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An Army Is Forming To Battle Patent Trolls

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For the past several months, we’ve exposed the flaws in the patent system and how they’re being exploited by opportunistic patent trolls looking to extort a quick buck – or hundreds of thousands of bucks, if you will – from businesses large and small. It’s a drain on innovation, a plague to all of technology and a drag on the economy.

Last week, our fight took a big step forward, as a gathering to highlight the patent troll problem and plot a path to legislation swelled into a standing-room only affair. The “big tent” meeting, hosted by the Coalition for Patent Fairness, drew a large, diverse crowd of influential industry representatives. Look at this amazing list of who showed up to listen, learn and weigh in:

  • American Association of Advertising Agencies (4A)
  • National Association of Broadcasters (NAB)
  • Food Marketing Institute (FMI)
  • National Grocers Association (NGA)
  • American Hospital Association (AHA)
  • Retail Industry Leaders Association (RILA)
  • National Retail Federation (NRF)
  • National Restaurant Association (NRA)
  • Financial Services Roundtable (FSR)
  • The Securities Industry and Financial Markets Association (SIFMA)
  • American Bankers Association (ABA)
  • Newspaper Association of America (NAA)
  • Entertainment Software Association (ESA)
  • Engine Advocacy
  • Public Knowledge
  • Internet Association
  • Internet Infrastructure Coalition
  • Business Software Alliance
  • Consumer Electronics Association
  • Computer & Communications Industry Association (CCIA)
  • Information Technology Industry Council (ITI)
  • Software & Information Industry Association (SIIA)

Importantly, as you can see, many of these groups represent independent small businesses, the type of companies we hold near and dear as they make up a significant portion of our customer base.

These organizations – large and small – are fed up. They’re sick and tired of patent assertion entities (PAEs), more commonly known as patent trolls, and their often baseless but costly attacks. In a blog post on Patent Progress, Josh Lamel, Executive Director at The Foundation for Innovation and Internet Freedom, likened the energy at the big tent meeting to the iconic scene from “Network,” where Howard Beale (Peter Finch) persuades viewers to scream out “I’m as mad as hell, and I’m not going to take it anymore.”

There have been encouraging developments recently, with President Obama addressing the issue live in a Google+ hangout and New York Senator Charles Schumer unveiling plans to strengthen the America Invents Act to improve patent quality and reduce meritless litigation. But more is needed. No one silver bullet will solve the problem, so industry leaders are contributing ideas to concerned members of Congress.

We expect the Coalition for Patent Fairness, our host of the big tent meeting, to contribute and help pass a list of excellent and fair proposals designed to work together to knock out the most egregious abuses of the patent system. The Internet Association will also weigh in with strong and thoughtful legislative proposals.

The Internet Infrastructure Coalition is taking up the flag of end user rights. Patent trolls sue small business end users as “soft targets,” because it is not cost effective for these defendants to hire lawyers. Protecting end users from suit will limit the options for PAEs, forcing them to pursue the manufacturers or providers of common products or services, rather than their customers.

Combining our efforts in this war on trolls will have the maximum impact. There is true power in numbers, and the diverse group of people who have joined the fight is a clear indication that banding together can make change happen.

About the Author

This is a post written and contributed by Alan Schoenbaum.

Alan Schoenbaum is Special Counsel for Rackspace.

Prior to joining Rackspace in 2005, he was a partner at Akin Gump Strauss Hauer & Feld LLP in San Antonio, Texas. Alan has more than 25 years of experience in corporate and securities law and mergers and acquisitions. Throughout his legal career he has represented public and private growth companies, venture capital funds and their portfolio companies. Alan received his B.A. in English and his law degree from the University of Texas at Austin.


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10 Comments

Patent trolling is a smaller problem than companies who use patents to nuke their competition. Trolls are parasites. A parasite doesn’t want to kill the host. Companies like Apple, IBM and Google use patents to destroy competition. They are by far the bigger problem.

avatar Nick Bauman on May 15, 2013 | Reply

Nick, I disagree because trolls usually target upcoming companies—companies that could emerge as the next Google, IBM, or Apple—at a time when they are most vulnerable to an attack. The last thing a 10 person startup can take on is expensive, lengthly litigation. A troll absolutely kills its host before moving on to find another. That’s what makes the business model work.

While there are some real issues with the use of defensive war chests of patents by larger companies, I think patent trolls—entities set up to do absolutely nothing more than extort funds from a broken system at the cost of real innovation—are the larger problem at the moment.

Meanwhile, the ultimate dream of abolishing software patents entirely would benefit both fronts.

avatar Todd on May 15, 2013

I’d also tend to disagree Nick – plenty of parasites kill their hosts after sucking them dry. They just rely on there being a plentiful supply of hosts…

avatar Dave on July 8, 2013

I’m going to meet you guys in the middle and say they are both equally damaging. Google, IBM, Oracle and all the big guys have just as much power to destroy an innovative startup as the patent trolls. Who is to say who is doing it more? They are both doing it. They are both problems and they should both be addressed.

It’s worth noting that I read recently that Google implemented a policy that they will not enforce their patents unless they are attacked first. If true, this is a monumental decision and an example that the rest of the industry should follow. This way the only thing left are the trolls and they are completely exposed and eventually can be terminated.

avatar Charlie Martin on May 15, 2013 | Reply

“It’s worth noting that I read recently that Google implemented a policy that they will not enforce their patents unless they are attacked first. If true, this is a monumental decision and an example that the rest of the industry should follow. This way the only thing left are the trolls and they are completely exposed and eventually can be terminated.”

That may well be true, but what about when they sell off their patents to trolls? They could do this knowingly or not, that’s the big issue with these guys. They play the shell game really well and sometimes, you’re a party to the “crime” without even realizing it.

“There is true power in numbers,” is exactly right. It’s going to take the collective action of a lot of companies on a lot of fronts to stop the problem, but I honestly believe it can be done.

Just sayin’,

IPTT

avatar Steph Kennedy on May 19, 2013 | Reply

I have a good friend who got hit by a troll a few years ago. It obliterated his small company, and negated six months of development by his team. Let’s not confuse two issues.. Patent trolls are a big problem, particularly for small businesses who make up a large percentage of the income and innovation in this country. Small companies can’t afford the fight.

Thank you Rackspace for sticking your neck out on this one!

avatar Anonymous Coward on May 22, 2013 | Reply

Keep up the good work. Please take this international.

It’s not just trolls but fairness in general. The bit about patents I find hard to accept are the patents for blatently obvious solutions where just being the first through the door at the patent office gets you a licence to charge everyone else. How can sliding your finger across a glass screen to do something, no matter how you word it, be something that can be limited to just one owner?

Madness, in my view!

avatar John C Brown on May 24, 2013 | Reply

What if nothing was patentable?

Well, for one we’d stop worrying about China stealing our stuff ;)

And all the copycats in the world would release WordToo, BMWToo, iPadToo – which would drive down prices, margins and profits to the all far too familiar equilibrium.

Later on, costly innovations like cures for rare diseases and new CPU chips would grind to a halt because no investors will invest in businesses which will never even pay back the costs – and for sure never generate extraordinary profits – so the risks far outweighs the small chance of breaking even.

But would that matter? Great discoveries like penicillin and electricity and the telephone were made almost singlehandedly – and yes, they took many years to unfold. Perhaps we have just all grown inpatient with evolution?

Perhaps the absent patent will let us all slow down and live life at a pace that does not have us develop all kinds of illnesses and allow us to eat properly (and slowly) and ….

It may be a pipe-dream but I’m rooting for it! Rackspace, you have my vote!

avatar Walther H Diechmann on May 29, 2013 | Reply

There are very few items that are truly unique and the work of just one person/company from the telephone to the iPad. Everything is built on the work of others, most patents are just the first through the door (the phone) and with sufficient funds.

The barrier for any patent should be very high and the length limited to a few years. Use it or lose it!

A lot of real innovation can be protected by copyright anyway.

avatar Brian m on July 6, 2013

Where can I sign up to join this army?

avatar Craig D on July 5, 2013 | Reply

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