Posts Tagged: "non-practicing entities"

Jane Muir, AUTM President: “[U]niversities are not the next patent troll because at the end of the day, university tech transfer offices were put into place to ensure that the new discoveries that happen in the research laboratories ultimately get out into the marketplace by way of product and services that improve the human condition. The big difference is with patent trolls. They’re not interested in commercializing discoveries. They’re interested in using those patents to sue legitimate companies who do want to move those products into the market. From the commercialization standpoint that really is the fundamental difference. Patent trolls have no real interest in commercializing. Their interest is in litigating.”

The above-enumerated problems of the current patent system are real and barriers to further innovation and job creation. But the solutions do not require a comprehensive definition of a troll to fix the patent system. Lady Justice is blindfolded for a purpose. Justice in the US should be meted out objectively regardless of identity. So too in the instant situation. It is not the identity of the actor that needs to be evaluated, but the character of the action. We need to assure that frivolous, predatory actions are penalized and prevent the abusive tactics used by many that harm our innovative culture.

In a magazine with the name Fortune—devoted to capitalism and free markets—it is surprising to see an article that would promote closed markets and limited ownership of property within its pages. I doubt Fortune would support laws restricting real estate ownership to those who build on the land and live on it. I doubt Fortune would consider supermarkets to be “grocery trolls” because they sell goods from others that the stores never actually produce. It is time to reconsider these foolish restrictions on intellectual property ownership and return to treating intellectual property as we do all other property.

Patent licensing, in fact, was the principal means by which new inventions were commercialized during the decades before in-house corporate R&D departments emerged in the early 20th century. Publications such as Scientific American were founded expressly to facilitate the trade in patents, and it regularly featured descriptions of new and interesting patents, which commercial enterprises then licensed or purchased to use in their product development efforts. American Bell Telephone’s new product pipeline, for example, operated like most others at the time. According to its 1894 annual report, the company’s R&D department licensed 73 patents from outside inventors, while developing only 12 from its own employees.

Congress is on the cusp of passing legislation that is said to be designed to control the so-called “patent troll.” Of course, as belatedly recognized by the person who came up with the moniker “troll” in 1993, Peter Detkin (former Assistant General Counsel at Intel at the time), the word “troll” is often in the eye of the beholder. Indeed nearly every litigator will tell you that term “troll” is commonly used against any opponent in a patent litigation suit, much as Arthur R. Miller asserted that “a frivolous lawsuit is any case brought against your client, and litigation abuse is anything the opposing lawyer is doing.” Miller, Simplified Pleading, Meaningful Days in Court and Trial on the Merits: Reflections on the Deformation of Federal Practice, 88 NYU Law Rev. 286, 302 (2013).

”They just walked away,” said Patrick M. Byrne, Overstock.com chairman and CEO. ”Patent trolls find us unappetizing. While we have the highest respect for intellectual property rights, we don’t settle abusive patent suits—we fight.” Byrne added, ”You can’t fork over your lunch money today, and expect a bully to leave you alone tomorrow. Patent trolls understand a bloody nose and in the long run, it’s the asymmetrical response that pays off.” [ ] So the question remains, will other tech companies see the light, or will they keep settling frivolous patent lawsuits brought by patent trolls?

And the game goes on, with sophisticated tactics and subterfuges. Some patent holders obfuscate their patent ownerships behind shell companies, including some large technology companies who find it useful to play the part of the NPE to harass competitors. Others use negotiations as fishing expeditions with the intent to prepare stronger cases in the court room – making escalations go even faster. Complaints are prepared before a first contact is made. Even those who would prefer to negotiate rather than sue are forced to sue to capture the attention of the accused infringer, many of whom simply refuse to discuss licensing or settlement unless they are sued. The IP game becomes a race to the courtroom. There are no obvious winners (except for the attorneys representing the parties) as legal fees keep escalating. Litigation could be avoided in many circumstances, but the IP game fosters a power struggle in which each party assumes the worst from the other and defends itself, at high legal expenses, against imaginary threats. Both sides, the users and owners of patented technologies, are antagonized.

By keeping an eye on stealth and dangerous patents managing the future risk presented is much easier. By proactively monitoring the landscape of published applications and granted patents you may be able to engage in design work-arounds to avoid the most dangerous patents. You may also be able to actively identify patents and pending patent application that are ripe for licensing or acquisition at an early stage, perhaps before the patent even issues or before the patent works its way into the hands of a litigious patent owner. Even if you cannot acquire rights through licensing or acquire all dangerous patents, if you have a meaningful patent footprint that gives you the right to do a variety of things you may well be able to defend based upon having broad based rights to engage in what it is that you are accused of doing.

It is almost incomprehensible that the Patent Office would put together a litigation resource that ignores the reality that many companies, both large and small, trample on the rights of innovators who have spent large amounts of time, money and energy receive a patent and disclosing their innovation to the world. . . the Patent Office only offers a one-sided help section that gives advice to infringers and sets a tone that comes across as anti-patent and anti-patent owner. This strikes me as fundamentally misguided and clearly demonstrates the anti-patent bias of the Obama Administration. . . I would expect the federal government — the Patent Office that is charged with an important Constitutional duty — to be even handed and empathetic to innovators and patent owners as well.

At this time of year we often see many prognostications of what the future holds. From the prospective of the small entity patentee we see big changes in store particularly as some in Congress seem hell-bent on amending the patent statutes once more. These changes are being pushed through without any real consideration for the impact of the changes on patents held by universities, research institutes, small and medium sized companies, emerging companies, independent inventors and new entrepreneurs.

The major beneficiaries are not the patent trolls- but the thousands of single patent owners and small high tech start ups who for the first time ever-are able to monetize the enormous investments in time, money and ingenuity that they have made in their inventions. The fact is- today, small patent owner and small tech start ups have real options to liquidate their intellectual property assets that they didn’t have before Intellectual Ventures and Acacia Research Group entered the market in the mid-2000s. If patent trolls sue big companies- then the owners of these patents were able to liquidate their investments. When the multinationals have to worry about these entities suing them it is good for the owners of the patents.

The Federal Trade Commission has extended the deadline for public comments on its proposed study of patent assertion entities (PAEs), which it announced on September 27. To provide additional time for interested parties to submit comments on the proposed study, the deadline has been extended throughDecember 16, 2013. The Commission will not consider requests for further extension. Comments can be submitted electronically.

Other important positive externalities of patent enforcement, including by NPEs, may be realized when competitors are encouraged to design-around the asserted patent. Incentives to design around patents usually materialize only upon patent enforcement lawsuits, but when design-arounds are commercially successful, they may result in substantial increases in social welfare: design-around patents have been documented to spur new manufacturers’ entry to the market, unleash fierce price competition, and reduce deadweight losses of the patentee’s monopoly pricing. From a dynamic efficiency perspective, the greatest potential social welfare enhancement due to the designs-around appears downstream over many years even in areas other than the patented technology.