

The Real Toll of Patent Trolls - bgossage
http://www.inc.com/magazine/201202/kris-frieswick/patent-troll-toll-on-businesses.html

======
roc
> _"Friedland isn't sure how word of the settlement leaked to Troll Town, but
> he says that after he paid the fee, he was inundated with infringement
> letters from trolls."_

NPE's are, almost by definition, shell companies for larger interests. [1] If
you paid one of those off, it's quite obvious and inevitable that any of the
other NPEs in that 'family' that have half a case would not even have to wait
for word to 'leak out', but would be explicitly notified and ordered to come
after you.

[1] Myhrvold's Intellectual Ventures has been reported to have a network of
over a _thousand_ such shell companies for this kind of thing.
<https://www.techdirt.com/articles/20100217/1853298215.shtml>

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nlh
Reading stories like this literally makes my blood boil. I know it's been
discussed at length, but still. This is pure economic leakage -- it's an
unintended consequence of well-intentioned legislation and it's absolute BS
that companies have to put up with the trolls.

Good on the guys for putting up a fight, as expensive as it is.

I feel particularly frustrated about this whole mess because I don't see an
end in sight. I'm not convinced the new patent reform legislation is going to
help (Or is it?) and it feels like an uphill battle for small businesses.

What to do?

~~~
JoshTriplett
> unintended consequence of well-intentioned legislation

I'd question both of your adjectives there. This seems like an _intended_
consequence of heavily lobbied legislation, as evidenced by the reactions to
any attempts to change this system.

~~~
lowboy
I think parent was referring to the inception of the patent system, which was
well-intentioned. This is different from the trolls lobbying to keep the
status quo, which is definitely not well-intentioned.

~~~
marcosdumay
I still disagree. Since inception patent law is heavily lobbied (except that
in some cases lobby didn't have a name yet), and legislators refuse to fix its
very visible flaws.

About the same patter repeated on every country.

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blindhippo
One of the interesting themes in the article is "we can't afford to go to
court". Not to detract from the main issue of patent reform but perhaps
America should look into making it's legal system a bit more user friendly.

It should be completely viable for a smaller entity to take on one of these
"bogus" claims in court and not go bankrupt doing it. Smacking these claims
down in court might go a long way towards preventing future shakedowns.

~~~
rayiner
Nothing prevents you from representing yourself. Maybe this is an easy way to
disrupt patent trolling: a "how to" guide for taking an obviously stupid claim
out in summary judgment.

~~~
thaumaturgy
> _Nothing prevents you from representing yourself._

...other than good sense.

~~~
noonespecial
That's the part that needs fixing. A greedy amoral entity can threaten your
entire livelihood for no cost to them and you are powerless to defend yourself
or even understand the process by which to do so.

That sounds like institutionalized injustice to me.

~~~
rayiner
How are you "powerless to defend yourself or even understand the process?"
There is nothing magic about the legal system. You can pick up the crucial
aspects of the patent law probably in less time than it'd take you to pick up
a new scripting language. And since it's federal law, the rules of civil
procedure and evidence are written in very easy to understand English.

~~~
sigsergv
You WON'T “pick up crucial aspects” because there all aspects are crucial. Law
practice costs so much money mainly because it's totally entangled and messed
up, and ordinary person just physically can't follow all these legal
procedures correctly.

~~~
rayiner
This is not true at all. There is nothing complex about basic legal practice.
Legal services get expensive because companies hire expensive people to work
on very complicated problems (e.g. multi billion business deal gone wrong).
The process itself, for simple problems, is not complex or "messed up."

~~~
thaumaturgy
We're not talking about small-claims court here. Your profile says that you're
an attorney; I would be absolutely stunned if any trial attorney would suggest
that a pro se defendant could prevail in a patent lawsuit against a much more
resourceful organization without any more experience than reading a book or
two (let alone a "how to").

You would know as well as anyone that legal actions are more a game than an
effort to determine who actually is right or wrong. The entity with the
greater amount of money in the bank can afford attorneys who are better at
playing the game; while everybody loves a good story of the self-taught layman
winning a case, in reality most laymen would get absolutely screwed.

 _Certainly_ if it's a fight worth fighting -- if the patent dispute is that
important to the victim's business -- then they should fight it as well as
they can, especially since they would have so much riding on the outcome:
potential grievous damages awarded to the plaintiff, for one.

And, this all presupposes that the layman is lucky enough to get a judge
presiding over the case that has some competence in the area of expertise
covered by the patent. If the suit is held in the East District Court of
Texas, well, the defendant already has the odds stacked against them.

Even if the lawsuit doesn't go to trial, and gets settled like 96% of other
such suits [1], the layman's ignorance of process could likely end up costing
them far more in the settlement than they would spend on letters from a patent
attorney's desk. The layman would be attempting to negotiate from a much
weaker position, _and the attorneys for the patent troll would know it._

[1]: [http://www.ipwatchdog.com/2011/06/02/what-to-do-sued-for-
pat...](http://www.ipwatchdog.com/2011/06/02/what-to-do-sued-for-patent-
infringement/id=17538/)

~~~
rayiner
I'm talking about "legal procedures" here, and the claim that ordinary people
couldn't hope to follow them. They are pretty streamlined and easy to follow
for a framework that must scale from small controversies to enormous ones. I
think it's totally possible for an ordinary intelligent person (say an
engineer) to pick up a couple of books and navigate that process. The
judiciary goes to great lengths to ensure that, because it is very sensitive
to the fact that a lawyer should not be necessary to defend yourself in court.

Now, would I recommend taking on a patent troll yourself? No, but that doesn't
mean you couldn't do it, and even have a good chance if winning if the case is
indeed totally meritless.

------
cwp
This article gives me an idea. Theoretically, problem with trolls is that they
can't be counter-sued because they're non-practicing entities, ie. they're not
technology companies. But build.com isn't a technology company either, they
just happen to use it in their operations.

From the article: "There was one for transferring data through a network,
another for using images on a website, another for having a computer that
connects to a database." Quick check... yup, intellectualventures.com has a
web site with images. I bet they have a database of patents, too. Let's see...
lodsys.com bingo.

So the real problem is just that "defensive" patents are optimized for
counter-suing other technology companies, not trolls. (Well, no, the real
problem is that the patent system is broken. But given the system we have...)
What's needed is a pool of patents that could be used to counter-sue trolls.
And hey, there are "business method" patents as well as technology patents.
Could we get a patent on sending threatening letters? How about a patent on
shell companies?

Now I'm off to work on my new invention: "method and apparatus for travelling
to a courthouse by means of a motorized vehicle."

~~~
dbrian
Having them rely on an industry group to take pity on their case and come to
their defense is not a good long term solution. The only way this will change
is if large companies (Google/Apple/MS/Amazon) decide it's in their best
interest to put lobby money behind patent reform.

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arbuge
Patents are completely broken in the software world - if your web/ecommerce
company reaches ~$10m in revenue at any point, the corresponding rise in media
attention will likely also bring you trolls demanding settlements. This is
most certainly not what the patent system was intended to be used for. These
people are legal criminals exploiting the law. The Acacia CEO's rationale is
rubbish in my opinion. Protecting inventors, my foot.

ps. I'm curious about the patent that was used to extract hundreds of millions
from defendants, including $565m from Microsoft, and was subsequently
invalidated. Will that money now have to be refunded, along with the
defendants legal fees, interest charges, etc.?

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ScottBurson
I think the trolls are making a strategic error by piling on (when more trolls
sue a victim that has demonstrated a willingness to settle).

Once it becomes clear that settling is as risky as going to court -- because
if you settle, you'll be faced with more suits from other trolls -- the
calculation changes. Business owners may as well take their chances in court.

I would love to see some business owners defending themselves _pro se_ , on a
shoestring budget, and winning.

Maybe I'm just a dreamer.

~~~
ScottBurson
Here, alas, is why that probably won't work: [http://arstechnica.com/tech-
policy/2012/09/how-a-rogue-appea...](http://arstechnica.com/tech-
policy/2012/09/how-a-rogue-appeals-court-wrecked-the-patent-system/2/)

Previous discussion on HN: <http://news.ycombinator.com/item?id=4594122>

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ISL
Does anyone have a reference for how much trolls tend to pay inventors for
their patents?

Trolls get a bad rap, and I'm opposed to trolling as opposed to licensing to
manufacturers, but they're one possible form of middleman between inventors
and infringers.

One major point of a patent is to compensate the inventor for doing something
smart. If the trolls are "non-practicing", then they must have acquired their
patent from an inventor. How much are inventors getting paid?

~~~
Symmetry
First: if an inventor comes up with some idea but decides that instead of
producing products based on their invention waits for other people to come up
with the same idea and get money from them (or has someone do it by proxity),
then is that actually something we want to encourage?

Second: both the times an entity I was part of was on the receiving end of a
patent troll, there was at least circumstantial evidence that the troll hadn't
invented anything. The first time was when one of the students at my dorm came
up with the idea of hooking up our laundry machines to the Internet for a
senior project. Shortly after they got Slashdoted someone filed for a patent
on the idea. The second time was when the place I worked went to some outside
contractors, and they tried to file patents based on the designs we gave them.

~~~
rayiner
> First: if an inventor comes up with some idea but decides that instead of
> producing products based on their invention waits for other people to come
> up with the same idea and get money from them (or has someone do it by
> proxity), then is that actually something we want to encourage?

The idea is that the original inventor publishes the secret sauce via the
required public disclosures and people either license the technology from him,
he sues people who copy the technology without licensing, or he just cashes
out and sells his whole interest to some other entity that does any of the
above.

If someone else independently comes up with the same idea within a relatively
short time frame, well in that case I don't think the patent should be
granted. I think the legally sensible thing to do is to move patents in the
direction of being an unfair competition type claim (unfair because you simply
copy someone else's technology instead of developing your own).

~~~
astrodust
I find it extremely unlikely that someone can conceive of and take the time
patent something so novel that someone, somewhere, hasn't already tried it at
least once.

In those rare cases, it should be a requirement to produce a detailed
description of the _method_ by which the desired result is achieved, and that
the patent would cover that _specific_ method.

"Attaching a computer to a database" is not a method. A very specific driver
format employing particular protocols is.

~~~
rayiner
That's exactly what a patent is! You don't patent "communicating wirelessly
between two devices." That's a result. Instead, you patent something like
OFDM, a particular, novel, way of achieving that result. Infringement is only
found if someone else not only achieves the same result, but does so in
substantially the same way. Even further, the scope of that way is cabined by
prior art--you only get to claim protection over the parts of that mechanism
that are actually novel.

~~~
shasta
...in theory...

------
zalzane
This is probably the biggest barrier preventing me from starting a business.

I know that if I ended up getting hit with NPE patent infringement claims, I'd
probably just buy a gun and go shoot up their office.

~~~
pravda
I hope you're not serious. Not about the second part, that sounds like a great
idea.

About the first part. You need for your business to be successful in order to
have any chance of attracting a patent troll. Most businesses don't get
successful enough to warrant a shake-down.

