> It isn't just HappyTroll LLC or whatever shell company was set up that week that's going to be on the hook for fees. The fees can be applied to any "interested party" in the case.
That's good, but the pessimist in me thinks IV could probably find a way around this too, but maybe not. Modifying the law to somehow identify patent troll originators (IV) and barring them from disbursing patents to NPEs would seem like some added protection.
Unless a company is in the business of producing things its patents cover, it isn't utilizing the patent system as intended. I fail to see how barring a Non Practicing Entity from litigating patents it isn't actually using in a real, product making capacity is unjust. It seems perfectly reasonable to me, in fact.
Part of the purpose of the patent system is to allow individual inventors and small companies to develop technology even if they won't have the resources to produce and sell it. The ideal situation is that these NPEs go out to the large companies in an industry and say "hey, we've got this invention you might be interested in...".
If NPEs are barred from litigating patents, there's nothing to stop those large companies from saying "great, we're going to use this... but not pay you anything, because there's nothing you can do about it".
No, large companies are generally scrupulous about licensing patents. Infringing a patent makes it valuable, and thus worth selling to a competitor or underwriting by a venture capitalist. Nobody wants to have the billion dollar product that is enjoined from sale.
Depends. Usually big companies have cross-licensing agreements between competitors (since they usually can't do a product without each other's technologies - example: hard drive companies)
Also, it's easier for them to come up with a way of not infringing the patent in the first place.
That would solve some problems but create others. If it's "original inventor" rather than "original inventor and heirs" you've just created an incentive to assassinate inventors (and a disincentive to invent if you're getting old).
Even if it's "original inventor and heirs", you've created a liquidity process -- if you're a chemist with lung cancer, it would be great if you could sell your novel synthesis in order to pay for your cancer treatments rather than needing to start selling drugs yourself.
And then there's the problem of defining what a "practicing" entity is, of course. Someone who has at least one customer? Someone who has used the invention themselves? Someone who was planning on building a product, but didn't get into YC and ended up working at Microsoft instead while he tries to license his invention to raise money to pay for his next startup idea?
I don't follow the chemist example. The patent is still valuable to companies who do want to productize it, or even companies that don't. Companies can still buy and hold patents without doing anything with them, it's just that they are barred from litigating them. They can still resell the patent to someone else, potentially for a profit.
A "practicing" entity has either brought a product to market, or uses the invention themselves in the process of building a product on the market. Someone who is planning on building a product but has no funds doesn't get to litigate unless they are the original inventor. Your last example seems to imply that they are the original inventor.
I think trying to come up with too many special cases is just the wrong approach. Patents are intended to be somewhat property-like, and transferability seems like a completely reasonable thing to me. In fact, it would be quite challenging to prevent transferability without impacting a lot of contracts -- they'd just set up some power of attorney scheme to make it seem like the inventor is a party to the lawsuit.
The root of the problem is more closely related to the imbalance of power in a lawsuit: one party has the ability to subject another to great cost; with little or no cost to themselves, even if they are completely wrong. That imbalance is what makes extortion possible, and this bill seems to be more directly aimed at that problem.
To force the plaintiff to take on more responsibility, perhaps they could go further and require posting a bond for the cost of the trial in case they are wrong. That would prevent them from just setting up shell companies and then saying they can't pay when they lose. The judge can be involved in setting the bond amount, which should help sort out the rest of the problems and keep the incentives reasonable.
The chemist doesn't want to spend time going around to companies trying to license his technology, and he certainly doesn't want to spend years in litigation. He's busy dying (and/or cooking meth) -- he wants to sell his technology to a company which will do the licensing and/or litigating for him.
The problem in this case there are many instances where the original inventor is not interested in taking on the risk of sales based licensing and so sells the patent for a lump sum to a third party.
Unequal treatment of NPEs acts against specialization of skills/division of labor. Invention, Manufacturing, and Litigation are three entirely different skills. If an inventor has to start some token manufacturing operations to monetize his patent, that manufacturing will be subscale and inefficient. If the manufacturer has to litigate and cannot sell the patent to litigation specialist firms, they will be distracting themselves from their core business.
The ability to sell an asset is an important one for an efficient economy.
Your first paragraph consists effectively of assertions without any sort of empirical support, and the second is at best an inappropriate generalization. The ability to sell assets, in general, may be important for an efficient economy, but not necessarily in the case of specific assets, in this case patents, if you care to call them 'assets'.
Why should patents be assignable or transferable anyway? The assignment or transfer of a patent necessarily implies the original holder isn't interested in the state-conferred monopoly that a patent is, and therefore he's not interested in having a monopoly on the invention the patent covers. To my mind, the assignment of a patent should immediately expire and/or invalidate it.
> The assignment or transfer of a patent necessarily implies the original holder isn't interested in the state-conferred monopoly that a patent is, and therefore he's not interested in having a monopoly on the invention the patent covers.
It means no such thing. The monopoly has value whether they go through with production themselves or sell it. Selling it just realizes the value in the short term rather than the long.
The monopoly no longer has value to the original holder once he sells it. He has realized the entire value of the monopoly for a short term profit. This isn't incompatible with the notion that, effective immediately upon such realization of value, the patent should expire. You may disagree that it should expire at that point; in which case we'll have to agree to disagree.
And should the purchasing party know that the patent will expire on the moment of purchase, the patent will hold no value and will never be purchased.
There is a middle ground, where a patent once transferred by the original patent holder cannot be extended, or is perhaps reduced, or the patent cannot be resold. Something of the sort. This would maintain the patent's value for the inventor in a market, as well as provide reasonable measure against patents being scooped up and plaguing IT for decades.
Better yet, though, no more software / algorithm patents.
As has been pointed out, if the patent expired on selling it would obviously have no selling value.
But beyond that I'm really confused by your argument. You seem to think that someone files a patent because they hope to exclude people from its use, which is not what patents are intended to do at all. They are intended to allow an inventor to realize an incentivized value for the public disclosure of their invention.
To that end it doesn't matter when the value is realized, the inventor has done their part by disclosing the invention to the public.
> Why should patents be assignable or transferable anyway?
Because the purpose of the patent system is to turn trade secrets into public assets. Bob the blacksmith's new alloy is not much of a public asset if for the first twenty years all we get are the few thousand horseshoes that Bob can hammer out. You are advocating a Chairman Mao patent system, with patents only benefiting garage semiconductor fabs and artisinal jet engine factories.
The transferability of patents allows them to immediately be deployed throughout society.
Can you explain? On the face of it, an entity without any skin in the game (i.e., can't be sued, it'll just fold and re-emerge as another company) sounds like a complete abuse of the system.
It's because you can have "good" NPE's. Take ARM Holdings for example, they do not manufacture their own chips but rather licenses their designs to other semiconductor manufacturers.
How exactly are ARM Holdings "an NPE"? They're definitely practicing - they're using their patents in their designs. They also attempt to shoot down any independent implementation of the ISA, for that matter.
ARM does not reduce its inventions to practice. It is not the hardware description language files that are subject to patents but the chips that embody those files.
Another valuable example of this is a patent pool consortium, a corporation that exists to bring all patents in a field together for easy licensing.
"Reduce inventions to practice?" First, I don't think that my country has any such legalese in our patent law. Second, what does that make NVIDIA? Or ATI? They don't make their own chips either. Third, I believe that what is protected by most of these patents are neither HDL files nor the chips but rather specific implementation techniques for parts of the HDL implementation of the ISA. If the chips were patented, it would be worthless because you could do an independent design.
That's good, but the pessimist in me thinks IV could probably find a way around this too, but maybe not. Modifying the law to somehow identify patent troll originators (IV) and barring them from disbursing patents to NPEs would seem like some added protection.