So what's to be done?
Cheng described how Newegg first took the settlement route rather than fighting – but no more. "We could see what was coming down the pike, and we decided to take the stand that we have taken," he said.
"And that's what I think it takes – it basically takes people saying, 'This doesn't make any sense to me, and I'm not going to do what's expedient and what seems to cost a little bit less money in the short run.' Because in the long run it's bad for the companies that pay people off because they're going to get sued more. They will encourage more entities to become patent trolls."
Congressman DeFazio wants to make it riskier for trolls to
extort settlements sue for patent infringement – although he's not at all sure that the current "incredibly dysfunctional Congress," as he put it, will be receptive to the ideas that he and his small-but-growing coalition of troll-hunting legislators are putting forward.
DeFazio and his congressional cohort are developing a test that would be applied at the beginning of any patent litigation that would be used to determine if the plaintiff could pass a patent-troll smell test. If the test determined that the plaintiff was a troll – or, more delicately, a non-practicing entity, or NPE – DeFazio's bill would require that the plaintiff shall pay (and he twice emphasized the word "shall") the legal costs of the defendent if said defendent prevails in the legal action.
What's more, the NPE would be required to post a bond before litigation began. "These people are very good at morphing, creating shell companies," Defazio said. "They could easily declare bankruptcy but still litigate, drag it out, still try to extort money from you." A bond would prevent that sort of chicanery.
It's not just startups and small companies that have been attracted to DeFazio and his growing coalition of legislators. He has been approached by airlines that are being sued for their seat-selection charts, for example, and cities such as Portland in his home state, which is being sued for how they track vehicles in their transit systems.
According to DeFazio, it's time to engage in good ol' fashioned citizen pressure on legislators. He gave as an example his work on establishing a national standard for organic foods, which he said involved getting people to make phone calls, send postcards, speak up at town-hall meetings, and "bombard" their legislators with input on his organic-foods amendment to the US omnibus farm bill.
It worked. As he tells it, one legislator came up to him on the floor of the House and said, "DeFazio, I don't know what this goddamn organic stuff is, but if these people will stop bothering me, I'll vote for your amendment." As it turns out, his amendment was the only one that was opposed by the House leadership that year which passed and became law.
"I believe that we can get folks in every one of the 435 districts in Congress to approach their member of Congress and advocate for our bill or something like our bill," he said, "we'll get this done and solve the problem."
And so, dear US Reg reader, if you're alarmed at the damage patent trolling is doing to start-ups, innovation, or American business in general – or, for that matter, if you think DeFazio is way off-base – it's your move. ®
Not everyone is the CES audience was thoroughly sympathetic with the panel's majority opinion against patent trolling. One listener who identified himself as Andrew Bridges from the law firm of Fenwick & West took issue with the use of the pejorative term "trolls", and argued that focusing on "bad people" rather than the host of other problems in the patent and legal systems was an oversimplification.
DeFazio agreed with Bridges that the patent office is woefully underfunded and understaffed, has a 600,000-patent backlog, and that in March the America Invents Act may very well cause "a whole new flood" of patent applications. Realistically, though, Congress is in no mood to increase any government agency's budget, he said.
Newegg's Cheng was having none of Bridges' suggestion that the use of the word "trolls" was counterproductive. "If labeling them 'trolls' or calling them 'cancers' gets the job done," he said, "I'm all for it."
Re: Get your terminology right!
You WOULD say that if you had an idea that you came up with on your own and invested your life savings in, only to be clobbered so far into bankruptcy that you'll spend the rest of your life stacking shelves...thanks to a company you've never heard of who makes nothing and owns patents so broad they could apply to a mobile phone or pushchair equally.
Wrong legislation wording
The litmus test should be... "Does the company bringing this lawsuit currently, or have in the past, produce technology that this patent covers?" If the answer is no, then the litigant pays double the defendants costs and this patent is invalidated and unenforceable in any future lawsuit.
Re: Best look on patents I have seen.
Open source and rejection of IP protection might work for Siedle - he talks about needing to innovate within 12 weeks to stay ahead of the copycats, and having hundreds if not thousands of products in his company's portfolio. That's great, but it's only to say that his company isn't what the patent system is designed to help.
Traditional products that require big investment and have long-term ROI schedules are not helped by such a laisez-faire attitude. If you are investing 6 or 7 figures into new product R&D and then a quality production set-up that will need to generate revenue for the next decade to be a worthwhile investment, the risk of cheap copycats that you have no effective legal recourse against is huge.
I have been involved in 'traditional' manufacturing, small steel working products, and development and bringing-to-market of products in that area. Very traditional stuff but stuff that there is great need for. The idea of open-sourcing all design IP and embracing the cheap rip-offs is ridiculous. There is no benefit to either us the developers and manufacturers, or the end-user, only downsides. For the end-user there is either the consequence, whether directly felt or not, of a) poor quality rip-offs flooding the market, or b) [more likely] we don't bother in the first place and the innovation/development never happens. To the extent that patents are not practical or enforceable, I assure you that situation (b) is happening constantly the world over.
Crying "open source" and "free" is no solution except in a very limited band of examples like that of SparkFun. What we should be talking about is the modernizing and improving of the patent system and the legal processes of enforcement.