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HolidayBuyer's Guide

Patent enforcement necessary

On the topic of patent reform, a reader suggests why patent enforcement is sometimes necessary even when a product is not made.

In response to the special report written by Michael Kanellos, "Patent system's problems defy easy solutions":

I read with interest your article on patent reform. I hold 8 U.S. patents as an individual and would like to provide some insight to why a patent is sometimes enforced when the patent holder does not produce a commercial product based on the patent.

When an individual (or even a small business) holds a patent that is being infringed upon by a large corporation, the cost of enforcement is often more than the small patent holder can afford. Sure there are plenty of contingency lawyers, and some of them are good, but the small patent holder is still responsible for out-of-pocket expenses that could run $1 million or more. The cost of an expert witness is very high.

An alternate is for the small patent holder to negotiate a licensing and enforcement program with a patent enforcement house. In this context, the enforcement house takes on considerable risks. There is no guarantee that the patent will withstand challenge, or that prior art will not be discovered (despite enormous prior-art searching, there is still that possibility). It is time and resource intensive, and requires significant financial backing to ensure the licensing program will be successful.

As part of their due diligence, the patent enforcement house often does not want the small patent holder in the product business. Why? Because it often does not maximize the ROI.

The party being sued will typically find a way to attack the patent holder's business/products and with enough pressure, the small patent holder will settle for a cross-license agreement in a way that prevents the patent enforcement house from maximizing on their investment.

Hence, from the viewpoint of the patent enforcement house, it is better that the patent holder has no product or company based on the patented methods/systems/utilities...etc.

Sometimes an inventor tries to build a business around their patent protected product. To secure financing the inventor may assign patent ownership rights to the investors. It allows the inventor to protect his/her idea, to secure financing, to create a business and contribute to the economy (hiring a staff, consuming resources, etc.). When the business fails (it can happen) the remaining assets are sold to offset the loss. This can include selling the patent to a patent enforcement house whose job is to maximize the return on investment for the investor.

While some may view it a more noble endeavor (i.e. enforce patents only to protect your commercial product), running a business is certainly not for the faint of heart. A researcher, for example, may not have the aptitude required for running a small business. If a researcher chooses to stay focused on research without commercializing the product, they still contribute to science and technology and they can pay for it through a licensing program of their IP.

It is important to remember that the small patent holder plays a critical role in the economy. They are not constrained by the goals of a corporate environment and often their innovations are outside of the box. Any proposed patent reform must protect their interest.

Finally, there is a struggle in the software sector where open-source proponents rely on copyright, and proprietary folks rely on patents.

I have seen both sides enforce their rights and stop distributions that allegedly infringed. Although a patent provides greater protection, it is more expensive. A patent may be challenged. It is much harder to invalidate a copyright. A patent generally has a 20-year life span, while a copyright can last three times as long (and longer in certain circumstances). Inventors must choose the best method of IP protection based on their own needs, goals, and budgets. I choose patents whenever possible.

Charlie Northrup
CTO, The PDCX Corporation