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Patent troll

Revision as of 12:34, 26 July 2010 by Ciaran (talk | contribs) (Why a "practising" requirement wouldn't suffice: reduce words)

A patent troll is a derogatory term used to characterise a company that acquires patents for the purpose of threatening product developers and demanding patent royalties.

Patent trolls attract a lot of media attention but it's important to remember that the problems caused by software patents are much more than trolls.

A narrower term is non-practising entity (NPE), which denotes a sub-category of patent trolls whose only activity in a domain is patent trolling. One definition of NPE is "an entity that does not have the capabilities to design, manufacture, or distribute products that have features protected by the patent".[1]

Who do they harm most?

Patent trolls (and NPEs) are mostly a problem for the large software corporations such as IBM, Microsoft, Google, and Apple.[2] Patent trolls are generally not a problem for free software projects, although a large software company could be targeted for its distribution of said software. Free software projects suffer more from harm with neither litigation nor threats and the harm to standards.

Why a "practising" requirement wouldn't suffice

One suggestion is to require that litigators practise the patent in order to demand damages, however, there seem to be fundamental problems with this: How should courts deal with litigators who claim to have the intention to practise the patent in the future? or litigators who say that they are in the process of practising the patent and their lack of a tangible product is because they're still in the fund raising phase?

It's also unreasonable for fields such as pharmaceuticals, where it's normal to spend 10 years on development before having a product to show.

In any case, this sort of requirement would do nothing against a company that has a trivial or tangential product (which may not even be making money). Any litigator could make a phantom project before going to court, so this requirement would be easily reduced to a formality.

How to protect only the big companies against trolls

There are certain software companies who want to solve the problems caused to them by patent trolls, but at the same time they want to continue to use their own software patents against other software developers. These companies don't want to fix the unfair system, they just want to be the ones profiting from the unfair system. So they support:

  • Making harsh measures such as injunctive relief harder to achieve (this has been partly achieved in the US case EBay v. MercExchange (2006, USA))
  • Making it harder to block imports and exports (for example, in the US, via the US International Trade Commission
  • Reducing the damages that patent holders can expect
  • Making particularly low damage for cases where the patent holder is a non-practising entity

Each of these steps is somewhat useful for society too, but it will never solve the problem, and it distracts politicians and judges from the real solution.

Activity levels

According to Stanford University's Lex Machina,[3] patent trolls account for 30% of all patent litigation.

Google's Head of Patents and Patent Strategy said in March 2009:[1] "Of the 20 patent lawsuits filed against Google since late 2007, all but two have been filed by plaintiffs who don’t make or sell any real product or service — in other words, by non-practicing entities or “patent trolls.”"

Troll companies

Here are some examples of companies that are considered patent trolls:

An example of a grey area is Microsoft. They clearly do practise their patents, but are still called a troll by some.[6]

Troll incidents

  • Google Fights Back And Wins Against Bogus Patent Lawsuit From Guy Who Couldn't Even Code His 'Invention' [4][5]

While the broad facts of the case—a pair of entrepreneurs with one failed business idea, almost no computer programming experience, and a couple of patents march into court waving those patents and demand $600 million from one of the most successful companies of the digital age—might seem far-fetched, but they’re actually quite commonplace."

Formative factors

A similar problem is companies who do develop products, but when their product fails, they change their focus to extracting money from more-successful companies.

The problem is particularly acute when a company fails, and the only assets it has left are its patents. The receivers have a legal duty to shareholders to obtain maximum value from the remaining assets, and this may involve pursuing competitors who have succeeded in exploiting and marketing similar concepts to the ones that the failing company failed to exploit and market. The more successful the competitor, the better the chance of extracting a generous out-of-court settlement. Thus patents reward failure and penalise success.

Related pages on ESP Wiki

External links

References