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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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May 9, 2013

Patent Trolls for the Little Guy

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Posted by Alan Wexelblat

I've long held an ambiguous regard toward patent monetization entities (aka non-producing entities, aka patent trolls) here at Copyfight. It's clear that some NPEs are picking on small fry in an effort to generate some quick cash. But there's another side to the story. In today's CorporateCounsel Lisa Shuchman tells the story of a patent monetization entity - CopyTele Inc.- that is trying to help the little guy stand up against a deep-pockets potential infringer, in this case Microsoft.

On the surface CopyTele looks like a typical NPE, asserting a couple of encryption-related patents against Skype, which Microsoft owns. CopyTele, as a small company, doesn't have the resources to sue a larger company which can afford to pay lawyers to keep patent claims tied up for years before any trial. This is a common technique big companies use to fend off smaller claimants - just run the smaller companies out of money and the problem goes away.

CopyTele is no white knight - they're overtly out to make money - but at the moment they're the only way that the little guy has of getting anything for their work. Like a lot of companies, CopyTele was not very good at making and marketing products. Having a good and novel idea - good enough to get a couple patents at least - is not the same as being able to thrive in business. CEOs make bad decisions, recessions happen, investors get cold feet - the list of reasons for a company with a good idea to fail goes on and on.

So what else are they to do? Closing up shop and vanishing is certainly going to happen, but that leaves the question of what to do with the company's good ideas. If they can - through the NPE - make some money off them, should that automatically be disallowed? I tend to think not. If we assume that the patents are good and validly granted then they represent the embodiment of innovation and hard work. For another company to make use of that innovation and hard work CopyTele ought to be able to get some form of compensation, such as by sale or license. Which brings us back around to the patent monetization entity.

A long time ago I made an analogy between patents and cars. Certainly people use cars to commit crimes. Cars are responsible for a lot of deaths. People use cars in all kinds of irresponsible ways (hang up the damned phone and drive!). But none of that causes us to want to abolish cars. Likewise, I do not think that the abuses of some NPEs are a reason we ought to abolish patents, software or otherwise. But surely some sort of (possibly stringent) regulation is required.

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