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Listeners of Radio 4, the “high-brow” BBC radio station that broadcasts in the UK, were treated on Tuesday evening to a programme that focused on the issue of ‘patent trolls’. Compared to the US’ National Public Radio’s treatment of the matter back in summer 2011, ‘Patently Absurd’ offered a somewhat more rounded and impartial perspective on the debate. But it also demonstrated a lack of willingness or ability to communcate on the part of some of those accused of being trolls which explains why the anti-troll and patent-sceptic camp is still winning the public relations battle in the US.
The NPR piece – ‘When Patents Attack’ – seemed designed to leave listeners uninitiated in the world of intellectual property with the impression that the US patent system is not fit for purpose and that malign NPEs/PAEs (and Intellectual Ventures in particular) are doing nothing but inflicting harm on innocent start-ups. Although the BBC’s report insisted on using the term ‘patent troll’ wherever possible and appeared to work from an assumption that the patent system is ‘broken, while also failing the Bessen & Meurer test, it focused more on the idea that many perceived problems in the US are rooted in patent quality, the costs of litigation and a lack of transparency, rather than with the actions of certain market players.
Julie Samuels, staff attorney and Mark Cuban Chair to Eliminate Stupid Patents at the Electronic Frontier Foundation, began on the issue of quality. “Part of the problem is that [some of the patents asserted] are really vague, really broad and often nearly impossible to understand,” she told reporter Rory Cellan-Jones. “And now [PAEs] are really going after everyone up and down the food chain.” Alan Schoenbaum – general counsel of RackSpace, which has been hit with a number of NPE lawsuits – agreed, adding that the costs of defending against a patent assertion can be extremely expensive to the point of being prohibitive for many businesses. "The patents that [PAEs] acquire are generally software patents,” he told the BBC. “And they are very broadly written. They are very difficult to understand and oftentimes inscrutable. [PAEs] play on that fear that the defendant is going to spend a lot of money to defend itself and it is simply cheaper to pay them off.”
Cellan-Jones also interviewed Erich Spangenberg, CEO of IPNav – one of the so-called ‘trolls’ that has been involved in lawsuits against RackSpace (IPNav’s version here, Rackspace’s version here). He appeared to hold some common ground with Schoenbaum and Samuels, and indeed with the White House, on the topics of patent quality and the costliness of the legal system. “[P]eople file these complaints, and no-one talks to one another for a year and runs up a tonne of expenses, and who advocates that system? The hourly billing lawyers,” he said. On the issue of patent quality, Spangenberg suggested that he would welcome reforms that would hobble the efforts of some patent holders to assert questionable assets of low quality. “The day you file [an infringement suit] you should have to have some significant basis for knowing what the infringement is, laying out what those facts are, and in that complaint you should make a demand for damages… of the 12 points President Obama put out, we’re in favour of 10 of them,” he told the BBC in reference to the legislative priorities and executive actions issued by the Office of the US President back in June.
In terms of transparency, the BBC programme highlighted the difficulties that potential licensees face when it comes to calculating how much they should reasonably be paying for a licence and working out exactly who it is they should be negotiating with to acquire that licence. Cellan-Jones made the point that while the majority of disputes between NPEs and operating companies are settled out of court, it is nigh on impossible to know any of the facts and figures relevant to such agreements. “This is a constant problem if you are trying to throw light on this murky business or to find out how much it is costing companies involved, with most settlements including a non-disclosure agreement,” he said.
Spangenberg also underlined the problem of putting a price on a patent or a patent licence. “The problem right now is that we are using the courts as a marketplace and that’s something that they’re ill-suited to do,” he told the BBC. “Courts don’t set the price of gold or the price of a piece of property down the street, yet we’re letting them set the price for what a patent is worth.”
All in all, and despite some unfortunate use of inflammatory terminology, the BBC produced a surprisingly balanced report, which unlike the one produced by NPR, was not aimed at telling just one side of the story. But despite contributions from Spangenberg and Sam Baxter, a leading patent plaintiff litigator, the BBC’s requests to speak to Uniloc and Lodsys – two of the more notorious NPEs – went unanswered. Those who support the US patent system and believe that poorly thought-through reforms are bound to do more harm than good are done no favours by such silence.
Licensing, IP politics, IP litigation, Patents, IP business
The balance for me came in a single sentence from Peter Harrison, when he flagged that one needed to get the Troll issue into perspective as a major problem from SMEs are not Trolls but the Patent Gorillas and their patent thickets.Nicholas White, Tangible IP on 25 Aug 2013 @ 19:41