> one of the main reasons that patent trolling is so successful is that the cost of settling is smaller even than the cost of winning a suit.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars?
Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.
The legal system is not equally available to all entities. That it is the center of how we enforce our rights and hold others to their duties is a major problem. Even if we could fix it in the case of patents, we still have major issues within other civil and criminal courts. I do not know the solution or even have any half baked ideas on it, but I do think the first step to any solution is for us, as a society, to realize that the legal system is largely pay to win and not a justice system.
There are other countries, where this issue is solved (more or less) by the fact that the side which have lost the case is covering trial costs. This does stop 'court trolling' because even is the cost of winning the case is higher than the cost of the settlement, winning the case nullifies that cost. But hey, US is special this way! (and many others... ;)
Having litigated against adversaries who use the courts primarily to be a nuisance, with little or no regard to the actual strength or weakness of their claims, I've become convinced "loser pays costs and attorney's fees of prevailing party" is a better system than what we have in the U.S.
This is not the only difference between the justice systems in US and EU (EU is what I consider to be elswhere): in US the case is the battle between boths sides lawyer, and the judge is simply a watching function, that a the end calls the sentence, based on the outcome of that battle. In EU, the case is a so called 'process of finding material truth' and the judge can take active stance, call witnesses, ask additional questions, call for professional opinions and so on - it is no longer a battle of who has better lawyers but a way to find what's the actual state of things.
The US system is also supposed to be a process of truth-finding, just that we leave the parties to support their own positions as adversaries. Without advocacy, American courts do very little on their own. So far that doesn't bother me, but I'm a lawyer. For someone thrown into the system, there can be an incorrect expectation that the court will automatically act to do justice.
Part of the problem with the adversarial system is that if one party has bad lawyers, you can end up with bad case law as a result of them failing to properly argue their case.
You could end up with one party intentionally losing a case in order to establish precedent that they expect to profit from in the future, because they expect they'll usually be on the other side of similar cases.
Not sure, but I seem to recall a case where Microsoft was on the other side of a suit from where you'd expect them to be, and people were afraid they'd lose intentionally. No idea what it was about or how it ended, though.
There's an important qualifier: loser pays reasonable costs of prevailing party, and the judge decides what is reasonable. It's not automatic. This addresses the concerns about a deep-pocketed party spending lavishly and winning, and the loser being forced to pay a massive legal bill.
(I'm not an expert on the subject, but it's been discussed before on HN, and this is my recollection.)
It occurs to me that an interesting variation would be for the loser to pay an amount equal to the lesser of the two parties' legal bills. That would limit the risk, and remove the incentive for the deeper-pocketed party to spend money just to inflate the bill.
I am small troll A suing company B. I lose, judge orders that troll A pay all the legal fees. I don't have the money, I file bankruptcy, I flee the country.
Lawyers still want to get paid. I doubt any legal team will just chase some random around into collections because "loser pays"
>>There's an important qualifier: loser pays reasonable costs of prevailing party,
I remember a comment a while back on HN or somewhere which suggested an approximate solution to this : the loser must pay the costs equal to its or the winners fees- whichever is lower.
Is there any issue with unfair inflation of costs? From what I understand these patent trolls are mostly teams of lawyers. Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
What about the situation with east Texas where they side with the patent holder the majority of the time?
Under this I might almost be more likely to just settle. Do I pay nothing, a paltry sum to settle, or 2-4x the cost without "loser pays" to lose? If I have even a 10% chance of losing it sounds like settling might be a good deal.
>Under this ruling could they charge themselves exorbitant rates, then the few times they do win makes up for the times they lose?
Not to mention that the costs to the losers the few times they win would really scare anyone who isn't able to eat the massive costs anyways. Would you sue someone from stealing thousands from you if there was a small chance at you owing them millions?
How do they avoid disincentivizing small parties from suing larger ones in this system? Let's say I have a strong case (say 90% chance of winning) to sue an insurance company for, say, $50k. But the cost of their legal team/experts/discovery to defend it is, ~$500k, then things look a bit more bleak.
Are there caps? Is one side prohibited from charging substantially more than the other?
I believe it's at the judges discretion. There was recently a case against a journalist who paid bribes on behalf of a news corporation in which the judge outright stated that if the corporation had been paying costs he would have ruled for a much larger costs settlement then he did when it emerged the journalist himself was going to have to pay. The remainder gets picked up by the taxpayer, so whatever happens the winning party isn't expected to pay the loser's costs.
Standard disclaimer: you should consult an actual solicitor!
I think it would somewhat depend on the judge's assessment of the situation, but I would think so long as you're acting in good faith they'd likely rule for you to pay whatever costs you can afford, and the rest would be covered by public finances.
It wouldn't surprise me to hear of judges deciding that the defence's legal team is grossly excessive and telling them they're not claiming for everything either, at least in the UK judges have quite a lot of leeway in what they can do in their own court room.
Well, if you want to sue them for $50k, and the cost of defense is $500k and your case is 90% chance to be lost, then the solution is quite simple - settle the case for 50k.
Limit the cost to reasonable costs. What is reasonable? Well, limiting the expense to the lower of the two parties' legal costs would strongly discourage the larger party from spending $500k on the case. And if they do it anyway, they pay for it themselves.
This does not solve it. Consider little guy suing mega corp. Little guy's costs may be covered if he wins, but with only 50K to spend, he still could lose because mega corp can drop 5M on the case. This could even make it worse, because without the ability to recover costs, little guy has a small chance at victory and losing the 50k and a large chance at losing the 50k with nothing. With the loser having to pay, it changes to little guy having a small chance at victory and losing nothing and a large chance at losing 5M + 50K.
But even then you propbably will get reimbursed only what an average lawyer would have been costing you. Not what the specialized high profile Lawyer normaly asks for.
In which case the problem isn't solved as the rich can still spend money to win (but they don't get it back). It makes the legal system pay to win and once again allows trolling. Maybe not as much, but still a lot.
This would only boost behavior that takes advantage of massive numbers of weaker individuals because in the rare case of one of them winning, you are only going to get a minor fee.
If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
> If the max cost of predatory practices isn't much higher than the gain from using them in the rare cases when caught, it creates an incentive to use such practices.
This isn't a complete economic argument in favor of companies behaving poorly. Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
Japan, for instance, prohibits punitive damages. Is there any suggestion on your part that companies there are somehow more "predatory" than ones here in the US?
>Punitive damages pale in comparison to a threat of loss of future business dealings as a result of poor behavior.
That fully depends upon how you simulate humans in one's argument. For a generally rational generally well informed human this is likely true (note I'm not even going with the 'fully rational fully informed'). But for the majority of consumers, there is less cost and there are ways to reduce the cost further. There will be some impact when the news breaks (if it breaks, the story being publicly available is a world of difference from the story being CNN/Fox New's headline of the day), but people will quickly lose interest or otherwise stop caring. While punitive damages may not be enough to fix the issue, I think there is an issue and I think the issue would be worse without them.
I'm a software engineer. Consequently I have to admit ignorance about this concept of a valid and useful patent. All I ever see is patents that hinder the Progress of Science and useful Arts. Are there really enough valid and useful patents that we should hesitate in our fight against the rest?
There are useful patents though they may hinder more then they help depending on your PoV. Various codecs and some crypto algorithms come to mind.
You run into a lot more useful ones at the intersection with the physical world where some protection lets a company get a chance to be the first one to market and reap some benefit.
In some industries (Pharma) it's really the only practical approach due to the extreme development costs (easily over 1B$) and often cheap production costs.
To be clear, when I say "patent" I'm referring to a legal instrument that secures exclusive rights. When I say "useful patent" I'm talking about the utility of the legal instrument, not the utility of the mathematical algorithm claimed in the patent.
I'm confused, are you asking if you should be fighting patent trolls or patents? If trolls, then fighting them is better than not. Patents are tools, valid and legal, you don't fight tools, you use them, improve them, complain about them, etc.
Though seriously, I think the term landmine is loaded toward using patents exclusively as a troll. A wider analogy could be like a toll bridge, where the builder should be compensated by travelers. Some tolls could be usurious, but that wouldn't invalidate the whole principle.
Can you explain why you think patents hinder progress of science and the useful arts? How many cases do you know of that people were unable to advance the arts because of a patent? People talk about patent trolls suing startups and main street shops: How many of them actually do anything technically innovative? Hinder commercialization of some old technology? Sure, patents can do that. Stifle progress? Not so much. There are studies on these types of things that you can find on ssrn.com
Your impression is likely based on what you hear in a) tech media, which is largely supported by ads and hence welcome rage-views, and b) tech forums like this where open source is the dominant religion. But count how many times you've heard of a merit-less lawsuit, and compare that to the dark matter of millions of active patents out there. Forming opinions based on cherry picked examples is not a good idea. Better to look at empirical evidence.
I'll give you some numbers less than 1% of patents are ever asserted, and only a fraction of them make it to a trial. The vast majority of patents lie fallow because there is no demand for their technology in the market. Now does that look like a serious problem anymore?
How many cases do you know of that people were unable to advance the arts because of a patent?
For one concrete example, anyone who worked on data compression outside of purely academic areas has been harmed, and by extension their customers have been harmed, by early software patents in that area. The LZW patent (infamously associated with the .GIF file format) and IBM's patents on arithmetic coding both rendered entire fields of computer science radioactive for years.
It's perhaps even more enlightening to spend some thinking about what life would be like if everything that could be patented under the incredibly loose standards of the USPTO was patented. It's safe to say you wouldn't be able to afford the computer or tablet you're typing on, nor the Internet service necessary to convey your thoughts. But this argument is also moot because neither of those technologies would be available in their present form, at any price.
Your impression is likely based on what you hear in a) tech media, which is largely supported by ads and hence welcome rage-views, and b) tech forums like this where open source is the dominant religion.
My impression is based on decades of work in the industry.
I'll give you some numbers less than 1% of patents are ever asserted
How many land mines ever explode? Does that make land mines a good thing? Patents are intellectual land mines, nothing more, nothing less.
I'm looking at actual data. You are speaking from hearsay and anecdotes. Here's a paper to get started with. It is a review of dozens of papers most of which have empirical results:
Your example is not concrete. What you think of as "radioactive" could simply be researchers concluding that specific area was not worth exploring anymore. Here's how you can give a concrete example: Those patents have expired. Can you point to any new fundamentally significant compression technology that has since emerged that could have been thought of as being previously held back by those patents?
Now I can give a concrete example of how those very same patents caused innovation: When they sued people over lzw in gifs, that prompted people to develop alternate methods like PNG. Sounds like progress to me. Was it forced innovation? Sure! But that's always been one of the rationalizations of patents. People often don't innovate unless forced to.
>My impression is based on decades of work in the industry.
So let's get even more anecdotal: how often have you been unable to "advance the arts" due to a patent?
> How many land mines ever explode?
How many good ideas get ripped off with their creator getting nothing in return? If we want to be hyperbolic, I could just say "anti-patent people are just intellectual thieves, nothing more, nothing less"?
The "dark matter of millions of active patents out there" is an apt description of failure. The constitutional purpose of patents was to disclose inventions that others could build on. If that purpose were being fulfilled we'd be browsing the patent database instead of all the places we actually go when we want to pick up a new technique.
Give concrete examples instead of vague generalizations. I just have an example of how the GIF patent actually provoked progress as it was used to sure people who were using it without remuneration to the creators.
Image compression experts say JPEG2000 is simply not used because it's just not enough of an improvement to make it worth the hassle. Patent issues are secondary. And note that patents did not prevent it from bruin developed in the first place.
H.264 patents did not slow down development of new technology, it just slowed adoption of existing technology (h.264) in a different existing environment (browsers) Would you really qualify using the same technology in a browser as a significant technical innovation?
So coming back to my challenge: Now that the RSA patent has expired in 2000, 15 years ago, what novel developments can you point to that you can say was blocked by the patent?
Your metrics are the percentage of patents asserted and how many make it to trial? You don't even consider the amount of settlements that happened for obvious universal technologies, or perhaps more importantly the number of uses of a patent to implement something useful which could not have been developed independently.
You're asking to assume patents are useful until proven otherwise, and waving your hands about cherry-picking, when in fact you'd have to cherry-pick pretty severely to find an example of a software patent which would stand up to an honest evaluation of its novelty. This is because software is not created by lone inventors having eureka moments behind closed doors—the state of the art is pushed forward primarily through massive collaboration. The vast majority of software patents only exist because software and mathematics are arcane topics that the patent office doesn't have the expertise to understand or the incentive to evaluate honestly.
Software patents and IP are not natural laws with inherent value. It is not for us to empirically prove their harm, rather they are specific legal constructs designed for the public good, and thus their good must be justified, not the other way around.
> I'll give you some numbers less than 1% of patents are ever asserted, and only a fraction of them make it to a trial. The vast majority of patents lie fallow because there is no demand for their technology in the market. Now does that look like a serious problem anymore?
It sounds like you are arguing to abolish patents. The rest of the world is held hostage for under 1% of the patents issued? It doesn't sound like a serious problem to just do away with then all according to your stats.
If you know you have a valid case (you aren't a troll), how hard would it be in practice to find someone to front the money for a lawsuit? Or for that matter, could you go to the competition and sell your patent? That is, say Apple's infringing on my patent; will Samsung buy the patent from me for a fair price and then sue Apple?
> how hard would it be in practice to find someone to front the money for a lawsuit?
What about paying into an troll insurance policy every month so that if a troll wanted to sue you they would see that you were protected and would fight the lawsuit with a giant pile of money. This might deter the troll from suing in the first place.
There is a whole ecosystem that is funding these lawsuits. It also operates somewhat anonymously, with funding sources working directly with law firms and indirectly with inventors (if they are even involved anymore). I've seen emails between law firms and the inventor that literally title the investors as "the funding source." The original inventor need not put any money at risk, and the law firms and funding sources do their own diligence to decide if it's worth proceeding to file suits. In most cases, the entity filing suit is created for each series of attacks so that if they actually lose a suit and are supposed to pay out, there are no assets from which to pay. Therefore, low risk and potentially very high reward.
The biggest factor for that is not the validity of the patents, but the breadth and ability of the patents to be filed against "juicy" targets with a lot of cash. The cost of filing a suit is literally in the hundreds of dollars (I think ~$750) and most of these cases get settled out fairly early because of the immense cost of the defendants to complete the discovery process.
This is true, except for tech and biotech startups, where patents have been shown to facilitate funding, potentially by signaling future success. Less than 1% of inventors get anything from their patents.
However to me this signals the possibility of an inefficiency in the market, and something that trolls leverage. Intellectual Ventures was reputedly originally formed to fix this gap.
That is one of the problems, he who fronts the money expects to get the reward. Hence class actions where the lawyer who works on contingency gets millions and those wronged get a nickle.
1. You'll still get a significant sum if the total is significant (and if the case is open-and-shut, the risk wouldn't be too high for an investor, so you could get a favorable deal)
2. The infringing company would have to pay in full, which discourages them from doing it in the first place.
I guess I really want to know is if this actually happens in practice, or if there are reasons I'm not thinking of that stop it from happening.
The cost is not just the lawyers' time (which you may be able to get on contingency), but the administrative time: managing the lawsuit, discovery, assembling evidence, time of witnesses, and so on. Then there's the business risk: lawsuits only happen when both parties think they have a case, so by definition one of them will be disappointed.
The selling out to a bigger player does happen, although since it's a distress sale it's often for a low value.
Some Patent lawsuits are taken on contingency (the winning lawers get a good size cut).
This isn't common. See Jarg corp which was basically out of cash, then hired lawyers on contingency (with patents licensed from Northeastern University) then sued google. I think google paid northeastern in a settlement.
There are people who specialize in evaluating patents and being the middleman if they believe there is value in licensing and/or asserting your patents. They are often thought of as just another breed of patent trolls.
Because agencies specialising in licensing a patent (i) are non practising entities, and many people's view a troll is pretty much defined by the concept of acquiring IP without the intention of doing anything with it other than seeking fees, and (ii) occupy their time sending legal threats to firms already using aspects of the patented invention rather than delivering sales pitches to people searching for technological breakthroughs, because "the right to develop your own technology which does X using Y" is a really hard sell.
'Genuine' with respect to patents is a very low bar. They've issued patents on any number of scientifically impossible inventions, in spite of rules against that sort of thing. So the courts are usually required to sort it out after many years and endless litigation.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits?
Lawyers are expensive. Good lawyers are extremely expensive. There are also experts, investigators and consultants to hire. Everything about the process is expensive. It's very good that newegg is doing this because it helps everyone.
Is the underlying reason for this strategy the low costs of settlement, or the extremely high costs of lawsuits? What if the value of a patent really is only a few thousand dollars?
Note that this very tactic is used by big companies to avoid licensing valid and useful patents owned by smaller entities. Licensing discussions often begin with the potential licensor saying "sue me", or these days, outright suing you first with a Declaratory Judgement. Can an individual afford to take on a large company? Trolls appear to simply be a symptom of this disparity in the market.