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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.


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.

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.

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.

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.

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.

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.

junko.yoshida
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Re: Balancing Patent Owner Rights Against Patent Trolls
junko.yoshida   2/12/2014 9:05:00 AM
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@DrQuine. You wrote:

 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.

I agree. That captures well the very dilemma we are in.

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

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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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.

lakehermit
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Re: Where's the data?
lakehermit   2/11/2014 4:45:09 PM
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Here is one article on patent infringement litigation numbers. http://patentlyo.com/patent/2013/03/chien-patent-trolls.html 

krisi
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Re: Where's the data?
krisi   2/11/2014 4:56:48 PM
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Losers paying the litigation costs!...interesting idea...should help in excessive litigation in US and bring in line with the rest of the world...Kris

me3
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Re: Where's the data?
me3   2/11/2014 5:04:57 PM
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"bring in line with the rest of the world"

.... and we shall be as innovative as China.

krisi
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Re: Where's the data?
krisi   2/11/2014 5:35:19 PM
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China is not the only example...virtually the whole world litigates less than USA...but you would be probably surpised to know that China applies for more patents than USA...so is Japan

http://en.wikipedia.org/wiki/List_of_countries_by_patents

me3
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Re: Where's the data?
me3   2/11/2014 8:23:23 PM
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If you don't litigate, why file patent at all? spending $50K to have a line on your resume?

Or you expect someone to come knocking on your door for permission to roll out his product? Say, from a company that says f- you to Apple. Oh yes, he would be so kind to Johny Thomas the little engineer, who rents an apartment, sleeps in the garage, eats ramen and pays blood sucking lawyer with a used scope?

rick merritt
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Re: Where's the data?
rick merritt   2/11/2014 9:32:54 PM
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@Me: Ouch!

Sounds like we hit a nerve. I have heard some engineers don't want to participate in the patent prcoess these days. Are you one of them?

 

betajet
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Re: Where's the data?
betajet   2/11/2014 9:40:46 PM
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me3 wrote: If you don't litigate, why file patent at all? spending $50K to have a line on your resume?

Many USA companies obtain patents as a defensive measure to protect themselves from other companies that may use their patents as a way to stifle legitimate competition.  For example, Google paid US$12.5B for Motorola Mobility a couple of years ago.  Many people think that this was just to obtain a huge pile of patents so as to protect Android from the likes of Apple and Microsoft.  It would have been nice if Google had used that money to do things like make Google Groups better, but patents in the USA are a very expensive game (especially in a hot area like mobile computing) and if you want to play you'd better be really, really rich.

me3
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Re: Where's the data?
me3   2/11/2014 10:39:07 PM
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If only the very very rich can afford to innovate, then there is something wrong with the country. Why would they do that anyway? If someone bought the patents, you can be sure they are infringing on some of these very patents. Unlike the Chinese who write patents to fill government quota and feed their inferiority complex,  real companies don't. It is a weapon for innovative small firms. It is a tool for driving innovation on the national level. But it is being weakened year after year, along with your other constitutional rights.

betajet
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Re: Where's the data?
betajet   2/12/2014 9:53:26 AM
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me3 wrote: If only the very very rich can afford to innovate, then there is something wrong with the country...

Anyone who's been paying attention has noticed that there are a number of things wrong with the USA regarding the very very rich.  But I'll stick to the topic at hand.

You don't need patents to innovate.  You may need patents to make money off your innovations, but often not.  For example, Microsoft didn't need any software patents to take over the PC software market.  However, they later tried to use software patents to stifle competition.

When large companies butt heads regarding patents, it's not what you've patented -- it's how many patents you have.  What do you do when IBM comes to you and says: "Here's 1000 patents we have: we say you're infringing on some of them.  If you try to defend yourself against one patent suit after another you'll run out of money long before we do.  You'd better pay the Danegeld."

What's your defense?  Having a pile of patents just as high so that they're better off cross-licensing or just going away.  For example, here's what happened when Microsoft went to Sun Microsystems and demanded Danegeld for Open Office:

[as told by Jonathan Ian Schwartz, then CEO of Sun]

"As we sat down in our Menlo Park conference room, Bill [Gates] skipped the small talk, and went straight to the point, 'Microsoft owns the office productivity market, and our patents read all over OpenOffice.  We're happy to get you under license.' That was code for 'We'll go away if you pay us a royalty for every download' – the digital version of a protection racket."

Sun Microsystems did not ink a patent covenant agreement with Microsoft.

[Schwartz' reply to Gates:] "'We've looked at .NET, and you're trampling all over a huge number of Java patents. So what will you pay us for every copy of Windows?'  ...it was a short meeting."

So what would the outcome had been if Sun hadn't had a pile of Java patents with which to counter Microsoft?  They would have been stuck.

me3
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Re: Where's the data?
me3   2/12/2014 10:34:13 AM
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How about extending that fee structure to rape cases, murder cases, work injury cases? How much would Nicole Simpson and Ron Goldman's families owe OJ? I suppose you can save a lot of money and build a lot less prison by doing so.

 

True, you don't need patents. You can write technical papers for a good living. Or you can keep everything secret, which is what large companies do. They come to conferences to listen, nose around and contribute nothing of intellectual value. They call it innovate inside. Or you don't need to innovate at all, like some other countries.

 

The founding fathers choose a punitive patent system that made America today. America's flavor of innovation is very down to earth and commercial driven. It is different from that of the Russians, the Japanese, and the Chinese. It is the envy of the world. Why would we craving for the world norm?

 

betajet
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Re: Where's the data?
betajet   2/12/2014 2:12:47 PM
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me3 wrote: The founding fathers choose a punitive patent system that made America today.

I'll let Thomas Jefferson and Benjamin Franklin speak for themselves. First Jefferson:
If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density at any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.

And now Benjamin Franklin, who invented many things including his eponymous stove but did not care for patents:
As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously.

Of course, this was the tail end of the Age of Enlightenment, when scholars recognized that human knowledge is a continuum of building upon previous knowledge, and the idea of someone claiming ownership of an idea was patently ridiculous.

me3
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Re: Where's the data?
me3   2/12/2014 2:37:16 PM
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"someone claiming ownership of an idea was patently ridiculous"

I suppose Vlad Lenin would agree. Thank God Lenin was not a congressman here. And this country is USA and not yet USSA.


Eric Scheuerlein
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Re: Where's the data?
Eric Scheuerlein   2/13/2014 12:55:14 PM
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Things are never so simple.  The last sentence of that quote from Jefferson, which is dropped by everyone that sites it on the Internet, is: "Society may given an exclusive right to the profts arising from them, as an encouragement to men to purse ideas which may produce utility, but this claim may or may not be done, according to the will and convenience of society, without claim or complaint from anybody."  Jefferson was a member of the first US patent board.  The above portion of the quote highlights the conflict Jefferson felt regarding patent law in that it has the potential to stimulate innovation and allow information to disseminate, but also secures monopoly profits for a select few at the expense of the public in general.     

It might also be overly simplistic to paint the Age of Enlightenment as a golden age of free IP.  Patent law predates the United States, and extends well into the Enlightenment.  England used patent law during the Renaissance as a tool for international trade--  Artisans from the continent where encouraged to bring technology to England through an offer of limited monopoly over commercialization of that technology.  In essence, the Patent Law was used to encourage a continental brain drain in favor of England.

Franklin Stove Tech Inc. puts this message on their website: We at Franklin Stove Tech want to foster innovation.  To put our money where our mouth is we have posted the schematics for our product on our website in English and Chinese.  Do you invest the money you are saving for your child's college education in Franklin Stove Tech?

rick merritt
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Re: Where's the data?
rick merritt   2/11/2014 9:35:17 PM
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As Cheech said to Chong, "Thanks for the refer!"

zewde yeraswork
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losers pay
zewde yeraswork   2/12/2014 10:40:40 AM
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It seems reasonable, and even efficient, to make losers pay the court costs as a main tenant of patent reform. Such reform is coming--in one way or another. It makes sense for it to include a provision making the cost and time spent in court part of the issue to disincentivize frivolous suits.

me3
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Re: losers pay
me3   2/12/2014 11:01:18 AM
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Law is about evidence. What is "frivolous" depends on the strength of initial evidence. A frivolous case cannot pass the threshold set forth by law. There are a lot of misconceptions out there in this field, like patent count etc. If you care, as I think you should, then read some real documents.


 

To start, you can read Tela Innovation vs. TSMC here


http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20131229000019&cid=1102


RWatkins
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How About Killing the Troll at the Patent when he looses also
RWatkins   2/12/2014 5:47:57 PM
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One of the classic tricks of patent trolling is to shotgun a broad industry with patent infringement notices, and anyone who answers in a manner that will stop the troll in his tracks is quietly "let off the hook".  Those who do not answer in such a manner are prosecuted.  This is the key to trolldom, that those who can invalidate the trolled patent or key claims are quietly set aside while the same patent or key claims are used to bludgeon others.

The solution to this is several.

One solution would be to pass a law allowing the courts to invalidate entire patents when one patent claim that can be demonstrated to have been known to be invalid prior to the lawsuit is used in any lawsuit, or the prosecuting party can be found to have obscured or not provided evidence of his knowledge of other prior art that would invalidate one or more of the claims cited in the case.  Further, the very fact that such knowledge demonstrably existed should be grounds for prosecution by the Feds for Sherman Anti-Trust or similar laws.  Further, there should be a triple-damages-plus-triple-costs-to-the-defendant clause when such evidence is unearthed during a civil trial.

Another solution would be to legally require the entity sending a patent infringement letter to pay USPTO fees for one re-examination based upon evidence provided of invalidating information whenever provided by any party receiving a letter of infringement.  This would encourge the entire system to become more honest, since shotgunning an industry could get pretty expensive if everyone has some evidence that could invalidate claims.

Ogemaniac
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Re: How About Killing the Troll at the Patent when he looses also
Ogemaniac   2/12/2014 6:49:20 PM
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I've always wished that USPTO would charge patent applicants for any claims that need to be dropped or modified during the application process. For example, if you want to get your patent approved, the cost goes up $1000 for each claim you have to drop along the way and $500 for each that you have to modify. This would cause applicants to write their claims narrowly and defensibly in the first place, rather than claiming the universe with the hopes that USPTO will feel good about merely whittling this down to a galaxy or ten.

 

It is very annoying when your competitors put out a patent that is obviously in conflict with prior art and obviousness, but for several years, all you can do is guess as to what USPTO will cut it down to. This stifles all sorts of research in the claimed "universe" due to uncertainty.

 

 

AZskibum
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Re: How About Killing the Troll at the Patent when he looses also
AZskibum   2/13/2014 11:55:59 AM
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That's an interesting idea, having the applicant pay extra for each claim that must be dropped or modified. It could go a long way toward discouraging the usual practice of patent attorneys trying to write the claims as broadly as possible, trying to claim far more than the inventor feels comfortable with.

RWatkins
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Re: How About Killing the Troll at the Patent when he looses also
RWatkins   2/16/2014 1:03:35 AM
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IRT Ogemaniac's fee structure, this may be throwing the baby out with the bath water.  There are generally some battles with the USPTO examiners where, even if a patent has properly been searched and claims carefully written, the examiner's training in several groups says "only grant very specific claims".  This was the case with the solid state laser patent that took 40 years for the courts to finally force the USPTO to grant the general patent to the inventor thereof.  A lot of people don't have the time or money to undergo such a fignt, and a provision where the USPTO could garner yet more fees if being unreasonable seems problematic.

I could not agree more with your frustration at the now common playing card game many companies have adopted with patents, and where there patent agents and attorneys are instructed to not do good searches but just to go general in claims.  The patents are then used in court cases to show how many of each others' patents are being violated by their competitor, regardless of patent validity.  I believe strongly that the simple answer here is to stop someone from abusing a patent that should not have been granted, or should have been much narrowed, but not stop good patents from encouraging innovation.

There is a lot more discussion to be had here, but not enough time or space.

Sheetal.Pandey
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Re: How About Killing the Troll at the Patent when he looses also
Sheetal.Pandey   2/26/2014 10:57:48 AM
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It could be interesring to know what can be the base cost of patent lawsuits and how much bigger it can become. How much normal (just infringement) penalty cost? and how much would it cost to a looser if there is stealing of inventions. Is it legally consider crime by local police.

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