2015: The Year of Two-Way Patent Licensing

I read with pleasure the recent feature on IAM Magazine’s blog, calling out a unique and emerging character on the patent licensing stage – the Patent Ogre. This is defined as a large product company who is wilfully and systematically infringing on the rights of small patent owners. The patent ogre is a character in that needs a bright spotlight shone upon it – and, asserts the post, perhaps the very reason that some bad actors – patent trolls – exist. As IAM writes (quoting author and inventor Fatih Ozluturk):

Small inventors are more important today than they have been in recent memory. This makes it imperative that we preserve and strengthen the intellectual property laws that protect small inventors. It is also imperative that while attempting to fix the patent troll problem we don’t undercut small innovators and give a free pass to patent ogres.And the fact is that a huge reason why patent trolls exist is because patent ogres exist.

The post goes on to discuss the various trends and reforms that large product companies systematically exploit to stonewall small inventors, including fee shifting, IPR proceedings, and the high burden of proof of willful infringement:

This treatment of small inventors by patent ogres is unfair and abusive. I say we level the playing field for the small inventors by forcing patent ogres to have to give due consideration to claims and requests from small inventors. A patent ogre should be required to answer a request from a small inventor within a reasonable time and have a credible process for doing so. In failing to show this in court, should the patent holder prevail, treble damages should automatically kick in. Let’s give the patent ogres an incentive to not shut out legitimate inventors and patent claims by stonewalling them.

Couldn’t agree more. As I referenced in a blog post from last fall, we believe that a few “bad actor” global product companies are hijacking the legitimate work of lawmakers in curbing trolls by expending huge resources on lobbying and media relations to propagate false claims about the patent system. They’re also engaged in a process of steadfastly stonewalling reasonable licensing conversations.

IP licensing is a legitimate and necessary business. And we believe that licenses have ethical obligations as a part of this process, including:

  • To investigate the licensor’s claims fairly and honestly, and if it determines that the licensor is likely to have valid and enforceable claims, conduct good faith discussions with a willingness to take a license on fair and reasonable terms.
  • To engage in good faith discussions with the licensor and make reasonable, good-faith efforts to timely meet with and respond to the licensor.  Individuals acting on behalf of the licensee must have the authority to negotiate with, and if appropriate, reach an agreement with the licensor.
  • To be willing to take a fair and reasonable license where appropriate.  This means that the licensee must fairly acknowledge that if its activities use, or are likely to use, the invention claimed in a licensor’s patent, then the licensee owes the licensor reasonable compensation for the use of that patented technology.   A licensee should not take a free ride off another’s patented innovation.

Simply put, principled patent licensing is a two-way street that requires licensors and licensees alike to conduct themselves ethically and responsibly in order to achieve mutual economic benefits.  Maybe 2015 is the year when the playing field will begin to be levelled.

IAM sums it up best:

When did you last see the EFF or the CCIA, for example, ever issue an angry press release about, or take up the case of, a small company being run into the ground by a big company that refuses to engage in equitable patent licensing negotiations? It’s not something I can ever remember them doing. Maybe they should, because it happens all too frequently and does significant harm to talented innovators and the people who back them. Giving the ogres even more power through imbalanced legislative patent reform is not only wrong, it is utterly foolish. Let’s hope that at some stage soon, before it is all too late, US legislators see sense and start to focus on the little guy.