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The rise of patent trolls

  • 25 September 2012
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Trolls are the gigantic, terrifying fictitious creatures found in Scandinavian mythology. Patent trolls are also rather terrifying in their own way. However, unlike their Scandinavian namesakes, these companies are very real and they are usually small. Theyre on the rise. So afraid are big corporations of these trolls that they have decided to try to protect themselves in an extraordinary way by patenting being a patent troll.
The rather pejorative term “patent troll” was coined in 1993 to describe companies that are more concerned with enforcing patents against infringers than actually marketing the patented inventions themselves.

This right to prohibit, known in law as ius prohibendi, is these companies hallmark. Contrary to what one might expect, their raison dêtre is not to put their patented inventions into practice, rather to continuously enforce those patents and bring lawsuits with the intention to obtain millions in compensation.

Opportunism and bad faith are terms that suitably describe their tactics, which sometimes involve acquiring portfolios of patents with which they rage their wars of destruction.

Patent trolls tend to associate with inventors and small companies that forecast what big manufacturers will be producing in the future, patenting these inventions in abstract, conceptual studies.

Just as canny opportunists second-guess companies and register key domain names before they are able to do so, patent trolls prevent large manufacturers from launching their innovations on the market until they have received a “payoff”.

However, some of these patent trolls are gigantic. One such company is Intellectual Ventures, a North American company which holds more than 30,000 patients among its assets and is also one of the five largest companies in the United States in terms of product portfolio. Intellectual Ventures exists and grows because of its licensing rights over patents, a very profitable business that has already netted it more than US $2,000 million.

Patent trolls have become so important that in 2007, two multinational companies, IBM and Halliburton, started fighting back in a very unexpected way by filing patent applications in the United States in an attempt to protect themselves from the patent trolls activities and turn off the juice”.

Therefore, using the “IBM patent applications method” means making profits from a portfolio of patents acquired from companies that lack the resources to maintain them, while a “Halliburton patent application” means acquiring patents and then filing suits for breach against third parties, or even negotiating licences to obtain economic profits. In other words, they are patenting being a patent troll.

Whether or not they succeed is quite another matter, because the U.S. Patent and Trademark Office is receiving numerous objections.

There is no question that patent trolls are in the news at the moment. The lower chamber of Congress in the United States has presented a draft bill to hinder their activities, fostering the innovative role of patents and endeavouring to impose some limits on the “patent war” raging in todays technology sector.

This bill would mean that patent enforcements for breach or nullity of patents in the computer software and hardware sector would be unsuccessful where it is proven that the plaintiff has no reasonable chance of success, with the plaintiff liable for the legal costs.

If this bill is eventually passed, it will remain to be seen if patent troll activity will slacken off or continue to boom.
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The rise of patent trollsThe rise of patent trolls