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Is Patent Litigation Really a Problem for Big Tech?


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: May 1, 2013 @ 8:00 am
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UPDATED: May 2, 2013 at 12:17am ET — An earlier version of this article explained that Google sells to patent trolls. Google has since informed me via telephone that they do not sell to patent trolls, but other big tech operating companies do sell to patent trolls, which concerns Google. See Google: We Don’t Sell to Patent Trolls.

Recently at a conference at American University Washington College of Law a senior patent attorney from Google — Suzanne Michel — lamented that big technology companies are practically forced to sell their patents to patent trolls. See Fixing the Patent System. So as it turns out big tech companies are responsible for creating at least a portion of the so-called “patent troll problem” by and through their own actions and business decisions. So how and why should their position relative to patent litigation be taken at all serious when they themselves admit to creating the problem in the first place?

If big tech companies are selling unwanted patents to patent trolls who then turn around and monetize them there are a lot of questions to ask. First, why are they selling to those who then turn around and sue them? There is an obvious solution to this problem, if it is indeed a real problem and not one made up for sake of publicity and swaying public opinion (and political opinion on Capitol Hill). Second, what are they doing selling patents that can be monetized? If they are giving these patents away how is that appropriate at all when the company needs to answer to shareholders? Isn’t the goal of any company to maximize returns for shareholders? Finally, if operating companies are selling to patent trolls then how is it possible that patent litigation is as big a problem as it is claimed to be? Something just doesn’t smell right here, but a room full of symposium attendees were told that big tech companies sells out to patent trolls. Curious.

As counter-intuitive as big tech companies selling to patent trolls may be, equally head scratching is how big tech companies complain about getting sued but refuse to negotiate unless they are sued. Seems like their actions force lawsuits that they complain about and hoist up to proclaim the patent system broken. Talk about the emperor wearing no clothes!

In an interview with software expert Eric Gould Bear he lamented the fact that his company sued Apple for patent infringement. Why? Because he and his company were told that Apple wouldn’t take licensing overtures seriously unless there was a patent infringement lawsuit pending against them.

Bear told me:

MONKEYmedia sued Apple because Apple all but said we can’t negotiate with you unless you sue us. The only emotion to have is sadness, because I’m a huge Apple fan. I learned to program on an Apple ][+ and was an intern at Apple right out of graduate school. In my family – my wife and my kids – everyone’s got a MacBook Pro, everyone’s got iPhones and iPods. We’ve got an iMac on the kitchen wall, a Mac mini for a server, and an AppleTV in the study. I have no negative feelings towards Apple. I’m an Apple shareholder and want everyone to be wildly successful. We also want to be able to find a balance that celebrates synergy between independent inventors and the companies that have the ability to get real products out into people’s hands.

He would go on to say:

It seems like it would be a lot cheaper to have business conversations. It doesn’t cost a lot to sit down and be humane. Independent inventors are generally driven by their passion for what they create and, I’d guess, probably by-and-large not greedy. They don’t have a large infrastructure to support with large amounts of money. Speaking for my own business, it’s not about breaking the bank of our partners or outrageous license fees. It’s just about finding something appropriate and workable…

What Bear told me about his experience with Apple is unfortunately not unique. In fact, at the 7th Annual Patent Law Institute hosted by PLI in San Francisco, CA, in February 2013, an executive from Microsoft on a panel admitted that when they are approached about licensing patents they simply throw away that correspondence, or I believe as he put it they put it into the “circular file.” He would go on to say they get so many inquiries about licenses they just don’t have the time, energy or desire to look into them unless the patent owner is willing to file a patent infringement lawsuit.

We can discuss, or even argue, about whether the Apple and Microsoft approach to forcing litigation is smart, business appropriate or wise. But how is it at all intellectually honest for big tech to then complain, lobby and whine about patent litigation run amok when it is their own actions that ensure that the only way to seek redress for infringement is to file a lawsuit?

Simply put, I don’t think you get to complain about patent litigation when you ignore legitimate inquiries of those who are seeking to resolve infringement without need to resort to an expensive litigation process.

Of course, the retort would be that these big tech companies get so many bogus inquiries from bad actors. That is undoubtedly true, but wasting precious resources litigating when there is a valid patent that is infringed is hardly a strategy for success.

Many in big tech (including Google, according to Michel) will not consider using post-grant procedures at the USPTO unless and until Congress changes the law to allow serial challenges. She said the fact that estoppel would attach with respect to whatever could have been raised, instead of with respect to only what was narrowly raised, is a non-starter. Thus, it seems that big tech is hell bent on paying off bad claims and then litigating good claims, which strikes me as exactly backwards.

Still, regardless of whether big tech creates their own problems by selling to patent trolls who then hold them hostage, or Apple or Microsoft won’t engage in business discussions without being sued first, the reality is that the rise of patent litigation in the U.S. is not particularly problematic. Yes, there has been a rise in patent litigation over the last several years, but the story really ought to be that for the previous 10 to 15 years there was a surprising lack of a rise despite greater and greater numbers of patents issuing. See The Rise of Patent Litigation in America.

And let’s not forget, that by design Congress decided that they wanted more patent litigation when they passed the America Invents Act. OK. That last statement was unfair because it presumes that Congress knew what they were doing when they took action. Yet, the truth is that the design of the AIA was guaranteed to lead to one of two things. First, the joinder and consolidation provisions of the AIA would either substantially curb patent trolling because it is not much more difficult, if not impossible, to bring a single lawsuit with many dozens (or hundreds) of defendants. Second, increase in the number of patent infringement lawsuits because patent owners must sue infringing defendants one at a time, or at least in much smaller groups. It would seem that the AIA did not stop patent trolling, so the result is a greater number of lawsuits with fewer defendants. See The America Invents Act at Work

Conclusion

I wonder whether patent litigation is as big a concern for big tech as they claim it to be. Big tech was overwhelmingly in favor of the AIA, which has increased patent litigation. By their own actions they sell unwanted patents to patent trolls who then figure out how to monetize them in ways the owning company never could. Big tech refused to talk to patent owners unless they are sued. It seems that the strategies followed by big-tech are calculated to lead to more, not less, patent infringement litigation.

I’ve offered many times in the past. I am available to consult with and represent any company who really has an interest in solving their litigation problems. Surprisingly, no one ever calls. If I were a CEO or CFO and really had a problem that I wanted solved I’d have picked up the phone and called long ago. So is a solution really what they are after? The evidence suggests no.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Litigation, 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.

 

6 comments
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  1. Actually, the practice of big business ignoring independent inventors is not unique to Big Tech. Remember Ford Motor’s response the the windshield wiper guy. That was standard practice in every industry I am aware of. Frankly, the patent lawyers are largely to blame for this, because they are the ones advising the big businessmen to tell the independent inventors to go pound sand.

    We need to get our own house in order. Right, AIPLA?

  2. Thanks Gene,

    Another article that is as I would have written it.

    I would have only added a paraphrase of the KSR case: the clues concerning Big Corp and their attack on the patent system (can anyone doubt that the AIA was a serious step backwards with more expense, less value and time of process still not addressed) can be put together like pieces of a jigsaw puzzle – what they are doing is obvious.

  3. I would like to see this article go viral so as to help counteract the BS spread by big corps.

    I would only add that, more and more, companies are failing to conduct patent searches to verify non-infringement prior to product launch. If they are doing their due diligence, then they are likely willful infringers.

  4. >>> Thus, it seems that big tech is hell bent on paying off bad claims and then litigating good claims, which strikes me as exactly backwards.

    Part of long-term strategy. Each ‘bad claim’ that wins and gets media exposure perpetuates the falsehood that the patent system is broken. Lose the battle but win the war.

  5. Jodi,

    Exactly – that’s just another jigsaw puzzle piece.

  6. [...] yesterday I was contacted via telephone by a representative of Google about my article titled Is Patent Litigation Really a Problem for Big Tech? I was told during that telephone conversation that I misunderstood what Suzanne Michel said during [...]