« What the heck is a patent troll? | Main | Announcing the newest PHOSITA - Laura Wood »
April 18, 2006
Trying to Burst the bubble - Just another troll?
So last week we asked ya'll to give us your best shot at a litmus-test definition for the term "patent troll." It's an understatement to say that the response was somewhat underwhelming. We received a grand total of......zero definitions.
We've decided to take that as an indication of the difficulty associated with defining the term and not a statement about the readership of the blog (which, for the record, is reaching all time highs right now).
We do believe that the issue is important enough for a follow-up, though. How about a real life example?
Check this out - Burst.com recently filed a patent infringement suit against Apple Computer. The patents at issue relate to technology that speed the delivery of data, including audio and video files, over a network.
We've got a question for you. A simple one. Is Burst.com a patent troll?
Wait...don't answer. Consider a few facts first:
The company has two (count 'em, 2) employees and a portfolio of ten (count 'em, 10) U.S. patents. It routinely asks companies to license its patents, and sues them if they don't. It focuses on software and high-technology companies for some reason (must have something to do with the fact that the technology relates to that area). Just last year, it successfully settled a dispute with Microsoft for a reported $60 million.
Hmmm...smacks of a patent troll by most definitions, right?
Consider this description from the company's web site:
The company focuses exclusively on licensing activities and strategic relationships.
(emphasis is ours)
Are you serious? An exclusive focus on licensing and strategic relationships? Does that mean they don't actually produce anything? (based on the web site, it's hard to tell if any "products" are available from the company at this time)
Surely there must be a bridge running over the Burst.com headquarters in Santa Rosa.
But, don't answer the question yet...Here's a few more facts:
According to a recent article in BusinessWeek, the Microsoft settlement reportedly earned the lawyers a fee of about $20 million. That lawsuit was apparently financed by "an investor." Oh, and the company openly states that its goal in the Apple lawsuit is to seek a chunk of the growing revenues for online music distribution.
A troll for sure, right? These guys are Pure Evil. Damn trolls.
Humor me, though. Don't answer yet. As Lee Corso would say, "not so fast, my friend."
Here are a few more facts that you should consider:
The founder of Bust.com is recognized by many as a true visionary in computer network technology. He's an inventor. His technology apparently wowed the crowd at the Consumer Electronics Show in 1991. He had invented improved methods for transmitting data over computer networks long before large video and audio files were of concern to the masses. The company was once viewed as a real tech startup success story, and had even grown to include 110 employees in the late 1990's.
But when Microsoft upgraded its Media Player software, Burst's product, Burstware, stopped working. Strange. Payroll shrank immediately from 110 to 4.
Ok...now give us your answer (or keep it to yourself, we don't care...just try to answer the question). Is Burst.com a patent troll?
Or is it just an angry innovator seeking to protect its property?
Do you see the challenge?
Posted by J. Matthew Buchanan at 10:40 AM.
Permalink: Trying to Burst the bubble - Just another troll?
| Comments (10)
| Sphere: Related Content
The slashdot crowd may use the term liberally, but none of them know enough about patent law to actually articulate a definition.
As you've illustrated, there is no way to define a "patent troll" because there really is no such animal.
Posted by: Troy Svihl at April 18, 2006 10:00 AM
I'll bite, because I don't think it is as hard as you are trying to make it.
When Burst.com was negotiating with Microsoft, several NDAs were in place, describing all the secrets of how Burst did what they did. As soon as Microsoft had squeezed enough information out of Burst for them to copy the innovations, they cut of negotiations and sent Burst away. Then, to add injury, they did things to purposely break Burst's software. And much economic harm (to Burst) ensued.
It isn't hard to see that MS was the one acting in bad faith during this time, and it wasn't hard for the jury to come to that conclusion when Burst sued.
Now, however, Burst is going after other players, who had nothing to do with the company, had no NDAs in place with them. They are suing these companies (most prominently Apple) purely over the belief that they "own" the ideas that were independently discovered by other players, working on the same problems Burst was trying to solve in the early 1990s. If there is one good common-sense test (admittedly, not a legal one) for obviousness, its whether or not others working on the same problem will come up with the same solution. In this case, it seems that Burst's ideas were obvious.
So, short answer: Burst was not a troll against Microsoft, when they employed over a hunder people and produced a product. Now that they've tasted the sweet nector of patent litigation, they have decided that casting a wide net and sitting under a bridge is much more lucrative than being a productive member of society, so they have become a troll.
There is nothing hard about this. The company has transformed itself into what our current patent system incentivized it to become: a pariah.
Posted by: Thomas Q at April 18, 2006 11:37 AM
Depends on whether the technology (implementation) they have is truly unique.
In Burst's case, it doesn't seem to be the case. Others have implemented the same concept in slightly different ways. So they qualify as a troll.
I also think MS settled because of the deleting-hiding email issue, not one of patent validity. Do a google search and you'll find plenty of info about this.
Posted by: mark at April 18, 2006 04:46 PM
What difference does it make? Their patents are being infringed and that's the way it works. Last time I looked, the Patent statute didn't require the patent holder to produce a product.
Has it changed?
Get over it and pay royalties when you infringe.
Posted by: Tony R at April 18, 2006 07:15 PM
Universities are the largest patent trolls out there. They don't use what their researchers invent. They just license and enforce.
Posted by: anony mouse at April 18, 2006 07:48 PM
The patent troll issue is one of perception over substance. It's a term used by an infringer against an owner.
A good example was mentioned above. Universities (and their respective tech transfer offices) may be "patent trolls" in the sense that they lack the ability to self-commercialize products--something, by the way, that is usually outside the scope of their non-profit activities. It's true, many universities do sue infringers, but most see that as contrary to their public purpose. So, instead they end up seeking licenses from capable companies and then reinvest the money into the institution. In addition, universities are also huge consumers of intellectual property. I can't count the number of commercial licenses that passed across my desk requesting the use of some company's something-or-other.
If I were to define "patent troll" it would be:
A derogatory term applied to a for-profit patent owners whose sole business objective is to seek windfall royalties or settlement agreements.
I think that this avoids incorporating companies whose purpose is largely inventive or educational, but includes companies who purchase patents solely to extract payments not necessarily commensurate with their investments.
Posted by: Mike at April 19, 2006 12:19 PM
Universities /are/ trolls, especially in the since the time they were allowed to take out patents on research FUNDED by YOUR TAX DOLLARS, and then sell those patent rights off to corporate america. What a deal!
And fyi, I am a product of post-graduate American Universities, and I hope one day to return to them -- but I don't think we need these absurd incentives at our premier research institutions. Better to put these tax-funded innovations in the public domain, where they can do the maximum possible good.
Posted by: Thomas Q at April 19, 2006 12:36 PM
IP Law & Business magazine published an insightful piece on Burst, which came out a few weeks before the BusinessWeek article. Read it at http://iplawandbusiness.law.com/display.php/file=/texts/0406/burst
(warning site registration is required)
Posted by: Emily at April 19, 2006 01:50 PM
I tried to post this before to no avail, but let me try again.
I'll take a stab at a definition of a "patent troll":
A company, individual or other entity whose current sole business objective is the exploitation of a patent or patent portfolio acquired after (but patented before) the adoption of a technology to extract royalties or settlement agreements at values calculated to be near the cost of patent litigation.
Under this definition, companies can move from "legitimate" inventive businesses into the realm of "trolls" and vice-versa. I think that I've incorporated several important distinctions:
- Simply seeking out licensors and/or infringers cannot be enough to be a troll;
- Simply seeking reasonable royalties cannot be enough;
- Simply defending one's actual business by using a patent or patent portfolio cannot be enough (purpose of; and
- Being a invention farm cannot be enough.
I think that this captures companies that are essentially patent holding companies, with no real business objective except the acquisition of patents (usually not of their own creation), to enforce against wealthier, productive entities.
The Slashdot crowd may not like this def'n since they use the term to include lots of entities--or even one commenter using the term against universities.
Frankly, I'm not sure that there is such a thing as a patent troll, or even if they're necessarily a bad thing. I think largely the idea of a patent troll is really about perception. The small patent owner is always a troll when you're the infringer.
Posted by: Mike at April 20, 2006 08:51 AM
In Re Thomas Q:
First, I'd like to point out that universities and their tech transfer offices are prohibitted by law from assigning patent rights of FEDERALLY funded invention to anyone. They can, if necessary, exclusively license those rights. If you're referring to non-federally funded inventions as far as I'm aware, there is very little in the way of state laws that have EVER prevented inventors/universities from doing whatever they'd like.
Second, I'd like to point out that the level of invention-to-market activity pre-Bayh-Dole was incredibly low. So even if there were inventions, no one heard about it or got to use it. Of course, that leaves a lot to be said for non-commercial uses like research.
Also, as far as I've seen, universities (and their respective tech. trans. office) offer I.P. (be it materials, patents, copyrights, etc) at relatively low rates relative to actual commercial rates and with very few restrictions. In addition most academic-research licenses are essentially "free" or very cheap.
Last, a significant amount of university research is also commercially sponsored. The results of that sort of relationship are far worse for the public than the previous discussion. However, I doubt many people would say that universities should never accept commercial funding since it's a source of revenue (public universities aren't usually fully tuition/gov'tally subsidized).
So I'm wondering where the hate comes from.
Posted by: Mike at April 20, 2006 06:56 PM
