An Energetic, Engaging and Balanced Symposium on Patent, Copyright and Trademark Trolls PART I

The Chapman University, Fowler School of Law’s Law Review sponsored a symposium titled, “Trolls or Toll Takers: Do Intellectual Property Non-Practicing Entities Add Value to Society.”  The symposium examined three areas of inquiry:

(1) . . . expanding on the scholarly debate surrounding patent trolls; (2) by expanding on the perspectives informing this debate beyond academia by inviting the views of practitioners from both sides of the patent troll divide; and (3) by expanding on the scope of this topic by considering the nature and possibility of copyright and trademark trolls.

I am blogging the conference and here is a partial description of one of three of the panels.  I will also post partial descriptions of the keynote speaker’s address and the second and third panels soon.  For more information about the speakers and the symposium, please use this link.  Webcasts of the complete symposium discussion can be found at that link as well.  The symposium was organized by Professor Samuel Ernst and the Symposium Editor for the Law Review is Rachel Baker. 

The first panel is titled, “The Scholar’s Perspective: Theories of Patent Trolling.”  The panelists included Robin Feldman, the Harry & Lillian Hastings Professor of Law and Director of the Institute for Innovation Law at UC Hastings College of the Law in San Francisco, California; Brian L. Frye, Assistant Professor of Law, University of Kentucky College of Law; Ryan Holte, Assistant Professor of Law, Southern Illinois University of Law; and Amy L. Landers, Director of the Intellectual Property Law Program and Professor of Law, Drexel University Thomas R. Kline School of Law.  The moderator was Professor Samuel Ernst, Chapman University Fowler School of Law. 

The first panelist to participate was Professor Feldman, who provided a thorough and thoughtful discussion of the patent troll problem and patent reform.  Building on and referring to her earlier work, she discusses the Government Accounting Office data concerning non-practicing entities.  She notes that the results of this study are similar to other studies, if you include those NPEs organized as trusts.  She points to the problem that patent demand letters are very troublesome and account for most of the activity concerning non practicing entitles.  However, she states that it is difficult to gather data concerning demand letters and negotiations because they are subject to non-disclosure agreements.  She does point to some studies which shed some light as to what is happening with demand letters and subsequent activity that does not result in formal litigation.  She outlines how there have been government responses to the nonpracticing entity problem and discusses the Supreme Court cases addressing nonpracticing entities, including the importance of the Alice decision.  She looks to the future and notes that, “the rhetoric” is escalating, and expresses concerns about how the Supreme Court is being attacked as “political.”  She notes that “in theory” monetization activities can have “positive ends,” but she thinks the way things are happening are not productive.  She further notes that smaller firms may suffer the most.  She advises turning down the rhetoric and working on the issues.

Professor Landers asked a fascinating and provocative question of whether patents are the new bitcoin.  She notes that patent monetization and patent markets have the potential for “positive change,” such as increasing collaboration internationally in research and pushing funds to research and development.  She notes that nonpracticing entities are acting rationally in our free market economy.  She states that the problem with patents markets is that there is a “lack of agreement on price.”  Thus, “there is a lack of transparency.”  She makes the general point that there must be a valuation of the asset that is credible and transparent, and, in part, because we lack this there is essentially a “patent bubble.”  If this “patent bubble” bursts, then the entire system is discredited.  She further notes that “a lack of comparables” exist in patent markets similar to bit coin.  She also points to “nonproportional responses” as “policy bubbles” discussed in sociological research, that may not provide the benefits that may be expected by stakeholders and the public.  One example she gives is appointing a czar to address problems.  She notes there is not a “widely accepted” way to value patents – there is “a lack of a fundamental understanding of how patents are priced.”  She notes that the “price of litigation has nothing to do with the value of the patent” and that this is a fundamental problem.  She further notes the problem with royalty stacking.  She proposes that we move “toward industry accepted norms for rates” and that we exercise caution with how royalty rates are set in the future. 

Professor Ryan Holte provided a comprehensive and interesting analysis of the MercExchange and eBay litigation history.  His past work has examined case studies concerning non-practicing entities such as MercExchange.  He reviews the history of the eBay v. MercExchange case.  Notably, he states that every time a patent case went to the district court judge in the eBay v. MercExchange litigation, Judge Friedman, he dismissed it—and he further characterized Judge Friedman’s decisions as “anti-patent owner”.  He notes important facts influencing the case, including eBay’s essentially anti-patent public relations campaign and eBay’s spin of the Federal Circuit and Supreme Court’s decisions as wins.  He points to data after the eBay case and notes “a huge change” in patent injunctions granted.  He notes that the “[p]ost-eBay injunction denial [rate is] at 78% for NPEs.”  He states that “eBay does not stand for injunctions being unavailable to PAEs—[and that] the true holding has been lost.”  He notes that MercExchange did win in some ways.  He further noted that district courts tend to overuse the language in Justice Kennedy’s concurrence concerning NPEs.  He also states that “large notorious public companies are dangerous as litigants for useful legal precedent.” 

Professor Brian L. Frye insightfully stated that metaphors obscure the problems associated with intellectual property problems.  We use many metaphors to describe the scope of intellectual property, such as “sweat of the brow” or “thieves” or “bootleggers.”  And, finally, “trolls”—entities that may abuse their rights.  He suggests that dropping metaphors is a good idea for understanding intellectual property, particularly directed to IP concerned with efficiency justifications.  He points out that the problem is poor patents and the troll metaphor obscures that discussion.