We all know the children’s story about the troll that lives under a bridge. To cross the bridge a toll must be paid to the troll. The troll is nasty, greedy, and mean. The heroes of the story tried to find other paths to get across without having to deal with the troll, but there were no other options. The troll had to be slayed or out-tricked. While this story is child’s play, it is very similar to the problematic patent troll situation damaging the world of innovation.
A patent can be obtained for anything that demonstrates a significant level of creativity and innovation. It must be a nonobvious and original invention. The US Patent and Trademark Office (PTO) reviews patent applications and has the power to approve or deny legal protection. If a patent is obtained, the unlawful use or copying of the idea or invention is called infringement. This is punishable by law. Just because something is distinctive to a certain product does not mean it qualifies as a patentable feature. Apple has tried to get many design patents for its products but has not been successful in obtaining a large number of the patents they seek. One of Apple’s patented inventions is the scroll wheel on the iPod.
Patent trolls are like cyber squatters. They hold the idea/invention ransom in order to make money from a company who wants to use it. “Instead of rewarding innovators, the patent system has been hijacked by trolls who prey on small businesses and startups, extorting licensing fees with claims that they are infringing often obscure, old and vaguely-worded patents. As I have written elsewhere, companies targeted by trolls often have no choice but to pay the ransom or be forced into costly and time-consuming litigation” (usnews.com) . It is easy to picture these patent trolls as recluses who live in their parent’s dingy basements. However, a significant number of patent trolls are big technology companies like Microsoft. “Some of Microsoft’s patent holdings are relatively well-known, since they are either assigned to Microsoft itself or a known subsidiary of Microsoft. But Microsoft over the years has grown very close to the patent assertion entity community. It has strong ties with Intellectual Ventures, Rockstar and MOSAID, three of the world’s largest patent trolls.” (usnews.com)
Patent privateering has become a greater issue than patent trolls. Patent privateering is when companies sell their patents to another entity that will pursue litigation against their competitors. They have an agreement to share in the proceeds. This action has been gaining attention from the Federal Trades Commission because it is anti-competitive behavior and may violate anti-trust laws. Patent Privateering can make it difficult to figure out who actually owns a patent and thus the propagation of patents to entities acts as a sort of shield for the aggressor company to hide behind. An example of a company that has engaged in this practice is Nokia.
Problem and Solution:
There are many problems associated with patents. Permitting too many patents to be approved (which would be the PTO’s responsibility) would bar entrants and new start-ups from competing. Also most innovation is not wholly original, it is a development of something that already exists, so it is hard to gauge and measure what is patentable. Patent trolls are holding patents hostage for ransom, and small companies that don’t have the power to pay suffer from this behavior. Patent privateering is sneaky and an underhanded way of damaging competition. Transparency is a possible solution to fight the underhanded patenting business. Companies like Google have entered into an agreement to only pursue defensive patent licenses. However this sort of agreement of transparency requires a level of trust that may not exist in the competitive world of technology.
There needs to be regulation and greater accountability in the technology industry for copying and infringement. It is an issue that affects small companies, as well as the larger ones. Generally businesses are considered persons by law, therefore they should adhere to the same basic moral codes that people do. This would enable more trust and enable a good-natured and healthy competitive environment. It seems that companies and people alike are so concerned with money they forfeit their morals.
Sources: http://www.usnews.com/opinion/blogs/economic-intelligence/2013/03/29/time-for-transparency-on-microsofts-patent-troll-privateering (usnews.com)