Late 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 the symposium at American University. I was also told that Google does not sell patents to patent trolls, although other big tech companies do, which concerns Google.
There is a video tape of Michel’s presentation, which you can view online courtesy of American University. I have reviewed the pertinent part of the video tape multiple times, and I have asked for input from several trusted advisers. I have also received unsolicited input from others who have also seen the video tape and who were present at the event. What is most clear is that there is a reasonable difference of opinion about the meaning of what was said.
Google has asked for a retraction based on what was said at 58:45 into the video segment, but what I wrote relied upon what was said at 53:45 into the video segment. I am not entirely comfortable with a retraction because I think my interpretation of what Michel said was fair, although I’m willing to accept Google at face value when they tell me that they do not sell to patent trolls. So rather than retract and say I misinterpreted what was said I will leave it to the readers to determine the reasonable interpretation of what was said during the presentation.
Let’s begin starting at approximately 51:35 minutes into the segment. This is after her presentation and during the Q&A period. I asked a question, prefacing it by saying that I disagreed with almost everything she said, to which she responded: “I’m not surprised.” Our exchange then went as follows:
QUINN: What strikes me as odd is, and it’s not just Google, across the board in the industry, you bring this problem on yourself. You are settling crappy cases for nuisance value over and over again.
MICHEL: We don’t.
QUINN: Well to say it doesn’t go on in the industry is false, and you know it.
MICHEL: Absolutely, because that is the right business decision to make.
QUINN: No it is not. We can have this discussion. The insurance industry figured this problem out in the 80s. But the other thing is the industry continues to litigate and want serial challenges on patent after patent after patent where the technology is good and the patent is good and the patent is confirmed valid over and over again. So we have this system where the big tech companies are settling crappy cases and preventing those who really innovate from getting the fruits of their labor, and that is the problem. And I don’t see anybody trying to address the problem.
MICHEL: Two things. One is I want to back out to a higher level. I don’t blame trolls and mean to be demonizing trolls, so thank you for the question because I think it will help me make a connection here. That is a reaction to a the circumstances created by the system. It is just a market response to the system as it exists. What the tech companies do is also a market response to the system that exists. So when you see that kind of behavior, in both cases, you try and identify the root causes of what is causing the kind of behavior that is not good for innovation and address those root causes.
It would take me another hour to explain why what happens in the tech industry happens in the tech industry but I do believe that there is too low of an obviousness standard for this kind of patent. I’m not really meaning to impact other areas, but if everybody else is running after every trivial patent and building a big portfolio, you have to too. What that does is put lots and lots of trivial patents out into the world, which you can’t maintain, because the maintenance fees are too high, so you sell them off to trolls, who then go and litigate them forever, and that’s happening more and more and more, and that’s really frightening. It’s just a bad situation all around.
QUINN: You don’t have to have massive patent portfolios to go after trolls because you can’t sue them because they aren’t doing anything because they are trolls.
MICHEL: You have your massive patent portfolio for competitor reasons. And you absolutely have to have it. Absolutely.
QUINN: Are there a lot of competitor lawsuits in this area?
MICHEL: It’s called mutually assured destruction. That is the dynamic. It absolutely is the dynamic you have to have it. And Google tried not to and it didn’t work. You have to have it. You cannot opt out of the patent system and decide I’m an open source company and anyone can use my stuff. You have to have a massive portfolio of your own and that is really expensive and it is what it is.
Starting at approximately 58:45 minutes into the segment is where Google pointed me to demonstrate I misunderstood Michel. Starting at this point she explained:
What’s happening more and more now, compared to two years ago, is that operating companies are selling off these massive portfolios that they have built and have become too expensive. I’ve been on panels and in conferences with in house counsel saying I don’t like doing this, I have to do it, everybody else is doing it, I have to do it, and these patents are sold off. We just get more and more litigation. That is not a good situation. I don’t really see that litigation environment getting any better. I see it getting worse unless something is done.
Here Michel is unambiguously saying that she has been told that at least some big tech companies are making the decision to selling to patent trolls. Thus, the premise of my article about whether patent litigation is really a problem if big technology companies are selling to patent trolls holds. In fact, the problem as described to me by Google during our telephone call suggests that the sale of patent portfolios held by big tech companies to patent trolls is a problem that Google is very concerned about.
Now I have been told that the use of “you” is clearly and unambiguously Michel speaking in terms of a hypothetical industry. Perhaps Michel was using “you” in a royal, hypothetical sense that was intended to mean “everybody but Google.” But I don’t understand why she would be talking about how the tech industry operates, giving an example of how the tech industry operates, but then not explain that this isn’t how Google does business. She had no trouble telling me directly that Google does not settle for nuisance value, although that is in her opinion the right business judgment. I would think that if Google doesn’t sell to patent trolls at some point during her explanation of how the industry works she would have mentioned that she wasn’t referring to Google.
In any event, the short of it is that Google says they do not sell to patent trolls, but others big tech companies do sell to patent trolls.
I have reached out to Google to inquire whether they would like to make an official comment. If they respond I will add that comment here.
In conclusion I will just say that it makes no sense to me that any big tech company would sell to a patent troll, and it makes less sense that they would then complain about patent infringement lawsuits after having sold to trolls. For goodness sakes, if you don’t want to maintain the patents let them fall into the public domain. Wouldn’t that be better than getting held up by patent trolls later?