It’s been a matter of debate for a while whether or not patent trolls would be allowed to impact the introduction of clean and green technologies, and whether or not, morally and legally, pure patent owners would be able to seek ITC bans or injunctions for supposedly infringing technologies. “Surely not”, cries the voice of common sense, “we’re trying to save a planet after all”.
Well it looks like today common sense didn’t prevail and we took another backward step to giving in to the trolls with the the announced settlement of the Paice and Toyota litigation brought before the ITC.
http://www.buffalonews.com/2010/07/20/1117910/inventor-of-hybrid-vehicle-system.html
To be fair it’s not new news. Paice has been chasing Toyota for 6 years and Toyota has given in faced with the threat of a US ban on its products. But this is no genuine IP dispute as with the Handy Humper (see below), this is all about money, and all about how the legal system in the US can be played by lawyers.” It’s not pretty, it’s not balanced and it’s not fair, but it’s how the system works, we all know it’s fu***d but just accept it and move on..”…you can just imagine the senior counsel to Toyota saying to his CEO explaining the arbitrary tax that has just been imposed on the Prius.
We’ve said enough on the topic to date (in fact I don’t think we’ve talked about anything else since IPBC, in and of itself giving this worthless pursuit some air time that it doesn’t deserve) so this post is only for information.
Can US legislators really afford not to step in and bring some common sense here? Can litigation really be threatened to stop the Prius and other hybrids from entering the US market?
Not that Mr Severinsky should not, with a valid patent, be denied (that’s a fair number of negatives in 12 words but you get the idea) some fair compensation for his invention. But he should not be able to threaten jobs should he? Or get some exorbitant tax awarded? Ri-dic-u-lous!
More, no doubt, to follow. Maybe next week we’ll find some positive IP news. I’ll search hard I promise.
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{ 8 comments… read them below or add one }
Andrew,
You really have a down on small guy patent owners who seek to enforce their rights! This has nothing to do with trolling and everything to do with corporations looking for scapegoats for their misbehaviour. More details here on the story http://bit.ly/cumVqs.
Toyota had a choice. Take a licence; it was on offer. Invent around. They decided to ignore his valid patents and not take a licence. They were found to infringe these valid patents. What do you expect Mr Severinsky to do roll over and die? That’s probably what Toyota was hoping just like many other dominant corporations that choose to ignore the legitimate rights of others. They settled because they were going to lose, because they were wrong. Not because of sharp practice lawyers. It’s Toyota’s reckless behaviour that was putting jobs at risk.
It’s not an arbitrary tax. It’s the costs of wrongdoing. You bet the Toyota senior counsel has some explaining to do to his CEO. How did Toyota not know about these patents? Mr Severinsky’s first patent has been cited against 217 granted US patents in this space and was issued in 1994! The patents are right on the button for Toyota technology so either they missed them when carrying out their FTO work or they chose to ignore them. Which is it?
Toyota has over 4000 patents in the hybrid vehicle space. What a massively innovative company? I suppose you believe that this massive pile of patents, each covering a world shattering innovation on hybrid technology, can only be of benefit to the delivery of cost effective hybrid technology to the masses? I hazard a guess that the 4000 will have a much bigger, illegitimate impact, on the price of a Prius and on the widespread delivery of hybrid technology than Mr Severinsky’s three US patents.
Nick. I don’t have a downer on lone inventors. In the troll spectrum they’re at the whiter end of an ugly overall scale. What I have a downer on is the gross inefficiency of a legal system that allows this sort of activity to thrive, with licenses only taken because of uncertainty of legal outcome and legal costs being more expensive than the cost of a license. How can any sizeable or even small company sensibly deal with all the patent crap hurled at it as soon as it shows a sign of being successful? You paint this as unfair to the little guy, maybe because of your background, I paint it as a pathetic system than over-rewards claims whether genuine or not. 95% of trolls cases settle-why, because it’s cheaper to fold than fight. It is unjustifiable.
But don’t get me wrong. If his claim was valid, he deserved something. Just not this way. If IP as a community cannot find a better way then we all suffer. Did I hear this week that Nortel’s administrators have concluded that the probable best option to realising value from the LTE assets is to turn it into a troll fund?
Come on–this is just so lacking in creativity or any value.
Andrew, I’m not taking any particular position on the basis of entity size. With a broad background in IP I have seen it from all sides.
My main concern is that generalizations in this area are damaging to the basic integrity of IP and the patent system. There is a paradigm shift going on here and it is important that we do not lose sight of the core issues within the maelstrom of rhetoric, misinformation and politics. IP is becoming increasingly important and parties of all sizes are showing an interest. We are in a knowledge age where for some all they have of value in the market is their IP. Wider participation is bound to lead to friction and LPEs are going to have to adjust to this new situation and dump their old practices. Companies of any size will have to pay more attention to an increasing amount of IP in the market. You just can’t ignore it anymore, handling it is just the cost of doing business.
The NPE scale is largely white and for some it is ugly at the extreme. We need to be very clear about the activities that we class as Patent Trolling. Today it would appear that any NPE in the US that even looks at enforcing their rights is labeled a Patent Troll. Frankly, we should be above such name calling as it simply panders to the hype, is what the LPEs (which have a vested interest) and detractors would wish us to do and is just plain wrong.
There are problems I agree but not with NPEs as such or the NPE model.
Your main concern appears to be the relationship between the cost of defending a patent action and taking a reasonable license. The high costs of litigation in the US (and elsewhere) is a problem. It should be much lower. This would have two benefits. The fist would be that many more patent owners would be able to afford to enforce their patent rights, so more patent litigation. Secondly, LPEs would feel it worth defending against invalid patents (there is patent crap mainly in the US). The US contingency practice is a significant element of this problem. But you know something when LPE A is suing LPE B litigation costs are not such a major issue anymore; I know how that works!
You are right that resorting to litigation is an inefficient mechanism for NPEs of all sizes to obtain legitimate payment for their rights. But in the vast majority of cases it is a last resort. Many practicing entities will push NPEs to the litigation route before ever accepting that they should take a license. For years the cost of litigation has deterred many from asserting their rights. That is really damaging to the IP system.
Cases settle for many reasons. I would hazard a guess that many settle because the patents are actually being infringed and are valid. The “cheaper to fold than fight argument” is something I just do not accept as the majority reason for settling. I can understand why some run this argument. The answer is cheaper litigation not curtailment of enforcement rights or the pillorying of those who chose to do so.
No entity in the main can complain faced with the prospect of an injunction if they are infringing a valid patent. They can avoid infringement or pay a license or stop. But here is the rub. The real issue for many is that a large quantity of the patents knocking around in the US in the hands of LPEs and NPEs are complete and utter rubbish. The patent quality problem. You don’t solve that problem though by complaining about owners enforcing these rights. You fix the patent office and the law.
But there is a related problem. How does a highly innovative SME get their innovation to market when an LPE with 4000 patents (mostly rubbish) uses their muscle to thwart every attempt? How do you fix that problem? This is a much bigger problem than so called trolling. The SME could handle a single litigation but 30? Is this justifiable?
Nortel? It’s not a “trolling” fund it’s a licensing activity! They may need to enforce against some unwilling infringers. Whose value? What would you suggest they do that is a more creative and of value in your terms?
There is one form of NPE that I have some problems with. Those NPEs (a small number) that only acquire US patents they know are being infringed, with the sole purpose of litigating for a sizeable settlement figure vastly greater than what which they could have achieved through licensing. They never intend to license. Even with these entities a patent originator somewhere has seen some reward (not enough usually) for their efforts.
We can agree that the US patent system as a whole could do with some sense knocking into it, but when it comes to NPEs as such I think they have as much right as anybody to see fair value for their rights and this adjustment has been long overdue. We should not knock this. It’s not for the IP community to sort out anything here. We are but one stakeholder in this system and not the important one. What we do need is clarity as to the issues/problems and we need to be careful that we do not pander to the interests of the few at the expense of a robust and fair IP system for all.
As the daughter-in-law of one of the PAICE founding engineers, I know first-hand that you have NO idea what you’re talking about! Toyota STOLE PAICE’s patents and it has taken six years for justice to finally prevail. PAICE won their lawsuit – TWICE — but Toyota kept appealing instead of owning up to their obligations. This has devastated my father-in-law and his family financially because of Toyota’s deep pockets. PAICE is NOT a troll!
Melissa. Thanks for the comment. If you look through our blog posts you’ll see that we don’t have a downer on the rights of any patent owner. What we don’t like is the inefficiency of a system that means that large corporates are left fighting dozens of claims, and that it is impossible to sift out the genuine from the spurious. The only system that allows all sides to get to a settlement is the US litigation system and if Toyota settled every claim from every lone inventor or licensing company it would have a car that could not compete on price.
The system is broken. If your father in law’s claim was genuine, the system should have proven that early. I’m not supporting Toyota here, just trying to make the world see that this system frustrates all sides.
The term troll covers a wide range of patent owners, all of whom seem to fight against it. Thanks for correcting me on the facts behind this claim (and apologies if I caused any offence, none was meant), but how are Toyata meant to tell the difference between those who have a genuine claim and a genuine desire to reach a sensible settlement, and those out to make a spurious buck?
It looks like a typical case. An independent inventor invests hundreds of thousands of dollars to develop and patent a technology, and tries to get funding to continue the development from companies who would benefit, but they decide they’d rather just infringe and see what happens. They develop his inventions further, and he decides to sue. I guess that is what you mean by a troll. Someone who expects fair play from a big company.
Thank you, Phil. That’s exactly what PAICE (my father-in-law) did — sued when Toyota infringed upon their patents.
Andrew, you state that “large corporates are left fighting dozens of claims, and that it is impossible to sift out the genuine from the spurious”. The genuine claims should have been obvious to Toyota, as PAICE held the patent for 3 technologies that Toyota took illegally, without compensation. PAICE prevailed in court — and again on appeal. You say “If your father in law’s claim was genuine, the system should have proven that early.” He did – TWICE. It cost PAICE, a very small company, massive amounts of money — sounds like the troll here is Toyota!
Here’s a good timeline as to the sequence of events.
http://www.paice.net/about-paice/paice-a-timeline-of-events