
Patent Trolls: Make Them Pay - melsmo
http://www.rackspace.com/blog/patent-trolls-make-them-pay/
======
robomartin
I've posted this a few times on HN. The solution to this problem is, in my
humble opinion, very simple. Rather than presenting a divided community to
trolls, we have to present a united front. This would come in the form of a
legal support organization that would be 100% dedicated to fighting trolls on
behalf of it's members.

Call it insurance, if you will. Member companies would pay a monthly or yearly
membership fee. In exchange for this the organization would evaluate any and
all patent lawsuits and consider them for representation. It's stated mission
would be to defend members from trolls.

How?

Well, for starters, imagine a legal organization with hundreds of millions of
dollars in the bank. How many trolls would dare risk going up against them?

Second, I am not a lawyer, but I imagine that there would be a way for this
organization to also create a cross-licensing ecosystem for member companies.
Maybe this is ridiculous. I don't know. Imagine that every patent of every
member company becomes an automatic IP license --only for the purpose of
patent defense-- for all members. This means that for my annual fee I could
have a virtual shield consisting of tens of thousands, if not hundreds of
thousands of patents protecting me.

How much is that worth? Any company doing anything at all that is not trivial
should easily be able to afford a $10K per year fee. larger companies could do
a lot more. Smaller ones less. It is not hard to imagine raising tens of
millions of dollars per year and even reaching a hundred million. With careful
management this organization could easily amass a billion dollars in the bank
over a number of years.

This would effectively destroy the troll business without legislation and it
would probably do wonders towards decimating bullshit software patents (or
bullshit patents in general).

~~~
neya
While this is certainly a good idea, what happens when one member from the
organization tries to sue another? Back to square one?? I'm just curious, I'm
no patent lawyer either.

~~~
robomartin
I obviously didn't work out all the details. I would imagine that there would
have to be some kind of a mutual agreement to not go after member companies.

Also, in order to be accepted you can't be a pure IP business. You have to
actually have products in the market. In other words, a real business.

Lots of details to work out mostly by legal minds.

~~~
sirmarksalot
The fundamental problem is that it assumes that all patents are invalid, and
that no legitimate grievance can exist over the companies' intellectual
property. While this may be a popular opinion on HN, I doubt many actual
companies are going to be willing to sign away their right to sue when another
member company brazenly steals their work.

------
wheels
I was curious where Rackspace stands with their own portfolio, and it seems
they have actually avoided patents, which surprised me somewhat for a large,
public company:

[https://www.google.com/search?tbm=pts&hl=en&q=inassi...](https://www.google.com/search?tbm=pts&hl=en&q=inassignee%3Arackspace&btnG=)

The tone of the article -- specifically focusing on patent trolls being
problematic, but less focus on the other systemic problems with the patent
system -- made me wonder if they were just going after the cases that annoy
_them_.

~~~
dredmorbius
One of the entities RS acquired was SGI. Whom I suspect may have had a patent
portfolio.

Not sure who got that though. Oh ... crap. Looks like they were retained by
Graphics Properties Holdings, who is, you guessed it, a patent troll
themselves:

[http://www.techdirt.com/articles/20120419/02113518553/sgi-
ba...](http://www.techdirt.com/articles/20120419/02113518553/sgi-back-dead-
again-suing-tons-companies-patent-infringement.shtml)

~~~
toddmorey
Oops, Rackspace never acquired SGI. That acquisition was done by a company
called Rackable Systems.

~~~
dredmorbius
Doh! Thanks, I've been making that error for quite some time now.

It never really did make sense to me that Rackspace == SGI, especially since
they weren't using the mark at all.

------
steve8918
What's to stop patent trolls from forming a corporation with no assets, suing
people, and then declaring bankruptcy if they lose their case? They could
forfeit their patents, but it would be worthless anyway if they lost the case.

~~~
JoshTriplett
I think you've summed up one of the major problems precisely, yes.

Ideally, such a transparent attempt at patent trolling ought to result in a
pierced corporate veil and personal liability on behalf of the owners, but in
practice that seems unlikely to happen.

------
tzs
What about legitimate inventors, rather than patent trolls? There is a large
element of uncertainty in any patent suit that has a trial by jury, and it is
not at all uncommon for clearly legitimate patents to be found invalid by the
jury.

The SHIELD Act sounds like it would make it effectively impossible for any
small inventor who is not wealthy to sue a large infringer, because the risk
of total ruin would be too high.

The way to address the patent troll problem is to address the ACTUAL cause of
the problem (standards for issuing patents are too lax).

~~~
genwin
> The SHIELD Act sounds like it would make it effectively impossible for any
> small inventor who is not wealthy to sue a large infringer, because the risk
> of total ruin would be too high.

Worse. It would make it effectively impossible for anyone who isn't wealthy to
sue anyone or any company that is. At a minimum, those pesky environmental
laws would no longer be a concern.

------
AlanSchoenbaum
A big thank you to all of you who are thinking about this issue and posting
your ideas. There is no one right way to fix the patent troll problem, but
hopefully Congress will figure out that this is a serious problem for tech
companies and will do something.

There is a long history here. These terrible software patents have been around
a good while now, and they have been a curse on Internet companies for over a
decade. The "America Invents Act" which passed about a year ago was the
culmination of a lengthy process which started with the proposed Patent Reform
Act of 2005. It went nowhere, nor did the later iterations in 2007, 2009 etc.
These earlier bills definitely targeted patent trolls, but did not pass
because of significant opposition by a coalition of interests that did not
(and do not) want to accept the changes necessary to hammer the patent trolls.
Take a look at the organizations against and for at the wikepedia entry for
the Patent Reform Act of 2009 and you will see what I mean.

Now, those opponents are still powerful; therefore to pass any legislation a
bill will need to be acceptable to most of them. That means any bill that
passes will not be ideal. My goal is to try to get a bill that at least levels
the playing field and puts plaintiffs in a position where they have economic
risk. The status quo is simply untenable and it is getting worse.

Many of the comments here correctly point out flaws in the SHIELD Act. We will
try hard to convince the sponsors to correct these flaws to ensure the bill
has teeth. However we must not lose sight of the real issue, namely whether
the bill can get out of committee and receive a majority of the House and 60
Senators. It will be hard, and it will take a lot of public support. Please
write Congressmen DeFazio and Chaffetz, as well as your own Members of
Congress and give them your point view. They will pay attention. If they do
not hear from thousands of people, nothing will change.

------
mnutt
The SHIELD Act is a great step, but I wonder how this will fare against the
patent troll practice of setting up separate legal entities specifically for
litigating individual patents? If they lose, they declare bankruptcy and move
on to the next shell corporation.

~~~
tedivm
If they file bankruptcy they have to sell off their assets to raise money for
their creditors- assets which include the patents themselves.

~~~
mnutt
True, but doesn't losing mean having the patent declared invalid anyway? Which
renders it worthless whether or not loser pays.

~~~
tedivm
No, it's just one way they could lose. The other side can be found to be non-
infringing, or it could be found that a very very specific clause of the
patent is invalid as opposed to the whole thing.

------
dreamdu5t
Patents _ARE_ the problem... not some vague notion of a poor implementation of
them.

It will still be profitable to troll for patents even with the SHEILD act. The
problem is the very idea of owning information/process.

------
DenisM
PG had a modest proposal to deal with the problem - name and shame lawyers who
work for trolls, create a blacklist and refuse to deal with those lawyers.
Trolls don't care about their reputation, but lawyers do. If we as an industry
come together on this one the trolls will have no one to do the dirty work for
them.

~~~
CamperBob2
That's a dangerous place to go. Next there will be a call to name and shame
lawyers who defend accused corporate polluters. After that, lawyers who defend
alleged child molesters. Then, alleged murderers. Lather, rinse, repeat until
we end up with a hopelessly-politicized legal profession.

Plus, it's not clear why a patent lawyer might stay up at night worrying about
his reputation with someone like myself who is almost violently opposed to
patents. It's not as if I was thinking of hiring him to sue somebody.

------
AlisdairO
Patent trolls aren't the problem. The problem is that it's a profitable
business model to have an idea, patent it, and then sit on it waiting for
somebody to accidentally recreate it.

The reason this is a profitable business model is because too many obvious
patents are granted. If granted patents were truly non-obvious, the likelihood
of accidental infringement should be exceedingly low.

Patent trolls are merely a symptom of this issue. Hurting trolls does little
to attack the wider problem.

------
ahi
>They are just another patent troll attempting to take advantage of bad law.
It is their nature. They look for opportunity, and patent litigation can be
very profitable. The real problem is the law.

Disagree. Assholes will always be able to abuse the law. We should name and
shame the trolls responsible. The lawyers and investors behind patent trolls
should have severe social consequences.

------
rz2k
The SHIELD Act does not strike me as the most effective way to attack this
problem.

Presumably there are legitimate innovators who will not be as quick at
execution as incumbent competitors. They may leverage themselves highly in
order to try to scale up production, and afterwards will have scarce resources
to hire legal representation.

Depending how open and shut the case looks, representation may take them on as
clients anyway. This act would marginally decrease the likelihood that they
would, whether it decreases it too little or too much is a legitimate concern.

Other industries than software are far more capital intensive. For instance
most new drugs are not developed at the same companies that are the best at
synthesizing compounds at scale and have the best distribution networks.
However, investors assume the risk of funding expensive research, specifically
because they know that in the rare case that it is successful, the large
companies will buy the property rather than simply make it themselves.

The SHIELD Act could very well create a different model where all drug
research had to take place under the umbrella of larger corporations that
could fund expensive legal fights on short notice.

There is an overwhelming presumption that intellectual property is a sham in
the software industry. Perhaps, software patents (and patents of business
practices) generally slow progress more than they reward innovation. However,
I don't understand how skepticism about the role of intellectual property
protections has turned into uncritical acceptance that it only causes harm.

~~~
luriel
> However, I don't understand how skepticism about the role of intellectual
> property protections has turned into uncritical acceptance that it only
> causes harm.

Is not uncritical acceptance, there has been plenty of research and evidence
that shows intellectual property harms innovation:

[http://levine.sscnet.ucla.edu/general/intellectual/against.h...](http://levine.sscnet.ucla.edu/general/intellectual/against.htm)

------
gallipoli
There is no need for elaborate laws to address the issue of patents for
software and business methods. Nor a lawyer witch hunt. Nor some giant
protection scheme like those mentioned in other comments.

The Constitution grants Congress the power to regulate patents. Everybody
interested in solving this problem should ignore the half measures and demand
the elimination of software and business method patents entirely. Other
solutions will undoubtedly be gamed and the problem will persist.

------
hermanhermitage
I'm wondering if you can analyse the problem of Patents from a game theoretic
point of view.

The problem is this, those that don't Patent or were unable or disincentivized
to Patent (different country, or different time period) cannot compete on a
level playing field.

They do not gain sufficient arsenal to defend against Patents.

Patent law is fundamentally incompatible with the past. In a different era or
different arena some ideas were not considered suitable for patenting (lack of
utility, novelty, and nonobviousness).

An example is software patents or business process. As money pours in to
create changes to the rules those not playing the same game are at a
disadvantage.

That is their past IP unprotected by Patent law is now differentially
disadvantaged in the marketplace.

The only way to rectify this is to reduce the power of Patents over time until
they are eliminated.

------
jakejake
It would seem like there could be legislation that says if you are not
actively developing a product from a patent then you can't sue. I'm sure
there's too much legal BS involving what "active" means, but it would seem
like there must be some way to have a law that limits lawsuits to those people
who are actually using their patent to create something.

Having the loser pay I think would also be a good step, however it probably
would affect honest innovators when they're victims of patent infringement.
Because it would be a huge risk to protect your patent. I know the argument
against that is just get rid of patents, but I don't think that's
realistically going to happen.

I can see why it's a tricky issue to legislate but it's so frustrating that
seemingly nothing is being done.

------
larrys
Notice that there is nothing in this blog post that indicates how vigorously
they will fight the lawsuit and certainly no bravodo type language. Only
essentially a call to action "We encourage all of our customers, partners,
open source collaborators and friends to support Reps. DeFazio and Chaffetz in
their effort to discourage these abusive patent troll lawsuits."

I takes this as potentially meaning that they might very well settle this out
of court w/o paying -or- they are planning some other atypical legal action
and don't want to telegraph anything. Even if they get this dismissed because
of the github assumption that doesn't prevent it from being refiled correctly
I believe.

------
krichman
This isn't going to work, the majority of trolls are NPE's and can simply
declare bankruptcy. How many defaults on payments are we going to have before
lawyers simply refuse to act as defence?

I think we should require half of the money spent on legal teams for lawsuits
to go to paying for the other party's legal expenses. I think this would
reduce frivolous lawsuits because, whereas now the wealthiest party always
wins, if the defendant/plaintiff has equal support the legally correct party
might win.

------
TerraHertz
Perhaps someone could patent the business method of patent trolling. Then sue
the trolls for patent infringement.

I suppose this is wishful thinking. No doubt some patent troll company has
already patented the idea of suing patent troll companies, and will sue you
for infringing their patent if you try to sue them.

Personally I think it would be best to just abolish the entire patent (and
copyright) system. But I know how impossibly unlikely that is.

------
jakozaur
How about ending software patents in USA?

I have never heard from serious european company which argue that it need
software patents to protect its IP.

------
grimey27
Call 'em out and take action. Well done.

Now if Congress can tighten patent regs and eliminate the ability to troll
altogether.

------
khet
Patent troll's about page -> <http://www.personalweb.com/About.html>

------
gitlock
So what exactly can we do to make them pay?

~~~
meritt
> This bill would require plaintiffs to pay defendants’ legal costs if the
> suit is unsuccessful. Under current law, the patent trolls don’t have any
> meaningful risk in bringing litigation. The defendants, on the other hand,
> are subjected to enormous legal expenses and discovery costs. The SHIELD Act
> is designed to level the playing field and take away the trolls’ unfair
> advantage. We encourage all of our customers, partners, open source
> collaborators and friends to support Reps. DeFazio and Chaffetz in their
> effort to discourage these abusive patent troll lawsuits.

Contact your elected officials and make them understand why it's critical they
support SHIELD.

~~~
astrodust
That America does not have a "Loser Pays" legal system is completely
terrifying. British law, which is followed in various forms by many countries,
imposes severe penalties on those that lose cases. The risk for a plaintiff is
significant and the damages done to a victim of wrongful prosecution while not
negligible are at least off-set by the fees paid by the loser instead of the
losing party being able to walk away without obligation.

~~~
rayiner
The American system isn't "terrifying" it's just different. You can't look at
the European system without understanding that a lawsuit means a lot more in
Europe than it does here. Many of the things that Europe does through
administrative processes, the US does through litigation. It's easy to fixate
on the costs of litigation, but realize that other systems don't necessarily
eliminate those costs, but move them around by organizing things differently.

If a suit is truly meritless, it will be dismissed very early in the
litigation process (summary judgment) before costs have piled up. The American
legal system tries very hard to be "lazy" (in the CS sense), backloading costs
as much as possible. Yes, it can cost millions of dollars to defend a suit at
trial, but if a suit has made it that far it means that it was not a meritless
suit. Why should the loser pay if he brings a meritorious case in good faith?
Remember, in the US a lawsuit is usually the process through which the facts
underlying a dispute are discovered. It often happens that someone
legitimately thinks he has been wronged, but the process of litigation
uncovers facts that show otherwise.

Loser pays systems chill litigation against big corporations. People focus on
the situations in which they perceive there to be too much litigation, but in
many areas there is not enough litigation. Litigation is the process through
which citizens force corporations to fix unsafe products or clean up polluted
land and water. Individuals are already at a huge disadvantage in these
situations, and the threat of a corporation running up the bill in a loser
pays system would do great injustice. Europe gets away with it because it has
far more active government oversight and prosecution of such things.

~~~
astrodust
I don't know if you sleep on a mattress filled with hundred dollar bills, but
even engaging a lawyer to fend of a possible lawsuit can cost thousands with
costs escalating quickly from there if you need to do more prep-work before
you even show up at court.

Even getting a case dismissed can cost a small firm more money than it can
afford. A fifty thousand dollar dent in the cash-flow of a small business is
not an easy thing to weather. Good luck collecting on damages from a wrongful
suit, too.

You say it chills litigation against big corporations? It tempers it. Where
you cite examples of lawsuits against companies promoting the greater good, I
see ambulance chasers trying to siphon extraordinary class-action settlements.
Very little of that money goes towards consumers and instead of making
companies more responsible it simply paralyzes them with paranoia.

It may sound rather peculiar, but in some countries the government plays the
role of advocate for the voters. It doesn't necessitate suing anyone and
everyone to send a message. Too many things that used to be taken for granted
have been completely eliminated because one individual decided to press ahead
with a lawsuit over something that, in many cases, was either a random act of
bad luck or a case of irresponsible behavior that can be blamed on another on
a technicality.

~~~
rayiner
> You say it chills litigation against big corporations? It tempers it. Where
> you cite examples of lawsuits against companies promoting the greater good,
> I see ambulance chasers trying to siphon extraordinary class-action
> settlements.

Read up on the economics of externalities. In the US, the legal system is
pretty much the only thing we have to deal with companies trying to
externalize costs. And the amount of these externalized costs is huge. $500
billion or so for the coal industry alone
([http://wvgazette.com/static/coal%20tattoo/HarvardCoalReportS...](http://wvgazette.com/static/coal%20tattoo/HarvardCoalReportSummary.pdf)).

The narrative popularized by corporate America is the ambulance chasers just
looking for a quick settlement, and while that no doubt exist the truth is
that lawyers are the only thing that stand between the big corporations and
everyone else.

------
BryanB55
Solution: If a court finds you to be a patent troll you get the death penalty.

That should solve things. :)

------
atomical
Just curious, how much do vague patents like this cost? Are they cheap?
Expensive?

~~~
udpheaders
Think about it. What would happen if they were cheap?

Anyone could amass a large portfolio. We could all block each other's every
move. No one would have any leverage.

But the second question you have to ask is what does it cost to sue? What if
that were cheap?

~~~
atomical
I'm trying to determine the difference between vague and worthless. I assume a
lot of vague patents are worthless. But where is the line?

~~~
udpheaders
Here's how it's done, in simple terms. This is not some new thing. IBM was
doing this before there was a Microsoft and before there was a WWW.

If you amass enough vague patents, any one of which on its own isn't worth the
paper it's printed on, then automagically they no longer remain worthless.
Suddenly you have something valuable: a patent portfolio! This is because it
costs a significant sum to pay someone (e.g. a patent attorney) to go through
your wonderful portfolio of junk and determine which ones are worthless. And
that is in turn because patent law firms charge very high fees to do that
work. And that is in turn because not every lawyer is permitted to become a
patent lawyer - so there's only a limited number of patent lawyers - hence
they have less competition to drive prices down. The uncertain validity of a
bundle of patent claims that I can allege others are infringing is the value.
Threat == value.

Therefore if I have several hundred vague patents of which a definitely large
proportion are worthless and I sue you alleging you have infringed a
significant number of them, you are screwed. Because it is going to cost you a
lot of time and money to have someone go through each and every claim and
convince me you are not infringing. So you just concede it's not worth it to
fight me and my deep portfolio of junk software patents. And we start
negotiations. Needless to say everyone at the negotiating table is not going
to be in a happy mood going into this given that we had to start the whole
process off with threatened or actual litigation. This is "business",
American-style. A model for the world to follow.

------
atomical
It seems like PersonalWeb is trying to develop software...

<http://www.personalweb.com/>

Interesting that their CEO was involved early on in P2P.

~~~
amitparikh
Does it, though?

First red flag for me is that they are based in "East Texas":
[http://en.wikipedia.org/wiki/United_States_District_Court_fo...](http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas#Patent_litigation)

On their "How we do it" page, they mention some Natural Language Processing
software that they're developing, but primarily highlight their "valuable"
patent portfolio.

~~~
learc83
Any company that lists that they own "some really amazing patents" in bold on
their home page can't possibly be real.

------
mtgx
I wonder if Microsoft or Apple will oppose this bill. They haven't won all
their patent lawsuits.

~~~
danilocampos
When did those two organizations become non-practicing entities? How are they
relevant to a discussion on non-practicing entities who sue startups for
protection money?

------
maeon3
The key is making congressmen pay attention to this is to translate it into
words they can understand. Money. All the techno babble about who own's what
and morality and fairness is like telling a dog to eat vegetables.

When patent trolls sue organizations for infringing on their patents with no
intention of innovating, it creates less GDP which means less revenues for the
big corporations which pay the most taxes, less taxes means less happy bottom
feeder voters, which means you don't get re elected. When they get that
through their heads, legislation will happen to fix the "injustice".

