US patent lawsuits now dominated by 'trolls'
reuters.com
reuters.com
That doesn't work with trolls.
With that as a recourse, it'd be easy for anyone to essentially create an army of privateers out there raiding your competitors (okay maybe a navy would have been a better metaphor).
Shouldn't there be a requirement to have an actual stake (i.e. sales lost) in order to file a lawsuit?
trolls.each { disbar }
http://en.wikipedia.org/wiki/Standing_%28law%29
*Not legal advice, or any type of advice.
Standing is not, therefore, a problem for this kind of lawsuit.
(I am not a lawyer, nor is this legal advice.)
Not even if it occurred during the lag time of you bringing it to market. (If this ever actually happened without corporate spying and intentional infringement, than the patent was clearly too obvious)
(Or more accurately, the value of the patent as a % of the cost of an item sold)
That's not right, obviously. Title 35 of the United States Code states that "the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer". Thus the basis of the damages is unpaid royalties for licensing the patent, not lost sales. The court may award damages for lost sales or anything else it considers "adequate to compensate for the infringement", but the ONE statutory-defined harm is the one you're saying doesn't exist.
Lost Sale if the patent constitutes the entire value of the item, theoretically possible in something like software.
Other nations have ruled in favor of Apple, and vice versa, which further adds to the confusion of who is a victor.
There are practical reasons for this. My law school alma mater, Northwestern, developed and patented the drug that became Lyrica. They sold the patent rights for about $700 million. Northwestern was not going into the prescription drug business. That would be utterly ridiculous. Treating patents as a property right allowed them to take the invention and "exit" by selling it to someone else. All research universities use this technique heavily: Stanford, MIT, etc.
Now, you may not agree that propertization is the right tool for inventions, but the fact remains that when you're discussing a property right it's irrelevant what someone trying to enforce that property right otherwise does with the property.
IMO, "trolling" should be limited to those who assert frivolous or weak patents to get quick settlements, not people who try to enforce legitimate patents. This is completely orthogonal to what sort of bar you think there should be for legitimate patents, or whether there should even be patents, by the way.
Did you get past the first paragraph?
The phrase that I saw used in the actual article itself, rather than the leader, was "patent-assertion entities" which is to say companies whose primary line of business is suing for patent rights.
That said, some of them are suing on behalf of entities like your law school alma mater. But the entities doing the suing have no other business.
What does it matter whether the entities doing the suing have no other business? Say I buy a really popular strip of land near the beach and don't do anything with it. Say that attracts a lot of tourists who picnic on it illegaly. Is it illegitimate for me to sue them for trespass? Say I sell off the right to sue for trespass to a non-practicing entity. Is that illegitimate?
Now, you may disagree with the nature and scope of the rights. You might say--people shouldn't be able to buy land by the beach--that belongs to the public (and that is the law in some places). But once you have a valid property right, it's not illegitimate to sue for real infringements of that property right, and it's not illegitimate to split up the "bundle of sticks" that makes up your property right and sell someone nothing more than the right to sue for infringements and keep any damages. That's just how property rights work in general.
In your example, you want something you didn't buy: access to a public road. I have three ways to monetize my property right with respect to you. I can sell you an easement across my land, I can lease you an easement across my land, or I can sue you for trespass and collect a nominal damages everytime you pass my land. The latter is somewhat inefficient, but all are totally legitimate--they are all just ways to transact in property rights between the two of us.
Using terms of "victim" and "vulnerable" are really inapropos here. A lawsuit is not an "attack." It's a "hey, I think you owe me some money." These are businesses all trying to make profit off inventions. If the patents in question are valid and legitimate (and I think a lot of them might not be, to be fair!) then there is no illegitimacy in a non-practicing entity suing to enforce their patent rights, because ultimately those rights derive from the original inventor. The NPE might not "create anything of value," but the inventor did, and the NPE bought out the inventor.
Now, to be fair, lawsuits are in inefficient way to transact in property rights, even if they are a legitimate way. Most people who believe in the patent regime think we need to develop things like patent markets to make it easier for companies to find and license patents without resorting to lawsuits.
Now, you may think that intellectual inventions shouldn't be the subject of property rights. That's an entirely defensible position, but it's also a totally separate issue.
You acknowledge this, sort of, but only when using the loaded language intellectual inventions to describe patents. This deliberately ignores the fact that a major complaint about the current patent system is the proliferation of patents which claim "invention" status to things that should not be called inventions.
You then go on to call the question of whether patents should be property a totally separate issue. I agree that it is totally separate from the line of argument that you want to pursue. But, given the opinions of most people on this site, it is actually the central issue. Your sophistry about property laws is actually the side issue that should be ignored in favor of what is really important.
The key question is this, is the rapid proliferation of lawsuits from non-practicing entities a problem? In fact evidence suggests that the companies being sued are generally ones that are creating real innovation, economic development, and jobs. The companies doing most of the suing are creating a tax on innovation. If you look at who is paying the costs, and who is capturing the profits, by and large the patent system is failing to incentivize actual innovation, and is rewarding useless legal activity.
When you look at it in this light, the activity of the non-practicing entities is absolutely the greatest source of the gap between what the patent system theoretically should be doing, and what it actually is doing. Therefore the rapid proliferation of lawsuits by non-practicing entities is direct evidence that our bad patent system is rapidly becoming worse.
Now, like a good lawyer, I expect you to take apart and criticize everything that I've said. After all you're paid to come to the conclusion you've decided in advance to, rather than to find the correct answer. Truth, for a lawyer in an argument, is merely one source of rhetorical ammunition. I admit it. I am not a lawyer. In a war of words, you'll win.
But I honestly believe that the ideas that I am putting forth are correct. And the ideas that you are putting forth are dangerous ideas that currently cost our economy tens of billions per year. Furthermore those costs are rapidly mounting. For decades now, Silicon Valley has been the world capital for tech startups. Some day, hopefully a long time from now, this will end and Silicon Valley will pass into history. But it could end much sooner, and worsening patent laws are on the short list of things that could end it quickly.
Also, I should note that I'm not a patent lawyer. I'm not paid to come to any conclusions on this issue. I have a somewhat more pro-patent outlook than many on HN, but I think it's one that reflects the prevailing view among engineers who have more traditional backgrounds (mine is in defense/wireless communications).
As for patents and engineers, I think it is likely that opinions differ. And one of the causes of that difference is that in software it is easy for random non-technical types to create broad patents with little merit by slapping "web" on top of obvious generic ideas. By contrast in hardware, patents are more likely to come from actual devices created by actual engineers, and therefore you tend to have fewer of the truly egregious patent abuses that outrage people on the software side.
By analogy, what does it matter that mobsters are able to demand "protection" money from legitimate businesses? If it was their right to threaten and demand payment without doing anything useful?
I'll tell you why it matters: because demanding payment from society without contributing back in any way is deplorable, criminal behavior.
It's more like if someone buy's out your landlords interest in the building your apartment is in and sues you on your lease. That's not a protection racket--that's enforcing your legitimate property rights.
While it may not be relevant from the point of view of the law, it is certainly relevant from the perspective of common sense and decency. If the law allows for abuses like this then the law is wrong.
And what is the someone else going to do with that right that makes it worth $700 million? That's the key question.
If what makes that right worth $700 million is that the someone else is going to manufacture the drug in large quantities and sell it at a profit, great! That's what the patent system is for.
If what makes that right worth $700 million is that the someone else is going to sue anyone who tries to manufacture the drug without a license and collect damages, that's not great. Either the drug won't be manufactured at all, which removes the justification for allowing it to be patented in the first place, or it will be manufactured at an extra cost, the licensing fee and/or damages, which means less of it will be manufactured or it will sell at a higher price.
In other words, a "non-practicing entity" who buys a patent like this one without intending to use it, is basically extracting an extra fee from everyone who needs the drug, without providing any compensating value. The economic term for that is "deadweight loss", and it's not a good idea. That's why patents should be held by those who are going to actually use them.
If the NPE actually does do work to find a buyer, so that he buys the patent for, say, $700 million but then sells it a year later, say, for $1.5 billion to a manufacturer, then I agree; the NPE in that case is adding value by doing "brokering" work that the original inventor didn't want to do, and was willing to take a quicker exit at a lower valuation to avoid.
But it seems to me that patent troll companies are buying patents with the explicit intention of doing nothing with them other than extracting fees and/or settlements, i.e., that they are adding no value.
Even if true in some technical sense, the whole point of laws, government, and so on, is to structure society in a way that works well. If that isn't happening, the law is, defacto, broken.
Given that NPEs, systematically, are able to drag down other businesses without doing anything useful themselves, this is clear evidence that patent law, "right" or not, needs to be changed. Strongly.
Actually, this isn't a good example, as a new drug is such an established item that it's not really a new invention as such, and there's no reason they couldn't just be copyrighted (with less term).
The point is that "using the property in your business" is not a requirement for legitimately enforcing property rights when it comes to any other kind of property. The right to use property productively is part of the "bundle of sticks" that defines a property right, but so is the right to sue for infringement of that property. Splitting up those individual rights and selling them and buying them individually, these are all just part of how property rights work.
The whole point of treating inventions as property is to allow inventors, like Northwestern, to monetize their inventions in the same ways they might monetize a piece of land. They can build something on it, sell it to someone else to build something on it, or even sell it to someone who does nothing with it but sues people who trespass on it. Usually people don't do the latter with land, but the nature of land makes for very different enforcement than the intellectual property.
Again, this is completely orthogonal to what you might think the scope of patent rights should be. Maybe we shouldn't treat them as property. Maybe they should go into the public domain immediately. That's all plausible. But we do treat them as property, and lawsuits are just one of the ways of monetizing property.
You are free to believe that patents encourage invention, but it's still government-granted monopoly, not property.
If patents are now more valuable to hold and sue, rather than use in product, than that's failed, and the solution is to make patents valid only when they're being used.
"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me."
-Thomas Jefferson
There are very strong arguments for the existence of patents in areas that can be defined easily, for example drugs, materials, in fact I'm undecided there. The argument for patents is that they encourage both innovation, and resulting products. However a patent is still not property and thus there is no natural right to it.
Somewhat like malpractice insurance for doctors, although the analogy is not precise - the malefactors would be the plaintiffs in these cases, not the defendants.
1. Insurance works because the risk of X happening to individuals in a group of insured people is low individually, even if over the entire population it isn't. This ensures the number of actual payouts are low. Here, the risk of troll lawsuits happening to all insured companies is high. Thus, you'd have to pay out to almost everyone.
2. Insurance also only works (for the insurer, anyway) if the premiums cover the payouts. Given the typical award is tens of millions or hundreds of millions, you'd need both lots of companies, and very high premiums.
To cover a single $100 million award, you'd need 10k companies to pay 10k each in premiums. If 100 million gets awarded against each of 5 companies in the lawsuit, now it's 50k premium per 10k companies.
ISTM it quickly becomes infeasible as long as damages are so high.
Note: General types of lawsuit insurance are already available, but they exclude patent infringement. Patent infringement/litigation insurance is also already available, but it's expensive as hell, per the above.
then
Please do not submit the link. My opinion only.
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=3620...
Not sure which paper the article talks about, by dates I assume it could be this one: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2146251
The only difference after 1-Jan-2014 will be the lack of "legal arbitrage" across states which makes a mockery of many laws in the US.
But legal arbitrage is trivially damaging compared to the new EU Unified Patent court ruled by patent law experts (which creates an incentive to expand their powers), the ability to file software/mathematical patents and the faster Unified Patent application process.