Patent Troll on a Money Making Rampage

Did you know that companies are allowed to collect patents for inventions they never plan to manufacture?  These “patent trolls,” can then opportunistically sue alleged infringers.

Peter Detkin, the assistant general counsel for Intel, coined the term “patent trolls” in the 1990s, to describe “somebody who tries to make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced.”  Patent licensing is a $100 billion dollar business, and these patent trolls are taking an ever increasing piece of the pie.

For example, NTP Inc., a patent holding company…er patent troll…, filed lawsuits last week against Google, LG Electronics, Apple, HTC, Microsoft and Motorola for infringements of eight patents NTP owns related to wireless e-mail delivery.

According to CNN Money:

““The filing of suit today is necessary to ensure that those companies who are infringing NTP’s patents will be required to pay a licensing fee,” NTP cofounder Donald Stout said in a prepared statement. The lawsuits were filed in U.S. District Court for the Eastern District of Virginia.”

A few years ago NTP settled a similar lawsuit with Research in Motion (the makers of the mighty Blackberry) for $613 million.

In light of these practices, a bill has been proposed in the Senate that may bring significant changes to the USPTO, including a transition from a “first-to-invent” system to a “first-to-file” approach.  Interestingly, the U.S. is the only major country that gives patents to those who can prove they invented an item, device, or gizmo before someone else’s patent was filed.  This is a widely debated issue that we will follow closely.

Eric Goodman

eric@goodmanmooney.com