Innovation vs. the Patent Troll
Patent law must be re-examined from time to time in order to prevent fraudulent patents from hindering innovation.
While many different factors motivate technological development, one of its foremost objectives is to fulfill the needs of humans. Necessity is the mother of invention, and the very existence of most technology is due to the service it provides and problems (sociological, economical, humanitarian, etc.) it solves. That is one of the original reasons why the United States patent system was implemented: to help enable and incentivize the creation and development of useful goods, arts and sciences.
Over time, however, the American patent system’s orientation with the broader technological landscape has shifted quite substantially. The usefulness and effectiveness of modern patent law in serving the greater good has been called into question periodically since at least the mid-twentieth century. And new doubts have been raised to an unprecedented level due to rampant abuse of patent law by entities who have acquired patents with no intention of developing or implementing them – entities that have earned themselves the nickname of “patent trolls.”
They’re called “trolls” because they obstruct innovation like a troll guarding a bridge, preventing passage unless a fee is collected. They are predatory in that they, by definition, only procure fraudulent patents for the sole purpose of generating revenue through litigation. The patents are fraudulent because they do not make any substantive contributions to the technology to which they claim to own rights. They simply block technological progress and innovation for the sake of their own monetary gain.
A common revenue-generating strategy among patent trolls involves filing very expensive lawsuits, and then attempting to settle with the defendant for a sum slightly less than their projected legal fees. This makes the choice to settle and pay damages the most cost-efficient option, in a sense, for the defendant; which is, of course, unfair and contrary to the original spirit and philosophy of patent law. Historically, most of these cases have been settled out of court.
The targets of patent troll litigation have varied widely, and are largely focused within the technology sector. They have gone after major companies, private parties and entrepreneurs, and even artists and entertainers. However, much to the patent trolls’ chagrin, recent high-profile cases have shone a spotlight on the issue to the extent that significant measures have been made in response to them – from successful crowdfunding campaigns to bipartisan legislation.
And while companies large and small are typically the targets of patent troll litigation, sometimes corporations themselves are the trolls, as has arguably been the case in a long court battle between Apple Inc. and Samsung Electronics. In the case, both companies have been accused by the other of stealing technology and intellectual property as frivolous as the rounded rectangle shape that has come to define the smartphone, and has resulted in multimillion-dollar penalties. Samsung lost an appeal of a previous decision in Apple's favor, but the case is now being escalated to the United States Supreme Court.
A Brief History of Patent Law
The first credible patent system is widely accepted to have been the Venetian Patent Statute of 1474, which basically implemented the idea of rewarding innovation by granting creators monopolies over their respective inventions or ideas. Greater Western civilization gradually adopted the concept over the next few centuries, and by the year 1790 the United States Congress passed its first patent act. The scope of the U.S. patent system encompasses the protection of either original work or significant improvement upon previous innovation. And said idea or invention must be approved by the United States Patent and Trademark Office on the grounds that it is new, useful and non-obvious.
Over time, however, the usefulness and obviousness of ideas becomes increasingly abstract as broader social, cultural and technological evolution unfolds. The original framing of patent law in the United States was a product of that time and place in history. The rise of the printing press in the fifteenth century prompted the normalization of copyright law – largely in order to leverage original content owners’ and licensees’ power to exercise intellectual property rights against bootleggers (whose numbers were increased with the new technology). And the laws remained quite effective for some time. The printed word became a massive industry and the technology continued to advance, enhancing human communication on a global scale. But as industrialization spread, the laws that governed it struggled to adapt to the pace of its progress.
Fighting the Trolls
Although patent trolling may have existed in some form much earlier, it was formally recognized in the United States around the turn of the twentieth century, when a man named George Selden began enforcing a patent on his “Road Engine,” which he used against the budding automobile industry while never significantly developing the protocol himself. Selden sued many automakers, however he faced a great deal of opposition in Henry Ford, who successfully defended his work against Selden’s accusations of patent infringement.
As Selden’s patented technology gradually declined in relevance, the Ford Motor Company made significant strides in developing gas-powered engines and paving the way for mass-produced motor vehicles. Selden sued them for infringement, but it turned out that the royalty costs actually exceeded the cost of fighting the suit – so Ford fought back. A first judge ruled in Selden’s favor, but Ford won on appeal after taking the case before a judge who was more familiar with automotive technology. “From the point of view of public interest,” the second judge argued, “it were even better that the patent had never been granted.”
Ford later reflected on the case, calling out these early patent trolls as “parasites” and “men who are willing to lay back on their oars and do nothing.” But now, over a century later, the tides have again shifted in the patent trolls’ favor, as the rapid expansion of digital technology presents many new opportunities for them to exploit the system.
There has been a lot of activity to create new and heavily revised solutions to the issue, such as the Innovation Act of the 113th and 114th Congress. This bill provides measures that would put increased pressure on patent trolls – for instance, by increasing transparency and specificity in patent litigation, as well as enabling defendants to recover legal costs. The bill has massive support on both sides of the aisle, as well as that of the Obama administration.
Patents exist in part so that inventions can be officially licensed, thus enabling creators with certain resources, allowances, and other benefits that cultivate the development of their idea. But over time, the very nature of technological innovation changes, and so the spirit and letter of patent law need to be re-examined to ensure that it is serving the greater good and not the greedy trolls.