Patent Trolls – The Pot Calling the Pot … Black

Not later than the nineteenth century patenting of the automobile by Rochester patent attorney George Selden paper patents and marginally developed patents have been obtained for the principal purpose of suing major manufacturers. Whether good or bad, providing a nasty buzz word to describe such activities in a generalized fashion merely inflames the rhetoric. Thus was born the term “patent troll” to widely define the enforcement of patents by those who do not themselves manufacture and sell products. The originator of this nomenclature has now switched to the dark side and, not surprisingly, says that he “refrain[s] from using [the term “patent troll”] today. It has become too emotionally charged and too often hurled carelessly as an epithet to disparage just about every kind of plaintiff in a patent suit.” See Peter N. Detkin, “Leveling the Patent Playing Field”, 6 The John Marshall Review of Intellectual Property law 636, 642 (2007) *.

We used the term “patent troll” also many times in our blogs (just type in the word “troll” in the search column above and one will see all the previous posts).

That Peter Detkin is trying to refrain from using the term is quite understandable, as he is managing director of Intellectual Ventures, seen by many as a patent troll in optima forma. Intellectual Ventures likes to see themselves as “a combination of a private-equity fund and an innovation hothouse”. So says Nathan Myhrvold, IV’s creator. The Wall Street Journal at the time wondered: “will the company begin launching patent-infringement lawsuits to pressure companies to pay for use of its IP?” Myhrvold says that his firm hasn’t sued anybody for patent infringement but that he can’t rule it out in the future.And that is exactly what a patent troll does. That it has obtained a negative connotation can hardly be a surprise. Amassing patents with the sole purpose to assert them against industries and users of patented technology by forcing them either by carrot or stick licensing into paying money, has nothing to do with “innovation”.The relation between patents and innovation is still an area of heated policy debates and theoretical controversies, and empirical studies of the consequences of patenting for innovative activity are scant. Most economic studies and seem to concentrate on the effects of patenting for innovative strength of developing and developed countries (**). One of the most recent studies – and one worth reading(***) – comes to the conclusion that the effects on innovation of patenting is far less in developing countries than it is in developed countries. However there is still a lot of unknowns what the effect is of patenting on innovation between competing undustries.It’s a far cry from the truth to claim that amassing patents in an organization that in itself does not produce any innovative products, improves working methods or produces any other economically relevant progress, is contributing to “innovation”.

(*)See Hal Wegner on “Who is the Original “Patent Troll”?”(**) see: Nagesh Kumar, “Intellectual Property Rights, Technology and Economic Development: Experiences of Asian Countries”, Research and Information System for Developing Countries, New Delhi, India.(***) by Brent B Allred and Walter G Park (“Patent rights and innovative activity: evidence from national and firm-level data”, Journal of International Business Studies (2007) 38, 878–900)