As my previous blog mentioned, a focus on the smallest companies may not create representative perspectives of the patent reform debate but it is worth focusing on small companies because they represent the majority of our PAE friends.
There are three ways we as a group had brainstormed and defended to reduce the harm of patent assertion in the patent market.
1) Small companies should decrease vulnerability as PAE targets by forming collective, industry association groups to set policies for the group in standard patent troll situations. By spreading information, risks and transaction costs, the return on trolling can be reduced.
2) Small companies tend to be targeted because they are USERS of technology, eg. wifi, digital scanners, innocently using widely available technology. Of course, since it appears that those innocently using technology are still targeted, Congress should adopt some limit on the liability of users under the "innocent user defense"
3) Small companies legitimize PAE patents by agreeing to royalty-based settlements.
Overall, we see a series of unique characteristics, i.e. popular PAE target, that characterize both big companies and small. I hope to learn more about examples anybody has in mind.
I definitely agree that something should be done about users of patented technology. Because users do not manufacture or sell, I don't think they should be responsible for paying patent fees. I think it's ridiculous to expect a user to have to look up the technology their using, check the company they're getting it from, and cross reference it with the company that owns the patent. It's unfair for them to be penalized and users should not be a viable target for patent trolls, especially considering that a lot of technology is quite complicated and hard to pinpoint. If this continues, next thing you know patent trolls will be suing consumers!
ReplyDeleteI think that in theory, your proposals are fantastic and could really help mitigate the patent trolling problem. However, I have difficulty envisioning a scenario where many competitors are working together to form anti-troll groups when they themselves are also suing each over the same patents they hope trolls won't sue them over.
ReplyDeleteI guess, depending on the industry and the threat of trolls in them, the option of an alliance could be enticing for the small companies could actually be reasonable, despite them being competitors. After all, we already see big alliances in the smartphone war, with the Google camp and Rockstar camp. The primary, or even only, reason for these alliances might be the monetary issue, where their collective patents could help shield against losses more than any one company could afford.
DeleteI think Jega makes a good point in that when it comes to larger companies, anti-troll groups may be difficult to come by. What's interesting about Rockstar is that although it is composed of a lot of companies together, Rockstar itself is sort of a patent troll. They are a non-practicing entity that holds a patent portfolio and seems to have been formed just to make sure the Nortel patents don't fall into the "wrong hands". So then, despite collaboration being a good thing, will there ever be a case that an anti-troll group becomes a troll itself? But I do agree that setting standards between practicing companies that actual sell products may help limit the power trolls have over them.
DeleteI think that smaller companies will always be on the receiving end of the plurality of demand letters for the exact same reasons that you pointed out: they're small, they often don't have the legal expertise, and almost never have the funds to defend these sorts of lawsuits, and the large companies are well aware of that. When the larger companies (or patent assertion entities) send out the demand letters, it is with the intention that the smaller company will settle out of court because the cost for the smaller company to go to court is relatively much higher. This is part of the reason why the proposed patent reforms are essential. When patent trolls sues a smaller company (well, any company for that matter) and loses because their case was very weak, the troll will be responsible for covering the legal cost of the case.
DeleteI agree that it is terribly unfair that these patent assertion entities are able to sue end users of a technology for violating the PAE's patents. The same issue was discussed in my blog post a few weeks ago when I analyzed the relationship between fast food restaurants and patent trolls (what do they have in common, you ask? Patent trolls are suing White Castle because it uses "patented" technology like WiFi). If this pattern is extended, it means that PAEs could sue any American who own a router or a GPS system in their home. The only people who should be able to be sued in court by a PAE are the actual manufacturers and designers of this product, not the end user who is not well-informed on which patents are involved.
ReplyDeleteI do agree that the technology user should not face consequences or give money to the patent holders. In essence, these stunts could drive away users and have the company try to rely on gaining revenue from patent trolling which would not be a great case.
DeleteRegarding standards, it seems that there is a lot of difficulty for the USPTO to even enforce current protocol let alone new regulations. In fact, the larger companies would probably have a lot of influence that could dwarf the ability for groups like the USPTO to do much. It is possible that many of these larger companies have a more oligopoly policy to try to keep the industry to their benefit and make regulation difficult.
For widely used technology, I do know that previous cases in my older posts like the debate over messenger features for smartphones were disputed since it would be difficult to collect penalties from every individual that uses a cell phone with a messaging system. The long fight would most likely be possible from groups with large funding unless smaller companies are targeted as mentioned. These lawsuit trolls would only pursue the smaller groups if there is some large long term benefit.
It would require clearer connection between the patent agency and judicial system to minimize these types of lawsuits. Then again, the judge should be sensible enough to realize lawsuits on common-use technology are not valid enough to be pursued.
I used to work for a small electronics manufacturing company a couple years ago. They were a tiny company doing well for themselves but the thing that would kill us the most is the fact that we had to pay boatloads of royalties because simple technologies within our products like ATSC tuners and IR transmitters were technologies that were patented by entities that didn't manufacture themselves but were in place to extract royalties out of companies like us. In this sense I feel patents on basic technologies become a barrier to entry for new companies trying to gain market share. Smaller firms just can't afford to pay the hefty royalties
ReplyDeletePAE companies are patent trolls. Patent trolls are typically small companies. Moving away from patent trolls now, and looking at just small companies: yes, licensing costs can hurt small companies because they need to make sure they are not infringing any patents. Infringement of patent for a small company, can cause huge financial damage, and a setback to the extent that the small company may be forced to file for bankruptcy. On the other hand, there are the small companies which are the patent trolls. Such companies try to make money off the fact of owning patent that larger companies use and possibly infringe upon. Patent trolls will not go after small companies, because patent trolls are not trying to stop a company, but rather make significant financial gains. So, I would think that small companies would generally be free from patent trolling. However, small companies who infringe patents would be in trouble from larger companies who want to slow down small companies from entering a market to make a disruptive change; this could hurt the larger company otherwise.
ReplyDelete