Is it fair to buy patents and then sue alleged infringers?
Q. My company is facing a patent infringement suit from a company that doesn’t even work in our industry. All they do is buy patents and then sue alleged infringers. Is this fair?
A. The phenomenon you describe is becoming increasingly common. Such aggressive firms are sometimes known as “patent trolls,” because they can suddenly pop up like ugly monsters up from the misty swamps of technology licensing and demand money. Another explanation is that instead of taking out a patent to use it in a particular application, like an angler positioning himself in a particular cove, they go out into the open water “trolling” for unwitting victims to fall into their net.
The question of trolls is particularly relevant from the point of view of Jewish ethics. Secular law views patents mainly as a way of encouraging innovation, or as the US Constitution puts is, “to promote the progress of science and useful arts”. Innovation is encouraged when an inventor can get paid for his invention, whether this payment is through profits from marketing the invention itself or from licensing or selling the patent. So this approach is basically amenable to the inclusion of patent holders who do no business themselves.
In this approach, the problem with “trolls” is not that they don’t do business themselves; it is that if the patent holder is only trying to capture unwitting infringers, he contributes nothing to innovation. On the contrary, his whole business plan assumes that going concerns will independently make the same inventions, not knowing that the “troll” was there first.
But in Jewish law, similar protections generally fall under the rubric of unfair competition. The idea is that when a businessperson invests effort in making a particular endeavor profitable, competitors shouldn’t be able to take a free ride on his investment. For example, the Mishna talks about someone who takes the trouble to climb an un-owned olive tree and shake out the ripe olives; it would be unfair for someone else to come along and just pick up the fruit. (1) A passage in the Talmud refers, interestingly enough, to a fisherman who goes to the effort and expense of attracting fish using bait; it would be unfair for a competing angler to choose that exact spot to cast his line. (2)
Based on this approach, many authorities conclude that inventions enjoy protection in Jewish law because if a person invests resources in a new product or process, he deserves protection from competitors taking a free ride on his efforts. But if the olive-beater or the fisherman abandon the area, it would seem fair for others to take advantage of the windfall. By the same token, if the inventor is not using his invention, it seems fair that others should be able to.
But in fact the distinction is not so stark. After all, if the person who invested effort is unable by himself to enjoy the fruits of his effort, it does seem fair that he should be able to demand something from others who can. And the protection against unfair competition is itself meant to encourage innovation. So again, the very fact that the inventor isn’t in the production business is no reason that he shouldn’t be able to license his patent; the question is if he takes out the patent in good faith.
An inventor may take out a patent in order to market the product himself or license or sell it to someone else who will do so. But if he wants to keep his invention a secret in order to trap an unwitting competing innovator, he is stifling innovation, not fostering it. The parallel to the Talmudic case would be someone who secretly baits a fishing hole, then waits until another fisherman happens along the same place and adds his own bait! Certainly the first, surreptitious actor doesn’t deserve any meaningful piece of the latter’s catch.
Before we conclude that firms need protection against the patent troll, the annoying little monster who holds the giant firm for ransom because of an alleged neglected patent, let us remember that he has an industry counterpart: the patent ogre. This is my term for the giant firm that runs roughshod over the rights of the small inventors, relying on its huge legal department to intimidate them from seeking their due in court. Very often the little guy who looks like a troll is actually the victim of an ogre–a large firm which knew of the patent or easily could have found it in a patent search, but is evading its responsibility to the inventor by calling him a troll.
From an ethical point of view, the criterion in both cases is good faith. If the inventor intends to foster, rather than stifle, innovation, then his right to benefit from his patent shouldn’t depend on whether he uses his patent, licenses it, or sells it. If the large firm knows that an infringement suit is frivolous, they have every right to use all of their legal resources to deter opportunistic litigants. But each side needs to be careful to use the legal system to defend his own rights, and not as a means to intimidate others.
SOURCES: (1) Mishnah Gittin 5:8 (2) Babylonian Talmud Bava Batra 21b.