Big names settle out of court with CryptoPeak in HTTPS patent spat

And why the mysterious Texas biz filed a sudden rush of infringement complaints

In late November, patent-holding biz CryptoPeak Solutions filed dozens of lawsuits against major US resorts, retailers, and financial service providers, among others.

The timing for the barrage of lawsuits was curious, but may be explained by a newly enacted law aimed at curbing patent trolls.

It turns out the litany of patent infringement complaints were all entered into the Eastern Texas District Court just days before the December 1 elimination of Form 18, a template that simplifies the process of issuing infringement claims by the boatload.

Earlier this year, lawmakers passed a rule to eliminate Form 18 filings and force patent-holders to adhere to a longer process when filing suit in US civil courts alleging infringement of patents. The rule will force those filing suit to provide more details on how their patents are being infringed.

According to the legal gurus at Law360, lawmakers passed those rules in an effort to prevent so-called "patent trolls" from making sweeping accusations against dozens of companies, accusing violation of their patents.

"On Form 18, a plaintiff is required to include little more in a patent complaint than the name and number of the patent and an allegation of infringement," the team explains.

The new rules require a longer process that, lawmakers hope, will make it more difficult to issue dozens of infringement suits alleging violation of the same patent.

Such was the case when CryptoPeak, a company whose sole purpose appears to be holding and collecting on encryption patents, filed dozens of complaints in the Eastern Texas District Court, a venue often chosen for intellectual property suits due to its reputation for siding with patent owners. The complaints reference US Patent 6,202,150, which describes a key escrow design that CryptoPeak claims somehow covers elliptic curve cryptography used by HTTPS websites.

With many companies complaining about the rising tide of baseless infringement suits, US Congress promised to take steps to crack down on patent trolling.

As it stands, however, there is still apparently money to be made with the practice. While some of CryptoPeak's targets have argued that the infringement allegations are without merit, the strategy seems to be paying dividends for the patent holder.

Prior to the November rush, CryptoPeak filed a string of 29 lawsuits in July alleging infringement of the same '150 patent. While 18 of the 29 targets have opted to take their fight to trial, another 11, including the likes of Scottrade, Anthem Insurance, and Discover Financial Services, have already struck out-of-court settlements with CryptoPeak.

It is not known whether those deals were made because the companies believed their secure HTTPS websites infringed the patent and paid up some royalties, or because they simply wanted to make the complaints go away and write them off as the cost of doing business.

The Reg has asked several of the firms for comment on the settlements, but has yet to receive a response. ®


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