Tag Archives: patent assertion entity

Media use of patent “troll” is unfair says professor in Stanford Technology Law Review

The use of inaccurate, prejudicial language by newspapers, business publications and technology magazines to describe patent licensing activity biases readers and courts.

That is among the findings from research conducted by Illinois Institute of Technology – Chicago-Kent College of Law Professor, Edward Lee. Writing in the Stanford Technology Law Review, Professor Lee states that while “some courts have even barred the use of the term [patent troll] altogether during patent trials on the ground that the term is unfairly prejudicial. But, among the mainstream media, the term is pervasive.”

“Patent troll,” the term employed by leading newspapers, magazines and online publications to describe how some patents are owned and used, provides a prejudicial impression of patent licensing that unfairly influences attitudes towards disputes.


table1. Total Number of Uses of Each Term and Contested Uses

Moral Panics

Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform, published on April 22, is the first empirical study of how the term patent trolls is treated in the media, and the results confirm what some courts have already stated: patent trolls is an inaccurate and often misleading term.

The scholarly paper states that starting in 2006, the U.S. media surveyed used “patent troll” far more than any other term, despite the efforts of scholars to devise alternative, more neutral-sounding terms (see table). The tipping point was the combination of the controversial Blackberry and eBay patent cases in 2006 — prior to that time, “patent holding company” was the most used term.

table3. Top Seven Sources Reporting

Since then, the media more often portrayed such patent entities in a one-sided, negative light with very little analysis or factual support.

Until now, few works have provided statistics or discussion of any studies to support their negative portrayal. Practically no articles mentioned the lack of a working requirement in U.S. patent law, which permits all patentees not to practice their inventions, should they so choose. Lee’s findings provide support for the recent judicial decisions that have barred, at trial, the use of the term “patent troll.”

Further Exploration

A useful next step would be to drill down below this Professor’s Lee’s excellent initial work to determine which reporters at what types of publications have used patent troll and other misleading terms, and when they took place.

This type of media analysis – sorely lacking in the IP space – will be conducted by the Center for Intellectual Property Understanding, a non-profit education organization that I recently established with several thought-leaders.

CIPU board members include Marshall Phelps, Keith Bergelt and Harry Gwinnell. Retired Chief Judge for the Court of Appeals for the Federal Circuit, Hon. Paul Michel, also is a supporter and assisted in the formation. The Center for IP Understanding focuses on improving attitudes towards patents through better awareness and innovative education.

table2. Types of Works Describing Entities in Positive or Negative Light

“The findings of this study,” concludes Professor Lee, who is Director of the Program in Intellectual Property Law at IIT, “suggest that the term may operate as a moral panic in a way that is detrimental to reasoned analysis and consideration of the root problems related to the issue of abusive patent litigation tactics.”

To view the full article, Patent Trolls: Moral Panics, Motions in Limine, and Patent Reform, click here.

A motion in limine (lim-in-nay), n. Latin for “threshold,” is a motion made by a party at the start of a trial requesting that the judge rule that certain evidence may not be introduced.

Image source: Stanford Technology Law Review

*A version of this post originally appeared in IP Watchdog.

U.S. Cong. Research Service Wants Some Patent Holders to “PAE”

Flawed IP Report Attempts to Legitimize Assertion Label

If the Congressional Research Service’s distorted findings on the impact of patent holders are not bad enough, it is promoting a new, nastier and arguably less accurate term for NPEs, “patent assertion entity.”

A recent report, “An Overview of the ‘Patent Trolls’ Debate,” relies on biased, flawed studies to tell Congress that trolls are even more destructive than they sound. (A summary of the report’s weaknesses can be found in “Report for US Lawmakers Gets it Horribly Wrong on NPEs.”)

A Google search on the term “patent assertion entity” does not reveal much. Wikia, the self-described “IT law wiki,” said that “A patent assertion entity is a firm whose business model primarily focuses on purchasing and asserting patents.” The earliest mention of the term that we could find was in a June 11, 2011 allusion to a paper by Colleen Chien, “From Arms Race to Marketplace: The New Complex Patent Ecosystem and Its Implications for the Patent System” Ms. Chien is with the Santa Clara University School of Law.

Her latest paper, “Startups and Patent Trolls,” released on September 13, argues that PAEs are more harmful to small businesses, not large operating companies. “A number of unique characteristics,” Ms. Chien writes, “make some startups and small companies, even though they lack deep pockets, attractive targets to PAEs.”

The Congressional Research Service suggests in its August 20th report that a new, harsher and less accurate term for NPE is a standard, when it is, in fact, not even close to being one. The first line of its report begins:

“Congress has recently demonstrated significant ongoing interest in litigation by ‘patent assertion entities’ (PAEs), which are colloquially known as ‘patent trolls’ and sometimes referred to as ‘non-practicing entities’ (NPEs).”

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Term or Label?

I don’t know anyone who routinely uses the term “patent assertion entity,” and I have been working in patents for 25 years. NPE is a confusing enough description that describes little, but patent assertion entity (PAE or “pay”) paints an even less accurate picture. It speaks to an inherent combativeness and ignores the need to uphold rights or stop invention theft. It suggests that “buying and asserting” is the DNA of non-practicing holders, even when some NPE holders self-generate patents and the preference of most NPEs is to license them. (Isn’t “entity” the term they use for alien life-forms in horror movies?)

Bad data unfortunately tends to get perpetuated by those who either don’t know any better or who want to believe it is accurate. Techdirt, a popular tech blog ran a sympathetic story about the Congressional Research Service report in its “good research” department. Sunnyvale-based Techdirt claims 800,000 RSS subscribers.

There are many types of patent owners. Many because of their size and lack of capital and experience, don’t produce products. I wrote in IP CloseUp in August 2011 in “Innovative IP Models Generate Cash, Provide Alternatives” that there are at least seven different type of business models for those who wish to monetize invention rights but do not commercialize or sell products.The group includes universities and research institutions, inventors and publicly held R&D business.

Some operating companies are starting to out-source their patents to so-called  “privateers,” third-parties who can enforce their patents without directly involving them, especially if they wind up suing their customers or vendors. Patent enforcement is a business tool which some are more effective deploying than others. It is not a dirty word.

Not all holders are in the position to commercialize their invention rights but are still entitled to a return on them..Many believe that keeping infringers honest is good for innovation and healthy for commerce. Valid patents are infringed on a regular basis because the owners can not afford to enforce them. Some businesses like Acacia Research typically do not even own patents, but enforce them on behalf of others, often inventors and increasingly operating companies, for a share of the return.

Today, it is almost impossible to license a patent without first suing for infringement. The potential is too high for declaratory judgment, a preemptive move that provides a defendant with venue it may not ordinarily be entitled to. Enforcing rights is something that NPEs are forced to do to realize a return.

Many NPEs given the option would rather talk than litigate.

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Intellectual property rights would benefit from a less hostile term for NPE, and PAE is not it. A term more in keeping with what patent holders outside of traditional operating companies actually do would be a good start. Something as simple as Independent Patent Holder, Patent Holding Vehicle or Invention Rights Business might do.

Whatever the acceptable term, let’s leave the alien life forms in outer space where they belong.  

Image source: ahirer.blogspot.com

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