Following up on a story we covered in the very first post to this blog, Todd Moore brings great news that Lodsys dismissed the patent infringement lawsuit against his company. While this certainly is a win for TMSOFT, it is important to note that it was made possible by a pro bono representation from Public Patent Foundation, which donated close to $190,000 in legal services. Todd also points out the underlying one-sidedness of the patent litigation process as Lodsys paid only $450 to file the lawsuit against TMSOFT.
Tim Rowe, founder and CEO of the Cambridge Innovation Center, writes in “Fight the trolls” about the impact that patent trolls are having on Massachusetts startup economy: “At a recent gathering at the Cambridge Innnovation Center, a home for startups in Cambridge, the patent troll problem was voted the number one public policy issue facing entrepreneurs.” The article cites an example of a Boston entrepreneur and inventor David Rose who unwittingly became associated with a patent troll which through a chain of acquisitions became an owner of David’s photo-sharing patent. With more than half of all patent litigation today stemming from trolls, it is clear that startups and many other innovative companies that cannot afford to litigate on their own need a novel approach to organizing and taking action against threats form patent trolls.
James R. Copland, director of the Center for Legal Policy at the Manhattan Institute, cites in “Throw (patent) trolls under bridge” a number of studies about the impact of patent trolls on the economy. Some salient points:
- In 2011, Google and Apple spent more on patent litigation and acquisition than on research and development
- “patent tax” adds 20 percent to software and electronic research and development costs
- Over the last six years, the number of lawsuits filed by such patent-assertion entities has increased 526 percent
The article also includes some interesting case studies. James writes that in 2011, attorneys working with a patent troll called Innovatio IP Ventures, mailed more than 8,000 letters seeking $2,500 to $3,000 each from retail businesses — including hotels, coffee shops, and restaurants — that offered customers Wi-Fi services. In a similar case in 2012, attorneys of MPHJ Technology Investments LLC , acquired a patent covering scanner technologies that employed a one-button scan and send-to-e-mail function. They then proceeded to mail demand letters to hundreds of small and medium-size U.S. businesses that were end users of printers and scanners — seeking roughly $1,000 per worker in licensing royalties.
Concero Group, released results of a survey based on 47 responses from Fortune 1000 Chief IP Counsels, finding that ” 74% … are either litigating against patent trolls or expect to be within the next year. A full 100% said that they expect patent litigation to either increase or hold steady during that time.” In another result which reinforces earlier reports in this blog, suggests that chief IP counsels believe that over a majority (61%) of smaller companies “are unfairly disadvantaged in their patent protection efforts.”
Leigh Beadon in “Gaining Momentum Against Patent Trolls” summarizes a timeline of key 2013 events relating to patent trolls.
Duane Valz, Senior Patent Counsel at Google shared some news about a very inspiring move by the company to pledge an additional 79 patents under the Open Patent Non-Assertion (OPN) initiative —committing not to sue any user, distributor or developer of open-source software on specified patents, unless first attacked. Most of the patents (46) cover middleware while 19 involve alarm monitoring, 10 distributed storage management, and 4 distributed database management. The entire list of OPN pledged patents can be found here.
Last but not least, Adam Mossoff from “Center for the Protection of Intellectual Property” argues from a different perspective on the patent troll issue in “The Myth of the ”Patent Troll” Litigation Explosion“. Adam encourages readers to “ask whether there really is a systemic [patent troll] problem… and who is pushing this rhetoric into the public policy debates to the point that it has become a deafening roar that makes impossible all reasonable and sensible discussion.” While this is a reasonable to question the approach taken to the patent troll problem and cui bono, the article goes too far and blurs the distinction between trolls and legitimate entities seeking to enforce their intellectual property rights. Adam asks the readers to “dispense with nonobjective rhetoric and simply identify these [patent troll] companies factually by their business models: patent licensing. ” In our opinion, it is not the patent licensing aspect of their business model that sets the patent trolls apart from other companies. The term patent troll is used in practice to describe companies that have a history of leveraging their intellectual property primarily against companies unable to carry the financial burden of litigation and thus are forced to settle based on the troll’s licensing terms.
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