‘Patent Trolls’, Intellectual Property and Technological Innovation

Over the summer the BBC website had an interesting feature looking at the ‘patent trolls’ who proactively buy patents with the sole intention of suing people for their infringement. The introduction of these ‘non-practicing entities’ into the patent system is something novel, with an influx of ‘entrepreneurs’ and ‘finance people’ having transformed the system into one in which the “majority of patent lawsuits today are filed by entities that don’t make any products”. Some ‘patent trolls’ develop their own patentable inventions in-house but most rely on buying second-hand technologies, which current owners were willing to sell for an influx of capital in exchange for potentially deployable ideas which nonetheless remain unactualised. Perhaps the financial crisis represents a supply-side cause of this willingness, given the apparent chronology of the growth of the ‘patent trolls’, though this is purely speculative on my part.

I find this interesting because the ‘patent trolls’ seem to rely on digital technology, in so far as that they use ‘virtual offices’ to minimise legal constraints and presumably rely upon internet research to assemble their ‘patent war chest’ and to identify their targets. Their methods rely upon digital innovation and abundant data but so too do the basis of their claims. What intrigues me is how an obscure potential technology for which they have acquired a patent can be linked to actually existingtechnologies which are claimed to infringe upon that patent. Their activities represent a weird inversion of the innovation process: linking ideas with their practical deployment in technological artefacts. How open-ended could this potentially be and what are its implications for innovation itself? Furthermore, what are the long-term effects of this likely to be for the viability of systems for registering and enforcing intellectual property? If we accept Margaret Archer’s (2012: 36) argument that the growth of the patent system “served to ‘freeze’ uncertainty and, in guaranteeing profitability ceteris paribus, thus freed up internal resources to make the next innovative development which, if successful, would then be protected in the same manner” then the long term viability of this growth, which underwrote the calculability upon which corporations have tended to depend, becomes something of enormous sociological significance. The enterprise of ‘patent trolling’ is “totally legal, and very lucrative, and absolutely shady”. Perhaps unsurprisingly then, it seems likely to take centre stage as a political issue in coming years:

Innovation is the foundation of America, and since 1790, entrepreneurs have been able to claim patents on their inventions so that copycats can’t profit off their work. But some companies have found a controversial use of the American patent system, derisively referred to as “patent trolling.” The practice refers to when a company buys broad patents for technology that it doesn’t make—or partners with inventors who don’t actively use their patents—and brings legal claims against other companies that use the technology. The price of stealing someone’s work in the United Statesff rrkis mind-blowingly expensive—in the millions of dollars—and even if the accused company wins, rkit still faces high legal costs. Often, a company violating a patent will pony up a few thousand dollars for licensing fees rather than face off in court.

“There are hundreds of thousands of crappy, vague, overly broad patents out there, and all you have to do is scoop up one of these patents and threaten to sue. No one is going to defend themselves, because it makes no financial sense,” says Julie Samuels, a senior staff attorney for the Electronic Frontier Foundation (EFF), which is running a database of patent troll claims. “It’s totally legal, and very lucrative, and absolutely shady.”

Bryan Farney, an attorney for a MPHJ, a company that has accused multiple businesses of using its patented office-scanner technology without permission, takes issue with the characterization of companies that sue others over patents they don’t use. “Obviously, patent trolling is a pejorative term…” he tells Mother Jones. “A more accurate term is Non-Practicing Entity.”

Earlier this month, Senator Claire McCaskill (D-Mo.) called these kinds of companies “scam artists” and “bottom feeders” who “work in the shadows.” Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Senator Mike Lee (R-Utah) introduced a bill this month that specifically takes aim at them by making it harder and more expensive to make these claims and allowing targeted companies to get their legal fees back. The bill has support from the White House. This week, a group of inventors—including Facebook and Twitter’s co-founders—sent a letter to the House and Senate Judiciary Committees arguing that “broad, vague patents covering software-type inventions—some of which we ourselves are listed as inventors on—are a malfunctioning component of America’s inventive machinery.”

But companies that oppose the legislation say that it shouldn’t matter whether or not they use their own patented technology because big tech companies are taking advantage of their inventions. “Almost all inventions seem obvious after they have been invented,’” wrote Katharine Wolanyk, president of Soverain Software, in a November 18 letter to the House Committee on the Judiciary. (Wolanyk’s company owns patents that governs online shopping cart technology and lost one of its claims in the US Court of Appeals for the Federal Circuit. Soverain is now trying to bring the case to the Supreme Court.) “The current system forces patent owners to defend, over and over again, the validity of their patents.”

http://www.motherjones.com/politics/2013/11/8-patent-invention-claims

If anyone can suggest useful places to begin reading further about this I’d be very grateful. There’s something extremely interesting happening here and I’d like to understand it in much greater depth than I do at present. I’m particularly interested in the potential scope of the activity: is it possible that the range of ‘broad patents’ which can be linked to particular products is basically infinite? Will it be possible to legislatively counteract this tendency? Or is it perhaps more likely that we’ll see an ever growing influx of financial and human capital into ‘patent trolling’ and, if so, what are the long-term consequences? Would it even be possible to have an intellectual property system which prevents ‘patent trolling’? 

One further thought is that The Mark Cuban Chair to Eliminate Stupid Patents must surely be the best name ever chosen for an endowment. It’s also an instance of systemic consequences leading to the grouping of new agents seeking to transform their shared context. I wonder if it is a sign of more to come. The difficulty seems to be whether the interests vested in the patent system itself preclude the reforms that would render ‘patent trolling’ untenable.


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