IP on IP: Defining Patent Trolls

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There’s an interesting little thread going on the IP list, started by a pointer to this article on proposed patent reforms.

Robert (Internet guy of long standing) Raisch’s question, and Jason (Lawgeek/EFF Attorney) Schultz’s response, are an interesting starting point for all of our musings…reproduced below:



Question:

From: Rob Raisch
Date: May 15, 2005 6:24:37 PM EDT
To:
Subject: Re: [IP] Patent reform in Congress

Ok, I’m slow about these kinds of things, so let me get this right…

1. I invent something useful,
2. I patent it (which gives me the right to exploit my invention
for a period of time), and
3. I then sell that right to someone else because for whatever
reason I am unable to commercialize it myself.

So, the new patent-holder finds an infringer and decides to protect their newly purchased property rights? And that’s a “troll”? Sounds like the infringer has been amazingly lazy, not done the requisite IP homework, and has made money off of an idea they do not own and had no rights to exploit.

What am I missing?
/rr


Response:

From: Jason Schultz
Date: May 16, 2005 12:25:02 PM EDT
To:
Cc:
Subject: Re: [IP] Patent reform in Congress

Rob,

You’ve hit the nail right on the head. Defining patent “trolls” is not as simple as saying its any entity that didn’t invent or doesn’t commercialize a product, just like defining spam and spyware are difficult out-of-context. The key to defining trolls appropriately is within step #3 on your list — the reason you did not commercialize it yourself. For some inventors in some industries, e.g., semiconductor manufacturing or biotech, it is nearly impossible for anyone without billions in capitalization to effectively commercialize inventions. However, in other industries, e.g. e-commerce or various forms of software engineering, it is much easier. The vast majority of troll complaints come from the latter and not the former. Thus, the key is context — why did the inventor assign the patent to the alleged troll? Was it because they were understandably unable to commercialize it? Or was it because there was no commercial market for it but rather (because of broad claims and the cost of litigation) a market for leveraging large settlements out of companies, both large and small.

These distinction are important because patents are not supposed to be universally fungible commodities like a car or a house or even a piece of real estate, where any sale for profit is considered a good sale. Rather, patents are government grants that are meant to be given only when they serve the public interes, i.e. they are only supposed to subsist as a tool to help promote actual innovation and commercialization of technology. If a company buys a patent that never contributed to any such innovation or development, then it is against the public interest to allow that patent to be unfairly exploited via litigation. On the other hand, if the patent did make such a contribution, the inventor is owed some compensation. Drawing that fine line has proven to be a tricky task, but it is nonetheless an important distinction to bear in mind when determining who’s a troll and who’s a talented innovator.

Jason Schultz
Staff Attorney
Electronic Frontier Foundation