Washington Week: Student Voices (O)

COLUMN: Patent-holding companies misuse rights
By Brian Bockelman
Daily Nebraskan (U. Nebraska)
03/31/2006

(U-WIRE) LINCOLN, Neb. — Did you notice the end of the BlackBerry patent case? If not — or if you have no clue who Research In Motion Ltd. (RIM) or NTP Inc. are — then you might be missing out on the next wave of frivolous lawsuits in the U.S.

The BlackBerry, nicknamed the Crackberry by those who own one, is a lovely little device that allows you to check your work e-mail anyway. The concept is not unique today. Many expensive cell phones can do this, but the BlackBerry has been around since 1999.

So what was the clash between RIM and NTP? NTP has only one asset — a set of wireless e-mail patents from the early 1990s. They have no products, only ideas written on paper approved by the patent office.

NTP is known as a patent-holding company. More or less, they buy and sell patents, produce nothing of value with them and then sue the crap out of anyone whose product might be remotely similar.

That's right — the sole purpose of these companies is to pepper entire industries with lawsuits. They don't hope to win in court. They want to be enough of a nuisance to cause a bigger company to settle.

The weapons of mass destruction used here are patents. In exchange for publicly disclosing their ideas in the form of a patent, the inventor is granted exclusive rights to the idea. Originally, they were actually good things for inventors.

This is meant to protect inventors who do the work of inventing. Otherwise, copycats who don't spend any effort developing, researching and testing can come out with a less expensive product.

That was then; patents have become something else entirely. The system has become so broken that it is difficult to know where to start complaining.

It is easy to file a patent: just find a good lawyer to write it and pay a minimal fee. However, in order to fight a patent and get it revoked, it can cost millions and take years. The best way to fight a patent? Countersue with your own pool of patents.

The technology industry has become a patent minefield of mutually assured destruction. If you don't have enough patents to sue everyone, your company will be perpetually stuck in court.

For a while, the cross-licensing balance worked. Large companies never launched patent assaults against each other, and the patents were used as a bargaining chip to screw smaller companies.

IBM alone has received more than 3,000 patents every year for the past couple of years. I'm convinced I violate at least five IBM patents just by getting out of bed and brushing my teeth. If the company wanted, it could send any smaller competitor out of business, crushing them in frivolous lawsuits.

This is really what patents are to large companies: a tool to kill competitors. The following Bill Gates quote is from 1991:

"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today ... The solution is patenting as much as we can. A future startup with no patents of its own will be forced to pay whatever price the giants choose to impose. That price might be high. Established companies have an interest in excluding future competitors."

Spoken like a true monopolist, Mr. Gates.

However, companies like NTP threaten this balance. Patent-holding companies have no product. They can't be countersued. The best hope larger companies have against them is to settle early before lawyer fees explode, even if the patents are invalid.

RIM was found to violate five of NTP's patents by a jury in 2001 and given the chance to settle for $26 million. However, RIM didn't stop fighting, claiming NTP's patents were obvious (one of the conditions needed to revoke the patent). RIM launched appeals in court and requested the U.S. Patent and Trademark Office (USPTO) review the patents, a multi-year process. As the companies went through the appeals process, the $23 million figure ballooned.

Earlier this year, the USPTO issued preliminary rejections of all five patents in question, and the final rejection of one of them. However, this fact was not enough to stop the court case, and the appeals judge appeared ready to shut down RIM's BlackBerry network.

Earlier this month, RIM and NTP settled with a nice fat check going to NTP. The final cost to RIM for violating five patents, patents which look like they will be rejected by the USPTO: $612.5 million. That's more than 20 times more than the original figure, a cost you, the consumer, will end up paying.

The patent-everything attitude of today's corporations has gotten out of hand. Even the trivial and impossible have been patented — a double-click on a PDA is patent 6,727,830 and an anti-gravity device is 6,960,975. It is apparent the system needs a complete overhaul. Patents were supposed to be a tool to protect inventors, not monopolists and their lawyers.

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