The value of patents resides largely with companies like Microsoft, Samsung and IBM. If Bill Hewlett and David Packard were just starting in their garage, they might be wise not to waste money acquiring them.
“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right…” (Article 1, Section 8, Clause 8 of the United States Constitution). It is difficult to argue today that this applies to individual inventors or small and medium-sized enterprises (SMEs). The same is true about our elite research universities.
If a patent assertion entity (PAE) – a small group of investors who buy someone else’s patents and threaten others with infringement lawsuits or a “small financial contribution” – assumes ownership of patents and asserts them against an infringer, we holler “patent troll”.
A rifle-shot change in the law could stop egregious behavior, but that is not what many in Congress have done or contemplate doing. Our Judiciary is no better. Instead, shotguns are used without regard to collateral damage to everyone who is not a high-tech titan, or a large, international company such as Facebook or Apple.
An easy reading of patent law tells us that an individual inventor, or SME, may defend patented inventions against unauthorized use – by everyone and anyone. However, it is disingenuous to say it is reasonable for them to do so, no matter what Congressional soundbites trumpet. The system is severely biased against these entities to the point of no longer serving them. Among other things, an individual inventor must overcome:
- Zero chance of preventing an infringer from using his or her invention. If an inventor receives a favorable judgment, the court will require monetary compensation to be the remedy for both past and future infringement. The high-tech titan’s business is never threatened; it only monitors the number of zeros in potential judgments which, with billions in the bank, it can easily afford. Huawei’s General Counsel – and every other high-tech titan GC – loses no sleep.
- Gang-tackling and serial IPR filing are often coordinated among high-tech titans. By separating suggested prior art and filing multiple IPRs spread out over time, titans place enormous financial impoverishment and delay of justice in the courts on the shoulders of the inventor. Why? Because they can. Because under the law it makes business sense. Apple alone has filed more than 200 PTAB petitions. The power imbalance between the two sides is insurmountable.
- The inventor has no safe harbor that defines rules of engagement guaranteed to protect him from eventual demands by a titan for all its litigation expense, much of which is generated by actions taken by the titan to maximize the inventor’s bleeding. It is impossible to imagine Joe Inventor accepting the risk of being required to repay Google for its team of outside litigation attorneys.
Another nearly insurmountable problem is high-tech titans do not negotiate when first shown proof that they infringe individual inventor or SME patents. The American Invents Act (AIA) effectively grants protected status to titans for infringement of small entity patents because it provides opportunities to impose enforcement costs and risks of financial destruction – detailed above – if the little guy pursues legal options to be compensated for his or her inventiveness. Industry insiders referred to this as “efficient infringement”.
The reality is high-tech titans view patents as rights created for themselves to fight for world-wide market dominance over other titans with similar product offerings. They welcome all law-protected relief from the SME and inventor piranha who want compensation – however reasonable – for co-opting their invention.
Equal justice to all? It is the preponderance of judicial decisions combined with legislative initiatives that tilt the field in favor of titans and against individual inventors and SMEs. So, what is the small guy to do? There is little he or she can do. . . except, find a PAE financially capable of accepting the costs and risks of enforcing patents; someone who can stand toe-to-toe with titans.
This exposes what Congress refuses to acknowledge: AIA rules, when paired with previous court decisions, at the very least, encourage inventors to feed trolls. Another option is a program such as IP3, a titan-driven effort to sweep righteous – but small – patent portfolios out of the market and away from PAEs. However, in its most recent incarnation, only 4% of proffered patent families were purchased with prices ranging as low as $10,000, the cost of securing a patent.
Conversations with most Congressional staffers demonstrate Congress’ singular intent to continue the narrative of fixing the troll problem, something the recent Federal Trade Commission report failed to give unqualified support, to the surprise of many. High-tech titans whine and our Senators and Representatives are receptive because “wow – what a great soundbite”. Individual inventors’ and SMEs’ plight is ignored even though Congress champions commitment to promote technology development. Those we elect can only be referring to the work inside tall silos on titan campuses – including those outside our borders. Lest we forget, foreign entities benefit equally with US industries by the disenfranchisement of little guys.
When the day comes, and it will, that patenting provides individual inventors and SMEs with an expensive piece of paper and little else, many will stop throwing away their money and some will stop inventing. That is impossible to argue against. Congress will have a fresh opportunity to tell us how they can help reboot technology advancement. How much damage will we endure by then?