Foreign governments getting into profitable US 'patent troll' business

Posted:
in General Discussion edited January 2014
So-called "patent trolls" can earn millions of dollars by being a costly thorn in the side of companies like Apple. Now, the governments of countries including South Korea and France have shown interest in getting into that business to protect domestic firms, and also potentially make money.

Patent suits


South Korea's Intellectual Discovery and French firm France Brevets are companies similar to U.S. companies that acquire patents and secure licensing deals for those inventions without actually selling any products. But a key difference revealed by Reuters on Wednesday is the new companies were launched by their respective country's own governments.

Neither company has yet to file any lawsuits, but there are also signs that the governments of China and Japan are also interested in getting in the mix. The Innovation Network Corp of Japan launched as a public-private venture in 2010, while China plans to set up about 20 "investment service platforms," according to the country's intellectual property office.

While China and Japan wouldn't comment on their plans, South Korea portrayed its venture as in an "incubating stage." The government-backed company has purchased more than 200 U.S. patents, and has said it plans to use those patents to protect other South Korean companies that might be targeted by a lawsuit.

Such intellectual property firms are derided by some as "patent trolls," because they siphon money from large corporations like Apple that sell products and services. An intellectual property firm can accuse such companies of violating the patents they own, and can secure licensing deals or even file patent infringement lawsuits to obtain cash.

Apple is routinely hit with "patent troll" lawsuits ? so much so that one report from last year found that the iPhone maker faces more patent lawsuits from non-practicing entities than any other technology company in the world.

The group PatentFreedom has continued to keep a running tally, and Apple remains the most-targeted, facing 165 patent lawsuits from non-practicing entities since 2008. In 2012 alone, Apple was hit with 44 additional lawsuits, also the most of any company.

Some believe those non-practicing entities are taking advantage of intellectual property laws in the U.S. for financial gain. That's prompted some, such as Rep. Peter DeFazio, D-Ore., to fight back.

DeFazio has co-sponsored the SHIELD act, which he hopes will discourage patent infringement lawsuits by non-practicing entities by requiring them to pay their opponents' legal fees if they lose.
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Comments

  • Reply 1 of 43
    Is this "the other shoe dropping", "blowback", or something else?

    I've long worried that; kudzu would replace all plants in the South East, a Bush family member would be elected President again, and that other countries would adopt the copyright and patent model of the US. I mean, it probably seemed like a good idea at the time; create nothing and patent everything and then make royalties more valuable and protected, unlike jobs and wages and edible paint on children's toys.

    Oh yeah, this is the "Chickens coming home to roost."

    We should enjoy our Just Desserts and eat our crow -- the Dutch Boy can't plug this leak with a fat finger and the cat is out of the bag of donuts.
  • Reply 2 of 43
    rob53rob53 Posts: 1,974member
    I understand the need for the original owner of a patent to protect their ideas even if they don't have a working product but I draw the line when they "sell" their patent to a troll who's only job is to try and attempt to get whatever money they can. These patent trolls are like ambulance chasing lawyers who could care less about the law and only about potential income for themselves. Add to this the ridiculous nature of patent law around the world and you have a totally corrupt and inoperable mechanism for trying to protect the real originators of an idea. For those truly unique and revolutionary ideas I can see protecting them with a patent but for the other 90%, cancel them all and let the market decide. Apple is trying to protect both its patents and its use of ideas and processes supposedly patented by others. As this article states, others are taking the quick road to making money by not developing anything, instead just suing to get money. Get a life and a real job trolls!
  • Reply 3 of 43
    The US government probably wont be alarmed until North Korea and Iran get in the game.
  • Reply 4 of 43
    gatorguygatorguy Posts: 19,805member
    I'm pretty sure I mentioned this once here a few weeks back, but China already pays subsidies to Chinese firms for successful US and other foreign patents applications, both utility and design. In fact a Chinese applicant can receive 10 times as much subsidy money from the Chinese government for being awarded a US patent than a domestic one.

    http://chinaipr.com/2012/06/12/china-to-provide-financial-incentives-for-filing-patent-applications-abroad/
  • Reply 5 of 43
    magic_almagic_al Posts: 325member

    Quote:


    So-called "patent trolls" can earn millions of dollars by being a costly thorn in the side of companies like Apple.



     


    "earn"?


  • Reply 6 of 43
    I dont know about the South Korea one but France Brevets is not a patent troll in the sense they dont acquire patents in order to sue.

    It is the patent holders (IOW praticing entities and/or inventors) that ask the fund so that licensing revenues can be drawn from their holdings, and also be protected. The fund acts as an intermediate true, but this allows small companies which, on their own, would not have the means (expertise and money) to sue, to be on an equal foot with bigger competitors. More, the main assets of the fund are actually the patents which are the results of publicly funded research, which is a lot more important in France than in the USA proportionnally.

    This article is complete hogwash, a 5 mn check would have found this.
  • Reply 7 of 43
    gustavgustav Posts: 823member

    Quote:

    Originally Posted by rob53 View Post



    I understand the need for the original owner of a patent to protect their ideas even if they don't have a working product but I draw the line when they "sell" their patent to a troll who's only job is to try and attempt to get whatever money they can. 


    This. It's one thing to sell your patent to someone who can manufacture a product, but it's another to sell it to a patent holding firm. Why did you invent the thing you patented in the first place? The point of the patent system is to foster innovation. How is inventing something only to sue people fostering innovation? It's the exact opposite.


     


    If I was King of the World™, any patent used in a lawsuit would become invalidated if the plaintiff could not show proof of it being used in actual products available on the market. After all, there's no stifling of innovation or damages if the patent holder doesn't actually use it to make anything.

  • Reply 8 of 43
    jragostajragosta Posts: 10,473member
    gustav wrote: »
    This. It's one thing to sell your patent to someone who can manufacture a product, but it's another to sell it to a patent holding firm. Why did you invent the thing you patented in the first place? The point of the patent system is to foster innovation. How is inventing something only to sue people fostering innovation? It's the exact opposite.

    If I was King of the World™, any patent used in a lawsuit would become invalidated if the plaintiff could not show proof of it being used in actual products available on the market. After all, there's no stifling of innovation or damages if the patent holder doesn't actually use it to make anything.

    That is total, unadulterated nonsense.

    The patent system gives an inventor rights to that invention - a special type of property rights. Just like any other rights, the inventor can choose what to do with them.

    What if I invent a way to make nuclear power plants safer or more efficient? Do I have to start building nuclear power plants (at a cost of billions of dollars each) in order to use my invention - or can I sell it to someone who builds nuclear power plants. Or, let's say that I invent a way to make an internal combustion engine more efficient. Must I spend billions of dollars building a car manufacturer to compete with GM and Toyota and the rest or can I license it to someone else?

    The owner of a patent has specific property rights. It is entirely up to them to decide whether to practice the invention, sell the patent, license the patent, or do nothing. The only thing the patent does is keep others from using his invention. It's not up to you or anyone else to tell him that he can't sell it. In fact, doing so would greatly limit the amount of effort put into innovation by small inventors. Why bother if you can't sell the patent?

    The closest analogy involves physical property. Let's say that you inherit a widget factory from your parents. You don't want to make widgets, so you close the factory. You have the right to sell the factory or rent it out to someone who wants to make widgets - and no one would object. Or, if the real estate market is slow, you might simply hold onto your closed factory for a while until the price is higher. Or maybe you don't want to make widgets, but don't want to sell the factory for sentimental reasons. It doesn't matter - you have the right not to sell the factory.

    If someone moved into the factory and started making widgets without your permission, no one in their right mind would defend them on the basis of "but you're not using it".

    Patents work the same way. If you have a patent to make widgets, you can choose to use it, sell it, license (i.e., rent) it, or do nothing with it. If you choose to do nothing with it, someone else isn't allowed to use that as grounds for their infringing your patent.
  • Reply 9 of 43

    Quote:

    Originally Posted by jragosta View Post




    The closest analogy involves physical property. Let's say that you inherit a widget factory from your parents. You don't want to make widgets, so you close the factory. You have the right to sell the factory or rent it out to someone who wants to make widgets - and no one would object. Or, if the real estate market is slow, you might simply hold onto your closed factory for a while until the price is higher. Or maybe you don't want to make widgets, but don't want to sell the factory for sentimental reasons. It doesn't matter - you have the right not to sell the factory.



    If someone moved into the factory and started making widgets without your permission, no one in their right mind would defend them on the basis of "but you're not using it".



    Patents work the same way. If you have a patent to make widgets, you can choose to use it, sell it, license (i.e., rent) it, or do nothing with it. If you choose to do nothing with it, someone else isn't allowed to use that as grounds for their infringing your patent.


     


    You're analogy is severely flawed. No one is using the "factory" but the patents are giving that factory owner the rights to produce those widgets in the town (USA). So no one else can make the widgets in that town regardless. So if I truly make something revolutionary and I know it's a death pool of patents that would kill my idea and possibly end up stealing it (I put the hard work into making an ACTUAL product... software patents can die), now I have to base my company out of a country that has a patent available for me and is clear of trolls to sell out of and restricting sales to only "friendly" countries.


     


    As stated before, patent system is completely pointless at this day in age... in the state that it is currently in. It cannot accommodate the needs that we have in the 21st century. It needs to be scrapped and rebuilt from ground up, period.

  • Reply 10 of 43
    no bueno!

    They can cause a lot of harm if they get away with this. I'm probably gonna get a lot of flack for this statement, but perhaps they shouldn't be able to sue unless they were actively making a product that used the patent they were suing about. It would prevent most patent trolls from making a case as the majority of them have no means nor the intention of making products at all.

    That said there are congressman in the united states that are coming up with ways to battle companies like these. See the SHIELD act here: http://www.infoworld.com/d/open-source-software/why-you-should-support-the-shield-act-214071
  • Reply 11 of 43
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by drewyboy View Post

    (I put the hard work into making an ACTUAL product... software patents can die)


     


    I sure hope none of your relatives write software for a living. They wouldn't be happy to know that you don't consider their jobs to be real.






    As stated before, patent system is completely pointless at this day in age... in the state that it is currently in. It cannot accommodate the needs that we have in the 21st century. It needs to be scrapped and rebuilt from ground up, period.




     


    Abject nonsense. You may have stated it before, but that's meaningless.

  • Reply 12 of 43
    rob53rob53 Posts: 1,974member

    Quote:


    Originally Posted by rob53 View Post


    I understand the need for the original owner of a patent to protect their ideas even if they don't have a working product but I draw the line when they "sell" their patent to a troll who's only job is to try and attempt to get whatever money they can.


     


    Originally Posted by Gustav View Post

     


    This. It's one thing to sell your patent to someone who can manufacture a product, but it's another to sell it to a patent holding firm. Why did you invent the thing you patented in the first place? The point of the patent system is to foster innovation. How is inventing something only to sue people fostering innovation? It's the exact opposite.


     


    If I was King of the World™, any patent used in a lawsuit would become invalidated if the plaintiff could not show proof of it being used in actual products available on the market. After all, there's no stifling of innovation or damages if the patent holder doesn't actually use it to make anything.



    Gustav, I think you misunderstood the second half of my sentence. I agree with your second to last sentence in the first paragraph. What you said is what I was saying. I believe patented ideas should be in products and not just "ideas" stuck in someones cabinet.

  • Reply 13 of 43
    fsad32fsad32 Posts: 20member


    To jragosta & others:


    The problem is not in the patents system understanding and that someone are not making the real product. The problem is in USPTO itself - in fact the first stage of it - very low quality expertise of any new application for a patent. Everyday they get thousands of applications for new patents - study such amount of data carefully is just impossible. That's why we have a registered patents with very questionable content.


    Even the last suit case of THX against Apple - THX in it's patent registered the "narrow" position of the speaker and the nature's principle how soundwaves are moving in the dense space - that's just the real nonsense. How such silly patent was even registered in first place - that's the main question? And USPTO have millions of same patents which are protected now. The Apple is playing in this dirty game too - numerous patents in their collection about user interfaces/algorithms (this two things are prohibited to patent in many other countries, but not in the USA) and other things which can't be patented in normal country and society.


    The other side of the problem was perfectly seen in American history - when someone makes an interesting discovery but the bunches of greedy-people knowing about it and immediately running in USPTO to get the patent for it. Famous Edison in fact with his patents for cinematography equipment and 35mm film are litterally may destroy the young Hollywood which in his early days are running from him and court marshals to not paying him for using cameras and film to create the art - that's why the Hollywood was founded near the mexican border - to use the discovery (cinema was invented by many inventors in that time - not by only the Edison) for the society and to satisfy it's needs, by contrast - Edison was motivated only by pure greediness, not to benefit the society (the same is with the bulb and power plant - edison wants to get money from every house, but the bulb invention was so big so during the process it transforms and benefit the society-not without the help from the other inventor Nikola Tesla and his work with AC current - Edison's bulb and plant was very primitive by using only DC) .

  • Reply 14 of 43
    anonymouseanonymouse Posts: 6,563member

    Quote:

    Originally Posted by jragosta View Post





    That is total, unadulterated nonsense.



    The patent system gives an inventor rights to that invention - a special type of property rights. Just like any other rights, the inventor can choose what to do with them. ...



    The owner of a patent has specific property rights. It is entirely up to them to decide whether to practice the invention, sell the patent, license the patent, or do nothing. ...

     



    Quote:

    Originally Posted by drewyboy View Post


     


    You're analogy is severely flawed. ...


     


    As stated before, patent system is completely pointless at this day in age... in the state that it is currently in. It cannot accommodate the needs that we have in the 21st century. It needs to be scrapped and rebuilt from ground up, period.



     


    You're both wrong. The analogy and argument is flawed, but the patent system isn't pointless and in need of scrapping.


     


    The significant point that jragosta always leaves out of his patent troll denials is that, while patent law gives an inventor "rights", it does so for a very specific purpose:


     


    Quote:


    The Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;



     


    The Congress isn't given the power to issue copyrights and patents, it's given the power, "To promote the Progress of Science and useful Arts." What we call Patents and Copyrights are merely the tools to achieve this end. (It is interesting to note that, while Congress is given this power, they are in no way required to exercise it -- i.e., there is no Constitutional requirement for the issuance of patents or copyrights, it's at Congress's discretion.)


     


    The goal here is, "To promote the Progress of Science and useful Arts." The goal is not to protect intellectual property, and certainly not to do so at all costs. So, the rights of the intellectual property holder are in no way inalienable. They are not even as fundamental as ownership rights to physical property. (Which is why the analogy is fundamentally flawed.) The "exclusive Right" referred to here is in fact a privilege, putting it much on the same level as we consider the "right" to take a deduction on your income tax calculation or operating a motor vehicle on the roads.


     


    The patent system is in need of reform, but it isn't pointless, or so hopelessly flawed that it needs to be scrapped. It needs to be reformed in such a way as to serve its purpose and, more importantly, so that it is not so easily gamed by leaches whose actions are contrary to its purpose. Companies whose primary goal is to collect patents solely for the purpose of suing "practicing entities" are engaged in activities contrary to the purpose of patent law. Quite simply, the law needs to, must be, changed to stamp out this sort of activity that does not in any way contribute to, "the Progress of Science and useful Arts."

  • Reply 15 of 43
    solipsismxsolipsismx Posts: 19,566member
    Maybe this the catalyst the US needs to reform the patent system.
  • Reply 16 of 43
    jragostajragosta Posts: 10,473member
    fsad32 wrote: »
    To jragosta & others:
    The problem is not in the patents system understanding and that someone are not making the real product. The problem is in USPTO itself - in fact the first stage of it - very low quality expertise of any new application for a patent. Everyday they get thousands of applications for new patents - study such amount of data carefully is just impossible. That's why we have a registered patents with very questionable content.

    I would agree with that - the patent office doesn't really have the expertise to evaluate technology patents properly.

    But that has nothing to do with this patent troll nonsense.
  • Reply 17 of 43
    anonymouseanonymouse Posts: 6,563member

    Quote:

    Originally Posted by jragosta View Post





    I would agree with that - the patent office doesn't really have the expertise to evaluate technology patents properly.



    But that has nothing to do with this patent troll nonsense.


     


    It's not entirely unrelated. This lack of expertise has allowed a "cottage industry" of, not inventors, but patent writers to spring up. People who do nothing but write vague technology patents for patent troll companies, or to sell to them. Again, this obviously subverts the Constitutional intent and needs to be stamped out. Intellectual property is not a Right, it's a privilege, and those who abuse the privilege ought to lose that privilege, just as we suspend and revoke drivers licenses from those who have shown themselves to be unsafe drivers.

  • Reply 18 of 43
    jragostajragosta Posts: 10,473member
    anonymouse wrote: »
    You're both wrong. The analogy and argument is flawed, but the patent system isn't pointless and in need of scrapping.

    The significant point that jragosta always leaves out of his patent troll denials is that, while patent law gives an inventor "rights", it does so for a very specific purpose:


    The Congress isn't given the power to issue copyrights and patents, it's given the power, "To promote the Progress of Science and useful Arts." What we call Patents and Copyrights are merely the tools to achieve this end. (It is interesting to note that, while Congress is given this power, they are in no way required to exercise it -- i.e., there is no Constitutional requirement for the issuance of patents or copyrights, it's at Congress's discretion.)

    The goal here is, "To promote the Progress of Science and useful Arts." The goal is not to protect intellectual property, and certainly not to do so at all costs. So, the rights of the intellectual property holder are in no way inalienable. They are not even as fundamental as ownership rights to physical property. (Which is why the analogy is fundamentally flawed.) The "exclusive Right" referred to here is in fact a privilege, putting it much on the same level as we consider the "right" to take a deduction on your income tax calculation or operating a motor vehicle on the roads.

    The patent system is in need of reform, but it isn't pointless, or so hopelessly flawed that it needs to be scrapped. It needs to be reformed in such a way as to serve its purpose and, more importantly, so that it is not so easily gamed by leaches whose actions are contrary to its purpose. Companies whose primary goal is to collect patents solely for the purpose of suing "practicing entities" are engaged in activities contrary to the purpose of patent law. Quite simply, the law needs to, must be, changed to stamp out this sort of activity that does not in any way contribute to, "the Progress of Science and useful Arts."

    Nonsense.

    First, patents have a limited time. Even if someone NEVER practices a patent and only sues people with it, the patent must become public. So, after some time, anyone can practice the patent. THAT is the purpose of the patent system - to get patents into the public rather than everything being a trade secret.

    Even more importantly, people can build on patented technology. The fact that patents are published means that people can see what others are doing - and improve upon it or find alternative ways of doing that. That promotes the arts and sciences - even if the original inventor never practices his invention.

    Finally, it is the very fact that patents can be sold that allows small inventors to participate on a level playing field with the big guys. Without the ability to sell patents to a holding company, there would be no point in inventing something in a market that requires lots of capital to practice the invention.

    There is absolutely nothing wrong with patent ownership rights - and your complaints that some people abuse the system doesn't justify stripping patent rights from their legal owners. Scenario: Small inventor invents something that will be massively useful in improving automobiles. They don't have the capital to do so, so they sell the patent to a holding company which is going to look for licensees. GM sees the patent and sees that it's now owned by a non-practicity entity (nee 'patent troll') and under your system would be absolutely free to infringe all they want - because you want to invalidate patents that are owned by someone who doesn't practice the invention. How does that help the small inventor? How does that help innovation? All it does is reward theft.

    Now, if you want to argue that 'loser pays' should be the practice in our court systems, I'd wholeheartedly agree. Or if you want to argue that the patent office needs to find a way to examine patents more thoroughly (using people who are familiar with the subject), I'd also agree. But simply stripping patent rights from legal owners makes absolutely no sense at all.
  • Reply 19 of 43
    jragostajragosta Posts: 10,473member
    anonymouse wrote: »
    It's not entirely unrelated. This lack of expertise has allowed a "cottage industry" of, not inventors, but patent writers to spring up. People who do nothing but write vague technology patents for patent troll companies, or to sell to them. Again, this obviously subverts the Constitutional intent and needs to be stamped out. Intellectual property is not a Right, it's a privilege, and those who abuse the privilege ought to lose that privilege, just as we suspend and revoke drivers licenses from those who have shown themselves to be unsafe drivers.

    So now you're saying that all these inventions were known to be bogus and were filed with the sole intention of suing others? Your evidence?
  • Reply 20 of 43
    maestro64maestro64 Posts: 4,414member


    I am not sure if many people here know this, the US is listed on many patents in the US, and probably should be listed on many more and they are not. The reason the US is listed on patents is the fact that when researchers and such take money from the government for research grant they are required to list the US as one of the patent holders. Also most all the research which comes out of the many US funded research labs around the coutry has the US as the Patent holder.


     


    The problem is many time the researcher fail to list the US as a patent holder, but in they are even though they were not listed. The same holds true to University they are named on all patents which students and professors come up with.


     


    So the US today can go after anyone they like since they are listed on more patent than any other entity in the world. If France came after a use company the US could go after them.

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