Ex-Googler Michelle Lee has just been appointed to head the U.S. Patent Office’s new Silicon Valley satellite office. The corporate shills are predictably chortling with glee over her oft-aired views on the subject of “patent trolls”:

“By 2009, Lee was talking publicly and blogging about how so-called ‘patent trolls’ were a growing burden for Google, and the tech sector at large. That same year she authored a blog post saying that patent reform was needed “now more than ever.” Of twenty patent lawsuits that had been filed against Google, only two were from companies with any products or services.
. . . .
“Caroline Dennison, a legal advisor at the patent office, said her hiring was a sign of the office’s dedication to better dialogue with the tech sector. ‘[Lee] has been in the trenches with the non-practicing entities in litigation,’ said Dennison. ‘She gets it, she knows what’s going on. And we couldn’t be more thrilled to have her. Director [David] Kappos is committed to this industry, and committed to looking for solutions to this problem. . . . ‘”

Did you see what happened there? “Patent trolls” morphed into “non-practicing entities”?

Here’s what’s really going on in this debate: large corporations don’t like to be sued for infringement. (Hardly anyone does.) They are happy to amass huge portfolios of what we may charitably refer to as “questionable” patents, and use them, often in concert with other large corporations, to erect an impossible barrier to any newcomers, but they really don’t like it when the roles get flipped.

But, pretty much by definition, big corporations can only ever be sued by a newcomer that is a non-practicing entity.

Consider this scenario: you come up with a great idea. It’s software based, easily copied, so you apply for a patent, max out your credit cards, and launch your startup.

Now Behemoth Corp. comes along and brazenly copies everything you were doing. Most likely, you just became a non-practicing entity, because there is no way you’re going to out-compete Behemoth Corp. They have a billion dollar bank account, you have a laptop and a web site, you’re history.

But let’s say you manage to get enough momentum going before they turn you into road kill, you’re still managing to stay afloat. You get your patent issued and sue them for infringment.

The next thing that happens is, those lovable guys in the Behemoth legal department rummage through their portfolio of thousands of patents and find a few dozen that are somewhere in the ballpark of what you’re doing. And they countersue, claiming that you’re infringing their patents.

So now your business plan consists of trying to ramp up a startup while paying millions to lawyers to defend yourself, having your operations disrupted by opposing lawyers rummaging through all your records, and having most of your time taken up dealing with a massive lawsuit?

For sure, if you weren’t a non-practicing entity before, you are now.

Plaintiffs’ patent litigators broke the code on this a long time ago. If you’re an inventor with a valuable patent, you can go the startup route and get elephant-stomped, or you can carefully set up a separate entity to own the patent, so that you don’t wind up spending millions defending specious counterclaims. This really is not a difficult choice.

Of course, no one likes patent trolls. I don’t like patent trolls. Properly defined, a patent troll is someone who extorts money on the basis of patents on things that aren’t really inventions. (Sort of like a lot of the patents in those multi-thousand patent portfolios that all the big software companies maintain — ever read any of those?)

But equating “patent troll” with “non-practicing entity” is just rhetorical sleight of hand, approximately the equivalent of calling Republicans “Nazis”. Just find a suitably incendiary pejorative label and attach it to whatever you don’t like.

Attacking non-practicing entities is nuts. For starters, let’s remember that every single university research lab in the country is a non-practicing entity. Are they patent trolls?

There are lots of independent labs and little consulting groups that do contract research in various specialty areas. Are they patent trolls?

And what about independent inventors? Apparently, if you invent something and somehow manage to persuade a big company to buy it, that’s ok, you aren’t a patent troll, but if they just steal it and you have to sue them, now you are?

And where is the logic in the idea that non-practicing entities are bad? What happened to the law of comparative advantage? Doing effective research and running companies are two very different skill sets, rarely found in the same person. Why isn’t it OK for inventors to invent things, and get paid for that, without having to be business tycoons too? Are we really prepared to say that researchers should only be paid for their work if they also start companies and develop products?

Isn’t that about like saying farmers shouldn’t be able to be paid for growing wheat, they can only be paid if they launch bakeries and sell bread?

Here’s the bottom line: the real patent troll problem isn’t non-practicing entities. It’s crap patents, and some of those complaining loudest about patent trollery are also some of the worst offenders. If the PTO really wants to do something about the “troll” problem, the solution is simple — stop issuing patents on things that aren’t inventions.

But as long as Congress uses the patent office as a cash cow while expecting examiners to do searches and rule on applications in fewer hours than it takes even to¬†read a complex technological application thoroughly, don’t hold your breath. Michelle Lee is obviously a talented lawyer and I wish her every success, and the PTO opening some satellite offices in a few places where people actually make things is long overdue. But attacking non-practicing entities isn’t the solution.

Either eliminate software patents entirely, or give the PTO the resources to do the job properly. Those are the solutions. The crusade against non-practicing entities is just a campaign by big corporations to tilt the playing field in their favor even more than it already is.

Leave a Reply

Your email address will not be published. Required fields are marked *