Two researchers at the famed London School of Economics & Political Science, Christian Helmers and Luke McDonagh, have released a thought-provoking study of “Patent Assertion Entity” litigation in the UK. From the summary here are the two key findings:
“Firstly, the majority of patent cases which reach a judgment in the UK result in a ruling invalidating the patent. Secondly, the costs regime in the legal system of England and Wales requires that the losing party pay the costs of the other side. In other words, even if its own costs are kept low, a PAE which loses a case may have to spend a substantial amount of money in order to cover the costs of the other side.”
So, will this study increase the snowball rolling downhill to introduce a “loser pays” policy for NPE’s in the US?
This study has other intriguing elements to it as well:
“We also offer interesting insights to the wider debate concerning whether it is likely that in the near future there will be a similar increase in PAE litigation in Europe as has already occurred in the US over the last decade. This article also discusses potential implications for the design of the proposed European Unified Patent Court.”
To read the entire study (and you should) please go to this link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2154958
In an angry post on infoworld.com Simon Phipps eviscerates NPE’s, the patent system, and the NPE toll on innovation. Here is a tiny sample of his rant (with bolding added):
“The cost of litigation for patent parasites must go up; there need to be penalties for failed attempts to monetize the innovation of others. Most important, the mafiosi-grade shakedowns costing America’s economy so much money — and with it the success of innovative startups and the creation of much-needed jobs — has to end.”
Patent parasites? Shakedowns (hmmm second use today)? The inflammatory language campaign against NPE’s continues.
For the entire diatribe, please go to this link: http://www.infoworld.com/d/open-source-software/numbers-dont-lie-patent-trolls-are-plague-205192?page=0,1
Distinguished Judge Richard Posner has written a short article on Slate.com regarding patents and Patent Trolls, and it is clear that he is not happy with the current patent system and Patent Troll litigation.
He offers 3 key remedies:
1. “….make the granting of a patent contingent on producing the product or process that incorporated the invention, within a specified time. This would reduce the troll problem, by clearing out patents that are obtained to extort license fees rather than to produce products or processes.”
2. ” Vary the length of patent protection…from industry (or industrial sector) to industry, ranging from no protection at all to 20 years of protection, or even more, for pharmaceutical drugs.”
3. Seek and train “…volunteers among federal district judges to take on more than their share of the patent cases filed in their districts.”
But Posner admits that these remedies are not a complete answer to the Patent Troll problem.
What do you think?
Here is a link to the complete article which is well worth a read: http://www.slate.com/articles/news_and_politics/view_from_chicago/2012/10/patent_protection_how_to_fix_it.html
In a post on lexology.com, Hogan Lovells attorneys Logan M. Breed, Joseph Krauss and J. Robert Robertson report that:
“Senior officials from both the Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) have made recent public statements that the antitrust agencies should evaluate the behavior of NPEs and their effects on consumers. FTC Chairman Jon Leibowitz recently acknowledged that practicing entities have complained to the agency about NPEs, and the FTC’s chief economist said at a recent conference that NPEs are ‘worthy of some very serious attention.’ Similarly, Joe Wayland, the head of the Antitrust Division, stated in a recent speech that NPEs raise ‘a number of competitive concerns’ and the DOJ is ‘looking at the exercise of intellectual property rights’ by NPEs.”
Translation: NPE’s – GET READY! The Feds are coming after you. How many times have we seen these types of statements before? And they always lead to investigations, hearings, and ultimately action.
Potential sources of FTC/DOJ statutory oversight? As reported:
“The DOJ and FTC have not publicly discussed how they would apply the antitrust laws to NPEs. But they may explore several possible theories. First, the transfer of patents to an NPE may raise unique issues under Clayton Act § 7, which prohibits acquisitions that may tend to substantially lessen competition in a relevant market. If NPEs use a series of patent acquisitions to create a portfolio that enables the NPE to charge a supracompetitive price for its patents for the reasons discussed above, the DOJ or FTC could possibly block or undo those transactions. Second, NPEs that force practicing entities into package license agreements for thousands of the NPE’s patents (even though the NPE may not have a colorable basis to believe that the practicing entity actually infringe many of those patents) arguably may violate the Sherman Act § 1 prohibition on anticompetitive ‘tying’ contracts. A third relevant theory may be Sherman Act § 2, which prohibits anticompetitive conduct that creates or maintains monopoly power (e.g., an NPEs likely pursuit of sham litigation, or use of deceitful or unethical conduct). Finally, the FTC may be able to use § 5 of the FTC Act, which prohibits ‘unfair methods of competition’ and ‘unfair or deceptive acts or practices,’ to enjoin certain NPE behavior.”
So, NPE’s get ready to spend lots of $ on Washington insiders, lobbyists and attorneys.
For more see this link (registration may be required): http://www.lexology.com/library/detail.aspx?g=d994da61-08b4-43ad-a5a0-c9f43e1a779d
In a paper just published researchers Robin Feldman, Sara Jeruss, and Joshua Walker report on patent monetization entities (oh no another name for patent trolls!) and their effects on litigation. Their summary states:
“The data confirm in a dramatic fashion what many scholars and commentators have suspected: patent monetization entities play a role in a substantial portion of the lawsuits filed today. Based on our sample, lawsuits filed by patent monetizers have increased from 22% of the cases filed five years ago to almost 40% of the cases filed in the most recent year. In addition, of the five parties in the sample who filed the greatest number of lawsuits during the period studied, four were monetizers and only one was an operating company.
Of additional note, universities, which are sometimes grouped with non-practicing entities on the theory that they do not make products, were almost invisible and accounted for only 0.2% of the cases in our sample. Finally, Patent monetizers were unlikely to advance very far in the trial process, generally settling prior to a summary judgment decision. Our article details these and other results of the study.”
BTW, Who are the “Fab Five”? Jens Erik Sorensen, Arrivalstar, Acacia and Guardian Media Technologies (all NPE’s) and Abbott Labs (an operating company). Who knew Abbott was so litigious?
To read the paper which has so much more to offer, go to this link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2158455