Perspective: Rise of Patent trolls
November 13, 2007 by Jessica PattonI agree that the “predator” patent trolls can be potential lethal to companies who make and sell products, but I do not agree that their function is futile or unethical.
The strongest argument against patent trolls is that they have not contributed to the inventions on which they claim patent infringement. They have, however, usually purchased exclusive licenses from patent owners. Patent owners have the right to sell licenses in exchange for royalty fees and an agreement that they need not be involved in time consuming litigation upon patent infringement. By acquiring these licenses, patent trolls are capable of sending a powerful warning message to manufacturers on behalf of patent owners collectively that individual inventors lack the resources to project.
Certainly, this message must be balanced against the possibility of using courts as a profit-making tool. As stated by an American Judge, the US Congress, desires patent law to “reward creativity, not legal gamesmanship.” [1]
Mr Beyers claims that patent trolls have an “inherently unfair advantage” due to the nature and uncertainty of the patent judicial system. It seems to me, that this sense of unfair advantage stems more from the lack of legal defences open to corporations in these suits. In most cases, manufacturers are not able to file counter-claims and offer cross licensing agreements because the licensees have not infringed. Patent trolls are able to terrify manufacturers because they are not able to fireback with their own “war chest” of lawyers and technologist.
While this disparity compounds the threat of patent infringement, it remains the responsibility of manufacturers using patented inventions to be diligent in respecting existing patents. In Free World Trust v Électro Santé Inc Justice Binnie, for the court states that “a patent is, after all, a public instrument issued under statutory authority which may result in sever financial consequence for its infringement.” [2]
Unfortunately, it is currently the patent holders who are suffering. In what has been referred to as a “backlash” against patents and licensors, one US article notes that “it is becoming increasingly difficult to transfer that right with any comfort that the title owner will not be brought into the litigation. These decisions may also discourage patent owners from pooling related patents for licensing and enforcement by independent third parties. This appears to be yet another example of the growing trend against patent owners who prefer to monetize their technology through licensing as opposed to commercialization.” [3]
Mr Beyers is correct that something must be done in order to preserve the integrity of patent law. However, his proposition of “pooling operating companies’ resources to jointly acquire patents for a fair price from inventors” would undermine the foundation of patent law. Patents are a bargain between the State and the inventor. Society benefits from the full disclosure of inventors’ ingenuity and in return, inventors acquire a time limited monopoly on their ideas the resultant profits. Allowing manufacturers to form alliances with their competitors and create their own patent portfolios, would effectively remove the market monopoly from inventors and hand it over to the patent users. If manufacturers want to evade the lethal potential of patent trolls – protection is simple, don’t infringe.
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[1] Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P, Patent Trolls: A Stereotype Causes a Backlash Against Patents and Licensing, online: [Patent Troll Backlash]
[2] Free World Trust v. Électro Santé Inc. [2000] 2 S.C.R. 1024 at para 29.
[3] Patent Troll Backlash, supra note 1
One Response to “Perspective: Rise of Patent trolls”
Patent trolls are not only ethical, as the above comment claims; they play an important role in the economy. Patent trolls are engines of liquidity, they help inventors fight costly infringement battles and they are the embodiment of creative destruction.
“Patent troll” is a pejorative term given to companies that seek to enforce patent rights against infringers (who are incidentally usually big corporations with deep pockets). As noted in the above comment, the harshest criticism against patent trolls is that they seek value from protecting inventions that they had no hand in developing. This argument is essentially the reverse of the “sweat of the brow” theory. However, patent trolls are hardly the only companies that profit from providing a minimal service. The capitalist system with its emphasis on specialization makes it so the largest share of profits rarely actually trickles down to the creator.
Patent trolls create value by providing companies or inventors with needed capital for products that they own patents on and are being commercialized by third parties. This gives more funds to the people who have the creativity but maybe not the commercial know how, thereby enabling future innovation.
The fact that certain opportunists have been able to take advantage of inventor’s desire to monetize their inventions and the relative ease of successful patent litigation should not be cause for concern. I agree with the above author that the only way for manufactures to protect themselves is to not infringe existing products…fighting trolls is futile.
By Jake Irwin on Nov 29, 2007