Defining The Patent Troll

from the definitions-matter dept

Recently, the IP Troll Tracker blog decided to try to officially define "patent troll" to a level that might satisfy a patent holder who insists that there is no such thing as a patent troll. For many years, we here at Techdirt avoided using the phrase "patent troll" because it did seem rather undefined, but it became so commonplace that we eventually gave in and used the phrase regularly. The term has showed up in all sorts of places, including courtrooms and discussions on legislation. In some circles, policy makers often use the term "non-practicing entities" (or NPEs) instead of "patent trolls" but that upsets some who feel that there are "NPEs" (like universities) that do research that they wish to license off, but which will never be "practicing entities." Some have also called them "Patent Assertion Entities" (PAEs) to describe companies who do nothing more than assert patents. At least that leaves out universities -- but then that also leaves out companies who do other things but who also, do some patent trolling (including, frankly, some universities, since we're discussing them).

Stephanie Kennedy, who runs the IP Troll Tracker blog, came up with the following definition:

Patent Troll, n -

1/ A company or individual who, using patents that either never should have been issued or are broadly constructed (intentionally for the purpose of misuse, or as a result of poor USPTO patent examination practices), sends letters to various and sundry companies and/or individuals that simultaneously request license fees and threaten legal action if the recipient fails to respond correctly by paying up and who will, in the face of inaction by a demand letter recipient, actually file suit in Federal District Court, the District of East Texas being the most popular venue.

2/ A company set up to act as a cover for large corporations who try to breathe new life into older patents which they would ordinarily let expire but, as a result of greed and/or pressure from Wall Street, have decided are ripe for assertion or litigation.

3/ Intellectual Ventures

I recommend not clicking on the link for number three.

Anyway, I like this formulation a lot better than the simplistic "NPE" designation, because I think there are lots of "practicing entities" that do trollish behavior (Microsoft being a big one). The problem with patent trolling tends to be that it's little more than a classic shakedown. Trying to get companies to pay up because the cost of paying up is usually a lot less than the cost of going to court to explain why you shouldn't have to pay up.

There is, not surprisingly, a fascinating discussion in the comments to the IP Troll Tracker's definition. A lot of it is people quibbling with who's to blame here -- arguing that there may be problems with the Patent Office granting patents it shouldn't or with some form of "litigation abuse," but that patent trolls aren't the "problem." That's... questionable at best. While it may be true that patent trolls aren't doing anything "illegal," it doesn't take any special economic skills to recognize that what they are doing is a deadweight economic loss.

Anyone who's spent any time exploring the murky underworld of patent trolling knows what is mostly happening. Quite frequently it's lawyers -- often former patent attorneys -- who absolutely know they're abusing the system for profit and they don't care about it at all. They buy up a few patents that they know are just vague enough and then they just start sending out the settlement letters and wait for the cash to come in. This is not "promoting the progress." It is not advancing any innovation. It is purely about taking money away from those who actually innovate, and handing it over to trolls and their investors, not to reinvest in any sort of innovation, but to reinvest in trolling.

Filed Under: definitions, patent troll, patents