Written by Nicoletta LePore
Edited by Sarah Mejia
When James Madison first introduced the Patent and Copyright Clause of the United States Constitution in 1787, it is doubtful that he envisioned today’s “patent wars” and “war on patent.” Since the birth of America, inventors have had a rich history of creating an idea and securing intellectual property protection. Patents have served as badges of honor, rewarding pioneers for their hard work and ingenuity. Individual inventors, such as Thomas Edison and Alexander Graham Bell, paved the way for the birth of GE and AT&T. While the value or providence of prized intellectual property was occasionally in dispute, such companies primarily appeared to interact with honorable intentions. In turn, this led to reasonable cross-licenses or acquisitions between them in spite of competing in the same business segments. That amicable culture has changed in the last twenty years with the rapid evolution of and advancement in technology. The potential for sudden and astronomic wealth has replaced pride as the driving force behind attaining intellectual property.
Today, because the development of the Internet has created greater opportunities for individuals to file for patents, intellectual property rights have increasingly fallen in the hands of people referred to as “patent trolls”—“ventures that profit from innovations they themselves often had no hand in creating” (Jones 1). The intention of trolls is not to develop a good or service protected by their patents, but rather to accumulate low-quality patents and target both large, well-established companies and small startups alike in hopes of realizing success via large financial settlements. Improvements in technology have caused an influx in the number of patents being issued by the Patent and Trademark Office (PTO). Upon acquiring the rights to intellectual property, trolls seek to collect significant settlements under threat of litigation, a practice widely condemned by small companies looking to build their businesses, as well as by large corporations that have essentially driven the recent technology boom.
Although technology companies have been quick to criticize the underhanded business practices of the industry’s trolls, some of these very companies have behaved much the same. For example, in the past five years more lawsuits have been filed against Apple by alleged patent trolls than any other company in the industry. At the same time, though, Apple and other notable tech giants have expanded their patent portfolio and initiated large-scale litigation with top competitors. For example, in 2011 Apple and Microsoft partnered in order to acquire over 6,000 patents from Nortel Networks, created an entity called Rockstar Consortium, and filed a lawsuit against Google (Jones 8). In the same year, Apple asserted its own patents in a high-profile litigation with rival Samsung on the grounds of infringement on its patented phone and tablet designs (Lee 3). Rather than reaching a settlement, Samsung countersued Apple, defying the past convention of competitors cross-licensing intellectual property. In my opinion—although I believe that Apple’s management has successfully leveraged its patents against rival firms—I think Apple has created a double standard as a result of engaging in litigation. While Apple and its competitors condemn the practices of patent trolls seeking compensation, top management at the same firms largely mirror their behavior.
The intersection of business, law and ethics within the intellectual property realm once coexisted peacefully; today, the intellectual property world is characterized by a culture of greed and self-interest. While the underhanded actions of patent trolls and tech giants looking to increase their bottom line are within the boundaries of the law, they nevertheless raise questions with regard to ethicality. Firms today often support that “as long as [they] do not violate the law, they are behaving ethically” (Brooks and Dunn 137). As evidenced by the behavior of trolls as well as established firms such as Apple, companies are narrowly focused on fostering their growth and increasing their utility, even if it means debilitating other ventures in the process.
While I do not foresee competitors in the tech industry ever cordially interacting, I believe there is potential to eliminate the “litigation first” practice that is rampant within the industry today. If the PTO implements balanced patent reforms free of influence by industry giants, I think patents can once again serve to protect companies and their ideas as they were originally intended. Atpresent, the America Invents Act is aiming to tighten administrative review processes at the PTO level as well as reduce the time and cost of patent litigation in the federal court systems. Ultimately, I believe that with the decreased potential for litigation, patent trolls will be less likely to pursue legal action.
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Brooks, Leonard J. and Paul Dunn. Business & Professional Ethics for Directors, Executives, and Accountants. Mason: Cengage, 2010. Print.Hughes, Neil. Apple Faces More Patent “Troll” Suits Than Any Other Company. 13 April 2012. Apple Insider. Web. 11 November 2013. Jones, Ashby. “Patent ‘Troll’ Tactics Spread.” The Wall Street Journal. The Wall Street Journal. 8 July 2012. Web. 11 November 2013.Lee, Amy. “Suing Samsung: Apple’s Bid To Protect Its Brand Has Big Risks.” Huffington Post. Huffington Post. 20 June 2011. Web. 11 November 2013.
Schumer, Charles E. “A Strategy for Combating Patent Trolls.” The Wall Street Journal. The Wall Street Journal. 12 June 2013. Web. 11 November 2013.