America
has always been known as the country of opportunities, the kind of
opportunities that allows individuals to personally benefit from their skills,
talents and hard work. The patent infrastructure allows individuals and
companies to reap the rewards of their ingenuity and investment into research
by allowing them a limited time monopoly on the products of their work. Without
patent infrastructure in place, there would be little incentive for additional
research into new technologies and an individual would not be able to benefit
from his or her labor; which is just plain old un-American. However, with an
increase in market competitiveness, patents are becoming tools of destruction
aimed at hurting productive companies and the technology sector instead of
instruments of investor protection.
The
current issue with patents is twofold; trivial patents and several Patent
Assertion Entities (PAE). Trivial patents are patents that are issued for
technology that lacks ingenuity or is already implemented in a slightly
different way. For example, IBM patent number 6,877,000 is for a “Tool for
converting SQL queries into portable ODBC”. This practice was
already used by almost every database that connects via an ODBC driver. Another
example of trivial patent is, patent number 7,362,331 “Time-Based, Non-Constant
Translation of User Interface Objects Between States” is essentially a row of
items that re-arrange themselves when other items are added or removed. Additionally,
trivial patents frequently just adopt existing technology to different, and
often broad, hardware category. For example, in 1987 IBM filed for patent number
4,648,067 “Footnote management for display and printing” to patent something
that has been standard in every word processor up to that point.
The
second problem is PAEs, PAEs are companies that buy patents from companies to
resell them or sue companies that may be using the patented technology. In all
cases, PAEs are legal entities that are not using the patented technology to provide
any services or goods, so the patent infringement does not directly impact
their operations. There are several elements that make PAEs particularly
dangerous to the industry.
First,
they often sue a company using the patent through a shadow company, thereby
limiting their own risk and media exposure. For example, in 1997 USPTO granted
patent number 5,629,867 to Robert Goldman for a “selection and retrieval of
music from a digital database”, essentially a digital collection of music that
something like a radio station can select music from. This patent was
transferred to Haltek America in 2007 and then assigned to Mission Abstract
Data. In 2011 Mission Abstract Data changed its name to Intellectual Ventures
Audio Data, a prominent PAE, and a week later change its name back to Mission
Abstract Data then two months later filed a patent infringement lawsuit against
116 companies
The
second reason that PAEs are dangerous is because they often don’t have the same
risk as a direct competitor. For example, if Apple is suing Samsung on patent
infringement, it is assumed that Samsung can retaliate over some patents that
Apple may be infringing. If this occurred, it would actually cripple suing
company’s operations and diminish features of existing products. However, that
is not a risk for PAEs because they do not actively use the technology that is
patented. As such, they can sue other companies with minimal risk to their
operations.
The
final risk is the increased cost of litigation. PAEs frequently sue in a court
jurisdiction that favors liberal eDiscovery procedures to increase financial
cost of litigation. In a typical litigation, the sued company would be required
to produce all documents related to the patent or technology. This include
internal documents, e-mails, meeting notes and much more. Search and retrieval
of this information can cost a large company millions of dollars. Comparably, a
PAE is usually small in size and would be easily able to burden similar eDiscovery
request.
This
risk-less environment created an opportunity for many companies to leverage
PAEs to attack their competitors through privateering. In the previous example,
this would equate to Apple assigning their patents to a PAE to sue their
competition through the PAE. In this scenario, Apple is not directly involved
in patent litigation, however their competition has to burden significant
litigation cost and possibly risk product features.
In
a real world example, there is a current litigation battle over patent number 6,170,073.
The patent is owned by Nokia, but it is not directly involved in litigation,
instead Intellectual Ventures is litigating. Intellectual Ventures I and II
added this suit against Motorola in Florida, although there is already pending
patent litigation between them in Delaware. This is probably to cause added
expense of having lawyers work in different states on two separate cases.
In
addition to the privateering and purposefully driving up litigation cost, the
patent is trivial in nature. The technology described in the patent relates to
transmission and rending of URLs in e-mail messages. This essentially
translates to sending a web page, via embedded URL in an e-mail and the patent
can be easily infringed on by sending an e-mail that has an img tag to someone
who can render the e-mail in HTML.
The number of similar cases has
significantly increased during the last decade and now verge on absurdity of
bogus and general claims on patents that should have never been granted. It has
reached a point that the United States Congress is looking into patent law and
reform with backing from the white house. The Executive Office of the President
(EOP) even published an official report “PATENT ASSERTION AND U.S. INNOVATION”
in June 2013 that perfectly summarized the problem with the following bullet
points:
·
However,
Patent Assertion Entities (PAEs, also known as “patent trolls”) do not play
such roles. Instead they focus on aggressive litigation, using such tactics as:
threatening to sue thousands of companies at once, without specific evidence of
infringement against any of them; creating shell companies that make it
difficult for defendants to know who is suing them; and asserting that their
patents cover inventions not imagined at the time they were granted.
·
Suits
brought by PAEs have tripled in just the last two years, rising from 29 percent
of all infringement suits to 62 percent of all infringement suits. Estimates
suggest that PAEs may have threatened over 100,000 companies with patent
infringement last year alone.
It’s
hard to imagine that the system that was put in place to protect inventors and
their labor has transformed itself to something that would serve as a hindrance
and a road block to the industry as a whole. It is my humble opinion that with
genius of today’s tech sector, a much better system can be collectively
developed to create proper incentive for inventor as well as allow the industry
to move forward without involving countless litigations. Re-working the patent
legislature will serve as a true testament of today’s government commitment to
future technology research, global prosperity and the U.S. economy. If Congress
fails to act, more and more money that could have been spent on job creation,
R&D and new product development will be wasted on frivolous litigation and
awards to companies with no social output.
References
Bohannon, M. (2013, June 24). US government
focuses on abusive patents. Retrieved from OpenSource.com:
https://opensource.com/law/13/6/congress-patent-assertion-entities
Executive Office of the President. (2013, June). Patent
Assertion and U.S. Innovation. Retrieved from White House :
http://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf
Klintz, J. A. (2005, May 8). About trivial
software patents: the IsNot Case. Retrieved from
http://citeseerx.ist.psu.edu:
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.104.614&rep=rep1&type=pdf
Unknown. (2013, June 19). Itellectual Ventures
Sues Motorola for Patent Infringement Again. Retrieved from Groklaw:
http://www.groklaw.net/article.php?story=20130619184238925
WYATT, E. (2013, July 16). Inventive, at Least in
Court - NYTimes.xom. Retrieved from New York Times:
http://www.nytimes.com/2013/07/17/business/ftc-turns-a-lens-on-abusers-of-the-patent-system.html?pagewanted=1&_r=2&adxnnlx=1374240136-aDCirskWen7E7FVIWKdt3Q
