libdmtx

Important Letter to libdmtx Users

November 30, 2006

To libdmtx users:

I recently learned of a company that is threatening lawsuits against users of Data Matrix technologies. The company claims that Data Matrix barcodes are covered by its patents 4,924,078 and 5,612,524, and is pursuing license fees from existing Data Matrix users while accusing them of patent infringement. Interestingly, further research indicates that these patents are probably invalid, and that this company has a history of aggressive patent trolling.

Please note that I have not been contacted by this company, and they probably neither know who I am nor care one bit about this project. However, given the remote chance that they might eventually decide to target libdmtx or its users, I feel it would be unwise to continue distributing enhancements and/or fixes before these patents expire in November 2007.

Ironically, before starting this project I researched the state of 2D barcode patents and chose Data Matrix specifically because it was unencumbered by patents. At least that's what it said in every resource I could find at the time. In that search I found other 2D symbologies that are covered by "unenforced" patents, but that wasn't good enough for me - I wanted something truly free "as in freedom". That is why I chose Data Matrix, and why this news is so disappointing to me.

Disclaimer: I am not a lawyer, but I have done some basic research on various aspects of U.S. patent law. Please don't take anything you read here as legal advice, as I'm certainly not qualified to give it out. The purpose of this letter is solely to inform libdmtx users of how and why I arrived at this difficult decision.

If They Own the Patents, Why Haven't We Heard From Them Before?

  • This company's business model is based on aggressively selling licenses under the threat of expensive court proceedings. If their claims actually landed in court I believe their patents would be ruled invalid and unenforceable, which would eliminate their leverage against future license "customers".

  • Going after small developers would likely present a lose-lose situation for them. That is, a loss in court could render their patents worthless, and a victory wouldn't be much better because most individuals' personal assets wouldn't even offset their attorneys' fees.

  • As far as I can tell, this company has never pursued a manufacturer of 2D barcode systems. Instead they have been pursuing customers of Data Matrix technologies (i.e. where the money is), although this is no guarantee they won't change tactics in the future.

    Incidentally, one manufacturer whose customers have been frequently targeted by this company has called the bluff and is suing the company over their claims. I am confident that this case will rule against the company, but I don't know if that would protect anyone other than the plaintiff's customers. In any event, it's likely that the patents in question will expire before the judge makes a final ruling anyway. In fact, even if the judge rules quickly, the company can appeal the ruling and further prolong the murky legal situation that they need to continue pursuing license fees.

What's the Strategy Going Forward?

  1. Preserve "experimental use" classification

    Patent law in the U.S. provides an "experimental use" exception that allows for the creation or use of patented inventions "for amusement, to satisfy idle curiosity or for strictly philosophical inquiry." 1

    While the definition does not specify exactly which uses are allowed under this classification, I do feel that these words perfectly describe my motivations behind creating libdmtx. Therefore, I am confident that I am operating under this classification, especially if I take the following measures:

    • I will not accept donations or other revenue for the development or enhancement of this software while this issue exists. I have not received any contributions so far, so this is a continuation of what's already (not) happening.

    • I will not distribute enhancements and/or fixes while this issue exists.

      Note: SourceForge.net is hosting all libdmtx file downloads and the project's CVS repository. The terms of using their service include that projects must use an approved open source license, and must not remove code once it has been released. I certainly don't want to break any agreements, so I have informed them of the situation and will let them handle it as they see fit.

  2. Constrain "meaningful damages" amount

    As of version 0.3 (the most recent release at the time of this writing) libdmtx has not yet reached the level of maturity that is needed for use in a production environment. Since penalties in patent cases are generally based on "meaningful damages" 2, if I stop publishing enhancements and fixes right now before libdmtx starts "damaging" any commercial sales then hopefully the penalties even in the worst case scenario would be limited to around $0. Unfortunately, they could also claim a damage amount based on lost royalties from me, but hopefully the court would recognize that I started this project under the widely held belief that Data Matrix was unencumbered by patents. Not to mention that they haven't charged royalties from any other "manufacturers" in the past.

    In other words, even if I take all of these precautions going forward, I still can't go back in time and "unrelease" the source code that is already in circulation. I can, however, cap potential damages to be as small as possible which constrains the worst case scenario and helps me to sleep at night.

Why I Feel These Measures Are Necessary

  • The patent-holding company is exploiting an unfortunate feature of the judicial system where I would have to spend a significant amount of time and money defending myself if they ever decided to come after me, regardless of whether or not their accusation has any merit. Since their business model is based on this exact strategy, I'm not comforted by the weakness of their patents.

  • The patents in question will expire in November 2007 anyway, and will become immediately irrelevant after this. However, a patent holder can sue for patent infringement for a period of 6 years after the patent expires if they believe an infringement took place before the expiration date. 3

  • While the "experimental use" classification protects me from infringement, I don't know if the same can be said about users. Generally speaking, if you are not covered by the "experimental use" exception then simply using a patented technology in the U.S. without authority is an infringement. 4 The rules get a bit fuzzy here for me, but keep in mind that the company has made a practice of targeting users and not manufacturers.

  • As much as I love developing libdmtx, it is purely for fun and I'm not making any money from it (i.e. even if the financial risk is small, the risk/reward ratio is still very large). In my nightmare scenario if they decided to come after me for some reason then I suspect it could devastate me financially even if I was the "winner" in court. Again, I seriously doubt it would ever come to this, but the mere thought of this scenario makes me shudder.

  • I would like to be able to say that I've done everything reasonably possible to stay clear of potential infringements given the information I've known at any given time.

I truly hate the thought that I might be caving in unnecessarily. I think that bogus patents present a serious threat to free and open source software, and I wouldn't want to do anything that lends credibility to those who are abusing the system. However, I think the option presented above is much better than giving additional legal leverage to a known patent troll through inaction. And I feel it is infinitely better than "purchasing" their license, thus giving them not only my money but also the perception of validity.

In this specific case we have a unique opportunity to wait "just long enough" for the problem to go away forever on its own. If, on the other hand, we were to continue with "business as usual" then I would spend the next 7 years wondering if our little project would ever appear on their radar screen, and hoping they wouldn't think of a reason to exploit the leverage we would have given them.

While I am disgusted by the practices of this company and I feel that they are clearly in the wrong, I still have to respect the law and treat them as if they truly believe their claims are legitimate. One year might seem like a long time to wait, but in the big picture one year is a tiny duration compared to the lifespan of software released under a GNU license. Thank you for understanding, and please contact me by email or forum if you have any comments regarding this decision.

Sincerely,
Mike Laughton

  1. The "experimental use" exception has been recognized since at least 1861, and was famously tested in Roche Products v. Bolar Pharmaceutical, 733 F.2d 858, 221 USPQ 937 (Fed. Cir. 1984), when the court ruled against a company for use of a patented article "solely for business reasons and not for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry."

  2. From 35 U.S.C. § 284 Damages.
           Upon finding for the claimant the court shall award
    damages adequate to compensate for the infringement, but in
    no event less than a reasonable royalty for the use made of
    the invention by the infringer, together with interest and
    costs as fixed by the court.
       When the damages are not found by a jury, the court shall
    assess them. In either event the court may increase the
    damages up to three times the amount found or assessed.
       The court may receive expert testimony as an aid to the
    determination of damages or of what royalty would be
    reasonable under the circumstances.
  3. From 35 U.S.C. § 286 Time limitation on damages.
           Except as otherwise provided by law, no recovery shall be
    had for any infringement committed more than six years prior
    to the filing of the complaint or counterclaim for
    infringement in the action.
  4. From 35 U.S.C. § 271 Infringement of patent.
    (a) Except as otherwise provided in this title, whoever without
    authority makes, uses, offers to sell, or sells any patented
    invention, within the United States or imports into the
    United States any patented invention during the term of the
    patent therefor, infringes the patent.
(b) Whoever actively induces infringement of a patent shall be
    liable as an infringer.