Print 19 comment(s) - last by w8gaming.. on Jun 10 at 7:20 PM

  (Source: Magnet)
Meanwhile states take the fight to settle-or-sue trolls themselves

It's widely acknowledged among veteran legal experts that the patent and copyright systems are broken.  Much of the human genome is "patented" by biotech firms preventing cancer research and other medical progress.  Big electronics companies like Apple, Inc. (AAPL) are patenting things like "rectangular body with curved edges" and suing their rivals.  Meanwhile, all these big players are also under attack from the bottom by "patent trolls" companies that produce nothing, buy up collections of intellectual property, and sue those who do produce via shell companies.

I. Congress to FTC: Help Us Fight the Trolls

When it comes to the latter problem -- the so-called patent trolls -- some members of Congress are feeling pressure from their corporate sponsors who paid their way into office.  Under fire to take some sort of action, Congress appears uneager to pass new laws to explicitly attack the patent assertion entities (PAEs) (a euphemism for "patent troll").

Two lawmakers, Reps. Judy Chu (D-Calif.) and Blake Farenthold (R-Tex.) have urged the U.S. Federal Trade Commission to use its ambiguously defined powers to examine whether PAEs are behaving abusively and crack down on them with fines or lawsuits, if necessary.

Rep. Judy Chu
Rep. Judy Chu (D-Calif.) [Image Source: Getty Images]

Rep. Chu dropped the euphemism and called a troll a troll, remarking, "We can't let patent trolls hide under the bridge any longer—we must expose them of their deceptive practices.  Patent trolls abuse the marketplace for financial gain and target end users who have every right to enjoy the products and services they purchased. The FTC has a role to play in ensuring every American consumer is protected from those who use wrongful business practices to make a quick buck."

Yet with five IP reform bills introduced or drafted, Congress still has yet to take any real action against the trolls.  The last piece of major legislation that affected the U.S. Patent and Trademark Office (USPTO) was the "America Invents Act of 2011".  Since then efforts -- particularly those focused on the trolls -- have stalled as Congress was afraid that passing changes could hurt a fragile economy.

II. Vermont Takes a Stand Against Top Troll

While some companies like Apple engage in so-called "mild trolling" -- patenting ambiguous claims and then using them anti-competitively -- "true" trolls (PAEs) are known for filing lawsuits against dozens, or even hundreds of companies relying on the fact that it costs more to fight the charges in court and get them dismissed than it does to settle.

One proposed solution has been to pass legislation to make it easier for the defendants to collect legal fees in cases where the lawsuits are determined by a court to have been inappropriate.

However, until those efforts stick, some states are taking matters into their own hands.  

In Vermont a company called MPHJ Technology Investments (via its "Project Paperless" campaign) sent letters to "thousands" of nonprofits and businesses threatening to sue them over violations of its patent (U.S. Patent No. 7,986,426) on scanning documents into email.  The "troll", who has never actually gone to court yet, is demanding up to $1,200 USD per employee (but settling for smaller sums).  The scanning threat/extortion scheme is one of several settle-or-sue campaigns by the over 40 shell companies owned by MPHJ.

Scan Wide
"Troll" company MPHJ claims to "own" an exclusive patent on scanning and sending email.
[Image Source: eHow]

Further, Amber Cite reports that the patents appear to be predated by dozens of near-identical patents.

In response to this threat, the Vermont legislature hurried through a "consumer protection" bill (Vermont Consumer Protection Act9 V.S.A. §§ 2451) granting the state the ability to countersue trolls for abusive behavior.  The bill was passed last month.  That same day Vermont's Attorney General William Sorrell filed suit against MPHJ noting that, "[The company] performed little, if any due diligence to confirm that the targeted businesses were actually infringing its patents prior to sending these letters."

Sources: Rep. Blake Farenthold, Vermont AG

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Trolls are not the problem - junk patents are
By ZorkZork on 6/8/2013 2:09:27 PM , Rating: 2
The root problem is not the patent trolls. The root problem is the sheer number of “Junk patents”. In order to patent an invention, the applicant should be required to show that the invention is either something genuinely revolutionary or something that required a significant investment.

Patents on plugs, file formats, gestures, APIs, look and feel, in-app-payments, sending stuff by email, etc. should never be awarded. If the number of granted patents were reduced to 1% of what it is today, then there would be fever trolls and those around would actually would actually own something of value.

By lagomorpha on 6/8/2013 2:18:08 PM , Rating: 2
That's actually a really good point. Just because a company introduces plug-X doesn't mean they should be able to patent it and charge royalties for anyone that wants to make something compatible with plug-x because even though they've developed a plug that does what they want, they have not actually invented anything new in the "no one ever thought of that before" sense.

RE: Trolls are not the problem - junk patents are
By tecknurd on 6/8/2013 11:51:06 PM , Rating: 2
... In order to patent an invention, the applicant should be required to show that the invention is either something genuinely revolutionary or something that required a significant investment...

Actually the patents are what you stated. The problem with a lot of patents is how the patent is phrased so it provides most general explanation. A patent should be very specific of what is revolutionary instead of talking general tung. I do believe companies are bribing the patent office to push their patents to be approved or else the company will take affirmative action to make sure it is approved.

I also believe patents should not adventure in fantasy land like software. Other areas that patents should not go on to health. I do not want something like movie Gattaca to happen.

By ZorkZork on 6/9/2013 7:35:36 AM , Rating: 2
Patents granted goes much further than what I stated. It is possible to patent the specific design of a plug, a specific file format, a gesture to unlock a phone, etc. Non of these inventions are revolutionary and none of them required any significant investment.

And it would appear that the law allows for this, as some of these patents have been upheld by the courts. The problem is the law, or least least how the courts interpret the laws.

We don't need patents that are more specific, we need to get rid of junk patents. If the patents that are left after laws have been changed are broad then so be it. In those cases I believe the owners have created something of value and they should be rewarded for it.

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