Is Landmark Technology’s Two-Decade Patent Assault On E-Commerce Finally Over? 

Landmark Technology’s U.S. Patent No. 7,010,508, and its predecessor, are very likely two of the most-abused patents in U.S. history. These patents, under two different owners, have been used to threaten thousands of small businesses since 2001. 

In just one 18-month period, the ‘508 patent was the subject of more than 1,800 patent demand letters sent to more than 1,100 different businesses. All of these businesses were told to pay up—typically $65,000—for using basic e-commerce technology like home pages, customer login pages, and product-ordering pages. 

Now the ‘508 patent’s threat is likely dead, thanks to a recent ruling by a North Carolina federal judge in a case that started after Landmark threatened the website Binders.com for selling binders (but, you know, on the Internet). NAPCO, the company that owns Binders.com, responded to Landmark’s $65,000 demand by challenging Landmark’s patent in court. After more than two years of litigation, the judge issued a ruling stating that the ‘508 patent’s disputed claim is invalid because it is ‘indefinite.’ Specifically, it purported to cover network technology that could perform various functions but failed to describe a way those functions could be achieved. While not at issue here, similar terms in the patents’ other independent claims are likely invalid for the same reasons.

“[T]he company broadly and aggressively misuses the patent claims, targeting virtually any small business with a website, seemingly at random,” is how the Washington State Attorney General describes Landmark’s business model. 

The Washington State Attorney General’s office sued Landmark in 2021, claiming its aggressive patent trolling violated state consumer protection laws. That case has been removed to federal court and is ongoing. 

We hope to never see the ‘508 patent—or any patent related to it—in a threat letter again. Landmark’s long, punishing campaign against small businesses who simply used basic online tools is, hopefully, over. It’s a good moment to take stock of how we got here. Unfortunately, many elements of our broken patent system continue to encourage behavior like Landmark’s. 

Courts Let “Functional Claiming” In Software Patents Get Out Of Control

The ‘508 patent involves “means-plus-function” claims. This is a type of patent that allows for broad, functional claiming. As explained by the Federal Circuit, the nation’s top patent court, this type of patent allows “patentees to express a claim limitation by reciting a function to be performed rather than by reciting structure for performing that function.” 

The Federal Circuit, the nation’s top patent court, has explicitly allowed this type of patent claim, and they are most used in software patents. Allowing broad “functional” claiming is part of what’s led software patents to become the disaster they have for developers and ordinary internet users. 

As patent scholar Mark Lemley explained in a 2012 research paper on functional claiming, it’s similar to allowing a pharmaceutical inventor to claim “an arrangement of atoms that cures cancer,” and assert their patent against any chemical, in any form, that achieves the purpose of curing cancer. “Indeed, the whole idea seems ludicrous,” he wrote. 

Lemley’s paper goes through the history of functional claiming, which has had ups and downs throughout American history. The idea of a “means-plus-function” claim is that functional claiming is allowed, as long as it’s connected to a “structure” described in the specification of the patent. 

Functional claiming has taken off in software patents. The Federal Circuit established rules that disclosing an “algorithm” would constitute the type of structure that could allow a patent. But the court set the bar for what an “algorithm” is to be shockingly low. You don’t have to send in a mathematical formula at all; prose or even a flow chart is sufficient. 

Would-be patent owners have definitely taken advantage of the idea that a flow chart can constitute an “algorithm.” It’s allowed patent trolls to get patents on things like using mathematical proofs, using a lyrics website, and clocking in to work.  

The law on software patents is so bad it requires real reforms. In our Defend Innovation whitepaper discussing patent reform ideas, EFF proposed installing strong limits on functional claiming and requiring those who want software patents to provide running code for each patent claim. Those are still good and necessary ideas. 

The ‘508 Patent’s “Algorithm”

The ‘508 patent’s supposed “algorithm” is truly a nothingburger. Its primary claim just describes a bunch of things computers do, strung together. Yet Landmark’s lawyers argued that the patent contained a “detailed six-step algorithm” with the following steps. (The “station” here is a general-purpose computer.)

1. The station reading textual data from memory; 
2. The station reading graphical data from memory;
3. The station accepting user input; 
4. Displaying, after accepting user input, textual data along with mutually-related graphical data describing more than one transaction option; 
5. Analyzing data provided by the user of the station or data received from a remote location; 
6. Depending on the result of the analysis, retrieving additional data from mass memory. 

In other words, getting data and analyzing it. 

Of course, “processing” or “accepting” data and “analyzing” it are simply generic verbs that don’t tell you how to do anything. That was exhaustively pointed out in the 66-page order finding Landmark’s patent claim to be invalid. Landmark’s citations “contain no explanation of how that data is ‘analyzed’ or how one would program the ‘processor’ to conduct such processing,” explained District Judge Thomas Schroeder. 

Landmark History 

At some point in 2019, Landmark Technology stopped filing lawsuits, and a new entity called “Landmark Technology A” began using the ‘508 patent, again targeting small businesses. Litigation has revealed that while inventor Lawrence Lockwood owned the original entity, Landmark Technology A—the newer company that has been sued by the state of Washington— is wholly owned by an IP consultant named Raymond Mercado. 

The Washington State Attorney General was able to identify more than 1,800 businesses threatened by Mercado, but the number may be much higher. And while this stupid patent was filed in 1995, it is related to an even earlier stupid patent, which won our Stupid Patent of the Month award a few years ago, for terrorizing even more small businesses. 

Lawrence Lockwood used these patents to terrorize hundreds of small businesses, demanding that any sized e-commerce operation: bakers, brownie shops, an organic farm, and many others, all pay him a royalty payment for making basic use of the internet economy. 

Adding insult to injury is the fact that there’s no evidence that “inventor” Lawrence Lockwood made any contribution whatsoever to software. Lockwood, a former travel agent, started his long patent trolling career by suing American Airlines for their software system. In that litigation, Lockwood admitted under oath that he had “never, for any length of time, used a personal computer.” When asked what he did for a living, he said that he simply litigated patents, according to a 2003 profile of Lockwood in the Los Angeles Times. 

We’ve lived with ultra-aggressive patent trolls like Landmark and its predecessor, PanIP, for more than two decades now. Congress needs to think about how to reel them in and must reject proposed bills that would actually help trolls get more broad patents, and ruin our existing legal defenses against them.

Originally published to the EFF’s Stupid Patent of the Month series.