| Patent Troll |
Article Index for Patent |
Website Links For Patent |
Information AboutPatent Troll |
| CATEGORIES ABOUT PATENT TROLL | |
| patent law | |
| troll, patent | |
| intellectual property law | |
|
Today, "patent troll" is used to describe a number of Business es using similar patent strategies. In its most common usage, the term appears to be used to refer to any company that attempts to license and enforce patents, but does not itself perform research or produce products. However, there is neither any official definition of the "patent troll" label nor any test to determine whether a company qualifies as a "patent troll", making the Neologism relatively vague and its use subjective. The neologism is pejorative while the concerned strategy is lawful. Ironically, Peter Detkin is now a partner in the patent licensing firm Intellectual Ventures , a firm typical of the "patent troll" label. LEGALITY The "patent troll" strategy is a lawful and expected result of present patent law. Patent protection grants an inventor or his assignee a right to exclude others from making, using and selling the patented invention for the Term Of The Patent . As far as the United States is concerned, the power of the federal government to grant patents is provided for in the United States Constitution (Article I, Section 8). Patents are Transferrable in the sense that they can be bought, sold and licensed in part to entities other than the inventor(s). Some anticompetitive licensing practices, however, as defined by laws and judicial precedent, are prohibited. In the US, owners of a patent do not have to commercialize the Invention disclosed therein in order to enforce said patent. They are legally entitled to charge any amount they wish as a Royalty to anyone that wants to make, use or sell the patented invention. Patent owners are also free not to license or make use of the patent at all. In a suit for infringement, a successful patentee is entitled to at least a reasonable royalty, where reasonableness depends upon the norms of the field of the patented invention. If a patent owner makes and sells the invention, they may also be entitled to sue for lost profits. WEAKNESSES IN THE PATENT SYSTEM LEADING TO PATENT TROLL BEHAVIOR One of the weaknesses of the patent system is that there is often a delay of many years between when a patent application is filed and when a patent issues. In Europe, for example, half of the patents issued have a pendancy of four years or more. One of twenty have a pendancy of nine years or more. Similar delays are also experienced in the US. Extended delays encourage patent troll behavior . Patent applications are generally published 1 ½ years after patent applications are filed. The inventions then become public. Patents based on these applications however, don’t issue for many years afterwards. Thus Third Parties may learn how to make and use an invention before a patent issues. If these third parties are successful in commercializing the invention before the patent issues, then they are a prime target for patent trolls who can acquire the patents when they do issue and sue those that have already commercialized the inventions. Another weakness of the patent system is that Patent Examination is not perfect. Often a patent is issued with Claims that are too broad. It is not uncommon, for example, for patents to issue on inventions that were already in the public domain or were obvious at the time the patent application was filed. In Europe, about 5% of all patents issued are Opposed because a third party felt they were invalid. Of those that are opposed, about 1/3 are overturned, 1/3 are reduced in scope, and 1/3 are fully upheld. The cost for invalidating a patent, however, can be high. European opposition proceedings can cost 50,000 in legal fees. In the United States, lawsuits to invalidate a patent can cost over 1,000,000. A less expensive proceeding called a Reexamination is available in the US for invalidating a patent, but reexamination proceedings are often viewed as less effective because the person requesting reexamination will either have no opportunity to be heard during the reexamination ( Ex Parte Reexamination ), or will be precluded from making the same arguments in often simultaneous litigation ( Inter Partes Reexamination ). About 1/3 of 1% of US patents are reexamined. Invalidating a patent also adds delays. The invalidation proceedings can add many more years to time it takes for the public to know if a patent will be upheld or not. The high cost of invalidating a patent creates opportunities for "patent trolls" to generate revenue on invalid patents. Jerome Lemelson , for example, collected over a billion dollars in license fees on a patent covering Bar Code readers before a lawsuit was mounted to finally have it declared invalid. PATENT HOLDING COMPANIES "Patent trolling" should not be confused with the business choice to consolidate patents with a patent Holding Company . Large, Multinational Companies may have many separate divisions in different countries, or within the same country. If a patent is granted in the United States to a European-based arm of a multinational company, the U.S. arm of that same company cannot make use of the invention in the U.S. without infringing the patent. It is also legally dangerous to ignore any infringement of a patent even if that infringement is by an associate company since it might create a legal assumption that you are not intending to defend your patent rights. Consequently, many multinationals set up a patent holding company in a tax-favourable country or U.S. state (e.g. Switzerland or Delaware ) and then sell (i.e. transfer or assign) all of the patent rights for the company as a whole to that patent holding company. The patent holding company can then focus on the task of granting licences to the different divisions of the multi-national as well as to third parties. While the patent holding company creates no new innovation and does nothing but licence and enforce patents, it should not be viewed as a "patent troll" since it is part of a larger company that has created the patented innovations in the first place. Similarly, it is not uncommon for numerous small companies to band together to consolidate their patents in order to better compete with a larger company. If these numerous small companies are potentially competitors, they may not trust each other to maintain independent ownership of the various patents. One solution is to set up a new patent holding company which can be jointly managed. Again, while this patent holding company creates no new innovation, it should not be viewed as a "patent troll" since the parent companies that started it are creating new innovations as part of their ongoing businesses before assinging the resulting patents to the holding company. Similarly, it is common for independent inventors with valuable technology patents to set up a technology-licensing company and to assign all the patents for their inventions to that company (Examples include NTP, Inc.; Townshend Intellectual Property, LLC and many others) These small holding companies, at least partially owned by inventors, should not be viewed as "patent trolls", because they actually invented patented technology. DEFENSE AGAINST PATENT TROLLS There are a number of actions that can be taken to reduce a company’s financial exposure to "patent trolls". These include:
MISCELLANEOUS
SEE ALSO
REFERENCES
NOTES |
|
|