“While the patenting of non-obvious and novel inventions does not hinder innovation, but rather promotes it, the issuance and use of poor quality patents as weapons against organizations seeking to advance and commercialize new technologies not only stifles innovation but creates a tax that ultimately is shouldered by the consumer.”
There has been a great deal of discussion over the years regarding patent trolls, also known as non-practicing entities (NPEs) and Patent Assertion Entities (PAEs). As most of the IP world knows, these organizations, either alone or in partnership with an inventor, look to leverage a patent or a portfolio in order to seek financial return from companies allegedly utilizing the technology. On the other side are organizations that have in many cases advanced and refined the base technology and created products therefrom who are seeking a way out of potentially high litigation costs by working to determine the need to potentially license the patent/portfolio or to fight patent infringement claims if the PAE has moved beyond assertion to litigation.
PAEs have a unique business model which involves leverage and forcing a target company to make a decision between risk and reward. PAEs acquire a patent, patent family or multiple unrelated patents at a low cost and serially assert those patents against a broad group of companies in order to seek licensing fees and/or infringement damages through litigation. The PAEs may request steep licensing fees but not at a level likely to approach the costs a company would face if it chose to defend itself in court. Quite often large companies, in particular, will settle for a modest fee and take a license to the patents rather than bear the costs of litigation required when defending against patent litigation claims.
PAEs Love Low-Quality Patents
Patents by their very nature are valued based on the quality of their claims, degree to which the claimed functionality is practiced, priority date and time until expiration. The fact that a patent is granted by the U.S. Patent and Trademark (USPTO) creates a presumption of validity, requisite novelty and insufficient or non-existent prior art. It is this presumption, despite the fact that critical defects may exist such as ineffective examination that did not properly consider relevant art, overly broad claim scope, etc., that enables PAEs to mount serial patent assertion campaigns designed to generate financial return from licensees.
PAEs generally rely on poor quality patents as these patent assets are generally less expensive to acquire than more fundamentally sound and defensible high-quality patents. In this way, PAEs are able to generate sufficient return to make their business model efficacious.
The Open Source Community Is Not an Easy Target for PAEs
The open source software (OSS) community relies on distributed and collaborative innovation whereby single contributors and integrators of open source code could mistakenly be viewed as attractive PAE targets. Because of the foresight of pioneers in open source such as IBM, Red Hat, NEC, Philips, Sony and SUSE, the open source community has operated under the protection of a global community-wide cross license since 2005, coordinated by the Open Invention Network (OIN). While initially focused on operating company patent risk, OIN has more recently turned its attention to the mitigation of PAE risk as it seeks to broaden the scope of protections and, in so doing, enable freedom of action in and around the core of Linux and adjacent open source project code.
Long time participants in the pre-issuance submission program ushered in by the America Invents Act, OIN’s actions and those of a diverse group of entities across the open source community directly resulted in the rejection of dozens of patent applications and the reduction of claim scope/disallowance of claims in literally hundreds more poor quality patent applications. OIN continues to expand its PAE interdiction role and supplement its pre-issuance submissions while expanding its patent risk management activities to include more broadscale PAE interdiction. IBM, Microsoft, the Linux Foundation and OIN’s founding of Unified Patents’ OSS Zone in 2019 is expected to be a strong positive step in that direction. Unified Patents’ deterrence strategy for the OSS Zone includes challenging poor quality patents through IPRs (inter partes review), identifying prior art through its Patent Patroll crowd-sourced prior art collection initiative, its NPE tracking and data analytics, online litigation and PTAB databases and patent landscaping and market transactional data, among many others. This program expands the partners’ patent non-aggression activities by deterring PAEs from targeting Linux and adjacent OSS technologies relied on by developers, distributors and users. The ultimate goal is to harden the open source community against PAE attacks while continuing to monitor and limit the patent aggression of the predominantly proprietary operating companies seeking to use patents to slow or stall the progress of Linux/OSS.
Sample activities in support of PAE interdiction includes OIN’s frequent provision of prior art to facilitate the negotiation of positive outcomes by entities facing aggressive PAE assertion or litigation. One such case dealt with the late-2019 patent litigation brought by Rothschild Patent Imaging, a PAE, against the GNOME Foundation. Rothschild claimed that GNOME’s Shotwell, an open source desktop image organizer and editor, infringed its patent 9,936,086 – a patent for “Wireless Imaging Distribution System and Method.”
Rothschild, a serial litigator, was looking to leverage a patent of questionable quality in order to establish a pattern of wins through relatively modest settlements, with the goal of coercing other businesses to settle without a legal fight in the courts. No doubt the outcome of the GNOME case will hinder Rothschild’s assertion/litigation activities going forward.
Specifically, Rothschild was granted the patent in April of 2018, although the USPTO should not have granted it in the context of the U.S. Supreme Court’s Alice decision. GNOME made an explicit decision to stand its ground and fight the PAE instead of paying the licensing fees Rothschild demanded. Shearman & Sterling provided pro-bono representation. OIN helped to uncover prior art related to 6086 and, coupled with assistance that poured in from other quarters in the open source community, enhanced GNOME’s defensive positioning.
In May of 2020, it was widely reported that GNOME entered into a free license to all Rothschild patents and secured protections for the balance of the open source community seeking to implement the targeted OSS project functionality.
Committing to Patent Non-Aggression
While the patenting of non-obvious and novel inventions does not hinder innovation, but rather promotes it, the issuance and use of poor quality patents as weapons against organizations seeking to advance and commercialize new technologies not only stifles innovation but creates a tax that ultimately is shouldered by the consumer. Given the unique innovation benefits of collaborative development on which all who adopt and use open source software rely, it is imperative that individuals, foundations and organizations across the technology spectrum commit to patent non-aggression through broad based cross licensing of core open source functionality. In addition, companies in the open source community must work together to lessen the effects of PAE activities through the crowdsourcing of relevant art that can prevent poor quality patent applications from being granted and poor quality granted patents from derailing the innovation agenda that open source uniquely fosters.
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