
Patent trolls now account for 67 percent of all new patent lawsuits - Libertatea
http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/15/patent-trolls-now-account-for-67-percent-of-all-new-patent-lawsuits/
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jeffdavis
"...patent trolls — also known as non-practicing entities because they simply
stockpile patents without making anything with them..."

I never liked that definition. It sounds like ordinary specialization in an
economy, to me.

"The latest effort would have required the loser in a lawsuit to cover the
winner's legal fees and for NPEs to state more clearly what was being
infringed at the outset."

Now we're talking: address the real problem. The real problem is not NPEs; the
real problem is that they can impose huge costs on others at little cost to
themselves, which sets them up perfectly for an extortion-like racket.

~~~
masklinn
> It sounds like ordinary specialization in an economy, to me.

It also runs counter to the purpose of patents: patents are originally a time-
limited and governmentally defended monopoly on an invention to encourage its
full publication[0] and ultimately the progress and improvement of society as
a whole[1].

When entities can exist to do nothing but defend such monopoly against
independent reinventions the incentives are completely out of phase with the
original purpose: patents assumed the invention (and its trade) is the
important object, not the monopoly itself.

[0] rather than trade secrets, espionage and other such focus on anything but
progressing

[1] not only because the invention is available at all but because once the
monopoly runs out it becomes a new baseline[2] for further invention

[2] in that it's free, it is possible to license the invention to build upon
it during the monopoly phase, but I think it reasonable to assume increased
activity once the invention becomes literally free for all

~~~
a-priori
This is why it seems to me that the core problem with the current patent
system is that it's too cheap to obtain and hold large patent portfolios.

There's an analogy here to land ownership. Land is a public good. It is owned
collectively by the nation-state that contains it, and the people rent
exclusive rights over parcels of land. I'm talking here about the difference
between allodial title (typically owned by the state) and fee simple title
(owned by individuals). We do this so that the owners have an incentive to use
and improve it, and everyone benefits when it owned by the people who can best
do so.

Patents are similar in many ways, since inventions are also a public good.
That's why patents exist in the first place: to promote the advance of our
technology for the benefit of all, by granting exclusive rights to the use of
a technology. And, like land, you want patents to be owned by the people who
can best use it.However, in order for the system to work, there needs to be a
cost to _holding_ rights to the property to encourage people to sell the
rights to someone else. With land, this is property tax; land owners have to
pay a percentage of the land's value each year for the continued right to use
the land exclusively.

We need a property tax for patents. Patents should have an assessed market
value, and a patent owner should have to pay a percentage of that value yearly
as 'rent' on the exclusive use of the invention. If they no longer feel that
it's worthwhile to pay that tax for the benefit they get from holding the
patent, then they can sell it to another party. It could be (and probably
should be) a closed system, where all taxes collected should be put into a
fund that the government uses to buy patents itself. When it does so, the
patent gets returned to the public domain, and anyone can use it from then on.
In that way, you may be able to get rid of patent term lengths.

~~~
SilasX
IMHO, that doesn't address the real problem, of patents that shouldn't have
been granted (because anyone faced with the same problem does the same thing
without being helped by the patent description).

In fact, it makes that problem worse, because the assessed or hypothetical
market value of the obvious, or "too old" invention is much higher. For
example, what happens if someone is (by foolishness) granted a patent on fire
or the wheel? They'd pay a higher tax, but be entitled to a much bigger
"extortion" from the economy. So it would "turbocharge" the incentive to slip
undeserved patents through.

IMHO, the real problem goes away when patents only go to legitimate "oh my
word I wouldn't have thought of that in a thousand years" innovations, at
which point it would be much harder to say, "why should anyone have to pay to
use _that_?"

~~~
kansface
Sure, but legislation that throws out 99% of existing patents will never fly
because legitimate businesses who have spent billions of dollars on them. The
only possible political solution is to filter out trolls.

~~~
narag
Would it be technically possible in the USA to create a special jurisdiction
for patents?

That could prevent a number of the current problems: certain states
particularly kind with patent suits, some judges ignoring higher courts
resolution...

~~~
chc
A special court for patents already exists in many places. In the US, it's the
Federal Circuit Court of Appeals.

~~~
narag
Appeals, that't not what I mean, but a system where patent demands need to be
started out of ordinary courts.

------
rayiner
This is an article covering a report which covers an actual study. The actual
study is here: [http://www.rpxcorp.com/wp-
content/uploads/2014/01/RPX-2013-N...](http://www.rpxcorp.com/wp-
content/uploads/2014/01/RPX-2013-NPE-Litigation-Report.pdf).

Chart 1 of the WaPo article is a bit misleading. The America Invents Act,
passed in 2011, limited the circumstances under which multiple defendants
could be joined in the same suit. So what might have been one suit with three
defendants pre-AIA might be three suits, each with one defendant now. If you
look at Chart 1-2 of the RPX study, on page 10, you can see that the total
number of defendants peaked in 2011. The same trend holds when looking at NPE
cases only (Chart 4-5 of the RPX report). Chart 10 is also interesting, which
shows the number of campaigns (suits related to single patent or set of
patents), down since peaking in 2011.

~~~
throwawaykf05
And here's the study backing that up:
[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346381](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346381)

The other change that receives less attention is the Medimmune v Genentech
case in 2007, which changed the playing field such that it forced many
potential licensors to initiate a lawsuit to avoid getting preemptively sued
for declaratory judgement:
[http://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?art...](http://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1038&context=jbel)

This decision also correlates with another jump in lawsuits in 2007 found by
other studies. Not sure why this dataset does not reflect that jump.

Also, I'm very curious about the PWC result that patent troll litigation
awards are rising. I've followed a bunch of NPE cases (many of which have been
discussed here), and I consistently find that trolls get much lower awards
than they seek. Case in point, the TQP vs NewEgg trial where, even though they
won, they got only half of the damages they sought. And that's at the higher
end... From hearsay, some attorneys claim the average is around 10% of the
damages sought.

What I'm finding is that accusing the plaintiff of being a "troll", regardless
of whether that accusation has merit, has an automatic impact on the damages
received, if at all the plaintiff prevails.

But then most of the cases I've followed have been in ED Texas. Maybe the
higher awards come from other districts, e.g. Delaware?

~~~
mike_hearn
Or trolls are scaling their demands appropriately and thus still ensuring they
make out like the bandits they are.

------
fzltrp
The original point of patents is to provide protection to inventors and give
them a head start in implementing their inventions. A company which hold
patents without implementing them is basically not following the spirit of the
law. Hence, there should be a drastic "countdown" to a patent viability, which
would be dispelled by a producing a viable, marketed application of that
patent. I would suggest a 6 months timeframe, non renewable. For software
patents, given the very abstract nature of the invention, 3 months should be
enough, and the patent lifetime itself should not exceed 3 years - 12 times
the countdown to market (3 years is already quite long in the software
industry, although not in the law one). This should be retroactive. Note that
I'd rather see the concept of software patents completely invalidated, but I
understand that the issue is quite complex.

Oh, and what should be done in the case of patent transfers? Should the new
holder be subjected to that countdown as well? What if the products tied to a
patent is eol'ed? Should the countdown be restarted? I do think so. It's all
about the practical side of things.

~~~
icebraining
_A company which hold patents without implementing them is basically not
following the spirit of the law._

Playing Devil's advocate, what about a company like ARM, which designs and
patents new CPU designs and then licenses them to others? We can't claim their
patents aren't implemented. Should they be forced to make the CPUs themselves?

And if not, what would prevent NPEs from licensing to one small company and
then suing everyone else?

~~~
prof_hobart
Who actually produces it (you or a partner) is, at least in my mind, neither
here nor there. A huge chunk of manufacturing is outsourced/subcontracted
these days anyway, so it's pretty difficult to say who is the actual
manufacturer of a product anyway.

The key question for me is the motivation for the patent - did you come up
with some novel idea in order to get it manufactured (and are using patent
protection primarily to stop someone ripping off your invention), or did you
come up with (or buy) an idea and patent it purely in the hope that some other
company independently comes up with the same idea and you can then sue them
for patent infringement?

~~~
icebraining
How would motivation be proven in a court?

~~~
prof_hobart
Not sure - maybe by showing a company that is manufacturing your patented
product under licence, or at least by showing your attempts to find a company
to do this.

------
Zigurd
Several people on this thread correctly diagnose the problem is not NPEs but
"it's too cheap to obtain and hold large patent portfolios."

Once a patent is awarded ANY application that references other patents should
be able to re-open examination of those patents if the applicant can show
evidence of the existence of prior art or articulate a reason for obviousness
or other reason for invalidation. Patent examiners should get bonuses for
passing patents that stand up to such scrutiny and get decreases in bonus if
they let through patents that are subsequently invalidated.

There should also be a bounty for invalidating patents through an
administrative process, not requiring litigation.

------
Fando
It is ironic that driving the progress of the currently broken patent system
are the laborious efforts of patent trolls.

------
dhimes
Not much meat here- just enough to raise your blood pressure.

------
cheepin
I got a 404. Anyone got a cached copy?

------
pizza234
Is it technically correct to say that frivolous patent lawsuits "drag the
economy"?

Ignoring for a moment the moral issue, if such phenomenon causes a
(relatively) large amount of money to flow from (software) companies to
"patent trolling" ones, isn't it still positive for the economy?

~~~
te_platt
No. The closest simple example is the broken window fallacy:
[http://en.wikipedia.org/wiki/Parable_of_the_broken_window](http://en.wikipedia.org/wiki/Parable_of_the_broken_window)

~~~
Guvante
Apparently the broken window fallacy has absolutely nothing to do with the
broken window theory:
[http://en.wikipedia.org/wiki/Broken_windows_theory](http://en.wikipedia.org/wiki/Broken_windows_theory)

