The only saving grace of the patent system has been that when a legitimate company launches a patent lawsuit, it's possible to retaliate, so there is the possibility that the tech giants would realize that futility of the war, and settle/call truces.
But that's not even the case. If you look at the way things like Intellectual Ventures (This American Life had a nice show on the subject: http://www.thisamericanlife.org/radio-archives/episode/441/w... ), the modus operandi is to sell off, or even lease off a patent to a 3rd party that operates nominally at arms length, and use that shell or shadow organization to go after people.
With that as a recourse, it'd be easy for anyone to essentially create an army of privateers out there raiding your competitors (okay maybe a navy would have been a better metaphor).
There is the legal concept of standing, in which a plaintiff has to demonstrate sufficient harm to bring a lawsuit. Don't know what the "trolls" are doing to meet this requirement.
If you own a patent, and someone is infringing on your patent without paying you licensing fees that you would normally require from them, this is legally a form of theft and you have standing to sue them.
Standing is not, therefore, a problem for this kind of lawsuit.
The harm is straightforward -- the lost patent licensing fees the infringer would have had to pay to use the patented invention. An inventor who has no money to take his invention to market licensing it to someone that does is part of how the patent system is supposed to work, so the fact that trolls also don't take their own inventions to market isn't anomalous in that regard.
There can't lost sales unless you were also selling the patented item.
Not even if it occurred during the lag time of you bringing it to market. (If this ever actually happened without corporate spying and intentional infringement, than the patent was clearly too obvious)
Lost sales aren't the only form of harm. Imagine you bought patent rights for 9000 dollars from original inventor, counting on this patent be very useful and you benefitting greatly. Now everybody uses it, but you are not paid. You are obviously harmed - you're out of $9000 and got nothing in return. Roughly the same situation as you buying a rental apartment and people living there not paying the rent (at least within the current framework of treating patents as property rights). Clearly you have a standing here.
This is the comment thread of an article about how non-practicing entities now make up the majority of patent infringement cases in court. You're asserting that every single one of them is represented by a law firm which is making up a nonexistent class of damages, and every judge who has awarded damages to a non-praticing entity in the past made a mistake in doing so.
That's not right, obviously. Title 35 of the United States Code states that "the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer". Thus the basis of the damages is unpaid royalties for licensing the patent, not lost sales. The court may award damages for lost sales or anything else it considers "adequate to compensate for the infringement", but the ONE statutory-defined harm is the one you're saying doesn't exist.
I wish I had a link handy, but the massive lawsuits firing back and forth between phone tech companies (apple, google, samsung, etc.) would argue against the Mutually Assured Destruction cold war theory for patents.
I think that Apple/Google/Samsung each still think that they can somehow "Win" the patent war. It should eventually become blindingly obvious to all of them that they can't.
The article states that Samsung lost a lawsuit in the US against Apple, however it fails to mention other high-profile results of Apple v. Samsung legal rulings -- namely where Apple had to publicly apologize in the UK and issue a prominently-featured statement as such on their UK website.
Other nations have ruled in favor of Apple, and vice versa, which further adds to the confusion of who is a victor.
The real problem here starts when the big guys realize they are all untouchable, and start fighting proxy patent wars with each other by brutalizing small defenseless companies.
And even that mainly works in big corporation vs big corporation battles. If a big corporation goes after a small company, the small one can only hope to win the lawsuit, and that's if they can even afford the lawsuit. Otherwise they'll just have to pay the full asking price of the "trollish" BigCo.
This article defines "troll" far too broadly, in including any non-practicing entity. The whole point of turning something into a property right is to be able to trade it, and have the new owners enforce the original rights. It's conceptually no different than someone who buys a farm, doesn't plant anything on it, but sues people who trespass through it. The law doesn't require you to do anything with your property rights.
There are practical reasons for this. My law school alma mater, Northwestern, developed and patented the drug that became Lyrica. They sold the patent rights for about $700 million. Northwestern was not going into the prescription drug business. That would be utterly ridiculous. Treating patents as a property right allowed them to take the invention and "exit" by selling it to someone else. All research universities use this technique heavily: Stanford, MIT, etc.
Now, you may not agree that propertization is the right tool for inventions, but the fact remains that when you're discussing a property right it's irrelevant what someone trying to enforce that property right otherwise does with the property.
IMO, "trolling" should be limited to those who assert frivolous or weak patents to get quick settlements, not people who try to enforce legitimate patents. This is completely orthogonal to what sort of bar you think there should be for legitimate patents, or whether there should even be patents, by the way.
This article defines "troll" far too broadly, in including any non-practicing entity.
Did you get past the first paragraph?
The phrase that I saw used in the actual article itself, rather than the leader, was "patent-assertion entities" which is to say companies whose primary line of business is suing for patent rights.
That said, some of them are suing on behalf of entities like your law school alma mater. But the entities doing the suing have no other business.
Generally, "non practicing entity" means companies whose primary line of business is suing for patent rights.
What does it matter whether the entities doing the suing have no other business? Say I buy a really popular strip of land near the beach and don't do anything with it. Say that attracts a lot of tourists who picnic on it illegaly. Is it illegitimate for me to sue them for trespass? Say I sell off the right to sue for trespass to a non-practicing entity. Is that illegitimate?
Now, you may disagree with the nature and scope of the rights. You might say--people shouldn't be able to buy land by the beach--that belongs to the public (and that is the law in some places). But once you have a valid property right, it's not illegitimate to sue for real infringements of that property right, and it's not illegitimate to split up the "bundle of sticks" that makes up your property right and sell someone nothing more than the right to sue for infringements and keep any damages. That's just how property rights work in general.
What if I buy all the land around your house and sue you every time you cross through it to go to the shops or take your kids to school? Would you consider that fair?
So note that in your example it's irrelevant whether one person or many people own the property around your house--no matter what you have to trespass on someone's land to go to the shops, etc. Moreover, in that hypothetical, you certainly got your house for a bargain basement price precisely because it didn't have access to a public road. "Access to a public road" isn't one of the features of the property that you paid for. So why should you get to have your cake and eat it too?
In your example, you want something you didn't buy: access to a public road. I have three ways to monetize my property right with respect to you. I can sell you an easement across my land, I can lease you an easement across my land, or I can sue you for trespass and collect a nominal damages everytime you pass my land. The latter is somewhat inefficient, but all are totally legitimate--they are all just ways to transact in property rights between the two of us.
What I don't understand is how you protect yourself as it doesn't seem feasible to wallow through preexisting patents hoping to not find a patent that may not exist. It appears as though these companies wait until you're most vulnerable (have successfully implemented something patented) before suing. I understand that you're saying some companies have legitimate claim to base their entire business around lawsuits for patents; but their profitability relies on a business model that seems to promote laying in wait under a bridge until the victim is most vulnerable... Like a troll.
You have to understand how the system is supposed to work. Imagine a world in where all patents are valid and legitimate. You're right that even in such a world, it's not practical to just troll through existing patents. So you proceed blithly ahead until someone realizes: "hey, this guy is making a lot of money and I think he should've gotten a license from us." They send an e-mail saying: "hey, you owe us some money." The recipient says: "oh, I think you're right." They do negotiate a license, and go on their merry way. This isn't "waiting under a bridge until the 'victim' is most vulnerable." Rather, it's like "lazy loading" of libraries. You avoid doing the work of determining what patents need to be licensed until the last possible moment. But the retroactive effect of any demand/suit should be similar to just having licensed that patent in the first place. Moreover, there is absolutely nothing illegitimate about only going after people with deep pockets in pursuing patent infringements. I don't sue the neighbor's kid for cutting through my property, but I'd probably sue anyone who drove a truck through it!
Using terms of "victim" and "vulnerable" are really inapropos here. A lawsuit is not an "attack." It's a "hey, I think you owe me some money." These are businesses all trying to make profit off inventions. If the patents in question are valid and legitimate (and I think a lot of them might not be, to be fair!) then there is no illegitimacy in a non-practicing entity suing to enforce their patent rights, because ultimately those rights derive from the original inventor. The NPE might not "create anything of value," but the inventor did, and the NPE bought out the inventor.
Now, to be fair, lawsuits are in inefficient way to transact in property rights, even if they are a legitimate way. Most people who believe in the patent regime think we need to develop things like patent markets to make it easier for companies to find and license patents without resorting to lawsuits.
If you accept that patents should fully be property, as the current law does, then lawsuits by non-practicing entities are not a sign of a problem with the system. Lawsuits are just one of the ways to enforce and monetize property rights.
Now, you may think that intellectual inventions shouldn't be the subject of property rights. That's an entirely defensible position, but it's also a totally separate issue.
Wow, you take a biased view of this subject. You're right that IF you accept patents as full property, THEN this is not a problem. But that is an if that many here - including myself - are not inclined to grant. And if you DON'T grant it, then this is very much not fine.
You acknowledge this, sort of, but only when using the loaded language intellectual inventions to describe patents. This deliberately ignores the fact that a major complaint about the current patent system is the proliferation of patents which claim "invention" status to things that should not be called inventions.
You then go on to call the question of whether patents should be property a totally separate issue. I agree that it is totally separate from the line of argument that you want to pursue. But, given the opinions of most people on this site, it is actually the central issue. Your sophistry about property laws is actually the side issue that should be ignored in favor of what is really important.
The key question is this, is the rapid proliferation of lawsuits from non-practicing entities a problem? In fact evidence suggests that the companies being sued are generally ones that are creating real innovation, economic development, and jobs. The companies doing most of the suing are creating a tax on innovation. If you look at who is paying the costs, and who is capturing the profits, by and large the patent system is failing to incentivize actual innovation, and is rewarding useless legal activity.
When you look at it in this light, the activity of the non-practicing entities is absolutely the greatest source of the gap between what the patent system theoretically should be doing, and what it actually is doing. Therefore the rapid proliferation of lawsuits by non-practicing entities is direct evidence that our bad patent system is rapidly becoming worse.
Now, like a good lawyer, I expect you to take apart and criticize everything that I've said. After all you're paid to come to the conclusion you've decided in advance to, rather than to find the correct answer. Truth, for a lawyer in an argument, is merely one source of rhetorical ammunition. I admit it. I am not a lawyer. In a war of words, you'll win.
But I honestly believe that the ideas that I am putting forth are correct. And the ideas that you are putting forth are dangerous ideas that currently cost our economy tens of billions per year. Furthermore those costs are rapidly mounting. For decades now, Silicon Valley has been the world capital for tech startups. Some day, hopefully a long time from now, this will end and Silicon Valley will pass into history. But it could end much sooner, and worsening patent laws are on the short list of things that could end it quickly.
I'm not taking a biased view at all. I'm accepting a premise on its face, then laying out an argument for why if you accept that premise, then NPE lawsuits are not by themselves a sign of any problem with the system. I'm not taking a position as to the underlying premise, other than to assert that it is the premise underlying the existing law.
Also, I should note that I'm not a patent lawyer. I'm not paid to come to any conclusions on this issue. I have a somewhat more pro-patent outlook than many on HN, but I think it's one that reflects the prevailing view among engineers who have more traditional backgrounds (mine is in defense/wireless communications).
The thing is that the premise that you are accepting, which does underly existing law, is there because of the triumph of an extreme position. (A triumph caused in part because of the creation of the United States Court of Appeals for the Federal Circuit.) Therefore accepting that premise is not a neutral position.
As for patents and engineers, I think it is likely that opinions differ. And one of the causes of that difference is that in software it is easy for random non-technical types to create broad patents with little merit by slapping "web" on top of obvious generic ideas. By contrast in hardware, patents are more likely to come from actual devices created by actual engineers, and therefore you tend to have fewer of the truly egregious patent abuses that outrage people on the software side.
What does it matter whether the entities doing the suing have no other business?
By analogy, what does it matter that mobsters are able to demand "protection" money from legitimate businesses? If it was their right to threaten and demand payment without doing anything useful?
I'll tell you why it matters: because demanding payment from society without contributing back in any way is deplorable, criminal behavior.
That's not an apropos analogy at all. You're ignoring the crucial fact that the NPE paid the original inventor to take over the inventor's rights in the patent. Would the suit be illegitimate had the inventor sued himself, even if he didn't himself intend to use the patent? Then it's not illegitimate for the inventor to sell the patent to someone else who does the same thing. The value the NPE provides is allowing inventors to "cash out."
It's more like if someone buy's out your landlords interest in the building your apartment is in and sues you on your lease. That's not a protection racket--that's enforcing your legitimate property rights.
>Now, you may not agree that propertization is the right tool for inventions, but the fact remains that when you're discussing a property right it's irrelevant what someone trying to enforce that property right otherwise does with the property.
While it may not be relevant from the point of view of the law, it is certainly relevant from the perspective of common sense and decency. If the law allows for abuses like this then the law is wrong.
Treating patents as a property right allowed them to take the invention and "exit" by selling it to someone else.
And what is the someone else going to do with that right that makes it worth $700 million? That's the key question.
If what makes that right worth $700 million is that the someone else is going to manufacture the drug in large quantities and sell it at a profit, great! That's what the patent system is for.
If what makes that right worth $700 million is that the someone else is going to sue anyone who tries to manufacture the drug without a license and collect damages, that's not great. Either the drug won't be manufactured at all, which removes the justification for allowing it to be patented in the first place, or it will be manufactured at an extra cost, the licensing fee and/or damages, which means less of it will be manufactured or it will sell at a higher price.
In other words, a "non-practicing entity" who buys a patent like this one without intending to use it, is basically extracting an extra fee from everyone who needs the drug, without providing any compensating value. The economic term for that is "deadweight loss", and it's not a good idea. That's why patents should be held by those who are going to actually use them.
The NPE is a middle man--it allows the inventor to cash out now, and recoups it's investment by doing all of the things the inventor himself could have done anyway. There is a value to allowing the inventor to cash out immediately with an NPE instead of taking the time to find a suitable buyer who will actually use the patent.
There is a value to allowing the inventor to cash out immediately with an NPE instead of taking the time to find a suitable buyer who will actually use the patent.
If the NPE actually does do work to find a buyer, so that he buys the patent for, say, $700 million but then sells it a year later, say, for $1.5 billion to a manufacturer, then I agree; the NPE in that case is adding value by doing "brokering" work that the original inventor didn't want to do, and was willing to take a quicker exit at a lower valuation to avoid.
But it seems to me that patent troll companies are buying patents with the explicit intention of doing nothing with them other than extracting fees and/or settlements, i.e., that they are adding no value.
The law doesn't require you to do anything with your property rights.
Even if true in some technical sense, the whole point of laws, government, and so on, is to structure society in a way that works well. If that isn't happening, the law is, defacto, broken.
Given that NPEs, systematically, are able to drag down other businesses without doing anything useful themselves, this is clear evidence that patent law, "right" or not, needs to be changed. Strongly.
You've answered your own question, Northwestern isn't a troll because they had no intention of holding a patent long term.
Actually, this isn't a good example, as a new drug is such an established item that it's not really a new invention as such, and there's no reason they couldn't just be copyrighted (with less term).
Northwestern is obviously not the troll in this hypothetical, since it's the inventor, but the entity that buys Northwestern's patent may very well be a non-practicing entity. If a suit by Northwestern to enforce the patent would be legitimate, why not a suit by anyone else who bought the patent?
The point is that "using the property in your business" is not a requirement for legitimately enforcing property rights when it comes to any other kind of property. The right to use property productively is part of the "bundle of sticks" that defines a property right, but so is the right to sue for infringement of that property. Splitting up those individual rights and selling them and buying them individually, these are all just part of how property rights work.
The whole point of treating inventions as property is to allow inventors, like Northwestern, to monetize their inventions in the same ways they might monetize a piece of land. They can build something on it, sell it to someone else to build something on it, or even sell it to someone who does nothing with it but sues people who trespass on it. Usually people don't do the latter with land, but the nature of land makes for very different enforcement than the intellectual property.
Again, this is completely orthogonal to what you might think the scope of patent rights should be. Maybe we shouldn't treat them as property. Maybe they should go into the public domain immediately. That's all plausible. But we do treat them as property, and lawsuits are just one of the ways of monetizing property.
You can't avoid the issue that patents aren't property.
You are free to believe that patents encourage invention, but it's still government-granted monopoly, not property.
If patents are now more valuable to hold and sue, rather than use in product, than that's failed, and the solution is to make patents valid only when they're being used.
"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 every one, 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."
Property has existed since the very beginning of settled societies, throughout the world. Civil law is a later development that simply codified the concept.
There are very strong arguments for the existence of patents in areas that can be defined easily, for example drugs, materials, in fact I'm undecided there. The argument for patents is that they encourage both innovation, and resulting products. However a patent is still not property and thus there is no natural right to it.
Absent meaningful patent reform (don't hold your breath on that one), what might be needed here is for some enterprising patent lawyers to band together and form a troll insurance company offering protection against these scammers.
Somewhat like malpractice insurance for doctors, although the analogy is not precise - the malefactors would be the plaintiffs in these cases, not the defendants.
1. Insurance works because the risk of X happening to individuals in a group of insured people is low individually, even if over the entire population it isn't. This ensures the number of actual payouts are low. Here, the risk of troll lawsuits happening to all insured companies is high. Thus, you'd have to pay out to almost everyone.
2. Insurance also only works (for the insurer, anyway) if the premiums cover the payouts. Given the typical award is tens of millions or hundreds of millions, you'd need both lots of companies, and very high premiums.
To cover a single $100 million award, you'd need 10k companies to pay 10k each in premiums. If 100 million gets awarded against each of 5 companies in the lawsuit, now it's 50k premium per 10k companies.
ISTM it quickly becomes infeasible as long as damages are so high.
Note: General types of lawsuit insurance are already available, but they exclude patent infringement. Patent infringement/litigation insurance is also already available, but it's expensive as hell, per the above.
Although certainly crippling to a startup, damages are usually not that high in absolute terms unless it's the likes of Samsung being sued. If memory serves me right, according to a recent article on HN, they're on the order of ~$1m for small-medium businesses and $7m for larger businesses.
This has to be expected, it's like saying "most of the debt collection is done by debt collection companies". Of course, that's the point of having debt collection companies. If there's a profitable activity - like suing for patents - there would be people who specialize on it, in order to make it more efficient. Now, useful distinction would be if the lawsuits brought on behalf of third-party clients or the PAE is the sole beneficiary, but this situation is impossible to distinguish from actual practicing entity just selling the rights to sue to PAE in order to not bother with it anymore, while keeping the benefits of the temporary monopoly.
With European Union patent, wonder if Europe will end up the same problem. A special "court" of appeal and a system immune to the European Court of Justice and sound very similar to the US system.
The EU will end up with almost exactly the same problem - just at a slower pace.
The only difference after 1-Jan-2014 will be the lack of "legal arbitrage" across states which makes a mockery of many laws in the US.
But legal arbitrage is trivially damaging compared to the new EU Unified Patent court ruled by patent law experts (which creates an incentive to expand their powers), the ability to file software/mathematical patents and the faster Unified Patent application process.
If an "article" that is clearly flamebait has as its subject an academic study or paper and does not include a link or reference to that paper or one can not be provided,
That doesn't work with trolls.