This American Life (TAL) is running a story this week that?is well worth?tuning in for. Some may have heard of Nathan Myhrvold during his time as IBM?s?chief strategist and chief of technology or from his $600, six-volume cookbook. But few outside IT circles would know of his ?innovative invention company??Intellectual Ventures, and how it is regarded by many in the field as the leader of patent trolls, having amassed roughly 35,000 patents since its inception in 2000.
TAL?s story?delves into the origins of the term ?patent troll? and the?rise of the patent troll industry?in America. Patent troll is a name usually given to companies that accumulate, at times, huge troves of patents and make money by threatening lawsuits.?And patent trolling is on the rise. From 2004 to 2009, the number of patent infringement lawsuits in America went up 70 percent while licensing requests went up 650 percent.
A large?proportion?of the story is spent on discussing the two sides of Intellectual Ventures, as a patent troll company and a legitimate business that allows inventors without sufficient resources or legal savvy to cash in on their patents. Intellectual Ventures buys and collects patents from inventors, creating a huge ?warehouse of inventions? that companies can pay for and use if they wish. In fact, Intellectual Ventures claims they are the exact opposite of patent trolls as they are on the inventors? side. As such, they themselves, so they constantly claim, do not initiate patent infringement suits.
What IV does instead, TAL alleges, is create shell companies, like Oasis Research or even recent patent bad guy Lodsys, to?whom IV sells its patents to. These shell companies get the supposedly dirty trolling work done and IV then receives its cut.
As much as we would all heavily frown upon patent trolls, and perhaps even sell or not buy Intellectual Venture shares out of principle, what these trolls do, in?enforcing?patent rights, even if the troll has no interest in what the patent itself is for, is entirely legal. So what was more disconcerting for me was not finding out that people would do questionable things because they are greedy (cause who knew?), but that the underlying American patent system facilitates it.
Originally, and theoretically, patents were intended to make it safe to share ideas. Their purpose was to encourage innovation from inventors. And to a certain extent, I?m sure it does. But with the rise of patent trolls, arguably like Intellectual Ventures, according to?TAL, the patent system isn?t promoting innovation, but stifling it.
Because as noble as Intellectual Ventures? claims are, protecting patents does not mean protecting invention.
?We?re at a point in the state of intellectual property where existing patents probably cover every behavior that?s happening on the Internet or our mobile phones today,? says Chris Sacca, a venture capitalist. ?[T]he averageSilicon Valleystart-up or even medium sized company, no matter how truly innovative they are, I have no doubt that aspects of what they?re doing violate patents right now. And that?s what?s fundamentally broken about this system right now.?
The TAL team brought a specific patent to David Martin, who runs a company called M-Cam, which is hired by governments, banks and business to assess patent quality. The patent the TAL team had brought to be assessed was for ?an online backup system.?
Not only did they find multiple other patents from the same time that covered extremely similar things, like ?efficiently backing up files using multiple computer systems? or ?mirroring data in a remote data storage system?, they also found?different?patents?with different patent numbers but with the same title: ?System and method for backing up computer files over a wide area computer network.?
Martin says about 30 percent of U.S.patents are basically on things that have already been invented. A more ludicrous example is the 2000 patent on making toast, patent number?6080436, the ?Bread Refreshing Method.?
As well, many patents are so broad, engineers say, everyone?s guilty of infringement. It seems like patents are doled out like candy at Halloween, the good mixed with the bad but equal before the law. This means any business, and particularly tech companies, big or small, will eventually and almost inevitably walk onto a patent landmine. That?s why big technology companies are now spending billions of dollars buying up huge patent portfolios in order to defend themselves.
But it is in the little guy where the American patent system will stifle innovation the most.
A patent lawsuit against or by the likes of Apple or Google would hardly raise an eyebrow as such mega-corporations can afford the multi-million dollar bill of going to court. Not so for the small or medium start-up companies who can ill afford these costs. Such patent infringement suits slows innovation as it becomes harder for small companies to prosper, increases the risk and stress of trying something new, and if the start-up survives the nearly inevitable settlement, the suit increases the cost of making their product.?Patent trolls have the capacity to completely obliterate start-up companies.
The patent granting system in Canada is currently not as generous as the U.S., and patent rights are not a constitutional right here as it is down there. But for better or for worse, the scope of what qualifies for patent protection is expanding here, as is the patent lawyering industry. There is much Canada can learn from some of the patent problems in the US, like over-generousness, broadness and repetition. And hopefully trolls will not crop up here, as no matter where they are, they ugly.
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