Patent ‘Trolls’ Recede as Threat to Innovation. Will Justices Change That?

from NYTs

In August, real estate agents in Texas fended off a company’s demands for royalty payments for a feature of many websites: the ability to show prospective home buyers where local schools, parks and grocery stores are. Administrative law judges at the United States Patent and Trademark Office found that the patent claims were simply not valid.

A few months before, in February, judges at the patent office put an end to “Project Paperless,” an attempt to extract royalties from small businesses using off-the-shelf scanners to scan documents to email. The litigants pressing for payment, the judges determined, had no right to the technology.

In September last year, they stopped Teva Pharmaceutical from extending its exclusive right to sell the blockbuster multiple sclerosis drug Copaxone, and fend off generic drug manufacturers for years after its original patent expired, simply by patenting the method to administer it in a 40-milligram dose three times a week.

In the five years since it began its work — a result of the America Invents Act of 2011 — the Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees alone, according to Joshua Landau, patent counsel at the Computer and Communications Industry Association, offering an expeditious and relatively cheap avenue to challenge patents of doubtful validity.

The benefits of stopping bad patents from snaking their way through the economy have been even greater.

More here.

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9 Responses to Patent ‘Trolls’ Recede as Threat to Innovation. Will Justices Change That?

  1. Vincent Scorese December 8, 2017 at 6:37 pm #

    This is good news in regards to the existence of the patent trolls and what it means for those who are trying to bring the creativity and innovation back to the workplace and industry. Patent trolls have costed businesses lots of money by trying to take advantage of the laws they found loops in by just sitting on patents and attacking those for royalties every time someone violated it. One of the major groups that suffered the most in this ordeal would be small businesses as they have attracted a lot of attention from the patent trolls to attack and try to extort money from. It’s like holding a company for ransom except in this situation it’s a legal thing to do. However, the patent trials and appeal board is striking back and is taking a fight back against the patent trolls that have taken a lot of negative impact on the business market that truly needs creativity and innovation to stay competitive. Just in the last few years they have saved small businesses over 2 billion dollars just in legal fees which is a very good sign and something that hopefully keeps the trend going.
    It is going to be a very interesting thing to see how the Justices will rule and whether or not they will rule in the favor of lessening the patent laws and their stifling effect on the company or will they rule to keep what some of these laws have done and kept a stranglehold on some part of the innovative process of the business world. Companies have tried to keep their products for as safe as they can be for as long as they can not only to protect their own company and its interests but to also keep a innovation they made only benefiting them and outdoing those who are opposed to them. Sometimes companies know once they patent something and it becomes public other companies will take it over at some point and call it something different so sometimes companies sell off the technology to at least try to make something from it. Sony has done this with Samsung I believe in the TV space with some of the new 4K technologies they came out with.
    I hope that the patent rules are lessened in regards to these trolls just sitting there trying to snag royalties from others but also not lessened too much where if someone invents something and innovates it they aren’t at risk to have that invention be used and not get some sort of reciprocation for it.

  2. Nicholas Marinelli January 26, 2018 at 6:04 pm #

    Innovation is the driving force that makes the world go round; innovation is the reason for existence and innovation is the reason for survival. It is clearly visible in every aspect of life. Whether it is apparent or not, every single object and item in a store is the offspring of innovation. To inhibit the idea of innovation will ultimately create a stalemate in life, technology, and business. Without it, the human race cannot cease to exist.
    In an effort to protect innovators and entrepreneurs, the United States Patent and Trademark Office has begun to reject more invalid and “troll” patent claims that riddle the economy. By the patent office imposing stricter methods of actually approving patents, “companies no longer have to pay ransom [to] the threat of lawsuits over dubious royalty payments” (Times). The idea that a pharmaceutical company has a right to create a patent to administer a certain dosage of a medicine is quite absurd and overbearing. Without stopping this, the company will create an overbearing and unfair presence in the marketplace- ultimately monopolizing the opportunities because it owns the right to administer the quantity ingested.
    The fact that the Patent Trial and Appeal Board has saved companies billions of dollars in the previous year’s says a lot about the control people are trying to aim for. Everyone thinks that owning the intellectual property and rights of something will enable them to succeed, when in fact it actually ruins society and innovation. According to the National Bureau of Economic Research, the idea of patents is a primary driver of innovation, “yet alternative models suggest that stronger patents can discourage innovation” (NBER). These trolls are trying everything they can to disrupt certain industries; however, the Supreme Court is beginning to put an end to that.
    What is interesting is the reverse idea here- the accusation that the patent office is using its ruling too strictly to enforce the proper control of intellectual property. I do not find that the patent office is using its rulings too strict in this case, because these trolls are trying to take advantage of a weakness. It is unfair, for example, for a company to place a patent on a feature that grants the ability for potential homebuyers to see where the local parks, stores, and schools are. It would in fact be great to have this idea, but to patent it is a nuisance for potential entrepreneurs, web-developers, and app builders to create a new real-estate app or business idea. Shows such as Shark Tank promote the idea of innovation but for people to try and get every penny from potential creators is unfair. For the technology industry, limitations definitely promote expansion and growth, while strong patent laws creates a stalemate and inability to produce new content. This is how Linux and other open-source programing helped create new products used daily; if we decide to patent every single aspect of life, people would be paying everyone and the economy would take a drastic hit.
    Included in one of Harvard Business Review’s articles, Elon Musk announced in 2014 that Tesla would not initiate any lawsuits with firms that used their patents in good faith. This milestone actually enabled automakers to tap into the new and exciting idea of electric cars. Simple, small steps like this create giant leaps for entrepreneurs and innovators. It is great that the Supreme Court is aiding in the fight for innovation.

  3. Dean Spenzos January 26, 2018 at 6:09 pm #

    Reading this article made me very happy. I did not know much about patent trolls before reading this and most of my knowledge came from HBO’s ‘Silicon Valley’ in which a small business, much like the ones described in the article, was targeted. They created and app and were approached by a patent troll trying to receive a cash offer before he would sue them. This particular troll used multiple small patents to extract millions of dollars from small apps throughout the years. He ended receiving $15,000 from the small business and continued his habit. If the patent troll had been taken to court he most likely would’ve been taken down in a situation like “Project Paperless” and wouldn’t have held them for ransom.
    These new steps that the patent office is taking are very beneficial to future and current innovation. Smaller patents that should be invalid are scaring people away from trying to create new products and medicines for fear of being sued over a minor technicality. It is completely slowing down beneficial progress that could be made for multiple reasons. In addition to people being scared away from creating something new, the people who are willing to take the risk are severely financially wounded when they do come across a patent troll. Just as the article states we need to lower the “stringent intellectual-property laws”.
    Understandingly, things like this do not happen overnight but the patent trolls have gradually started asking for less money as Mark Lemley puts it. Some of these patents are old, outdated, and do not apply to where they are being used. Going forward, it would be nice to see the patent office continue this trend, rejecting claims on patents based on arbitrary ideas that have been around for a long time. The argument that only a court can take private property, not a government agency like the patent office is valid and should be analyzed. However, the fact is that some of these patents being rejected like the one over a system similar to E-ZPass create a sort of monopoly and therefore should be regulated by the government. If the government starts getting too controlling over these patents then something should be done, but everything thus far has been just.

  4. Antonio Macolino January 30, 2018 at 10:56 am #

    Patent trolling has become a very large problem in the United States. In today’s society, patents have become stricter and stricter and companies are charging huge royalty fees for other companies to use their ideas. These huge royalty fees are even being charged on ideas that are actually very old and not even innovative anymore. One of the biggest patent charges that keep occurring are charges on intellectual property. Small startup businesses are being charged huge amounts of money for “stealing” the ideas of another company. Even if some of these ideas are over 20 years old. The trick that these companies use is to prolong their exclusive rights to a technology long after they are invented. This can especially be seen in the realm of pharmaceutical companies. As explained in the article, “Pharmaceutical companies start moving doctors to the tweaked formulation before the original patent runs out, so that by the time it expires nobody is prescribing the original drug.” It is through this manipulation that companies are able to retain exclusivity over a drug and charge huge fees to patients and their insurance companies.
    This is a huge problem for innovation. Because of the huge fees presented by these big corporations, small businesses lack the desire for innovation. There is less and less innovation these days because of the insane royalty fees being charged by companies who own the patents, which are only given to them by the government. Luckily, the Supreme Court and courts across America are becoming more and more sympathetic to these small businesses. Many justices agree that patents these days are becoming too restrictive and this is actually hurting the economy. I completely agree with what the justices are saying. With a lack of innovation, America will never be able to come up with groundbreaking medicines to save lives or new technologies to change the way we live. In America, we should be fostering an environment for people to innovate and invent. Without this ability, old technologies will catch up to us and we will never find better means of doing things. Hopefully, with the courts cracking down on these ultra-restrictive patents, we will begin to see more innovation by young minds and small businesses. With this increase innovation, our economy would vastly improve as well.

  5. Andrew Kuttin February 1, 2018 at 2:45 am #

    The existence of so-called “patent trolls” is a relatively new concept to me. My first exposure to the predatory legal practice came in an episode of the HBO show Silicon Valley that I watched in August of 2017. The show’s conflict centers on a retired lawyer using a patent to an old mariachi song to scare artists into settling outside of court for royalty fees less than the cost of a legal challenge. At the time I watched the show, I did not think twice about the real world effect that trolls like this fictional lawyer had. Upon reading this New York Times article, I now see that real life patent trolls are all too regular. A Boston University study entitled “The Private and Social Costs of Patent Trolls” found that more than 10,000 companies have been sued by a patent troll at least once and that over the past four years, Patent Assertion Entity (PAE) litigation has resulted in an average annual loss of $80 billion dollars.
    With any legal issue as delicate as this one, there is bound to be a constitutional dispute. On the subject of patent trolls, there is already a case before the Supreme Court aimed at creating some sort of precedent. In 2011, congress passed the America Invents Act, which established the Patent Trial and Appeal Board. This board conducts trials, including inter parties, post-grant, and covered business method patent reviews and derivation proceedings, hears appeals from adverse examiner decisions in patent applications and reexamination proceedings, and renders decisions in interferences according to the US Patent Office website. This board offers a cheap avenue to challenge patents of doubtful validity. As a result, it has saved businesses more than two billion dollars in legal fees alone. The legal question that the existence of this board creates is whether or not a.) The striking of a patent constitutes as deprivation of property, or b.) A board within a government agency has the authority to strike these patents.
    This legal question will be tried in the upcoming Supreme Court Case Oil States Energy Service vs. Greene’s Energy Group. The accuser is arguing that the taking of private property is something that only a court and not a government agency can do. The New York Times article points out that patents are not “standard issue private property” similar to land. They are granted by the government to further innovation and investment for the public good. I believe that the justices of the Supreme Court should view patents in this light. They are property created by the government; therefore, the government should reserve the right to rule them invalid. This would validate the authority of the Patent Trial and Appeal board. If the opposite is held true, a legal precedent is created for patent trolls to run wild.
    The article does mention a patent precedent Supreme Court case in 2014’s Alice Corp vs. CLS Bank international. In this case, the court ruled that the patents held by Alice Corporation over digital means for financial trading were covering abstract ideas and were thus inappropriate for patent protection. This precedent invalidates “abstract” patent ideas that can be seen as common sense or old enough to be common practice and I believe it favors the argument that patents are not private property that must be properly compensated. Since patents are proven to be capable of being abstract, it becomes the job of the government to determine if a patent is valid.
    Ultimately, I hope that the court creates a legal environment where it is impossible to corner a company into paying unnecessary settlements via patent trolling.

  6. Joseph Lisowski February 2, 2018 at 5:00 am #

    This is a positive step in terms of innovation in the US. Patent trolls were responsible for halting innovation by sitting on patents that others needed for the sole purpose of collecting royalty. Being that they do not produce anything with their patents, I believe that it is fair to take legal action against them unless they can prove otherwise. Not only that, but with many patent trolls are claiming new territory for themselves, it is very difficult for an ambitious startup company to get off the ground with a patent troll sucking royalties out of their revenue. Andrew Kuttin has found a very interesting statistic that I would like to add to. With 10,000 companies sued in the past four years by patent trolls (Boston Universtity study), it is clear this was an issue that needed some attention. On top of this, estimates patent trolls coupled with excessive verdicts costs the US economy $1.5 billion per week.
    While to a certain extent I believe in the copyrighting of intellectual property, I believe we must draw a line somewhere. These patent trolls are not holding property to use it, they are instead exploiting the system which in turn hurts other potential businesses. That is the important distinction. When it comes to property, I think it is crucial for the courts to find ways to distinguish between people who have yet to act on their patent, and people who simply want to hold it and abuse the system.

  7. Tanner Purcel February 7, 2018 at 11:45 pm #

    Patent trolling is “the practice of obtaining and using patents for licensing or litigation purposes, rather than in the production of one’s own goods or services.” As the country has further developed, patent trolling has become a lingering problem in the United States today. Companies are now charging huge prices to other companies, even though that some of these ideas are old. Small businesses are the ones that are truly struggling from this because they are being charged by other businesses for using their. Because of these fees, small businesses do not take the chance on innovation. The courts of America have realized this and have begun to lean towards these small businesses in disputes. Many believe that the patents are too restrictive and is hurting the economy and the development of America. This is an accurate statement because innovation is the way for America to be a step ahead of the rest of the world. This should be a place that promotes innovation, not punishes it. I believe that legal action should be taken against these patent trolls.These trolls are not actually holding the property. They are taking advantage of the system. It is important for the courts to find ways to decipher those who get patents for actual use or those to take advantage of others

  8. Jacob Abel February 8, 2018 at 10:30 pm #

    This article offers a very interesting perspective that I think most people have never thought of. I have never heard of patent laws and protections for intellectual property actually coming in the way of innovation. It has always lauded that in the United States one of our great economic innovations is the protection of idea’s so that innovation may prosper. Overall the shift in the ruling of the courts should be beneficial to US economy as the practice of patent trolling tends to benefit large businesses. The idea that a massive company can starve out any small competition simply through a large law suit is bad for the US. Competition is key to the prosperity of the US economy and small businesses should be able to apply the tools that have been developed to make businesses practices more efficient.
    The author of the article also very effectively highlights how many large corporations actually aren’t innovating but rather re-branding old products. The fact that companies can simply take more of a claim over a drug by placing a patent on another aspect of the drug is not good. It seems criminal that these companies are simply adjusting the dosages of certain drugs simply so that they may make more money and extend their dominion over the drug. They are ripping people off. I hope that the courts as well as the Patent and Trial Appeal Board continues to make positive steps in ending patent trolling as it is simply un-American.
    There is a bigger issue of large US companies having their technology stolen from foreign nations which the US government should focus more on as that is harder to punish. Small US companies learning how to apply technologies in new ways is not as big of a threat.

  9. zhijie Yang February 9, 2018 at 1:34 am #

    The patent troll is a very new term, and I first contact with it, so I looked up a lot of cases to understand it.
    Companies that can be called “Patent Troll” have the following characteristics: Usually from a bankrupt company to buy a patent, and then Sue another company’s product for infringement of the patent that they purchased; They do not intend to carry out the patent they hold or provide the patented products; Patents have been put in place, but they don’t have the record of making the patent or developing the patent, or they’re just busy licensing the patents to other companies; Suing “fat sheep” company.
    Patent troll is also called “patent monster” or “speculators” patent, they are usually bought from a bankrupt company or individual inventor patent, patent and by itself does not produce a patented product or provide services, and then rely on patent litigation to earn huge profits professional companies or organizations.
    Patent trolls tend to hide in the dark, dormant for several years, until use their patent products occupy a certain share of market, jumped out suddenly and will produce and sell these patent products wholesale company to court, asked to pay licensing fees.
    Since it’s called a patent monster, it’s certainly terrible. Patent trolls are entitled to proprietary rights that are justified and justified in their claims. IT enterprises, they are long – term industrial business, so once the harassment of the patent monster, often very headache. Because of the uncertainty of patent lawsuit, even if the company strength is strong, again also not completely win grasp, especially once ruled for patent infringement, it is possible to be put to a permanent ban, its products involving lawsuit will be forever out of the U.S. market, it is for the enterprise. As a result, these defendants’ IT companies tend to pay a lot of money to negotiate a settlement with the patent trolls, which in turn stimulates more patent monsters. This is a vicious cycle. Until 2007, such cases usually ended with a substantial amount of compensation paid by torts.
    Applied on June 22, 1982, 1982 on May 31, authorized by the United States patent no. 4386272, protect a generated by different size of light spot image device and method, it has only seven claims. In 1995, the right owner Pitney Bowes began using the first three rights to Sue HP for infringement. On June 4, 2001, on the day of the court session, the two sides reached a settlement: HP denied infringement, but had to pay the plaintiff $400 million.
    The most famous is the six-year legal battle between RIM, a Canadian company, and NTP, a california-based patent company. In November 2001, an inventor of NTP in Illinois state team claimed that the RIM blackberry service violated his eight patents, including electronic mail system in wireless communications using radio frequency, etc., and the RIM to court. In 2006, the two sides finally settled, paying $612.5 million for blackberry’s service in the United States.
    A patent tends to take the company back for more than a decade, but for IT companies, products often involve thousands or more of the patented technology. The huge profits and the successful tactics have caused more and more enterprises to be targeted by patent monsters, causing great trouble to the operation of enterprises. According to statistics, before the eBay case, 95 percent of the cases of patent infringement in the United States were issued with a permanent injunction, and the technology was not allowed to be used again. Since then, that percentage has fallen to 74 percent.

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