Patent Troll Update - New Hope and New Perspective

June 4, 2013 by Paul Byrne

Business Environment
patent trolls

Unless you are a lawyer, you are probably aware of the damage the current excess of litigation causes to our economy. In fact, if you are an entrepreneur, small businessperson, or CEO, you are very aware of the problem. Those involved in the business of creation (rather than those executing others' ideas) are especially at risk.

Now, if you are a lawyer, you probably have a hard time admitting it, but, deep down, you know there’s an issue. In any case, the number of over-broad, poorly considered patent awards is shocking, and growing. For example, there are companies suing coffee shops, libraries, and other places offering free public wi-fi. Believe it or not, they do this because they have a patent on offering wi-fi in a public space.

Intellectual Ventures,  the grandaddy of all patent trolls, recently lost a case through one of its shill companies to Carbonite. The final decision in the case was just. However, the story behind it reveals the problem holding back the innovative community as a whole. Luckily for us, the radio program This American Life picked up the story and reported on it. I urge people to inform themselves and listen to the podcast it put out.

It is time to reset the entire patent system in the US. In 2011, President Obama signed a law that, under the guise of patent reform, was really a gift to many lawyers. It wasn’t all our president’s fault. After all, the bill was passed by both houses. However, the way he sold it when he signed made it clear he supported it fully.

In the podcast, Ira Glass failed to explain why Intellectual Ventures sells its patents to other LLCs  just before going to court. Regardless, it is important to understand why. And, really, it’s rather obvious: the countersuit. Intellectual Ventures sells its patents to companies whose only job is to pursue legal cases. The company then becomes an ‘interested party’ but only has a revenue-sharing arrangement. As a result, if they lose the case, they have fewer disclosure requirements. Because of this, it is harder to go after their assets. Talk about hypocrisy.

In any case, the story from This American Life seemed worth sharing. I hope it will provide hope for technology creators.

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