When Google released 'Android', the operating system for 'smart' phones, Steve Jobs was furious. Author Walter Isaacson described the reaction of the legendary CEO of Apple to the success of Android-based phones, which were eating away at large parts of the iPhone's market share:
When Google released 'Android', the operating system for 'smart' phones, Steve Jobs was furious. Author Walter Isaacson described the reaction of the legendary CEO of Apple to the success of Android-based phones, which were eating away at large parts of the iPhone's market share:
"...Google, you shamelessly copied the iPhone....I will fight you until my last breath, and I will spend every penny of the $40 billion Apple has in the bank to right this wrong. I'm going to destroy Android, because it's stolen goods.”
Steve Jobs was known as a determined person who does not give up easily. If he announced that he was going to 'destroy Android', he probably meant what he said. On the other hand, it is clear that Apple cannot physically reach every such smartphone and break it with a hammer. Nor can it raise a private army and storm the 'Googlefax', Google's headquarters in California. Apple has many dedicated fans, but let's face it - Apple users are less of a patrol and more of nervous birds.
The weapons in Apple's war against Android are the patents. In recent years, Apple has filed a series of lawsuits, in several countries, for patent infringements against several manufacturers of 'smart' phones such as Samsung, HTC and Motorola. Apple claims that the products of these companies are bot copies of its iPhone, and demands from them not only compensation in the amount of a billion dollars - but also a complete cessation of the marketing of the devices: a demand that means almost certain bankruptcy. Samsung and HTC are fighting back and suing Apple for infringing their patents, for similar amounts.
It is tempting to dismiss Apple's strategy as a direct continuation of the personality of Steve Jobs, who was a brilliant genius in matters of technology and design, but one cannot say that he was a nice person. But if we look up from Apple's offices and survey the entire high-tech industry, we will find that it is actually a world war. There is hardly a single large technology company that is not in the midst of a patent war against another company - and in many cases against several companies at the same time. Motorola vs. RIM, the maker of the BlackBerry. Facebook vs. Yahoo, Kodak vs. Apple, Oracle vs. Google, Nokia vs. Apple, Motorola vs. Microsoft - and the list goes on. Everyone sues everyone!
Since a loss in such a lawsuit means a financial loss of hundreds of millions to billions of dollars, all companies equip themselves with weapons - that is, patents. For example, Microsoft, Ericsson and Sony recently purchased 6000 patents that belonged to the Canadian Nortel company for 4.5 billion dollars. Microsoft bought 800 patents from AOL for more than a billion dollars. Google stepped up and bought Motorola-Mobility, formerly Motorola's mobile phone division, for $12.5 billion. Motorola-Mobility owns 17,000 patents, all of which will be transferred to Google.
Lawsuits for patent infringement are nothing new, of course - but nevertheless, global and wide-ranging patent wars in which everyone sues everyone else and thousands of patents change hands for billions of dollars, are a unique and unprecedented phenomenon in history. What changed in the world of technology and in the world of law that turned the patent from a means designed to protect the interests of a talented inventor, to an offensive weapon in the hands of lawyers? Has the patent turned from a tool that encourages innovation, to one that stifles it and threatens to stop the wheels of technological progress with a screeching halt?
In the fifteenth century, Venice was a liberal multicultural city-state that attracted merchants and professionals from all over Europe. Venice was especially known for its developed glass industry, and the mayors looked for ways to encourage the glassware manufacturers to develop new and advanced techniques on the one hand, but also to encourage them to share the techniques with the other manufacturers and thus benefit the entire city's economy. This is not a simple problem, because the clear interest of the person who invented a new and good technique for glass production is to keep his invention a secret: as long as he is the only one capable of producing the colored glass, he can demand a high price for his products. Once everyone knows how to do this, the competition will force him to lower prices and his profits will be cut.
The Venetians' solution was, as you might have guessed, the patent. The origin of the word 'patent' is in the Latin word Patere, which means 'to open wide': any inventor who was willing to publicly disclose his invention and share its full details with the general public, was granted absolute exclusivity for the right to use it for a predetermined number of years. This arrangement suited the glass manufacturers very well: instead of making an effort to hide their production methods behind locked doors and closed factories with the danger of industrial espionage constantly hovering over their heads - they won an absolute monopoly on their invention, a monopoly that was backed by law enforcement. At the end of the exclusivity period, all manufacturers were allowed to make use of the advanced technology, and the new knowledge promoted the entire glass industry and indirectly also the economy of Venice.
The principled idea of exclusive ownership of an invention or product was not new in the days of Venice, in the fifteenth century. Such exclusivity was granted around six centuries BC to cooks who created particularly high-quality culinary dishes. The uniqueness of the Venetian patent was that it embodied in it a basic principle of modern patents: disclosure of the details of the invention, in exchange for exclusivity for a limited time - usually twenty years.
The great advantage of the patent is that everyone benefits from it: the inventor enjoys exclusivity, and the entire company benefits from the exposure and technological progress that follows. At the same time, almost from the moment the idea of the patent was introduced, there were those who tried to exploit it in a cynical way and contrary to the purpose for which it was created.
The first patent granted in Great Britain was granted to a man named John of Ottenham, in 1449. John was an expert in glass production and he immigrated to London from the region of present-day Belgium. King Henry VII decided to grant him exclusivity on the technique he brought with him from his homeland to entice John to stay in Britain and promote the local glass industry.
Within just a few decades, however, the royal family began using patents as a source of income for everything. Anyone who was willing to pay enough money received a patent - and it didn't matter if his invention was original or completely banal. The only criteria for obtaining a patent were how close the inventor was to the royal court, and how tight the king's financial situation was: thus, for example, an unknown merchant managed to register a patent for... salt. The patent has lost all meaning as a tool in the public service. At the beginning of the 17th century, the public's soul was torn from this corruption, and the king was forced to apply a comprehensive reform in the framework of which almost all previous patents were canceled and clear criteria were established for receiving new patents. The rules formulated as part of this reform formed the basis of patent laws in most western countries today.
Patent laws vary from country to country, but the criteria for obtaining a patent are very similar in all of them. In order to be registered as a patent, the invention must be new, not obvious to a person with reasonable knowledge in the field, and it must be possible to use it in industry.
The first two criteria are pretty self-explanatory. Even if I reinvented the wheel independently, I can't get exclusivity on it because it's already in use before. In the same way, if all bicycle wheels in the world have a maximum of ten spokes, and I developed a bicycle wheel with eleven spokes - I will not be able to register a patent for the development, because this addition will be obvious to every bicycle manufacturer, and does not require special creativity.
The third criterion is a little less obvious: the invention must be useful in the industry, or in other words - can be implemented in practice. This condition is at the heart of the modern patent concept, and it exists to ensure that patents will indeed serve their purpose: to promote the country's economy. It is worthwhile for the state to enforce the exclusivity of an inventor on a certain development only if the disclosure of the invention will advance the local industry in the future. An invention that cannot be practically implemented, even if it is based on a brilliant idea, is practically worthless and the state has no interest in protecting it.
These three criteria - innovation, creativity and usefulness - served us faithfully and helped advance technology and industry for nearly four hundred years. But in the twentieth century, technology began to change its character: from mechanical inventions and developments, such as steam engines and production lines, innovation moved to chemistry, biology and medicine. The familiar criteria for patents were still strong and valid, but now they were accompanied by some difficult problems and dilemmas.
Here, for example, is a basic dilemma from the field of biology.
Suppose, for example, that tomorrow morning a new hormone is discovered which is of critical importance to our health. The same hormone existed, of course, even before it was actually discovered by the scientists - so it violates the first and most basic criterion for registering a patent: it is not 'new'. On the other hand, no one yet knows how to produce it artificially in the laboratory, so the first researcher who discovers the way to do so may rightly claim to have invented a new, non-obvious production process that has useful applications in industry. Is it possible to register a patent on the artificial hormone production process, or not? In other words, is it possible to patent a chemical compound that originates from living production?
In other branches of science, this dilemma is much simpler. In physics, for example, everyone knows that a new theory cannot be patented: the basic assumption is that it is a 'discovery' and not an 'invention'. In the same way, you cannot patent a new formula or a brilliant mathematical proof. In biology, however, there are many more shades of gray.
Here is another example. Ananda Chakrabarty was a geneticist who, in the seventies, developed bacteria capable of breaking down crude oil, for example for the purposes of cleaning up oil pollution in the sea. In 1979, Chakraborty applied for a patent for his invention, but was rejected by US Patent Office officials on the grounds that an animal cannot be patented.
This is a fairly understandable claim: it doesn't make sense to register a patent on a cat, no matter how well it plays the piano and how many millions of views it has on YouTube. Ananda, however, filed an appeal with the Government Exceptions Committee and claimed that it was not an ordinary animal, but a new and artificial production, which had never existed before in nature. The committee accepted the appeal, and approved the patent.
The Patent Office did not give up, and in 1980 filed an appeal to the Supreme Court with a request to cancel the patent anyway. The court deliberated hard, and finally ruled by a narrow majority of five judges against four in favor of Chakraborty. The ruling stated that any new invention - including an organic chemical compound - can be patented, provided it is produced artificially. In this respect, it does not matter if it is an animal or a DNA molecule: if it is artificial, it is a patent. This ruling is considered groundbreaking, and paved the way for a flood of new patents in the field of biotechnology. For example, the American Harvard University registered a patent for the 'Oncomaus': a genetically engineered mouse used for cancer research.
Nevertheless, biotechnology continues to provide lawyers and legislators with ethical and moral dilemmas. For example, it is accepted by most countries of the world that it is not possible to register a patent on an entire human being, even if someone succeeds in creating one under laboratory conditions one day. Registering patents on embryonic stem cells, for example, also encounters many difficulties because it apparently contradicts the idea of the 'sanctity of life' accepted in most developed countries.
A good example of this ethical and moral problem can be found in the case of John Moore. The American Moore contracted leukemia in 1976, and was hospitalized at UCLA University Hospital in Los Angeles. The doctor who treated him, Dr. David Gold, recommended that he undergo a splenectomy to prevent the cancer from spreading, and Moore agreed. Before the operation, the doctor had Moore sign a fairly standard legal statement in which the patient authorized the hospital to destroy all the tissues, blood samples and other organic matter that comes out of his body as part of the treatment. The surgery was successful, and between 1976 and 1983, Moore continued to visit the hospital regularly, and Dr. Gould continued to take blood samples from him. During one of the regular visits, Doc Gold presented John Moore with a new legal statement to sign. The wording of the statement differed from that of the previous statement: Moore was asked to confirm that he was granting the hospital all rights to commercial products developed as a result of the research on his blood samples.
The new wording aroused the suspicion of John Moore. He refused to sign and showed the document to his lawyer. The lawyer's investigation revealed a very surprising fact: it turned out that Doc' David Gold was able to transform the cancerous cells he extracted from Moore's body into what is known as a Cell Line, 'line of cells' in Hebrew: cells that can be grown in culture under laboratory conditions. Such a cell line is an important tool in medical research. Not only did Gold issue a patent for it, but he also signed deals with commercial companies amounting to hundreds of thousands of dollars.
John Moore sued Dr. Gold and demanded a share of the profits, claiming that the cells in question were actually his own body cells and belonged to him - therefore Dr. Gold was not allowed to register a patent on them. The case was tried in court in 1986, and Moore's claim was dismissed. The judges ruled that while they understand Moore's outrage that Dr. Gould conducted research on his tissues without his knowledge, and they even allow him to sue Dr. Gould for malpractice if he so chooses, the mere fact that Moore signed a statement allowing the hospital to destroy the tissues The goddess indicates that he was willing to give up ownership of them. The rights to the patent remain, therefore, in the hands of Dr. Gold - although it is clear that the ethical cloud over his actions has not yet completely dissipated.
Another gray area is that of patents related to medical procedures. The reference here is not to medicines or medical equipment, on which it is permissible and acceptable to register a patent, but to physical operations. For example, let's say that tomorrow morning I will invent the "Levy Maneuver": a new and more effective version of the "Heimlich Maneuver", a first aid technique of pressing the abdomen and diaphragm to save a person who is suffocating as a result of a foreign body in the trachea. Am I allowed to register a patent on "Tamaron Levy"? Let's remember that a patent is a right to exclusivity over the invention, so the next time your Polish mother-in-law chokes during the family meal - you have an excellent excuse for not wanting to help her...
The above example is a bit absurd, of course: Polish mothers-in-law do not die so quickly... and yet, a similar question was discussed in a court in the United States in 2011.
Prometheus Labs developed a method for identifying the correct dose of any drug according to the concentration of a certain chemical in the blood, and registered a patent for it. Researchers at the Mayo Clinic developed a method very similar to the same test - and Prometheus sued the institute for patent infringement. This lawsuit attracted a lot of public attention in the United States, because blood testing is a very common medical procedure. If it would be possible to patent the physical act of measuring the concentration of a chemical in the blood, there would be no obstacle to patenting other medical procedures as well, such as examining a sample under a microscope or cutting tissue at a certain angle during surgery. From here to a patent on the 'Levi Maneuver' the road is very short...
Fortunately, the American court rejected Prometheus' claim and canceled the patent for the method she invented: the judges defined the relationship between the concentration of the chemical in the blood and the dose of the drug as a 'law of nature', which cannot be patented.
Despite this decision, the American law that exists today creates an absurd situation: it is allowed to register a patent for a medical procedure, but the law does not allow a doctor or other medical staff member to be sued for violating such a patent. That is, if I registered a patent for the 'Levy Maneuver' and an MDA medic used it to save someone's life - the medic infringes my patent, but he is protected from a lawsuit. If, on the other hand, someone who is not a medical staff member performs the same maneuver... well, we'll meet in court.
If you thought that medical and biological advancements posed a challenge to the centuries-old patent laws, then know that the situation is even worse when it comes to the world of high-tech and information technology. Here is an example of such a challenge.
In 1999, a software called DeCSS was distributed on the Internet which was designed to enable the copying of movies from DVD discs. The content on the CDs is encrypted, and DeCSS allowed anyone to crack the encryption and copy movies from the DVD to their personal computer drive. The movie studios filed a lawsuit against the website owners who posted links to download the software from their websites, and the court issued a restraining order prohibiting the distribution of the software until the proceedings are over.
The ban on the distribution of the software infuriated activists for the freedom of information on the Internet, who saw the court's decision as a violation of their freedom of speech. Software, in the opinion of these activists, is not only a commercial product, but also an idea - and a ban on the distribution of ideas is a draconian and useless ban. To prove that software is more of an idea than a product, they converted the original software code written in C, an accepted programming language, into other and radically different forms. For example, someone wrote the software code in the style of the 'haiku', a Japanese poem in rhyme. Here is a translation of a short section of the poem:
"Elements in an array
Start at zero and count up
Do not forget!
wholes are four in length
bytes, or thirty-two bits
which is the same thing.”
Although the haiku format is completely different from the C language, a person with adequate programming knowledge will have no trouble converting the poem back into code that a computer can understand. In the same way, there were those who converted the original code into a rock and roll song...an audio book...and also into an electric circuit of resistors and capacitors, a print on a t-shirt, a sequence of bases in a DNA molecule, a bar code like the one on products in the supermarket, and even a pure mathematical formula. All of these spectacularly demonstrate the fact that the essential part of the software is not the words and signs that represent it, but rather the idea (or in professional parlance, the algorithm) that it contains.
This fact is important in the world of patents, because technological developments can be patented, but abstract ideas such as algorithms cannot. Most countries in the world do not allow patenting of software code, but this prohibition can be circumvented by patenting a 'computer system' that actually implements this software - for example, a processor that runs the software. As a result, a complicated and very delicate situation is created where it is not clear whether the patent protects the hardware of the computer system, or the software itself. Courts invalidated certain software patents but confirmed the validity of other patents that are almost identical to them, so that today there is great confusion in this area and many are calling to completely cancel the right to patent software code.
Product design and user interface are two other areas where the old and tested patent laws are losing their effectiveness.
I opened the chapter by describing the lawsuits filed by Apple against Samsung and HTC, manufacturers of Android devices. A closer examination of the indictment against Samsung shows us how shaky the ground is on which patent laws stand these days. Apple has a patent on the basic design of iPhones: a square product with rounded corners and black edges. Samsung's smartphones - like most of the sophisticated mobile devices of recent years - are square products with rounded corners and black edges, and therefore Apple accuses Samsung of trying to confuse consumers and make them believe they are buying an iPhone, when in fact they are buying a 'Galaxy' model device , for example
On the surface, this is a ridiculous claim.
If you think about it a little more, and consider it seriously... this is still a ridiculous claim. I don't know anyone who has walked out of a store holding a Samsung smartphone and is convinced that they have purchased an iPhone. Samsung also claims that this is a ridiculous claim, and that it does not make sense that Apple would accept ownership of black squares in our world.
Nevertheless, Apple has a registered patent on its design, so by law it has the exclusive right to use it. Trials in the United States are conducted in front of a jury that consists of ordinary people who are not experts in the field in which they are required to decide, and therefore Samsung cannot afford to assume that it will win the trial with certainty. The price of defeat - a ban on the marketing of smart phones - is so high that Samsung's only choice is to sue Apple back for infringing its own patents. Samsung is an old company that has been developing advanced products for decades, and owns thousands of patents - such as, for example, a patent on taking a picture with a mobile device and sending it over the cellular network, or playing an mp3 file on the mobile phone while performing other actions on the device, such as surfing the Internet. Here, too, we are dealing with patents that are absurdly and illogically broad, of course.
Now we can better understand the basis of the current patent wars between the big tech companies, and why companies like Google and Microsoft are spending huge fortunes on acquiring tens of thousands of patents. The existing patent laws create a twisted situation where a company cannot assume with certainty that it is not infringing another company's patent, even if it tries very hard not to. The only solution to this situation is to create an element of deterrence not much different from the arms race between the Soviet Union and the United States during the Cold War. One aggressive executive convinced that he can gain a competitive advantage over a rival company by filing a patent infringement lawsuit is enough to start a 'world war' of lawsuits and counterclaims.
In Norse mythology, a 'troll' is an evil and aggressive creature. One of the common tactics of trolls in ancient stories is to hide under a bridge and wait for passers-by. As soon as the passengers approached the bridge, the troll would leap out of his hiding place, pull out a huge stone sprout and squeeze tolls on 'his' bridge, so to speak.
The mythical trolls belong to history, but they have been replaced by modern and much more sophisticated trolls. For example, in 2011 several iPhone application developers received a letter from a fairly unknown company called Lodsys. In the letter, Lodsys lawyers claimed that the developers are infringing a patent belonging to the company and therefore they must pay it a percentage of their profits, or a lawsuit will be filed against them in court. And what is the infringed patent? The familiar Buy Now button, which allows the user to purchase the application conveniently and quickly. Lodsys claims that it has a patent for the very use of such a button within an application.
It goes without saying that the threatened developers claimed that this was nothing more than an extortion attempt: it is clear to everyone that the 'buy now' button is such an obvious feature of an iPhone application that no one thinks twice before using it. Still, a patent is a patent: the claims are still pending and will be determined in court.
Lodsys is a typical example of a company known as a "non-productive entity" (Non Participating Entity), or informally called a 'patent troll'. By law, patents can be sold and transferred, like any other commodity: the trolls purchase patents from private inventors or bankrupt technology companies, wait until the moment when the relevant technology has matured enough to become a lucrative and profitable business - and then surprise their victims by demanding payment of royalties and threatening to file a lawsuit .
The number of companies that engage in such activity has increased greatly in recent years, and in 2011 alone lawsuits were filed against over 6000 technology companies. Most of these lawsuits are for 'alleged' infringements of patents which to most of us seem completely trivial. For example, a company called EveryMD sued Facebook claiming that the idea of a 'Home Page' and comments to statuses - belongs to it. A company called 'Polaris' is suing Amazon and Yahoo because they use an automated e-mail service, for which it owns the patent. Another company, Data Carries, filed a lawsuit in 2012 against Apple, Nokia and LinkedIn over the use of the 'word auto-completion' function in a search field.
Such claims seem peevish and hopeless: can someone really believe that they have exclusivity over comments on websites, or over sending e-mails? But reality proves that the extortion strategy works well and brings the trolls a lot of money. The accepted statistics hold that legal costs in the field of patents are one million to two and a half million dollars, on average! And these are only the direct costs of lawyers' fees, fees and all. Big, rich companies can afford to go to court, but tiny startups and early-stage companies don't have such resources. Ninety-five percent of troll lawsuits end in an out-of-court settlement: the defendant company prefers to pay several hundred thousand dollars, and close the matter.
If this parasitic strategy boils you down and makes you slightly nauseous, you're not alone. It is difficult to find people who will defend the trolls and their methods, and the hatred towards them is almost universal. But when money talks, morality apparently takes a backseat: according to a 2011 study, trolls cost American technology companies about $29 billion in that year alone. The astronomical profits are also the reason why quite a few economic organizations and investment houses support trolls and invest in them, thereby enabling them to also attack rich and resourceful technology companies. For example, Intellectual Ventures, a well-known patent troll in the United States, recently raised five billion dollars from various investors to purchase new patents. Among the investors, by the way, you can also find technology companies that transfer their patents to the trolls' authority, in exchange for a percentage of the future profits.
The issue of trolls is very troubling for the high-tech industry in the United States, since the activity of patent trolls can be seen as a kind of 'tax on innovation' which falls mainly on the shoulders of small and medium-sized companies. Every influential giant company was once a small and fragile company, and the threat from the trolls could wipe out such small companies before they were given a chance to prove themselves.
Many are trying to find solutions that will defeat the extortion strategy of the trolls, and one of the constant claims that comes up in every discussion on the subject is that the patent officers are the main culprits in the success of the trolls. After all, they are the ones who are supposed to prevent the registration of absurd patents such as the patent on the 'buy now' button in apps. If the officials were doing their job properly, they should have rejected such patents based on the fact that they are self-evident to a professional with knowledge in the field, which is, as I remember, one of the important criteria for patent approval.
But not everyone agrees with this claim. It is clear that, at least in some cases, the patent officials approved too inclusive patents that should not have been accepted, but we should not be mistaken and think that these are stupid and uncomprehending officials. The opposite: the patent officers are almost always experienced people with extensive academic education in their field of work. For those who have forgotten, there was a patent clerk who even had "some" success in physics - his name was... Albert Einstein! The burden on the shoulders of an average patent officer is very high and the amount of time available to him to examine the patent and approve it is limited, so it is likely that here and there unfounded patents will manage to escape disqualification.
Prof. Gerard Magliocca, from the Department of Law at Indiana University, raised another interesting question in an article in which he reviewed the problem of trolls and its history. If patent officers are to blame for the current situation, the professor wondered, why are we encountering this problem only now, and only in technology patents? If patent officers are so bad, it stands to reason that we should have encountered a similar problem fifty or sixty years ago, and in other areas of industry. The very fact that this is a new phenomenon indicates that there may be additional hidden factors that play an important role in the matter.
Prof. Magliocca's (excellent) article opens with the following quote:
"Of countless dormant patents, there will be some that contain some new principle... that the inventor, however, was unable to find a use for himself. Another inventor, blind to the fact that this principle had already been discovered before, was talented enough to also find a practical and profitable application for it. The patent sharks of the legal world, whose eyes are always open to detect such cases, will approach the first inventor and purchase his useless patent from him - and then immediately try to extort the second and profitable inventor."
This is, of course, a classic description of the extortion strategy of the patent trolls. The interesting detail here is that these words were spoken more than one hundred and thirty years ago, in 1878. The speaker, an American senator named Isaac Christiansi, lamented a serious problem that befell the farmers in the United States, and which is very reminiscent of the state of the high-tech industry these days. Although it seems that the distance between agriculture in the 19th century and the electronics industry in the 21st century is almost unbridgeable, Prof. Magliocca suggests that we learn from the past to try and solve the problems of the present.
The seventies and eighties of the 19th century were boom years in the American economy. The civil war had ended some time before, and the industrial lull contributed to the steadily growing economy.
Patents, by their nature, are intended to encourage technological innovation and creativity, and the Patent Office decided to update the existing procedures to spur creativity in the field of agriculture. Unfortunately, it is very difficult to invent completely new agricultural tools. Unfortunately, my practical experience in agriculture is limited to listening to records of 'The Tractor's Revenge' - but I'm pretty sure that the hoe, the plow, the sickle and the other agricultural tools were already invented thousands of years ago.
In order to still allow the registration of patents and to encourage innovation, the Patent Office changed the laws so that a patent could also be registered on a technological development with aesthetic characteristics. In other words, the invention does not have to be very new on the practical and applied level: even a change in the design can be enough to allow the registration of a patent. The result of this change was a flood of new patents on agricultural tools, the only difference between them and existing tools was a slight change in the handle, the color, the material the tool is made of, etc. In just seven years, more patents were filed than in all the previous eighty years combined.
In a short time, the patent trolls also appeared. They were then known as 'patent sharks', but their modus operandi was quite similar to that of their modern-day counterparts. Shrewd lawyers would purchase patents from inventors for a few dozen dollars, then go from farm to farm examining the farmers' tools. If the hoe or plow were similar to the description that appeared in the patent in their possession - and they almost always were, apparently - the lawyer would threaten the farmer with a lawsuit for patent infringement, unless he paid him a few hundred dollars. The poor farmers, who had neither the legal education nor the resources to fight the sharks in court, would surrender and pay.
An outcry arose among the agricultural organizations, who put pressure on their representatives in the House of Representatives. Then, as today, the main claim was directed - and to a large extent rightly - towards the Patent Office.
But Prof. Magliocca finds several other factors or circumstances that were valid then, at the end of the 19th century, and are also valid in the high-tech industry today.
First, the farmers were vulnerable to extortion by the sharks because it was impossible for them to avoid infringing the patent: they did not have enough money to purchase new and "safe" tools. Today's technology companies are also very vulnerable to this kind of extortion. Every advanced product is the result of gradual refinement over time, therefore it incorporates many existing patents. It is almost always impossible to change a small part of the product to avoid infringing the patent, without the change having a far-reaching effect on the entire product. Therefore, the technology companies have no alternative but to cross the "bridge" that the troll claims to own.
Second, a farmer who chose to resist extortion and go to court, could not be sure that he would come out entitled. The difference between a hoe and a hoe is not great, and who knows if he will be able to prove to the judge convincingly enough that his hoe is fundamentally different from the hoe that appears in the patent. The uncertainty meant that even wealthy farmers who could afford to take the sharks to court, chose in many cases not to do so. As we have already seen before in the case of Apple v. Samsung, even nowadays the technology companies cannot assume with a reasonable degree of certainty that the jurors in the trial would know how to distinguish between a legitimate claim and an attempt at extortion.
Third, then - like today - patents were cheap. It was very easy to issue a patent for a design change in an agricultural tool then, and it is very easy to issue a patent for a slight variation of software code or a tiny change in an electronic circuit today. This ease means that the trolls are in possession of tens of thousands of dormant patents, of which it is likely that at least one of them is very similar to existing technology.
Prof. Magliocca speculates that the abuse of patents, as trolls do, reaches its peak when all three of the above conditions are met - the inability to avoid patent infringement, uncertainty about the outcome of the trial and the low cost of patents.
If so, how can you prevent patent abuse by trolls and sharks?
One option is to let big and rich companies like Google and Microsoft fight the trolls in the courts. On the face of it, these giant companies can afford to hire the services of the best lawyers, and they themselves hold tens of thousands of threatening patents of their own.
Unfortunately, this possibility is outright ruled out: the trolls are immune to the threat of the big companies. Patent trolls, by their very nature, are legal organizations that only deal with lawsuits in court: they have no research labs, manufacturing plants, or products of any kind. The trolls will never infringe someone else's patent, because to infringe a patent you have to make something. The patents that the big companies accumulate can, perhaps, threaten other big companies - but they are completely useless against the trolls. We will also remember that many trolls have a solid "financial back" in the form of external investors who are happy to try and cut a coupon on the backs of the big technology companies, so they also have their own good lawyers. In other words, Google will not save us.
Another option is to change the patent laws. This was the solution that, in the end, the legislators resorted to in the late 19th century: Congress passed a law that canceled in one fell swoop all the ridiculous patents on design changes in agricultural implements, and returned the situation to the way it was before. This was extremely effective, and the phenomenon of patent sharks disappeared almost as quickly as it appeared.
Unfortunately, it seems that nowadays it is much more difficult to implement such a sweeping and cutting solution. Many entities and companies will oppose sweeping changes in the patent laws and try to thwart them, such as the pharmaceutical and biochemistry companies, for which the current laws provide good protection and in this industry the phenomenon of trolls does not exist. Even the big hi-tech companies are not averse to revolutionary changes in the law: they, as I remember, invested many billions of dollars in purchasing patents, and would not want to see all this investment go down the drain. There may be major changes in the patent laws in the future, but for now there is no revolution on the horizon.
The third option is to outlaw the trolls, once and for all: enact laws that would prohibit such extortionate activity. It's hard to believe that anyone would oppose such a law, isn't it?
Once again, reality slaps us in the face. In order to outlaw trolls, one must first define who a "patent troll" is, and this is not an easy task. For example, if we choose to define a troll as "a small company that is not a manufacturer, which extorts other companies through patents", we can immediately bring examples of the same behavior on the part of companies with different characteristics. For example, in the XNUMXs, IBM threatened SUN, claiming that it was infringing an IBM patent. And what was the patent in question about? by drawing a thick line on a computer screen. Yes, you heard that right: IBM had a patent for drawing a line on a screen. The threat did its job, and SUN (which was then a much smaller company than the "blue giant") surrendered and paid an unknown amount. IBM is a large and productive company, and yet it exhibited strictly 'troll' and extortionate behavior. This is, of course, just one example of many, of course.
On top of that, anti-troll legislation may inadvertently hurt innocent inventors. If small entities are prevented from suing large companies, how will inventors be able to protect themselves? What would prevent a company like IBM, Intel or Apple from deliberately infringing the patents of small and weak start-up companies, if the big companies knew they were immune in court? Many patent trolls justify their activity by supposedly protecting the interests of small and weak inventors.
Nevertheless, here and there there are those who have found creative methods to overcome the problem of trolls. For example, a company called Lexmachina offers a "business intelligence" service to sued companies: for a small fee, Lexmachina uses computerized means to scan all the judgments relevant to the lawsuit in question in order to form a more reliable picture of the threat from the troll.
Let's remember that one of the factors that help trolls a lot is uncertainty on the part of the victim about the outcome of the trial. According to the information published by Lexmachina, the trolls lose about nine out of ten lawsuits that reach the court, but the defendants, as mentioned, almost always prefer not to take a risk and pay the ransom. If the service provided by Lexmachina allows the defendant company to know with a reasonable degree of certainty that it may win the trial, this will completely change the terms of the competition. The biggest threat to the troll is a loss in court: if the defendant manages to prove in court that the patent is invalid - for example, someone has already invented something similar in the past - and the judge declares the patent held by the troll invalid, the troll will no longer be able to use it to sue other companies... in such a situation , the troll would rather withdraw his threat than pull the sprout from his belt and discover that it is a toy sprout.
The examples I have given in the chapter so far, from biology through medicine to the extortionist trolls, testify to the challenges facing legislatures all over the world. Technology is advancing at a faster pace than ever before, and brings with it new dilemmas that the existing laws are not designed to deal with. In the time that elapses until a consensus is formed about new laws, they themselves become irrelevant.
What is the solution to the patent problem? As of today, no one has a definitive answer. The proposals range from minor changes to the existing laws - such as a faster expiration of the exclusivity granted by the patent or drastically raising the fee for registering patents to reduce their number - to calls to completely abolish the patent institution. There are those who ask themselves if there is even a point in dealing with these questions: who knows, maybe in a few years each of us will have a XNUMXD printer at home, and everyone will be able to print any product they want. In such a situation, restrictions and exclusivity on the freedom of production would be useless, at least at the level of the individual, just as file-sharing networks have rendered the question of copyright in music and movies almost irrelevant.