Ever wondered who is the most responsible for flooding the US courts with frivolous patent litigation suits over the past decade? While most fingers will inevitably point towards the so called “patent trolls”, the recent study proposed by Nathan Myhrvold in collaboration with the Stanford University Law Professor Mark Lemley is determined to bring the truth to the surface. The reason why this study has already drawn a lot of scepticism is because Myhrvold, a former high-ranking Microsoft Corp. executive, is also a co-founder of Intellectual Ventures, a company labelled as a “non-practising entity (NPE)”, or a “patent troll”.
Patent troll is a term used for those companies or individuals who are patent holders but do not manufacture or use the patented invention. Such entities often purchase a patent from a bankrupt firm, among others, and later sue other companies by claiming that one of their products infringes on the purchased patent. The common criticism of “patent trolls” focuses attention on the potential of these entities to negotiate license fees that are grossly out-of-alignment with their contributions to the alleged infringed product. Many view this as a cause for stunted innovation and unnecessary patent litigation.
One of the excellent illustrations of this criticism is the Virginia based ‘NTP Incorporated’ lawsuit against ‘Research in Motion’ in 2000. NTP Inc. is a patent holding company with the current asset of 50 US patents in its portfolio. With absolutely no intentions to put that patent into any product, NTP Inc. later settled with RIM for $US 612.5 million. On one hand, NTP Inc. sets a desirable precedent by discouraging large companies from poaching innovation from small companies or individual inventors. On the other hand, however, some argue that antagonistic to Article 1, s. 8 of the US Constitution, such NPE entities stifle innovation by threatening companies with lawsuits.
Understandably, the common reaction to the proposed study thus far has been of cynicism and disregard. While many IP attorneys and CEOs are willing to go so far as to merely acknowledge the need for such a study, there is still widespread disagreement with respect to the scrutiny the results of the study will undergo. This is despite the fact that the study is in collaboration with Stanford Law. Before the credibility of the study is questioned, it is worth reflecting on the market effects of the results.
If the results favour the common perception that the NPEs are responsible for the most number of frivolous lawsuits, it might not make any difference to the currently standing situation. Arguably the patent troll population may remain unmoved by the findings of the study and maybe it will take more than an independent study to alter their viewpoint. There is a possibility that this crossing over can only be accomplished by legislative measures or judicial precedents. Alternatively, if the results of the study indicate otherwise, there will inevitably be a lot of scepticism and finger pointing on the credibility of the results. In addition, the NPEs may now be able to cite statistics to justify their activities.
What is probably required then is the answer to the inquiry about the objective behind such a study. Although Professor Lemley suggests that the results will enhance patent reform, it is not entirely clear how such a reform will progress. Furthermore, PatentFreedom has already undertaken an extensive study of litigation in an effort to keep tabs on NPEs, and the Myhrvold-Lemley study is not a novel idea. Therefore, before proceeding, it might be a good idea for the duo to ensure that the results from the study will not be disregarded with a grain of salt and instead will contribute to the purpose of enhancing an innovation driven economy. Additionally, if patent reform is what is being sought, why not spend time, money and efforts in strategizing and drafting measures that might minimize the number of patents issued by the USPTO or delineate some guidelines in terms of access to injunctions.