Professors Noel Maurer & Stephen Haber wrote an interesting article: An Empirical Analysis of the Patent Troll Hypothesis: Evidence from Publicly-Traded Firms that addresses patent monetization, innovation, and patent trolls.
From the Abstract: "Do firms that earn revenues from licensing patent portfolios, rather than producing physical
products—often called patent assertion entities (PAEs)—frustrate or facilitate innovation?
Using a sample of 17 years of SEC filings by all 26 publicly-traded firms that an expert (RPX
Corporation) categorized as PAEs, we estimate spending on, patent acquisition, and litigation;
and their revenues, rates of return, and risk-return ratios.
We also estimate an upper bound of the transfer from operating companies to those 26 firms, including the cost of defending against their
lawsuits.
We find that sample firms spent twice as much on R&D (as a percentage of revenues)
than the average for large high technology companies. We also find that most sample firms lost
money.
Finally, we find that the magnitude of the transfer from operating companies (including
legal defense costs), represents only 0.28% of the revenues of the U.S. high technology market.
These findings are inconsistent with the characterization of the PAE business model in an
influential policy and academic literature."
Copyright © 2020 Robert Moll. All rights reserved.
Showing posts with label patent trolls. Show all posts
Showing posts with label patent trolls. Show all posts
Friday, January 31, 2020
Saturday, November 3, 2018
IP Watchdog - Director Andrei Iancu lauds risk takers, calls patent troll narrative "Orwellian doublespeak"
The article Director Andrei Iancu lauds risk takers, calls patent troll narrative "Orwellian doublespeak" is encouraging if you are tired of the patent troll narrative. Things appear to be shifting in favor of patent owners at the USPTO.
Copyright © 2018 Robert Moll. All rights reserved.
Copyright © 2018 Robert Moll. All rights reserved.
Friday, October 21, 2016
Stanford Technology Law Review - Predictably Expensive: A Critical Look at Patent Litigation in the Eastern District of Texas
Brian Love of Santa Clara University Law School and James Yoon of Wilson Sonsini Goodrich & Rosati's article Predictably Expensive: A Critical Look at Patent Litigation in the Eastern District of Texas to be published in the Stanford Technology Law Review is worth review.
Here is the abstract:
"In this Essay, we compare U.S. patent litigation across districts and consider possible explanations for the Eastern District of Texas’s popularity with patent plaintiffs. Rather than any one explanation, we conclude that what makes the Eastern District so attractive to patent plaintiffs is the accumulated effect of several marginal advantages — particularly with respect to the relative timing of discovery deadlines, transfer decisions, and claim construction — that make it predictably expensive for accused infringers to defend patent suits filed in East Texas. These findings tend to support ongoing efforts to pass patent reform legislation that would presumptively stay discovery in patent suits pending claim construction and motions to transfer or dismiss. However, we also observe that judges in the Eastern District of Texas tend to exercise their discretion in ways that dampen the effect of prior legislative and judicial reforms that were aimed (at least in part) at deterring abusive patent suits. Given the broad discretion courts have to control how cases proceed, this additional finding suggests that legislation restricting venue in patent cases may well be the single most effective reform available to Congress."
Copyright © 2016 Robert Moll. All rights reserved.
Here is the abstract:
"In this Essay, we compare U.S. patent litigation across districts and consider possible explanations for the Eastern District of Texas’s popularity with patent plaintiffs. Rather than any one explanation, we conclude that what makes the Eastern District so attractive to patent plaintiffs is the accumulated effect of several marginal advantages — particularly with respect to the relative timing of discovery deadlines, transfer decisions, and claim construction — that make it predictably expensive for accused infringers to defend patent suits filed in East Texas. These findings tend to support ongoing efforts to pass patent reform legislation that would presumptively stay discovery in patent suits pending claim construction and motions to transfer or dismiss. However, we also observe that judges in the Eastern District of Texas tend to exercise their discretion in ways that dampen the effect of prior legislative and judicial reforms that were aimed (at least in part) at deterring abusive patent suits. Given the broad discretion courts have to control how cases proceed, this additional finding suggests that legislation restricting venue in patent cases may well be the single most effective reform available to Congress."
Copyright © 2016 Robert Moll. All rights reserved.
Saturday, February 13, 2016
WSJ - Patent Litigation Up in 2015, Despite Efforts to Rein it In
In the Wall Street Journal article Patent Litigation Up in 2015, Despite Efforts to Rein it In, Ashby Jone's refers to a RPX report as supporting that non-practicing entities (NPEs) lawsuits seeking to monetize patents are flourishing in 2015 despite Congress' patent reform efforts and the Supreme Court decision making it more difficult to get a software patent in Alice.
The article is interesting, but doesn't explain why patent infringement lawsuits filed vary in 2013-2015:
2015: NPEs filed 3,604 lawsuits
2014: NPEs filed 2,891 lawsuits
2013: NPEs filed 3,733 lawsuits
Despite lots of activity, Congress didn't pass any significant patent reform in 2013-2015. Further, although the Supreme Court's heightened standard for software patent eligibility in Alice might explain why less software patent owners would want to file a lawsuit in 2014, it doesn't explain the rise in lawsuits in 2015.
Copyright © 2016 Robert Moll. All rights reserved.
The article is interesting, but doesn't explain why patent infringement lawsuits filed vary in 2013-2015:
2015: NPEs filed 3,604 lawsuits
2014: NPEs filed 2,891 lawsuits
2013: NPEs filed 3,733 lawsuits
Despite lots of activity, Congress didn't pass any significant patent reform in 2013-2015. Further, although the Supreme Court's heightened standard for software patent eligibility in Alice might explain why less software patent owners would want to file a lawsuit in 2014, it doesn't explain the rise in lawsuits in 2015.
Copyright © 2016 Robert Moll. All rights reserved.
Friday, December 4, 2015
Joe Mullin - Patent Trolls Filed Hundreds of Lawsuits to Beat December 1 Deadline - Brief Comment
In Patent Trolls Filed Hundreds of Lawsuits to Beat December 1 Deadline, Mr. Joe Mullin states the amendment to the Federal Rules of Civil Procedure effective December 1, 2015 triggered a US patent litigation spike in late-November 2015. He attributes the spike, i.e., 790 filings, to those seeking to avoid unfavorable amendments such as the heightened standard for a patent infringement complaint and elimination of FRCP Form 18.
Mr. Mullin's observations are not that surprising given a good lawyer should file a lawsuit before the law changes adversely to a client. But what is less clear is why he talks about "patent trolls" filing hundreds of lawsuits. Why are they trolls? He explains "with the exception of pharmaceutical giant AstraZeneca, all the companies appear to be patent-holding shell companies." He might be right, but the danger is labeling a company a patent troll, because they have a business of licensing patents. Can't say I understand all of his views, but it appears the assumption is patent licensing by a non-practicing entity is a suspect category of business if you are an LLC and/or have an obscure name.
Copyright © 2015 Robert Moll. All rights reserved.
Mr. Mullin's observations are not that surprising given a good lawyer should file a lawsuit before the law changes adversely to a client. But what is less clear is why he talks about "patent trolls" filing hundreds of lawsuits. Why are they trolls? He explains "with the exception of pharmaceutical giant AstraZeneca, all the companies appear to be patent-holding shell companies." He might be right, but the danger is labeling a company a patent troll, because they have a business of licensing patents. Can't say I understand all of his views, but it appears the assumption is patent licensing by a non-practicing entity is a suspect category of business if you are an LLC and/or have an obscure name.
Copyright © 2015 Robert Moll. All rights reserved.
Sunday, November 1, 2015
NY Times - The Patent Troll Smokescreen - A Comment
In the NY Times article The Patent Troll Smokescreen, Joe Nocera nicely sums up where big tech lobbying has taken the US patent system since passage of the AIA:
"But what if, in the name of cracking down on trolls, Congress passes an anti-troll law that winds up having huge negative consequences for legitimate inventors? What if a series of Supreme Court rulings make matters worse, putting onerous burdens on inventors while making it easier for big companies to steal unlicensed innovations As it happens, thanks to the 2011 America Invents Act and those rulings, big companies can now largely ignore legitimate patent holders.
Of course, they don’t call it stealing. But according to Robert Taylor, a patent lawyer who has represented the National Venture Capital Association, a new phrase has emerged in Silicon Valley: “efficient infringing.” That’s the relatively new practice of using a technology that infringes on someone’s patent, while ignoring the patent holder entirely. And when the patent holder discovers the infringement and seeks recompense, the infringer responds by challenging the patent’s validity.
Should a lawsuit ensue, the infringer, often a big tech company, has top-notch patent lawyers at the ready. Because the courts have largely robbed small inventors of their ability to seek an injunction — that is, an order requiring that the infringing product be removed from the market — the worst that can happen is that the infringer will have to pay some money. For a rich company like, say, Apple that’s no big deal."
Exactly, and with the effectiveness of AIA trials, we now have a legal framework where it is relatively inexpensive and quick (at least compared to in court) to invalidate a US patent that is the subject of a lawsuit. So why do I need a license again Mr. small time inventor? This is not an argument against patents per se because once the typical big tech acquisition occurs -- the new ownership gives financial parity making the pushback to the validity challenge worthy of serious consideration.
Copyright © 2015 Robert Moll. All rights reserved.
"But what if, in the name of cracking down on trolls, Congress passes an anti-troll law that winds up having huge negative consequences for legitimate inventors? What if a series of Supreme Court rulings make matters worse, putting onerous burdens on inventors while making it easier for big companies to steal unlicensed innovations As it happens, thanks to the 2011 America Invents Act and those rulings, big companies can now largely ignore legitimate patent holders.
Of course, they don’t call it stealing. But according to Robert Taylor, a patent lawyer who has represented the National Venture Capital Association, a new phrase has emerged in Silicon Valley: “efficient infringing.” That’s the relatively new practice of using a technology that infringes on someone’s patent, while ignoring the patent holder entirely. And when the patent holder discovers the infringement and seeks recompense, the infringer responds by challenging the patent’s validity.
Should a lawsuit ensue, the infringer, often a big tech company, has top-notch patent lawyers at the ready. Because the courts have largely robbed small inventors of their ability to seek an injunction — that is, an order requiring that the infringing product be removed from the market — the worst that can happen is that the infringer will have to pay some money. For a rich company like, say, Apple that’s no big deal."
Exactly, and with the effectiveness of AIA trials, we now have a legal framework where it is relatively inexpensive and quick (at least compared to in court) to invalidate a US patent that is the subject of a lawsuit. So why do I need a license again Mr. small time inventor? This is not an argument against patents per se because once the typical big tech acquisition occurs -- the new ownership gives financial parity making the pushback to the validity challenge worthy of serious consideration.
Copyright © 2015 Robert Moll. All rights reserved.
Sunday, April 12, 2015
Professor Robin Feldman and Reseach Fellow Evan Frondorf - Patent Demands and Initial Public Offerings - A Comment
In a study Patent Demands and Initial Public Offerings, forthcoming in the Stanford Technology Law Review, Professor Robin Feldman and Research Fellow Evan Frondorf of UC Hastings law school state a "significant majority of information technology companies received patent demands near their IPO and "almost all of that activity originated from patent NPEs." Sounds like a problem, right?
In this study the authors checked with lawyers at recently public companies about exposure to patent demands as their company developed. Mr. Frondorf explains "Patent trolls thrive on extracting settlements from startup companies that don't have the time or money to litigate, even if the claims are dubious. An IPO is new leverage that can be used against a company that wants to avoid the negative effects that pending litigation might have on its offering price or public reputation. The results are consistent with monetizers issuing demands based on the economics of patent litigation, rather than on the legitimacy of the claims. It's more evidence of the need for comprehensive patent reform."
I appreciate the research of Professor Feldman, but I am not seeing that a study revealing patent demands occur before IPOs is more evidence supporting the need for comprehensive patent reform being considered by Congress.
Patent demands made before IPOs is not a new tactic, but a long standing strategy of patent owners. As a patent lawyer at Wilson Sonsini Goodrich & Rosati from 1993 - 1998, I saw a number of tech companies get hit with patent demands and even patent lawsuits before going public. That does not prove, however, whether the patent claim is legitimate or not. Patents owners simply show up when they have the most leverage to get paid. Whether the patent owner practices the invention is not relevant to whether or not a patent is valid or infringed.
I also question the suggestion that companies near an IPO have no time or money to fight illegitimate patent claims. Many tech companies have pending patent litigation or threatened lawsuits but have the resources to handle that as well as go public. How many of them withdraw from going public because the patent lawsuit drained their resources? I would venture rarely if ever. A patent lawsuit may be resolved before the IPO, but it is not required. Instead, the risk of that patent lawsuit is disclosed in the prospectus. Whether or not it settles is up to the parties. One notable example is Yahoo's online advertising patent lawsuit before Google's IPO. Google disclosed the risk in the prospectus, and settled with Yahoo, then went public, and life went on. Sure Google had to pay a chunk of stock, but a number of observers believed Yahoo had a legitimate claim. Google had the legal talent, financial resources and considerable momentum in the search engine space that enabled it to settle that patent case on its own terms.
If a company is successful to the point of going public, it usually also has smart management, a viable business, legal talent, and the financial resources to settle or fight the patent demands before, during, and after the IPO. Further, the AIA trials give a relatively low cost way to deal with dubious patent demands today. Just before a company goes public is not when it's vulnerable to illegitimate patent demands. Higher vulnerability occurs at a much earlier stage, but as the study notes "almost no companies received demands near another important funding moment-- obtaining the first round of venture capital funding." Another vulnerable time for a startup to receive a patent demand is when seeking a first round of funding, since investors do not want to invest in that situation, but of course you have exceptions.
Copyright © 2015 Robert Moll. All rights reserved.
In this study the authors checked with lawyers at recently public companies about exposure to patent demands as their company developed. Mr. Frondorf explains "Patent trolls thrive on extracting settlements from startup companies that don't have the time or money to litigate, even if the claims are dubious. An IPO is new leverage that can be used against a company that wants to avoid the negative effects that pending litigation might have on its offering price or public reputation. The results are consistent with monetizers issuing demands based on the economics of patent litigation, rather than on the legitimacy of the claims. It's more evidence of the need for comprehensive patent reform."
I appreciate the research of Professor Feldman, but I am not seeing that a study revealing patent demands occur before IPOs is more evidence supporting the need for comprehensive patent reform being considered by Congress.
Patent demands made before IPOs is not a new tactic, but a long standing strategy of patent owners. As a patent lawyer at Wilson Sonsini Goodrich & Rosati from 1993 - 1998, I saw a number of tech companies get hit with patent demands and even patent lawsuits before going public. That does not prove, however, whether the patent claim is legitimate or not. Patents owners simply show up when they have the most leverage to get paid. Whether the patent owner practices the invention is not relevant to whether or not a patent is valid or infringed.
I also question the suggestion that companies near an IPO have no time or money to fight illegitimate patent claims. Many tech companies have pending patent litigation or threatened lawsuits but have the resources to handle that as well as go public. How many of them withdraw from going public because the patent lawsuit drained their resources? I would venture rarely if ever. A patent lawsuit may be resolved before the IPO, but it is not required. Instead, the risk of that patent lawsuit is disclosed in the prospectus. Whether or not it settles is up to the parties. One notable example is Yahoo's online advertising patent lawsuit before Google's IPO. Google disclosed the risk in the prospectus, and settled with Yahoo, then went public, and life went on. Sure Google had to pay a chunk of stock, but a number of observers believed Yahoo had a legitimate claim. Google had the legal talent, financial resources and considerable momentum in the search engine space that enabled it to settle that patent case on its own terms.
If a company is successful to the point of going public, it usually also has smart management, a viable business, legal talent, and the financial resources to settle or fight the patent demands before, during, and after the IPO. Further, the AIA trials give a relatively low cost way to deal with dubious patent demands today. Just before a company goes public is not when it's vulnerable to illegitimate patent demands. Higher vulnerability occurs at a much earlier stage, but as the study notes "almost no companies received demands near another important funding moment-- obtaining the first round of venture capital funding." Another vulnerable time for a startup to receive a patent demand is when seeking a first round of funding, since investors do not want to invest in that situation, but of course you have exceptions.
Copyright © 2015 Robert Moll. All rights reserved.
Tuesday, March 24, 2015
Mullin - Life360 CEO tells others how to beat patent trolls in three not-so-easy steps
In Life360 CEO tells others how to beat patent trolls in three not-so-easy steps, Mr. Joe Mullin passes along the CEO's advice on how to beat patent trolls: "go nuclear" which means publicize the law firms and trolls involved, share the prior art with others in your industry, and "go with your gut" knowing you fight for what is right.
Whatever you think about this advice, my question is why doesn't the article talk about the option of filing a petition to invalidate the patents in the USPTO? Maybe this occurred, but the article never mentions it. It talks about sharing prior art, but the case was won on non-infringement. Either way about 2/3 of patents litigated in court have a concurrent USPTO proceeding (e.g., inter partes review). Thus, whatever happened here, many defendants are turning to this approach to invalidate patents and significantly reduce costs when the court stays the litigation.
Copyright © 2015 Robert Moll. All rights reserved.
Whatever you think about this advice, my question is why doesn't the article talk about the option of filing a petition to invalidate the patents in the USPTO? Maybe this occurred, but the article never mentions it. It talks about sharing prior art, but the case was won on non-infringement. Either way about 2/3 of patents litigated in court have a concurrent USPTO proceeding (e.g., inter partes review). Thus, whatever happened here, many defendants are turning to this approach to invalidate patents and significantly reduce costs when the court stays the litigation.
Copyright © 2015 Robert Moll. All rights reserved.
Wednesday, December 10, 2014
Professor Robin Feldman - Transparency - US Patent Ownership
If you are interested in the problems arising from the ability to hide US patent ownership, I recommend reading Professor Robin Feldman's article Transparency proposing regulation borrowed from corporate securities law to identify the owners of US patents. Professor Feldman asks: "Who stands to win and lose when a patent system created to foster innovation is being utilized to hide and distort patent ownership?"
From the abstract of the article:
"The United States patent regime is a quintessential notice system. Implicit in its design is the concept that one attempting to license a patent can identify those who hold the requisite rights and the territory that the patent holders claim as their own. As the system has evolved, however, it bears little resemblance to the idealized form. Little scholarship has addressed problems related to notice within the modern patent system, largely because these problems have sprung up so recently. In the last five to seven years, an entire Hobbit’s world has been created under the foliage. Moreover, historic scholarly discussions of notice generally have focused on the role of governmental actors in ensuring that a patent can be properly understood and interpreted. In contrast, this article argues that market information is a critical element of the notice function of patents. One can think of the mechanisms for providing that market information as 'Transparency'.
To address transparency insufficiencies, one need not write on a blank slate. Rather, this article suggests borrowing from the substantial body of well-developed doctrine and literature concerning disclosure in the realm of corporate securities and explores how these doctrines could be molded to patent concerns.
The patent asset is imbued with public interest by virtue of the fact that it is a government grant, bestowed for constitutional purposes. As with the trading of public securities, the trading of an asset imbued with the public interest must be sufficiently regulated to ensure proper functioning of that trading market."
Copyright © 2014 Robert Moll. All rights reserved.
From the abstract of the article:
"The United States patent regime is a quintessential notice system. Implicit in its design is the concept that one attempting to license a patent can identify those who hold the requisite rights and the territory that the patent holders claim as their own. As the system has evolved, however, it bears little resemblance to the idealized form. Little scholarship has addressed problems related to notice within the modern patent system, largely because these problems have sprung up so recently. In the last five to seven years, an entire Hobbit’s world has been created under the foliage. Moreover, historic scholarly discussions of notice generally have focused on the role of governmental actors in ensuring that a patent can be properly understood and interpreted. In contrast, this article argues that market information is a critical element of the notice function of patents. One can think of the mechanisms for providing that market information as 'Transparency'.
To address transparency insufficiencies, one need not write on a blank slate. Rather, this article suggests borrowing from the substantial body of well-developed doctrine and literature concerning disclosure in the realm of corporate securities and explores how these doctrines could be molded to patent concerns.
The patent asset is imbued with public interest by virtue of the fact that it is a government grant, bestowed for constitutional purposes. As with the trading of public securities, the trading of an asset imbued with the public interest must be sufficiently regulated to ensure proper functioning of that trading market."
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, November 12, 2014
Joe Mullin - Startups can now buy insurance against threat of patent trolls
Tonight I recommend Joe Mullin's article: Startups can now buy insurance against threat of patent troll. Mr. Mullin says "RPX wants to protect small companies from patent threats. Premiums start at $7,500." I guess you call RPX-- no wait these are modern times ... visit its website-- to get the cap and deductible on this bottom offering.
Copyright © 2014 Robert Moll. All rights reserved.
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, November 5, 2014
IP WatchDog - Exclusive Interview with Jaime Siegel of Acacia Research
Tonight, I suggested reading Gene Quinn's interview with Jaime Siegel of Acacia Research, which indicates where US patent monetization has been, is, and will be heading in the future.
Copyright © 2014 Robert Moll. All rights reserved.
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, August 20, 2014
PriceWaterhouseCooper's 2014 Patent Litigation Study
Tonight, check out PWC's 2014 Patent Litigation Study - As case volume leaps, damages continue general decline. This study is interesting.
IP Navigator argues the explosion in patent litigation is a myth. IP Navigator's article states the study fails to support big tech's claim that patent litigation is out of control. Instead, big tech pushes the myth to pressure Congress to pass new laws that limit US patents. This makes sense as an incumbent wouldn't want strong patents held by startups. After all, it might shake up the status quo.
How do lobbyists and academics perpetuate the myth? Ignore that the increase in cases is partly due to the American Invents Act making it difficult to join multiple defendants in a single lawsuit, plus ignore that the increase in patent litigation is also due to an increase of US patent grants.
Copyright © 2014 Robert Moll. All rights reserved.
IP Navigator argues the explosion in patent litigation is a myth. IP Navigator's article states the study fails to support big tech's claim that patent litigation is out of control. Instead, big tech pushes the myth to pressure Congress to pass new laws that limit US patents. This makes sense as an incumbent wouldn't want strong patents held by startups. After all, it might shake up the status quo.
How do lobbyists and academics perpetuate the myth? Ignore that the increase in cases is partly due to the American Invents Act making it difficult to join multiple defendants in a single lawsuit, plus ignore that the increase in patent litigation is also due to an increase of US patent grants.
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, August 13, 2014
Conversant Offers Help: Patent Troll Letter or Notice Letter?
Tonight, Conversant's ad on IP Watchdog asks if we have received a patent troll letter. Here's what Conversant offers:
1. A quiz, a video, two articles, and two letters to help us understand the difference between a patent troll demand letter (bogus) from a patent notice letter (legit);
2. An opportunity to share one's patent troll experiences with others; and
3. An opportunity to see a streaming RPX ad and Professor Rubin Feldman's quote that 70% of VC-backed startups have received a demand letter.
Unfortunately, I don't feel like taking a quiz or sharing with others at 11 pm. Also not to fixate on a typo, but it's Professor Robin Feldman not Rubin.
Copyright © 2014 Robert Moll. All rights reserved.
1. A quiz, a video, two articles, and two letters to help us understand the difference between a patent troll demand letter (bogus) from a patent notice letter (legit);
2. An opportunity to share one's patent troll experiences with others; and
3. An opportunity to see a streaming RPX ad and Professor Rubin Feldman's quote that 70% of VC-backed startups have received a demand letter.
Unfortunately, I don't feel like taking a quiz or sharing with others at 11 pm. Also not to fixate on a typo, but it's Professor Robin Feldman not Rubin.
Copyright © 2014 Robert Moll. All rights reserved.
Sunday, February 16, 2014
Professor Feldman - Patent Trolling: Why Bio & Pharmaceuticals Are at Risk
In the study, Patent Trolling: Why Bio & Pharmaceuticals Are At Risk, Professor Feldman and Harvard Fellow Dr. Nicholson Price discuss patent trolls- also referred to as non-practicing entities, patent assertion entities, and patent monetizers- moving into the biotech, pharmaceutical, and life science industries.
The authors state highlights include:
"With the Association of University Technology Managers revisiting its policy against selling to NPEs, the authors considered whether universities could provide an extensive pool of ammunition for NPEs to launch against current products.
To supplement increasing anecdotal evidence that patent trolling is moving into bio and pharma, the authors examined the life science holdings of five major universities.We skimmed the patent holdings for four of the of five university systems with the highest number of patents issued in fiscal year 2011: the University of California system, the University of Texas system, MIT, and CalTech. We added as a wild-card the University of Southern Florida, the school among the top 10 in 2011 patent grants which had the lowest ratio of license revenues to research expenditures.
The study identified dozens of patents that could be deployed against current bio and pharm industries, following the patterns that NPEs have used against other industries. These include patents on drug formulas, methods of treatments, research methods, dosage forms, and others.
In deciding whether to undertake the study, the authors agonized over whether the potential for harm outweighed the potential benefit. After all, if reform efforts are not undertaken, the work could simply provide a handy road map for those who would follow.
Life sciences trolling is predictable and in its infancy, however. The study is intended to sound a warning bell."
Even if you are not the biotech or life science industries, the study gives insight into patent troll strategies.
Copyright © 2014 Robert Moll. All rights reserved.
The authors state highlights include:
"With the Association of University Technology Managers revisiting its policy against selling to NPEs, the authors considered whether universities could provide an extensive pool of ammunition for NPEs to launch against current products.
To supplement increasing anecdotal evidence that patent trolling is moving into bio and pharma, the authors examined the life science holdings of five major universities.We skimmed the patent holdings for four of the of five university systems with the highest number of patents issued in fiscal year 2011: the University of California system, the University of Texas system, MIT, and CalTech. We added as a wild-card the University of Southern Florida, the school among the top 10 in 2011 patent grants which had the lowest ratio of license revenues to research expenditures.
The study identified dozens of patents that could be deployed against current bio and pharm industries, following the patterns that NPEs have used against other industries. These include patents on drug formulas, methods of treatments, research methods, dosage forms, and others.
In deciding whether to undertake the study, the authors agonized over whether the potential for harm outweighed the potential benefit. After all, if reform efforts are not undertaken, the work could simply provide a handy road map for those who would follow.
Life sciences trolling is predictable and in its infancy, however. The study is intended to sound a warning bell."
Copyright © 2014 Robert Moll. All rights reserved.
Wednesday, January 15, 2014
New York AG Investigation Results in Settlement with MPHJ Technology Investments
Professor Robin Feldman said I might find this interesting: A.G. Schneiderman Announces Groundbreaking Settlement with Abusive "Patent Troll." She is right, and thus it's my late night post.
I suggest reading the attorney general's press release, but the following passage describes the deceptive conduct that led to the attorney general's investigation:
"Certain patent trolls, such as MPHJ, have adopted a strategy of targeting small and medium sized businesses. These companies acquire patents of dubious validity, then send deceptive and abusive letters to a large number of small businesses in an effort to extract small, often nuisance-value license payments from them. This strategy can be successful, and the collective value of these smaller payments can be quite high, because smaller businesses often do not have the experience or resources needed to fully evaluate the patents. In MPHJ’s case, it told hundreds of New York businesses that they "likely" infringed its scanner-related patents, creating the impression that MPHJ had conducted a meaningful, individualized analysis of the targeted company’s business. In fact, MPHJ merely sent form letters to companies of a certain size and industry classification. In addition, MPHJ falsely told businesses that most other businesses it had previously contacted had acquired licenses when in fact only a handful of businesses had done so. MPHJ also provided misleading information about the fees that the (few) prior licensees had paid. And MPHJ falsely threatened to sue hundreds of businesses if they did not respond to its letters within two weeks; in fact, it has never filed a patent lawsuit against a New York business.
The AG also listed its guidelines to stop the most abusive tactics used by patent trolls:
"Diligence and Good Faith When Contacting Potential Infringers. The guidelines require a patent holder to make a serious, good-faith effort to determine whether a targeted business actually engages in infringement before making an accusation. This prohibits the mass mailing of accusations of infringement to hundreds of businesses with little regard to the actual likelihood that the businesses infringed. The guidelines also forbid using a lawyer as a threatening mouthpiece for baseless allegations. If a patent troll communicates through an attorney, the attorney sending such letters must also make diligent efforts to ensure that there is a good-faith basis for believing that the targeted business infringed the patents.
Providing Material Information So an Accused Infringer Can Evaluate the Claim. When a patent holder accuses a business of infringing its patent, the guidelines require it to explain the basis for the claim in reasonable detail. This information will allow the recipient to assess whether the accusation has any foundation in light of the actual activities of the recipient’s business. The guidelines also prohibit a patent holder from trying to collect revenue for a patent that has been held invalid, and from failing to disclose material information that reveals the patent’s likely invalidity.
No Misleading Statements about a License Fee. If a patent holder seeks to justify a specific licensing fee, it must clearly explain the factual basis for its proposed fee. This requirement prevents a patent troll from taking advantage of informational asymmetry to deceive businesses into paying more than a fair price for a license.
Transparency of the True Identity of the Patent Holder. The guidelines prohibit a patent troll from hiding its identity from its targets. This allows businesses that have been targeted by patent troll campaigns to find information about the patent troll. Ensuring transparency has a number of positive effects, including allowing targeted businesses to find and communicate with one another."
The attorney general says "the guidelines in this settlement are minimum standards- they are not a safe harbor."
"As redress, the settlement requires MPHJ to allow any licensees that received deceptive letters to void their license with it and receive a full refund, and it prohibits MPHJ from further contacting certain small businesses it previously targeted. The settlement also imposes a variety of obligations on MPHJ that should serve as guidelines for all patent trolls engaged in similar patent assertion behavior."
Copyright © 2014 Robert Moll. All rights reserved.
I suggest reading the attorney general's press release, but the following passage describes the deceptive conduct that led to the attorney general's investigation:
"Certain patent trolls, such as MPHJ, have adopted a strategy of targeting small and medium sized businesses. These companies acquire patents of dubious validity, then send deceptive and abusive letters to a large number of small businesses in an effort to extract small, often nuisance-value license payments from them. This strategy can be successful, and the collective value of these smaller payments can be quite high, because smaller businesses often do not have the experience or resources needed to fully evaluate the patents. In MPHJ’s case, it told hundreds of New York businesses that they "likely" infringed its scanner-related patents, creating the impression that MPHJ had conducted a meaningful, individualized analysis of the targeted company’s business. In fact, MPHJ merely sent form letters to companies of a certain size and industry classification. In addition, MPHJ falsely told businesses that most other businesses it had previously contacted had acquired licenses when in fact only a handful of businesses had done so. MPHJ also provided misleading information about the fees that the (few) prior licensees had paid. And MPHJ falsely threatened to sue hundreds of businesses if they did not respond to its letters within two weeks; in fact, it has never filed a patent lawsuit against a New York business.
The AG also listed its guidelines to stop the most abusive tactics used by patent trolls:
"Diligence and Good Faith When Contacting Potential Infringers. The guidelines require a patent holder to make a serious, good-faith effort to determine whether a targeted business actually engages in infringement before making an accusation. This prohibits the mass mailing of accusations of infringement to hundreds of businesses with little regard to the actual likelihood that the businesses infringed. The guidelines also forbid using a lawyer as a threatening mouthpiece for baseless allegations. If a patent troll communicates through an attorney, the attorney sending such letters must also make diligent efforts to ensure that there is a good-faith basis for believing that the targeted business infringed the patents.
Providing Material Information So an Accused Infringer Can Evaluate the Claim. When a patent holder accuses a business of infringing its patent, the guidelines require it to explain the basis for the claim in reasonable detail. This information will allow the recipient to assess whether the accusation has any foundation in light of the actual activities of the recipient’s business. The guidelines also prohibit a patent holder from trying to collect revenue for a patent that has been held invalid, and from failing to disclose material information that reveals the patent’s likely invalidity.
No Misleading Statements about a License Fee. If a patent holder seeks to justify a specific licensing fee, it must clearly explain the factual basis for its proposed fee. This requirement prevents a patent troll from taking advantage of informational asymmetry to deceive businesses into paying more than a fair price for a license.
Transparency of the True Identity of the Patent Holder. The guidelines prohibit a patent troll from hiding its identity from its targets. This allows businesses that have been targeted by patent troll campaigns to find information about the patent troll. Ensuring transparency has a number of positive effects, including allowing targeted businesses to find and communicate with one another."
The attorney general says "the guidelines in this settlement are minimum standards- they are not a safe harbor."
"As redress, the settlement requires MPHJ to allow any licensees that received deceptive letters to void their license with it and receive a full refund, and it prohibits MPHJ from further contacting certain small businesses it previously targeted. The settlement also imposes a variety of obligations on MPHJ that should serve as guidelines for all patent trolls engaged in similar patent assertion behavior."
This is an interesting development in patent law and it makes some sense for states to police deceptive practice. At the same time, why aren't manufacturers defending and indemnifying these small businesses? It should be universal practice and widely publicized. Most small businesses cannot conduct a patent investigation even if all the guidelines are followed nor can they afford defending themselves in a patent suit. Further, the manufacturers might add a web page up for purchasers to upload or email any patent dispute letter and a standard reply to the patent owner saying I bought my gear from company X which has requested all correspondence go directly to it, because it is handling this dispute. Finally, I have mixed feelings about state efforts. US patent law is federal law and most times best handled by Congress to avoid the risk of balkanizing US patent law state by state.
Copyright © 2014 Robert Moll. All rights reserved.
Tuesday, December 17, 2013
US Senate Hearing - Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse
Today, the Senate Judiciary Committee conducted a hearing Protecting Small Businesses and Promoting Innovation by Limiting Patent Troll Abuse.
I am still wading through the witness testimony but it appears worth reading if you are interested about the Senate's patent reform effort. Here is the witness testimony:
John Dwyer, CEO New England Federal Credit Union
Dana Rao, Adobe System's VP and Associate General Counsel of IP and Litigation
Philip Johnson, Johnson & Johnson's Chief IP Counsel
Steve Bossone, PhD, Biotech scientist
Harry Wolin, AMD's Senior VP, GC, and Secretary
Todd Dickinson, AIPLA's Executive Director and former Director USPTO, etc.
Copyright © 2013 Robert Moll. All rights reserved.
I am still wading through the witness testimony but it appears worth reading if you are interested about the Senate's patent reform effort. Here is the witness testimony:
John Dwyer, CEO New England Federal Credit Union
Dana Rao, Adobe System's VP and Associate General Counsel of IP and Litigation
Philip Johnson, Johnson & Johnson's Chief IP Counsel
Steve Bossone, PhD, Biotech scientist
Harry Wolin, AMD's Senior VP, GC, and Secretary
Todd Dickinson, AIPLA's Executive Director and former Director USPTO, etc.
Copyright © 2013 Robert Moll. All rights reserved.
Wednesday, October 30, 2013
Joe Mullin - Lawmakers blast patent trolls, but split on parts of a key bill
In Lawmakers blast patent trolls, but split on parts of a key bill, Joe Mullin tells us "Rep. Brent Farenthold (R-TX) was incredulous that Whataburger, the Texas-based chain of hamburger joints, had been targeted by a patent suit. 'They make hamburgers!' sputtered Farenthold. 'They don't play in the intellectual property game ... You know there's a problem when I can't get Wi-Fi and the prices at my grocery store are going up, because they're tagged by frivolous lawsuits." Sounds like Rep. Farenthold is voting yes on the bill, and I would too if I didn't have Wi-Fi and rising grocery prices due to frivolous patent cases.
Copyright © 2013 Robert Moll. All rights reserved.
Copyright © 2013 Robert Moll. All rights reserved.
Tuesday, October 29, 2013
Professor Robin Feldman - Patent Demands & Startup Companies - A Comment
Professor Robin Feldman published an interesting article Patent Demands & Startup Companies: The View from the Venture Capital Community on October 28, 2013.
Some of Professor Feldman's findings, based on responses from Members of the National Venture Capital Association and CEOs of the VCs member companies, are as follows:
The article is well researched and written, but I am not sure it supports major patent reform is urgently needed to protect startups from patent demands. Like any potential lawsuit (e.g., contract dispute, founder or shareholder suit, product liability, domain name, or employment suit) patent demands are not a positive development, but something to manage so they don't have "a highly or moderately significant impact," "distract management," "expend resources," or "alter business plans."
Many VCs want patents filed to protect their startups inventions, but readily vote to sell them to the highest bidder (i.e., a patent monetizer) if the startup fails. Maybe we should determine how many patent demands are based on patents purchased from VC backed startups that failed in case we are unsure of VC's role in this problem.
Copyright © 2013 Robert Moll. All rights
reserved.
Some of Professor Feldman's findings, based on responses from Members of the National Venture Capital Association and CEOs of the VCs member companies, are as follows:
- About 70% of VCs and 30% of startups report having received a patent demand.
- 80% of VCs think patent demands have increased over the last five years.
- 70% of VC believe patent demands most impact the IT sector, 30% life sciences, and 10% clean tech.
- VC report 60% of patent demands came from patent assertion entities whose core activity is licensing or litigating patents.
- 60% of VCs estimate defense costs exceed $100,000, with some reporting costs in the millions.
- 75% of VC and 60% of CEOs report patent demands had a highly or moderately significant impact on startups, since they distracted management, expended resources, or altered business plans.
- 70% of VCs don't think patent demands are positive. Every VC said a patent demand against a prospect could influence an investment decision, and 50 percent said it would be a major deterrent.
The article is well researched and written, but I am not sure it supports major patent reform is urgently needed to protect startups from patent demands. Like any potential lawsuit (e.g., contract dispute, founder or shareholder suit, product liability, domain name, or employment suit) patent demands are not a positive development, but something to manage so they don't have "a highly or moderately significant impact," "distract management," "expend resources," or "alter business plans."
Many VCs want patents filed to protect their startups inventions, but readily vote to sell them to the highest bidder (i.e., a patent monetizer) if the startup fails. Maybe we should determine how many patent demands are based on patents purchased from VC backed startups that failed in case we are unsure of VC's role in this problem.
Tuesday, October 22, 2013
Patent Trolls or Patent Monetizer - Goodlatte's Innovation Act of 2013
The news media has barraged the public with the evil of patent trolls: they harm our business and create nothing of value. Yes, patent litigation abuse needs to be curbed, but how?
Goodlatte's Innovation Act of 2013 proposes to change things. The Act limits legal estoppel to issues actually raised in post-grant proceedings and increases transparency on patent ownership, which should help, but also proposes to radically change decades of US patent law by introducing fee shifting perhaps in many if not all cases. This is more than "modernizing" 35 USC 285 folks this is giving up the American rule. We have this rule to encourage small entities to be able to protect their rights against large interests. If passed, large company defendants will have an incentive to overspend on legal fees, resulting in a win (how could they not win if they spent an order of magnitude more?), then hand the losing patent owner a very large legal bill. We are talking millions in legal fees. This will soon deter a small entity from enforcing a patent against any large company that decides infringement makes sense. The Act also heightens an infringement complaint to essentially require the patent owner submit a claim chart showing infringement with the complaint, and do it all before any discovery! Is this how we want it to work, establish infringement without discovery? Such a provision should be carefully considered by the patent community, because it only benefits large companies.
Beside carefully considering the impact of the laws, we need to drop the pejorative labels. Many acknowledge we shouldn't use the term "patent troll." Instead, we should refer to "patent assertion entities," but months later it is back to calling non-practicing patent owners patent trolls in the press, which preconditions the debate. Consider if you were accused of bullying others. Let's assume we don't know yet if you are. What if we each time we cross paths I ask, "So Mr. Bully, what have you been doing today?"
Congress appears to be introducing patent reform based on PR, media, and lobbyists. Many arguments raised against "patent trolls" might be raised against any patent licensing. Is it evil for someone to seek to obtain income from patent licensing and/or litigating rather than provide a service or make a product? IBM, Microsoft, Texas Instruments, HP, Intel, and SanDisk have all licensed patents beyond what is in their products, but that is left out of the media barrage, because these companies make valuable products and services (even if not related to a patent) and therefore are not "patent trolls."
We must delve into the facts to understand how to reduce patent litigation abuse. The FTC recently launched an investigation into patent monetizer. Some academics have done a great job of investigating into the facts. In The AIA 500 Expanded: Effects of Patent Monetization Entities, Professor Robin Feldman investigated almost 13,000 cases and 30,000 patents in lawsuits filed in 2007-2008 and 2011-2012 and draws interesting conclusions about how patent monetizers are reacting to changes of the patent law in the America Invents Act (AIA). This fact investigation with reasonable conclusions is a step in the right direction and should continue. Some of the findings of Professor Feldman's article:
Goodlatte's Innovation Act of 2013 proposes to change things. The Act limits legal estoppel to issues actually raised in post-grant proceedings and increases transparency on patent ownership, which should help, but also proposes to radically change decades of US patent law by introducing fee shifting perhaps in many if not all cases. This is more than "modernizing" 35 USC 285 folks this is giving up the American rule. We have this rule to encourage small entities to be able to protect their rights against large interests. If passed, large company defendants will have an incentive to overspend on legal fees, resulting in a win (how could they not win if they spent an order of magnitude more?), then hand the losing patent owner a very large legal bill. We are talking millions in legal fees. This will soon deter a small entity from enforcing a patent against any large company that decides infringement makes sense. The Act also heightens an infringement complaint to essentially require the patent owner submit a claim chart showing infringement with the complaint, and do it all before any discovery! Is this how we want it to work, establish infringement without discovery? Such a provision should be carefully considered by the patent community, because it only benefits large companies.
Beside carefully considering the impact of the laws, we need to drop the pejorative labels. Many acknowledge we shouldn't use the term "patent troll." Instead, we should refer to "patent assertion entities," but months later it is back to calling non-practicing patent owners patent trolls in the press, which preconditions the debate. Consider if you were accused of bullying others. Let's assume we don't know yet if you are. What if we each time we cross paths I ask, "So Mr. Bully, what have you been doing today?"
Congress appears to be introducing patent reform based on PR, media, and lobbyists. Many arguments raised against "patent trolls" might be raised against any patent licensing. Is it evil for someone to seek to obtain income from patent licensing and/or litigating rather than provide a service or make a product? IBM, Microsoft, Texas Instruments, HP, Intel, and SanDisk have all licensed patents beyond what is in their products, but that is left out of the media barrage, because these companies make valuable products and services (even if not related to a patent) and therefore are not "patent trolls."
We must delve into the facts to understand how to reduce patent litigation abuse. The FTC recently launched an investigation into patent monetizer. Some academics have done a great job of investigating into the facts. In The AIA 500 Expanded: Effects of Patent Monetization Entities, Professor Robin Feldman investigated almost 13,000 cases and 30,000 patents in lawsuits filed in 2007-2008 and 2011-2012 and draws interesting conclusions about how patent monetizers are reacting to changes of the patent law in the America Invents Act (AIA). This fact investigation with reasonable conclusions is a step in the right direction and should continue. Some of the findings of Professor Feldman's article:
- In 2012, patent monetizers filed 58.7% of all patent lawsuits filed in the USA. In contrast, patent monetizers filed only 24.6% of US patent lawsuits.
- The recently issued US patents are most frequently litigated, which might mean people are applying for patents with the plan to file lawsuits.
- Current mechanisms to notify the public when a patent is asserted in lawsuit did not operate 2/3 of the time.
- Month-by-month data show a massive spike in monetizer activity the month prior to the joinder provisions of America Invents Act became effective then the lawsuits began to rise again in the last part of 2012. I thinks she gets it right in noting, "The data demonstrate that the increase in activity by monetizers in recent years is not an artifact of the changes in the America Invents Act, but represents a true rise in the level of litigation activity."
I am not saying let's give any patent monetizer a free pass, but let's stop labeling them patent trolls and let the FTC investigation take its course. It should help identify conduct that needs to be stopped before we rush to change laws. Otherwise, Congress' efforts to change the law may bar legitimate patent enforcement and licensing activity.
Copyright © 2013 Robert Moll. All rights reserved.
Friday, October 4, 2013
Professor Robin Feldman - Prolific Patent Scholar
If you follow this blog, you know I like to read and post late at night. One of my "late night discoveries" after I started blogging was Professor Robin Feldman. I had met her husband Boris Feldman, a partner WSGR, as an associate in 1993 -1998. Boris had all of our respect (despite the toys in the office) because of his brilliance in fending off opportunistic SEC claims. A typical result for Boris? Case dismissed. No discovery, just dismissed. Someone mentioning his wife was a law professor at UC Hastings, but that's all I remembered ... I was too busy.
So when I stumbled across The Giants Among Us on the rise of patent aggregators and saw one of the authors was a UC Hastings law professor Robin Feldman ... I thought wait is this Boris' wife? As I read Giants, I was stunned. It was a tour de force and gave many fresh details regarding Intellectual Ventures, a firm that has been shrouded in secrecy. The fact research was excellent. It followed she had graduated second in her class at Stanford Law school.
Tonight, when I saw UC Hastings law school had an article Robin Feldman: Shaping Patent Policy Through Scholarship noting her influential law review articles in recent years, I was not surprised. I appreciate her scholarship and hope it continues well into the future. She strikes me as someone who is relentlessly investigating and reporting on the challenges of US patent law, something we need before Congress passes "helpful" bills for the sake of the US economy. Thus, reading her articles is much a better starting point to understanding today's challenges than the agenda set forth by corporate lobbyists.
Copyright © 2013 Robert Moll. All rights reserved.
So when I stumbled across The Giants Among Us on the rise of patent aggregators and saw one of the authors was a UC Hastings law professor Robin Feldman ... I thought wait is this Boris' wife? As I read Giants, I was stunned. It was a tour de force and gave many fresh details regarding Intellectual Ventures, a firm that has been shrouded in secrecy. The fact research was excellent. It followed she had graduated second in her class at Stanford Law school.
Tonight, when I saw UC Hastings law school had an article Robin Feldman: Shaping Patent Policy Through Scholarship noting her influential law review articles in recent years, I was not surprised. I appreciate her scholarship and hope it continues well into the future. She strikes me as someone who is relentlessly investigating and reporting on the challenges of US patent law, something we need before Congress passes "helpful" bills for the sake of the US economy. Thus, reading her articles is much a better starting point to understanding today's challenges than the agenda set forth by corporate lobbyists.
Copyright © 2013 Robert Moll. All rights reserved.
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