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The Joy of Patenting, Part 3: Patent Trolls Degrade Innovation

This blog is dedicated to one very smart analog engineer who has made it to the top. I’m not mentioning names however this subject is of great interest to him.

Normally one starts out a blog with an introduction instead of a closing statement such as: “In 2011, United States business entities incurred $29 billion in direct costs” due to patent trolls, infringement lawsuits, and the like. Seeing how this is a blog for engineers, I think in this case it’s appropriate. The bottom line is patent trolls cost companies money on defense that could otherwise be spent on new innovations. Not only do they use salaries for lawyers that could be spent on engineers, the payouts also cost dearly as indicated by this excerpt: “firms forced to pay patent trolls reduce R&D spending, averaging $211 million less than firms having won a lawsuit against a troll”.

The majority of this blog will reference the Wikipedia subject of “Patent Troll” as it is most inclusive. As a blogger, I’m more interested in introducing a subject for debate than giving credit to one source. I often investigate a number of sources. After looking at only a few, I really wasn’t getting any new information. On occasion, one source provides enough background on a subject to start the discussion. In addition to that, Wikipedia does a lot of the leg work for me by researching the topic and providing references to their findings.

Patent trolls have many definitions and the definition itself has seen quite a bit of evolution and change. Currently it refers to an entity that uses patents to make life miserable for others. Most entities are companies that enforce patent rights against infringers. Worse yet is that these companies are all about profiting from the threat and rarely about using the patent for profit by implementing the invention. These underhanded methods are even more deviant when one considers that the patents are obtained from those experiencing hard luck while the enforcement is beyond the “good circle” of the original patent into the area of remote claims that cast a net much larger than intended by the inventor. In other words, it’s the typical US legal system at work where right doesn’t always mean you will win the case…..been there, done that, more than once.

Companies that troll patents fall under three basic types:

  • patent holding company(PHC)
  • patent assertion entity (PAE)
  • non-practicing entity (NPE)

According to Wikipedia, these labels are not inclusive and instead depend on the company’s mode of operation. Still, there is a commonality among them that seems to lead towards unscrupulous behavior for the most part.

Some say the cause of this epidemic is the slow nature of the USPTO due to the examination backlog. Others say that allowing broad claims opens the door for going after others dancing in similar areas of technology. Some mention of ignoring prior art is also blamed. In reality, I think the US has over 9 million patents listed so there is a high probability that prior art can be overlooked. Couple that with the way terminology varies from patent to patent on such a grand scale and most searches seem to overlook quite a bit in terms of prior art. Even the best search firms have a disclaimer stating that prior art verification is not guaranteed in this sea of disclosures.

So what is being done about these trolls? In 2013 five federal measures were introduced in order to thwart them. States also got involved. Here is a summary:

Highlights of the five measures:

  • the President ordered the USPTO to require companies to be more specific about exactly what their patent covers and how it is being infringed
  • tighten scrutiny of patent claims that appear overly broad
  • the President asked Congress to enact legislation to more aggressively curb “abusive” lawsuits
  • In February 2014, Apple filed two friend-of-the-court briefs for cases pending in the U.S. Supreme Court, claiming to be the #1 target for patent trolls, having faced nearly 100 lawsuits in the preceding three years.
  • In November 2014, the U.S. Federal Trade Commission (FTC) settled its first consumer-protection lawsuit against a company, for using “deceptive sales claims and phony legal threats”

Like the Feds, states are stepping up as well:

  • May 2013 Vermont's Consumer Protection Act
  • August 2013 Nebraska's Attorney General sent warnings to a patent troll's law firm
  • 2013 Minnesota's Attorney General obtained a settlement prohibiting MPHJ Technology Investments LLC from continuing its licensing campaign
  • April 2014 the Wisconsin passed legislation that would make patent trolling Wisconsin companies more difficult.
  • 2014 Idaho the “Patent-troll” bill which protected companies from “bad faith assertions of patent infringement”

It’s hard to say whether or not all of this is working. Patent infringement lawsuits were at an all-time high in 2015. Incidentally the 2013 efforts were due to infringement lawsuits going up by a factor of six from 2006 to 2012. In 2016 there was a win according to this article, “One of the most profitable patent trolls has been defanged”. So again, it’s hard to say what’s working and what isn’t.

Like a bad divorce with children, it’s the innocent that suffer. My experience with law is that it’s not about fairness. Instead it’s about the ability to twist the law in a manner that guarantees a win. This is why I will stop short of ever becoming an attorney. I may become a patent agent at some point however the lack of integrity in the modern court room would not suit my ethics very well. The rewards often overlook the innocent engineers who invent the idea and instead reward lawyers who either enforce or defend it. Couple that with judges who decide based on “case law” and you have a system that’s more about covering one’s behind than it is about fair awarding to the party that is right. Have you ever seen a lawyer promise to tell the truth in court? Exactly. It’s the non-lawyers that are sworn in. Of course like any profession, there are good and bad. That’s not my point here. My point is that my audience of engineers is being swept aside due to unintended occurrences based on the rules that be. I write for this audience. We are a brotherhood of creators, all PC aside.

As for the targeted companies in this fiasco, here are some numbers:

Lawsuits Against Large Corporations (2009 through mid-2013)

  • Apple Inc. (171)
  • Hewlett-Packard (137)
  • Samsung (133)
  • AT&T (127)
  • Dell (122)

Small companies

  • 2005 patent trolls sued 800 small firms
  • (those with less than $100 million annual revenue)
  • the number growing to nearly 2,900 such firms in 2011
  • the median defendant's annual revenue was $10.3 million

Nowadays it’s easier to patent as a micro entity. Costs are reduced to encourage more patenting. However, the patent only provides a stake in the sand. Defending a patent can cost $1 million or up to $2.5 million for detailed efforts. Couple this with the costs to get started and it’s no wonder so many small businesses fail while large corporations dominate. It’s as if the name Sherman were more associated with the general that tore through the south in the Civil War (in a manner similar to large corporations) than it is associated with ant-trust.

Here is a bit more about who is targeted: “trolls tend to sue firms with fewer attorneys on staff, in effect encouraging firms to invest in legal representation at the expense of technology development”. Again this goes against the engineering pool into the legal realm. In this “make work” scenario, the legal system almost guarantees its market while engineering becomes less of coveted career choice. Hence fewer engineering students will want to enter the market……in the US. China isn’t slowing down. India isn’t slowing down. The lower classes in those countries are seeing their lives improve. In the US, it’s just the opposite. We are being legalized into failure. It’s called, “a clue”.

References

  • “Patent troll,” From Wikipedia, the free encyclopedia https://en.wikipedia.org/wiki/Patent_troll
  • “One of the most profitable patent trolls has been defanged,” https://www.engadget.com/2016/03/26/uniloc-patent-troll-defeated

13 comments on “The Joy of Patenting, Part 3: Patent Trolls Degrade Innovation

  1. Morgan Beaglemann
    December 22, 2016

    That is a GREAT sweater and is reminisent of a STAR TREK Endineering Division uniform. Martin

  2. SpeedEvil
    December 22, 2016

    It would be really nice if a problem statement wasn't enough to get you a patent.

    It seems all too often today that patents of the form 'I hit X novel problem' 'I solved it by Y'.

    And a patent is granted for that, when it does not in any way encourage innovation by information sharing, which is the original intent of patents.

    I would argue that the average engineer sitting at their desk should never be able to get a patent on something which did not involve a truly novel idea that nobody else would come up with in 20 years.

    At the least, the effort involved should obviously be more than the effort required for another engineer sitting at another desk to do a complete patent search on the topic, to see if their technique infringes an existing patent.

     

     

  3. sroochi
    December 22, 2016

    I believe one gets more “original” patentable ideas the less one knows about any particular subject.  I recall a young engineer who was excited because he had come up with a way to implement a simple current limiter circuit using a couple of active (nmos devices) and a resistor.  He showed me the circuit as he was ready to apply for a patent.  I didn't have the heart to tell him that one of the original OP Amp designs (circa..uA741 ~1969) had such a circuit for its output current limiting function.  Hopefully, he found out before he spent more time and effort …

  4. D Feucht
    December 22, 2016

    Scott,

    Your point about yet another aspect of the unworkability of patents is more evidence that patents are a bad idea that only “seemed like a good idea at the time” of Thomas Jefferson. Like most bright innovations in human social institutions, some of the flaws are as follows:

    1. Nobody owns ideas. They are part of the intellectual commons of civilization. The Asians understood this well before Western influence. New ideas are discovered and were consequently there all along.

    2. Ideas and working implementations differ only by degree, not kind. Software algorithms and DNA are patentable yet are based directly on general principles hard to distinguish from specific instances of their application.

    3. Only novel ideas can be patented, yet who is to say what is novel? What is novel to an idiot is obvious to a genius.

    4. How much must an idea differ from an existing patent to be different? What is the same to one is different to another.

    5. The patent involves law and thus gives government a nexus for control of the use of ideas – a form of mind control.

    6. Property cannot be “intellectual”. If one person has it and gives it to another, both have it. Property by definition is mutually exclusive as to who owns it.  “This is mine; that is thine.”

    7. What constitutes public disclosure? If it is defined by law, then one is made subject to a legal procedure in order to freely use one's own idea without the risk that someone else will patent it upon discovery. And what constitutes a public disclosure? There are plenty of obscure publications and websites out there nowadays.

    8. Patents discourage innovation. Without patents, ideas can be freely discussed and refined, but with them, ideas are subject to secrecy before patent disclosure. The patent relates ideas to wealth, creating a protective milieu for ideas which otherwise is open and free.

    9. The patent office putatively decides what reality is as they have suppressed patents for genuine inventions.

    10. Patents teach behavior contrary to fundamental institutions of civilization, such as schools, for which the free exchange of knowledge is encouraged as well as its use, which is often the purpose of the exchange.

  5. vsurducan
    December 23, 2016

    “Nobody owns ideas.”

    Of course you own your own idea until you disclose it to anyone else. 🙂

    Once you're talking about it you may found that it belongs to someone else 100 years ago or so… 🙂

  6. D Feucht
    December 23, 2016

    “Of course you own your own idea until you disclose it to anyone else.”

    Au contraire. You might have an idea and never disclose it to anyone else, only to discover that someone else (or others) have independently discovered it – even if you never talk about it. Then whose is it?

    This is (in part) why “intellectual property” is an oxymoron. It is like talking about “square circles”. There is no such thing as “intellectual property”. It is in the same category (to relate it to the season) as Santa Claus.

     

  7. Effective-Technical-Writing dot com
    January 3, 2017

    First to file is the US patent statement on ownership.

  8. Effective-Technical-Writing dot com
    January 3, 2017

    And this  https://www.youtube.com/watch?v=E_lb3D7Ay-M

     

  9. Effective-Technical-Writing dot com
    January 3, 2017

    That is called prior art and it is discovered in a patent search.  If it is over 20 years old and hasn't been extended, it may be available for use.  You just can't patent it.  I sound way too much like an attorney here (which I am not) however they will sue at the drop of a hat.  Hence the word “may” and a disclaimer that this is NOT in any way legal advice or advisement.

  10. Effective-Technical-Writing dot com
    January 3, 2017

    Patents are one way of protecting and idea.  They add value to a company.  Regardless of how they are viewed, they are a government award based on the findings of a patent reviewer.

  11. Effective-Technical-Writing dot com
    January 3, 2017

    This is why you hire a patent attorney or perform a search.  Attorneys can sometimes create a patent out of an estalished series of claims together in functional combination.  

  12. Effective-Technical-Writing dot com
    June 27, 2017

    As a patent searcher, you don't know how many times I've heard, “I've never seen one” yet I have several pop up within 5 minutes.  Nothing beats that moment of euphoria yet it can be beaten down when realizing prior art exists.  Still we are approaching, or may have surpassed ten million patents.  Not bad for an agency that hit the 5 mil mark in the 90's.  Seems ideas are still being issued patents even though it's been thought of previously.

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