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Issue #188 March 2006
Beware the Trolls
by Steve Ciarcia
I’ve never professed to have any legal knowledge, but I frequently get e-mails from readers asking about patents. Certainly any person with the talent to design a winning contest project or to author one of our great technical articles is also entrepreneurial enough to be curious whether some of these ideas have unique attributes. They’ve designed something and want my opinion on whether they should patent it. Heck if I know what to tell them. All I know is that it sure seems that any patent worth its salt these days ends up being a full-employment program for lawyers.
My usual advice is that before investing your life and fortune, you should investigate whether someone else has already patented the idea. That doesn’t mean just searching around the Internet to see if someone is manufacturing a similar widget or software package. At the very minimum, you need to have an attorney on board early and do a proper patent search. Of course, even that may not disclose enough.
Under the category of rude awakening, it may not be until you’ve designed a product and established a multi-million dollar business that you find yourself in the crosshairs of a “patent troll.”
A patent troll (a term coined by former Intel counsel Peter Detkin in 2001) is an individual or company with a patent portfolio containing important, fundamental patents, which it never intends to commercialize. Instead, a patent troll’s strategy is to wait until other individuals or companies manufacture products so that it can pursue them for patent infringement. Their goal is to negotiate license agreements or, in order to avoid patent infringement litigation, to “settle.” (Ironically, the word “troll” was coined as being less biased after a lawyer referred to the process as “patent extortion” and was sued by opposing counsel.)
The most prominent case presently in the news is between two companies: RIM (the parent company that makes Blackberry wireless e-mail devices) and NTP (a company built on protecting potentially valuable ideas, including some about sending messages to wireless devices). From the outset, RIM and its lawyers didn’t seem to take NTP seriously. The company was convinced NTP’s patents were junk because they codified technology that was already widely in use by RIM and countless others. Unfortunately, because of the extended conflict, this billion-dollar legal case has become a focus for “patent troll legislation” advocates and a distraction for technology investors.
Trolls have an inherently unfair advantage in extracting value from operating companies because they can seek an injunction on the other company’s product shipments. Patents are entities that can be bought, sold, or assigned, and patent protection grants an inventor or his assignee a right to exclude others from making, using, and selling the patented invention. A patent troll who owns a patent does not have to commercialize the patented invention in order to obtain protection.
In the defense of the venture capital companies that “purchase ideas,” some fields like biotechnology and semiconductor manufacturing are nearly impossible to break into for individual inventors without billions of dollars to effectively commercialize a product. The majority of complaints about trolls come from e-commerce and software businesses that are greater in number and have considerably lower commercialization costs. Before damning all IP-venture companies, did an inventor assign rights to an alleged troll rather than never see it commercialized or to stop blatant infringement by others?
Protracted legal fights aside, a patent is supposed to be a tool to help promote actual innovation and commercialization of technology. An inventor, whether an individual or a corporation, deserves the right to obtain fair compensation for an invention. Recognition and financial rewards are powerful incentives that spark the innovations that motivate our industry. Of course, some critics suggest that the U.S. patent system could also use a dose of sanity when it comes to granting some patents. Apparently, a patent was recently issued for an antigravity spaceship to an Indiana inventor. Of course, I’m sure at one time people thought that radio communication and lasers also defied the laws of physics.
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