Patent Trolls: Fact or Fiction

Congress is holding hearings at 9:00 am (EST) June 15, 2006 to figure out whether legislative action should be taken to stop the evil marauding patent troll.  [Hearing Info] [Live Webcast] The speakers include Ed Reines (Weil Gotshal), Dean Kamen (Inventor), Paul Misener (Amazon.com), Chuck Fish (Time Warner).

Mr. Reines defines patent trolls by their activity — a patent troll

  • has no significant assets except patents;
  • produces no products
  • has attorneys as its most important employees; and
  • acquires patents, but does not invent technology itself.

Reines is also clear that issues of “patent quality” are distinct from the patent troll issue and should be addressed separately.

In a loose proposal, Reines finds six problem areas of the law:

  • Willfulness (it is too powerful and ruins attorney-client privilege);
  • Submarine Patents (they are still around);
  • Continuation Applications (Applicants shape pending applications to capture the current market);
  • Damages (should be proportional to the value of the innovation in a larger product);
  • Choice of Forum (forum shopping is rampant);
  • Injunctions (eBay is wonderful, but might not be enough).

Documents:

7 thoughts on “Patent Trolls: Fact or Fiction

  1. I listened to part of the hearings and could not help but notice the 800 pound gorilla in the room.

    This gorilla was brushed against when the Amazon attorney mentioned that a company was threatening Amazon with patents that the company only paid 1 million or so for.

    The gorilla of which I speak is the incredible cost/uncertainty of litigating a patent infringement claim.

    The problems that were mentioned in the hearing were all in some way resultant from these costs and their related market inefficiencies.

    If the small inventor could afford to litigate their patents then there would be no need to liquidate their portfolios for bottom dollar prices to the “trolls” (free market facilitators).

    If more uncertainty could be eliminated from the process (how many decisions are based upon legal representation not performing due diligence in presenting an argument or preserving it for appeal) then more cases could be resolved based upon the true merits of the patent instead of upon technicalities (market inefficiencies).

    What if patent defendants could more easily join together and collaborate in a cost efficient method of defeating mass trollers that game the system in search of small amounts from the many?

    It is obvious that the direction taken should involve the more efficient flow of information within the advocacy process itself in order to eliminate the boundaries to reward for innovation.

  2. Ed Reines should review the basic premise of the patent system: add to the written public database in exchange for property rights. The inventor and his support system add to the written public database and then become the bad guys for trying to enforce their constitutional property rights? (Yes, patents are directly mentioned in the US constitution.) Give me a break!


    The inventor and his support system meet their end of the contractual bargain and now are expected to do more? Reines should review contract law.

    A patent does not give a right to produce a product, rather keeps other from makig, using, and selling the calimed inventions. Reines should review patent law.

    Now attorneys are the bad guys because they help and inventor enforce his property rights? Reines should review the ‘Government of Laws’ basis for the United States’existance.

    Inventors should be prohibited from licensing their technology? INFRINGERS DO NOT INVENT THE TECHNOLOGY THEMSELVES. Does this Reines character know anything about patent law?

  3. The Myth of the Patent Troll

    The proposed “protection” from “Patent Trolls” essentially means that if an invention that is new, useful and non-obvious, is patented by an individual or an organization without the capacity to produce the product, their patent rights should not be equal to those of the moneyed giants. Thus the mega-corporations are propagating the myth that inventions are only good for the public if they are owned by…guess who…them. Usually, when the powerful try to stifle the rights of individuals by using their lobbyist armies, they at least TRY to disguise their true motive. In this case they just spell it out in plain English. They don’t want inventors, without vast financial resources, to be able to compete with them…pure and simple.

    A new and useful innovation can benefit the public just as much if a patent is licensed to a company that produces the product, as it would if the patent owner produced the product. In fact, a patent holder who does not produce the product (or practice the method) is MORE inclined to license the invention to more than one company, thereby creating price competition between the companies offering the invented product to the public. Therein lies the REAL problem…big companies don’t like competition. If they can’t stop it in court, they will try to stop it in Congress. After all, that is where they have their greatest unfair advantage over ordinary people. That is what this “patent troll” thing is all about. A more accurate description would be “Patent Robin Hood”.

  4. I am convinced that there are patent trolls, but many patent owners are incorrectly labeled as such. If the government has issued a valid patent, why should the owner be persecuted for trying to enforce the rights given by the government?

    Here is the scenario that I believe constitutes a patent troll:
    – patent is issued
    – owner of the patent sees technology that is related but it probably does not infringe
    – patent owner offers the alleged infringer a settlement that will cost less than litigation that the alleged infringer should win (but must pay for!)

    A patent troll should be defined as someone that holds a patent and uses the high cost of litigation as a big stick to get money from someone with deep pockets, and the deep pockets pay solely on price of settlement vs. price of litigation. Patent trolls should not be defined as someone that does not produce a product – that would be too close to the garage inventor that is so dear to American culture.

  5. I think one factor making patent trolls so troublesome is the laziness with which patents are treated in the electronics and software industries. Cross-licensing “by the pound” (notably of patents not practiced by the assignee, e.g. IBM) has been so pervasive in that industry that the “troll” is a startling problem: it’s someone who might actually sue!

    A legislative or even judicial response to the troll would be an overreaction, in my opinion. This will take care of itself.

  6. The real issue in my mind is why the very companies that ultimately are the targets of so-called patent trolls don’t themselves buy up the “troublesome” patents before the “trolls”, at a huge bargain, relative to the potential cost of infringing.

    In many ways, it strikes me that the deep problem with industry, especially the technology industry, is that they simply don’t take patents seriously enough. I mean, if patent trolls can manage to find relevant patents to buy, why can’t people in industry?

    There’s a lot of arrogant self-importance in the technology industry, particularly the software industry, that seems to get in the way of giving patents their due.

    Somehow, these people think that they are just too busy to file for patents themselves, for example — even though inventors have managed to do so in the past for well over a century. Somehow, it seems that they and their companies just can’t be bothered to keep track of patents relevant to their own field, which they might do well to buy up, or to license, or to avoid infringing.

    I think that people in the technology industry need to get over themselves. They need to buckle down and pay the attention to patents that they deserve. That by itself would eliminate a great deal of the supposed difficulties that patent trolls and patents seem to represent to these people.

  7. As a former employee of 4 failed startups (including one that I still own a small part of), all of them spending a bit of time on patent production, I have more sympathy for “patent trolls” than I used to. It’s simply a matter of the free market at work, and these companies do the legwork of finding possibly valuable patents, and negotiating a price that would let an otherwise failed company recover some of their investment. That the trolls then attempt to maximize the value of their own investment is just good business.

    And no, I have not sold any patents to trolls, but I can well understand why someone would, and cannot say that I would not do so myself if the opportunity presented itself.

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