Google Seeks Allies Against Patent Trolls - InformationWeek
Government // Mobile & Wireless
02:51 PM
Connect Directly
[Dark Reading Crash Course] Finding & Fixing Application Security Vulnerabilitie
Sep 14, 2017
Hear from a top applications security expert as he discusses key practices for scanning and securi ...Read More>>

Google Seeks Allies Against Patent Trolls

Along with BlackBerry, EarthLink and Red Hat, Google is urging the Federal Trade Commission to limit "privateering."

Google Nexus 7, Take Two: What To Expect
Google Nexus 7, Take Two: What To Expect
(click image for slideshow)
Google on Friday joined with BlackBerry, EarthLink and Red Hat to ask the Federal Trade Commission and the U.S. Department of Justice to examine how businesses that sells products or services -- operating companies -- have taken to outsourcing patent claims to companies that exist solely to litigate -- patent assertion entities (PAEs) -- as a way of imposing costs on competitors without risk of retaliation.

Technology companies traditionally have preferred to maintain large patent folios for defensive purposes. Filing a patent lawsuit against another technology company armored with patents was believed to be a risky proposition because the litigation would be expensive and the defendant could counter-sue, potentially winning an injunction against the plaintiff's products.

But recently PAEs, also known as non-practicing entities or as patent trolls, have proven that the investment required to obtain a patent and then file lawsuits asserting infringement is worth the risk when weighed against the potential financial reward. And companies with many patents have realized that they can cross-license their patents to PAEs, thereby allowing them potentially to share in licensing fees or legal judgments without risk of a counter-suit. This practice is sometimes known as privateering, in reference to the former maritime practice by which governments authorized privately operated ships to conduct attacks on their behalf.

[ Who is collecting personal info on you? Read California Weighs Tough Rules For Data Brokers. ]

The problem with this practice is that it promotes litigation and harms companies producing goods or offering services.

"Outsourcing to PAEs alters these incentives in ways that raise costs and harm competition," the companies said in remarks submitted to the U.S. government. "Unlike an operating company, most PAEs are immune to patent countersuits because they offer no products or services. Transferring patents to a PAE can shift symmetric patent peace into asymmetric patent aggression."

According to BlackBerry, Google, EarthLink and Red Hat, PAEs are filing four times as many lawsuits today as they were in 2005 and their cases now account for 62% of all patent litigation. The four companies refer to such litigation as an innovation tax and claim that PAE actions cost U.S. companies $29 billion in 2011, or $80 billion when direct and indirect costs are considered together.

As if to demonstrate the burgeoning appeal of this business model, Lodsys, a patent holding company known for demanding licensing fees from app developers, last week sued 10 additional mobile game developers, including the Walt Disney Company, for allegedly infringing its in-app purchase and chat patents. Lodsys has filed over 60 patent infringement lawsuits since it began its litigation spree in early 2011, and has obtained licensing deals with over 200 companies.

Lodsys has been alleged to have ties to Intellectual Ventures, a well-known PAE. Intellectual Ventures has said it does not control Lodsys, but it has not disavowed the possibility that it might benefit financially from the patent fees and penalties collected by Lodsys. Intellectual Ventures did not immediately respond to a request for comment.

Apple has tried to intervene in the case, but its claim -- that its developers inherit its license to Lodsys's patents -- won't be heard until later this year. Google is challenging the validity of Lodsys's patents but that claim also awaits resolution.

The proliferation of PAE infringement claims might be addressed through proposed legislation such as the Shield Act, which would make PAEs pay defendants' legal costs upon defeat in court. But further patent reforms might be necessary to curb abusive litigation.

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
Drew Conry-Murray
Drew Conry-Murray,
User Rank: Ninja
4/9/2013 | 11:32:27 PM
re: Google Seeks Allies Against Patent Trolls
A major part of the problem is a patent system that's far too ready to award patents to incremental advances and features, rather than truly innovative ideas. The USPTO awards hundreds of thousands of patents every year. Whatever happend to prior art?

Drew Conry-Murray
Editor, Network Computing
Thomas Claburn
Thomas Claburn,
User Rank: Author
4/9/2013 | 1:10:16 PM
re: Google Seeks Allies Against Patent Trolls
Google has been pushing for patent reform for several years. But legislation has been slow to follow.
J. Nicholas Hoover
J. Nicholas Hoover,
User Rank: Apprentice
4/9/2013 | 11:59:45 AM
re: Google Seeks Allies Against Patent Trolls
I wonder what is driving Google's apparent new stance on IP issues. First, Google indicating that it won't (usually) sue unless sued first, and now this.
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll