Patent Trolls: Make Them Pay!

Filed in Cloud Industry Insights by Alan Schoenbaum | September 18, 2012 4:44 pm

Rackspace has been subjected to yet another patent lawsuit by a patent troll looking for a settlement. In this case, the plaintiff is called PersonalWeb Technologies. This particular lawsuit is not much different than the others, except that it highlights why software patent litigation suppresses innovation, and why Congress and the courts need to improve the system. If it wasn’t such a serious issue we might want to laugh at the irony of it all.

To explain, this suit claims that Rackspace infringes the PersonalWeb patents “by its manufacture, use, sale, importation, and/or offer for sale of the following products and services within the PersonalWeb Patent Field: Rackspace Cloud Servers and GitHub Code Hosting Service.” It’s apparent that the people filing the suit don’t understand the technology or the products enough to realize that Rackspace Cloud Servers and GitHub are completely different products from different companies. By now, it’s widely known that GitHub is hosted at Rackspace, but beyond that, there is no other connection between the two.

In fact, GitHub is a perfect example of a company that is built to foster and enhance innovation. The GitHub repository service for software development projects has achieved legendary status among open source developers all over the world. GitHub has over 2.1 million users hosting over 3.7 million repositories. They are a paragon of innovation. Yet PersonalWeb has the audacity to file a lawsuit which alleges that “Rackspace Cloud Servers and GitHub Code Hosting Service” infringe some obscure patent from 1999 that has nothing to do with Rackspace and GitHub. Who is truly innovating here, PersonalWeb or Rackspace and GitHub? PersonalWeb is not the issue of course. They are just another patent troll attempting to take advantage of bad law. It is their nature. They look for opportunity, and patent litigation can be very profitable. The real problem is the law. According to a recent study by James Bessen and Michael Meurer of the Boston University School of Law, titled “The Direct Costs from NPE Disputes[1],” patent trolls cost the American economy $29 billion in 2011. The authors found that patent troll litigation affected 5,842 defendants in 2011.

Fortunately, most members of Congress know that they need to fix the patent troll epidemic. Congress gave a strong effort when it passed the Leahy-Smith America Invents Act last year, but more work is needed.

The next legislative effort will likely center around what is known as the SHIELD Act, which has been introduced by Rep. Peter DeFazio (D-Oregon) and Representative Jason Chaffetz (R-Utah). This bill would require plaintiffs to pay defendants’ legal costs if the suit is unsuccessful. Under current law, the patent trolls don’t have any meaningful risk in bringing litigation. The defendants, on the other hand, are subjected to enormous legal expenses and discovery costs. The SHIELD Act is designed to level the playing field and take away the trolls’ unfair advantage. We encourage all of our customers, partners, open source collaborators and friends to support Reps. DeFazio and Chaffetz in their effort to discourage these abusive patent troll lawsuits.

Source URL: http://www.rackspace.com/blog/patent-trolls-make-them-pay/

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