On 6th April 2013, a few companies appealed to the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to take down patent ‘trolls’ such as Lodsys and Intellectual Ventures. The list of companies includes giants such as Google, Blackberry, Earth Link and Red Hat, who claim that patents cost US technology based firms about $80 billion every year directly and indirectly. The Congress is supposedly in the process of bringing out appropriate legislation regarding the same.
According to Matthew Bye, Google’s senior competition counsel, trolls hurt consumers by attacking small businesses, restricting innovation and stagnating competition. Statistics show that Patent Assertion Entities (PAEs) account for 62% of all patent lawsuits. PAEs are accounting for as much as four times as many cases today as they did in 2005. Most importantly, they frequently pick on small-medium sized businesses which include independent app developers, demanding licensing fees for apps which feature only a few similar elements, thus virtually laying down a trap for every small sized firm looking to innovate to the top of the market. Smaller companies like BT have emerged as patent privateers and thus pile added pressure on companies like Google.
Patents are now also being used as an instrument of last-resort finance. Companies like Ericsson have transferred their patents to companies like Unwired Planet, which is already involved in patent litigation against Apple, Google and Blackberry. Companies which are on the brink of shutting down like Ericsson stand to gain financially if they win any patent related disputes. Not all is gloomy, though.
Thanks to the tendencies exhibited by these PAE’s, companies like Twitter and Google have come out with less-aggressive approaches to handling the situation; by encouraging inventors to innovate at will. However, Google stance is not a little hypocritical – the company is at the forefront of patent litigation, and seeks to be a defender of innovation as well. Like countries racing to acquire more arms to defend themselves, the end result could be as messy in the technology patents industry as it is in the real world.
Whether these statements and efforts will prove to be piecemeal remains to be seen, but they seem to be heading in that direction. No leading company is willing to take a strong stand on the issue yet as there are still competitive edges to be had from patent claims – whether from the side of the manufacturers themselves or by specialized patent ‘trolls’.
