CyberTech Rambler

August 8, 2006

Finally, something that knock some sense into the Patent system

Filed under: Uncategorized — ctrambler @ 6:00 pm

On the heels of a recent Supreme Court opinion that “permanent injunction is not always the warranted, and that monetary damage might be sufficient,  if the patent holder does not practice the patent” as covered in my blog post here, Patently-O is carrying a story about a patent holder (Finisar) that was forced to license the patent to the infringer (DirectTV), eventhough the jury found that the infringement is wilful.

I remember the days where some companies assign their patent portfolios to subsidiary in a bid to protect the parent company from potentially  huge financial damage against them that can results if they fail in their patent lawsuits. Unfortunately, this act puts any defendent of patent lawsuit at a disadvantage because it is a lose-lose situation. Damned if they lose (permanent injunction and huge fine against them), damned if they win (no way of recovering the financial cost). Furthermore, the threat of permanent injunction and absolute monopoly power given to patent holders biased the licensing discussion for the patent holders. Hence, it is not surprising that we see companies that are setup to exploit the monopoly power of patents that do not practice the patent, but instead license the patent to others.

What earned these companies the name “Patent Trolls” is their willingness to extract exhorbitant licensing fee and the impunity in using legal techniques to achieve it with apparently no constraints at all. Permanent Injunction is one of the few tools they use to REALLY strike fear into potential litigants. Normally, there is a mechanism known as “mutual licensing agreement” where both parties comes to the conclusion that it is better for both parties to agree to mutually license their patent pool. Although this system is bad in itself, at least it offers a reasonable way out. Unfortunately, there is unlikely see anything in the defendent’s patent arsenals that these “Patent Trolls” are interested to license.

I always maintained that I am against the “monopoly” aspects of Intellectual Property Rights, not the property aspects of Intellectual Property Rights. I am happy that the judge sees it fit to order a compulsory license to DirectTV. This pushes patents more towards property rights than monopoly rights which is the correct way to go. People who creates Intellectual Properties should be rewarded. I am one of them and I want my reward. However, nobody, including me, should be permitted to hold anyone by their throat to shake them down for more than my fair share of reward. No legal techniques permitted. Period.

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