U.S. Court Blocks Australian Order Against ‘Stupid’ Patent Blog

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By Malathi Nayak

An Australian ruling directing a California-based digital rights group to remove a blog post that called a company’s patent “stupid” violates U.S. free speech protections, a U.S. federal court held.

The Electronic Frontier Foundation filed a lawsuit in U.S. district court in April seeking to block an October 2016 Supreme Court of South Australia order to take down one of its ‘Stupid Patent of the Month’ blog posts. EFF challenged the order obtained by Australian patent holding company Global Equity Management SA Pty Ltd. on grounds that the foreign court ruling violated the group’s First Amendment rights and was unenforceable in the U.S.

GEMSA’s allegations that an EFF post from June 2016 damaged its reputation would not give rise to defamation under U.S. and California law, U.S. District Court for the Northern District of California Judge Jon Tigar said in a Nov. 17 opinion. “The broad context of the article is clearly opinion, as it is a part of EFF’s humorous and pointed ‘Stupid Patent of the Month’ series,” he said ( Elec. Frontier Found. v. Glob. Equity Mgmt. (SA) Pty Ltd , 2017 BL 414175, N.D. Cal., No. 17-cv-02053-JST, 11/17/17 ).

The monthly blog item launched in 2014 highlights what EFF calls “examples of questionable patents that stifle innovation, harm the public, and can be used to shake down unsuspecting users of commonplace processes or technologies.”

In the post, EFF described GEMSA’s U.S. patent No. 6,690,400 as claiming “the idea of using ‘virtual cabinets’ to graphically represent data storage and organization,” and that the company was using the basic idea to sue “just about anyone who runs a website.” The statement was “expressive exaggeration,” Tigar said.

EFF also wrote that the Australian company “seems to be a classic patent troll.” That was cautiously phrased as an expression of opinion, Tigar said.

Foreign court orders of defamation aimed at parties from countries with stronger free speech laws could have a chilling effect on those countries’ constitutional rights. Congress passed the Securing the Protection of our Enduring and Established Constitutional Heritage (SPEECH) Act of 2010 to render foreign libel judgments unenforceable in U.S. courts in instances where legislation applied by a foreign court provides less free speech protection than the First Amendment, or where a domestic court wouldn’t have held the defendant liable.

Speech Act Conflict

The Speech Act was enacted to tackle “libel tourism,” or the practice of international forum-shopping by plaintiffs filing defamation lawsuits in foreign jurisdictions where laws would favor their claims.

The federal court agreed with EFF’s argument that the Australian injunction does not provide as much protection for freedom of speech and of the press as the U.S. Constitution, and would not pass muster under California’s Anti-SLAPP law that blocks lawsuits that could chill the exercise of constitutional free-speech rights.

EFF also said in its petition that GEMSA did not properly serve it with a notice of the Australian lawsuit as required under the Hague Convention to which both the U.S. and Australia are signatories. “EFF was never properly served, thus the Australian court did not have jurisdiction over EFF,” Tigar wrote in his opinion.

Gemsa did not appear in court or respond to EFF’s allegations, according to court records. GEMSA is currently appearing in and actively litigating other cases in U.S. district courts, Tigar said in his opinion.

GEMSA has filed 44 infringement suits in U.S. district courts against companies such as eBay Inc. and Amazon.com Inc., asserting its ‘400 and other patents, according to Bloomberg Law data.

Despite being served, GEMSA failed to enter any appearance, including to contest service or jurisdiction, Tigar said. “This factor also favors granting default judgment,” the judge said.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bloomberglaw.com

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