Patent Law

Publicity for Stupid

By Gary Odom and Jordan Kuhn

Trumpeting expressed ignorance is not usually a publicity-seeking modus operandi. But for two patent Paris Hiltons, it seemed just the ticket. Professional patent wrestlers Nathan Myhrvold of Intellectual Ventures and Stanford University Law Professor Mark Lemley are tag-teaming to battle the unknown: who is behind the "flood" of patent litigation in the past decade? Let me save you guys a lot of work. It's simple. Patent holders.

The bodacious bugaboo bothering these boys is to what extent patent litigation plaintiffs don't practice the asserted invention. Lemley has had a keen interest in "non-practicing entities" for quite some time. Law school professors often suffer a sorted reputation for strange obsessions, an inability to see the forest for the trees.

On the other side of the coin, Intellectual Ventures (IV) is a non-practicing patent holder. Although they haven't sued anyone yet. Extortion is a harsh word for a smooth practice of rhetorical persuasion. However IV makes money from patents without litigation is how patent licensing might ought to work. But IV is treating that like it's a trade secret.

These jokers made the Wall Street Journal with this "forthcoming study." Must have been a slow news day.

Lemley said that he's seen estimates on the number of suits filed by non-practicing entities that range wildly, from 2% to 50% of all patent litigation. In addition, many struggle even to define what makes a so-called "patent troll" that acquires patents to use in court, and what makes a legitimate non-practicing entity.

"There is some gray area," Lemley said, "What do you do about an IP-holding subsidiary of a company?"

Intellectual Ventures executive editor Wayt Gibbs said that an impartial study of patent litigation is necessary. "This is very important to innovation policy," Gibbs said.

Gibbs said the study is focused on the years 2000 through 2007, and includes "data on every single patent case filed" in that period. The roughly two-year project is being undertaken by a number of different Intellectual Ventures employees alongside Lemley, and is expected to produce several papers.

"We're pretty close now, and we're starting to write up our results," Gibbs said. "We hope the academic community will take this research and expand on it."

Stupidity is so hard to explain precisely because it's not logical. Not only is there no law requiring patent holders to practice their invention, there's no rational reason to do so. Imagine. You have to prove you are practicing your invention before you can enforce your intellectual property rights. Like you can't sell pony rides unless you ride the pony yourself.

While corporate patent wars are common, companies cross-license patents all the time without resorting to litigation. They have something to trade. Inventors have nothing to offer a corporate infringer. And a corporate infringer, feeling mighty mighty, would rather squash an inventor like a bug than pay a "patent tax."

I know this guy who used to consult a big software company. I mean orca fat BIG. The company really liked this guy. He did good work. Then it soured. Real fast. He told them about a patent he had that they were using. Didn't threaten to sue. Didn't even ask for money. Just wanted to keep them as a client. Figured they find out anyway, and he just wanted to be up-front. For seeming smart, boy, that guy was naive sometimes. Way too pure for this planet. Anyway, the guy said that, if they wanted to buy or license it, he'd be happy to do so at a "friendly" price. In response, they told him to give them free licenses to all his patents, and in return, they'd give him nothing. Nada. The big Zipola. They "set forth terms." Infants are like that. Always trying to see what they can get, and get away with. The guy told him they were making a big mistake. "Empathy and reciprocity are the fabric of the social contract," he said. That guy was always kind of weird with words. Told them that such bad behavior would be rewarded. One day he'd get them. And he did. But I digress.

Whatever these boys' little study comes up with, it'll be another academic victory of numbers telling you nothing. Whether a small percent or the vast majority of patent litigations are by patent owners who don't practice their invention is irrelevant. The problem is that litigation, the most expensive way to figure out patent validity and value, is the only avenue available. The courts have made it worse, because now you can't even offer to license a patent without opening yourself up to be sued.

That's the big problem with the patent system. There is no licensing system. Patent holders have no way to engage infringers in an equitable negotiation. They have to sue. The system encourages litigation. Who's up for a study on why that is so?

Peter Zura at 271 had a more lapdog response: "there is little doubt that the findings of the study will be one of the most anticipated events."

Full post as published by The Patent Prospector on February 05, 2009 (boomark / email).