Who’s that Trip-Trapping over my Patent?

Or: in defence of the patent trolls.

You’ve probably heard something, or like me, a lot about patent trolls recently. You may have wondered what exactly they are and what the problem is with them. The pejorative term “troll” does not help. They have also been referred to as “Patent Assertion Entity” or “Non-Practicing Entity”.

I have seen various headlines such as “Patent Trolls Cost US Economy $29 Billion” and so forth. You may have seen similar.

So what are they?

They are companies that have acquired one or more patents (usually they have a fairly hefty portfolio) but rather than seek to exploit these patents by incorporating them into products, they look for infringements of their patents in the marketplace and seek to assert their patent rights against the producer of those infringements.

They seem to be far more of a problem in the US than elsewhere, and that seems to be for two reasons: first is that the US seems far more litigious generally but also because costs are not generally awarded against the losing party in US litigation as they usually are in, for example, UK litigation. So there seems to be less of a financial risk in a patent troll pursuing litigation in the US. Moreover, the scale of some US damages awards can make litigation attractive, especially if the plaintiff can demonstrate willful infringement of the patent(s) and achieve a “punitive” damages award.

My assertion is that if you take issue with the patent trolls, you take issue with the whole patent system.

The first point is that a patent is a property right. It may be bought, sold, traded, licensed, mortgaged, left in a will, etc. The patent trolls have apparently lawfully obtained these property rights. This may be by purchasing from a liquidator or from the original owner for whatever reason they deemed it worthy of being sold. If you start to undermine this property function, you fundamentally alter the intellectual property system, likely to the detriment of the “little guy” whom the patent system seeks to protect by placing them on a more level playing field with the big players.

The second point is that plenty of patentees may be deemed to be a “troll” if some form of compulsory trading or exploitation element (a commonly cited “cure” for the troll) is insisted upon. Any experienced patent attorney has likely dealt with a number of private inventors who have a good idea, but perhaps neither the time, the experience, nor the suite of skills needed to bring a successful product to market. The patent system allows them to file their patent application and look for potential licensees to take that burden from them. Does that make them a patent troll?

The same goes for other non-trading entities – Universities for example. Universities may have acquired significant patent portfolios through research undertaken that they may never themselves exploit by direct manufacture. These they may want to license or sell on, perhaps even to a patent troll.

But, I hear you say, the University and the private inventor have at least come up with something new: they have added to the great store of human knowledge and deserve the limited monopoly that the state grants to them by virtue of the award of a patent. That is true. But part of the patent award is its status as a private property right and the fact that its transferable. You may have a patent and you may sell it. That is your right. Or, if a company has a patent and runs up debts and then becomes insolvent, the administrator/liquidator may try and sell that property to pay back the creditors.

Fundamentally, a patent has never really been about a right (nor obligation) to exploit an invention by the patentee; they have always been about the right to prevent others from exploiting that invention.

Rather than being seen as a fault with the patent system generally, or the US system in particular, perhaps the rise of the patent troll is an unintended consequence of the US system of litigation.