Editor’s Note: Caroline Horton Rockafellow is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.
RESEARCH TRIANGLE PARK, N.C. – The term “Patent Troll” conjures up images of something very scary and troublesome.
The large creatures that invade the dreams of small children have now moved into mainstream conversation of intellectual property professionals. While there is no formal or widely accepted definition for patent trolls, they are generally considered to be companies or individuals who do not manufacture or sell goods, but rather profit solely from enforcing patent rights.
The arguments in favor of restricting such activities appear reasonable. After all, why should an individual be able to restrict a product from moving into commerce when he does not have any intent or ability to put that product into commerce himself?
Unfortunately, the debate is not quite that simple. Recent case law and proposed changes to the patent system seem to be going against the patent trolls, but the trolls are not yet dead and the underlying arguments in favor of the trolls are worthy of serious consideration that goes to the core of our patent system.
Who Is A Patent Troll?
If the definition of a patent troll is one who seeks to enforce a patent but has no intent or ability to manufacture or commercialize products that would infringe such patents, then patent trolls would include research institutions, universities and all companies that focus solely on research and development. Since innovation is generally regarded to be a desirable thing, and in fact the entire premise behind Article I, Section 8 of the U.S. Constitution, which provides that Congress shall have the right “[t]o promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries,” it would not make sense to limit the activities of these institutions or their ability to secure and enforce patent rights. In fact, these institutions are generally not considered to be included in the definition of a patent troll. So, if a university with no intent or ability to commercialize a product chooses to enforce such patents, why would they not be included in the definition of a patent troll?
The general consensus by those that wish to limit the activities of patent trolls is that trolls are entities and individuals whose sole business model is focused on collecting patents for the purpose of extracting license fees from product manufacturers. The argument is that the companies that invest in the development and manufacture of products are being held hostage by patent trolls with patent rights that cover the products under development. Again, the argument seems reasonable, but does require further analysis.
Why Not Exterminate The Trolls?
It is important to remember that a patent does not give anyone the right to do anything. In exchange for disclosing inventions, the patent holder is given an exclusive right for a limited period of time to prevent others from making, using or selling his or her invention. It does not give the inventor the right to make, use or sell such invention and, in fact, in cases where there are other patents that cover the applicable product, the inventor may not be able to make, use or sell any product without securing rights from others. The other important thing to remember about patents is that a patent is only useful if the patent holder is willing and able to enforce his or her rights. If a product infringes a patent, but the patent holder is not able to incur the costs associated with litigation, the infringement will go unchecked. Small inventors often find that it becomes too expensive and too difficult to enforce valid patents, and they therefore do not take steps to enforce their patent rights.
This frustration on the part of small inventors has given rise to a new industry of companies that acquire patents from small inventors with the sole purpose of securing revenue by enforcing the patent rights. It is these entities that have helped to create the current furry over patent trolls. These companies take no efforts to develop technology or to innovate. Rather, they are making money solely by enforcing patent rights. The argument is that these entities should not benefit when they do not create.
Again, this sounds reasonable. However, it is important to keep in mind that a patent will (or should) only issue if it is novel and nonobvious. Accordingly, at some point in time, the inventor of the patent did take some efforts to disclose to the public an invention or discovery that is novel and nonobvious. The ideas came from somewhere and the patent office deemed them to be of value. It makes sense that the inventor should be able to benefit from his or her disclosure to the world. Whether certain patents should have issued is an entirely different debate, and there are certainly some patents that should not have issued, but that is not the case for the large majority of issued patents. It is safe to assume that not all “patent trolls” are seeking to enforce weak patents.
So the issue really comes down to whether it is fair to have legitimate business with commercial products put at risk by being forced to deal with patent trolls either by defending lawsuits or by paying large license fees. On the one hand, it certainly does not seem fair that a business that has developed technology and expended the time and effort to commercialize the technology should be held hostage by a company with no products to offer the public. Yet, that is not the right that the Constitution grants. The Constitution gave Congress the right to promote science by securing exclusive rights in inventions. It is not a grant to the company that has the best ability to provide the best product to consumers, even if that is what would provide the greatest value to consumers. Ultimately, we do not want a situation where good products are kept from consumers or where companies that invest heavily in technology development are restricted from benefiting from that effort because of a prior patent right.
At the same time, we do need to have rights that protect the two guys in the garage with an idea and not much else. These are the entrepreneurs that build our economy. We certainly do not want a system that prevents these entrepreneurs from benefiting from their creations, even if they are not able to commercialize their inventions. If the only way they can truly benefit from their creative efforts is to seek out larger entities that will help to enforce patents and extract license fees, then that would seem to be consistent with the concepts of our founding fathers.
There are clearly two competing interests here and while our courts and our legislators argue over how or whether to exterminate the patent trolls, we must keep in mind that while there is no easy answer, we cannot risk losing our entrepreneurial small inventors, even if that means we must live with patent trolls.
Keep The Ultimate Goal In Mind
The ultimate goal of our patent system is to promote the progress of science and technology. If patent trolls are effectively stifling this progress, then reforms should be implemented. However, we need to be very careful about any new rules or regulations that would limit the ability of our small entrepreneurial inventors from moving forward with their creative efforts and eventually benefiting from their work and efforts.
It is very easy to accept patent trolls as evil and in need of extinction, but before any changes are made, we do need to carefully consider all of the ramifications to our smallest and most innovative inventors. It would be unfortunate if instead of exterminating the trolls, we are really limiting the resources of our innovative and entrepreneurial inventors.
Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. Caroline Horton Rockafellow concentrates her practice in the representation of entrepreneurial and technology-based business, focusing on corporate, technology and licensing matters. Questions or Comments can be sent to crockafellow@d2vlaw.com
