Tech Companies Indulge in Patent Troll PR

(MoneyWatch)  Verizon, Google, Cisco, Telefon AB, Ericsson, and HP are among a group of high tech companies planning to buy important IP before patent trolls snap them up, as the Wall Street Journal reports. But is this a real concern, or corporate spin? The mass of patent litigation is hardly all due to a handful of patent trolls:

The Coalition for Patent Fairness, a group of technology and financial-services companies that has lobbied for patent legislation in Washington, says the number of patent-related lawsuits rose to nearly 2,500 through October of last year from 921 in 1990. The so-called trolls aren't the only ones suing. Many companies, including Qualcomm Inc. and Rambus Inc., have been aggressive about enforcing their patents on their rivals.

Let's not cut the list so arbitrarily short. Just in the last 30 days, we've seen a lot of non-troll activity:

• SAP will have to pay $83 million to i2 to settle a patent dispute;
• Internet fax service and voice mail provider J2 Global Communications filed suit against three competitors;
• Telecom equipment manufacturer ADC filed a patent infringement suit against AFL Telecommunications;
• The same ADC lost a patent suit against Switchcraft;
• Samsung filed suit against Polaroid and Westinghouse;
• HP and Acer settled a patent dispute involving three federal suits and two US International Trade Commission investigations;
• Audiovox filed a patent infringement suit against INViSiON Industries;
• Tellabs filed suit against Fujitsu.

I easily could have continued. Patent litigation is hardly victimization of the big by the small.

This new coalition claims that it wants to avoid creating an entity that could turn around and sue the members, according to the Journal story.

To head off such concerns, companies in the new group will sell the patents they acquire after they have granted themselves a nonexclusive license to the underlying technology. "It will never be an enforcement vehicle," said the group's chief executive, Brian Hinman, a former vice president of intellectual property and licensing at International Business Machines Corp. "It isn't the intent of the companies to make money on the transactions."

But they don't need to make money to use this approach strategically. They are giving themselves a free license and then selling the patents to other companies knowing that the new owners could then sue everyone else for them.

Yes, there are small companies that collect patents and enforce them without creating products using those technologies. So? Large companies often have thousands of patents that they license rather than use themselves. The difference is that the large companies have some degree of mutually assured destruction in their various patent portfolios. What giants don't like is flies with poisoned stingers that cannot be easily swatted by a patent countersuit. The big companies want to keep patent actions among themselves and keep smaller companies out of their markets.

For perspective, former Intel assistant general counsel Peter Detkin claims to have invented the term "patent troll":

"We were sued for libel for the use of the term 'patent extortionists' so I came up with 'patent trolls,'" Detkin said. "A patent troll is 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."

However, earlier this year, an industry insider told me that the definition actually was "a PR move to come up with a pejorative to attribute to anyone who might assert a patent against large companies." So much for righteous anger and consortiums.