Dear Doc:

I hear that courts are once again trying to crack down on “patent trolls.” What is a patent troll, and why should courts try to squash them?

Signed,
Under a Bridge

Dear UB:

Patents are called “intellectual property” in much the same way as land is called “real property” and your car is “personal property.” For much of the history of the United States, a patent granted to an inventor was, in fact, her property, and she had the right to use or dispose of it as she wished. In the past quarter-century, however, courts have drawn a distinction between “private property” and “public property,” with the latter somehow being less owned than the former. They have done this in response to the rise of so-called “patent trolls” — corporate entities that own patents, license them to others, and bring enforcement actions against infringers, but which do not “practice” the inventions (that is, they do not manufacture, distribute and market the patented inventions themselves).

Patent Trolls: The Origins of the Term

The Doc discussed the issue of trolls more than ten years ago in this newsletter. To recap briefly, the giant chip manufacturer Intel Corporation first coined the term “patent troll” back in the 1980s, but the term has never had a very precise definition. In the legal literature, trolls are often called “Non-Practicing Entities” or NPEs. This is unhelpful. For instance, when a university professor invents and patents something, and the university owns the rights to it, and licenses others to use the patent, is it being a troll? When a doctor invents a new surgical device but decides not to leave her practice to start a new company, and instead licenses the patent to a major medical device company, is she a troll?

A Thought Experiment: The Problem with Patent Trolls

The Doc has a thought experiment that helps illustrate why the patent troll issue may not be useful at all. Imagine that you own an acre of land. It has a market value based on its location, level of development, and so-on. You are allowed, subject to zoning, to build a house, office building, parking lot, or gas station on your acre. You can subdivide it. You can grow crops on it. You can rent it to others for short or long terms.

Now, imagine that a court decided that the only things that you could do with your acre were those that involved you personally. Want to build a structure? Grab a hammer. Want to grow corn? Grab a shovel. You can live there, but you’re not allowed to rent the house you built there to someone else. You can run your business there, but you can’t have someone else run her business there and pay you a percentage of the profits. The value of your acre has just taken a huge hit! Just because you are a “land troll” or “non-occupying entity.”

Now, Chief Judge Connolly of the District of Delaware has gone beyond the Federal Rules of Civil Procedure to address what he sees as the major issues with patent trolls – identifying who pays for litigation. He has referred attorneys representing patent owners in certain cases for disciplinary action. Although the attorneys seem to have complied with the Rules as they are written, Judge Connolly is saying that a stricter standard should apply to parties seeking to enforce patents than applies to other litigants.

The Future of Patent Trolls in Litigation

It’s a case of new wine in old bottles (or is that old wine in new bottles, which might be very good, depending on the vintage…but the Doc digresses…). What is not clear is whether the disclosure the judge now requires even addresses a real problem in patent litigation.

The Doc knows that there are issues in patent litigation, but thinks that name-calling is not productive. Making it again possible to issue an injunction against an infringer, actually requiring fact-finding before invalidating a patent, and a host of other reforms would make a difference. 

Have an invention that you’d like to protect and exploit? Talk to the attorneys at LW&H. They do this stuff.

Until next month,

The “Doc”

— Lawrence A. Husick, Esq.