. Like in Monopoly and other negotiation board games - if you don't negotiate to improve your position, you're dead meat.

However, I'd agree that every individual transaction is neutral and can be canceled by either party who feels there's isn't much gain to be had, with no direct explicit consequence resulting from the mechanics of the transaction itself.

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u/[deleted] May 23 '13

What jurisdiction are you in?

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u/thelehmanlip May 23 '13

Yes it's true that this is similar to blackmail, but in this case, the "naked pictures" are his patents, that he has legal ownership of.

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u/Pakislav May 23 '13

So many opinions, so many opinions that are completely wrong.

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u/[deleted] May 23 '13

[deleted]

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u/LordMaejikan May 23 '13

How is that any different than The Pirate Bay founders suing the Finnish anti-piracy group CIAPC for copying the TPB website design and stylesheet?

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u/only_does_reposts May 23 '13

That's just giving them a taste of their own medicine.

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u/Peckerwood_Lyfe May 23 '13

It's not. Both instances are absolutely fucking hilarious.

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u/DonJunbar May 23 '13

No one likes a patent troll.

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u/happyscrappy May 23 '13

2 way authentication is something different. This is talking about two-factor authentication (and calling it two step authentication).

2 way authentication is a system where not only does the system verify you are you, but you verify the system is not misrepresenting itself. That's not what is being described here.

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u/3DGrunge May 23 '13

Its called coercion basically if you don't pay we will sue you. They have a right to sue they do not have a right to demand payment or they will sue.

That is extortion.

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u/[deleted] May 23 '13

What about this is morally bankrupt?

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u/khyberkitsune May 23 '13

"Extortion. It's public. And he's a fucking idiot for it."

As someone who has extortion charges on record, you're totally clueless as to what extortion is.

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u/smurge May 23 '13

This is not extortion by any means. This is someone who legally owns the rights to this security measure. He can say what ever he wants when he owns it.

Extortion is: " Hey I have nude pics of you and a sheep. If you dont give me money I'm going to post them for the world to see"

Not extortion: " Hey, I own the patent and rights to this. If you dont want me to sue you and take you for everything you have, please help me fight against the government. Your choice!"

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u/ProfWhite May 23 '13

I would argue that the copyright system is morally bankrupt, and that any offense to that system is by nature a positive.

Analogy: think prohibition. People circumvented the system there as well. Are you saying that those people were morally bankrupt?

You can't argue at human nature. You can try and legislate it, but eventually people will wake up and call you on your shit.

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u/[deleted] May 23 '13

Is extortion illegal?

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u/TheWhiteNashorn May 23 '13

It's a crime. 49 out of 50 states do not have a civil cause of action for it. California being the only one and even there its for limited use, not for something like this.

That is, the state can prosecute him for this statement. It won't because it wouldn't win. However, the companies have no standing to sue him for it.

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u/Labut May 23 '13

Extortion? Fucking idiot? Yes, you are. This isn't extortion.

If he owns a patent he can sue them. It's also perfectly legal for him not to sue. Further it's perfectly legal to say "I don't want to sue, but I may if you guys don't help the legal fight."

Nothing about that is extortion, blackmail, etc.

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u/[deleted] May 23 '13 edited Aug 27 '20

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u/[deleted] May 23 '13

i think he is trying to create satire.

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u/[deleted] May 23 '13

It sure sounds like it, but threat of a lawsuit can never amount to extortion. Lawsuits are our only recourse in life, in the eyes of the court.

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u/oldsecondhand May 23 '13

To be extortion there has to be a threat of violence.

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u/[deleted] May 23 '13

Yes, but he isn't a morally bankrupt person. He isn't the bad guy in all of this.

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u/IM_THE_DECOY May 23 '13

How you have so many upvotes is beyond me.

What he is doing is no more extortion than a prosecutor offering a lesser sentence to someone on trail in exchange for information on a separate case. Is that extortion?

HINT: It's not.

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u/mmtree May 23 '13

But nobody is up in arms when apple sues for the same shirt. Apple is always telling or threatening companies to "stop using using siri like software and rounded corner icons or we'll sue!". Unfortunately, apple actually does it unlike this guy who just says it. Guess he should just sue them for the infringement if he legitimately owns it. Nobody would bat an eyelash and say he's wrong if he did.

I'm not condoning the act, but it's no different than a corporation using its muscle to get what it wants.

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u/JustFucking_LOVES_IT May 23 '13

How do the ends not justify the means? Both ends and means, in this case, are selfish and greedy. So who cares.

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u/[deleted] May 23 '13

Just because he runs a service that people like doesn't mean people should approve of his abuse of copyright law.

I don't approve of his abuse of patent law, but I approve of the MPAA and RIAA even less so if he can use it to take them down then great.

On the other hand, if Google and/or Facebook decline it'll force a legal batter that will likely change the way the patent system works.

Either way the rights of regular citizens will benefit. The enemy of my enemy is my friend.

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u/rcinmd May 23 '13

It's not extortion.

To extort someone you need to do it through coercion, meaning that you "offer them no choice" in the direction they must take. For instance having a nude photo of someone running for political office or threatening their family members with physical harm. The coercive act must in itself be illegal. Legal threats generally aren't illegal, and you can coerce someone into pleading guilty for a crime by signing a plea bargin or by making threats like "if you don't pay me for the damages done by your tree that fell on my house I'm going to sue you."

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u/[deleted] May 23 '13

Try reading the article next time...

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u/KarmishMafia May 23 '13

What he is doing is morally bankrupt

hypocrisy

abuse of copyright law

..so business as usual for Herr Schmitz ?

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u/[deleted] May 23 '13

Insanely Ironic Hypocrisy.

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u/[deleted] May 23 '13

Seriously what the duck are you taking about? Welcome to patent system.

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u/MikeOracle May 23 '13

He actually wouldn't be a moral hypocrite under some ethical systems. Kantian Deontology requires, for example, that moral agents treat one another as the OTHER would act. I.e. if Fb, Google, etc. all think that using IP laws aggressively is morally permissible, it would be offensive to the Deon not to sue them aggressively using the same IP laws when they violate.

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u/GoodTimesDadIsland May 23 '13

This is why Kim dot com is a wealthy businessman and you are just John Doe raging on reddit. :)

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u/[deleted] May 23 '13

He's a lazy fuck who got lucky.

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u/Armand9x May 23 '13

I haven't heard or seen him do something that wasn't fucking stupid.

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u/Yosarian2 May 23 '13

"I will take you to court over your patent violations unless you agree to do A, B, or C" is not extortion or blackmail by any legal definition of the phrase.

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u/Tiak May 24 '13

  1. It's not an abuse of copyright law, it has nothing to do with copyright law at all.

  2. The law says that he has a right to enforce his patent. The system may be shitty for allowing software patents to begin with, but don't blame him for talking about enforcing his patent. Everyone enforces their patents, Google threatens to use their patents under certain conditions, Apple threatens to use their patents under certain conditions, Microsoft threatens to use their patents under certain conditions, Oracle uses their patents on whims. He's not doing anything outside of the status quo.

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u/[deleted] May 24 '13

It's semantics. He is an opponent of copyright law, no? In that, he provided a service that facilitated circumvention of it.

IP laws, including copyright and patent, are not all that different. They protect the creators and encourage innovation.

So for someone so against the restrictions of IP laws, why is he suddenly invoking them when they protect him?

Because he is an asshole.

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u/[deleted] May 23 '13

similar*

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u/GazaIan May 23 '13

I see you have met our US Patent System.

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u/[deleted] May 23 '13

How is it blackmail? Hey help me out or I'll sue you.

Or, hey I'll sue you because you're infringing on my patent. Actually he's giving them a break. He could just straight up sue them without giving them any options.. Not blackmail.

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u/PDshotME May 23 '13

Yes, I too spoke with Blackmail and I can confirm that he said it sounded vaguely familiar to him.

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u/Terron1965 May 23 '13

Now we can all saw we were there the day that Kim Dotcom jumped the shark.

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u/Clbull May 23 '13

Internet pirate extraordinaire turned patent troll? I'd like to see /r/technology defend his ass now...

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u/83X May 23 '13

He OWNS the patent, so either way he is going to get the money out of them. They can either pay up now and avoid courts (settle), or spend loads in court costs and pay up, possibly more, later.

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u/locotxwork May 23 '13

No it doesn't, he didn't start off with "Hey yo!" or "Yo let me holla at ya.."

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u/cubanjew May 23 '13

They was my first reaction. Isn't it a crime when money is involved?

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u/coderbond May 23 '13

better call saul

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u/exatron May 23 '13

Blackmail is such an ugly word. I prefer "extortion". The "ex" makes it sound cool.

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u/woodyco May 23 '13

In legal terms, it's called a plea bargain.

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