Patent Trolls: They Do Exist

By  |  Thursday, January 7, 2010 at 1:59 am

Stanford University has announced a new service for analyzing and tracking patent lawsuits called Lex Machina. Its use of legal informatics has already led to some interesting findings about the nature of patent lawsuits in the US software industry.

The database helped Mark Lemley, the William H. Neukom Professor of Law and the director of the Law, Science Technology Program, determine that patent trolls account for nearly 30% of suits in the IT industry, depending on who is defined as a troll, he said. The clearinghouse data shows that trolls are “disproportionately owners of the most-litigated patents — the ones that show up in dozens of different lawsuits,” he added.

Lemley has conducted research to identify the characteristics of patent trolls, and has testified as an expert for the US Senate on the topic of patent reform.

“I do think [trolls] have a larger impact than the percentage alone would suggest, especially in the IT industries,” Lemley said. He added that the data will help dispel myths about patent litigation from who sues to who wins, and how much defendants have to pay. “We are giving the world access to the facts in a way they’ve never had before.”

Lex Machina is an outgrowth of a research project called the Stanford Intellectual Property Litigation Clearinghouse (IPLC). IPLC was developed to provide scholars, policy makers and citizens with open and instant access to data about intellectual property litigation in the United States.

The database grew so vast that Lex Machina was spun off as a separate venture to sustain development, according to Stanford. It now contains over 100,000 cases, over 10 million docket entries, and automates the parsing of that data. “The company includes more computer scientists than lawyers, and has people working at the very forefront of machine learning,” Lemley noted.

I applaud Stanford’s work, and hope that the IPLC database is used to drive patent reform, demystifying a complicated issue. Higher quality patents will protect investments in intellectual property while preserving the ability of start ups to do innovative things.

 
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  1. Vic Kley Says:

    Stanfords latest foray into creating a purely large corporate view of the patent world is interesting. Since Worthington can’t or won’t share the definition of “patent troll” we can only understand it as used unfailingly as a pejorative. As usual with efforts by any group to cast a false light on another group through pejorative pronouncements there is little light but much heat. No one doubts that the group being characterized is a minority and, at least at Stanford, nobody cares.

    Much more can and should be made of this subject. One thing though is certain David Worthington in characterizing patent reform as having the ability to somehow create “Higher quality patents will protect investments in intellectual property while preserving the ability of start ups to do innovative things.” does not know his tukis from the Grand Canyon. He is unable to state what “higher quality patents” are, unable to explain or understand that patents are NOT an Industrial product but when important and disruptive the creation of a person or small team. Inventions don’t need big industry, big industry needs inventors and inventions they just don’t like to pay for them. Enter “patent reform” the sure fire way to get the legal profession, courts and the US government in the business of stealing good ideas from the small and weak.

    Shame on you Worthington, shame on Stanford for promoting a denigrating phrase used to hurt or dismiss small entities, and Individual Inventors.

  2. Dale B. Halling Says:

    In Defense of Patent Trolls

    The term patent trolls is usually applied to companies that enforce patents that they are not practicing. These Non-Practicing Entities (NPEs) include companies specifically organized for this purpose such as Intellectual Ventures. However, it also includes Universities and divisions of most large corporations such as IBM. Many of these corporations complain about NPEs. However, any consistent definition of a NPE (troll) would include these hypocrites.

    The moral argument against NPEs is that they are not practicing their patents, so they are not entitled to enforce them. The U.S. has consistently rejected a working requirement for patents. The only time the U.S. had a working requirement for patents, was in early 1800s and only for English inventors. We do not argue that a landowner has to work his land in order to keep his property rights in the land.

    From an economic point of view patent trolls are the beginning of a secondary market in patents. Most of these companies got their start in the failed companies of the dot.com bust. These patent investing companies bought the patents of failed dot.com companies. This reduces the cost and the risk associated with R&D. The VC’s I knew were going to let these patents expire, resulting in zero return to the investors. Patent investing companies should not be vilified, but appreciated for the valuable secondary market they are creating. Like all new markets, the pioneers took enormous risks but also paid very little for the assets they acquired. Their success will encourage other entrepreneurs driving up the prices for patents (excess R&D). This will reduce the cost and risk associated with R&D, which will result in more investment in high technology start-up companies.

    Vilifying patent investment companies is like vilifying investors in the physical assets of failed enterprises. These investors recycle assets and make them part of the productive economy again. While it is sad to see a business fail, failure is part of the innovation process. Putting the assets of a failed enterprise back to work as soon as possible would be considered a humanitarian effort if performed by a non-profit. However it is just as valuable or more valuable to the economy when done by a for-profit enterprise.

    Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.” http://www.amazon.com/Decline-Fall-American-Entrepreneur-Regulations/dp/1439261369/ref=sr_1_1?ie=UTF8&s=books&qid=1262124667&sr=8-1

  3. David Worthington Says:

    @Vic You certainly assume a lot about what I do and do not know.

    There are many ways one could define a troll – Mark Lemley has defined characteristics of trolls in his research. I trust Mark’s opinion, as do many others.

    To suggest that they don’t exist is utter bull, and any attempt to portray me as anti inventor or anti-patent is nothing less than a snowballing of reality. A good patent system is a boom for the economy.

    There has been a loophole (a programming algorithm may preexist as a statement of math, part of it can be patented if it is tied to a process or machine)that many individuals and organizations have exploited to be awarded poor quality patents.

    Thankfully, court cases including Bilski, KRS and Nuijten have forced the USPTO to become more rigorous in how it reviews software and business process patent applications.

  4. David Worthington Says:

    boon*

  5. Vic Kley Says:

    David I assume nothing not in evidence. Dealing day by day with a USPTO spiraling out of control, set on a course ruinous to the Individual Inventor I know exactly of that which I speak. Would you care to address some of these problems? Care to tell how they will be corrected by S515 or the House bill? Care to get specific?

    How is this – I have had one simple patent application on making a hollow diamond sphere usable at the NIF in Livermore (and actually used there recently) into more then 50 independent applications (and presumably, eventually patents) on the whim of the examiner that each modest dopant of the diamond (in a process and product otherwise identical) was a separate invention! 50 sets of fees! 50 maintenance fees! I have been forced into appeal for the first time in my life as an inventor (40 years- more then a hundred patents and applications).

    The pendancy at the USPTO is devastating to small inventors and start-ups. Growing worse every day thanks to the worthless blackberry addicts who populate the Senate, House and Federal government and think that the little people, the actual inventors have no place in benefiting from their creations at the expense of those who have become addicted to them.

    There has no been a single Individual Inventor who commented on or was asked to comment on S515. That fact speaks for itself.

    Shame on you Worthington and Stanford too.

  6. Vic Kley Says:

    A constructive approach to express concern about NPE’s would be to carefully define the special NPE that is an anathema to Lemley, Apple, Microsoft, Intel and other’s of their ilk. Interestingly this does seem possible. When care is taken to define offending NPE’s a list is started almost always led by Intellectual Ventures, then Acacia etc., I could make the list and it would have fewer then twenty entries. It would consist primarily of greedy lawyers many I’m sure well known to both Lemley and Worthington whose saving grace (usually) is only that some modest part of their efforts will result in actual reward to the the inventors ripped off by Microsoft, Apple, Intel etc.

    Outside that list are just inventors trying (sometimes by seeking funding partners) to be paid for their work. These are of course just one-off suits not long term entities with an NPE enforcement purpose like those avaricious entities Stanford and UC.

    So the burden is really on Worthington and Lemley to name these NPE’s they believe we should fear as sources of intervention in the innovation that used to drive our economy. Lemley and Worthington should develop a term unique to these entities and use the scholarly resources we have been told about in this article to show that in fact these NPE’s do harm our society. Show us why the IVniks are the bad guys, if you can!

  7. James Wallis Martin Says:

    The simplest patent reform (but will never be adopted for its simplicity) is to have patent term limits. We have them for politicians, why not patents?

    Patents should only last for three times the length it took from starting R&D to initially earning revenue from the resulting product. Business Process Patents should only last five years (roughly triple Moore’s law). Music is seven years, with two additional renewals available before it becomes public domain, the same should happen for patents. Otherwise it stifles innovation, which hurts everyone.

  8. Mark Hayden Says:

    I think Vic’s personal bad experience with the USPTO has made him over-sensitive to David’s support of Lex Machina, and to the systsm’s very existence. From what I’ve read I am puzzled as to why he shames Stanford for their good work in making patent litigation more transparent to the public. He seems to assume that these people think NPE==patent troll and I’m sure they are more reasonable in their definition in this case. Have you even tried to contact Lex Machina? Why do you assume that they’d be reluctant to disclose who are considered patent trolls, and if they do, have you sought out an explanation?

    In fact it seems to me he is, in a way, a victim of exactly the kind of abuse of patent law that Stanford is trying to track. Vic’s invention is absolutely worthy of protection under patent law–it involves far more than algorithms and there is complex technology, equipment and processes involved, to the point I’m sure is almost never seen in software patents. I think that because frivolous business-method and software “inventions” have merited patents of their own that examiners, in an attempt to be consistent across all applications, feel small variations as Vic has described must also be classified as patents unto themselves. Furthermore, there is little motivation for those in the USPTO and the legions of IP litigators surrounding them to reform the system themselves because it is their job security.

    The problem isn’t with NPE’s as a whole and I think everyone here knows that. The problem is with NPE’s that actually abuse the system. Most notably:

    * NPE’s who are not the original inventors, but rather purchased their IP from struggling individuals and businesses to add to their litigation warchest.

    * NPE’s who do nothing to publicise the existence, nor attempt to grant licenses, nor enforce their patents until an Apple or Microsoft or IBM-sized entity establishes the use of related technology

    * NPE’s who deliberately create patents that contravene the spirit of patent law, taking even uncomplicated, marginally novel algorithms or business processes and justifying the patent application through its implementation through software that runs “on a computer” or “over a network” (ie. it makes use of an “apparatus” or physical equipment).

    I very much think Apple, IBM and Microsoft have *acted* as trolls in the above sense from time to time, though they are certainly NOT “patent troll companies” as the acquisition of IP and related litigation is definitely NOT their primary means of revenue generation, and NPEs like the research arms of such companies, academic institutions, etc may be NPEs, but they certainly do NOT deliberately file abusive patent applications and it is their mission generally to bring their inventions to market in one way or another.

    There are two things that I find lacking in patent law. First, it is too often seen as a right without regard to responsibilities–If an invention is truly novel, useful and merits protection then the inventor clearly should be willing to take responsibility to both enforce the patent and seek out some means of bringing it to market (NPEs are fine, but the burden should be on them to seek out licensees, not to sit on their fat IPs and wait for others to become successful first). NPEs who do NOT take on a reasonable amount of effort should see their patents lapse far sooner than the 20 years protection granted to all patent holders now.

    Second, it is clear that the technical arts are not uniform across all industries and technologies. Some inventions entail a great investment of resources and time to realise, whilst others are ideas cooked up quicker than the time it takes to apply for the patent. And in the case of IT, technology moves fast in general. I think that justifies a more granular application of patent law. As such, very software-centric patents might warrant as little a 5 years protection whereas an elabourate process involving complex materials might warrant more than 20 years.

    Whether you agree with these findings or what the remedies are, what is very clear to all reasonable people is that the status quo is harmful to innovation, competitiveness and the economy. Patent law was intended to protect inventors so as to ENCOURAGE innovation, and it has been perverted by lawyered up companies into something that is given value in its ability to INHIBIT innovation (yes, even those critical of patent abuse that hypocritically build up a “defensive” patent warchest are guilty in many cases). What is REALLY shameful is that it is the entire business model of too many companies (even “less than 20″ is too many).

  9. ben ford Says:

    All this talk about “patent trolls” is pure hype. If you will look at the 1898 Rude et al. v. Westcott et al. SCOTUS case [130 US 152, 9 S Ct 463, 32 L Ed 888] you will see that at least since 1874 inventors have been selling and partnering with other parties to enforce their patents. Without doing so, few inventors and small companies can afford to enforce their patents, meaning larger competitors can easily beat them out of the market they created and run them into bankruptcy. That’s big companies idea of “patent reform”. Therefore, all this present day discussion of “trolls” is a hoax whose purpose is to cut off the small entity support system and deny them any profit from their creations. Simply put, its intent is to legalize theft.

    These inventor antagonists rail against firms who license patents they do not themselves commercialize, yet many of the large firms who are most critical of the practice do it themselves. Out licensing is now an important profit center of most every firm. Often, as a result they end up licensing out patents covering technologies they themselves do not use. Rather hypocritical isn’t it?

    Call it what you will…patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.

    For the truth about trolls, please see http://truereform.piausa.org.

  10. Kennedy Says:

    It’s worth noting that most of the recent high-profile “patent troll” cases have involved software patents. So inventors like Vic should be heartily in favor of action against these trolls. They are sucking up valuable USPTO resources that would be far better spent providing a better service to real inventors.

  11. Bryan Says:

    An invention isn’t any good unless it is used for something. If someone has an idea, and another peson figures out how to use it practically. I think the peson that figured out how to use it shouldn’t get thier idea destroyed and all profits taken away because someone has a patent for something that they didn’t know what to do with.

  12. patenthitman Says:

    Speaking of patent troll… I’d like to suggest a defense to patent trolls and frivolous patent lawsuits!

    http://patenthitman.com/

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