I remember the cutting edge high technology mobile “brick” phone in the early 1990s: the flip receiver, 8-character dot-matrix red LED display, with a rudimentary phone book and it fit in your shirt pocket. I have no idea how long the battery would last between charges because we always had the device plugged into our car or wall somewhere. The phones were expensive to purchase and to use.
Twenty years later, for a few hundred dollars, I now carry around more computing power in the front pocket of my blue jeans than all of NASA’s computer power in 1969 when it sent two astronauts to the moon, according to Professor Michio Kaku. The “phone” function with its innumerable ring tone options is now a side show on the tiny device, pushed aside by my email, texting, calendar, camera, library of photos and songs, several online chess games, GPS tracking map, and many other apps … We’ve gone from somewhere just over 10 million mobile phones worldwide in 1990 to over 4.5 billion today.
Beyond the implications of Moore’s Law, our current state of mobile telephony reflects rapid and continual technological innovations. Dr. Martin Cooper is the first inventor named on the first ”Radio telephone system” patent, US Patent 3,906,166, filed on October 17, 1973 with the USPTO. Since then, hundreds of thousands of patents have issued relevant to mobile telephony. Brian Partridge of the Yankee Group estimates that the innovations for most mobile phones today involve between 70,000 and 100,000 patents.
As a result of so many patents in play, mobile telephony patent litigation is now routine and one of the favored fertile hunting grounds for trolls “non-practicing entities.” One such NPE, Intellectual Ventures, with a library of more than 35,000 patents, is reported to have “earned” over $2 billion through licensing since 2000.
Some question whether our patent system and high cost of patent litigation are retarding further telephony innovation. The BBC recently published an article on patent litigation asking, Can Mobile Phone Innovation Survive the Patent Trolls? Such a result would be ironic given the public policy justification for the patent grant is to encourage and reward innovation. In a now well-read piece, Daniel P. McCurdy argued that Patent Trolls Erode the Foundation of theU.S. Patent System.
The ever present threat of patent suits has incentivized industry leaders to reach concensus on technology standards and to promise each other ”fair, reasonable, and non-discriminatory” licensing terms on their patents related to such standards. Such a “FRAND” defense will not have significant applicability to NPEs, however, it establishes compelling evidence of what a reasonable royalty should be in such cases.
The increase in patent litigation has also brought about anti-NPEs of sorts: defensive patent aggregators. One such DPA is the company RPA which offers its clientsa license to all patents and associated rights aggregated in the RPA patent portfolio. RPA promises to never make offensive use of its patents, however, patents in the portfolio are also available for members to use in a counterclaim against any non-member who initiates litigation. Again, it’s unclear how DPAs would dis-incentivize NPEs, since NPEs have no product against which to launch a patent counter-attack.
The America Invents ACT minimally addressed NPE litigation. The only meaningful reform is that multi-defendant patent suits are now prohibited absent the collusion of the defendants. NPEs can no longer file a single lawsuit against numerous defendants whose only commonality was the alleged infringement of the same patent. Now NPEs are filing numerous lawsuits in a court instead of filing one actions with the same numerous defendants. This increases the cost of litigation for NPEs.
Mr. Partridge reports, the ”U.S. International Trade Commission (ITC) is considering major changes to the way it handles patent litigation, including forbidding suits brought by NPEs or companies that hold patents but don’t use them for anything other than filing lawsuits. Such firms would need to prove the patent infringement harms the public interest.”
Some have advocated for a patent exchange, where companies would be able to review and bid on patents in competition with NPEs. This would also increase the costs to NPEs that rely upon acquiring patents from others.
Limiting the available venue for filing a patent suit would provide a simple procedural remedy to deterring the proliferation of NPE suits. Venue could be limited to the defendant’s principal place of business or to the plaintiff’s place of business if the defendant’s accused device is sold into that jurisdiction.
In the meanwhile, courts are pushing back against NPEs. As noted and explained by Mr. McCurdy, the Supreme Court and Federal Circuit’s rulings in MedImmune, Sandisk, eBay, KSR, Bilski and Quanta Computer can all be read as reducing some of the threats, leverage, and tactics of NPEs . The largest problem from my perspective of judicial push-back on these issues is that these decisions also adversely affect legitimate individual inventors and small, upstart technology companies, both of whom rely upon the leveling power of patents to protect their market innovations.
As our system evolves to be less troll friendly, we should remain confident that our patent laws will continue improve to keep pace with our systems of innovation. Technology itself may present solutions to some of these issues. There’s probably a mobile app being developed right now to assist companies with identifying trolled technology.