Why Tech Vendors Fund Patent Trolls

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Why Tech Vendors Fund Patent Trolls

Posted by timothy on Thursday April 5, 2012 @04:50AM from the can't-leave-their-friends-behind dept.

Lucas123 writes "Major tech vendors are funding patent trolls, companies that derive the bulk of their income, if not all of it, from licensing huge libraries of patents they hold as well as by suing companies that use their patents without permission, according to an investigation by Computerworld. Tech companies — including Apple and Micron — have railed against patent 'nuisance' lawsuits, only to fund or otherwise support some of the patent trolls. Because of patent trolls, more politely called mass patent aggregators, patent litigation has in part increased by more than 230% over the past 20 years. 'Most of the major tech companies are backing a troll in some way, probably financially,' says Thomas Ewing, an attorney who has authored reports on what he calls 'patent privateering.'"

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The problem is obvious patents by Anonymous Coward · 2012-04-05 05:02 · Score: 2, Interesting

The problem is obvious patents, not who owns and enforces those obvious patents. All big tech companies own and enforce obvious patents, so how is this worse than companies that produce nothing doing the same thing? We need a fix to obvious patents. Shorter time limits for (de facto) software patents, and peer review are the only workable solutions that have been proposed.
1. Re:The problem is obvious patents by ashtophoenix · 2012-04-05 05:14 · Score: 5, Insightful
  
  The problem is a lot more fundamental and deep-rooted than what you have described. The short time limits, lack of proper reviews are symptoms of the problem. The real problem is the people, the incentives and the fundamental lines on which our world operates. The majority of the world operates not based on the drive to create something, the passion for perfection but rather on making money and gaining fame. Also, we don't understand ideas very well. Where do ideas come from? Do they belong to the person who got them? What if multiple people had them at the same time, whether in close proximity of location or in different parts of the world. Who would they belong to then? To the person who gets the patent? Should they really belong to someone, or the person who happens to get the idea first should only get a small part of the attribution? Who is making the decision to fund patent trolls? The executives sitting in a boardroom. Who is supporting these decisions? Everyone who is a stakeholder - all top level execs as well as senior/middle mgmt as well as stock option holders. Again, incentives supplanting principles/values.
  
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2. Re:The problem is obvious patents by HBI · 2012-04-05 05:18 · Score: 4, Interesting
  
  No, the problem is non-practicing entities holding and enforcing patents. A practicing entity - a real company - has an incentive to not troll with its patents. Trolling with its patents would be painting a big target on its ass, as Apple and Yahoo are starting to find out. What does a non-practicing entity have to fear from trolling? No liability at all. It doesn't do anything!
  While I agree that obvious patents suck, it's much harder to separate obvious from non-obvious. The USPTO doesn't inspire me to believe that it could ever fix the problem adequately. In comparison, it would be rather easy to say that non-practicing entities cannot bring patent claims.
  
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  HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
3. Re:The problem is obvious patents by tomhath · 2012-04-05 05:33 · Score: 3, Insightful
  
  Unfortunately there's no good way to define practicing versus non-practicing. Is a law firm that employs some pimply-faced script kiddie who writes phone apps now a practicing entity? I think the real solution is to eliminate software and business process patents, they're like an architect patenting the idea of putting a window in an office at a specific location. Big deal.
4. Re:The problem is obvious patents by chrb · 2012-04-05 05:47 · Score: 2
  
  A practicing entity - a real company - has an incentive to not troll with its patents.
  
  That disincentive only works for large companies with similar patent warchests. Small companies, end users etc. can get just as screwed by a practicing entity, since they have no or few patents. What are you going to do when someone sues you for patent infringement if you use Facebook? What are you going to do if you really do invent some new technology, say a new graphics pipeline rendering technology? Do you think that Nvidia would hesitate to take you down with their patent warchest to take you down if your new technology posed a direct threat to their profits? And how would you stop non-practicing entities creating trivial examples of their patents - would they need to have some level of market share or product revenue before qualifying as practicing? What if they license out the patent, but don't directly sell a product?
5. Re:The problem is obvious patents by Epimer · 2012-04-05 09:39 · Score: 2
  
  You've recognised yourself that that's an extreme solution to the problem, and I can't help but think that such a solution would do infinitely more harm than good.
  One of the stronger arguments for the benefits of a patent system is the notion that it helps correct the market imperfection which would result in the absence of intellectual property rights, where (for non computer-implemented inventions) he who holds the manufacturing and distribution capabilities can effortlessly muscle out your little guy who patented something in his garage.
  I don't think there's anyone - I'm even going to pre-empt the predictable "except rich lawyers LOL" comment - with an interest in the patent system who's actually fond of patent trolls, or finds their practices particularly palatable. But it would be enormously harmful to the current beneficial aspects of the patent system as it stands to restrict patents to practicing entities only.
  And still it's a common viewpoint on Slashdot. I can't help but think it's a reflection of the core audience here with a software bias, where manufacturing/distribution/reproduction are significantly lesser hurdles to overcome than in other fields.
Re:Laborless Capital by flaming+error · 2012-04-05 05:04 · Score: 3, Insightful

I think this is what it looks like when the system values bureaucracy over results. Viva la Kafka!
Math Check.... by Anonymous Coward · 2012-04-05 05:04 · Score: 5, Insightful

"patent litigation has in part increased by more than 230% over the past 20 years."
Math check... a 4.2% increase, per year, over 20 years yields 230%.
Is 4.2% per year so much? Given the changes in technology in the past 20 years, that seems quite modest to me.
1. Re:Math Check.... by flaming+error · 2012-04-05 05:21 · Score: 3, Insightful
  
  That's a really good point - thanks for making it.
  And if this rate of increase continues into the future, where it approximately doubles every ten years, in 2020 we'll be 400% higher than 1990 and in 2030 we'll be at 800% and by 2040 we'll be at 1600% ...
  As far as math goes, that's all fine. But behind those numbers we have to put resources, and resources come from meatspace, where there are physical limits to growth. In the finite world, continuous growth is just not sustainable. And even if it were, is this where we want to dedicate our resources?
2. Re:Math Check.... by the+eric+conspiracy · 2012-04-05 06:57 · Score: 2
  
  A 4.2% compound growth rate is not a doubling every ten years. Simply just apply the rule of 70 and you find it's 16.7 years.
  And even that math isn't that great because it doesn't factor in the overall US economic growth rate of 2.5% over the past 20 years or so. So really the excess patent rate is 1.7% per year compared to the overall economy. That's a doubling every 40 years.
  And that's the overall growth rate, which is not as fast as the growth rate of the technological components of the US economy.
  Once you figure in that I bet it isn't growing at a significant rate compared to the economy it's linked to at all.
  And those who moderated the parent article up - WTF?
Re:Laborless Capital by Sarten-X · 2012-04-05 05:08 · Score: 2, Funny

Labor produces the research in the first place, and gets funded when the troll buys the resulting patent.

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Patent litigation trends by Grond · 2012-04-05 05:11 · Score: 4, Interesting

Because of patent trolls, more politely called mass patent aggregators, patent litigation has in part increased by more than 230% over the past 20 years
The number of patent cases has increased almost exactly in lock step with the number of patents granted (see page 8). The growth rate for litigation since 1991 is 4.9%, whereas the rate for patents granted is 4.5%. There is not a lot of evidence that there are more patent cases because of non-practicing entities. For example, litigation rates have been relatively flat since about 2003, despite numerous patent aggregators only coming into existence in that timeframe (see page 8 again).
NPEs also tend to lose cases more often than practicing entities (see above, page 24 and 32). NPEs win about 23% of the time overall, and PEs win about 39%. When NPEs do win the awards are higher, but that's to be expected. The primary value of litigation for an NPE is to get money, either as a damage award or as a license agreement. The primary value of litigation for a practicing entity is to exclude a competitor. Damages are nice, but the real point is the injunction.
That loss rate is a good example of why more fee-shifting (i.e. loser pays the other side's attorney's fees) in patent cases would be beneficial in eliminating frivolous, "shakedown," and otherwise questionable patent suits brought by NPEs.
1. Re:Patent litigation trends by Khashishi · 2012-04-05 05:59 · Score: 3, Insightful
  
  NPEs win about 23% of the time overall, and PEs win about 39%
  That's a very sad statistic for the patent office. It means they are rubber stamping far too many invalid patents. But you already knew that.
2. Re:Patent litigation trends by Epimer · 2012-04-05 07:22 · Score: 3, Insightful
  
  That statistic tells you absolutely nothing about the validity (or otherwise) of the patents involved in litigation.
  The numbers would include the successful bringing of an infringement action with respect to a perfectly valid patent, for example.
  A declaration of invalidity is far from the only remedy available in patent litigation.
3. Re:Patent litigation trends by Eivind+Eklund · 2012-04-05 07:40 · Score: 2
  
  Due to selection bias, such numbers say very little. If a case would be obviously won - in either direction - then it will most likely be settled instead of going to court.
  
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Patent system broken by kipsate · 2012-04-05 05:22 · Score: 5, Insightful

The way patents work almost forces companies to pursuit the aggregation of huge numbers of senseless patents. How else can a company defend itself against companies doing exactly the same and suing the shit out of them? The patent trolls are not the ones to blame - the problem is the legal framework around patents that allows "trolls" to exist in the first place and build a profitable business on it.

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Re:Like Warren Zevon said... by peragrin · 2012-04-05 05:26 · Score: 4, Funny

You can defend yourself from guns. From lawyers all you can do is kill them and hope you dont run out of bullets before they run out lawyers.
What's the difference between a lawyer and a zombie? Zombies only want your brains

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they are trying to become the standards bodies by alen · 2012-04-05 05:38 · Score: 3, Interesting

DVD, bluray, 3GPP, JEDEC, the list goes on. you write a check, send in your patents or agree to license them cheap to anyone who asks and you are part of a standard
the trolls or whatever you want to call them want to be the standards body. why let a non-profit collect membership checks when you can start a PAE and do the same?
Re:Call for action! by game+kid · 2012-04-05 05:54 · Score: 2

White House e-petition n. see talk to the hand, /dev/null .

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Blackmail by PPH · 2012-04-05 06:16 · Score: 3, Interesting

Either you pay them to fight on your side or they end up working for your competitor, working against you. Its basically a protection racket.

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Have gnu, will travel.
Re:Financially backing? by aiken_d · 2012-04-05 07:17 · Score: 2

The two are inseparable. Consider that you are Apple, or Google, or Microsoft, or really any big company. A patent troll comes to you and offers a chance to buy in to their patent pool -- you will gain a blanket license to their entire portfolio for only $500m, presented as an equity investment.
Your patent attorneys look through the pool and determine that, if they were to sue you on every patent they have a 50% chance of winning, the expected outcome is $750m. Even if you prevailed in every case, legal costs would be about $100m.
What do you do? Keep in mind that you're publicly traded and shareholders -- the board -- isn't going to look kindly on personal crusades that disregard best outcomes for your company.

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