Opinion

Felix Salmon

Why patent trolls don’t need valid patents

By Felix Salmon
March 4, 2012

Farhad Manjoo has an interesting profile of Cheryl Malone’s Article One Partners, a company which crowdsources the discovery of prior art for use in patent suits. These “amateur sleuths are stamping out patent trolls,” according to the title of the page; the headline is “How To Kill Patent Trolls.”

Which is why it’s surprising that there’s no indication in the article whatsoever that patent trolls are even being harmed, let alone killed, by the actions of Article One. Instead, the whole piece is based on a rather rocky syllogism. If you can find prior art, goes the argument, you can kill a patent troll. Article One finds prior art. Therefore, Article One kills patent trolls. Here’s Manjoo:

Patent trolls should be easy to defeat. Say a company tries to enforce some ridiculous claim, as in the recent case over a 1994 patent covering the entire “interactive Web.” It doesn’t seem hard to invalidate a patent that broad. All you need to do is find descriptions of that invention that date back to before the patent was filed.

The problem is that searching for old inventions is really difficult.

Does Manjoo really believe that “all you need to do” is find prior art, and the court case automagically disappears in a puff of smoke? It would be wonderful were that the case. But the real world, sadly, behaves differently.

Probably the most famous patent-troll case in recent years was the one where a troll named NTP managed to extract $612.5 million from Research in Motion. That case covered five different patents: of the five, the U.S. Patent Office had given “non-final” rejections to all of them, and had issued a final rejection to one, when the case was settled.

RIM had discovered prior art for all of the patents that NTP was suing over — but that didn’t really help them at all. The problem was that the patents had already been awarded to NTP, which meant that NTP was within its rights to sue RIM for as long as it held those patents. Once RIM found out what NTP was up to, it could and did challenge the patents at the U.S. Patent Office, which has a procedure for such things. But the U.S. Patent Office is an entirely separate entity from the U.S. District Court, where judge James Spencer made it very clear that his job was to rule only on whether RIM was violating NTP’s patents, and not on whether NTP’s patents were properly granted. Had RIM not settled the case, the court could and probably would have shut down the entire BlackBerry service.

RIM, of course, offered to post a substantially greater settlement if it could get the money back were NTP’s patents deemed invalid; NTP, naturally, rejected that offer. And challenging patents at the U.S. Patent Office takes time; if you’ve already been sued by a patent troll in U.S. District Court or just about anywhere else, it’s almost certainly too late at that point to look for prior art, take it to the USPTO, get the patent invalidated, and win the case that way. Meanwhile, it’s pretty much impossible to keep tabs on every patent awarded to a possible troll, and try to challenge those patents at the USPTO on the off chance that if you don’t, those patents might be used against you.

So while Article One is surely doing God’s work out there, I think it’s massively overoptimistic to believe that they will make so much as a dent in the patent-troll industry. What they’re doing might well be necessary to kill patent trolls. But it’s very, very far from sufficient.

Update: As commenter rootless_e points out, the jury in the NTP vs RIM case did find against RIM’s claims of prior art. Largely because RIM’s courtroom strategy was unbelievably boneheaded. But the fact remains that RIM was forced to settle the claim before the USPTO could invalidate NTP’s patents.

Comments
9 comments so far | RSS Comments RSS

“But the U.S. Patent Office is an entirely separate entity from the U.S. District Court, where judge James Spencer made it very clear that his job was to rule only on whether RIM was violating NTP’s patents, and not on whether NTP’s patents were properly granted”

Sorry Felix: RIM did argue that the patents were invalid, were permitted to make the case in court, but the JURY disagreed with them.

Posted by rootless_e | Report as abusive
 

There is another reason that you are overlooking entirely. Non-equal participants. I as a hobbyist software developer (or even a start-up) get threatened by a patent troll. They have an entire legal department, I likely have 0-1 lawyers on retainer. Even if their patent is absurd, it will cost me to fight them. In fact, as an individual this cost can be so prohibitive as to force me to settle.

This sort of thing is quite common. It has happened to me personally as a hobbyist. My friends who run small software consultancies live in fear of it.

Posted by Fowles | Report as abusive
 

I agree with rootless. I’m pretty sure the judge is allowed to rule on the validity of the patents, even if this particular judge didn’t care to. OTOH, I’m just a guy who studied a bit for the patent bar, before deciding the whole thing was just too boring.

Posted by JayCM | Report as abusive
 

So Felix: NTP asked RMI to license patents that were issued to it; RMI could identify no actual prior art; RMI went to court and lied to the judge and jury and were caught; RMI lost the court case on the merits. They then started to prevail in a second venue – the Patent Office appeal (and there it seems like they may have improperly influence the PTO) and the courts, properly refused to allow them to get a do-over. Consider an inventor suing a large corporation under your scheme. First the inventor has to commit to the enormous expense and time of a trial; win the trial; get a judgement and then the infringer is allowed to try it all again in the PTO. That’s an invitation for big companies to appropriate other peoples work – something that they do not need much of an invitation to do.

In any case your original point is not correct. If RMI had gone into court with solid prior art, they would have most likely prevailed – because they _are_ allowed to argue patent validity.

Posted by rootless_e | Report as abusive
 

I don’t know what I am typing about, but I think there is something which judges can constitutionally do if asked to enforce patents which they think were improperly granted — take money from the defendant rather than shut them down. The story goes
1) judge must find for NTP
2) awards megabucks compensatory plus punitive damages and additionally
Kilobucks per hour that the blackberry network stays up after the judgment.
3) RIM appeals and asks for a stay
4) Judge must say no way, but does put damages in escrow as appeal heard
5) NTP can’t demand a quick hearing of appeals as money is piling up in escrow.
6) patents revoked
7) new appeal on grounds patents revoked
8) NTP ends up with doodly squat

The problem, it seems to me in my ignorance, was that the judge was prepared to do irreversible damage to RIM. I am assuming that some smart investor would be willing to loan to RIM at a not gigantic rate of interest based on the assumption that the patents would be revoked in the end.

A judge sure can help patent trolls out in spite of prior art, but I don’t think judges have no alternative. I think the case shows something particular about RIM bone headedness or maybe about the judge, but doesn’t show that trolls can’t be fought by finding prior art.

Posted by robertwaldmann | Report as abusive
 

And if that wasn’t bad enough, there’s the Leahy-Smith America Invents Act, and the idiotic “first to file” rule. USPTO is broken, and Congress is corrupted.

Posted by GRRR | Report as abusive
 

Felix – While issued patents are presumed to be valid, District Courts are empowered to review patents de novo. If RIM had been able to so easily show prior art, they would have been fine.

GRRR – First to file is the world-wide standard. I agree with you, but it was probably only a matter of time before we switched given all the treaties we’ve signed saying we would.

Posted by DaDaDan | Report as abusive
 

“District Court, where judge James Spencer made it very clear that his job was to rule only on whether RIM was violating NTP’s patents, and not on whether NTP’s patents were properly granted.”
This is merely the opinion one judge. There is no rule requiring judges to take such a position. The judge has every right to rule that a patent is invalid/improperly granted. Additionally, the judge can issue a stay, or pause, of the proceedings if there is an on-going reexamination at the patent office.

Finally, its important to appreciate that patent litigation is a public affair and that patent trolls typically sue defendants in batches. This gives notice to other similarly situated potential defendants to find prior art and initiate a reexamination proceeding.

Posted by patentguy | Report as abusive
 

@DaDaDan – IDK — did US provide political backdoor pressure for WIPO to adopt these new ideas, then bringing public pressure for the US to align federal law to match?

For instance, if you examine the history of ACTA, the international negotiations first begun under prodding by former President George Bush, which led to COICA, then PIPA/SOPA, and the Leahy-Smith Act.

Posted by GRRR | Report as abusive
 

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