Breaking the Cycle – Stand Up and Fight Patent Trolls

The term “patent troll” conjures up all kinds of images and ideas, but there is no universally accepted definition of who is a patent troll. This has led many to recognize that, by and large, if you are being sued for patent infringement, it will likely be your belief that you are being sued by a patent troll. But obviously not everyone who sues for patent infringement is a patent troll, and neither is every plaintiff who loses a patent infringement lawsuit. There will be reasonable assertions that ultimately result in a defendant prevailing for a variety of reasons. Thus, a patent troll really should be identified by litigation tactics. A patent troll is one who is abusing the judicial process and leveraging judicial inefficiencies to obtain unwarranted settlement payments.

In determining whether one is a patent troll, I don’t think it should matter how the patents were acquired. If there is infringement of substantial patents, then there should be recourse. Having said that, it would be naive to pretend that there is not real evil lurking in the patent infringement realm. Stories of $500 to $1,000 offers to settle and avoid patent infringement litigation that would cost millions of dollars to defend abound. Some courts have openly acknowledged what feels like “extortion-like” activity. See Indicia of Extortion and Troll Turning Point? 

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Patent Trolls: In the Eye of the Beholder

The term “patent troll” conjures up all kinds of images and ideas, but what is a patent troll?  Unfortunately, there is really no universally accepted definition of what a patent troll is, which has lead myself and others to recognize that, by and large, if you are being sued for patent infringement, it is your belief that you are being sued by a patent troll. Sadly, who is and who is not a patent troll is largely in the eye of the beholder.

Still, we are not without at least some recognized industry definition. For those who can look past the surface and do not feel that patent owners are evil simply because they own patents, the term “patent troll” is usually a term that is reserved for those who acquire patents from inventors or companies, perhaps through bankruptcy, auction or otherwise, and then turn around and sue giants of industry for patent infringement.  In other words, patent trolls are those who simply acquire patents for the sole purpose of monetizing the patents through licensing regimes and ultimately litigation if a license cannot be obtained. These types of patent acquirers are typically well funded, they are not engaging in any commerce, so they do not fear a patent infringement counter-claim because they are not infringing (or, in fact, doing) anything.

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A First Step Toward Solving the Patent Troll Problem

Years hence we may look back to Tuesday, January 14, 2014 as the turning point in the battle against abusive patent litigation. On January 14, New York Attorney General Eric Schneiderman announced the settlement with one of the more notorious patent trolls. See NY Attorney General Settles Investigation into Patent Troll. This operator, MPHJ Technologies, is the owner of patents dealing with scanning technology and has claimed that thousands of small businesses infringe its patents. MPHJ has been one of the entities used by those in the anti-patent community as an example of a patent system run amok. At the end of the day, at least for those who carefully pay attention and look at the facts, this is not a story about the patent system in any way, shape or form. It is a story about a bully that engaged in reprehensible pre-litigation scare tactics.

Unfortunately, in his announcement of the settlement, Attorney General Schneiderman went too far in condemning legal patent activities in the name of defining what is a patent troll. Schneiderman said:

Patent trolls – sometimes referred to as “patent assertion entities” – are not innovators. They buy patents owned by others and then try to turn a profit by aggressively pursuing businesses they claim infringe the acquired patents. In virtually all cases, the businesses targeted by patent trolls did not copy other companies’ technology. Instead, patent trolls argue that that independently developed technology or business processes used by the target – and in some cases, everyday business activities – require a license linked to the troll’s patents.

The problem with this definition is that there is nothing illegal or immoral about acquiring patents, there is nothing illegal or immoral about enforcing patents and seeking out licensing agreements, and independent creation has never been a defense to patent infringement. Thus, it is unfortunate that legitimate patent activities that are clearly legal were at least to some extent compared with the deceitful activities of MPHJ.

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Litigation Abuse: The “Problem” of Patent Trolls

Gene QuinnThe term “patent troll” conjures up all kinds of images and ideas, but what is a patent troll?  The answer is that there is really no universally accepted definition of what a patent troll is.  In the most common sense of the term, it is usually reserved for those who acquire patents from inventors or companies, perhaps through bankruptcy, auction or otherwise, and then turn around and sue giants of industry for patent infringement.  In this situation, patent trolls are typically extremely well funded, they are not engaging in any commerce, so they do not fear a patent infringement counter-claim because they are not infringing, or doing, anything.

Over time, however, as the debate has matured and many with a patent reform agenda seek to weaken patent rights in hopes of solving their short-term litigation concerns, the term patent troll has morphed to mean any non-practicing entity. Such a definition of patent troll is overly broad, though, because it collects many entities that are simply not doing anything other than pursuing the American dream. These individuals and entities include universities, independent inventors, research & development companies, and federal laboratories. Indeed, such a list of innovators has typically been one that has been celebrated, not reviled.

But there are, of course, bad actors.

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Problem Child – A Third-Grade Approach to Patent Owners

Gene QuinnLast week on IPWatchdog.com, I published a five-part series that debunked many prevalent myths about patent trolls. See A Fractured Fairy Tale: Separating Fact and Fiction on Patent Trolls, written by Steve Moore of Kelley Drye. While a bit long, it should be considered mandatory reading if you want to understand the underlying facts instead of just buying into the hype and hyperbole associated with the so-called “patent troll problem.”

Moore, with co-authors Marvin Wachs and Timothy Moore, concludes that when you really look at the facts and underlying dynamics of patents and patent litigation, there really isn’t a problem at all. Perhaps there is litigation mischief in some cases, but overall what you see in the hard, factual data is not at all surprising. There really is no patent troll problem at all, and despite what many charge, the quality of the patents asserted by non-practicing entities is quite high, at least if you remove from consideration patents asserted by independent inventors.

But is there a problem? Yes. I think there is clearly litigation abuse, and some of that abuse probably does rise to the level of patent misuse. But we have laws on the books to handle that kind of litigation misconduct, which is exactly what it is — litigation misconduct. To try and sweep an entire class of patent owners together in a pile in order to address the few, easily identifiable miscreants is just plain stupid. We all knew that it was wrong when we were in third grade and the teacher punished everyone because one or two kids didn’t follow the rules.

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