Technology innovation’s relationship with patent trolls

Technology companies continue to push the envelope further in the United States and around the world, but one of its biggest enemies are Patent Assertion Entities (PAES), commonly known as patent trolls. These organizations don't actively create products, but allegedly remain afloat by suing businesses for violating patents they obtained from the free market, according to CNN Money.

Even though many of these businesses are multi-million or billion-dollar corporations, a report recently came out that these enterprises receive a lawsuit from PAEs about once every 12 days. Based on data from RPX Corporation, one of hundreds of PAEs in the country, representatives will ask for subscription fee from AT&T, Google, Verizon and Apple. Failure to comply usually leads to an intellectual property lawsuit.

Unfortunately, due to the time that is spent consulting with business attorneys, many of these cases are dropped where the PAEs will receive a settlement, the Chicago Tribune reported. RPX alone filed more than 36,000 lawsuits in 2013, which is a 19 percent jump from 3,042 filings in 2012.

"These argue that giant tech corporations routinely pilfer innovations dreamed up by independent inventors, and that NPEs simply give these powerless individuals the financial support and litigation muscle they need to vindicate their rights," one non-practicing entity representative explained to Fortune Magazine.

Technology industry leaders like Apple have voiced their concerns on PAEs, hoping that patent reform will occur sooner than later. Based on RDX's data, it was sued 41 times in 2013. However, Apple's problem with PAEs go beyond RDX.

Apple's fight with intellectual property

At first glance, it appears that Cupertino, California-based company is the aggressor, but according to its letter the Federal Trade Commission, they have had their share of legal losses. Over the past three years, Apple received 92 intellectual property lawsuits.

"Its experience confirms what many others have documented: although PAE activity is not necessarily harmful in theory, far too many PAEs exist only to extract undeserved royalties," the letter reads. "As both a market leader and the PAEs' favorite target, Apple has a special interest in policies that discourage this behavior.

Out of the 92 cases, Apple decided to pay a settlement 51 times because it didn't want to commit resources and time to legal disputes, even though Apples asserts that they did not violate a PAE's patent. In fact, the problem has become so widespread, Apple has two business lawyers whose jobs are to only read lawsuits. 

"Victory figures as small consolation because in every one of these cases, Apple has been forced to bear its legal fees," its attorneys wrote recently. "This reality is the lifeblood of the patent assertion industry, because the threat of fees often forces an undeserved settlement."

Take into account other legal services Apple has to defend itself in the technology community, it is likely that Apple allocates thousands, maybe millions of dollars to enforce its intellectual property. An example of a costly battle is the one it has with Samsung on its smartphone features—their case continues in March.

Nowadays, legal battles between technology sector businesses have become much lengthier. Smaller companies that may not have the resources to go to court with them or patent trolls can protect themselves with a small business attorney. 

Categorised in: Intellectual Property Law

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