NASA, Government Shutdowns And Patent Trolls

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Ok. First the NASA plug. I have a trip coming up that will hopefully be to NASA. It is far enough away in time that the current shutdown will not affect it but one never knows about Congress. At this point even their website is down (Fig. 1).

This mess has everything to do with politics and it is affecting everyone within the U.S. and many outside whether they like it or know about it. Everything from getting a passport to visiting a national park now needs to be put off, indefinitely.

If you haven't read any of the thousands of news items on the web or in every daily newspaper in the country then you might not have heard that the House of Representatives and the Senate are playing ping pong with a continuing resolution that would keep the government going but only for a little longer. They haven't been talking about the actual budget yet.

There will not be any work done at the patent office either which is what I really want to talk about. That along with a discussion of standards that are based on patented ideas. There are lots of standards like this and many organizations set up to handle them that work to varying levels. For example, MPEG LA licenses MPEG codec technology.

The idea of these organizations is the patents in the pool are available for fair, reasonable, and non-discriminatory terms (FRAND) to parties that would then make products based on the patents. Normally there are royalty rates that are fixed in some fashion, usually a percentage. These organizations were set up because often a standard required multiple patents and negotiating with multiple patent holders is a challenge at best.

These patents are often called standard-essential patents (see Standard-Essential Patents: Innovation’s Boon Or Bane?). These SEPs, as they are known, essentially limit the use of a standard to those that own or license the technology. A problem occurs when a SEP is not available under FRAND because the patent holder did not disclose the patent when a standard was being created. This has occurred numerous times with typically leading to long and costly court battles to resolve the issues.

Some organizations, like VITA, have an ex ante patent standards policy. VITA is known for the VME and VPX standards. As part of the process, all working group members must disclose all patents and patent applications and provide FRAND terms. This may not lead to terms that some would consider adequate to build products from but usually they are. At least all parties know what the costs are going to be.

It is the up front disclosure that makes a big difference and one reason the U.S. Department of Justice (DOJ) finds this type or policy procompetive rather than monopolistic. Otherwise, this type of collusion could run up against antitrust laws.

Unfortunately, patents in general have the same kind of problem because not knowing about a patent or a patent application does not prevent a patent holder from suing after a product is brought to market. FRAND terms would eat into profits from a product but hopefully they would not eliminate the profits completely.

On the other hand, patent holders often use their patents in an offensive manner to maintain a monopoly as with the ongoing Apple/Samsung disagreement (see The Apple/Samsung Judgment And Our Broken Patent System). This is likely to go one for quite awhile with many other patent holders becoming involved in various ways because of the nature electronics and computers these days. Our mobile devices contain hundreds of components and technologies that are covered by one or more patents. Any one could hold up shipment of a device or force terms that would bankrupt a company.

This is where patent trolls come in. Patent trolls are companies that simply buy and sue or license technology. They never use the patents to create a product or service. Unfortunately patent trolls can extort money simply because they have deeper pockets than companies actually trying to build products even if the patents are eventually voided.

Hopefully our government will be back up and running soon. I am not as confident about the patent system though. It works well for some but I suspect that most designers and programmers are not even thinking about patents until a patent troll comes knocking.

Discuss this Blog Entry 2

on Oct 4, 2013

William the matter of access to essential IP in standards is much more complicated than you portray. One might read your contribution and conclude that patent owners and patent trolls are bad actors in standards setting and implementation. Maybe it mischoice of words, but it is just not true that: "SEPs, as they are known, essentially limit the use of a standard to those that own or license the technology" It is also not true that the current problem is due to the "patent holder did not disclose the patent when a standard was being created" You say this happens numerous times, but my experience is that non disclosure is the rare problem. The dispute that leads most often to litigation is over what constitutes the terms in a particular license that are "reasonable and non discriminatory" Patent owners may believe a license offer is "reasonable and non discriminatory" and potential licensees may believe otherwise or may just continue to infringe the patent waiting to be sued which may or may never happen (litigation can be expensive for the patent holder too). All the current SDO patent policies about which I am aware have obligations for the patent owner/contributer of patented technology without similar obligations on the licensee to negotiate in good faith. I don't take a position on the merits of specific litigation but you mention the Apple/Samsung disagreement. It was the International Trade Commission that determined on the merits that Samsung deserved a ban on importation of certain Apple products. It was the White House that intervened on essentially political grounds to prevent the exclusion order. Finally you castigate "patent trolls" in the clause "They never use the patents to create a product or service. Unfortunately patent trolls can extort money simply because they have deeper pockets" What is it about a business model that may specialize in research but not manufacturing or service or a business model that pays small time inventors for their patents and then seeks to monetize their value that is wrong? Look, all this is not to say there are not problems. Sure there are bad actors ... in all categories of patent owners and potential licensees and by "patent assertion entities" (the better term than patent troll). But it is not the business model that is the problem, it is the bad actor that is the problem. Anyway my two cents.

on Nov 19, 2013

The thing that is wrong is that many of these patents are meaningless or so shallow that they should not have been issued in the first place by our broken patent system. However the "trolls" - and I will use that term - can extort "violators" only because they have the deep pockets, and the small businesses trying to stay alive can't afford the legal fees to properly contest them. Been there.

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William Wong

Bill Wong covers Digital, Embedded, Systems and Software topics at Electronic Design. He writes a number of columns, including Lab Bench and alt.embedded, plus Bill's Workbench hands-on column....
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