Patent Trolls provide a needed service to individual inventors and small businesses.

The “patent trolls” are coming! If you scan the news for the phrase “patent troll,” you find it everywhere. The tenor of the news is gloom and doom–that patent trolls could destroy our economy. (Not cute little garden trolls but ugly Lord-of-the-rings style creatures).

The trend in the news is to show a patent troll as a villain that corrupts the institution of patents. We are told the government needs to intervene to stop the corruption in the patent system. Senator Orrin Hatch (R-Utah) has even sponsored senate legislation to deal with these troublesome trolls.

But, according to a former Chief Judge familiar with patents, “”the ‘problem’ [of “patent trolls”] [is] greatly exaggerated.”
Former Chief Judge Paul Michel Court of Appeals for the Federal Circuit

So, either patent trolls are destroying our economy or they are not very much of a problem.

Part of the problem is the language used by the news. A patent troll is a derogatory label put on a company that is a non-practicing entity (NPE) or a patent assertion entity (PAE). That means that the company does not produce products but holds the rights to patents.

That means that NPE/PAE’s generate their revenue through licensing agreements or by suing companies infringing their patents.

The kicker is that most independent inventors or small business inventors simply do not have the resources to enforce their patents. Patent law suits cost millions of dollars. Generally a NPE/PAE will use their money to enforce patents on behalf of the independent inventors or small business inventors.

Many companies opposed to PAE’s focus on the fact that PAE does not produce products. The argument seems to be that since the PAE is not actually producing products it doesn’t have a right to exist.

This is a straw-man argument. A patent right is the right to exclude others from copying the patent. It is not the right to produce products.

But, a patent does not give you the right to produce a product it gives you the right to “exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States.” USPTO

Perhaps that point should be emphasized. A patent is a right to exclude not a right to produce.

Chief Judge Paul Michel stated, stated that the founders [of the United States of America] did not want to only grant patents to practicing entities like the British did, but wanted to include non-practicing entities as well.

He stated that both Thomas Edison and the Wright brothers would be considered non-practicing entities under current proposed laws which make it harder for non-practicing entities to enforce their rights.

If you are an independent inventor who has a patent on a widget—lets call it the “troll-bot,” and you find out somebody else is selling the troll-bot without your permission (infringing your patent)—what are you to do?
DePaul University College of Law Center for Intellectual Property Law & Information Technology in October 2013

Your options are:

  1. Get a license in place with the infringing company; or
  2. Initiate a costly lawsuit with the infringing company

But license agreements are hard to get into place and it costs a lot of money to litigate a patent—usually millions of dollars. So, what is an individual inventor without millions of dollars in the bank account supposed to do?

The individual inventor really has two options, either he or she can:

  1. Look at his patent, hang it on a wall, and tell everybody that he invented the troll-bot that everyone is buying but he has not made any money on the patent; or
  2. Hire a PAE company to get licensing agreements in place or sue to prevent the infringing company from making the troll-bot.

Rather than being a drain on society, the troll provides a service to individual inventors and small businesses in America.

Some companies that complain about “patent trolls” state that “patent trolls” simply send out thousands of letters about frivolous patent claims to companies in America, and those frivolous claims cost businesses billions of dollars a year to deal with.

In fact, RPX states that the threat of patent litigation costs “$11 billion per year… not including lost productivity.” RPX

But, isn’t that the purpose of patents? To exclude others from using the technology for which there is a patent. RPX’s statement seems to blame PAE’s instead of stating that the potential for patent lawsuits is a real cost of doing business.

Also, it should be stated that RPX earns money through patent litigation insurance.

Also, on its face the “patent troll” frivolous claims argument doesn’t seem to hold water. Why would a PAE pursue very costly litigation over patents that are frivolous or that are not being violated?

If a PAE were really running a frivolous operation, after years of losing lawsuits and after millions in lost dollars, wouldn’t the PAE go bankrupt? On its face, the argument against patent trolls seems suspect.

The “patent trolls” seem to be the only companies that individual inventors and small companies can use to actually enforce their rights. Why punish the companies that provide a solution to a growing problem?

So, it turns out that the so called “patent trolls” may be less like the lord of the rings animals and more like the cute trolls that your kids play with.

So, it turns out that the so called “patent trolls” may be less like the lord of the rings animals and more like the cute trolls that your kids play with.