Podcasting in peril? Trial showdown in September

Millions of people enjoy listening to online audio shows from the likes of comedians Adam Carolla, Marc Maron and Aisha Tyler. But podcasts, as they're known, could be in peril, due to a patent lawsuit that is brewing up.

Jefferson Graham, USA TODAY 3:20 p.m. EDT May 4, 2014

LOS ANGELES — James Logan freely admits that he's never made a podcast.

But he also insists he helped create the medium of podcasting. Logan says that it happened in 1996 — and that he has the patents to prove it.

In a controversial legal battle, PersonalAudio, the company founded by Logan, is suing comedian Adam Carolla's ACE Broadcasting, two other podcasters and networks Fox, CBS and NBC, saying they are infringing on his copyright and owe him money.

The trial begins in September. Carolla has taken to the Web to raise money for legal fees against what he called "patent trolls."

Carolla says he needs $1.5 million to face PersonalAudio in an East Texas courtroom that historically has been favored by patent litigants. So far, Carolla has pulled in just over $370,000 on the Fundanything.com crowdfunding website, including a $20,000 donation from e-commerce giant Amazon.

"The first thing they (PersonalAudio) said was 'Give us $3 million,'" says Carolla, whose show is listed in the Guiness Book of World Records as the most downloaded podcast ever. When faced with the suit, Carolla said he chose to fight.

"Obviously, $3 million is out of the question," he says. "But even if they said tomorrow, 'Give us $100,000, and this will all go away' — $100,000 for what?"

Should he lose, Carolla says he might shut down his show, a sentiment seconded online by others.

Podcasting has been around since at least 2004, initially as a vehicle to supply non-music programming for the Apple iPod, which launched in 2001. Apple began offering podcasts, through subscriptions and downloads, via its iTunes app in 2005.

As the popularity of smartphones and tablets has eliminated the need for subscriptions and downloads, sites such as TuneIn Radio, SoundCloud, Stitcher and Swell offer instant listening, both on the Web and via increasingly popular smartphone apps.

Nerdist'sChris Hardwick built a huge online following with his podcast, which he parlayed into a high-profile hosting gig with cable network AMC. Comedian Aisha Tyler, a co-host of TV's The Talk, parlayed her popular podcast Girl on Guy into a best-selling book, Self-Inflicting Wounds. National Public Radio has found huge audiences for shows such as This American Life, Snap Judgement and Fresh Air, which regularly top the iTunes podcast charts.

The trials — six separate suits between PersonalAudio and Carolla, Discovery Networks, podcaster Togi Entertainment and the broadcast networks — will take place in a small Texan town with 24,000 residents. Marshall, three hours east of Dallas and near the Arkansas border, has become known as the "patent trial capital", a popular place to get a trial in a city whose docket isn't filled with other cases waiting to get a hearing.

Many patent cases take place there, and historically, litigants win 60% of the time, according to a recent study by PriceWaterhouseCoopers.

Carolla's team fought the locale, seeking a bigger city and fearing the history.

PersonalAudio, based in Beaumont, Texas, has a handful of employees working on creating new technologies, says Logan, who himself is based in New Hampshire.

PersonalAudio has no products but instead owns patents and investments in several companies, including consumer tech company Bringerr.

Logan's 1996 idea predates podcasting as we know it. His concept was downloadable entertainment via the Internet to a new kind of MP3 player he was trying to market. The product fizzled, so he switched gears to subscription of cassette tapes. He filed for and was granted several patents, which included the notion of having downloaded playlists.

In 2009, PersonalAudio amended the patent to include podcasting.

PersonalAudio sued Apple over the issue of playlists, which it popularized with the iPad, and won an $8 million settlement in 2011.

Then he set his sights on podcasters. Why start with Carolla?

"Somebody that's trying to collect license fees doesn't start with the little guy," says Logan, 61. "The obvious place to start is with the largest infringers. Adam Carolla has the largest podcast empire in the industry, so it was a logical place to start."

Logan knows that in the court of public opinion, he has not fared well. Carolla has a large megaphone and has enlisted pals including Howard Stern, Hardwick, Maria Menounos, Marc Maron, Joe Rogan and others to speak out on his behalf.

Logan's reaction to being called a "podcast troll"?

"It's a catchy term, and it's caught on," he says. "That's too bad. The patent system is an important part of our innovation economy."

But many say the patent system has gone out of control. Sure, big companies such as Apple, Samsung and Google regularly battle one another in court over patents, but many small firms have complained about getting letters from firms like PersonalAudio that don't pertain to their business but cause them to settle, since patent litigation is very expensive.

"So many entrepreneurs are doing good things; it puts a damper on the entrepreneurial work they're doing," says Charlene Li, an analyst with the Altimeter Group. "The patent office is trying to fix this."

Indeed, there are several bills in Congress that are aiming to tighten up the ease of getting patents, but with gridlock in Washington, they aren't expected to pass this year.

But the issue of "patent trolls" is so rampant that Dallas-based Marc Cuban, host of ABC's Shark Tank and owner of the Dallas Mavericks basketball team, donated to the San Francisco-based Electronic Freedom Foundation to start the "Marc Cuban Chair to Eliminate Stupid Patents."

Daniel Nazer, an EFF staff attorney, is working to invalidate PersonalAudio's patent — which Logan described: "system for disseminating media content representing episodes in a serialized sequence."

"We think there's a really good case that PersonalAudio didn't invent podcasting like they claim," Nazer says. "There's no question that distributing cassettes isn't podcasting. If they had invented podcasting, they would have done some podcasting."

The EFF petitioned the patent office to hear its case about invalidating PersonalAudio's patent and got a hearing accepted. This is considered a big victory for podcasters, but the patent office has until April 2015 to make a decision.

(Just raising the issue isn't cheap: The patent office charges $25,000 for a filing fee, Nazer says.)

Despite the history with Texas patent trials, Li says the trial is an "uphill battle" for PersonalAudio.

"This case is so contentious," she says. "It would rule invalid so many of the activities that are out there now, and all people will be impacted."

Anyone who has a prerecorded show that's available for subscription or download would be violating Logan's patent. That would include not just Carolla but streaming video services such as Netflix and Amazon Prime, along with any of the broadcast TV websites.

John Donham, CEO of audio app TuneInRadio, which offers access to radio stations and podcasts, says 14% of its listening comes from podcasts.

How would his app be affected if Carolla and others lose in court?

He doesn't expect that day to come. "We're not going to start planning for a world where podcasts are suddenly gone."

Readers: What's your favorite podcast? Let's chat about it on Twitter, where I'm @JeffersonGraham.


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