Patent Trolls

September 24, 2013

A new species has recently been discovered inhabiting the world of patents. Called a patent troll, it prefers to inhabit the lush undergrowth of the US legal system

There have also been sightings of "patent assertion entities" and "non-practising entities" but academic opinion varies on whether these are separate species, or a subspecies of the patent troll. So let's just call them all patent trolls, for simplicity. The principal observed behaviour of patent trolls is to sue people for patent infringement, or at least threaten to do so. Typically, they threaten to use the US legal system. For a lump sum payment or ongoing licence fee, they will back off. The patent troll owns the patents which they threaten to enforce. A patent is a statutory monopoly which allows the owner to stop others doing something which infringes the patent, or to extract a payment for continuing to "infringe". So aren't they just making conventional use of the patent system in the way it was intended? Well, that seems to depend on who you speak to. A key characteristic of a patent troll is that they don't actually do anything themselves, other than enforcing their patents. They're just using the patents to extract money from trading companies. Another key characteristic of a patent troll is that they usually haven't made the invention - typically, they buy patents from the originators of the invention. And this lies at the heart of why they are so hated in some quarters. The trading company has to take all of the risk in developing a product which is commercially marketable, and all of the risks of manufacturing, distribution etc only to find that once they have achieved some commercial success, a patent troll appears, brandishing a patent and demanding payment. The patent troll walks off with the profits (he hopes) but what did he do to create those profits? The troll hasn't done anything to create a market, hasn't made any investment in manufacturing etc and usually hasn't even made the invention. Not fair, says the Campaign for Preservation of Patent Trolls. Okay, I made that bit up, but this is what they would say if the campaign existed. Actually, they would say, the activities of patent trolls could almost be considered a public service. After all, they will often buy patents from penniless inventors who have protected their ideas but have no realistic hope of getting their product into the market. So the original inventor gets a payment, more than he might otherwise have achieved. He has benefited from his invention. The troll can collect groups of patents in this way and use them against large corporations in a way which the individual inventors could never afford to do. So the large corporations don't get away with stealing the inventions of the little guy. What could possibly be wrong with that? But hang on, say the big corporations. Some of these patents are ridiculous and probably aren't even valid. They cause us (the downtrodden multinationals) an awful lot of hassle to defend ourselves. Sometimes it's better just to pay up and accept the position, rather than spending a lot of money in defending ourselves when we have a business to run. But is this the pot calling the kettle black? Is it completely unknown for a small guy to think that one of these large corporations has acted in this manner when they have the benefit of the patent in their favour? Or for a large corporation to buy a big bundle of patents, just to keep their competitor at bay? What about organisations such as the National Research Development Corporation which was set up by the British Government after World War II to extract revenue from commercial companies who marketed ideas generated initially within the military? Didn't that make the British Government a patent troll? The reality is that the use of language such as "troll" tends to stoke up emotive responses which don't really help the underlying discussion. The patent system is intended to provide protection for inventions and is intended to allow those patents to be enforced and payments to be extracted when infringement occurs, i.e. when someone other than the owner of the patent makes use of the invention protected by the patent. The patent system has various checks and balances intended to make sure that patents only exist for inventions which are worthy of protection. Part of this is to require that an invention is adequately described if a patent is to be granted. So, in theory, each one of the patents owned by a patent troll should represent a significant step forward in the appropriate technology, and should provide clear teaching on how that step forward can be achieved. The return for making this contribution to innovation is the right to control the invention, by using the granted patent. If life was always as simple as that, perhaps there would be no problem. But perhaps the checks and balances of the patent system don't always work as well in practice as they are intended to do. Perhaps the legal system (particularly in the US) isn't always as efficient, quick or cheap as it should be. So there remains an opportunity for the troll to bludgeon his opponent into submission. What can be done? A good question, says President Obama. The White House has recently indicated that it believes “trolling has gotten out of control, and it’s time to act”, stating that "the abuse of the patent system is stifling innovation and putting a drag on our economy". We'll have to see if this initiative is sufficient to eradicate the species from its natural environment of the US legal system, before it spreads too far. Having said that, let's give a round of applause to the UK Patent Courts, which have made big strides in the last few years to make patent litigation more speedy, efficient and cost-effective, perhaps giving us an environment which is more hostile to patent trolls.

I would be interested in your views about patent trolls. Are they a nasty beast which should be wiped out, or perhaps a good business model! If you have any thoughts, comments or questions concerning patent trolls please do not hesitate to contact me at [email protected] or any of my colleagues.

Swindell & Pearson has been helping businesses and individuals protect and defend their ideas, innovations and brands for over 130 years. With its head office in Derby, the firm also has offices in Stoke, Wolverhampton, Stafford, Sheffield and Burton. To find out how Swindell & Pearson can help you with any intellectual property requirements please get in touch via [email protected] or by telephone on 01332 367 051.