A Troll by Any Other Name Would Smell As Bad

WC, from time to time, tilts at the digital age’s bottom feeders, the patent trolls. It is WC’s thesis that patent trolls are hurting the United States, and U.S. innovation in particular.

Patent Troll (Not to Scale)

WC has tried mockery, posting a faux-bestiary of trolls. WC has attempted an economic analysis. WC has pointed out the incredible burden imposed on the justice system by the explosion in intellectual property litigation. WC has applauded heroes and scorned villains. WC has noted that even Congress has taken a sluggish, vague and so far ineffectual interest in the problem and attempted to reform the law.

None of which has solved the problem, of course. But WC’s frustration was capped by a recent email in which a reader called WC an “Apple Fanboy” and accused WC of being unwilling to call Apple a patent troll for its ongoing patent infringement lawsuit against Samsung.

Now it may be that the email is from a different species of troll, the Internet Troll. There’s no shortage of ignorant, inarticulate folks who are willing to cast stones and then run away. But WC will treat the comment seriously, perhaps more seriously than it deserves, and see if WC can’t tease out, for his readers, the difference between bonafide Patent Trolls and others who may be involved in patent litigation.

Apple invested a reported $30 million in development of the iPhone. Apple hired Samsung to manufacture its iPhones. Apple proved, to the satisfaction of a jury, that Samsung intentionally, knowingly and deliberately stole Apple’s work product and used that work product in its own line of smart phones. Apple, the trial court found, had its premier product line pirated by one of its vendors. As the dust of litigation settles, a jury and the trial court has tagged Samsung for $890 million. Some of Samsung’s products, especially earlier models, may get banned in the U.S. WC has no problem with Apple’s efforts. Samsung’s conduct was in-your-face, outright piracy.

IBM is a little harder to defend. IBM uses teams of patent analysts and IP lawyers to dismantle its competitors’ products, looking for ways those competing inventors might have unknowingly used the same solutions to product problems that IBM had patented. IBM then meets with the competitor in question and “invites” them to purchase licenses of IBM’s patents. Especially royalty-based licenses, the “gift” that keeps on giving. Anyone who independently invented technology in the areas IBM had helped create almost certainly had to solve problems of implementation in similar ways. It’s not copying or “idea theft.” It’s just that there are only a limited number of ways of solving most problems. That’s especially true at the highly detailed, fine-grained level at which patents today are granted. The developers IBM is shaking down for royalties aren’t copying whole products. The “patent violations” involve small, seemingly obvious solutions that arise from the problem-solving process. It’s hardly trivial. IBM’s patent royalties lets the computer-services giant produce about $1 billion a year in licensing revenue.

And then there are the there are the companies with no products and no intention of ever creating any products. They are sometimes called “patent assertion entities” – PAEs – or more sarcastically “patent aggression entities.” When WC writes about patent trolls, it’s generally the PAEs that he is describing. They don’t create  product; they don’t even create a patent, however dubious. Instead, their entire business model is acquiring patents, especially software patents, however dubious, as inexpensively as possible, and then shaking down everyone they can. For PAEs, extortion isn’t part of the business plan; it’s their entire business plan.

The patent troll is the critter at the far end of a spectrum of increasingly dubious conduct. It’s the extreme case. This is the troll that WC damns, the PAE that has no business plan beyond extortion. Defending what you create, as Apple has, is essential to survival as a business. Licensing what you have created, as IBM does, is marginally legitimate. At least you created the property you license. But the PAE has no such excuse. It neither creates products or intellectual property.

If you don’t see a difference, a difference of significant degree, you haven’t been paying attention. Or you are a PAE.

If you don’t understand that the racket money paid by legitimate business to the patent trolls adds nothing but cost to the products you buy, then you shouldn’t be trusted with a credit card.

If you don’t think Congress needs to act, then you are unable to see how damaging the threats of patent trolls are to innovation, manufacture of new products and the cost of new products.