Posts Tagged: "npe"

The HuffPost recently published a piece authored by Massachusetts State Senator Eric P. Lesser (D), which is titled Patent Trolls Are Trolling Startups In Massachusetts – And We Need To Change That. The piece attempts to engage readers by taking a situation from the HBO sitcom Silicon Valley and apply it to real world business activities currently ongoing within the state of Massachusetts. However, critical analysis of Lesser’s article indicates glaring flaws with his logic in a way that makes it look like Lesser is more interested in following a false narrative in service to patent infringing interests than he is in supporting Constitutionally-protected property rights.

House IP subcommittee chair Rep. Darrell Issa (R-CA) led off the hearing by discussing the large number of interests who are often on Capitol Hill to discuss their issues with “patent trolls,” including the “genius ones” which have only been developed in recent years. Despite the intent of the America Invents Act (AIA) of 2011 to weed bad patents out of the system, “patent trolls” remain active. Issa felt there were a few reasons for this, including the fact that such entities make money and that good patents could still be used to assert unreasonable claims. “Why innovate when it’s far easier and more profitable to simply purchase a patent, acquire one, acquire the rights to a patent, perhaps one that has never been licensed, bully businesses into writing a check, go away without ever seriously litigating,” Issa said. He said that 80 percent of “patent troll” litigation focuses on small business. “Simply put, we should not confuse ‘Making America Great Again’ with ‘Making American Patent Trolls Richer Again,’” Issa said. Although Issa was pleased with the U.S. Supreme Court’s recent decision on patent venue in TC Heartland v. Kraft Foods Group Brands, he recoiled at what he felt was an “overreach” by Judge Rodney Gilstrap from the Eastern District of Texas (E.D. Tex.); Issa felt that Gilstrap misinterpreted the Supreme Court’s decision in TC Heartland by denying a motion to transfer venue from E.D. Tex. in Raytheon v. Cray. “It is, in fact, an act that I find reprehensible by that judge,” Issa said.

A $1 trillion a year industry not wanting to pay innovators less than a 1% royalty on the innovations they appropriate (i.e., steal) for their own profits seems like a terrible price to pay given the national security and economic consequences of forfeiting our world leadership to the Europeans and Chinese… Google and Uber are locked in a patent battle over self-driving automobiles, so does that make Google or Uber a patent troll? What about General Electric, Apple, Samsung, Microsoft, Cisco, Oracle, Whirlpool, Kraft Foods, Caterpillar, Seiko Epson, Amgen, Bayer, Genzyme, Sanofi-Aventis, and Honeywell, to name just a few?

The true agenda of those who support further reform of the U.S. patent system is as follows: to discriminate against entities which license technologies instead of manufacture; to increase the costs of asserting patent rights to the detriment of individuals and startups; and to stilt the conversations surrounding tech licensing in favor of the infringer bringing a product to market. “If you trip over our patent, you’re a thief. If we trip over your patent, you’re a troll,” Giancarlo said… “Let’s call patent reform for what it is: a blatant economic and power grab by tech firms to infringe on technology created by others,” Giancarlo said. In his opinion, the true trolls are the entities trolling Congress to get a competitive advantage over smaller entities.

Unified Patents is a relatively new form of patent troll that works as a “Troll of Trolls” or “ToT.” They file IPRs (inter-partes reexamination requests) to kill patents. While they purport to only attack “bad patents,” their definition of a “bad patent” is simply any patent asserted against their clients. So who are their clients? Good question – that is a large part of the problem. They keep most of their clients’ identities secret. Unified does identify a handful of their members on their website such as Adobe, Google, NetApp, Roku, and Salesforce… But China is different. Here, a mercenary third party attacking innovation via patents is problematic. China, unlike America, has made innovation a top priority. China’s government has also, over the last few years, created the best patent enforcement environment in the world.

IP departments are often forced to spend their limited budget defending patent troll lawsuits targeted at the base computing and service layers instead of where it should be spent – protecting application layer innovation. There has been no shortage of such litigation due to the glut of vague and ambiguous software patents directed to basic computing technologies. These broad, vague patents have become glaring targets for trolls, who are eagerly buying them up and asserting them wherever they can. As a result, companies are being sued for patent infringement for things that aren’t directly related to their end products and services.

If Bill Hewlett and David Packard were just starting in their garage, they might be wise not to waste money acquiring them… An individual inventor, or SME, may defend patented inventions against unauthorized use – by everyone and anyone. However, it is disingenuous to say it is reasonable for them to do so, no matter what Congressional soundbites trumpet. The system is severely biased against these entities to the point of no longer serving them.

NPEs are uniquely positioned to help China by attacking foreign entities to clear the way for Chinese companies by exerting pressure in ways that only NPEs can. Even if Chinese semiconductor companies had the necessary patents and experience to engage their foreign competitors, they would risk retaliation from these foreign parties. NPEs, on the other hand, can unilaterally attack foreigners without fear of retaliatory patent suits. Although there are a few of antitrust issues, I do not believe that NPEs that act in the best interest of China should, or will, be attacked by the NDRC or any other antitrust agency in China.

Patents and the innovators who own them do not “cost” the U.S. economy tens of billions of dollars each year. This claim has been repeatedly and thoroughly debunked… But for a moment let’s buy into the fraud. If you actually do the math, which the Internet Association and infringer lobby obviously has never done, you will be amazed as how inconsequential even their grossly inflated estimates of cost are in terms of the scale of the overall U.S. tech economy… If the problems with patents are so awful because they create such a windfall for patent owners doesn’t that just admit that these companies are misleading their own shareholders and perhaps even not maximizing value?

The Supreme Court has run two areas of technology, bio and software, into a legal ditch from which there is no escape…. It should be no surprise then that research and progress in these two fields is decamping and moving off-shore, along with the attendant jobs and economic activity. In essence, the boundless technical future, upon which the US economy has long thrived, is being given to others with whom the US competes… As for the 35 USC 101 conundrums, here’s the fix. DO NOT MODIFY 101! Rather, modify the definitions in 35 USC 100 as follows, and also supply a one paragraph legislative history as to why this definition was changed.

The Norwegian fairy tale “Three Billy Goats Gruff” was far ahead of its time and the moral of that story has a very relevant, modern application. In short, the story introduces three goats that want to cross a river to eat some luscious grass. To do so, however, the goats must first cross a bridge; under which lives a fearsome troll, who is so territorial that he eats anyone who dares to cross it. By working together, the goats are able to plot against the troll, and ultimately knock him off of the bridge. After knocking the troll off the bridge, the three goats lived happily ever after. So, if these goats can figure out how to get rid of trolls, why can’t sophisticated companies do the same?

Anyone who has followed recent developments in the U.S. patent landscape, however, might note something interesting occurring in this particular case. According to the recent patent assertion entity (PAE) report put out by the Federal Trade Commission (FTC), Network-1’s business activities would seem to put it in the category of what the FTC calls a “litigation PAE.”… Unfortunately for the FTC, Network-1’s license agreement with Polycom is horribly inconsistent with the agency’s findings on the exact business model that Network-1 seems to employ.

Basing policy recommendations on no evidence, or at best anecdotal evidence, has great potential to do more harm than good…especially when some of the missing evidence is the other side of the equation – the benefits afforded by patent licensing activity… Instead of seizing the opportunity to survey the patent licensing landscape and shed light on behavior that otherwise is invisible to the public, the FTC squandered the chance and instead developed two arbitrary categories of PAEs, determined that one of these categories was not good, and developed a set of policy recommendations because of “nuisance” litigation. By making recommendations without gathering or using the very facts that were supposed to be the public benefit of this PAE study, the FTC’s report is undoubtedly going to do more harm than good.

Why should the costs of the tortfeasing infringer be relevant in determining whether the extracted value from a settlement is fair? The fact that law firms charge a lot of money to defend patent infringement cases, and don’t particularly have any incentive to settle cases early, somehow translates into certain settlements being for nuisance value without any consideration of whether the settlement is a fair value for the rights trampled upon by the infringer? The FTC has quite a lot of explaining to do, because it seems they picked an arbitrary number that is a function of what attorneys ordinarily charge infringing defendants through discovery. I don’t see how that is a function of the value of the innovation, or how it says anything about the merits of the infringement case, the damages case, or the tactics of the patent owner. In fact, it seems as if the $300,000 figure is completely irrelevant.

Simply stated, Fortune is wrong. The FTC report did not have harsh words for patent trolls. In fact, the FTC had harsh words for those who use the term “patent troll” to vilify patent owners! At the risk of upsetting the predetermined narrative obviously favored by Fortune, allow us to interject some facts into this discussion… Perhaps Fortune confined their coverage of the FTC report to the press release accompanying the report, which conspicuously leaves out any mention of patent trolls, or that they view the term “patent troll” as being unhelpful and prejudicial. Seriously, if you are going to cover a report shouldn’t you at least read all of Chapter One?