About “patent trolls” and property rights! 1/4
Feb 20, 2013
In the last few months, we’ve read again and again about lawsuits between producing companies and companies whose only interest is to make money with the patent pool they own, but never use (prominent case Apple against MobileMedia). These companies are also known as patent trolls. A patent troll is a term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered unduly aggressive or opportunistic, often with no intention to manufacture or market the product. A related, but less pejorative expression is non-practicing entity (NPE), which describes a patent owner who does not manufacture or use the patented invention. Essentially “patent trolls” purchase patents, often from bankrupt firms, with the intent to sue other firms which may actually use this patent. They try to force patents, but have no interest in a manufacturing or research base.
Effects on the market…
In recent years, tech companies have spent more of their time and money, defending themselves from infringement lawsuits. Sometimes, it’s tech-company versus tech-company, such as Apple’s recent smartphone design fights with Samsung. Increasingly, firms are begun to fight against patent trolls. These organizations have pressed hundreds of lawsuits against thousands of defendants over the past 20 years, and business is booming now more than ever. James Bessen, Lecturer in Law, Boston University School of Law, wanted to know the extent of this escalating issue. According to a recent study he co-authored, fighting these firms can cost companies an estimated $500 billion from 1990 to 2010.
For example, the smartphone technology has estimated 250,000 U.S./worldwide patents covering the technology behind the devices and components that make them work. That means no cell phone, computer program or a single product of modern technology is currently legally available on the market. Tens of thousands of overlapping trivial patents prevent any competition, thus halting innovation. The lawsuits could engender a lot of money which the costumer ultimately is responsible for covering. The U. S. patent law must change to undermine this evolution.
On the other hand, have patent trolls become a problem for European markets? Not yet! The reason for that is simple. It is harder to get a new patent registered because they prove the novelty of each patent! Also, a patent has to contain a technical part. This means it is not possible to register a trivial patent in Europe, but these strict patents are the most interesting for patent trolls because they are often spongy and a good base to start a lawsuit. Another reason is that there is a long catalogue of compulsory licenses, for example if the patent holder is not using the patent itself, a stranger may apply for a compulsory license.
Suggestion…
In the future, patents should have different long maturities. Patents in areas with lots of fast, cheap innovation should be less valid as those in areas with expensive, long-lasting innovation cycles. The conditions for the patenting of software and business methods should be significantly tightened. At the same time, the subsequent verification of the validity of a patent can be simplified. Finally a longer list of compulsory licenses would help to fight the patent trolls.