There’s no shortage of people who think the patent system is unfair, broken and an impediment to progress. An article I came across earlier today is a good example of what’s commonly heard and highlights many of the misperceptions surrounding patents, patent owners and patent lawsuits.
The point is made, for example, that, “A new industry of companies collecting patents with the sole purpose of suing others for money has formed in the past years.” Hmmm…sounds pretty bad doesn’t it? Companies formed for the sole purpose of suing others? For money? In America?
The truth is these so-called patent holding companies almost certainly aren’t formed for the “sole purpose of suing.” They would much rather license their patents and collect a reasonable royalty instead. Suing only becomes necessary when companies using the patented technology decide they don’t want to pay.
The decision not to pay rests enitrely with the company using the patented technology.
The argument is also made that “The patent system today is not advancing technology, it is inhibiting technology. It does not treat people fairly, it is completely out of whack, it needs to be fixed.”
Let’s start with the “inhibiting technology” claim. This is one argument I’ve never understood. How does respecting the property of others inhibit technology? I could run a very profitable business indeed if I stole my inventory from others, sold it without regard for existing business regulations and elected not to pay taxes to boot. In that sense, obeying any law “inhibits” one’s activities. Is that what they mean?
I think what’s really being said here is that companies could rush their products to market faster if they didn’t need to worry about such niceties as not infringing patents, particularly those belonging to others. But that’s not the law. And the companies doing the complaining don’t want that to be the law either. Their very existence depends on legal protection for products that would be easy for others to duplicate at lower cost were they free to do so.
As to the patent system treating people “unfairly,” how so? The truth again is that the patent system favors the large players much more than the small ones. Patent prosecution expenses that are almost trivial to large companies are a real impediment to individuals and smaller companies. It’s not the individuals and small companies that hire teams of high-priced lawyers to tie up cases for years. And a review of recent Federal Circuit cases from Markman to Festo shows a trend toward limiting both the scope of patent rights and the right of patent owners to have juries hear their cases. These changes don’t favor the “little guy.”
As to the system being “out of whack,” well, that’s subjective I guess. Again, many who complain about the patent system in fact apply for and receive patents by the thousands. Wouldn’t a “customer boycott” be in order if the system were really so bad? Don’t expect to see one any time soon. These guys know real value and a bargain when they see one.
The fundamental question that’s often ignored in complaints of this nature is that if a patent is, in fact, invalid or not infringed, why not demonstrate that to the court? And if it turns out that doing so is not as easy and straightforward as initially believed (i.e. the patent turns out to be valid) why not take a license and avoid the headaches? After all, as the article points out, when a number of companies were sued under some questionable patents, they were able to get those patents tossed out in court. In other words, the system worked as it should.
Patent holding companies serve a legitimate role and should not be unfairly trashed. Seeking a profit is not immoral and is indeed the main reason the large companies exist in the first place. It strikes me as a bit hypocritical to hear from these very same companies that it’s somehow unfair to expect them to pay for the technologies they take from others. Do they give away their technology for free?
Those trying patent lawsuits on behalf of individuals, small companies and holding companies should expect to be attacked on the grounds that they are “pirates,” that they “don’t make a product,” that they are “suing for money” and that their motives are somehow sinister. The fact is these attacks are unfair and, at their core, fundamentally unsound. If it’s your privilege to represent a small patent owner in the face of such arguments, don’t be apologetic and don’t be afraid to attack these arguments head on. Most jurors understand. Enforcing patents is a noble endeavor. Doing so on behalf of those facing formidable opposition is nobler still.