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Extortion Patent Style: Small Business in the Troll Crosshairs


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: May 24, 2011 @ 2:00 pm

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There is no doubting that being in the patent troll business is exceptionally lucrative.  In 2010 PriceWaterhouseCoopers released the 2010 Patent Litigation Study, which gives a peek into just how lucrative it is to be a patent troll.  Between 1995 and 2009 the overall median patent litigation damage award was $5.2 million, but between 2002-2009 there was a huge discrepancy between the average damage award for practicing entities versus non-practicing entities.  The median award for non-practicing entities was $12.9 million, while the median award for practicing entities lagged far behind at $3.9 million.  No wonder there is ever increasing activities by those the Federal Trade Commission refers to as “patent assertion entities,” which seems to be yet another sanitized name for patent troll.

According to a recent FTC Report, The Evolving IP Marketplace, the high damage awards for non-practicing entities has generated a lottery-ticket mentality that encourages entities to purchase patents solely for the purpose of asserting them against established products and services.  But solving the problem is not at all easy.

One of the difficulties facing the industry with respect to how to handle the patent trolling problem is that it is exceptionally hard to define.  This is due to the fact that not all non-practicing entities are properly characterized as a bad actor.  Indeed, many non-practicing entities are the very type of inventor that the United States has always embraced — independent inventors, Universities, federal research laboratories and R&D companies.  In fact, today Thomas Edison would be considered a patent troll by some, which is the height of absurdity.  Dealing with the patent troll problem without catching up the good actors in the mix has prove to be near impossible.  Thus, it is unlikely that government imposed solutions exist for the bad actors, which means those affected need to take matters into their own hands.

For the most part, the bad acting patent assertion entities purchase patents, and then license them.  While there is nothing inherently wrong with this, the bad actors will assert patents that have nothing to do with what the accused infringer is doing.  They are simply looking for money, on sometimes dubious patents and many times on patents that upon any amount of investigation would prove to be unrelated.  Many small businesses I talk to mistakenly believe that they just need to talk to the patent troll and explain to them and then they will be left alone.  Simply put, that isn’t going to happen.  Likely every other bully in life they understand only two things: (1) you rolling over; or (2) you standing up and punching them in the nose saying you aren’t going to take it any more.


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The bad actors will charge whatever amount of licensing fees can be extracted from operating companies already using and marketing the technology, and increasingly have turned their attention onto small businesses.  They seek relatively small amounts for large numbers of companies.  This model deviates from the historic patent troll model, which would target large corporations looking for a huge payday, but sometimes is a precursor to targeting large corporations.  If they get a bunch of companies to roll over they generate revenue, and more importantly they set a licensing rate that will be useful in future litigations against the Mega-giants they really want to pursue.

More and more we are seeing dubious patents, with claims that are hardly relevant, being asserted against smaller and smaller businesses.  Why?  Because the cost of fighting a patent litigation can easily venture into the 7 figures and the amount of the licensing fee is relatively low so there is little or no incentive to fight.  Small businesses just pay.

When a small business is faced with the decision to fight or pay a small fee, the temptation to pay the small fee is overwhelming.  I see no other way to characterize these attempts other than to acknowledge what is really going on.  Increasingly patent trolls are shaking down small businesses and the payments they force look far more like extortion than anything else.  What is going on in some corners of the patent industry is far worse than the protection rackets.  At least with the protection rackets you would pay for protection and the party extorting money wouldn’t let others push you around.  In the patent troll racket there is no protection.  Worse, those who cave and pay might as well be painting a bulls-eye on themselves.  Nearly every product or service in the IT sector involves multiple technologies, and you have demonstrated the willingness to pay without a fight, meaning you are an easy target.

But wait, you say.  My product or service doesn’t infringe on any patents, therefore, I have nothing to worry about.  Think again my friend.  What I have been seeing lately is the assertion, or threatened assertion, of patents that have little if anything to do with the products or services that the defendant is offering.  In fact, filing a patent infringement complaint in federal court is exceptionally easy.

According to the Federal Rules of Civil Procedure all a patent owner has to do is assert the number and title of the patent and then vaguely say that one or more claims are believed to be infringed.  This type of complaint almost certainly violates several Supreme Court cases requiring more rigorous complaints be filed, and some District Courts are agreeing with my analysis here, but the reality is that no due diligence is required to send a threatening cease and desist letter, and no real due diligence is required before a patent infringement complaint is filed.  For better or for worse in the United States anyone can be sued for virtually any reason, and recovering your attorneys fees from even a malicious plaintiff is various degrees of impossible, meaning you have to pay to defend or  you pay extortion to get out of the case.

It is unrealistic to look to the government or to the courts for a solution to the patent troll problem.  Indeed, in a recent report the Federal Trade Commission observed:

Attempts to address concerns about the detrimental effects of PAE activity on innovation and competition must be undertaken with sensitivity to the roles played by a patentee’s ability to enforce and transfer its rights.  The patentee’s ability to allege patent infringement even against independent creators of the patented technology and enter ex post patent transactions is an important feature of the patent system’s incentives to innovate.

The need for caution when trying to address the effects of those who seek only to license is certainly legitimate because whatever rules and laws are adopted with apply to everyone, good actor and bad actor alike.  Upsetting the delicate balance that defines the patent owner’s rights to make it more difficult for bad actors would undoubtedly have a negative impact on innovation through lower incentives.  The innovation we want most requires enormous capital investment, and the only way to get that investment is to demonstrate a competitive advantage, which is why overwhelmingly investors want patents.  While investors are not patent experts or patent attorneys, they do well understand what an erosion of rights looks like, so ought not be talking about weakening patent rights to address the patent troll problem.

Those who are facing an assertion of rights by those with dubious patents or patents that simply don’t cover what they are doing need to make a choice.  Either you suck up and pay the extortion or you don’t.  The temptation to pay is real and understandable when faced with the prospect of moving forward to fight the battle alone, but you don’t have to fight alone.  If you are facing a cease and desist letter the likelihood is that many others in your shoes are facing the same thing.  A good example of this is the recent Lodsys assertion against Apple App developers.  See Apple to Patent Troll: Back Off App Developers.

Luckily for the Apple App developers it seems as if Apple is standing up to take the heat, offering at least some protection, but in many situations where patent trolls are going after small businesses there is no Knight in Shining Armour going to ride in and save the day.  In some cases I have heard from small businesses getting sued alongside of big businesses that they believe that they are really safe and have nothing to worry about it because the big business will fight the battle for them.  That type of thinking strikes me as nearly delusionally naive.  There is an odd symbiosis between the legal departments of many large companies and patent trolls.  I have been told that good working relationships, even friendships, are pursued so that when they get sued again it will be easier to work out a deal.  I’m not sure how a small business tying their horse to that carriage is a good strategy.

There are things that can be done to fight off a renegade patent troll, such as: (1) filing a request for reexamination; or (2) filing a Declaratory Judgment Action in a jurisdiction that is likely going to be more favorable to defendant’s than the Eastern District of Texas, which is where the patent troll will eventually sue you.  If you get sued you probably want to consider a variety of intentional tort cross-complaints because the patent troll is trying to intentionally interfere with your business for no good reason.  There are also numerous defenses that can be employed if you get sued that can turn up the heat on the patent troll, such as patent misuse, but the real goal is to try and not get sued, or if you get sued to get sued in a District Court that is either even-handed or more likely to be pro-defendant.  Of course, this is not free, which is why many small businesses resort to painting the red bulls-eye on themselves and pay.

In my opinion it is it becoming increasingly critical within the IT sector for small businesses to form alliances or industry organizations.  If one is getting pursued it is only a matter of time before others will get pursued, so it would make sense for an alliance of like businesses to collectively work together.  This is particularly necessary since the business model of the patent troll, as a non-practicing entity, means they have absolutely nothing to lose.

Let’s face it, the patent troll business model exceptionally attractive — little or no risk, potentially huge rewards.  That being the case it is acutely naive to believe the patent troll problem will go away and won’t affect you.  If you are a small business in the IT sector it is only a matter of time.  Unless and until a unified industry strategy can take the fight to patent trolls and force them to spend money they will always be the hunter and those engaged in business will always be the hunted.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, Patent Troll Basics, Patent Trolls, Patents

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

37 comments
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  1. Great article Mr. Quinn, and I think that your recommendation to small and, for that matter, large defendants to form alliance to defend against non-meritorious assertion of patent rights is good advice. Let me add this. Those asserting any patent infringement claim, whether it has merit or not, must do so against a technology that is commonly practiced by a large number of developers; otherwise pursuit of an infringement claim against a financially small developer for a unique practice of a technology most likely can’t recover enough to make it worth the effort of an infringement suit.

    So small developers will be able to coalesce around the defense of a common technology, and where the suit has no merit, there are a number of steps that developers can take to dispense with a non-meritorious infringement filing. In addition to patent misuse and tortious interference with one’s business, there are the torts of abuse of process and malicious prosecution. And for filing any claim or defense that has no basis in law and fact, that is, a frivolous pleading, there is Rule 11, which authorizes the judge to award damages. Also, federal judges have broad equitable powers to discipline a party and/or its counsel, when a claim or defense is filed for improper purpose, including not only dismissal of the improper pleading but also awarding damages.

    Yes, it is true that defendant has high burden to meet in showing that claim is frivolous or was filed without merit in an effort to use the courts to extort money from a defendant on a bogus patent claim, but that burden can be met, and taking discovery on any of the counterclaims and/or defenses, supra can turn the tables on a NPE that files a meritless infringement claim.

    I also thinks that there are reforms to Title 35 of the U.S.C. that can be made that will fully protect the property interests of the patent holder in his/its patent, while protecting small developers from extortion by eliminating or at least dramatically diminishing the incentive to file meritless patent infringement claims. However, that is my law review article.

  2. A good and timely article Gene.

    I’ve seen this played from both sides, namely, from the viewpoint of a small business that gets sued for doing something it simply doesn’t do and from the viewpoint of a small patent owner who gets knocked down by the system while legitimately trying to assert his patent.

    I believe you left off your list the naming of two more prime players in this game:
    1) Inexperienced district court judges who get played by T-word plaintiffs, and
    2) The US Congress

    Why the US Congress?
    For the same reason they are to blame for the backlog at the USPTO. They underfund the courts, they underfund the USPTO and then they go wiggling their fickle finger of investigative blame at other actors but never at themselves.

  3. e.g., Landmark Technologies which owns patents it claims cover virtually all internet commerce.

  4. Hi Gene,

    Nice summary of the issues. Thanks.

    You mentioned reexamination as a useful tool, and in part I agree. One issue that compromises the usefulness is the ability of the patent holder to add new claims. While the law states the new claims must no broader than the original claims (same with amended claims) I understand it is a difficult position to argue. Secondly, in my experience some new claims are written with the weaknesses of the original claims removed and the accused product manuals open. While intervening rights applies, if the patent has life left in it the patent holder may now be in a better position to continue asserting the now reexamined (and in the mind of the jury “blessed by the PTO”) patent.

  5. Chris-

    I don’t disagree with your observations on the limitations of reexamination. It is useful in a lot of cases, but not all. I personally think it is under utilized. The numbers are staggering in terms of rights lost by the patent owner in an inter partes reexamination, something like 75% of all claims are lost and 20% are modified. Getting a claim modified when there will be intervening rights is a real win. Ex parte reexamination is less successful, but still quite good.

    Personally I think there needs to be a coordinated effort on multiple fronts to go after patent trolls. There is no risk and they call the shots. One of my lawyer mentors always told me that if you have a good case that you think should settle you need to get the other party to spend money. Until they have to spend money they are unlikely to really look at the merits of the case. I think that approach is the right way to handle patent trolls.

    I’ll be writing more in the future. Thanks for reading and contributing here in the comments.

    _Gene

  6. Nemo-

    The only thing I would add/say, is that while Rule 11 seems to have teeth District Court Judges simply don’t use it. If Rule 11 had real teeth that alone would solve this frivolous behavior.

    Until there is a required of at least a bare minimum threshold of due diligence before filing a patent infringement lawsuit there will be little the system can do (aside from apply Rule 11 as written) to solve the patent troll problem. That is why the hunted need to become the hunters and turn the table on the bad actors.

    -Gene

  7. Step-

    Congress certainly hasn’t engaged in meaningful oversight in the patent area for a very long time, and it is so true that they love pointing fingers at everyone except for themselves.

    I’m not sure inexperienced district court judges are to blame, although perhaps you are correct. It seems to me that the Supreme Court and the various Court of Appeals like to meddle with how frivolous litigation is handled. Eventually this will come to a head given that the latest Supreme Court cases on sufficiency of complaints has moved away from the long standing tradition of allowing a complaint to be filed and discover to shake out whether the defendant was really doing anything to violate rights. The Supremes seem more interested in notice pleading now. If that becomes the standard and little tolerance is given for no due diligence prior to filing then things could change in a meaningful way. I can see it on the horizon, but not as quickly as it should come.

    It is essential, in my opinion, for those facing patent trolls to preserve these issues appropriately. I think the Federal Circuit might be hungry to adopt the latest Supreme Court view of notice pleading. I also think some District Courts have had enough and could be emboldened to take a more proactive role. That does seem to be happening, although not in any even way.

    -Gene

  8. Gene,

    I do not need to emphasize differences of opinion that I may have (especially given our system of notice pleading and what that should mean), but your statement of “If Rule 11 had real teeth that alone would solve this frivolous behavior. ” rings loudly and accurately.

    The question then becomes – how do we get the (existing) rules applied to do what they are supposed to do? How do you hold the people accountable who are supposed to hold the other people accountable? So many rules are written to provide judges discretion – have we gone overboard and need to reign discretion back in? On the criminal side, I think mandatory sentencing guidelines have recieved mixed reviews – are there lessons to be learned and applied to civil matters (which include – but are not coextensive with patent matters)?

  9. Whether Rule 11 has teeth depends a great deal on one’s advocacy and particularly getting the judge to understand the issues of law and fact. What I’ve seen is that judges are rarely presented with a motion on Rule 11 or to invoke their equitable authority to deal with frivolous suits. And remember that Rule 11 is an ongoing obligation, so that the moment it appears from the record that a claim or defense no longer has a basis in law and fact, opposing counsel must abandon it. I’ve discovered that when you can persuade a judge that a claim or defense lacks a sufficient basis in law or fact, he/she will act, and sometimes if not right away, then later, once the record is more sufficiently developed. But you have to ask persuasively.

    Rule 11 dismissal and sanctions are hard to get, as they should be. But I’d like to know–and these are hard stats to get: (1) How often sanctions and dismissal under Rule 11 or judge’s equitable powers are granted in patent cases, and (2) how often lawyers in patent cases seek sanctions under Rule 11 or the court’s equitable authority, where the record would support it.

  10. As for the Supremes announcing some broad limitation on notice pleading, I observe that the Federal Rules of Civil Procedures carry the dignity of a federal statute, and the Supreme Court, therefore, except on constitutional grounds, can’t or at least shouldn’t simply read notice pleading away. Whether the requirements of notice pleading have been met should be left to the sound discretion of the trial court, because only the trial court can judge the sufficiency of pleading at first instance, and any broad limitation issuing from the Supreme Court will almost certainly result in more injustice than justice. However, trial court judges should heed the Court’s adminition to use the available to tools (e.g., Rule 11) to dispatch meritless claims and defenses.

    And at least in so far as Title 35 is concerned, I believe that it can be reformed to provide full constitutional protection of a NEP’s property rights in its patent, while protecting financially small and unsophisticated developers from unexpected and/or frivolous patent infringement claims.

  11. Nemo,

    Accord.

  12. Great post. It would also be interesting to explore one (of a few) other sides of the table, namely the inability of most independent inventors to legitimately assert their rights. In the same way that is can be costly for a small defendant to counter threatened or actual litigation, it can be nearly impossible for an independent inventor (those of us without many thousands or even millions to spare) to take action against clear-cut infringers. Some of these independent inventors will have no choice but to resort to a relationship with a NPE that is capable of financing the litigation. In my experience, there are bad actors out there, however there are also several players (who have been characterized as trolls) that serve a legitimate purpose in this complex marketplace. In essence, these firms finance litigation, although they typically do so by taking control (via assignment or license of the patents) in order to mitigate their risks (seems legitimate) and be able to control the enforcement process. That’s no different from a large corporation with deep pockets allocating funds (or borrowing them) to assert their rights. While in some cases the enforcement actions will target large corporations, many of today’s technologies relate to software, apps, etc. that are sometimes infringed by many smaller players. So while some NPEs are bullies, others are legitimately seeking reasonable license fees, sometimes from a large numbers of infringers, if only because that’s the way the particular invention has been claimed and implemented in the market.

  13. James,

    Great counterpoint – and one I have not seen before. I hope it becomes a staple in any discussion of the definition of “Troll.”

  14. Dear James: I think that your points are well taken, which is why I would oppose only frivolous, that is, meritless, patent claims using the methods that I and/or Mr. Quinn proposed here. Meritorious claims are another matter completely. However, they can and do also present a serious problem for the financially small and unsophisticated party who inadvertently and innocently infringes a patent. It is when that innocent party is surprised and exploited by an unexpected patent claim that there is also, as with meritless claims, an opportunity for abusive assertion of patent rights. But, as I said supra, I think that Title 35 can be reformed to protect the small, unsophisticated, and innocent infringer from ruin or at least abuse as a result of the surprise assertion of patent claims, while providing full constitutionally mandated protection to the patent holder’s property rights in his patent.

  15. The root cause is poor, or at best uneven, patent quality. A tiered patent system would be the most practical solution, better matching the strength of patent rights to the underlying variation in patent quaility. Only top-tier patents would have the right to litigate.

  16. Dear Mr. Hilton: I am not ready to start saying that some patents are better or of higher quality than others. That is for the market to decide and can’t be determined by legal mandate or by a government employee at the USPTO. (Imagine our already overworked and often under qualified examiners trying to apply some standard, whether legal rule or subjective, to rank the quality of duly granted patents.) The U.S. Supreme Court has held that patents are property rights, so that any duly granted patent represents property rights that are all of equal dignity with respect to the U.S. Const.

    So the question isn’t one higher or lower quality patents but one of which patents and their respective associated claims are properly granted and which are improperly granted, when the USPTO makes a mistake. The problem seems to be, as mentioned supra, is that Congress refuses to adequately fund the USPTO so that it can hire a sufficient number of high quality patent examiners who are equal to the task of property granting or denying patents and who, therefore, will make far fewer mistakes in granting or denying patents and/or patents’ claims. So the problem is one of quality and quantity of patent examiners, not of the quality of patents, which is an unpredictable economic outcome. And to solve the problem of not enough high quality patent examiners, Congress will have to adequately fund the USPTO so that it can hire enough high quality patent examiners.

  17. There’s a difference between invention quality and patent quality. Invention quality is a function of commercial value and that is what the market decides. Patent quality is a function of legal validity and that is what examination and litigation decides. A tiered system would allow patent quality to better reflect invention quality, by imposing higher fees and legal hurdles for higher tiers. Only higher-quality inventions would be worth the added cost and effort from a market perspective, and be able to withstand the heightened scrutiny for enforcement from a legal perspective. BTW, I am very much in favor of ending fee diversion and fully funding the USPTO. That is certainly a big part of the solution too, and one for which I have strongly advocated to my representatives in Congress.

  18. Dear Mr. Hilton: Would you explain how Congress or the USPTO could draft a rule of law that would make an a priori determination of patent quality that would better reflect invention quality, which you seem to admit must be determined by the market and which would, therefore, be unknown at the time of examination of the invention’s patent app? And how would you deal with the fact that property rights are and have always been held to be of equal dignity before the law? And especially, how would deal with constitutional Equal Protection Clause challenges to the U.S. government’s attempt to establish differing quality of patent property rights, which, after all, is what you are proposing, for duly granted patents?

  19. Nemo,

    Ron is floating (once again) a half baked idea that I took him to task for quite thoroughly.

    Ron, do you have the thread for that beatdown?

  20. I just googled “ron hilton patent tier” and found four IP Watchdog threads with my illuminating commentary on the subject :). I guess this makes number five. I can’t help it if repeated cases in point illustrating the need for just such a reform keep surfacing. I take that as being indicative of a fundamental problem in need of a comprehensive solution. The problem may manifest itself as anti-competitive monopolists, extortionist trolls, free-software utopians, and in many other ways, but the root cause is patent quality vs. cost. And a tiered patent system would help to make that trade-off in the way that has always proven best – a free-market system driven by choice and competition. The patent examiner does not have to determine the value of the invention or the examination tier that woudl be appropriate. That is up to the applicant, by paying a higher fee to get a higher tier. As for property rights, a patent only confers them to the extent that its claims are held valid, which may be subject to further challenge at any time.

  21. Ron,

    To the contrary, it is not that “repeated cases in point illustrating the need for just such a reform keep surfacing“, and yes – you can help the continual posting of your inane and half baked ideas to what you perceive as calls for your solution.

    I have quite thoroughly ripped apart your suggestions. Your choosing to ignore my comments is likewise purely within the power of your choice – but just as assuredly, the truth of my beatdown is NOT something you can help.

    Let’s share those IP Watchdog threads so that our new friend Nemo can see all the glorious holes in your suggestions (holes, I remind you, that you have never filled in any of the various threads).

  22. Dear Mr. Hilton: I said through out my comments, supra, that all duly granted patents must, as a matter of law, receive full constitutional protection as property rights. The word duly means: “in accordance with what is required or appropriate; following proper procedure or arrangement.” And therefore, all claims of duly granted patents and their claims–which must also be duly granted, otherwise the patent isn’t duly granted–would be valid and enforceable constitutionally protected property rights, and you, therefore, haven’t answered the questions that I propounded, supra.

    I also wonder about your grasp of IP law. The three main types of IP, patents, copyright, and trademarks, are constitutional protected property interests that confer by the granting of exclusive rights legal monopolies in those rights. And where one is asserting right of a duly granted patent, one isn’t extorting anyone but merely enforcing one’s property rights, which like you exercising your right to tell someone to get out of your house. There is nothing extortionist about it. Therefore, the assertion of patent claims by a NPE isn’t extortion by merely enforcement of its property rights.

    Assuming arguendo that this tier thing is constitutional, which I strongly doubt, if I have a duly granted patent, why would I ever pay anything but for the lowest tier, since the federal district court must, as a matter of constitutional law, in compliance with due process and equal protection, protect and enforce my lowest tier property just as equally and fully as it protects and enforces the duly granted patents of any other tier?

  23. That adjective “duly” covers a multitude of sins. There are a number of post-grant proceedings that can impact the validity of patent claims. Furthermore, the determination of infringement is a lengthy, costly, and uncertain process. Furthermore, even a valid patent right can be misused. The ability to survive those challenges to validity and prove infringement and make it stick are what I mean by “patent quality.”

  24. “The ability to survive those challenges to validity and prove infringement and make it stick are what I mean by “patent quality.” ” In short, you mean a duly granted patent.

  25. And a misused patent, as Mr. Quinn pointed out, supra, is subject to an action for patent misuse and tortious interference with the defendant’s business, and, as I suggested, supra, is also, in a proper case, subject to actions for abuse of process, malicious prosecution, and/or Rule 11 sanctions.

  26. Then “duly granted” = “unduly expensive”

  27. Ron,

    Either give it up or actually address the many faults I have (repeatedly) pointed out to you.

    You are trying to pass off a half baked solution and no one is buying. No one bought the first time. No one bough tthe second time. No on ebough the third time. No one bought the fourth time. No one is buying the fifth time.

    Are you seeing the pattern yet? Open your eyes.

  28. BD,

    I disagree that no one is buying it. Multi-track will be a step in that direction, even though it has been temporarily sidelined due to the federal budget crisis. I also disagree that it is half-baked. It’s not the total solution, but it’s part of the solution. Peer-to-patent is another part of the solution, which is also gaining traction despite some the naysaying. I am happy to respond to issues that I deem to be substantive. I don’t respond to content-free pejorative rhetoric, no matter how emphatically and repeatedly it is given.

  29. Peer-to-patent is another part of the solution, which is also gaining traction despite some the naysaying

    Yet another half-baked comment. What is the current percentage of all applications that have used peer-to-patent to all existing applications? Try typing the NAME of that number rather than using digits, and then try again to say your piece with a straight face.

    Seriously.

    that I deem substantive” – Your judgment has already been shown to be deficient and now you want to be the judge of what it is worth responding to? One big HELL NO to that.

    “Content free” – Sorry, but your being wrong on just what is “content free” when I point out critical shortcomings is more than just a little bit self-serviing on your part. Yes, I do admit my posts can get a little rough (I do try to keep the tone humourous at least), but the only “content-free” posts are those that refuse to see how verymuch content free they are (and in case you are confused, those include your vacuous repititions).

  30. As I’ve said before, I don’t ever expect the percentage of applications that use community/peer-provided prior art references to be large, just as the number of top-tier applications in a multi-tier system would also likely be comparatively few. But I do envision that those few would put a large dent in the equally few patents that ever get litigated, with the outsize cost and economic impact that they wield. Returning to the subject at hand, if a troll had to pay to upgrade a patent to the top tier, including a costly peer-assisted prior art search, before being permitted to enforce it through the court system, would that not put a huge damper on the numerous frivolous infringement suits now being brought at little or no risk or cost to the troll? But for a legitimate plaintiff with a strong, high-value patent, it would be well worth the added up-front cost as a prudent component of the overall investment in commercializing it.

  31. As I’ve said before, I don’t ever expect the percentage of applications that use community/peer-provided prior art references to be large

    Give me an answer Ron.

    How small is your “not large”? Do you even know how to name that small of a fraction? How many other ideas will you need to fill these giant holes that I have leveled in your ideas?

    If you are going to hide behind a label of “substance” – you better damn make sure that your own replies have some.

    They do not.

    You also now add the misunderstanding of what “cost” a “Troll” faces (or not). It is not (nor ever has been) the costs involved with the courts that the “Trolls” have escaped. The cost is in relation to the retaliation from the targets.

    You might want to think before you post your foolishness (and I am not even touching your repeated foolishness with the lack of understanding of any type of ability to determine “upfront” high-value and the relation with commercialization). I have a background in that very topic and I find your half-baked musings downright insulting.

    Stop.

    Please, for your own sake.

  32. It’s risk or cost. Litigation cost may not be a major factor for the troll directly, but it is the major factor for the target, and therefore the key source of leverage for the troll. Even more importantly, the risk of invalidation from increased scrutiny prior to being able to sue under a mutli-tier system would make it easier for the target to call the troll’s bluff. BTW, I’m not claiming to be an expert in IP valuation. But I trust the market to do so far more than I would trust a government bureaucracy. That was my only point in that regard.

  33. Ron,

    Please think before you post. Your arguments are all over the map because you fail to do so.

    To wit: In response to my challenge of your position of “Returning to the subject at hand, if a troll had to pay to upgrade a patent to the top tier, including a costly peer-assisted prior art search, before being permitted to enforce it through the court system, would that not put a huge damper on the numerous frivolous infringement suits now being brought at little or no risk or cost to the troll?

    You fail to actually address my point (and yes I want you still to compute that fraction and write it out in non-numerals – when you do so you will see just how ridiculous your idea is – like spitting into the ocean – humor me and do the math) and now respond with: “Litigation cost may not be a major factor for the troll directly, but it is the major factor for the target, and therefore the key source of leverage for the troll

    You can plainly see that the one has ZERO to do with the other.

    You also plainly do not understand that your so-called “Troll” is not an entity that is likely to prosecute a patent through your beloved system – “Trolls” do not do so now. As Peter Zura wrote awhile back, “Trolls” are most likely to buy existing high quality patents from failed ventures. Thus, your premise here fails – much like your various other positions. I am not sorry to use invective because at times (like these) that invective is supposed to hurt – it is supposed to sting.

    And rightly so.

    Get off the “Troll” bandwagon and try to think critically for yourself.

  34. BD,

    I have attempted for many months now to carry on a civil discourse with you, but I see that it is impossible. You may have noticed that very few commenters ever attempt to contradict you on this forum. You probably flatter yourself that it is because of the strength of your arguments. The truth is that life’s too short to waste time arguing with someone like you who can never be wrong, claims authority as an expert while hiding whatever credentials and qualifications he may have behind a cloak of anonimity, and resorts to continual unrelenting personal attacks and invective against those with whom he disagrees. Reluctantly, and with all due respect, I must join the ranks of those who silently ignore your posts from now on. That is a shame because occasionally you have provided some useful ideas when you stopped spouting arrogance and hate long enough to do so. If I am wrong in my assessment, then I welcome others to come to your defense. But that is way that I honestly feel, and I believe in being straightforward and candid with people.

    Ron Hilton

  35. Ron,

    I neither seek nor need others to come to my defense.

    I make no apologies for asking tough straight forward questions. Do not indulge youself in a self-righteous mantle, as your posts carry their fair share of invective (accusations of non-substance).

    Repeatedly you have dodged the issues and holes I point out in your half-baked ideas. I would gladly be more civil if you stopped dodging. I have made this offer to you in the past, and I am not surprised to see that you again hide rather than truly enjoin the discussion. You would have more honor though if you simply admitted the flaws I point out rather than attempt to “silently ignore” that which you choose not to (or cannot) answer – if you honestly feel that you have answered my questions and that you are not hiding because you lack answers, then I suggest that you seek a different vocation.

    Life is too short to keep running, especially when you choose to run with your eyes closed.

  36. Congrats on a very good post. Indeed, the reexamination option is underutilized, and potentially offers a powerful option in fighting off patent trolls. Most trolls are after easy money, and hence don’t really want to fight; nor do they want to risk the possibility of their IP being judicially invalidated. Just like other bullies, trolls often roll over when you hit back.
    http://www.generalpatent.com/media/videos/learn-more-about-general-patent-corporation

  37. […] What To Do If You Are Sued for Patent InfringementUnfortunately for small businesses and start-up companies, some patent owners are becoming far more litigious.  Once upon a time small businesses might be able to fly under the radar screen even if they were infringing because the cost associated with going after such folks was prohibitive.  But welcome to the brave new world of the patent troll, where certain nefarious bad-acting patent owners seek to enforce dubious patent rights against those who are engaged in a business vaguely related, but who are almost certainly not infringing.  These bad actors, who seek to extract licensing payments with threatening letters or lawsuits if necessary, know that because it can be expensive to fight most will simply fold and pay what amounts to extortion.  See Extortion Patent Style. […]