Blog Posts

Playoff Ticket Option Patent Goes To Auction

A vague patent on playoff ticketing practices is going up for auction, and could set off a potentially larger ‘patent troll‘ ligation issue for the sports, ticketing and travel industry depending on the auction winner.

The ‘playoff ticket option’ patent holder is auctioning off his invention claims through the ICAP patent brokerage firm on April 23, 2015, despite never actually using his patent or having any actual background in the ticket industry.

The patent claims to cover any type of ticket ‘option’ sold to fans by a secondary ticket company, travel company or even by a sports team for playoff game scenarios, said F. Fitzgerald Maloney, Vice President of IP Research at ICAP.

And while Maloney said that a ticketing technology patent is a very rare auction item.

The Electronic Frontier Foundation’s Staff Attorney Daniel Nazer said that Ghosh’s patents are all pretty routine, and look to be a very typical, overbroad software patent.

“I’d guess a patent like this will be most attractive to a troll,” Nazer said. “So, there is a chance it could end up in the hands of a troll and become part of a litigation campaign.”

Nazer succeeded former Senior Staff Attorney Julie Samuels to lead EFF’s campaign to reform the patent system and smash patent trolls, becoming the new “Mark Cuban Chair to Eliminate Stupid Patents.”

“The patent office is issuing about 60,000 software patents every year, and they tend to be of low quality,” Nazer said. “Unfortunately, these patents can end up on the open market.”

Several Team & League Sales Practices Potentially Affected

Most of Ghosh’s patents appear marginal about how the ticket industry collectively operates, as well as how professional sports franchises sell their tickets, suggesting that each restrict tickets to buying an entire postseason block, rather than when a fan’s specific team or player is participating.

Several of Ghosh’s citations within his patents are for TicketReserve.com – which later changed its name to FirstDIBZ in a rebranding effort in 2008 – which made several a legal attempt in 2003 to have the Security & Exchange Commission define what the company was doing was not violating the U.S. Securities Act of 1933. FirstDIBZ was part of a 752 member class action lawsuit in 2011 over massive fraud at the 2009 Super Bowl, reaching a $529,920.74 settlement.

So, Ghosh may have not come up with the ticket ‘option’ idea first, but filed four patents on it, and based off his own citations referring to TicketReserve.com (a.k.a. FirstDIBZ).

The NFL has had several teams in the last few years utilize ticket playoff ‘option’ plans. The 2014 Atlanta Falcons sold a ‘no risk option’ their season ticket holders for playoff tickets. The 2014 Cincinnati Bengals sold a ‘pay as we play’ option to fans for the playoffs as well. The 2014 Green Bay Packers did a ‘Pay As We Play’ plan for fans to purchase options for playoff tickets as well.

Note: The NFL did not immediately respond to requests for comment.

The Milwaukee Brewers announced a “Timeless Ticket,” sold for $1,000 each, which would give fans the ability to select any future game of their choice, including Game 7 of the World Series, to attend.

MLB Advanced Media does have a ticketing patent; 8121872 – “System and method for allocating seats for a ticketed event;” which does not mention MLBAM’s Postseason Ticket Reservation System which was introduced in 2010.

Note: MLBAM did not immediately respond to requests for comment.

At least one secondary market company, Forward Market Media (FMM)’s TeamTix, currently utilizes a ticket option system for sporting events and could be affected by the acquisition of ICAP’s Lot 24 patents won at ICAP’s auction. Despite having patents of their own measuring specific systems and methods to create a ticket option. Back in 2008, a company called OptionIt, competed with TeamTix by selling “options” to ticket buyers for potential match-ups.

Note: FMM declined to comment for this story.

According to ICAP’s Maloney, all of the ticket ‘option’ actions from leagues, teams, secondary market brokers and travel could be deemed an infringement by the Lot 24 patent’s claims. Including the examples listed above by the NFL, MLBAM and TeamTix.

Potential Litigation Issues

The origins of Ghosh’s four patents were about creating a system where the user could buy a ticket option, pay a reduced fee, or only be allowed to claim that option if specific criteria were met. Such as a specific team or player playing in the game for which the ‘option’ was held. If the player or team doesn’t make the game, then ‘option’ is useless. It specifically uses high-profile events, such as the U.S. Open, as examples of how this system criteria would be met.

The patent inventor saw his idea as a way to sell more tickets to more events, ICAP’s Maloney said.

The patents were issued in 2005 to Sharad A. Ghosh. The ICAP Auction Lot 24 wraps up four total U.S. patents: 7,637,809 – “Systems and methods for providing a player’s ticket;” 7,762,881 – “Systems and methods for providing match-up player’s ticket features;” 7,831,452Systems and methods for providing enhanced player’s ticket features;7,850,523 – “Systems and methods for providing a player’s ticket.”

One current company that may have an issue with Ghosh’s patents is Forward Market Media’s TeamTix, which has been selling ‘options’ to sporting events for years, including high profile events such as The National College Football Playoff, B1G Ten Championship Bowl Game and Capital One Orange Bowl.

On Forward Market Media’s website, they list their own U.S. Patents for their ticket option claims: 7,206,755 – “Method, apparatus and article-of-manufacture for the creation, issuance, valuation/pricing, trading and exercise of options for attendance rights, and derivative instruments thereon;7,363,267 -“Contingency-based options and futures for contingent travel accommodations;” 7,610,220 – “Systems and methods for contingency-based options and futures for playoff tickets based upon individual athletes;” 7,610,221 – “Systems and methods for contingency-based options and futures for game tickets based upon game participant standings;” 7,660,751 – “Systems and methods for contingency-based options and futures for playoff tickets based on qualifying teams;” 7,660,752 – “Systems and methods for contingency-based options and futures for contingent travel accommodations based upon a playoff game.

Both Ghosh’s patents & Forward Market Media’s patents cover ticket options; with Ghosh’s starting in 2005 with the last of the four secured in 2010, but TeamTix’s starting 2007. However, TeamTix has an earlier priority date of 1999, which is an assumption, not a legal conclusion, of when the claims to the original idea were being utilized prior to the patent’s actual filing at the U.S. Patent Office.

However, part of TeamTix’s legal events within each of the company’s patents regard TicketReserve.com, where the patents originated, and from which Ghosh based his four patent citations on.

No Licenses Ever Issued For Ghosh’s Patent

Despite several instances of teams, secondary market companies and even travel companies utilizing the playoff option scenario, Ghosh’s patents have not actively sought out nor detected a violator in the ticketing space, yet. However, that may be from a lack of knowledge about the ticket industry as a whole. Ghosh’s background is in the financial sector, not the ticketing space, Maloney said.

“We haven’t identified an infringer, obviously this is a fair consolidated space, with a handful of big players,” Maloney said. “We view this as a novel idea, and one of the systems that a big player would try to implement. By virtue of that, there are no existing licenses.”

But the reason that Ghosh hasn’t identified an infringer may be from a lack of trying or knowledge about the industry. When asked, Maloney didn’t know a lot about the sports, ticketing or travel space and questioned whether the playoff ticket “option” method had ever been used. And since it has, the winner of the Lot 24 auction item may decide to deem judicial relief from the NFL, MLB, ticket brokers and travel companies who have previously or are currently using the playoff ticket ‘option’ system.

Ghosh’s patent covers a programmer or company creating software that establishes a playoff ticket option. That means if a team, broker or travel company sells an ‘option’ to fans where a team or player makes the playoffs, then they would be in violation of Ghosh’s patent. It also includes any issuance of travel or hotel accommodations, as well as advertising rights fees, Maloney said.

“The way that the patent has been written, it extends not only to ticketing, but to travel companies, including other products tied to that event: including every TV advertising slot, every hotel room,” Maloney said. “The possibilities here are endless and covered under this patent.”

“The term ‘option’ was specifically omitted from the patent application and our description because from a patent perspective, it may be determined that the concept isn’t unique or novel. So, this isn’t a true option,” Maloney said.

A Patent’s Legal Standing

Ghosh’s patent may be an outlier which gains their immediate involvement into a legal quagmire of creative or novel invention claims. Non-practicing entities (NPEs) have been a business issue for over 100 years. Currently, patent trolls are finding less sympathy for their practices, and more backlash for their auctions.

TicketNetworks’ President Don Vaccaro, after discussing with his legal counsel, disagrees that Ghosh’s patent has instant credibility or merit, stating that it has never been through a legal challenge.

“This patent was filed in 2005, when there was blanket patent approval out of the U.S. Patent Office,” Vaccaro said. “Now, there’s been a patent furor over the last few years and its hurt a lot of innovation.”

Ghosh’s patent has never been established in any actual form other than the creative idea and application process. There is no software design. Ghosh was awarded his claim in 2005, by the U.S. Patent Office, and creates a conversational piece in the ticketing industry of whether Ghosh’s claims could be used by a ‘patent troll’ scenario. Apple, Inc. just lost $533 million to a ‘patent troll’ – a company with no actual product.

Vaccaro points to the legal term of ‘prior art’ as a key example of how to defeat a patent troll.

“Before, there wasn’t a lot of prior art when a patent lawsuit was filed. But that’s not the case now. There’s a lot of discoverable art on the internet, and its easier because it stays for years,” he said.

After a lot of small ticket companies went out of business because patent troll lawsuits, the ticket industry galvanized and focused on defeating them, he said.

“The ticket industry has a lot of competitors who have come together to fight these types of patent issues,” Vaccaro said. “At the end of the day, if we pay up, it means higher prices for the consumer.”

Vaccaro said that the ticket industry not going to yield to a patent troll, nor the scare tactics of losing big jury awards for patent infringement.

“Our strategy is to fight patent trolls and never to settle,” Vaccaro said.

Sports Industry Has Patent Fights With Trolls Too

Several media companies have experienced alleged ‘patent troll’ litigation with NPEs who threaten lengthy legal action in exchange for large sums of money. Sports has not been immune to the patent infringement controversy either.

MLB Advanced Media, NBA Media Ventures and Time Warner Digital Basketball Services were each sued by Front Row Technologies, LLC, in a New Mexico court room. Front Row Technologies claimed infringement of their patents; 7,620,42 – “Providing video of a venue activity to a hand held device through a cellular communications network;” 7,376,388 – “Broadcasting venue data to a wireless hand held device;” 7,149,549 – “Providing multiple perspectives for a venue activity through an electronic hand held device.”

Front Row Technologies, LLC has perform several litigation claims against sports and media companies regarding patents the company owns, in order to achieve a financial settlement or jury award.

A Ticketing History Of Patents

Ticketing platforms have also sued each other based on patent claims. In 2007, Veritix’s Flash Seats, LLC sued Paciolan, Inc for infringement of Flash Seat’s patent in a Delaware court; 6,496,809 – “Electronic ticketing system and method,” which covered Flash Seat’s paperless ticket system and authentication data system being used by Paciolan’s Ticket Marketplace. But the difference was, both were practicing entities fighting over a technology that enabled Flash Seats to obtain a competitive advantage and proprietary software. The Delaware court ruled that Paciolan did not infringe on Veritix’s patent.

In 2012, Ticketmaster/Live Nation and Redbox were both sued by Patent Group, LLC., for infringement of a ‘website screen rotation.’ Patent Group, LLC. acquired the 2003 patent from inventor John F. Coombs in July 2012, and immediately went into litigation against TM and RB for infringement. TM/Live Nation was also sued in 2012 by Ameranth, Inc., for violating their patent; 6,384,850 – “Information management and synchronous communications system with menu generation.” Amerath, Inc. has sued several ticketing and menu apps such as OpenTable and TicketBiscuit, claiming the same infringement of their patent. TM managed to get the case dismissed in 2013, and became part of a contingent of companies, including Apple and Pizza Hut, to have Amerath’s four patents “reviewed” by the U.S. Patent Office because of their numerous lawsuits claiming infringement.

In 2015, secondary market platform Vivid Seats Ltd’s had an infringement case dismissed in North Carolina by Robert Mankes, who claimed that VS had violated his patent, 6,477,503 – “Active reservation system,” which he was awarded in 2002 by the U.S. Patent Office.

Another secondary market platform, TicketNetwork was one of 30 companies, including several airlines, sued by an alleged patent troll, CEATS. After a lengthy litigation, the case was dismissed.

TicketNetworks’ President Don Vaccaro said that his company was ‘vehemently’ against patent trolls, and the ticket industry as a whole has been successful in litigation against them.

“Patent trolls have misused the legal system,” Vaccaro said. “Before, there wasn’t a lot of prior art when a patent lawsuit was filed. But that’s not the case now. There’s a lot of discoverable art on the internet, and its easier because it stays for years.”

Dynamic ticket pricing company Digonex Technologies, Inc. sued it’s rival QCue, Inc., in 2012, for infringements of its patents; 8,095,424 – “Dynamic pricing of items based on sales criteria;” 8,112,303 – “Digital online exchange for pricing items to exhaust inventory by an expiration time.” The fallout of the case was massive, as Digonex lost its claims, and QCue countersued for copyright infringement.

Most of these patent lawsuits force infringing companies toward settlements, instead of going through lengthy litigation, which makes it advantageous for patent holders. Especially when finding favorable judicial districts such as East Texas, where the majority of these patent troll lawsuits are filed. The Electronic Frontier Foundation estimated that out 24.54 percent of all of the 6,000 patent lawsuits filed in 2014 were done so in East Texas.

Patent Auction Market Is Softening

ICAP’s Maloney said at the rulings and hearings on Capitol Hill, as well as several recent court rulings, have make the patent auction market soft. In 2014, the U.S. Supreme Court ruled in Alice v. CLS Bank that merely programming a computer language to carry out a well-known process isn’t enough to register for a patent. Litigation since the June 2014 Supreme Court ruling has dropped 25-35 percent by NPEs trying to enforce patent trolls.

“Patents are worth what people are willing to pay for them,” Maloney said. “It’s had an effect of patents overall and patent-holders to assert their rights.”

He also believes that patents, as well as their owners, typically get a bad image.

“It’s a debate where patents should be used as shields or swords,” Maloney said. “It is true that there are organizations called NPEs, that are pejoratively called ‘Patent Trolls,’ the simple fact is that they are playing within a legal framework. The notion that someone who holds a patent, and is trying to assert their rights, is really trying to hurt a mom & pop coffee shop that’s using WiFi, I think that’s misrepresents where the patent market is, and the genuine rights of the patent holder to protect themselves from infringement.”

The ICAP auction itself will have a 48-hour window, where bidders will submit their bids in advance, without knowing the other bids against it. Maloney said that he expects the bidding to be in the six figures. Interested parties can bid by clicking here.

Previous post

NHL Secondary Market Recap (April 13-19, 2015)

Next post

Ep. 483 - Andy Rowdon (Asst AD/Texas Tech)

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *