Here are five ways to use a patent:
- Nonuse Don’t practice the claimed invention and exclude all others
- Troll Don’t practice, demand payment if others practice the claimed invention
- Flip Don’t practice, and exclusively license, assign, or sell the patent
- Practice Practice the claimed invention while excluding all others
- Share Practice and allow others to practice the claimed invention
Each of these methods has its own variations–some with significantly varied effects. Let’s look at each of these approaches and consider university patent management practices. The first three patent uses involve non-practice. Here’s a discussion of trolling.
Troll
In an early computer game, Colossal Cave Adventure, you come to a bridge guarded by a troll. If one has collected the right stuff, the troll lets you pass. Otherwise, you are stuck. In patent trolling, much the same thing happens, except the troll is a patent owner and the bridge is a set of patent claims and you have already crossed the bridge and are trapped. Some folks don’t like the term “troll” and use “non-practicing entity” (or NPE), and others
Here’s the Electronic Frontier Foundation description of a patent troll:
A patent troll uses patents as legal weapons, instead of actually creating any new products or coming up with new ideas. Instead, trolls are in the business of litigation (or even just threatening litigation). They often buy up patents cheaply from companies down on their luck who are looking to monetize what resources they have left, such as patents. Unfortunately, the Patent Office has a habit of issuing patents for ideas that are neither new nor revolutionary, and these patents can be very broad, covering everyday or commonsense types of computing – things that should never have been patented in the first place. Armed with these overbroad and vague patents, the troll will then send out threatening letters to those they argue infringe their patent(s). These letters threaten legal action unless the alleged infringer agrees to pay a licensing fee, which can often range to the tens of thousands or even hundreds of thousands of dollars.
The patent troll exploits the patent position to tax others rather than to exclude others in favor of one’s own productive work. If one obtained a patent franchise to operate a steamboat on a river, then the expectation was that one operated the steamboat, deriving profits from the freedom from competition (for a limited time). However, if all one did with the patent franchise was to wait until others operated steamboats and then demand payment for holding the right to exclude others, we might think that the patent holder had failed in the basic social contract–the patent holder had no interest in operating a steamboat, but only in taking a share of revenue (not even a share of profits) from everyone else who tries to provide the service that the patent holder has failed to provide.
Not everyone accepts that there is such a social contract, that a patent is granted with an expectation that the right to exclude is tied to an obligation to practice, but at least you can see how a patent troll sets up on less commendable social ground. As an NPE, a troll has no need to play nice with competitors who also may hold patents, nor worry about others who hold prior and more general patents that prevent the practice of the inventions controlled by the NPE’s patent(s). The patent becomes a purely legal asset, and a primary value of the asset comes from the ability to threaten an infringement action–along with the cost to defend against such an action, which often runs easily over a million dollars. Clearly, then, one sweet spot for the patent troll is to demand less than the apparent likely cost to defend against a claim of infringement. If the troll has plenty of money and appears aggressive, then the apparent cost of defense goes up, and the troll can charge even more to settle the case before it has been filed.
In 2007 Mark Lemley asked if universities were also patent trolls:
One of the assumptions corporations in patent-intensive industries (such as IT or increasingly biotechnology) make about patenting is symmetry: that if a competitor sues you for infringement you can sue them back. That symmetry deters patent litigation in the industries in which it operates.16 But that symmetry doesn’t exist for non-manufacturing entities. Universities aren’t going to cross license. They aren’t going to trade their patents away in exchange for a cross-license, because they don’t need a license to other people’s patent rights. Instead, they want money.
It’s not the simple desire for money that gets universities into trouble. One can sell lemonade to steamboat passengers when they arrive at the dock, or one can threaten them with a shotgun to pay up before they are allowed to come ashore. Money either way, but you can see that how one chooses to make one’s money makes a huge difference in the social contract in play. Lemley looks at various ways in which universities have helped to block patent reforms that would have limited the effect of patent trolls. The resulting view of universities is that they indeed do think like trolls and operate like trolls:
These university preferences shouldn’t be surprising, at least if we view the university as a profit-maximizing entity rather than one concerned with the social good. Like other non-manufacturing entities, after all, universities are first and foremost intellectual property (IP) owners, not IP licensees.
We will come back to this dichotomy between profits and social good in a bit. Lemley doesn’t argue that universities are trolls (at least not in his view in 2007) but instead blows up the whole debate by questioning whether “society needs or wants university patents at all.” That’s a still a legitimate question, ten years later, and the answer continues to have to do with the distinction between social good and profit-seeking. As for the question whether universities are patent trolls, Lemley ends up arguing that universities aren’t trolls when they transfer technology along with their interest in granting licenses, but the definition of a patent troll will always be gamed if made a part of law, so the real issue is changing the laws that allow the system to be gamed in the first place and until then so what if universities are also “bad actors” at times in exploiting a poorly conceived legal system. Perhaps, as Chaucer would have it,
The wery huntere, slepynge in his bed,
To wode ayeyn his mynde goth anon;
The juge dremeth how his plees been sped;
The cartere dremeth how his cart is gon;
The riche, of gold; the knyght fyght with his fon;
The syke met he drynketh of the tonne;
The lovere met he hath his lady wonne.
And even exceptionally good academic IP lawyers dream that if only the law were better, folks wouldn’t be so able to be both legal and bad actors. Yeah, sure. As for universities, Lemley’s conclusion comes as a tremendous slap–why expect university patent administrators not to be anything but bad actors, if they can make money and stay technically legal at it? I’d rather make the case that regardless of patent law, universities have legal obligations to do other than play the patent troll, obligations established by universities’ own formal policies, by federal law, and by the contracts that universities have entered into (including contracts with their own employees and with the federal government).
A expectable outcome of a nonuse patent management strategy is one of trolling. Universities generally back into playing the troll rather than announcing upfront trolling as a strategy. Having failed to transfer a patented technology, a university then discovers the opportunity to shake down industry once industry has adopted the technology anyway. All that changes is that university patent administrators (and research foundation patent administrators) wrap their behavior in moral language about “protecting the public’s investment in research” and “preserving the value of assets the university manages in the public interest.” It’s the same shakedown, however, and it’s trolling behavior.
I have argued that under Bayh-Dole, the standard patent rights clause, and the property trust relationship clause of federal funding agreements with universities, universities have no legal standing to play the patent troll: when there’s beneficial public use on reasonable terms, the “attributes of personal property” represented by a patent on a subject invention are exhausted. It’s just that, as Mark Lemley has observed, until government or privately funded lawyers get around to make the case, and judges agree, bad actors will get away with being bad, even when they are university-based, and there’s nothing to do about it but note that universities, too, have become pigs and pigs will be pigs.