One of the most distinctive and well-regarded parts of The Economist magazine is its periodic surveys. For those of you who do not read The Economist, a Survey is an in-depth analysis of 15-20 pages in length on a specific topic. I eagerly look forward to reading them. Given that build-up, and the anticipation that awaits tackling each new Survey that is published, I was extraordinarily disappointed by a paragraph that appeared in the May 30th issue entitled "Business in America.' Under the section entitled "Red Tape and Scissors," in which the Survey discussed some of the difficulties posed for business by "crazy rules, convoluted taxes and rampant lawyers, " the following paragraph appeared:"" 'Patent trolls' pose another problem. These are firms that buy up patents, not to turn them into products but solely to sue firms that may have infringed them. Since the United States Patent Office grants patents freely and courts enforce them zealously, every inventive company lies in fear of trolls. If one cannot convince a court that a billion-dollar product incorporating hundreds of patents infringes only one of his, he can an injunction to stop it being sold. The victim typically settles. Michale Heller, author of "The Gridlock Economy", argues that vaguely defined property rights stifle innovation and cost lives."Let me see if I have this right. Within the heart of the most thicket of the most regulatory issues facing American business, e.g., the tax system, products liability, the drug approval process, byzantine financial regulation, lies the patent troll. It is true that patent trolls were apparently viewed as a significant enough issue to warrant a decision several years ago by the U.S. Supreme Court in the eBay case, here. But in that judgment, the Supreme Court significantly cut back on the ability of a so-called patent troll to obtain an injunction.
Contrary to what is asserted in the Survey, a party that sues on a patent that he purchased and of which it does not make any commercial will now have a difficult time if it seeks to obtain an injunction. Moreover, in the post-eBay world, courts are reluctant to grant an injunction if the patent in question covers only a small portion of the overall product. In a word, the account in The Economist does not reflect the current legal position regrading patent trolls, and patent trolls do not constant a systemic threat to the well-being of US business.
Moreover, it is unclear what the reference to the Heller book has to do with patent trolls. mystery. In particular, it is not clear "what vaguely defined" rights are intended in the Survey, and how this relates to patent trolls. There is no evidence that the patents owned by patent trolls are less clearly defined that other patents. Heller's concern is in another direction, namely the threat posed by what he has called "the tragedy of the anticommons", where the transaction costs to reconcile multiple property rights becomes prohibitively expensive. But that, as noted, is a different issue from the claims made against patent trolls. Someone seems to have conflated the two issues, with the result that neither of them is properly dealt with in the Survey.
Find the patent troll