EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

08.03.17

High Cost of Erroneous Patent Grants

Posted in America, Europe, Patents at 2:26 am by Dr. Roy Schestowitz

Patents granted in the absence of economic rationale/basis can be a heavy burden on society

On patent externality

Summary: An in-depth look, courtesy of the Computer and Communications Industry Association, into the cost of invalid patents being granted, then used extrajudicially against small companies that cannot afford a challenge or have little financial incentive to do so

THE migration/emergence of patent trolls to/in Europe is real. We have pointed this out many times (I also heard stories like that, e.g. over the telephone). It will never make it into the press because extortion rackets rely on silence; a lot of this is due to reckless patent offices that grant bogus patents, not realising how much pain these patents may cause to many people. Battistelli's latest lies and distraction from decreased patent quality symbolises the sort of sycophancy which endangers the EPO.

But this post is not about the EPO. It’a actually about this long new article from the CCIA (Computer and Communications Industry Association) and it focuses on the USPTO, whose low-quality patent grants cost the American economy a lot of money. Here are some portions from this article:

The Cost Of Bad Patents: It’s Not Just The Lawsuit

The cost of bad patents is not just the cost of lawsuits.

This may seem obvious, but apparently it isn’t. I’ve recently noticed a trend from the anti-reform lobby: someone testifies in front of Congress about patent reform, they complain that “they’ve only been sued once or twice, why are they being asked to testify, what would they know?” They base their dismissal of the witnesses’ experience purely on the number of times that they’ve been sued. If you haven’t been sued enough times, in the mind of the anti-reform lobby, then you don’t know anything.

But any patent attorney with any experience knows that just isn’t true.

Most Assertion Activity Doesn’t Show Up In Court

At the DOJ/FTC hearing on Patent Assertion Entities back in 2012, Colleen Chien provided two estimates of the number of times a company will see a demand based on a patent compared to the number of times they see a lawsuit. A general estimate, provided by a sell-side patent broker (i.e., someone who sells patents for a living) is that there are between 25 and 50 patent demands made for each lawsuit actually filed. Another, based on the behavior of a real NPE, noted that the NPE sent out more than 8,000 demand letters, but only filed 26 lawsuits. That’s 307 demand letters for each filed lawsuit.

These demand letters are essentially invisible—they don’t show up in court and companies rarely publicize them. In other words, there’s a lot more than just lawsuits. You can face trolls any number of times without ever actually having a suit filed against you.

And it’ll cost you a meaningful amount of money every single time.

[...]

Even if you’re successful in convincing the other side that they don’t have a case, you’re still out the money and the time. You’ve still paid for the privilege of not having a lawsuit filed against you, and you’ve still learned about how trolls (and the Eastern District of Texas) operate.

None of which will ever show up in a lawsuit—or in the news.

The above mentions, notably, Conversant (MOSAID), which is particularly malicious. It pays IAM and receives puff pieces from IAM, but in reality it’s a litigation machine lubricated in part by Microsoft and Nokia.

We must always remember that for each lawsuit we publicly see/hear about there may be lots of shakedowns (in the above example, there’s one lawsuit per 307 demand letters). It’s good for the patent microcosm, which wants to then jump to the ‘rescue’ (from the mess it contributed to). Problem-solution business model.

Here is an article from yesterday that’s titled “What to do if you’re accused of patent infringement”; law firms keep selling their services (Katherine A. Hamer and Nathan E. Whitlock in this case) and for each of these demand letters they can make a lot of money at both ends (accuser/sender and accused/recipient). The patent microcosm makes money not just from the party suing/threatening but also the recipient of the threats/defendant. It’s obscene.

In the US, being merely accused of patent infringement can cost one dearly (anyone can accuse anyone else and it’s now done extensively by copyright trolls too). It’s a ruinous thing and it should not be tolerated. As the promotional article from yesterday puts it:

Just as you are looking forward to the weekend, you receive a cease-and-desist letter accusing your company of patent infringement. Or, worse, you receive a summons and complaint. You have been sued. There goes the weekend.

As CEO, CTO or in-house lawyer, you may have only cursory experience with patents. It never occurred to you that what you sell could have been patented by others. And, until now, you had never heard of the company that owns the patent. What do you do?

Basically, pay some law firm. That’s the advice of law firms. And as CCIA points out, the whole thing can end up costing thousands of dollars if not tens of thousands of dollars even without it reaching a court.

Patent grants come at a high cost — a societal and collective cost. Patent offices and examiners hopefully realise the nature of this externality.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. When Google Used Alex Converse to Raid the Public Domain With Software Patents

    In its overzealous pursuit of software patents, Google is now turning public domain methods into private 'property' (in defiance of critics)



  2. Mark Kokes, the Man Behind BlackBerry's Patent Aggression, Leaves the Company

    The man behind the patent troll-like behaviour of BlackBerry is leaving



  3. WordPress Demonstrates That Facebook's Patent Strategy is Deterring/Alienating Developers

    React is being dumped following Facebook's attempt to restrict distribution/derivatives using software patents



  4. Links 19/9/2017: Pipewire, Mir Support for Wayland, DRM in W3C

    Links for the day



  5. Links 18/9/2017: Linux 4.14 RC1, Mesa 17.2.1, and GNOME 3.26 on Ubuntu Artful

    Links for the day



  6. Patent Trolls Update: Eolas, Conversant (MOSAID), Leigh Rothschild, and Electronic Communication Technologies

    Patent trolls are still being watched -- as they ought to be -- even though some of them shy away, hide from the media, engage in dirty tricks, and file more lawsuits



  7. Microsoft is Promoting Software Patents in India in Another Effort to Undermine Free/Open Source Software, Microsoft-Connected Trolls Are Still Suing

    The ongoing patent threat to Free/libre Open Source software (FLOSS) and the role played by Microsoft in at least much of this threat



  8. Patent Trial and Appeal Board (PTAB) Under Attack by IBM and Other Patent Parasites Who Undermine Patent Quality

    The PTAB, which has thus far invalidated thousands of abstract/software patents, is under a coordinated attack not by those who produce things but those who produce a lot of lawsuit



  9. Why the Mohawk Tribe Should Fire Its Lawyers and Dump the Patents Which Now Tarnish Its Name

    In order to dodge the Patent Trial and Appeal Board (PTAB) with its Inter Partes Reviews (IPRs), the Mohawk tribe is being exploited -- very much in direct detriment to its reputation and status



  10. Amazon and Google Have Both Become Part of the Software Patents Problem

    The transition from so-called 'defensive' patents to offensive patents (ones that are used to suppress competition) as seen in Amazon and in Google, which is already suing rivals and is pursuing additional patents by acquisition



  11. Unless Physical, Inventions Are No Longer Patent-Eligible in US Courts, But USPTO Ignores Precedence

    Even though the ability to enforce software patents against a rival (or many targets, especially in the case of patent trolls) is vastly diminished, the US patent office continues to grant these



  12. Citing the European Patent Convention, Spanish Court Tosses Lawsuit With EPO-Granted European Patent

    The quality of European Patents (EPs) -- a subject of growing levels of scrutiny -- as demonstrated in Barcelona this summer



  13. Links 16/9/2017: More of “Public Money, Public Code”, Equifax Failed to Patch for Months

    Links for the day



  14. BlackBerry Has Turned Into a Patents and Licensing Company

    The Canadian company that made fairly reputable phones early in this century is left with nothing but the power to sue other companies -- a power to which it increasingly gravitates



  15. European Patent Office Continues to Paint a Rosy UPC Picture Even Though the UPC May Already be Dead

    The European Patent Office (EPO) doesn't let facts get in the way as another week passes with UPC promotion and further staff repressions



  16. Tax Evasion by Patent Boxes and Lies About Small Businesses (SMEs) in the Corporate Media

    The lobbying effort of the patent 'industry' -- and its largest beneficiaries -- paints its own perks as something that's intended for their small/minuscule competitors (whom they actually attempt to misrepresent and crush)



  17. Links 15/9/2017: Mesa 17.2.1 RC, Wine 2.17, WordPress to Ditch React Over Patents

    Links for the day



  18. The UPC Fantasy is Going Nowhere as Complaints and Paperwork Pile Up

    Many submissions and complaints about the Unitary Patent have time to arrive before the end of October as a decision on the matter seems as distant as 2018



  19. At Event of EPO SLAPP Firm, a Suggestion That the UPC Should be Scrapped Because It's Stuck

    Just like the TPP, the UPC is now in a potentially fatal deadlock, so people with a stake in the outcome consider starting again (almost from scratch)



  20. Watchtroll Helps the EPO Peddle Fake News About the Unitary Patent (UPC)

    The Unified Patent Court (UPC) isn't happening; the EPO, however, keeps on pretending that it can already operate as though the UPC got the green light



  21. Links 14/9/2017: Plasma 5.11 Beta, Q4OS 1.8.8, Orion

    Links for the day



  22. Links 13/9/2017: Blender 2.79, Qt 5.10 Alpha, GNOME 3.26 “Manchester”, Parrot 3.8

    Links for the day



  23. Amazon's Infamous Patent is Dead and the World's Richest Man Failed to Fulfill His Promise on Software Patents

    Amazon continues piling up a lot of software patents even though its founder once pretended (only after enormous public backlash) that he would pursue far shorter terms for software patents



  24. EPO Gets Together With Patent Radicals to Promote Software Patents

    Watchtroll, a widely-known site of patent extremists with the agenda of promoting software patents, gets together with the EPO for a puff piece in the form of an "exclusive" interview



  25. Patent Boxes Are for Tax Avoidance, But in the Land of Tax Avoidance (Switzerland) No Avoidance for Software Patents

    The world leader in European Patents (EPs) refuses to acknowledge software patents or barely respects these



  26. Latest Attempts to Blow Air Into the Sails of the Sinking Unitary Patent (UPC)

    A survey of the latest media mentions and interpretations of the UPC, which don't quite stack up when compared to reality



  27. Links 12/9/2017: Linux 4.13.1, digiKam 5.7.0

    Links for the day



  28. Patent Maximalism Duo: Watchtroll and Patently-O Now Conjoined and Mutually Referencing One Another

    Radical sites like Watchtroll are spreading their ideology and harassment tactics to sites such as Patently-O, run by Dennis Crouch from the University of Missouri School of Law



  29. Complaints About Google Patents, R3 Patents, and the EFF's Campaign of Exposing/Disarming Patent Trolls

    A mix of interesting developments surrounding patents, including a nasty campaign by Dominion Harbor Group to smear patent reformers



  30. Latest Assaults on PTAB and More PTAB Bashing, This Time by Anticipat

    The Patent Trial and Appeal Board (PTAB), which helps eliminate patents granted in error (a lot of software patents), is still besieged by the patent 'industry'


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts