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In 2001, NTP Inc., a non performing entity
(NPE), sued Research in Motion (also known as Blackberry) for patent
infringement based upon its sales of the Blackberry devices, which uses an
email delivery system that allows users to send and receive emails. The
suit settled with Blackberry paying NTP $612.5 million to continue to use
the Patent in manufacturing while avoiding a shut down by way of an
injunction. Nevertheless, the NTP
Inc. v. Research in Motion (RIM) lawsuit is viewed as the “poster child” and constantly
referred to as particularly illustrative of the Patent trolling.
Apple Inc., one of the most valuable
companies, has paid as much as $7 billion to Optis, a group of Patent trolling
companies. Appallingly, such actions are rampant, where patent troll
companies like NTP Inc. and Optis tamper innovation.
The term “Patent Troll” was
initially coined by Peter Detkin (ironically a founder of
intellectual ventures) in the late 1990s. Patent trolls are loosely defined
as owning and enforcing patents without practicing or making underlying
patented inventions. Companies or person(s) involved in patent trolls are
opportunists who buy or license patents with the sole motive of filing
infringement suits and with no intention to put the Patent to use, market
and practice.
Do patent trolls hurt innovation?
As observed by Justice Sarkaria in the
case of Bishwanath
Prasad Radhey Shyam v. Hindustan Metal Industries, the primary
objective of the Patent Law/Act is to promote scientific research, new
tech, and industrial progress. In contrast, patent trolls have a negative
impact on innovation. A survey on software start-ups by Santa Clara and
Stanford University found that 41% reported significant operational results
from patent troll lawsuits. At the same time, another study of venture capitalists found that 74% had companies that
experienced substantial impacts from patent demands. On the other hand, a
Harvard Business Review report shows that patent trolls cost defendant firms $29 billion per year
in direct out-of-pocket costs. The average settlement cost goes up to
millions of dollars, as evidenced in the NTP Inc. case.
An Indian Perspective
Although the patent laws in India don’t
provide for specific legislation or a provision to deal specifically with
patent trolls. But it does create a barrier with a few relevant provisions
post Patent (Amendment) Act, 2005 which under the law such as: -
· Section 146 of the Patent Act, 1970 clearly states that the controller might need a patentee to
furnish information regarding the duration of the Patent worked in India,
i.e., commercial use of the Patent. If not done so in the territory of
India, it would invoke compulsory licensing.
· Section 25(2) of the Patent Act, 1970 provides for post-grant opposition wherein any person interested can
file a post-grant opposition within 12 months of the date of publication of
the grant of a patent on any grounds specified therein.
A way forward…
Even after having these provisions, patent
trolls seek to exploit the weaknesses in the legal system to enforce
equally weak patents, such as in these two cases of Spice &
Samsung v. Somasundar Ramkumar and M/s Aditi Manufacturing
Co. v. M/s Bharat Bhogilal Patel where Intellectual Property
Appellate Board (IPAB) revoked three patents from the two respondents
(patent trolls) respectively.
Though the 2005 Patent amendment has
indirectly addressed the issue of Patent trolling and is seen as a
commendable step in preventing these instances. However, start-ups and
small companies have to be protected from Patent trolling as they are the
ones affected the most, mainly due to heavy investments that they have made
in the research & development of the product and the fear of losing the
Patent.
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