Why tech vendors fund patent 'trolls'

Experts say it's about protection from lawsuits and access to a large pool of patents

By Gina Smith, Computerworld |  IT Management

The two patents that Apple transferred -- Patent Nos. 6,208,879 and 6,456,841 -- form half the basis of Digitude's February 2012 lawsuit (PDF) against Motorola Mobility Holdings, which alleges patent infringement, according to records in the U.S. Patent and Trademark Office patent-assignment database . Google has made an offer to purchase Motorola Mobility and is waiting for legal approval.

Nor is Apple the only tech vendor to say one thing publicly and then do another. The late Micron CEO, Steve Appleton, also lashed out at "patent trolls" in his March 2009 testimony (PDF) during a Senate Judiciary Committee hearing on the Patent Reform Act.

U.S. patent law has encouraged abuse of the system, Appleton complained, since the law has been interpreted to award royalties based on entire market value and not simply based on a company's share of that market -- for example, the value of all mobile phones and not only those that use a specific platform involved in a patent dispute.

Such awards can "exceed the infringer's entire profit on the infringing product or service -- making clear that the entire standard has no basis whatever in economic reality," Appleton said. "Such a royalty is by definition unreasonable, because a product manufacturer would stop making the product rather than pay it. But this legal rule authorizes NPEs to pursue irrational damages demands with impunity..."

Unlike companies that make or sell products, "NPEs cannot be deterred from asserting opportunistic and unjustified patent claims by the counter-threat of infringement claims asserted by defendants back against them -- their lack of any products or services prevents the assertion of such claims," Appleton said.

"Because the patent system was designed with product manufacturers in mind, not NPEs, the NPEs are able to exploit the lack of clarity of the reasonable royalty standard in a way that manufacturing companies cannot."


Originally published on Computerworld |  Click here to read the original story.
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