Posts Tagged: "patent assertion entities"

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.

The App Developers Alliance is joining with law schools nationwide to help startups battle patent trolls. The Law School Patent Troll Defense Network is a consortium of law school clinics that will provide free legal representation to small app developers and other entrepreneurs that have been threatened or sued by patent trolls. Clinics participating in the Network may also represent the Alliance in major patent cases affecting developers and the app community.

I recently received an e-mail from a colleague who is embarking on an interesting research project. This colleague, who would like to remain publicly anonymous for the time being so as to be able to conduct the underlying research privately and without influence. The researcher is seeking to interview a number of different industry participants for a research study on patent assertion entities.

With the FTC taking this step now I don’t know how Congress can move forward with patent reform legislation that purports to address the so-called patent troll problem. Perhaps they will move forward, but at a time when the Congress has so many issues to deal with is patent reform prior to yet another in-depth government report really where times should be spent? As of the writing of this article we do not have a budget for FY 2014, or even a continuing resolution and the debt ceiling debate looms in the backdrop. Perhaps Congress and the FTC should be spending time fixing other problems rather than tinkering with an issue the GAO says doesn’t need to be fixed.

Obama’s action plan was heavily influenced by a report, “Patent Assertion and U.S. Innovation,” which was released by the President’s Council of Economic Advisers, the National Economic Council, and the Office of Science & Technology Policy. The full text of the report can be read here. It is surprising that a report that was prepared by such an august and high-level set of entities could be so blatantly biased and one-sided. The body of the report slams PAEs and points to everything that’s bad about them. It creates an artificial distinction by referring to “good” patent middlemen as “patent intermediaries,” although there is no indication in the report of what are the characteristics of a good “patent intermediary” versus an evil PAE.

Settling nuisance value perpetuates the cycle, as the automobile industry discovered in the 1980s and early 1990s. Show a willingness to pay extortion-like demands and you will see more lawsuits filed. It is an endless cycle, at least until it gets broken. The solution is an easy one — fight at least occasionally, or at least one! Because the easy solution isn’t pursued and instead the industry pursues a strategy akin to a Buck during deer hunting season I have to assume that they really don’t want a solution. What other conclusion can you reach when intelligent people ignore the obvious?

Our analysis of the full set of cases across the chosen years confirms what we saw in the smaller sample: patent infringement litigation by patent monetization entities has risen dramatically over a remarkably short period of time. One of the most striking results is the following: in 2012, litigation by patent monetization entities now represents a majority of the patent litigation filed in the United States. Specifically, patent monetization entities filed 58% of the patent lawsuits in 2012. This is a sharp rise from 2007, when patent monetization entities filed only 24% of patent infringement litigations.

Despite the fact that the anti-patent forces ignore history and make claims that are wholly unsupported about the scope and overall problem of patent litigation and patent thickets (which by the way always result in an explosion of technology), there is a troubling problem with really bad actors who seek to enforce specious patent claims against increasingly small defendants. They engage in activity the federal courts has characterized as extortion like, and they do present a significant drag on the economy because they target job creators.

As far as I am concerned the problem is not generically with patent assertion entities, or even the likes of entities like Acacia Research, or with patent litigators such as Ray Niro. Both engage in comprehensive due diligence before getting involved with a patent owner, turning away more than 99% of what is presented to them for evaluation. Actors like Acacia and Niro seek to enforce good patents that are widely being infringed. Somewhere along the way society has chosen to vilify them and the patent owners they represent as if striving to achieve a patent on an innovation of fundamental importance is evil incarnate. What a sad commentary on the cluelessness of the masses.

The House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet on March 14, 2013, heard from six witnesses that the business of “patent assertion entities” (PAEs) is inflicting severe harm on a broad range of technology users. The witnesses at the hearing agreed that, when confronted PAE demand letters on frivolous claims, settlements by and large are economically unavoidable.

Right now the best business to be in at the moment is the patent enforcement business, at least if you are concerning yourself with low-risk monetization with high reward. Between the legacy issue of bad patents, patent auctions and the many who purchase patents, what has started to happen is that the patent system rewards those who have the finances and ability to game the system. But the problem is extraordinarily complex.

This workshop will examine the economic and legal implications of patent assertion entity (PAE) activity, as distinct from prototypical “non-practicing entity” (NPE) activity, such as developing and transferring technology. By contrast, PAE activities often include purchasing patents from existing owners and seeking to maximize revenues by licensing the intellectual property to (or litigating against) manufacturers who are already using the patented technology.

One of the newer prior art research studies currently underway at Article One Partners is one that relates to U.S. Patent No. 6,332,158, which relates to a system that assists user’s in selecting desired domains. This study is of particular interest because the patent in question is owned by a subsidiary of Acacia Research Corporation, which is one of the largest and most powerful of the patent assertion entities (PAE) in the industry today. The technology in question in the Acacia owned patent is a domain name lookup system and associated method. In the method a domain name query is sent from a resolver process when the user wishes to obtain information. If the domain name exists, the domain name server provides the corresponding machine address back to the user’s computer. However, when the domain name query uses a non-existent domain name then a machine address for a computer that executes a domain recommendation engine is provided. The domain recommendation engine assists the user in locating a desired domain name.

Ray Niro is a nationally recognized trial attorney specializing in the enforcement of patent, trade secret and related intellectual property rights. The name Niro, however, is not like any other in the patent industry. It was as a consequence of a lawsuit one of his clients brought against Intel in 2001 that the term “patent troll” was coined. On March 12, 2012, Niro went on the record with me in an exclusive interview. We discussed many things, including the nearly constant attempts to erode patent rights, make it more difficult for patent owners to seek redress for infringement and what the America Invents Act will mean for patent litigation moving forward. We also discussed the undeniable reality that there are bad actors in the industry.

Raymond P. Niro is patent litigator with tremendous experience and a reputation that is larger than life. To some he is a champion of independent inventors and small business community, frequent clients of his. To others he is nearly the definition of evil. It was as a consequence of a lawsuit one of his clients brought against Intel in 2001 that the term “patent troll” was coined. He has been trial counsel in literally hundreds of intellectual property cases, and since 1996, has won verdicts and settlements for his clients totaling more than $1 billion. On March 12, 2012, he went on the record for this exclusive interview.