
Make Patent Trolls Pay All Costs If They Lose - mdesq
https://petitions.whitehouse.gov/petition/make-patent-trolls-pay-all-costs-associated-their-frivolous-lawsuits-if-they-lose/gWPpVYMt
======
btilly
I like the principle, but most patent trolls are small shell companies. If
they lose, you can ask for costs, but you'll find nobody to collect from. (And
the next shell, with the same lawyers, will be suing someone else with a
different garbage patent.)

Also there will be an uphill battle to avoid any Congressional response
turning into a symmetric "loser pays" scenario. In that situation, the troll
can trivially run up huge legal fees, knowing that you will collect nothing if
they lose, but you stand to lose a lot. That change would leave trolls better
off and potential victims worse off than they are now.

~~~
pash
Patent trolls own a patent, at the very least. The court could seize the
patent and auction it off (or place it in the public domain) if the troll's
string-pullers choose not to pay the loser's penalty.

~~~
visarga
Putting the patent in the public domain or invalidating it would be a good
penalty for frivolous patent suits.

~~~
bloaf
Or the maintenance cost could be significantly increased.

I would love something like this: any failed patent suit doubles the
maintenance cost for _all patents owned by the entity which owns that patent._
The effect would be transferable (i.e. if they sold the patent to some other
company, that company's costs would double) and it would stack (i.e. failing
with the same patent twice, or owning 2 such patents would quadruple your
maintenance costs.) The effect would last for some fixed period of time, so if
the patent were truly valuable, a company could opt to keep it anyway.

Obviously, that would make any patent involved in a failed lawsuit highly
undesirable, so no one would want to buy it. It would also mean that shell
companies wouldn't be able to send the patent back to a company dedicated to
simply amassing patents.

~~~
jbri
This would discourage legitimate patent suits, while not particularly hurting
one-patent shell companies.

------
rayiner
One of the things that occurs to me is that if the patent in question really
is frivolous, defending it isn't going to cost $1.5 million. That'll buy you
two decent small firm lawyers working overtime for a year. At the same time,
forcing losing plaintiffs to pay _all_ costs means that small firms can
basically never sue large companies for ripping them off.

I think a less destabilizing way to address these sorts of nuisance suits is
to require the plaintiff to post a substantial bond (as is done in shareholder
derivatives suit), perhaps subject to losing a "deductible" if the patent is
invalidated in the suit. Requiring the plaintiff to risk say $50,000 would go
a long way towards both deterring truly frivolous suits like the X-Plane one,
and to compensating defendants for defending against such litigation without
chilling meritorious litigation.

~~~
j_baker
$50k? They've probably already paid far more than that on lawyers by the time
they get to court.

~~~
rayiner
It depends on the "troll." If you're Intellectual Ventures suing Microsoft
over arguably legit patents, then you have put a lot of money into the case.
But that's not "trolling" in the same way as in the X-Plane example, and it's
arguably not something that needs any particular deterrence. There are valid
economic arguments to be made in favor of NPE's in that context.

Th X-Plane case, however, is what I think most people on HN tend to be worried
about. An entity coming at you with an obviously invalid patent, and going for
volume: hoping to get a few hundred people to pay a few thousand in fees each
hoping nobody will litigate. It doesn't cost anywhere near $50k to throw a
quick, cut-and-paste lawsuit together.

~~~
beagle3
> If you're Intellectual Ventures suing Microsoft over arguably legit patents,

I'm sure you meant that hypothetically, but in case you are not aware:

Bill Gates personally, and probably Microsoft as well, are investors in IV -
and best friends with IV founder Nathan Myrvhold - who quit Microsoft to start
IV.

------
alok-g
PS: I am not pro-patents.

Per Wikipedia [1], the definition of patent troll itself is unclear, creating
an important first roadblock to implementing something like this. Just for
example, if a company files a patent, and manufactures/sells one device using
it, is it still a patent troll or not? What happens if the troll intends to,
but at the time, is unable to manufacture or sell the product carrying the
invention?

>> Patents cost $195 to file. $1,500,000 to defend against in court. As a
result, Patent Trolls collect inane, invalid patents ...

Isn't the purported troll also risking their time and money in the lawsuit,
going well beyond $195? If so, the $195 to $1.5 million comparison above is
clearly weak.

>> The patent office has approved countless ridiculous patents that are
clearly non-sensical or based on obviously long-known ideas, making it easy
for trolls to collect ridiculous patents and use them as their flimsy excuse
to file outrageously expensive lawsuits.

When an patent invention is filed, a prior art search is generally performed
to see if the claimed invention already exists or not. If no prior is
discovered in spite of it existing at the time, how and why is this considered
to be a fault of the purported troll (and not of the patent office for
example)? No one can possibly know what all exists already, which is part of
the reason why patent office ends up approving the patent to begin with.

From the best I understand, it is now becoming easier to invalidate a patent,
showing prior art at during litigation.

The real thing at issue with patents is non-obviousness, due to which a patent
may wrongfully stand in spite of missing prior art. Obviousness is so hard to
define because what is obvious to someone is not obvious to another. Add to it
figuring out whether it was obvious back when the patent was filed.

[1] <http://en.wikipedia.org/wiki/Patent_troll>

~~~
chii
I propose that obviousness should be tested with an expert in the field. If
that expert could explain how the invention worked by only looking at the
result, but not at the patent itself, then the patent is considered obvious!

~~~
SoftwareMaven
That's hard to do after the fact. It may be that it is now obvious to
everybody _because_ of the patented technology. Something needs to be done,
but there are no easy answers.

~~~
chii
this is where the ideology between us differ - the classic example i use when
i argue with friends on this topic is 'the wheel'.

Some of my friends argue (and i assume this is your point of view), that the
wheel would've been granted a patent should it be invented today. I argue that
even tho the idea is novel, there is no "secret" that you can hide with the
wheel invention, and hence, there is no incentive for society to give you a
monopoly, because you can't both use the invention, but hide its
implementation from society. The price for said monopoly is the devulsion of
the secret, and if there are none to give, you do not deserve the payment.

If the patent was for some complicated industrial process to produce better
paint, an expert looking at the paint can't work out what went on in the
process. But if you look at the sort of "design patents" that have come out,
the amazon one-click is the classic example here, there is absolutely nothing
that they can hide about the workings of the patent, and thus don't deserve a
monopoly.

~~~
alok-g
A patent is granted for an "invention", whether it is visible or not. I do not
see why a visible invention is not an invention.

See my separate comment for more on this:

<http://news.ycombinator.com/item?id=5071287>

------
RexRollman
Here is how I would change patent lawsuits:

1: If the defendant wants the patents reexamined, then the case should be
stayed until a review is finished; only litigate the upheld patents.

2: No more avenue shopping.

3: The party who filed the suit should pay if they lose. And the law should
allow for getting that money from parent companies.

4: Awarded damages should be close to zero for non-practicing entities.

------
krschultz
I'm getting sick of the white house petitions.

You know what works? Getting people together to call congress. Or lets
collectively digging into patent trolls and outing them. These petitions don't
change anyone opinions on the matter.

~~~
kamjam
Well it's a start, every revolution has to begin somewhere!

And if you are that sick of them, don't sign them. Simples.

~~~
sirclueless
This is a fallacy. If there are widely trusted outlets for activism that in
fact have little to no effect on policy, then we should speak out against
them. This notion of "voting with your feet" and walking out does nothing.

So far as I can tell, the main purpose of the We The People site is to provide
a scapegoat: a place for angry activists to vent their anger without causing
real damage or wasting anyone's time with legitimate protests. In return, the
president's staff must occasionally make a statement of the party line on some
issue.

It's a neat trick funneling dissent into a neat little internet package. It
defrays real activism ("Why are you taking action? It's much more polite to
make an online petition.") and so it's worth decrying if you think it's really
harmful. Merely refusing to sign is a tacit acceptance, and in fact is likely
to just harm the issues you care about. Much better to sign, and then speak
out against them if you think they are a fool's errand, as I am starting to
believe.

~~~
kamjam
Well, yes I agree with, _just signing_ a petition will achieve nothing. Just
like the man down the pub complaining about XYZ will achieve nothing except
give him an outlet to vent. As the old saying goes: Actions speak louder than
words!

------
IanDrake
Please stop posting these inane "petitions" from whitehouse.gov or elsewhere.
No one in the White House or the Capitol building cares. It might feel good,
but it's a waste of your time.

I don't recall women, African Americans, or homosexuals getting their due
civil rights recognized by signing petitions.

Maybe what we need is a million geek march on DC. Can you imagine!

~~~
jacalata
As Martin Luther King once said, "Nothing worthwhile ever happened on the
internet."

------
mtgx
They should also be forced to put up a sum of money (say $1 million) before
the lawsuit starts, in case you're dealing with a shell company, that doesn't
have to pay anything if it loses.

------
charonn0
Random idea: reform patents such that they carry with them the requirement to
license them to others under reasonable (perhaps even uniform) terms.

Make the purpose of a patent to reward the inventor for a useful invention
rather than to prevent others from implementing the design.

~~~
GFischer
That is already implemented in several countries, it´s called "Compulsory
Patent Licensing".

Here's a paper from 1988 (!!!) which basically endorses it for the U.S.

[http://heinonline.org/HOL/LandingPage?collection=journals...](http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/nwjilb8&div=35&id=&page=)

The Wikipedia article:

<http://en.wikipedia.org/wiki/Compulsory_license#Patents>

they're basically used for medicines now, but it should be implemented for
everything.

Also, a little research showed it to be ineffective in Australia because you
need to ask for permission from the government first.

Finally, it doesn't stop "bad patents" and might even promote them.

------
alok-g
The fundamental idea of granting a time-limited monopoly (via a patent) to the
inventor/assignee to use the invention is to encourage research and
development expenses by the company. These expenses are now like an
investment/return in exchange for benefits to the entire society after the
patent expires. If use of a patent in a product gives the company competitive
advantage, they may recover their R&D expense with it.

An interesting / novel way to curb the issues with the patent system would be
to cap the maximum monetary benefit a company may get out of a patent based on
the R&D expense involved in coming up with the patent. For example, if the
expenses involved in coming up with invention is X (including filing fees?),
the patent may be set to expire once the company makes say 10X out of it. If
it takes $2 to come up with an idea, then the maximum worth of that patent
under this example would be $20, which would still be a good return on the
investment.

Of course, tracking this would be painful, but so is the current state of the
patent system! On the very least, this may be applied to limit awarded damages
during litigation.

~~~
chii
how do you judge what the cost of development was? it is a very manipulatable
number - looking at what holywood movie studios do already tells me that this
method can't possibly work due to many who would game the system.

~~~
alok-g
Agreed, generally. I am not familiar with how the calculation is currently
done for calculating the damages, and so am not sure if the latter is any
easier. Most probably, tracking the cost of development would have to be made
a legal requirement just like other things that companies need to track (for
taxes, immigration, etc.)

Another complication comes from the number of patents involved in a single
product. How to tell how much revenue maps to each patent?

On the other hand, this does capture the intent of the patent system well --
Encourage research and development investment while avoiding frivolous cases.

------
zacwitte
The world where loser pays is not so perfect. If I as an independent inventor
sue apple for infringing on my patent and they win simply because they have
unlimited legal war chest, then I would get stuck with millions of dollars
worth of legal fees. That threat alone is enough to stop smaller patent owners
from rightfully defending their intellectual property.

------
rexreed
Patents cost a lot more than $195 to file. Even the filing fees are more than
that -- you're just quoting the Provisional Patent cost, which doesn't
actually result in a patent issue. The actual cost of filing and successfully
getting a patent to grant is in the tens of thousands of dollars, and possibly
more depending on the art and office actions.

So, the cost comparison here doesn't hold. Perhaps it would be more accurate
to say that successfully defending a patent against a patent troll intent on
taking the case to court costs at least ten times as much, and possibly up to
a hundred times as much as the cost of getting the patent granted in the first
place.

But I'd eliminate the $195 wording as that's a straw man argument that can
easily be refuted.

~~~
monochromatic
Actually it looks like he's quoting the basic filing fee (provisionals are
less), without including the search and exam fees. But yeah, it's a total
straw man and just costs him credibility.

------
beagle3
That really won't solve anything - most (perhaps all) patent trolls use shells
so that they have no liability.

It's been a couple of years since I first had an idea, and realized I'm
definitely not the first who thought about it: IP Tax. If IP is property, it
should have property tax (a discussion here:
<http://news.ycombinator.com/item?id=2855835> ).

While I'm not for taxes in general, among all the suggestions that I've found
(loser pays, shorten patent period, refuse granting more software patents,
etc.) this is the only one that:

a) puts newer and older patents on equal footing (thus, no "grandfathered
trolls" get a free pass), meaning you can implement it as quickly or gradually
as you want without being unfair to either existing or potential patent
holders.

b) makes shell games and international games much less appealing and
useful[1]: If you want to sue in some jurisdiction, you have to have a skin in
the game, both financially (proportional to how much you will be able to
extract with a lawsuit), and jurisdictionally - you have to have a tax paying
nexus.

I'm still looking for other suggestions, and this one isn't "good", but it's
the best I can find.

When you are criticizing (and I welcome criticism), please try to remember
that the most relevant alternative is "existing patent regime" (and the need
to switch from it to a new regime), then other suggestions such as loser pays,
shorter terms, etc - and only finally "no patents at all" - because it seems
most criticism I received so far assumes we're starting from a "no patents at
all" world.

[1] this is the game played by IV and their friends: set up tens of companies,
each owning the next, and each in a different jurisdiction (e.g. NY owns dutch
owns british owns cypriot owns turkish owns Delaware owns hungarian owns
french owns .... owns dutch owns turkish owns ... owns US corporation that
owns patent suit rights). The cost of setting up this structure is less than
$1000/company/year (in many jurisdictions, and especially if you do this en
masse, down to $100-$200/year). However, piercing it is an exercise in
futility and is more of the order of $10000/company - and if you try anything
more than discovering ownership chain, more like $100,000 company)

~~~
dnu
Then we must increase the liability. When patent owners want to sue for
damages worth $1000000, make them pay $1000000 in a 3rd party bank account
BEFORE that.

If they win, then they get their money back plus the damages. If they lose,
then the defendants can pay their legal costs from those $1000000 (and the
reminder goes back to the patent owner).

~~~
beagle3
I am in favor of that solution, but there needs to be some constant of
proportionality:

If you have a patent worth $1M, it is reasonable that you can finance a $1M
bond.

If you have a patent you believe (and sue for) $400M, it is less likely that
you'll be able to finance that bond unless you are Microsoft.

So, it needs to work out to a percentage (1%-5%) of what you sue - but
probably something like "and you lose at least half of that even if you pull
it back the next day".

------
viraj_shah
I think the issue will be in identifying who qualifies as a patent troll. Of
course we know but what is a legal definition that would suffice and encompass
all the companies that acts as trolls?

~~~
mtgx
Companies who have sued more than a certain number of companies (5?) in the
past would be a good start, I think.

~~~
viraj_shah
I'm sure Google and Apple and the other large companies fall into this
category. I'm not sure I qualify them as trolls. Neither would the number of
patents held by those companies qualify them either.

------
anigbrowl
a) The executive branch has exactly zero control over this

b) This has a hard-luck story attached, and those are almost never as simple
as they seem

------
WalterBright
The loser in any civil suit should pay the winner the lesser of (his legal
costs, the other guy's legal costs).

~~~
rayiner
If the plaintiffs are working on contingency, do you calculate an imputed
cost? If so, you'll basically put an end to any semblance of justice for
victims of medical malpractice,[1] defective products, industrial polluters,
etc.

[1] See: <http://www.press.uchicago.edu/Misc/Chicago/036480.html>

~~~
SEMW
A lot of jurisdictions, e.g. England, have a 'loser pays' rule (as the default
anyway, it's usually at the discretion of the court), and don't seem to be
particularly less fair to malpractice victims etc. than the US.

One reason may be better legal aid. But also, a claimant who wants to avoid
the risk of paying the defendant's fees if he loses can easily do so, by doing
what anyone does when they want to avoid risk: taking out insurance (here,
against losing the case).

So if you lose, the insurance company pays the costs order instead of you. If
you win, you pay the insurance premium out of the costs award you get. It's
called ATE (after-the-event) insurance. So you can basically use an insurance
company to nullify the loser-pays rule should you choose to.

Cost orders are on a standard basis, so don't change depending on whether a
lawyer is working on a conditional fee.

~~~
rayiner
The U.S. does a lot of things through private litigation that other countries
do through administrative regulation/enforcement. E.g. in European countries
you have laws and agencies you can turn to if your employer treats you
unfairly. In the U.S., even things like racial discrimination in the work
force are left to private lawsuits. Basically, there's no free lunch.

------
hkhanna
One person's troll may be another person's market-maker. For a contrary view
to the idea of patent trolls, check out this paper:
<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1534282>

~~~
hdevalence
Or, instead of having the government grant monopolies on production left and
right, and then using the legal system to create a market in these monopolies,
we could..... skip this whole process, and let the free market operate
properly from the start.

~~~
rayiner
Externalities (<http://en.wikipedia.org/wiki/Externality>) undermine the
operation of the "free market" and much of the legal system exists to deal
externalities. Tort law exists to manage risk externalities, environmental law
exists to manage pollution externalities, etc.

The theoretical justification behind IP isn't just "hey the government decided
to come along and create some monopolies." You can model intellectual
developments as positive externalities which are subject to free-rider effects
that reduce or eliminate the incentive to create.

~~~
hdevalence
Yes, I am aware of the theoretical justification for IP. I'm just not
convinced that it's as strong a justification as is claimed. I think that the
current system, in general, provides monopoly protection beyond what is
necessary to compensate for these externalities, and is hence detrimental to
the economy.

See, for example, chapters 4 and 8 of Boldrin and Levine's Against
Intellectual Monopoly (Google to find the PDF), which presents empirical
evidence that patent protections go beyond what is necessary.

"To sum up, careful statistical analyses of the nineteenth century's available
data, carried out by distinguished economic historians, uniformly shows two
things. Patents neither increase the rate of innovation nor are the best
instrument to maximize inventors' revenue. Patents create a market in patents
and the legal and technical services required to trade and enforce them."

My point is that a market in patents is not our goal, and absent evidence that
such a market increases innovation (our real goal), there's no reason to have
one. I don't think the evidence available supports the extent of the current
patent system -- it might support a more limited one, but I'm not making a
claim there.

