Thursday, December 29, 2005

2005: YEAR OF THE TROLL - This was the year that patent holding companies truly arrived. While many other issues in patent law were closely watched by lawyers, journalists and bloggers, nothing attracted more attention than the latest showdown between established corporations and a patent holding company.

In a sense, holding companies have done for patents what blogging has done for news distribution - it has empowered "ordinary" individuals to tread into areas that were previously dominated by institutional entities. Some people have embraced this evolution, some are uncomfortable with it (but have resigned themselves to this reality), and many others have decried or dismissed it.

Whatever your view is, holding companies have demonstrated that patent rights, in and of themselves, and extermely powerful and can bring tremedous benefit or catastrophic ruin. Companies and patent holders that are able to successfully harness the power of their portfolios will continue to tap into additional revenue streams and gain access to other technological markets that would not have been available without the backing of patents. And this year, a lot of companies have shown that developing such strategies are possible for any company, regardless of the size or the industry. Even some big-named businesspersons (e.g. Myhrvold, Perot) has jumped on the bandwagon and started enterprises that borrow heavily from the holding company playbook.

Alas, there are significant problems that holding companies have brought to the forefront. There is no denying that current means of patent enforcement are strongly skewed in the favor of the patent holder. The current cost of litigation almost prohibits smaller companies from challenging a patent plaintiff, and almost guarantee that larger companies will settle in lieu of engaging in a proactive defense. To its credit, the government has been attempting to address these problems by introducing significant patent reform, but there are some troubling aspects in the proposed legislation (e.g., first-to-file, redefining prior art), and it remains unclear which parts will survive when the legislation works its way through Congress.

Also, the issue of patent quality and prior art need to be addressed more seriously. While there always have been (and always will be) "bad patents," the USPTO has to take a more proactive role in searching and applying prior art, especially art that is found in non-patent literature. While there is a conventional wisdom to view every patent being asserted by a holding company as a "bad" patent, this is not typically the case in reality. Nevertheless, there are a few cases where lapses by USPTO personnel have ended up costing others millions of dollars in defending themselves against poorly examined patents. This simply has to stop.

In the coming year, the 271 Patent Blog will continue to provide you with the best available information on patents and patent law, and will try to provide you with the most straightforward analysis on developing trends. 2006 is shaping up to be a groundbreaking year for patent practice - make sure you stay informed every step of the way.

HAPPY NEW YEAR!

6 Comentários:

Anonymous said...

I do not see "ordinary individuals" being empowered by patent holding companies. Most of these companies are backed by an amount of funding that is unattainable for ordinary individuals.

While I have not seen any details on any deals that these holding companies cut with "small inventors", I doubt that the small inventor is left with any more than comparatively minor slice of any bounty that these companies harvest off of someone else's hard work and ingenuity.

Anonymous said...

I agree with the previous comment.

As a small inventor with one patent, I just do not feel how I am "empowered" by those companies.

I was thinking about auctioning my patent on EBay, or establishing a litigation fund by selling stocks to anybody interested.
The last thing I want to do is to sell my patent to such a holding company for a pittance.

Anonymous said...

Obviously, patents provide benefits (i.e., empowerment") exclusively to the patent holder. And the strength of any patent is ultimately determined by (1) the scope of the claims, and (2) the willingness to actually enforce the patent once infringers surface.

A patent is not an academic paper, but a legal instrument and business tool. one of the biggest misconceptions of patents is that something "magical" happens once a patent issues. To the contrary, your work has only begun. It is only by taking your patent to the market and promoting it that people will begin to notice it. And it is only when you take your patent to court that people will begin to respect it.

I'm not suggesting that this is always fair, but it is what it is, and you have to know how to deal with this situation, regardless of the side you're on (i.e., plaintiff or defendant).

Condemning the patent system, and whimsically calling for the invalidation of "troll" patents is neither constructive, or remotely practical. Many companies, such as IBM, Qualcomm, Intel, have pursued infringement actions on patents that did not cover any existing products. Are they trolls as well? Are universities? Research laboratories?

Anonymous said...

>Condemning the patent system, and whimsically calling for the invalidation of "troll" patents is neither constructive, or remotely practical.

Excuse me....

but I did not understand either of the two previous comments to be calling for the invalidation of 'troll' patents nor did they appear to condem the patent system in general.

What does seem apparent to me is that both of the two previous posts were directed specifically at the original post's statement that the emergence of patent holding companies has empowered the ordinary individual.

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Anonymous said...

An above posting raises an interesting comment about Universities. US universities collectively collect about $1 billion per year in license fees for patented inventions that, by definition, none of them produce. This has been going on for years without any outcry from the public.

Any thoughts on why?

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