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[[Patent Trolls]] are an innovation bogeymen, ==Definition==<section begin=trolls />No agreed-upon definition of patent troll exists. The term patent troll is used interchangeably with numerous research articles the terms non-practicing entities (NPEs) and legislation addressing ways to curb troll activity. Patent Trolls, also known as [[Patent Assertion Entities]] patent assertion entities (PAEs). Despite similar sounding names, generate revenue through suing or threatening to sue businesses that infringe on patents. Experts dispute several key differences exist between the three terms for such corporations, labeling them as either [[Patent Assertion Entities]] (PAEs) or [[Non-Practicing Entities]] (NPEs).
'''Hypothesis 1: Most Patent Assertion Entities are drivers trolls may also target a slew of companies that tangentially intersect the sphere of innovationthe patent. One famous example of a patent troll is MPHJ Technology Investment, and incorrectly labeled as patent who claimed to have patents that cover any networked "scan-to-email" function. MPHJ sent demand letters to more than 16,000 small businesses, each letter demanding license fees of at least $1000 per worker.<section end=trolls.'''/>
Method 1:Find list of PAEs, sort by location, number of lawsuits filed, damages. Need to control for size of company and sector. Top 10 PAEs in 2015, according to [http://unifiedpatents.com/2015-year-end-report/ (Unified)]
648 total casesIn illiquid markets where asets cannot be sold or exchanged easily, 519 in Epatent assertion entities can help match patent holders to patent buyers and transfer ideas and technology from inventors to manufacturers effectively. This allows inventors to focus on innovation while benefiting from the knowledge and connections that intermediaries possess. Patent assertion entities are able to incentivize innovation through the effective brokerage of patents.D[https://www. Texwhitehouse. 80gov/sites/default/files/docs/patent_report.09% pdf] They manage risks for small inventors and inform manufacturers or inventors of all the usefulness of having another inventor's patent litigation cases filed in 2015 were filed in Etheir patent portfolio.D [http://www. Texasbna. com/challenges-of-defining-a-patent-troll/]
A patent infringement case can be filed According to the U.S. Census Bureau, small businesses with fewer than 20 employees made up 89.6 percent of employer firms in the United States in 2012. [http://sbecouncil.org/about-us/facts-and-data/] Small firms produce more patents per employee than large companies and help drive innovation in any of the US districts that United States economy. The patents they develop have personal jurisdiction over the defendant, which include states or districts where the defendant's products a greater impact and are sold, regardless often more technologically important than those of whether or not an office exists in that locationlarge firms. [httpshttp://www.fenwickimamidejo.comsi/resources/files/FenwickDocumentsdoc/Legal_FAQ_Patent_Litigationanaliza%20patentov%20v%20msp%20usa.pdf (1)] The large number Small Business Administration reported that "although small firms account for only 8 percent of patents granted, they account for 24 percent of cases filed the patents in Ethe top 100 emerging clusters.D" [http://sbecouncil. Texas could point org/about-us/facts-and-data/] Because small businesses and emerging companies are not always able to the favorable disposition protect their patents on their own and account for much of the court innovation driving emerging industries today, they need patent holders. See [[Eastern District of Texas]]assertion entities who have the power to protect their patents for them.
'''Hypothesis 2: Patent litigation is increasing, but only because ==Evaluations of the uncertain nature Proposed Regulations=====Stricter Demand Letter Requirements===Supporters of technological developments and how current legislation against patent claims apply to trolls claim that. Patent the huge increase in patent litigation surges cases proves that patent trolls, just like eDekka, are consistent with major shifts increasing in technological developments'''*High tech number and prevalence. Many of them point to stricter demand letter requirements as the solution. The Innovation Act that is currently under consideration in the only sector where House demands that any claims of patent infringement must be accompanied by a majority very specific initial complaint letter, including information such as the name, exact model number, and description of cases were NPE relatedeach alleged infringement.
Method: Find a reliable graph There are two problems with this. First, the increase in patent litigation cannot be attributed to an increase in patent trolls. Patent litigation is increasing, but only because of developments within the technology sector uncertain nature of technological advancements and match the application of patent claims to these new developments. Patent litigation surges are consistent with major shifts in technological developments. There has been an increase in lawsuits, but it is proportional to the one below [https://docsincreased filings.googleThus, patent trolls exist but their prevalence has been greatly exaggerated by the media.com/spreadsheets/d/1mx9j2cnrQ_cL0PeP3x40yN7bGxnt4mNzzPPUDNltfaU/pubchart?oid=1082659239&format=image]:
*==Recommendations on Curbing Patent Troll Activity==Legislation that enacts sweeping reform of the patent system will not help curb patent troll activity. This type of reform only weakens patent protection for legitimate patent holders and patent trolls alike and does not deter patent trolls from engaging in abusive or frivolous litigation. The [[Innovation Act]] and [[PATENT Act]] would exceed what is needed to reduce the activity done by a small number of patent trolls by raising the costs and risks for all legitimate patent holders to enforce their patent rights in court or defend themselves from larger companies. Any legislation that would alter the current patent system should target the specific actions used by patent trolls and should not propose broad reforms that change the procedure used to enforce patents. For example, legislation like the recently proposed [[STRONG Patents Act]] gives the FTC the power to determine that certain demand letters are in "bad faith" and penalize the companies that issue these letters, but also specifically protects mistakes that were made in good faith.
'''Interesting facts that may deserve extra research'''*Historically, the [[Eastern District of TexasCategory: Public]] is the top patent dispute venue. In 2015, 44% of all patent litigation was filed in E.D. Texas, most of which were assigned to Judge Rodney Gilstrap
The Truth Behind Patent Trolls (view source)
Revision as of 15:18, 2 September 2016
, 15:18, 2 September 2016no edit summary
'''Non-practicing entities (NPEs)''' own patents, but do not necessarily create products out of these patents. This behavior is common; 95% of patents are never used commercially [http://www.wired.com/2015/01/fixing-broken-patent-system/]. Universities are examples of non-practicing entities. Faculty members may file for patents based on their work in a laboratory and receive a patent. Then, those faculty move on to a different project and do not use the patent they hold.
'''Patent assertion entities (PAEs)''' are a type of non-practicing entity that generate a majority of their revenue through licensing patents they own. For example, a large firm may buy up a thousand patents. Instead of creating products derived from those patents, they license these patents to other firms that wish to create those products. If another firm infringes on a patent, the patent-assertion entity may send a demand letter to the company with a warning. The demand letter warns the infringer that they are subject to a lawsuit if they do not acquire proper licensing of a patent.
These '''demand letters''' serve as the tipping point between patent assertion entities and patent trolls. Whereas PAEs assert the fair value of their patent against the infringer, patent trolls inflate the amount of damages felt as a result of infringement. Patent trolls may threaten a firm with exorbitant lawsuit costs, and then provide a quick way out of a lawsuit through a license. The supposed infringer, fearful of a high lawsuit costs, may just pay the licensing fee. However, the supposed infringer may not even have infringed on any patent.
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² 79% of cases filed in Southern District of Florida
==Patent Assertion Entities and Small Business==
The current U.S. patent system restricts the market for innovation with high transaction costs and legal risks. [http://www.wired.com/2015/01/fixing-broken-patent-system/] Most small and medium-sized businesses are unable to afford the costs associated with patent litigation and are prevented from commercializing or licensing over 95 percent of current active patents. [http://www.wired.com/2015/01/fixing-broken-patent-system/] Therefore, many smaller-sized businesses rely on patent assertion entities to protect their patents and defend against expensive litigation. Patent assertion entities aggregate and manage patents and have the expertise to legitimately protect patents from infringement. [https://www.whitehouse.gov/sites/default/files/docs/patent_report.pdf]
==An Illustration of Patent Troll Activity==
There's no doubt that patent trolls exist. eDekka, widely considered one of the top patent trolls, filed lawsuits against 101 companies for patent infringement in 2015, 55% of which are considered small businesses under SBA regulations. There may be more companies eDekka sent threatening demand letters to, companies that decided to settle instead of bringing the case to court. Compare eDekka to Intellectual Ventures, which had only filed 6 patent lawsuits in all of 2015. Intellectual Ventures is considered by the public to be a legitimate patent monetization firm [http://www.ipnav.com/blog/patent-assertion-entities-good-or-bad-for-innovation/]. It is clear that there is a distinct difference between patent assertion entities and patent trolls. As of December 2015, eDekka had sued over 200 companies for infringing upon the US Patent no. 6,266,674 "Random Access Information Retrieval Utilizing User-Defined Labels", a patent on a form of household remote controls. 168 of these cases were later thrown out by US District Judge Rodney Gilstrap, who wrote that the "strikingly similar lawsuits" demonstrate "an aggressive strategy that avoids testing its case on the merits and instead aims for early settlements falling at or below the cost of defense" [http://arstechnica.com/tech-policy/2015/12/in-a-first-east-texas-judge-hits-patent-troll-with-attorneys-fees/].
Second, stringent demand letter requirements are not an efficient solution to curbing patent trolls. The proposed reforms against demand letters by the Innovation act are too broad; they have the potential to stifle innovation. Patent owners acting in good faith would not be able to legitimately enforce their patent rights, creating an ineffective patent system and reducing the incentives for innovation. Qualcomm Incorporated, one of the leading companies within the telecommunications sector, manages a portfolio that contains at least 13,000 US patents. As a company that relies on the current patent system to protect its innovations, Qualcomm stated that "the appropriate goal of the legislation should be to identify, and empower the FTC to address, only those demand letters that are sent in bad faith" [[Imagehttp:Patent_litigation_2011//www.ipwatchdog.com/2015/03/04/demand-letter-legislation-must-be-narrowly-tailored/id=55365/].png]]
===Empowering the FTC===
Skeptics of the Federal Trade Commission’s (FTC) effectiveness may question how well the commission would handle patent trolls that have heavy financial and litigation muscle. However, these skeptics should remember that the Federal Trade Commission has already demonstrated willingness and ability to address patent trolls. In the 2014 investigation regarding MPHJ Technology Investments, LLC, the FTC found more than 16,000 demand letters sent to small businesses. Subsequently, the FTC prohibited MPHJ from asserting "false or unsubstantiated representations" regarding a patent's licensing activity or the potentiality and imminence of a lawsuit. [https://www.ftc.gov/system/files/documents/cases/150317mphjtechdo.pdf] However, the FTC did not award any damages to small businesses that fell victim to this patent troll.
The bad faith standard in legislation such as the [[Targeting Rogue and Opaque Letters (TROL) Act]] provides a high standard that the FTC must meet in its patent trolls investigations. Bad faith refers to "'clear and convincing evidence'that the infringement assertions are 'objectively baseless'Hypothesis 3to avoid dismissal on summary judgment or a motion to dismiss." [http: Data //patentlyo.com/patent/2013/05/what-is-happening-in-vermont-patent-law-reform-from-the-bottom-up.html] In the case of an FTC investigation, the commission would have to show that supports increased costs a demand letter written by an alleged patent troll demonstrated bad faith assertions. Some examples of these bad faith assertions include, but are not limited to innovation rely on broad , falsely claiming the existence of a pending lawsuit, previous patent infringements, and confusing definitions even the valid ownership of a patent. The authors of the issue brief will note that determining the bad faith nature of demand letters sets a high standard for NPEs the FTC. However, such a high standard will protect legitimate patent assertion entities against unreasonable investigations and PAEs'''sanctions.
Congress last passed comprehensive patent reform only five years ago, in 2011, and the unintended consequences from those changes are still appearing. [https://www.congress.gov/bill/114th-congress/senate-bill/632/text#toc-id645863c82106422dbabf0358ad52716d] Without carefully analyzing the potential effects of broad reform, Congress should not rush to combat the small amount of abusive litigation activity with sweeping changes that negatively affect everyone.
