Tuesday, January 31, 2006

How to Become a Patent Troll

An article at The Age chronicles Forgent's JPEG patent lawsuits, (unintentionally) laying out a simple 4-step plan to convert your company into a patent troll:

Step 1: After failing in the marketplace, rummage around and see if you can find or obtain a dodgy patent:
Forgent's previous incarnation, a videoconferencing company called VTEL, fell on hard times in the late 1990s... The company lost $US6.1 million in fiscal 2002.

Cash-crunched, [Forgent] began rummaging through the company closets - and found a treasure.

Inventors working for Compression Labs, a company that VTEL bought, had registered for patents on a process that Forgent now claims is used in JPEG compression.
Step 2: Bomb Japan:
Mr Snyder first aimed his guns at Japan, a less litigious place than the United States, in hopes of setting a precedent. Forgent sent letters demanding a one-time licence fee to cover alleged past and future infringement. The strategy worked. Staying out of court, Sanyo paid $US15 million and Sony more than $16 million in fiscal 2002.
Step 3: Use Japanese companies' willingness to capitulate as leverage against US companies:
Emboldened, Mr Snyder moved on to the US market, going after more than 1000 companies that have used the JPEG in their products.
Step 4: Reinvest proceeds of settlements into more litigation, against bigger and bigger fish:
Forgent was left with two businesses: the $3 million NetSimplicity, which offers meeting-planning software, and the lawsuit business. That means that for Forgent, licensing is the name of the game. Patent law allows a company to force a violator to stop producing the item in question and pay compensatory damages, which can be tripled in the case of willful infringement.
In Step 2 & 3, you may subsitute other vulnerable and litigation-adverse groups in place of Japan. For example, Acacia has created a very profitable patent trolling venture by targetting first pornographers, who are also very likely to agree to terms keeping them out of court.

In Step 1, I used the term 'dodgy' to describe the Forgent patent. Perhaps that is too kind a term:
"I believe that the patent is invalid," says Dan Ravicher, the [Public Patent] Foundation's executive director, and it is "causing substantial public harm" by adding extra costs to an already taxed system for inventions and by threatening the JPEG standard that is now part of the public domain.

Some critics even question whether software patents like Forgent's ought to exist. "Software is a thought process," says Tom DeMarco, a fellow at the Cutter Business Technology Council, an IT consultancy. "To patent it is comparable to patenting induction or deduction." The European Union, for example, does not grant software patents.
Even more damning is the fact that US Patent Law is beginning to force innovative companies to flee our borders, moving off-shore to protect themselves from silly patent thickets such as those laid by Forgent. We are experiencing an exodus of jobs and revenue, thanks to our patent system:
The number of patents granted has exploded to 187,170 in 2004, up from 66,176 in 1980. There has been a similar explosion in lawsuits, which usually cost at least $2 million to defend if they go to trial. "Now you can make the case that it's driving innovation offshore," says Mr DeMarco. "If you want to start a new software company that does something imaginative and wonderful, you have every incentive to start that company in Slovenia or China or a place that doesn't have these rules."


Anonymous Anonymous said...

From a small independent inventor:
shame on you, Jackson, for posting
such incredible lies and promoting big moneyed interests for free, out of pure ignorance and misinformation.

On the sibject of patent trolls, IBM is the biggest and ugliest troll to date: they own 40,000 patents (90 % of them are potentially invalid) and they extort royalties from smaller companies for their patents which they don't even use in their products. Sounds like a troll ?
How about US universities ? Do they make any products ? How are they allowed to collect money on their "paper patents " ?
And speakinf about myself, I will have no choice but to become a troll to see any money in the end for the stuff I created and disclosed to the world. The moment your patent application is publisehd all those big corps start using it in their products without even thinking about asking you for a lisence. That's why we have so many small trolls (aka indepnedent inventors backed by some investors) suing the likes of MS to recover at least some of their money - money that was stolen from them in the first place by unlicenced use of their inventions.
But you obviously have never invented anything in your life and have no clue at all...
Keep writing your junk...

6:50 AM  
Blogger Jackson Lenford said...


I, too, am dismayed at the trolling behavior of IBM and other large companies. Microsoft also seems to recognize that there is real money to be made in becoming a troll, with their recent announcements that they will pursue licensing for their shaky FAT filesystem patents against USB device makers and others. The fact that companies which have traditionally pursued defensive patent strategies are now turning into trolls is very alarming.

But there is a glaring inconsistency in your complaint: you complain about these big companies and their ability to troll, but you come to the defense of Forgent and their ilk when they do it? And you complain that you, too, must become a patent troll, implying that the system doesn't give you any other option?

If you want to fix these problems, you should join with me in calling for meaningful reform. And by meaningful, I don't mean reform that only helps out the big companies.

Let me ask you this: how many of the thousand or so companies that Forgent is suing could be called big? Out of 1000 businesses, I can guarantee that the vast majority are small guys. Some are independent software shops. Some that have been threatened are even single-author shareware writers that happen to support JPEGs in their software. If you really had the "small guy's" interests at heart, you'd see that what Forgent is doing has extracted a huge toll on innovation, not only for Big Business, but especially for small biz.

11:25 AM  
Anonymous Anonymous said...

Jackson, you are an idealist...

Where did you see a "meaningful" patent reform originating from Washington DC ?

It's all by the big money and for the big money...

Very sad for America with over 200 year history of wonderful world-changing inventions (mostly originating from small guys)

1:51 PM  
Anonymous Anonymous said...

This is ridiculous! Patents are killing us! And they are killing the U.S.! No wonder why so many new technologies are springing up in places other than America. We are repressing them with our crazy patent laws.

And to the guy who thinks that this is all fine and dandy, and that we shouldn't try to reform the system - You are nuts! Why wouldn't we try to fix whats so obviously broken?

7:23 AM  

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