Patent trolls cost companies money spent on defence that could otherwise be spent on innovations.
Normally one starts out with an introduction instead of a closing statement such as: "In 2011, United States business entities incurred ₹1.97 lakh crore in direct costs," due to patent trolls, infringement lawsuits and the like.
The bottom line is patent trolls cost companies money spent on defence that could otherwise be spent on new innovations. Not only do they use salaries for lawyers that could be spent on engineers, the payments also cost dearly as indicated by this excerpt: "firms forced to pay patent trolls reduce R&D spending, averaging ₹1,434.69 crore less than firms having won a lawsuit against a troll."
Beware of trolls
As a blogger, I’m more interested in introducing a subject for debate than giving credit to one source. I often investigate a number of sources. After looking at only a few, I really wasn’t getting any new information. On occasion, one source provides enough background on a subject to start the discussion. In addition to that, Wikipedia does a lot of the leg work for me by researching the topic and providing references to their findings.
Patent trolls have many definitions and the definition itself has seen quite a bit of evolution and change. Currently it refers to an entity that uses patents to make life miserable for others. Most entities are companies that enforce patent rights against infringers. Worse yet is that these companies are all about profiting from the threat and rarely about using the patent for profit by implementing the invention. These underhanded methods are even more deviant when one considers that the patents are obtained from those experiencing hard luck while the enforcement is beyond the “good circle” of the original patent into the area of remote claims that cast a net much larger than intended by the inventor. In other words, it's the typical U.S. legal system at work where right doesn't always mean you will win the case. Been there, done that, more than once.
Companies that troll patents fall under three basic types: the patent holding company (PHC), the patent assertion entity (PAE) and the non-practicing entity (NPE).
According to Wikipedia, these labels are not inclusive and instead depend on the company's mode of operation. Still, there is a commonality among them that seems to lead towards unscrupulous behaviour for the most part.
Government joins the fight
Some say the cause of this epidemic is the slow nature of the USPTO due to the examination backlog. Others say that allowing broad claims opens the door for going after others dancing in similar areas of technology. Some mention of ignoring prior art is also blamed. In reality, I think U.S. has over 9 million patents listed so there is a high probability that prior art can be overlooked. Couple that with the way terminology varies from patent to patent on such a grand scale and most searches seem to overlook quite a bit in terms of prior art. Even the best search firms have a disclaimer stating that prior art verification is not guaranteed in this sea of disclosures.
So, what is being done about these trolls? In 2013, five federal measures were introduced in order to thwart them. States also got involved. Here is a summary:
- the president ordered the USPTO to require companies to be more specific about exactly what their patent covers and how it is being infringed
- tighten scrutiny of patent claims that appear overly broad
- the president asked Congress to enact legislation to more aggressively curb "abusive" lawsuits
In February 2014, Apple filed two friend-of-the-court briefs for cases pending in the U.S. Supreme Court, claiming to be the No. 1 target for patent trolls, having faced nearly 100 lawsuits in the preceding three years.
In November 2014, the U.S. Federal Trade Commission (FTC) settled its first consumer-protection lawsuit against a company, for using “deceptive sales claims and phony legal threats.”
Like the feds, states are stepping up as well:
- May 2013 Vermont's Consumer Protection Act
- August 2013 Nebraska's Attorney General sent warnings to a patent troll's law firm
- 2013 Minnesota's Attorney General obtained a settlement prohibiting MPHJ Technology Investments from continuing its licensing campaign
- April 2014 the Wisconsin passed legislation that would make patent trolling Wisconsin companies more difficult.
- 2014 Idaho passed the "Patent-troll" bill which protected companies from "bad faith assertions of patent infringement"
It's hard to say whether or not all of this is working. Patent infringement lawsuits were at an all-time high in 2015. Incidentally, the 2013 efforts were due to infringement lawsuits going up by a factor of six from 2006 to 2012. In 2016, there was a win. So again, it’s hard to say what's working and what isn't.
Twisting to win
Like a bad divorce with children, it's the innocent that suffer. My experience with law is that it's not about fairness. Instead it's about the ability to twist the law in a manner that guarantees a win. This is why I will stop short of ever becoming an attorney. I may become a patent agent at some point, but the lack of integrity in the modern court room would not suit my ethics very well. The rewards often overlook the innocent engineers who invent the idea and instead reward lawyers who either enforce or defend it. Couple that with judges who decide based on "case law" and you have a system that's more about covering one's behind than it is about fair awarding to the party that is right. Have you ever seen a lawyer promise to tell the truth in court? Exactly. It's the non-lawyers that are sworn in. Of course, like any profession, there are good and bad. That's not my point here. My point is that my audience of engineers is being swept aside due to unintended consequences of the rules as they stand. I write for this audience. We are a brotherhood of creators, all political correctness aside.
Choose your side
Nowadays it's easier to patent as a micro entity. Costs are reduced to encourage more patenting. However, the patent only provides a stake in the sand. Defending a patent can cost ₹6.80 crore or up to ₹17.00 crore for detailed efforts. Couple this with the costs to get started and it’s no wonder so many small businesses fail while large corporations dominate. It’s as if the name Sherman were more associated with the general that tore through the south in the Civil War (in a manner similar to large corporations) than it is associated with anti-trust.
Here is a bit more about who is targeted: "Trolls tend to sue firms with fewer attorneys on staff, in effect encouraging firms to invest in legal representation at the expense of technology development." Again, this works against the engineering pool in favour of the legal realm. In this "make work" scenario the legal system almost guarantees its market while engineering becomes a less coveted career choice. Hence fewer engineering students will want to enter the market in the U.S. But China isn't slowing down. India isn't slowing down. The lower classes in those countries are seeing their lives improve. In the U.S., it's the opposite. We are being legalised into failure.
This article first appeared on EE Times Europe.