46 Comments

Summary:

Win or lose, it usually doesn’t cost a lot for patent trolls to bring spurious lawsuits against companies and technologists. In this guest post, Ben Lee of Twitter argues that it’s time for trolls to bear more of the costs they create with baseless lawsuits.

Twitter Bird perched on gavel
photo: Shutterstock Composition: Bird via basel101658 / Gavel via Alexander A. Sobolev

Twitter is an engineering company, and engineers like to innovate. Twitter is also well known, and, as a result, we receive patent threats and lawsuits from time to time. Many of these are baseless, and our policy is to fight them with all our might. In fact, we have never agreed to pay to settle a patent suit.

Still, even meritless lawsuits cost us money in attorney fees, and force our engineers to spend time with lawyers rather than improving our product. For example, we recently won a case regarding U.S. Patent No. 6,408,309, entitled “Method and System for Creating an Interactive Virtual Community of Famous People.” After a trial before a jury, we managed to prove that we didn’t infringe and that the asserted claims from the patent were invalid. This patent was “invented” by a patent lawyer, Dinesh Agarwal. According to his own testimony at trial, Mr. Agarwal had no computer science or programming background, and he thought up the whole idea while he was shopping for groceries.

As Judge Posner recently observed in his article, “Why There Are Too Many Patents in America,” this patent is a perfect example of a patent issued by the Patent Office with a near-zero cost-of-invention. It cost Mr. Agarwal nothing to create his patent, and it cost him nothing to bring the lawsuit (the law firm of Friedman, Suder & Cooke took his case on contingency fee). When you hear engineers complaining that the patent system is broken, a system that last year issued a record-breaking 247,000 new patents, this is the type of thing they are talking about.

According to the American Intellectual Property Law Association (AIPLA)’s 2011 survey, an average patent lawsuit costs between $900,000 to $6,000,000 to defend. In the last month and a half alone, Twitter has received three new patent troll lawsuits. The law currently does not allow us to recover the millions of dollars in fees we spent to defend ourselves — nor does it compensate us for the time spent by many Twitter employees who worked on the case. The law only allows us to ask for certain types of minor fees, which is why the court was only able to order this particular patent troll to pay us $10,447.85.

There is a bill that was introduced in Congress several weeks ago, by Representatives Peter DeFazio and Jason Chaffetz, which would try to change that. The SHIELD Act would put the financial responsibility for these sorts of trivial patent lawsuits on the patent trolls themselves. We support efforts like the SHIELD Act to improve our current patent system.

Ben Lee is legal counsel at Twitter.

  1. Why don’t they write a new act to ban frivolous patents in the first place? SHIELD only makes things more lopsided in favor of large companies.

    1. Because it also costs quite a bit of money for patent reviewer’s to do more thorough job. Plus “frivolous” is actually easier said than done; and lastly, at most one can deny one patent, and then trolls try again with different patent, possibly different reviewer.. It is quite similar to fighting SPAM.

    2. Because less suits = less work for attorneys and judges

  2. Cap the amount Lawyers can get from them and the trolls would start to fade.

    1. Wrong, then they just get surrogates.

  3. I agree that the patent system, especially w/r/t software patents, seems to be out of control, but this seems like it might have a chilling effect on valid patent lawsuits naming large or well-funded corporations as defendants. If you’re a small innovator whose work has been stolen by some big corp that can afford high-priced lawyers where you can’t, what’s your recourse under the SHIELD act?

    1. Winning the case.

  4. Why not just make it so that the patent trolls have to pay all fees regarding the trial if they lose? Instead of creating more loopholes for large companies.

  5. I’ve just patented the idea for creating a SHIELD act that protects companies from being sued by patent trolls, and acts that prevent the creation of patents regardless of cost and/or “how-frivolous-they-may-seem.” I’ve also patented the idea that prevents acts that prevent patents from being patented. OOO BURRRRN.

    1. “Ideas” are unpatentable subject matter. Call it a method.

  6. Do away with patents altogether. Problem solved.

    1. Then what happens when a modestly compensated individual…lets say school teacher…or even college student…develops something brilliant or revolutionary, and a large corporation steals the concept and puts it into production? New markets and ideas would belong to centralized private power and it would almost impossible to really reap the indivual awards of innovation.

      1. Given that the patent system is designed to help the little guy and it is being used to destroy the little guy it simply isn’t working like everyone thought it would. It’s time to go back to the drawing board and put in a system that makes more sense.

  7. One way to stop the trolls, if they lose their claim they are forced to pay for the legal fees of Twitter. This will make the lawyer think twice before taking the claim to court.

  8. How about requiring a prototype or proof of concept for a patent. Patenting a design or idea is simply wrong.

    1. No, this would stop poorer people from patenting. If you can show diagrams that support an idea and have those designs patented, that should be good enough. It’s not right that a poor but intelligent person be unable to patent something because they don’t have access to expensive machinery that is needed to make their product.

      1. Poorer people? You have no idea what it costs to actually get a patent in the first place. The patent trolls are spending lots of money to patent incredibly obvious concepts that add nothing to the known base of technology. Then they earn millions by extorting settlements from defendants who would rather pay $100,000 than 10 to 100 times as much…so the patent validity is never actually tested. It’s a racket, and it’s a drain on society. The poorer people are the ones who have the most to fear; if they have a great idea and push forward with it, regardless of whether they get a patent or not, they will be obliterated if they attract the attention of even one patent troll with a ridiculous claim of infringement.

      2. are you kidding? every second of the day 3 people are having the same idea, and diagramming it is all it takes? drivel. i would say that a yearly progress update be required by the patent office that demonstrates a good faith effort in developing on the patent, or at least a good faith effort in obtaining funding, staffing or otherwise. The EDD requires you to show effort in obtaining an income on a weekly basis if you are on unemployment, so why isnt that a fair requirement if you file a patent.

    2. Prototypes or proof of concept are a practical requirement of disclosure. Pure ideas are unpatentable. One conflict comes from the inherent difficulty in differentiating computer programs (as a mechanism for doing something useful) from the mere abstract algorithms on which they are based. Another difficulty comes from the relative ease of claiming something “new” in a computer progran

  9. why not just abolish patents in the first place?

  10. $10,447.85 is no pocket change for patent trolls. Consider the fees lost as a deterrent of future patent trolls (or rather their dumb lawyers taking cases against twitter on contingency fee). Thanks for writing this article. It reveals a sad truth about the current state of innovation.

    1. It is completely pocket change… These patent trolls make a living suing as often as they can. They have some consideration in their accounting books to make up for a measly 10k, its just a loss of business associated with the risk. You have no idea how many other people this particular troll has sued and the defendant has simply settled for 100k since it is cheaper than court. Until the trolls risks properly out weigh the reward it will keep happening.

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