Patent “squatters” (IP thieves) are a MUCH bigger problem than purported patent “trolls” (IP enforcers)

There is an outstanding piece today on Flashpoint IP that I encourage every patent stake holder to read.  It summarizes very well the ongoing debate about patent “trolls” and if/how they can be classified into groups of “good” and “bad.”

While I applaud this effort to balance the discussion of patent rights, it does not go far enough.  I say this because the popular press has been pandemically infected with the pejorative label “troll” whenever it comes to anything “patent” and uses the term pervasively and indiscriminately to refer to conduct that, in reality, is not “trollish” by any normal definition.

This behavior is an unfortunate prime example of perpetuating false stereotypes “invented” and promoted by large corporate interests and their well paid minions who benefit daily from stealing other people’s inventions.  Patents are said to be owned by “trolls,” which means all patent owners are analogized to ugly mythical creatures to bias Joe public’s mind and prevent a fair reading of the facts.   Demonizing the opposition is key to big companies’ strategy of diverting attention from their own bad behavior and the press does no public service by repeating this oligarchical anti-patent propaganda.

But why do I say the use of the term “troll” is a false moniker and should be rebuked at every turn?

Simply this: anyone with a 3rd grade education will remember that in the traditional “troll” legend, the poor innocent and hungry goats are barred by the evil troll before they can get access to the sustenance of green grass on the other side of the bridge.   Therefore, they have to FIRST ask the troll’s permission to cross, i.e., pay a toll in advance for this necessity.

This is not what is happening in the technology – patent universe today.  Despite all malicious insinuations to the contrary, there is no evil patent “troll” barring hapless innocent “innovators” from accessing key technologies.

Rather, the bulk of confrontations arise because the alleged patent “victim” crosses the “bridge” freely and of their own volition, because they see irresistible financial opportunity on the other side, not some staple or necessity of life (as in the fairy tale).  They traipse there, without checking out first who owns the territory, without an “invite,” and often by walking right past a large posted “no trespassing sign.”  They arrive at the fertile territory (owned and cultivated by the patent owner) and then proceed to use/abuse it for whatever purpose they think they can get away with – at least…until they are challenged.  Then all hell breaks loose, and they release the PR whine engine proclaiming that they are being “attacked” by evil patent “trolls.”

In other words, today’s patent “squatters” (mostly in the electronic/software arts I should qualify) operate from the premise (like so many it seems noawadsy) that it is easier (and of course, more economically advantageous) to ask for forgiveness than permission.  To date, I have never seen a single press release from one of these IP interlopers in this space that reads:

You know, we scouted out that territory, hired an expert and a title company to make sure it was available, and only THEN proceeded to use the technology en masse. Oh and we bought insurance too in case we found out later we might be wrong.  Even after all this due diligence we simply missed the ownership rights in this technology by the patent owner that is now suing us.”

But as we all know, that’s not what happens today. Rather, the lazy IP bandits proceed from the premise that doing due diligence is for losers, is too hard, and just too expensive.  It just takes time and gets in their way of “innovating” (i.e., making big advertising $$ from yet another crappy “Flappy Birds” clone app).

To reiterate: no “troll” or patent owner is barring these people from doing …anything of any significant consequence.  If they want to stay and use the patent owner’s property for economic gain, so be it, but they are not being deprived of some basic necessity, and they can’t be heard to complain when asked to pay something for their uninvited occupation.  If they don’t want to pay then they are FREE TO LEAVE – its as simple as that.  The insinuation that evil patent trolls are invading poor mom and pop businesses and taking food from their children’s mouths is just more hyperbolic scapegoating.

I’m hard pressed to think of any other historical precedent here in this country where we have given license to steal to so many people in any other industry.  Its completely irrational and irresponsible in any system that respects property rights to let businesses operate under the premise that simply because they CAN do something – with no visible impediment – that it must also mean it is free of charge or repercussions.

Today these IP thieves (in the Internet space especially) cloak their behavior under the guise of being clever “innovators” (more on the bastardization of this term in a later post) because it is yet another feel-good buzzword that the public mind soaks up today as associated with positive business values.  Apparently being an “innovator” means never having to first investigate the viability or legality of one’s products or services.

The other lame excuse trotted out is the long debunked “…well the patent owner is not making a product so I should be able to do so  instead” argument. I have news for you: the patent laws of this country were intentionally set up to NOT require the patent owner to first (or ever) build something or practice the invention.  The founders believed in democratizing invention rights by allowing protection even for individuals who did not have resources to exploit their patents directly. (“…The decision about how or whether the patent should be exploited remained completely within the discretion of the patentee, in the same way that the owner of physical property is allowed to determine its use or nonuse” – see Khan) Many large companies in fact (IBM is a perfect example) also license patents on products that they don’t make themselves, because it may not be in their primary business line.

Can you imagine how this perverted logic would work in any other IP discipline? A music writer could not enforce a copyright on a song, because the infringer could say “…well, I know she wrote it, but because she didn’t PERFORM the piece on an instrument and record it she should get no protection” or perhaps more absurdly “hey I know she wrote it, but she didn’t SING the piece so she can’t protect it

Right! Somehow I don’t Hollywood would allow this kind of reality distortion at the expense of author rights.

You might wonder how this can happen in a country that purports to respect patent rights?

In the patent arena the Courts let them get away with this behavior because, in the end, the patent squatter knows that the only remedy available to the patent owner will be for the latter to try and make the squatter pay a fair price later for all the resources they’ve consumed on the other side – AFTER THE FACT.  The SCOTUS (see the famous Ebay decision) has now made it “legal” for these patent interlopers to stay and (ab)use the patent owner’s property as long they like because the patent owner can’t evict them as a matter of right.  That’s right, all the neighbor kids can pile in your pool every day, and you can’t get them out – you’re relegated to begging them all to pay you something after they’ve taken their swim.  The once proud 200 year standing constitutional guarantee for inventors to “exclude” others from using their inventions was eviscerated over night under pressure from large tech company lobbying and sponsored faux academic scholarship (more on this later too).

In reality, far from being able to exact a “trollish toll” to bar access, the patent owner is now subjected to a compulsory license, a term that once upon a time would have brought shame and disgrace to anyone purporting to be in favor of intellectual property rights. This forced action on the rights holder used to be ridiculed by law abiding Americans as an abusive artifact of third world backwater countries where they did not respect property rights.

But it is now a fact of life for any patent inventor in this country – Megacorporation can steal your idea, make a ton of money from it, and your only recourse is to beg a lawyer to take your case on faith, sue and then pray for a “reasonable” royalty because the Courts have eviscerated basic protections for the small guy, like making the bad guy…. stop.  Imagine an old Western where John Wayne is the sheriff, and the banditos hole up at the small farmer’s house, deciding to eat his food and drink from his well.  The Duke shows up and tells the farmer “sorry, I can’t make them leave, you’ll just have to get used to them and charge room and board.”  Next week he shows up and the farmer complains they didn’t pay, but the Duke retorts “… they say you don’t really need the whole house anyway, the water in the well actually comes from the mountain, and the chickens and eggs used to roam here before you got here and put a fence around them… so they claim none of this stuff is really yours anyway and they don’t have to pay. SORRY.”

Now that’s a story …none of us grew up with.

And if you don’t like this limited protection, just wait, they’re about to try and take this away as well!  The SCOTUS Ebay decision, and other similar butcherings of inventor protection have now resulted in an upside down system, where it is clearly cheaper for big companies to steal IP than to license or even litigate.  This is known as “efficient infringement” and is well documented all over the IP universe, as well articulated here:

“…America’s largest big tech corporations are now using a business technique called “efficient infringement,” which means that they calculate the benefits of stealing someone else’s patented technology against the possibility of getting caught, tried in court and being forced to pay damages and penalties. If the benefits exceed the costs, they steal.

What makes patent theft so attractive is that infringement is not a criminal act and those found guilty face no jail time. Paying up is the worst that can happen to the infringer.

The most aggressive users of this business model are fifteen of America’s largest big tech corporations. Led by Cisco, Intel, IBM, Microsoft and HP, these giants have spent millions of lobbying dollars over the past five years trying to buy legislation in Washington that would weaken the existing U.S. laws on patent infringement. Their interest is obvious since in the 13 years between 1996 and 2008, patent owners have sued these fifteen corporations 740 times for infringement and have won $4 billion in damages. Not surprisingly, these big tech corporations’ political goal is to change the law so patent theft is more difficult to prove, less costly when caught, and willful infringement virtually impossible to prove.

The principal victims of these big corporations’ “efficient infringement” approach are America’s independent inventors, small businesses and universities – the source of most breakthrough innovations and the creators of two-thirds of all new jobs in America.

Read more here.

The author of the note above is probably grimacing at the most recent sponsored patent “deform” bill barreling through Congress that seeks to protect the IP thieves even more, by trying to implement an intimidating “loser pays attorneys fees” option to discourage small inventors from hiring effective counsel on contingency to protect their rights.  Yup, its not enough that inventor rights are being diminished daily, and were semi-castrated by the Seagate decision (which makes it now effectively impossible for an inventor to get punitive damages from even wilfull infringers), or the Ebay decision discussed above (which removed inventors’ guaranteed right of injunction against infringers), or the Orwellian/farcically named “America Invents Acts” (which “invents” a new barrier in the law to protect large gangs of infringers by by making the patent owner sue them all… individually, and “invents” new specialized post patent grant procedures to kill patents faster) or the Medimmune decision (which makes it impossible for patent owners to even ask companies nicely to please license a patent without subjecting themselves to a lawsuit).

Nope, the corporate infringers apparently don’t have enough protection, because despite their extraordinary investment in DDT like anti-patent spraying, there is still yet a hardy band of inventors who can access competent legal counsel in this country to defend small IP interests.   An even bigger thorn in the corporate infringers’ side are those limited entities who will actually help small inventors monetize their IP, or worse, in some instances, help take the fight to big patent squatters.

Thus the latest big company patent squatter tactics are focused on two fronts: 1) intimidating small inventors from suing in the first place by paying off enough politicians in Congress to get “loser pays” enacted; ask yourself what small inventor in his right mind would bet the house on a lawsuit against megacorporation’s huge legal pockets and maybe have to pay ultra expensive defense counsel  fees? and 2) if at all possible remove small inventors’ ability to get funding to sue and make these funding pests pay as well if the lawsuit fails (“…the bill would allow a judge to order others who had a financial stake in the plaintiff’s lawsuit to join the lawsuit and pay the defendant’s legal fees).

The big company anti-patent oligarchy agenda is transparent: eliminate all patent suits, which leads to elimination of all patent demands from small inventors. Because without recourse to the Courts there is no company in this country that is going to voluntarily pay for something they can already steal with impunity.

PS: as exhibit A to the over-hyped, sensationalist yellow journalism anti-patent reporting we bring you a screaming quote from today’s headlines:

In 2012, patent trolls sued more non-tech companies than tech companies, costing the U.S. economy $80 billion in litigation costs.

And of course the author of such piece offers exactly….0 in the way of facts, analysis or logic for this figure, which is more mythical than the “troll” it refers to…. this is the anti-patent, anti-inventor propaganda that gets put out with the hope that if it is repeated enough people will start to believe it is fact.

2 Comments on “Patent “squatters” (IP thieves) are a MUCH bigger problem than purported patent “trolls” (IP enforcers)

  1. Pingback: Dem. Sen. Schumer (NY): protecting big corporate infringers …as usual | Inventor Chronicles

  2. Pingback: SCOTUS Alice Patent Ruling: Rumors of Software Patent Death Greatly Exaggerated – AGAIN | Inventor Chronicles

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