Patent Trolls by the Numbers

by Assistant Professor Colleen Chien, Santa Clara University Law School, colleenchien@gmail.com, @colleen_chien (Download PDF of this at SSRN)

Following President’s Obama remarks and reintroduction of the SHIELD Act, today the House Judiciary Committee Subcommittee on Courts, Intellectual Property and the Internet is holding hearings on litigation abuse by patent trolls (aka patent assertion entities or PAEs). Companies J.C. Penney, SAS, Cisco, Johnson & Johnson, & Adobe, are testifying. Part of the discussion may focus on patent troll metrics, on which I have previously reported. These statistics draw heavily upon proprietary research as well as my own analyses, so, in the interest of full disclosure, below are the numbers and what I know about them.  Some say that the time has come to act, not to further study the PAE phenomenon but I believe in both – that to craft interventions that are both narrowly tailored and actually will work requires a deep understanding and careful analysis.

(It bears mentioning as well that much also can be learned from related experiences  — indeed, litigation abuse is nothing new and in fact the Judiciary committee that is hosting today’s hearing held a hearing on litigation abuse in non-patent contexts yesterday. In the patent troll context, many interventions, like fee-shifting, improving patent quality control, special defenses, and maintenance fee tweaking have been suggested/tried before – in the recent past (early 2000s) as well as in the late 1800s, against both farming and railroad patent trolls and related contexts. FWIW, in my paper on the topic,  I discuss other fixes like court leadership, industry organizations, collective action, and bolstering protection of users based on what has worked in these settings.)

1. PAEs brought 62% of 2012 patent litigations

According to RPX Corporation PAEs initiated 62% of all patent litigation, or 2,921 of 4,701 suits in 2012. RPX is a publicly-traded company that provides solutions to troll threats for its member companies and has great data, principally maintained by Seth Besse.

        PAE Suits (2005-2012)

Credit: © RPX Corporation 2013

Data checks on RPX numbers:

  1. Patent Freedom reports 2,923 NPE lawsuits in 2012, as compared to RPX's 2,921 PAE lawsuits, using a slightly different definition.
  2. I compared about 1,000 of RPX's codings with my own, and reported the result in Appendix C of this paper: "The share of disagreements between the databases was 7%, with the net number of trolls varying by 4%."
  3. Robin Feldman, Sara Jeruss, and Joshua Walker found that about 40% of 2011 suits were brought by patent monetizers in their study for the GAO. See comparison at page 17.

Comparison to 2011: The share of suits brought by PAEs in 2012 grew from 2011. However, the AIA's misjonder rules, which curbed the troll tactic of naming multiple unrelated defendants in a single suit which had artificially deflated troll suit numbers, are responsible. Thus, the increase in the number of troll suits, post-AIA, is most likely an artifact of the AIA.

2. In 2012, PAEs Sued More Non-Tech Companies than Tech Companies

Though the PAE share may surprise some, patented technologies like software are the building blocks of modern commerce. "Low-tech" industries like funeral homes, advertising agencies, and retailers like JC Penny which is testifying today are all taking steps to protect themselves from troll demands. Though historically a "tech" problem, in 2012 PAEs sued more non-tech companies than tech companies, according to the analysis below by Patent Freedom, which provides market intelligence on patent trolls. Retailers are hit the hardest by non-tech PAE suits, followed by automotive like Ford, which has also testified against trolls, financial services, and consumer products. So expect a broadening of the coalition to deal with trolls especially as many in these sectors are likely being sued over their use rather than making of technology.

3. Individual Inventor v. Corporate PAE suits

Not all trolls are created alike. Individuals get injunctions, corporate trolls don't. (See my paper with Mark Lemley, at FIG 3.) The SHIELD act would force corporate losing trolls to pay, but not individuals. "Non-practicing entities" can also include universities and startups, which is why I created the term PAE to apply to businesses that assert patents as their primary business model – universities and startups don't, they are focused on commercializing or transferring technology. (As Justice Kennedy put it in his eBay concurrence, trolls are firms that "use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.")

Based on data provided by RPX, 94% of 2012 suits brought by entities that don't practice were brought by corporate PAEs. Individual inventors were another 5% and the remaining 1% universities, based on data provided by RPX. However, PWC's excellent litigation report reports much higher "individual NPE" proportion – of 51% but for the 1995-2011 period and likely using a different methodology (the PWC university share is a bit higher). Because the SHIELD act turns on the individual vs. corporate distinction, it would be good to reconcile these numbers. 

The Distribution of 2012 NPE Suits by NPE Type (based on RPX data)

4. PAE defendants comprised 59% of all patent lit defendants

According to RPX Corporation, defendants to PAE suits represented 59% of 2012 patent litigation defendants, or 4,125 out of 6,934. (Patent Freedom counted 3,859 NPE defendants to RPX's 4,125).

    PAE Defendants (2005-2012)

Credit: © RPX Corporation 2013

Comparison to 2011: As the graph above shows, the absolute number of defendants named in PAE suits in 2011 shrank about 25% in 2012. However, that the relative share of troll defendants only declined by 4% (from 63% to 59%), supports that this trend reflects a general decline in new patent cases brought by practicing and non-practicing entities, rather than a fundamental shift away from the courts by PAEs.

The Success of the Misjoinder Rules

While the share of PAE defendants has not gone down significantly, I do believe, based on unreported analyses that I have performed, that trolls have changed their litigation tactics in at least one respect – they are less likely, because of the misjoinder rules, to name small defendants in lawsuits where they cannot be joined with other parties. In this way, the joinder rules can be said to be having their intended impact of making life harder for trolls. The small companies that actually are sued, however, are arguably worse off because they have fewer joint defense options. And even if they are not sued, many small defendants are receiving letters (see below).

5. 55% of Unique PAE defendants makes $10M or less

Based on my analysis of RPX's database, 55% of unique PAE defendants make $10M or less in revenue, and 66% make less than $100M a year. (previously I have erroneously reported the 55% number as associated with defendants making "less than $10M", it should be "$10M or less." Apologies for the error!). While small defendants have historically received less attention as troll targets, the patent woes of podcasters and small businesses that use scanners, not to mention bakeries (I love bread) have gotten recent attention.

Notes:

Because small companies are sued fewer times than large companies – e.g. Apple gets dozens of PAE demands whereas a small company may only get a handful – the number of total demands is more heavily skewed towards large companies than the unique defendant count. However, I believe 55% to be a conservative estimate because I calculated it based on actual revenue estimates in the RPX database provided by Dun & Bradstreet and commercial providers, and excluded from both the nominator and denominator companies for whom no revenue is reported. If, on the other hand, we assume that companies without coded revenue likely have limited revenue – an assumption other scholars have made– the share would grow. Longer discussion of methodological issues and approaches to filling in missing data here. Also of note, because of the success of the joinder rules in discouraging suits against individual small cos., the 55% number has likely declined in recent months.

6.At the ITC in 2012, PAE complainants brought about 35% of patent complaints and about half of patent respondents.

337 Patent Investigations & Respondents

2011

2012

New Patent Investigations

69

40

PAE Share

23%

30%

New Patent Defendants

226

184

PAE Share

43%

48%

My research assistants worked with me to code the complainants in these cases, using data provided by the ITC. As with district court defendant counts, total ITC investigations and defendants (called "respondents") declined in 2012 from 2011, by about 40% and 20%, respectively. However, the PAE share of investigations and respondents actually increased from 2011 to 2012, from 43% to 48%.

Data checks:

  1. Last summer, the ITC published a report called "Facts and Trends" that tracks NPEs. It reported a combined NPE share of 19% of investigations, and 41% of defendants in 2011, versus my PAE shares of 23% and 43%, respectively (see above). The ITC report also notes that ITC numbers tend to vary greatly from year to year, given their relatively small numbers of investigations, which I tend to agree with.
  2. Covington & Burling's Robert Fram and Ashley Miller, in an excellent unpublished paper The Rise of Non-Practicing Entity Litigation at the ITC: The State of the Law and Litigation Strategy (Jan. 5, 2011), tracked the percentage of companies relying on their licensing activities to show a domestic industry from 13% in 2000-2006 to 35% in the first 8 months of 2010). Based on an extension of their database they shared with me, the rate in 2011 (through Oct. 1) was 41%.

Legislative reform?: Members of the ITC bar and ex-ITC officials remain deeply skeptical of the efforts to reform the ITC legislatively that tech companies are pushing for. Last summer, I argued that the ITC's decision-making was evolving, and recommended revisiting its record in six months to a year. However, the fewer cases and exclusion orders that the ALJs have issued since then have meant a slower evolution of the ITC's law, despite more attention from government agencies and others.

While we wait, I still find it puzzling that entities like Acacia, Industrial Technology Research Institute of Taiwan, Beacon Navigation GmbH of Switzerland, and Intellectual Ventures would put up the considerable funds it takes to bring an ITC case when the ITC can't award the licensing revenues they seek, but only an exclusion order. The best I can tell is that this trend reflects a deeper dissatisfaction of patentholders with the consequences of eBay, rather than a desire to stop unfair importation, particularly since PAEs name domestic defendants more often than foreign ones (see Appendix A).

7. Some High Impact PAE Patents Fit the "Buy and Sue" Pattern

SHIELD has put more emphasis on the provenance of patents, with Joff Wild at IAM estimating that SHIELD might only cover one in four NPEs based on Patent Freedom Data. I really respect Joff's blog and magazine, and recommend it to anyone who is serious about understanding the monetizer perspective (though the magazine is expensive). However, I have a different view of the numbers, that because patent impact is heavily skewed, what matters are high impact patents– that is to say, if just Lodsys and Geotag were discouraged from bringing their suits, many people would have been happy. Through our analysis of "high impact" patents I asked Patent Freedom to put together for another analysis, we found that the nine out of ten were purchased before assertion, rather than owner-asserted.

10 High-Impact PAE Patent Campaigns: 9 out of litigated patents were bought, not owner-asserted

.

Also, I understand that the Patent Freedom folks have a different view of their own data than IAM so if you are interested follow them on Twitter:@PatentFreedom.

8. PAEs are Less Successful than Practicing Entities in Litigation

PWC's excellent annual litigation report is chock full of statistics about patent litigation and in particular, with respect to NPEs, that: they look to juries more (but the differences are declining), a higher median damage award and a lower than practicing company success rate (34% practicing co v.23% NPE ) that is declining (Chart 5B).

John Allison, Mark Lemley, and Josh Walker's paper documents that the "most litigated" (8x or more) NPE patents lose more than 90% of the time in court. Data provided by RPX found that such repeat litigants dominate PAE cases – 61% of defendants named in 2011-2012 were sued by a PAE who had brought the case 8+ times (see page 33).

9. Public PAEs

My research assistant and I have been working on profiling public company PAEs – those which derive a majority or significant revenue from asserting patents. Depending on how you slice it, we have found about 16 of them (ACTG, ASUR, DEMO: OTC, NSSI, OPTI, RMBS, VHC, WIN:TO, VRNG, PANL, DSS: NYSE Amex , WDDD: OTC, BB,PCO, PRKR, UPIP); a number of the stocks are very volatile and live and die by litigation outcomes – invest with caution.

10. What We Need to Understand Better: Demands , Users, the Differential Impact of Interventions

Litigations are only a tiny part of the story. While good data on patent demand letters is lacking, here are a few data points:

  • In my survey of startups, among companies that had received threats (N=79), in some cases many threats, less than a third had been sued. This survey is being redistributed to a larger and more representative sample which should yield better estimates when it is concluded.
  • In its RICO complaint against Innovatio, Cisco reported that over 8,000 letters had been sent, even though there were only 26 named defendants, a ratio of 276:1.

We also need to understand how many of these suits are user based ones – in my survey (N=79), 40% of respondents said the demand was based on a technology they were using, not making. Such suits seem hard to justify as anything but nuisance-based.

Some will say that the time has come to act, not to further study the PAE phenomenon but in order to craft interventions that are both narrowly tailored and actually will work requires careful analysis and learning from the past as many interventions like fee-shifting, patent quality control, and maintenance fee tweaking have been suggested/tried before, in related and different contexts — some of them even to trolls of the late 1800s, as detailed in my paper, which also suggests: bolstering protection of and staying cases against users, industry organizations, and collective action.)

11. What Really Counts

What really matters is not PAE litigation itself but the impact it has on businesses, innovation, and the economy, and in particular how these impacts are distributed and also the justice or injustice of the claims – that is why there is so much heat on the PAE issue –because people who are sued feel that had no ability to anticipate or avoid it. My research has documented the positive impacts of a liquid IP market, and that startups are selling to trolls and benefiting from that monetization. However, it also documents a significant emotional toll: people said demands have "invoked rage over the waste of time," made a target "very very angry," "ruined family friends" and caused "stress" and "ill-will generation [sic]": "it was agonizing to hand over all the money we had earned from a product we had invented and created ourselves to a firm that invents nothing and creates nothing. Our founder has since lost his house, car [sic] all his assets." As the numbers of impacted companies and industries continues to grow, don't be surprised if the ranks of those who support curbing most egregious litigation abuses – the practices of going after end-users, rather than manufacturers and extracting from small companies nuisance-based rather than value-based settlements – continues to swell as well.

= = = = =

Notes:

  • With thanks to my research assistants Aashish Karkhanis, Nicole Shanahan, Teri Karobonik, John Neal, and Coryn Millslagle and to RPX Corp., Patent Freedom, Gazelle Technologies, Robert Fram and Ashley Miller.
  • High impact patents discussed above include 7,222,078 (Lodsys), 7,346,472 (Bluespike), 5,937,402 (DataTern), 6,101,502 (Datatern), 5,930,474 (Geotag), 6,150,947 (Ogma), 5,223,844 (PJC Logistics), 6,185,590 (Project Paperless), 7,054,949 (Single Touch) 8,015,307 (Single Touch).

343 thoughts on “Patent Trolls by the Numbers

  1. There are cases that have held that mental processes are not patentable subject matter

    Ned – how many times must I say the word?

    Anthropomorphication

    machines do not have mental processes

    a novel use…for a new purpose

    You cannot be serious.

    Take a step back and see how ridiculous you are being.

  2. Trying one more trick to make certain words . And certain words not bold. If this fails can someone please post and let me know how to do it? BTW, this test worked if the word bold is the only word “bold” in the first sentence.

  3. Last time trying to learn to how to make certain words bold . And certain words not bold.

  4. When you say there is nothing abstract about conducting a business, I assume you have something in mind that extends to the physical. I hope you will agree though, that mental processes without more are not patent eligible because they are mental processes even if they have a business use.

    Sent from iPhone

  5. MM: “Hey, look, it’s another “emotional ploy” from one of the patent t–b-ggers. Nobody could have predicted that.”

    INTEGRATION

    Also known to you as….

    BOO!

    :: Sound of tiny feet running away::

  6. I am not going to dispute at this point whether any case, not overturned, that has ever held that a patent was invalid because it was directed to a business method.

    However, There are cases that have held that mental processes are not patentable subject matter.  The patentability of a business method would depend upon only in those steps that employ physical actions, such as updating bookkeeping forms and the like.  I don't know yhat we have a clear case of whether a novel use of old physical items of commerce, like bookkeeping forms, or even general purposes computers, for new business purpose would be at patent eligible.  

    But I still think not.

    Sent from iPhone

  7. they they provide a very little cash settlement to inventors that the thefting infringers wont do because there a corrupt money monopoly mob. They want to be in the position to cheat the inventor themselves by paying them a bag of peanuts or less for patents. I wish i could get a commitment from one of them to take on patents that I could concieve but I am not because theres nothing in it for the conciever. The patent office is all empty now of marketable inventions because of these cheap thieves and all the jobs revenues and exports are not happening Oboma

  8. not a word here in the article about what suits in the past are suposed to be frivilious I dont think they have any examples at all its all just to squash the little guy

  9. So entities that specialize in assessing, researching and buying patents for a living actually sue on them to monetize to get a return on their investment?

    Wow, who woulda thunk!

  10. The issue being ignored is the money monopoly that is being assembled by big business to strangle the indegent startups into letting go of there billion doller IP through every dirty trick in the book. They now wont pay anything for it esentially unless its for a member of there goon mob to be hjorse traded up with the original conciever cut out of the deal so the incentive to create is destroyed in top inventors patents that were selling for up to 35 billion are now not hapening and the associated jobs revenues and exports are are zero as well as justice for the worlds only inventor.I am having to require large scale investor commitment just to attempt conceptions because everyother methods is a ripoff using 40 methods of cheating the inventor. America doesent deserve to have a conciever of my caliber with the disgusting treatment

  11. I was watching the Oboma interview about hijacking the intrests of the big business patent holders and extrorting money. I am assuming that improvement issues not involving the entire product are involved so they need a chart setup to set dependable judgement rates in various circumstances for the value of the patented item in relation to the overall product. Also they need to determine the value as it relates to buying preferance of consumers and also the value of cheated original concievers contribution

  12. “(aka patent assertion entities or PAEs). Companies J.C. Penney, SAS, Cisco, Johnson & Johnson, & Adobe, ”

    I find this troubling because all Inventors are essentially, patent assertion entities or PAEs. If , J.C. Penney, SAS, Cisco, Johnson & Johnson, Adobe, or any other big company starts using my patented invention, I am going to assert my patent rights. Whether or not I have in fact started using my patent should not matter in the least. To paraphrase Beyonce. If you liked it then you should have paid a royalty on it!

  13. Not at all. Where have you been? Go back and revisit the threads

    Pure horsepucky Malcolm. You should go back and look at the threads.

    Because the Constitution guarantees you a patent?

    That’s a meaningless attempt to move the goalposts as no one has indicated any type of constitutional guarantee. Can you at least try to stay on point and not kick up dust?

  14. IBP “so-called “software patents”, in particular, are likely invalid”

    IBP, you are wrong if for no other reason than the fact that “software” is an “Integrated Technological Process.”

    No one on this blog has ever been able to refute this, including you. And no, just calling my argument “Rubbish” is not refuting it!

    Now, if you don’t understand “Integration” and it’s relation to software, I will be glad to explain it to you.

    And while a software process that is not new and useful, or does not pass 112, 102, or 103 can all be reasons to deny patentability, the mere fact that the process is software does not make the invention invalid.

    Any questions?

  15. Regardless, I think a business utility is hardly within the useful arts.

    You are going to have to deal with reality (and with Congress) sooner or later Ned.

    Have you read Stevens in Bilski yet? Have you read the guest post on Patently-O yet? Have you come to grips that in US Patent Law, business methods ARE recognized as a patent eligible category?

  16. I know Ned – YOUR definition is wrong. This is US Patent Law we are discussing, not your make believe stuff.

    Do you need me to tell you again?

  17. His other stuff is far better. But I don’t think you quite understood the English-as-a-second-language that IBP mysteriously slipped into.

    /eyeroll.

  18. Actually, yes I have met Prof. Chien, and yes, your assessment of the devastation is quite like everything else you post: meaningless.

    I noticed that you haven’t actually addressed anything I brought up in any meaningful way, and have merely waved your hands about as if that would dispel the valid points made.

    I suggest you re-read IBP’s critique of you, unless miraculously he all of a sudden in also stricken with your (projected) inability to communicate.

    Love the bit about checking grammar – yup, just checked and this is still a blog and not a full fledged journal. You might want to focus on the important things rather than grammar or spelling. Saying important stuff with imperfect grammar is way better than saying absolutely nothing with perfect grammar. You might try that some time (if you are not too afraid of burning to cinders any more of your dogmas, that is – what again is the controlling law in regards to the exceptions to the printed matter doctrine?).

  19. Ned: “I think Bilski already held that abstract methods are not eligible. Why are you complaining?”

    Because you are assuming business methods are abstract methods. When in fact this is not true. There is nothing abstract about conducting business. If it were the Court would have made business methods an exception under the abstract idea rule. That Bilski’s method was applicable to the hedging business had nothing to do with it’s eligibility.

    As you know Bilkki’s claim 4, IIRC, was reduced to pure math. And that is why the method was abstract, and an exception to patent eligible subject matter.

    Ned: “Regardless, I think a business utility is hardly within the useful arts.”

    Name me one patent that does not have a business utility?

    ::Silence::

    You can’t because EVERY patent has a business utility. So by your logic, EVERY patent would be outside the useful arts and ineligible subject matter.

    Any questions?

  20. Why do you want to kill the dreams of entrepreneurs and prevent them from feeding their families and creating jobs for others?

    Hey, look, it’s another “emotional ploy” from one of the patent t–b-ggers.

    Nobody could have predicted that.

  21. Ned: “I’m not so certain that the patent laws have approved the patentability of business methods ever. ”

    You can be certain that patent laws have approved the patentability of a process. And a business method is nothing but a process, period.

    And of course you can be certain that no Court or Congress has EVER ruled business methods are an exception to the law, ever.

    If you doubt this then read Bilski:

    “(Section 101 similarly precludes the broad contention that the term “process” categorically excludes business methods. The term “method,” which is within §100(b)’s definition of “process,” at least as a textual matter and before consulting other limitations in the Patent Act and this Court’s precedents, may include at least some methods of doing business. See, e.g., Webster’s New International Dictionary 1548 (2d ed. 1954) (defining “method” as “[a]n orderly procedure or process … regular way or manner of doing anything; hence, a set form of procedure adopted in investigation or instruction”). The Court is unaware of any argument that the “‘ordinary, contemporary, common meaning,’” Diehr, supra, at 182, of “method” excludes business methods.) Bilski v Kappos 2010

  22. I think Bilski already held that abstract methods are not eligible.  Why are you complaining?

    Regardless, I think a business utility is hardly within the useful arts.

    Sent from iPhone

  23. Witness the devastation of the (otherwise well crafted) Chen article here.

    Have you ever met Colleen? Pretty sure she’s not “devastated” by your virtuosic baloney slicing. Next time she’s giving a talk, you should ask her one of your “tough” questions. Maybe run it by a friend first, to get the grammar correct etc.

  24. Malcolm is pure-anti patent (outside of his own little backyard).

    The evidence is right here in every read

  25. At the same time, however, any effort made by the PTO to improve their operations will be fought tooth and nail by the same crowd.”

    Pure horsepucky.

    Not at all. Where have you been? Go back and revisit the threads Dennis created regarding the PTO budgets and increasing the number of examiners. See what sort of comments are there.

    Of course, if you mean by “improve their operations” a taking of rights or a shifting of duty, well, you need to be a bit more clear

    Because the Constitution guarantees you a patent?

  26. IBP “Patent trolls” are not the problem, invalid patents are the problem.

    Right. Except that the “patent trolls” and their supporters are, by and large, the same people who have neither seen a patent that they didn’t love.

    Patent trolls don’t care if their patents are invalid. I mean, if they are determined to be valid in litigation, that’s a bonus for them. But other than that, they don’t care.

    Are you aware of any patent troll organization that seriously wants more rigorous examination of patents (and the rate of patent issuance to decrease)? Look at the trollbots who post here. Yes, they happily recite a script about “better examination is the answer” but when it comes to specific — they got nothing. It’s like getting a Republican to go on the record and say exactly which “entitlements” for elderly white people they are going to cut in order to “balance the budget.” They’ll never say. Because that’s not what motivates them. What motivates them is tax cuts for rich people.

    Same with the patent trolls/t–b-gger types. They don’t want “better examination.” They want faster examination and more patents. Period. The evidence is right here in every read.

    The rest of your screed is just … weird.

    This type of re-negotiation of the social contract, piece by piece, is what defines the current evolution of American society. There is no problem with that in the abstract, but when you look deeper, you will see that we are replacing some of the foundational underpinnings of not only America but of much of the post-Feudal world, with concepts that are cumulatively taking us back to that era. …I encourage you to visit China, Africa, the Mideast, Russia, etc..

    What. The. F.ck? I’m not entirely sure what you’re trying to get at but if you’re bothered by the increasing disparity in wealth in our country (certainly a fundamental feature of “feudal” times”) than allowing the already wealthy yet another playground in which to gamble with at the expense of everyone else’s rights is one of the more ridiculous solutios I’ve heard.

  27. That should be poor Thomas and I was the original conciever of everything they got but was paid nothing. I think the owner might be willing to pay 15% of profits for my conceptions over the years thats what he said but I never know if that real or its just another disapearing offer once conception occurs

  28. Jeff: “These are key concepts embraced by the United States to create the greatest engine for economic and technological growth that has existed in all of recorded history, thus far.”

    Excellent post Jeff!

  29. AAA JJ,

    How about the substantive portion of my 1:45 pm post – as opposed to the parsed section you have chosen to focus on.

    LOL – your choice, bourbon or lollipop.

  30. Ned: A brand of abstract method.

    That definition is itself an “abstract idea”.

    You are simply calling business methods abstract ideas, without any objective definition or legal reasoning!

    You can’t even provide a sound policy reason why business methods are harmful to society.

    Personally I believe business methods should remain patent eligible subject matter because they help our economy grow and create more jobs at a time when we truly need them.

    If a small inventor can come up with a new idea or use of technology that when applied as a process can change an entire industry and make or save business millions of dollars, that inventor deserves the same patent rights as anyone else.

    Have you ever watched SharkTank TV show? The entrepreneurs with patents or patents pending are the ones that get investments. They often have new concepts or ways of doing business that they believe will fill a need and make money.

    The show often does follow ups on the entrepreneurs and they always end up starting a business that has employed one or more people, created good jobs, and added to growing our economy.

    There is no way they could create those jobs and compete against big corps if they did not have patent protection and the capital such patents allow them to attract.

    Ned, why do you want to take this vital engine of the economy away?

    Why do you want to kill the dreams of entrepreneurs and prevent them from feeding their families and creating jobs for others?

    Why are you anti patent?

    Are you anti capitalism or do you just h ate America?

    I don’t understand. :-/

  31. Bilsky did not define business method

    Clearly, then, your definition MUST be wrong. Tell me what I told you long ago as to the HOLDING of Bilski.

    Aren’t you tired of having to have me hold your hand on this?

  32. Read as asked.

    Try to distinguish what Stevens would have done in re-writing the actual law.

    TRY a little intellectual honesty here Ned.

  33. Ned,

    It is you that are employing sheer speculation – tha twould be your IMHo which is not only totally lacking in legal backing, but runs counter to existing law.

    Please stop the nonsense.

  34. PAE – everyone who is not an existing player in the electronic freedom foundation lobbying group

  35. No. I said you have a reading comprehension below that of 6. Which you continue to insist on demonstrating.

  36. C’mon AAA JJ – you know NWPA wanted more than just “Yes” to a question of “do you dispute my contention.”

    And you say I have 6’s reading skills…

    try actually reading my post at 12:14, and answering that question therein.

  37. LOL.

    AAA JJ – while you said “Yes.” your own logic indicates the opposite. trying reading again your post at 12:45 PM. Priceless.

    You are such a wiper.

    Thanks for the chuckles throughout this thread.

  38. Furthermore, your “humble opinion” is directly contrary to controlling law – see the Stevens dissent-dressed-as-concurrence in Bilski.

  39. There is nothing (legally) to back up “your humble opinion.”

    I care little for it, as – and we both have nodded to this fact – that opinion is driven by third party interests in violation of the terms of use of this board.

    It’s the reason why you cannot be intellectually honest and the reason why any such discussion is derailed when it nears forbidden ground.

    C’est la vie.

  40. Ned,

    Find and read the article.

    Then come back with your “I’m not certain” – you will not be able to say that after reading the article.

    It’s time you stopped that particular bunch of nonsense.

  41. You are running with an unwarranted ASSumption there my wiper’ing friend: my posts are not “insane rantings” and they do not pollute.

    But thanks for the suggestion (even as that suggestion misses the boat about law review publishing).

    I noticed you haven’t chosen a Lemley article. Choose one if you wish that has been accepted by the Stanford law Review if you wish, and I will STILL find things in it that are total B$.

  42. AAA JJ: What? I said they are equivalent to blog posts you said no, then you equate the post with a blog post.

    OK. I think you need to work on your logic.

    You have now agreed with me. They aren’t controlled by anyone. So, their words (article if you must) is equivalent to a blog post.

  43. You forgot one there honesty how the masterinventor invested all his hard earned money in patent applications then lost everything when he couldent find any investors or trolls to create more patents because there all industrial goons owh wouldent consider paying the person who created there wealth and are trying to buy off senators to stop all inventors and then there allowed to leave the country with congress allowing mergers and aquisitions without an examination period and all there stolen money from previous patent thefts that are now justice obstructed by the AIA by eliminating suits about invention clusters to prove thefts against true concievers and non joiner provisions to disallow true concievers from compensations and on and on

  44. In my humble opinion, we should not be issuing patents on business methods. This has nothing to do with sectors of the economy business business method patents do not promote the progress in the useful arts. Rather they harm the US economy.

    Sent from iPhone

  45. What they sue you for is quite irrelevant. The question rather is whether IBM is selling a product Covered  by their own patent. Why don't you tell me just how many IBM products are covered by their own patents or better yet tell me what IBM product as a patent number on it?

    Sent from iPhone

  46. Anon, I'm not so certain that the patent laws have approved the patentability of business methods ever. They have approved of technology that has a business use, of course. But not business methods per se.

    That all changed With State Street Bank.

    Sent from iPhone

  47. “Who are these people responsible to? Who controls their behavior?”

    Why should anybody be controlling their behavior? Is there anybody controlling your behavior on this site?

  48. Here’s an idea for you. Contact the Stanford Law Review and tell them you have an article you’d like to publish. And then come back and tell all of us if getting them to publish what you submit is as easy as it is for you to publish the insane rantings you regularly pollute this site with.

  49. Really? You want to compare law school grades as if that is relevant to this conversation?

    Your by whom question is the Question. Who are these people responsible to? Who controls their behavior?

  50. Sanctioned is the correct term in the academic world.

    The fact that you don’t even recognize this says a lot about how you are thinking of these “journal articles.”

    And, I asked a straight question and got back a non answer.

  51. more editorial controls

    what color is the sky

    LOL.

    Gee controls without force are, um, what exactly?

    And note, even this blog with its lax attention to written terms of use and bans on l_ying (yet with no force), is not completely without control.

    You are such the card AAA JJ (well, five of them to be precise).

  52. Good one there honesty if only we had less corruption in congress and more inventor representation we need laws to fine the corperate contributors of these senators and the senators voting in favor of for only considering one side of the story not to mention shutting down human advancement and the american dream of climbing the ladder of sucess through partnershipping with master concievers and the disincentive to create causing no job cretion revenues and exports

  53. How about that these so called trolls that the industrial goons are villanizing are actually patrollers of infringement enforcement that represent the only method of recieveing any compensation for the conciever so restricting or eliminating them will cause loss of jobs revenues and exports. They should be called the paralegal contingent attorneys of the indegent

  54. You must not have been on law review while in law school.

    Sanctioned? For what? By whom?

    What color is the sky in your world?

  55. And what are those controls? What is the evidence for these controls? When was the last time a law professor was sanctioned for an article?

  56. “Do you dispute that?”

    Yes. I’m sure there are more editorial controls at the Stanford Law Review than there are on anonymous blog postings. The postings from you and anon are proof of that beyond any reasonable doubt, beyond any shadow of a doubt, or any other variation of doubt you’d care to consider.

  57. >>But curing the patent problem requires general >>solutions … not ones targeted just at patent trolls.

    Wow, so Risch actually wrote something I agree with and is reasonable.

    “with a grain of salt.” — AAA JJ: read what I wrote above. There are no more controls on one of these scholarly journal articles than a blog post. Do you dispute that? If not, then you should can the sarcasm.

  58. Prof. Michael Risch has a different opinion than Prof. Chien.

    link to wired.com

    Of course all of these academics are liars who are secretly enriching themselves by publishing these articles, so take whatever he says with a grain of salt.

  59. You forgot one: we do not have a robust marketplace for buying or selling patent rights

    And yet, attack those in the existing marketplace who buy others’ property and make it difficult (e.g. SHIELD Act) to actually use that property as is allowed by law (and in the process denigrate such use as “abuse”).

    As noted onthe other thread, one possible outcome is to clear the field of the ‘lessor’ trolls and only leave the vacuum created to be inhabited by the super trolls (and Troll Universities).

    Morass indeed.

  60. You forgot one: we do not have a robust marketplace for buying or selling patent rights

    And yet, attack those in the existing marketplace who buy others’ property and make it difficult (e.g. SHIELD Act) to actually use that property as is allowed by law (and in the process denigrate such use as “abuse”).

    As noted onthe other thread, one possible outcome is to clear the field of the ‘lessor’ trolls and only leave the vacuum created to be inhabited by the super trolls (and Troll Universities).

    Morass indeed.

  61. Remember about 2 weeks ago when Anon went through a sort of meltdown?

    LOL – never happened.

    As for Malcolm and his “trajectory,” as I posted, this is nothing new from him. He’s had the same trajectory” forever.

    More likely, this is merely a topic in which you see the difference. Also as I posted, his vacuousness is more quickly noticed by some.

    btw – very nice posts above.

  62. Mooney, you should be embarrassed by the trajectory of your posting history on this thread.

    I think Anon’s gotten inside your head. Remember about 2 weeks ago when Anon went through a sort of meltdown? I thought it was you who had gotten to him, but I can now see that his response to your stimulus was an all-out carpet bombing…and it seems to have worked to some extent.

    Your armor has been pierced, and your psychological entrails are showing.

  63. Who? Who are you?

    – as might be asked by Pete Townshend.

    Bonus:

    I woke up in a Soho doorway
    the policeman knew my name
    He said, “You can go sleep at home tonight
    If you can get up and walk away”
    I staggered back to the underground
    The breeze blew back my hair
    I remembered throwing punches around
    And preachin’ from my chair

    I guess ‘soapbox’ was difficult to rhyme…

  64. Hear! Hear! You might also add that the patent and copyright clause is the original and only constitutionally recognized industrial policy of the US. The property right. And our Government was formed to protect property rights under a rule of law – not a king’s court.

  65. IH and especially Night Wiper,

    Totally agree. Absolutely. This article does not qualify as “scholarship”. Nor does the previous one on GUI design patents.

  66. Indeed, and how how about the irony that the patent troll fixes to date have actually created the economic incentives for more so called trolls i.e.,

    ebay – make market relief uncertain

    ksr – create an objectively unreviewable common sense standard.

    PTO – reject the finality of the courts – create a king’s court and re-litigate every patent post trial

    AIA – create another king’s court – and obviate the 7th amendment’s right to impartial trial.

    This all creates expense, time delays, and uncertainty around the patent right. Thus is it any wonder that even more patents are sold to a patent enforcement entity – that can navigate this morass?

  67. Ned is correct – and obviously knows what is he talking about here. I would further contribute that IBM is using its non practicing patents to leverage sales of its existing products and:

    IBM – leveraging websphere sales with its non-practicing portfolio.

    NCR – leveraging its copier and printer sales with its non-practicing portfolio

    Bell Labs – of at least a piece of its portfolio – leveraging sales for Lucent.

    Apparently too microsoft. In other words, patent monetizing class 601.

    Smart organizations use IP rights to get all sorts of benefits besides pure cash, for example, product sales – which wall street likes and not license fees which wall street discounts as one time payments. Sales of course helps the share price multiplier, but one time events do not. This is an entire class of NPE that is not counted because this is ‘good’ v ‘bad’?

  68. And, note they can say things in these “journal” articles that could get them sanctioned in court.

    In this aspect, the low quality level blog posts are no different. Yet we are plagued with those constantly recurring post-ignore-valid-counterpoints-run-away-and-post-the-same-c_rrp-again-later, as well as clear violations of posted user rules, with no consequences.

    C’est la vie.

  69. Requiring the PAEs to pay statutory rates to patentees say minium 33% would ensure retention of incentive to create for invention concievers and sufficient money to fund new projects to become practicing entities. A minium of 15% for concievers in negotiations with the few patent purchasing entities and triple damages for intentional infringers will work progressivly to continue incentive to create and associated jobs revenues and exports.

  70. and, anon, you are right there is no argument with them.

    The irony of course is that their little pea brained articles are just like the fictional patent they wish to destroy. They have a presumption of validity for publishing in a law journal but no examination has occurred. And, the presumption of validity is a high bar because of their tenured professor position. Yet, they make money from their “professor” jobs and use them to try and become celebrities and not scholars. And, there is no consequence or control no what they say.

    And, note they can say things in these “journal” articles that could get them sanctioned in court.

  71. I am not sure what they are. Something new. I think they are riding the academic ship into the bottom of the sea and using up what little reputation for integrity was left.

    They are money hounds, publicity hounds, brigands really, that are using the farce that a law “professor” is anything but a person on loose with no controls to get what they can.

    And, the key here, is no controls. If a science professor said the things Lemley had in a journal article, they would be dismissed for academic integrity violations.

  72. I quite agree anon. These law “journals” need to be exposed for what they are–soapboxes as I describe above.

    Additionally, law “professors” like Lemley need to be exposed for what they are. They should not be on NPR with a presumption that somehow they are representing the “truth” or that they are academics. They are not academics. They should have to disclose where they are getting their money. And how their “articles” are as described above.

  73. You are being rather hard on blogs, NWPA.

    At least on blogs you have a chance for some immediate feedback and toning down of the soapbox claptrap.

    Witness the devastation of the (otherwise well crafted) Chen article here.

    Had this item not been featured on a blog, the counter points would have had no home, and the absolutely ridiculous and vapid Malcolm supporting points would never been seen (there is value in Malcolm’s posts as an example of what not to do).

  74. So, just to be clear: the farce here is law professors pretending that their “publications” are like a science journal.

    These are vanity press non-reviewed, non-consequences for misrepresentation or being wrong, extended blog posts.

  75. What gets me about this “research” is that these “professors” also don’t disclose that they are making money from taking their viewpoints.

    So, let’s rename The Stanford Law Review, the Stanford Law Blog. That is a far more accurate name.

  76. IH: in our modern world the “academic” don’t try to disprove their hypothesis nor offer information leading to different hypothesis.

    The law professors are particularly egregious because they publish in non-peer review vanity presses and are not subject academic discipline for ly..ing in the “articles.” These “papers” should be accorded the weight according to the publication process they have to go through (nearly zero), and the potential damage to the authors for ly..ing, omission, or just being wrong.

    In science, such as a journal like Nature the consequences would be career ending—here there is no one to call them out.

    So, be real, professors. You “papers” should be accorded no more weight than an extended blog post.

  77. Maybe that’s why she’s still an “assistant” professor. Need to be a bit more classy and objective to wear the brass ring.

  78. On a brighter note, I really like all the colorful graphs. A splash of color to otherwise drab black print is a nice touch.

  79. I have a real simple question: how has this affected the spending on innovation? My guess is that it is going way up. Microsoft started their giant research center for patents.

    Additionally, what counter-measures are the corps taking and what can they take? Maybe all this is good.

    I’d also say again (and again) that a lot of this is caused by Benson. Benson encourages people to obfuscate the invention. Judges like Moore who try to force more to patent applications obfuscate the invention.

    My gut tells me the way to solve this if I were a corp would to start the submissions at the patent office. Also, my gut tells me the way to solve this is to have made the PGR much more effective.

    Has anyone thought of these things? What tool could be given to the corp? What about more disclosure?

    Think arms race in innovation. This is not necessarily a bad thing.

  80. LOL – sounds fair enough, as Ned wants to waffle on what “software” is – and yet is in full crusade mode against this thing called business method patents.

    ps: make sure he gives you a proper legal citation for it – and if he his following his pal Malcolm, make sure that that is a proper citation from the Supreme Court (and make sure he does not try to hoodwink you with his one example equals whole category nonsense by prefacing your request with the question of whether he believes Prometheus has outlawed all medical method patents).

    Then watch him try to derail the conversation when he realizes that it will go against his third party benefactors.

  81. In all fairness, her (or a non-biased researcher’s) next effort should be:

    Patent Pirates by the Numbers.

    She could start by using the PTO assignment database to locate a representative sample of inventors who sold their patents to PAEs to gather data on:

    1. How they didn’t have the money to bring their inventions to market.

    2. How they were ignored by the infringers after they in good faith attempted to partner with, license, or sell their patents to them.

    3. How they then had to settle for pennies on the dollar by having to sell out to a PAE in order to get anything for their inventions.

    We probably shouldn’t hold our breath for that one though, should we.

  82. Of course to get things rolling in a progressive direction you need immediate novelty check and lockering to decide simple conception inventorship due to interoffice files insertions corruption. Then enforcing no startups using that invention are allowed then auction bidding on the valuable marketable invention with a partner with sufficient capitol to fund the due diligence to avoid takeover. This way you get rid of the troll and make him a business partner now theres progress

  83. Why; from the inventors, of course.

    Welcome students to Patents 101.

    Now please take your seats and get ready to learn.

    Yes, MM; that includes you.

  84. Everything this congress does is backwards and corrupt. There making a big deal about 59% of patrollers (trolls) are bringing suits compared to 5% of inventors. What they need is a law to require that every indegent inventor filing a valuable patent has either a troll or partner with financial backing so he wont be cheated of his intellectual property by inability to defend the patent against all legal theft methods now theres progress not regression like they want.

  85. “However, it also documents a significant emotional toll: people said demands have “invoked rage over the waste of time,” made a target “very very angry,” “ruined family friends” and caused “stress” and “ill‐will generation [sic]”:

    Well… I have to ask… are you angry because you stole someone else’s patented invention? Or because they caught you?

    ““it was agonizing to hand over all the money we had earned from a product we had invented and created ourselves to a firm that invents nothing and creates nothing. Our founder has since lost his house, car [sic] all his assets.””

    I have to laugh at this. So did I! The difference is that I lost it inventing… you lost it stealing. The other difference is that I lost far more including my career, my professional credibility and 13 years of my life.

  86. I believe he was responding to the possibility that you think the patent is invalid (for whatever reason).

    Do you? Or are you starting with a presumption of validity (like, as the law dictates)?

    Let’s presume for argument’s sake that you agree the patent is valid. Then the issue is litigation abuse. A problem for which the ‘solution’ of wrecking the patent system is an excessively poor answer. You need to address the rules of civil procedure (including Rule 11).

    However, any such logical indication is completely missing from any of your posts today.

    Pick up your arrows (you don’t have to reach far), and try again.

  87. Gosh, where have I heard this sort of griping about facts before?

    (sigh)

    There is NO griping about facts. However, there is disgust at the biased spin.

    You really need to recognize the difference instead of tendency to [shrug] and stand by (hint: the word you want to understand is credibility; another good one is objective).

  88. 103 works just fine. No need to wipe out segments of the economy just to get rid of nuissance.

    Burning down part of your house to get rid of a mouse is a poor plan.

  89. I would add the pertinent legal citation of 35 USC 101:

    Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, OR ANY NEW AND USEFUL IMPROVEMENT THEREOF, may obtain a patent therefor, subject to the conditions and requirements of this title.

    To further Jeff’s analogy, this allows you to build a second floor on an existing building, and prevent the first floor owner from coming upstairs. Of course, this does NOT give you the right to move through that first floor to “USE” that second floor.

  90. Wall of text broken down (and highlights added) for your reading enjoyment (nice post Jeff):

    MLM, “the right to exclude, but not the right to produce or sell” refers to the fact that each issued patent is burdened by, and only stands beside but not above or below, all other issued patents, like property deeds in a filing cabinet for a series of adjacent lots of real property in a subdivision.

    A property developer cannot build a new development on adjacent lots that she did not purchase, nor can an inventor produce, use or sell a product that includes inventions made by others, the various inventions related to her own, unless she first obtains permission from each of the other inventors.

    Perhaps it is not too “hard to see what use patents are at all”? Patents are an engine for economic and technological growth and progress “in the useful arts”.

    The right to exclude is the right of the inventor to exclude others from what the inventor has invented. Perhaps the inventor invented a better mousetrap or a time machine to use for her own benefit, or perhaps for the benefit of others.

    The motivation of the inventor, and her intentions, are irrelevant to the patent rights granted to her.

    The People of the United States, by enacting the Patent Statute into law, have established a Patent Office and an examination process for the purpose of “promoting progress in the useful arts” which guarantees all inventors that their patent applications, when disclosed to the public for the purpose of informing the public of the inventions, will be examined and where standards for utility, novelty and non-obviousness have been met, certain patent rights will be issued to each inventor.

    The Patent Statute reflects a balance between encouraging inventors to disclose and explain their inventions to the public, rather than keeping them secret and hidden, in exchange for the guarantee of patent rights.

    Each inventor’s patent rights are limited only to the exclusive rights to make, use and sell the claimed invention in the United States for a limited period of years. These rights are intended to provide the inventor the sole right and opportunity to exploit the invention during the limited period of years, but not beyond.

    The opportunity for others who are not the inventor to make, use and sell the invention protected by a patent does not exist at all during the life of the patent, and during the life of the patent can be lawfully obtained only by permission of the inventor.

    Apparently to the amazement of some folks, the patent statute provides the inventor the right to exclude even the largest, most powerful corporations in the world from making, using or selling the invention without her permission, but again only during the life of the patent.

    These are key concepts embraced by the United States to create the greatest engine for economic and technological growth that has existed in all of recorded history, thus far.

  91. Of course, the patent t–baggers will say that the real problem is that “better examination” is needed. At the same time, however, any effort made by the PTO to improve their operations will be fought tooth and nail by the same crowd.

    Pure horsepucky.

    Of course, if you mean by “improve their operations” a taking of rights or a shifting of duty, well, you need to be a bit more clear in the translation from your other-worldly ‘wisdom.’

    attempt by the courts to clarify or change the law to prevent

    One does not ‘clarify’ to prevent. Nice ‘code word’ for activist-court-re-writing-the-law-to-suit-an-agenda. As to change, well, we all know who has the authority to change the law (hint: see the 1952 Act and the Constitution).

    Go figure indeed.

  92. Yeah, I guess I agree…. its all telco and shipper. Maybe there are dependent claims to which the shoe sellers contribute infringing activity?

  93. MLM, “the right to exclude, but not the right to produce or sell” refers to the fact that each issued patent is burdened by, and only stands beside but not above or below, all other issued patents, like property deeds in a filing cabinet for a series of adjacent lots of real property in a subdivision. A property developer cannot build a new development on adjacent lots that she did not purchase, nor can an inventor produce, use or sell a product that includes inventions made by others, the various inventions related to her own, unless she first obtains permission from each of the other inventors. Perhaps it is not too “hard to see what use patents are at all”? Patents are an engine for economic and technological growth and progress “in the useful arts”. The right to exclude is the right of the inventor to exclude others from what the inventor has invented. Perhaps the inventor invented a better mousetrap or a time machine to use for her own benefit, or perhaps for the benefit of others. The motivation of the inventor, and her intentions, are irrelevant to the patent rights granted to her. The People of the United States, by enacting the Patent Statute into law, have established a Patent Office and an examination process for the purpose of “promoting progress in the useful arts” which guarantees all inventors that their patent applications, when disclosed to the public for the purpose of informing the public of the inventions, will be examined and where standards for utility, novelty and non-obviousness have been met, certain patent rights will be issued to each inventor. The Patent Statute reflects a balance between encouraging inventors to disclose and explain their inventions to the public, rather than keeping them secret and hidden, in exchange for the guarantee of patent rights. Each inventor’s patent rights are limited only to the exclusive rights to make, use and sell the claimed invention in the United States for a limited period of years. These rights are intended to provide the inventor the sole right and opportunity to exploit the invention during the limited period of years, but not beyond. The opportunity for others who are not the inventor to make, use and sell the invention protected by a patent does not exist at all during the life of the patent, and during the life of the patent can be lawfully obtained only by permission of the inventor. Apparently to the amazement of some folks, the patent statute provides the inventor the right to exclude even the largest, most powerful corporations in the world from making, using or selling the invention without her permission, but again only during the life of the patent. These are key concepts embraced by the United States to create the greatest engine for economic and technological growth that has existed in all of recorded history, thus far.

  94. They do not sue you to protect their own products. They sue you to make money for their patent assertion business.

    Can you list all the patent lawsuits IBM has been the plaintiff in the last 10 years.

  95. I can tell from your postings that you are the kind of guy who regularly talks the talk but has never walked the walk… You appear to have a lot to learn.

    LOL – some of us catch on to that much quicker.

  96. Perhaps, as customers of such a phone company and subscribers to such a service, the shoe company or its shipper are contributory infringers?

    Of a method claim? My guess is that this is what the plaintiff will argue, but I don’t think there’s any basis for such a theory in the law.

  97. but those limits are predicated on who the party is, rather than on what they are doing

    LOL – Lady Justice (blindfold and all) welcomes you to the club.

  98. Come now, MM, such a response is unworthy of your apparent intellect… Your response was a bit surprising.

    You don’t often read his c_rrp, do you IBP? There is ZERO surprise at what Malcolm is throwing against the wall.

  99. The quoted portion should read:

    Patents provide the right to exclude, not the right to produce and sell…”

  100. Patents provide the right to exclude, right to produce and sell…”

    That is precisely why it is nonsensical to think that any poorly written proposal for law (for example, the SHIELD Act) can simply graft on a “must use” type of requirement. Such is fundamentally ignorant of US patent law.

  101. It is not credible that requiring a would-be or existing NPE to post a bond in litigation will change their current or future behavior to make them practicing entities, especially if the reason they are not practicing derives from inadequate financial resources.

    Notice that the result of not posting a bond, if I am not mistaken, is that the dispute is decided in favor of the defendant on summary judgment. Such an outcome effectively transfers legally earned property rights from the plaintiff to the defendant, without even any attempt at compensation for that defendant for the deprivation of their property. (Please correct me if I am mistaken.)

    The social inequity is obvious. This is a massive step beyond the idea of a compulsory license, it is a compulsory free license, which is a vitiation of the property rights initially granted under the quid pro quo.

    Society has made its bargain, and it’s a balanced one. This type of re-negotiation of the social contract, piece by piece, is what defines the current evolution of American society. There is no problem with that in the abstract, but when you look deeper, you will see that we are replacing some of the foundational underpinnings of not only America but of much of the post-Feudal world, with concepts that are cumulatively taking us back to that era.

    I make no judgment on that other than that much good “progress”–along with much bad progress–has occurred since the change. I appreciate the subsequent developments in art, music, science, philosophy, medicine, law, etc. that have occurred–and make no mistake, they have occurred in areas that recognized the concept of private property ownership, and not generally in others, and thus the concept of private property ownership can and is rightfully said to have been in part responsible for those developments.

    I can tell from your postings that you are the kind of guy who regularly talks the talk but has never walked the walk. I encourage you to visit China, Africa, the Mideast, Russia, etc.. I also encourage you to file and prosecute some of your own applications so that you know and understand what it means to be a patent owner, from the inside. I also encourage you to live homeless for a substantial period, and thereby gain the understanding of how the concept of private property ownership shapes our current social relations in ways that are currently inaccessible to your understanding.

    You appear to have a lot to learn.

  102. Any NPE-related legislation will represent only further restrictions on the ownership of private property, even if that property is IP. Ever since Kelo v New London, I’ve been extremely wary of government restriction on the use and ownership of private property. It is a further erosion of one of the fundamental principles of US citizenship.

    Trolls should not be disparaged for adhering to the rule of law, which is responsible for the preservation of civil society.

    Nor has a compelling argument yet been made that their behavior is generally socially undesirable to any extent, in particular to the extent that a new social policy needs to be articulated and effected through law. Why? Because the current policy is based upon, again, a foundational aspect of US citizenship and governance, that of personal property. The way I hear new policy proposals articulated, they are founded in no principle as foundational as that of private property ownership.

    Yes, I understand that the point here is not to divest anybody of any personal property, it is just to place limits on the use of that property–but those limits are predicated on who the party is, rather than on what they are doing. In order for this type of system to make any sense, there has to be a class that is worthy of “protection” relative to another class(es). Who is that class here, practicing entities? Socially, why are they deserving of more protection than NPE’s? Both classes have satisfied the legally required quid pro quo. There can be any number of reasons an entity is not practicing–delayed implementation, gaps in financing, lack of financing, strategic planning, etc.–that are not morally reprehensible in any way, and it is socially unjustifiable that they be relatively punished on the basis of their intentional or unintentional status as NPE’s.

  103. “Patent trolls” are not the problem, invalid patents are the problem. Any patentee holding a good patent has satisfied the quid-pro-quo demanded of him–a term of protection in exchange for public disclosure.

    As for the prohibitive cost of responding to an infringement suit, much of that cost, along with the uncertainty, IMO derives from the ill-defined and murky state of patent jurisprudence. That is not the fault of NPE’s, and to the extent that NPE’s avail themselves of whatever advantages that might confer, so does everybody else who adheres to the rule of law, even if the relevant law is uncertain.

    Your response was a bit surprising. You know that I can’t stand invalid patents, that I think 101 should be used as a substantive test to filter out invalid patents under SS&C utility, and that therefore so-called “software patents”, in particular, are likely invalid as written or, if valid, are extremely narrowly drawn.

  104. The “patent system” is made to be “exploited”, and is so exploited by anybody who uses it. What society should be interested in should be any generally socially undesirable exploitation thereof, and the determination of that undesirability is where the real game lies.

    I have yet to see any compelling argument that NPE activity is generally socially undesirable, and that includes anything that anybody has ever posted on this blog including this most recent article.

    The real generally socially undesirable phenomenon about which we need to be concerned is the issuance of invalid patents by the PTO. The most important thing is that PTO examination needs to be cleaned up, and the second most important thing is that post-issuance validity challenges have to be made more economical, if possible.

  105. Come now, MM, such a response is unworthy of your apparent intellect.

    I personally am a member of the professional legal class, which means that I am sworn to uphold the rule of law and not bring the legal system that is based upon that rule of law into disrepute, and that I am authorized to represent people’s interests in that pursuit.

    My perspective is party-neutral (parties to a dispute, that is) and apolitical. Both large and small entities are so-called NPE’s or PAE’s or whatever. I don’t insert value judgments at this point, and therefore don’t apply disparaging monikers such as “grifter” and “skimmer” to any of the involved parties, or classes of party, and I don’t use terms like “exploit” in a value-laden way.

  106. Let the record show that the witness has attempted to change the subject from the plight of individual inventors to the availability of Cheetohs in his apparently poorly run convenience store.

  107. Can someone help me understand what it means to “use patents … as a basis for producing and selling goods”? Patents provide the right to exclude, not the right to produce and sell, correct? If you don’t intend to “use” your patent to exclude or obtaining licensing fees from others (or as a defensive threat to exclude or obtain licensing fees from others), then it is hard to see what use patents are at all.

  108. “Do you think the online shoe retailer is likely to have charged its customers a subscription fee for this advance notification service?”

    No. Furthermore, the preamble of claim 1 would seem to limit infringers to telephone companies.

    Perhaps, as customers of such a phone company and subscribers to such a service, the shoe company or its shipper are contributory infringers?

  109. Facts are facts.

    Spin, however, is what makes you such an excessively poor blogger.

    Just [shrug] and stand by.

  110. How are patent assertion entities or PAEs identified? Is there a list of alleged PAEs somewhere?

  111. 1 and 2 are functions that can be performed by the computer you provide, while d and e are the corresponding functions performed by you, using the computer. Why was it written this way? Who knows.

    So, do you think an online retailer of shoes is likely to track the location of a vehicle using a computer that communicates with another computer on-board the vehicle? Do you think the online shoe retailer is likely to have charged its customers a subscription fee for this advance notification service?

  112. spilling over into the non-useful arts

    LOL – you remain clueless 6, thus hardly worth a comment (and I do so merely to point out that the laughter you hear is not laughter with you)

  113. These statistics ignore where is the innovation truly coming from

    Where is today’s “true innovation” “truly coming from”, David?

  114. At this time we’d like to thank Miserable Failure Kappos for doing his best to make the current mess worse

    chapter three: denigrate denigrate denigrate.

  115. essentially business methods… man who brought you all this chaos has a name

    ! Canard Alert !

    Ned,

    Prof. Crouch had a guest post a story that explicated in great detail the fact that business method patents have been approved by the Patent Office throughout its history – and thus your targeted vehemence is quite misdirected.

    Of course, this is no surprise, as I have notified you of this many times now, and yet you continue to ploy your agenda in the typical lack of intellectual honesty.

    Please stop your nonsense.

  116. I agree with Malcolm that the real problem here are vague claims to essentially business methods. The man who brought you all this chaos has a name. We know who he is.

    But that man is a hero to the patent bar who only have one issue, their billings. The greater, the better.

    Litigators also like chaos.

    The Federal Circuit has to do something and it is not suppressing PAEs. It has to do with suppressing the era of Rich.

    If the Federal Circuit does not do something, Congress should, and it should be essentially banning business method patent, fixing 112, p. 2 to put more teeth into it, etc.

  117. So, 62% of the time this legislation proposes to award the the benefit of the an invention to the company with the means to manufacture the technology, regardless of whether or not they actually invented the technology. The above statistics ignore and the “troll” and PAE designations ignore whether the basic question of whether the remaining patent system will ecourage innovation by rewarding the true innovators. These statistics ignore where is the innovation truly coming from and the ability of the true innovator to profit from their innovations – or at best suggest that the proposed legislation will destroy any real incentives that patents provide for innovators to innovate.

  118. That “computer based notification system” claim is a real hoot.

    1. A computer based notification system, comprising: means for enabling communication with a user about the status of any process that can be monitored by a computer, wherein the process comprises a [insert anything allegedly “new” here about the information being provided, its source, or the recipient].

    That’s an ancient system and it was ancient when this patent was filed. Any variation and all varations that differ merely by the recitation of different sources, content and recipients of information are per se obvious and unpatentable as such unless there is a novel, non-obvious machine or novel, non-obvious transforming process involved as of the filing date (and recited in the claim in a non-functional manner.

    At this time we’d like to thank Miserable Failure Kappos for doing his best to make the current mess worse. Enjoy the paychecks, Dave.

  119. like when poor Ford had to defend itself from that evil “troll” that invented the intermittent windshield wiper?

    Robert Kearns is the furthest thing from the grifter/skimmer class that is presently exploiting weaknesses in the US patent system.

  120. Of course, the patent t–baggers will say that the real problem is that “better examination” is needed. At the same time, however, any effort made by the PTO to improve their operations will be fought tooth and nail by the same crowd.

    Likewise, any attempt by the courts to clarify or change the law to prevent this kind of anti-progress j–k from being issued so casually will be met with derision by the same crowd. Go figure.

  121. vehicle computer-based apparatus
    determine locations of said vehicle as said vehicle travels
    notified … of the impending arrival of said vehicle

    Classic example of the pure j–k that the patent t–baggers embrace with glee: take ancient information processing “technology” and toss in some “limitation” about a “new” type of content being “processed” and/or a “new” location from which the content is being received/sent. Voila! The USPTO hands you the patent and you are good to troll.

    Next up: “wherein the vehicle is a shade of red”
    “wherein the location is in another state”
    “wherein the subscription fee is rounded off to the nearest dollar”
    “wherein the vehicle is approaching at a rate between 37 and 84 miles per hour”
    “wherein the vehicle is an electric or solar powered vehicle”

    Rinse, recycle, troll, repeat.

  122. How about fixing the amount based on size of the company. A google using Motorola patents would pay lot more if they loose than a smaller company?

  123. Yes, I do know what reexam is. But what does that have to do with whether an online retailer of handbags infringes the claim I posted?

  124. From some of the other patents in the suit:

    1. A method, comprising the steps of: monitoring travel data associated with the vehicle; comparing planned timing of the vehicle along a route to updated vehicle status information; contacting a user communications device before the vehicle reaches a vehicle stop along the route; and informing the user of the vehicle delay with respect to the vehicle stop and of updated impending arrival of the vehicle at the vehicle stop, based upon the updated vehicle status information and the planned timing.

    1. A system for monitoring vehicle travel and for reporting vehicle status information, comprising: a storage mechanism configured to store travel data transmitted from communications devices associated with vehicles being monitored by said system; a data manager configured to receive a request transmitted by a user, said request including information sufficient for identifying one of said vehicles, said data manager further configured to retrieve travel data associated with said one vehicle from said storage mechanism in response to said request; and a first communications device configured to transmit a message to a second communications device, said second communications device located remotely from said first communications device and associated with said user, said message based on said travel data retrieved by said data manager and indicative of a proximity of said one vehicle from a particular location.

    1. A computer based notification system, comprising: means for enabling communication with a user that is designated to receive delivery of a package; means for presenting one or more selectable options to the user, the selectable options including at least an activation option for instigating monitoring of travel data associated with a vehicle that is delivering the package to the user; means for requesting entry by the user of a package identification number or package delivery number, each pertaining to delivery of the package; means for identifying the vehicle based upon the entry; means for requesting entry by the user of contact information indicating one or more communication media to be used in connection with a notification communication to the user; means for monitoring the travel data; and means for initiating the notification communication pertaining to the package via the one or more communication media, based upon the travel data.

  125. As if on cue, a company named ArrivalStar filed 14 cases today, several of which are complaints against online retailers of shoes, handbags, scarves, and fishing supplies. Their concern appears to be that these defendants provide a “Your Package has Shipped” notification.

    These patents passed through a few hands before being assigned to a Virgin Islands entity named Melvino Technologies, who apparently licensed the patents back to a Luxembourg company, ArrivalStar SA. According to earlier press reports, over 100 cases had been filed over these patents as of 2011. Apparently in some cases the demand to the alleged infringers was as low as $110K.

    Here’s claim 1 from one of the patents at issue. I’m still trying to imagine how an online retailer of purses goes about infringing it:


    1. A method of doing business to be implemented by a telephone company for its telephone subscribers, comprising the steps of: (a) offering for sale an advance notification service to the telephone subscribers for a subscription fee, the advance notification service for causing a subscriber telephone interface associated with a subscriber to be contacted prior to arrival of a mobile vehicle at a predetermined location; (b) providing a computer-based apparatus associated with the telephone company, said computer-based apparatus comprising a communications device and a processor electrically connected to said communications device, said processor programmed to perform the following steps: (1) tracking locations of said mobile vehicle as said vehicle travels by communicating with a vehicle computer-based apparatus on said vehicle using said communications device, said vehicle computer-based apparatus configured to determine locations of said vehicle as said vehicle travels; and (2) transmitting a notification message to said subscriber telephone interface when said vehicle is en route to and approaching, but not yet at, said predetermined location, so that said subscriber is notified in advance of the impending arrival of said vehicle at said predetermined location; and (c) billing said subscription fee in a telephone bill to one of said telephone subscribers that subscribe to said advance notification service; (d) tracking locations of said mobile vehicle as said vehicle travels using said computer-based apparatus of said telephone company; and (e) transmitting said notification message to said subscriber telephone interface when said vehicle is en route to and approaching, but not yet at, said predetermined location, so that said subscriber is notified in advance of the impending arrival of said vehicle at said predetermined location.

  126. Is that what you do? run a Convenience store?

    Sorry, Les. We’re all out of Cheetohs.

    Reminder: Les believes that purely mental processes should be eligible for patenting. Keep that in mind when reading his comments regaring what sort of changes are necessary to improve the US patent system.

  127. “like Ford, which has also testified against trolls, financial services, and consumer products. ”

    Ya mean like when poor Ford had to defend itself from that evil “troll” that invented the intermittent windshield wiper?

    Poor weak tiny Ford lost that one to that Evil Troll too…

  128. n reading the headlines only, I found myself thinking after each one “OK, so what?”, thinking immediately of the legal context in which the headline exists, and how society has already chosen to address the issues.

    This “logic” can be used in any context to justify inaction and, in fact, has been used regularly by conservatives to oppose changes that would negatively impact stakeholders. See, e.g., civil rights.

    We will likely see Congressional action on this, because of either or both Congressional inability to understand the issue, or an inevitable adherence to the flawed mechanics of Congressional decision-making.

    Or maybe because something needs to be done to stop grifters and skimmers from exploiting the patent system.

    it would represent a step backward rather than forward.

    Only if you are a member of the grifter/skimmer class.

  129. Well, it is apparently hard for you to understand how much you owe to these “individual inventors”.

    As I understand it, this patent resulted from a couple a guys working in a garage:

    link to google.com

    It lead to a few jobs being created… so… you know…

    Is that what you do? run a Convenience store?

  130. “Though the PAE share may surprise some, patented technologies like software are the building blocks of modern commerce. “Low-tech” industries like funeral homes, advertising agencies, and retailers like JC Penny which is testifying today are all taking steps to protect themselves from troll demands. Though historically a “tech” problem, in 2012 PAEs sued more non-tech companies than tech companies, according to the analysis below by Patent Freedom, which provides market intelligence on patent trolls. Retailers are hit the hardest by non-tech PAE suits, followed by automotive like Ford, which has also testified against trolls, financial services, and consumer products. So expect a broadening of the coalition to deal with trolls especially as many in these sectors are likely being sued over their use rather than making of technology.”

    It looks like the world may yet start to be waking up to the problem of patent lawl, designed for the useful arts, spilling over into the non-useful arts.

  131. The good professor says that the hearings in Congress are to consider litigation abuse By patent assertion entities. But of one reads to Shield Act, it seems that the assertion is that patent assertion entities are the abuse and the objective of the hearings is to put an end not the litigation abuse but the patent assertion entities.

    Regardless, I have long considered IBM to be the greatest abusers of the patent system that I’ve ever seen for the reason that they aggressively license patents as a business, and not to protect their own business or products. IBM demands royalties based upon the size of their pile rather than based upon actual patent infringement. They do not sue you to protect their own products. They sue you to make money for their patent assertion business. Whether or not their patents actually cover an IBM product to IBM is substantially irrelevant.

    Microsoft it seems has a similar patent strategy. I recently reviewed the Barnes & Noble presentation about the abuses of Microsoft which claims effective patent ownership of whole technologies based upon a few patents on very minor features. That is abusive if true, but I have no personal experience dealing with Microsoft to know that it is true.

    But one can see in the Shield Act that both Microsoft and IBM have protected themselves from the Act by excluding original assignees.

  132. I agree with everything you said Pat, except that we should “just junk the whole thing” (assuming you mean the whole patent system).

    In reading the headlines only, I found myself thinking after each one “OK, so what?”, thinking immediately of the legal context in which the headline exists, and how society has already chosen to address the issues.

    I then skipped to the end part, “What really matters”, where the author states that “What really matters is not PAE litigation itself but the impact it has on businesses, innovation, and the economy, and in particular how these impacts are distributed and also the justice or injustice of the claims…”

    Assuming arguendo that her assessment of “what really matters” is appropriate, I would answer that:

    1) the impacts of any non-frivolous litigation or other lawful assertion of legal rights are the outcome of a legal proceeding that has been sanctioned by society and in which there are many substantive as well as procedural protections in place, as they should be. It might not be completely equitable all of the time, but that issue is broader than the narrow context of this article;

    2) those impacts are distributed according to legal process and individual economic considerations, as they should be;

    3) the “justice or injustice of the claims” is again legally determined with equal consideration and protection for parties on both sides of the dispute, as it should be.

    I worry about the determinations of legislators, however. Many who vote, if not most, have absolutely no idea what they are doing on any particular issue, and are driven by the flawed mechanics of Congressional decision-making.

    We will likely see Congressional action on this, because of either or both Congressional inability to understand the issue, or an inevitable adherence to the flawed mechanics of Congressional decision-making.

    In either case, it would represent a step backward rather than forward.

  133. the plight of individual inventors

    Ah yes, those poor individual inventors who create a job every time they file a patent and who carry the American economy on the backs. It must be hard for the lazy people who make bread or coffee or run convenience stores to understand how much they owe to these “individual inventors”. That’s why they need to be sued. It’s a friendly reminder that part of running a business in America is living in fear of a patent suit. But hey, if that’s a problem those lazy people should just move to Venezuela or Cuba.

  134. such an emotively biased viewpoint serves poorly as an objective baseline.

    Translation: “I want my own facts, mommy!!!! WAAAAHHHHH!!! WAAAAAAH!!!”

    Seriously, anon, you should start your own patent blog and everyday you can post “emotively biased viewpoints” of your own. For example, today your blog post could have been “It’s Thursday morning and 99.99% of the population wasn’t sued for patent infringement so what’s the problem?” You know, sort of like your refrain about the “record number of rejections” at the USPTO. People love that stuff!

  135. China’s going the other way. Let’s junk the whole thing and call ourselves Venezuala or Cuba.

    Right. Taking reasonable steps to curtail the worst exploiters of weaknesses in our patent system is like something Stalin would do if he was in a bad mood.

    Congratulaions, though, on resisting the use of “emotional ploys.”

  136. Antiparasitic: To what members of a civil society does the ownership of property, and the exercise of the rights that ownership entails, create a “nuisance”?

    The non-owner members whose lives are impacted or ruined by the manner in which the propery owner asserts his/her “rights.”

    Should a civil society protect those members from that “nuisance”?

    Certainly. Happens all the time, every day, in all kinds of contexts. What is happening now and has been happening for some time is that the “rights” of patent owners are changing in response to behavior by those patent owners that is perceived as undesirable by most reasonable, informed people.

    Of course certain patent owners are going to see things differently. But those patent owners are not entitled to their own facts. They are, of course, entitled to interpret those facts in any way that they choose. Whether those interpretations are persuasive is also a matter of opinion, although at some point the rubber will meet the road.

  137. That’s one huge amount of confirmation bias

    Gosh, where have I heard this sort of griping about facts before? Oh, yes: Republican types complaining about evolutionary biology, cigarettes as a cause of cancer, global warming, etc.

    use of emotional ploys

    Not seeing much of that at all. In any event, there’s nothing compared to the “every patent is a job” and “small inventors are the lifeblood of the economy” g-rb-age that you and your friends have been dumping on the rest of us by the bucketful for the past five years.

  138. And, just to be clear, my understanding is that China has analyzed the situation and attributes the patent system to Korea’s fantastic success.

  139. Nice summary.

    This is exactly the problem with eBay. All incentive has been removed. Infringers know that, at worst, they’ll lose part of the profit they made by infringing, so why negotiate, must less settle?

  140. RE: “..still find it puzzling that entities like .. would put up the considerable funds it takes to bring an ITC case when the ITC can’t award the licensing revenues they seek, but only an exclusion order.”
    It does not seem that puzzling to me. The products [or components within the products] of very many companies are now imported. The likelyhood of a more prompt ITC exclusion order promptly ending all sales of that product is far more likely to induce a larger settlement than the risk of infringement damages years later after a patent infringement trial and appeal, for companies that fail to make prompt use of an IPR. Also, litigation costs for defendants in ITC actions are far more “front loaded,” which encourages earlier settlements.

  141. We do have a marketplace. However, because of ebay, the only way to enter discussions with a large entity is to file suit and wait for the court ordered settlement conference.

    Chipping away at the rights a patent holder has is directly responsible for the increases in litigation. There’s simply no reason for a large entity to bargain up front anymore. The downside is much larger than the upside of using the IP for free.

  142. Dennis:

    That is a selective description of the piece, at best. It is pitiful that the discussion is being driven by this nonsense.

  143. China’s going the other way. Let’s junk the whole thing and call ourselves Venezuala or Cuba.

  144. These are not surprising results to anyone and really just serve as a baseline for any debate on the topic.

    Completely disagree – such an emotively biased viewpoint serves poorly as an objective baseline.

    All this is is trying to control the terrain. See Sun-Tzu.

  145. Shouldn’t a discussion on this topic also mention that the only way an inventor or small company without 3mil to burn can sue an infringer is by selling their rights to an entity that will assert those rights?

  146. Should an academic paper be this filled with childish name calling?

    I tolerated if for a few paragraphs but after a while I had to stop reading. If you redraft it to refer to the other side as infringers and whiney, put upon corporations, maybe that will make it tolerable to read.

    Will you be doing a similar right up on the plight of individual inventors that are ignored by large corporations because the large corporations understand that the individual inventor doesn’t have the resources to initiate a patent suit?

    Whats wrong with individual inventor pooling their resources and patents in the form of a Patent assertion entity in order to get the attention of infringing corporations and get the royalties to which they are entitled?

  147. What Prof Chien has done here is to provide some evidence that yes, in fact non-practicing patent owners are major players in patent litigation and also a suggestion that operating companies would prefer that these folks go away. And some folks targeted with lawsuits are angry. (Wouldn’t you be angry if you were sued?). These are not surprising results to anyone and really just serve as a baseline for any debate on the topic. As Professor Chien recognizes, this information does not tell us whether we are in a bad system or whether something needs to be done to stop PAEs.

    In my view, a major part of the problem is that we do not have a robust marketplace for buying or selling patent rights. As such, patent holders resort to litigation, despite its very real costs.

  148. This is an embarrassing discussion piece. Only slightly less embarrassing than the proposed SHIELD Act and those that defend it. Let’s get to the merits and cease this sham of an issue. There are substantial rules in place to stop frivolous suits. Large companies assert patents they have never practiced and/or purchased all of the time. The property rights of patent holders have already been destroyed by Ebay and other jurisprudence.

    What’s worse, this “study” seems to take issue with the strict liability nature of patent infringement.

    Let’s just junk the whole thing. We can call ourselves China.

  149. Professor Chien writes: “40% of respondents [to her survey] said the demand [letter] was based on [a patent covering] a technology they were using, not making. Such suits seem hard to justify as anything but nuisance-based.”

    Uh, Professor, doesn’t the “bundle” of rights provided by a U.S. patent include the right to exclude others from making, importing, using, offering for sale, OR selling “technology” (or anything else) that falls within the scope of one or more (not invalidated, in-force) claims of that patent?

    If so, are you trying to argue that a property owner’s exercise of their right to exclude others from _using_ that property is “hard to justify as anything but nuisance-based”? To what members of a civil society does the ownership of property, and the exercise of the rights that ownership entails, create a “nuisance”? Should a civil society protect those members from that “nuisance”?

  150. “I’ve come loaded with statistics, for I’ve noticed that a man can’t prove anything without statistics. No man can.” – Mark Twain, 26 Oct 1880

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