Patent trolls' get their just desserts - San Jose Mercury News -5/16/2006

[Coastie for Truth]

A unanimous U.S. Supreme Court dealt an important blow Monday to an increasingly common form of extortion whose No. 1 target was the technology industry. The racket has cost tech companies and consumers billions in legal settlement fees.

In a case involving eBay's ``Buy It Now'' feature, the court leveled the playing field between plaintiffs and defendants in patent lawsuits. The ruling should stunt the growth of a booming cottage industry of firms whose only reason to exist is to file or acquire patents and then sue companies whose products may violate those patents. The tech industry has labeled those firms ``patent trolls.''

There's nothing wrong with acquiring and enforcing patents. Patent laws were created to foster innovation by giving inventors property rights over their creations and the opportunity to turn them into money-making enterprises.

But until Monday, trolls and other plaintiffs had too much power to disrupt innovation. That's because courts automatically granted injunctions to plaintiffs whose patents had been violated. The injunctions could force a complex tech product -- say a laptop or handheld computer -- off the shelves if even one of its hundreds of components was found to violate a patent.

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Snippets from the editorial--

Injunctions could still be granted in patent cases, but only if a set of stringent criteria of the general law of equitable relief is met.

Four of the justices wrote a concurring opinion noting that the emergence of patent trolls has changed the stakes in the patent litigation game.

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The Supreme Court on Monday sided with eBay in a closely watched patent ruling that is expected to give lower courts greater flexibility in handling patent disputes.

In a unanimous 9-0 opinion, the justices threw out an earlier appellate court ruling that required injunctions to be automatically issued in most cases when patent violations have been found.

Justices also ordered a federal court in Virginia to reconsider the dispute between eBay and MercExchange, a small Virginia company.

MercExchange initially sued San Jose-based eBay in 2001, claiming that eBay's ``Buy It Now'' feature, which allows online shoppers to immediately purchase a product at a fixed price, infringed on MercExchange patents.

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Two real issues:

1. "Paper patents" and "Patent trolls" --- Where there may be no real research and development or actual "code" to back up a patent (i.e., a "paper patent") and the subsequent use of the patent to extort -- and not to build a legitimate business.

2. The ease with which injunctions are granted in patent cases.

[sybylla]

1. This is a big problem

We've got a product we'd like to design and build but a patent troll has a patent on a like device using only a very basic description - i.e. box a gathers information from widget b using method c with end result d.

Anything we do would infringe on it, but they have done no design work and are holding back the industry. No one has even made an effort to build and market such a device even under a license from said patent holder. It's a niche market but people are asking for the product. But no one will even venture there, even people already producing a similar product using method a or b.

I don't have any suggestions on how to solve this except I don't think it would hurt for a patent to have a time limit for the owner to design, license and/or manufacture the product. If after, say five years, a patent holder has nothing to show that he or she is developing the product, it expires.