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Patent Suit Bills Found Wanting

2/11/2014 08:00 AM EST
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lakehermit
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Patents are necessary to a healthy economy.
lakehermit   2/11/2014 12:46:27 PM
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It should be recognized that much of the hand-wringing over patent abuse is driven by a very few highly vocal companies many of which that seem to have no respect for US law. These companies are quick to introduce new (often competing) products to enter a market or gain market share. Many do not bother to check to see if their new product will infringe existing patents which protect the inventions of others. When the lawful owners of those rights approach the company the cry of "patent troll" is loud and clear. I analogize these situations to the reckless freeway speeder that blames bad cops when they get a ticket.

Take as just one example Level Up who has created a press circus with their attacks on so called "patent trolls". In all of the name calling and finger pointing, it seems that LevelUp is more interested in press than the costs of litigation. LevelUp itself filed one of the three suits which it claims is draining its money! http://www.bizjournals.com/boston/blog/startups/2013/11/levelup-patent-trolls-lawsuits-boston.html?page=all Next, apparently having finished with its press opportunity, LevelUp immediately makes an extraordinary request to stay the litigation that it was so quick to file! One has to wonder about such unusual activities.

LevelUp is but one example of many companies using the "patent troll" label in criticism of the licensing activity of legitimate patent holders. That criticism is however unsupported by the facts. In the November 7, 2013 U.S. Senate testimony by noted patent law scholar, Professor Adam Mossoff, he eloquently debunks the myth of the "patent troll." Mossoff urges policy makers to appreciate that the business model of patent licensing companies is neither new nor alarming.  Such companies are, in fact, entirely necessary for a healthy innovation economy.

Most readers of this column are well aware of the important role that venture capital plays in funding research and experimentation that ultimately leads to new and innovative companies based on new technology. Such technology is often quite brilliant in its solution of long standing problems or needs. Which of the readers would be willing to invest the kind of money that this research takes, without the availability of patent protection to ward off unscrupulous copyists. By making it impossible, or at least very difficult for these companies and their investors to protect valuable intellectual property, it will also make it very difficult to attract the investment money that is necessary to get off of the ground, or to succeed and recoup the cost of the innovation.


DrQuine
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Balancing Patent Owner Rights Against Patent Trolls
DrQuine   2/11/2014 12:52:15 PM
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How should we balancing patent owner rights against frivolous lawsuits and patent trolls? The monetary value in a patent resides in the exclusive license that is granted to exercise that intellectual property for a period of time. It is enforced through patent lawsuits when copycats infringe the patent. For those inventors who have neither deep pockets nor law degrees, their only opportunity to capture the value of a patent may lie in selling it to someone who will enforce it.

LoggerMN
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Re: Patents are necessary to a healthy economy.
LoggerMN   2/11/2014 2:52:47 PM
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Maybe we should give patent inventors greater rights than someone that buys a patent from the inventor.  An entity which buys a patent, and then tries to enforce it with law suits should be liable if they fail to show infringement.  That entity is obviously building a busieness case around "monotizing under utilized" patents.  That is not the kind of "innovation" patent law should be striving for.  However, true inventors could retain their existing rights.  Which is the kind of innovation we are looking for.

That remains completely separate from what things we should allow to be patented, as well as how long patents should be.  I think those issues should be addressed as well, but they are harder questions to answer.  Shutting down second-hand patent owners (trolls) should be something we can all agree on.

betajet
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"Loser Pays" would help a lot
betajet   2/11/2014 3:17:41 PM
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Right now, the USA system is almost always "defendant pays".  Even if a defendant prevails in a patent infrigement suit and can get a Marshall, Texas jury to agree that a patent is invalid, the defendant still has to pay its own costs, often US$millions.  Patent trolls know this, and basically run an extortion racket: pay us the Danegelt or we'll make you pay far more than that in legal costs.

"Loser pays" evens the playing field -- if a troll knows that the suit is likely to fail and that they'll be stuck paying the defendant's costs, the entire patent troll business model crumbles.

JMO/IANAL

tb100
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Re: Patents are necessary to a healthy economy.
tb100   2/11/2014 3:35:40 PM
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Patent trolls are a myth? Hah!

Read this:

http://arstechnica.com/tech-policy/2013/01/patent-trolls-want-1000-for-using-scanners/

I think it is pretty clear to all but lakehermit and his professor Mossoff that patent trolls are an incredible drain on the economy and create a strong disinsentive to create new products.

rick merritt
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Re: Patents are necessary to a healthy economy.
rick merritt   2/11/2014 3:55:04 PM
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@LoggerMN: Interesting idea about only rewarding patents from practicing companies. But some small inventors claim they haven't the time to enforce their rights and WANT specilists ( some call trolls) to do it for them.

rick merritt
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Where's the data?
rick merritt   2/11/2014 3:56:56 PM
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This discussion motivates me to marshall more notes from thje rceent Hoover Instute event and my inteview with Kappos on what data is/isn't available on the troll and other tech patent issues!

Got a credible tech patent study? Tell me about it now!

betajet
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CEO
Re: Where's the data?
betajet   2/11/2014 4:26:21 PM
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Here's a recent paper from Prof. Colleen Chien, Santa Clara University School of Law.  I haven't read it myself, but I've heard her speak and have a lot of respect for her.

Patent Assertion and Startup Innovation
According to survey responses, patents for novel inventions play a generally positive and at times crucial role for startups. They help to transfer technology, enable investment, and improve exits, particularly in bio/pharma industries.  But patent assertions by NPEs [Non-Practicing Entities: a polite term for patent trolls], which at times hit startups when they are least able to fight them — on the eve of a funding or acquisition event, or, 40% of the time, in the context of the startups' customers — can have significant and at times devastating impacts on companies.

Sounds pretty balanced to me.

LoggerMN
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Re: Patents are necessary to a healthy economy.
LoggerMN   2/11/2014 4:31:32 PM
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I would consider pushing that kind of "inventor" out of the business a desired outcome of such legislation.

lakehermit
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Re: Patents are necessary to a healthy economy.
lakehermit   2/11/2014 4:36:49 PM
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That is an interesting operation to say the least. Why would a patent holder threaten to sue a small user like Mr. Vicinanza when the patent holder's legal costs would surely be more than what they could hope to recover in the suit.

But even more curious is why the scanner users don't turn the matter over to the manufacturer they purchased the scanner from, e.g. Canon or Xerox? As the article notes "After all, they have patent lawyers on payroll already and are in a far better position to push back." While it isn't directly stated in the article, I strongly suspect that Mr. Vicinanza tried to do this and the manufacturer(s) wouldn't stand behind their equipment.

Or can it be that the scanner company knows it is building infringing scanners, won't do the right thing and take a license from the patent owner (or stop selling infringing scanners) but wants to sell the infringing scanners to unsuspecting users? Reading between the lines it appears that the manufacturers don't want to defend their products. Otherwise why did Vicinanza have to sue them.  "He also hired a new lawyer, Ann Fort, who filed a third-party complaint against four of the companies that actually made the scanners—Xerox, Canon, Hewlett-Packard, and Brother." It appears to me that the scanner manufacturers are squarely in the middle of this problem. If you want to change the law, in my view the best change would be to force the manufacturers who sell equipment to indemnify their customers against infringement claims.

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