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All Patentees Are Equal…But Some Patentees Are More Equal Than Others

By Brian Prentice | March 16, 2009 | 4 Comments

The Future of Ownership - IP & IT Industry

Patent reform is back on the agenda in Washington and, like most legislation debated on Capitol Hill, one needs to be wary of vested interest masquerading as principled argument.

Recently, Michelle Lee, Google’s Head of Patents and Patent Strategy, posted her thoughts on why patent reform is needed. It included these insights:

“Consider this: Of the 20 patent lawsuits filed against Google since late 2007, all but two have been filed by plaintiffs who don’t make or sell any real product or service — in other words, by non-practicing entities or ‘patent trolls.'”…All too often, Google and other companies face mounting legal costs to defend against questionable patent claims from speculators gaming the system to reap windfall profits.

But what are the principles underpinning Lee’s comments? Is it that the value of property should be hinged on its owner’s intended use? If so, then by extension, shouldn’t:

  • Anyone who owns shares in a company without directly participating in its operations,
  • Anyone who rents their rural property to a tenant farmer rather than cultivating it themselves,
  • Anyone holding a cab license who doesn’t operate the vehicle themselves

be considered a “non-practicing entity” and therefore deserving of a legislative intervention to redress any “windfall profits” resulting from their “gaming the system?”

Let’s be clear that Lee’s views are commonly held across a broad spectrum of the IT industry. But it’s a little too convenient for my liking. Crafting this dichotomy between a good patentee (I make and sell real products and services) and a bad patentee (they don’t) is a convenient way to justify building and exploiting a patent portfolio while deriding others for doing the same thing.

If this was simply an issue of name calling – which it’s been up to now – than it really doesn’t matter. But this is being used as an argument to lobby Congress for changes to patent law. These changes specifically seek to limit damage rewards for infringement. In this case we can all expect a little more principled reasoning than is currently on offer. For example:

  • To what extent is a “non-practicing entity” in the business of speculating as opposed to seeking rents? How do you logically quarantine such activities from those applied to other forms of property?
  • Is there a difference when a practicing entity licenses a patent to a 3rd party and when a “non-practicing entity” does the same thing?
  • How do you support your assertion that “non-practicing entities” are gaming the system? Haven’t they obtained their patents through the same process you have?

I’d welcome any insights that Google, Michelle Lee, or others can offer.

Comments are closed

4 Comments

  • Jeff Mann says:

    I think there are two reasons why patent trolls are so offensive to many people.
    1. Why we have patents
    Patents exist primarily to encourage and protect innovation. Those who work hard at a good idea, should be able to benefit from them. The idea of someone unconnected to the original work benefitting years later is at best, distasteful.

    2. Flaws in how the patent system works
    Overly broad or misunderstood software and business model patents have wreaked havoc with many companies. These flaws leave holes for people to gain benefits unjustly.

    When patent trolls hoover up thousands of patents from bankrupt companies, then go looking for someone to sue based on those long-forgotten patents, I have little sympathy for them. They are taking advantage of the system, not engaging in innovation.

    I realize that I have sketched the most extreme example (for an even more extreme example see my satirical posting here https://blogs.gartner.com/jeffrey_mann/2009/02/18/a-potential-business-model-for-facebook-ii/ ).

    I don’t have all the answers, but I think that the case for business as usual is pretty weak. Reform is needed, if only to prevent debacles like the SCO example (http://en.wikipedia.org/wiki/SCO_Group#SCO-Linux_lawsuits_and_controversies ).

  • Brian Prentice says:

    Thanks for your comments Jeff.

    Being well aware of the offense patent aggregators (sorry, I won’t use the “T” word) seem to cause people I think it’s really important to put the reasons under some serious scrutiny – especially since it is being used to advocate new laws.

    You mention that patents exist to encourage and motivate innovation. But why is the purchase of a patent for the purpose of licensing mutually exclusive with that objective?

    Would this also mean patents should only be enforceable when used in a product by the originating inventor? So, by extension, all cross-licensing should not be permissable – even if it was the original inventor that is doing it?

    I also agree that there are way too many overly broad patents. But that’s a systemic problem that adversely effects everyone. Even if the system worked as it should it wouldn’t eliminate patent aggregation. In fact, a working system would result in significantly fewer patents of much higher quality and that would actually strengthen patent aggregation business models.

    And keep in mind that for every patent that is “hoovered” up by a patent aggregator there is a willing inventor or administrator (in the case of bankruptcy) that’s happy to sell it to them and pocket the money. When those purchases are made legally and in good faith, why then should their property rights be significantly undermined if not revoked?

  • Jeff wrote:

    >>> “1. Why we have patents
    Patents exist primarily to encourage and protect innovation. Those who work hard at a good idea, should be able to benefit from them. The idea of someone unconnected to the original work benefitting years later is at best, distasteful.”

    The problem with this is it limits the exist avenues for the inventor. Selling a patent to an aggregator is simply providing liquidation to patent holders. Who cares if they are sold or resold? Patents are assets afterall.

  • Small Software Guy – I appreciate all the comments you’ve made 🙂

    You said “patents are assets after all.” Amen! Why is this such a difficult idea for so many people to accept?