Patent Trolling Is Draining the Blood from the Idea Economy, and It's Just Getting Worse

US Patent No. 6,599,460 is barely comprehensible and not even the slightest bit sexy. It has to do with preventing irregularities in a certain kind of injection molding; like, if you were making a cheap, thin drinking cup in a mold from liquid plastic...

Oct 17 2012, 6:16pm

US Patent No. 6,599,460 is barely comprehensible and not even the slightest bit sexy. It has to do with preventing irregularities in a certain kind of injection molding; like, if you were making a cheap, thin drinking cup in a mold from liquid plastic, the idea behind the “460 patent” would make your cup better in some way that, myself as a non-expert, doesn’t really understand. The patent is owned by Jens Erik Sorensen, the trustee of the Sorensen Research and Development Trust, who at some point purchased the idea from its inventor, Paul Brown.

Both were in court earlier this year,
defending ownership of the idea against litigation from Homeland Housewares. Homeland had filed what’s known as a declaratory judgment against Sorensen, and defending against declaratory judgements appears to be a popular activity for the Trust. That is, Homeland wanted a court to say that it wasn’t infringing on Sorensen’s patent, so that, presumably, it could continue in making stuff without the fear of being sued blind. In patent law, the move is usually in anticipation of an action by the patent owner against the potential infringer, e.g. a preemptive strike.

In the court case, which went down last spring, Homeland had wanted to ask the inventor Brown a number of hypothetical questions about molds. With the court agreeing, Sorensen Research argued that Brown, the inventor of the technology being litigated, was not an expert in that technology.

Searches for Jens Erik Sorensen and the Sorensen Research and Development Trust don’t readily bring up a company website. You won’t find slick pictures of an R&D lab with men like Brown in white coats working in clean-rooms, or some sort of mission statement, or a list of technologies currently being innovated or technologies currently owned. That Google search will give you Jens Erik Sorensen suing the hell out of everything that walks — or at least things that walk and have to do with injection molding.

Going further down Sorensen’s Google hole reveals that Brown’s patent might be something of an exception for the Trust. Most Sorensen cases involve one single now-expired patent — though the Trust appears to own at least several more. That patent at the middle is U.S. Patent No. 4,935,184. “Over the years, Jens Erik Sorenson has sued so many companies for infringement of his cyclic injection molding patent, U.S. Patent No. 4,935,184, that it might be the most well-known patent of the 20th Century,” writes one law blog. Patent 184 is a troll patent. That is, it’s a patent useful to its inventor not as a technology, but as a litigation tool.

The Sorensen Research and Development Trust is what’s known as a non-practicing entity. It doesn’t make anything or do particularly much of anything outside of courtrooms (at least anything that I can find). Instead, Sorensen sits on his patent(s) and sues people. Patent trolling is a boom industry and Sorensen is at the top of it. According to a paper just out from Lex Machina (the descendant of Stanford’s Intellectual Property Litigation Clearinghouse) and requested by the United States’ GAO, patent trolling has risen to be 40 percent of all patent litigation, nearly doubling in a five year period. And of that 40 percent, Sorensen has been the most furious litigator (of a 500 case sample), beating even Monsanto. In fact, of the five litigators examined by the study, four were non-practicing entities. Only one was a company that made things. (Apple and Samsung, while behaving in a troll-like fashion, are still companies that make things.)

The suits are just a suggestion of the deeper problem. “Lawsuits are only the tip of the iceburg, and a major operating company may face hundreds of invitations to license for every lawsuit,” explains the paper. So, Sorensen’s business model likely revolves around licensing shakedowns: a threat is made to an operating company and, rather than undertake the risk and expense of defending against Sorensen, said company will pay off the patent-holder. This is, increasingly, the nature of licensing in the patent world. One might note how well it parallels the tactics of ASCAP and BMI: threatening potential rights offenders with a lawsuit, and walking away with cash paid for a license. Everyone wins, except for the organizations that might not have actually infringed — and, of course, the larger culture of ideas.

What does it mean that money is draining out of the innovation economy to entities that don’t do anything for that economy?

Is that in debate? Almost half of all patent litigation is put forth by companies that are in the business of litigation, not creating. Can that possibly be anything but bad news? The conjecture is that Sorensen had at one point, an idea/invention/patent. As a non-expert, it doesn’t look like a particularly landmark idea. Its real value for its inventor has been to put fear into companies engaged in making things possibly related to Sorensen’s technology and to extract money from them. If you are an inventor, a generator of ideas — you know, one of those people that has brought us into the technological age — what does it mean that any new thing you create could be a patent troll target? Or, what does it mean that money is draining out of the innovation economy to entities that don’t do anything for that economy?

Sorensen is an unlikely heavyweight in the world of patent trolling. Most trolling is done by larger organizations whose declared existence is patent monetization, not individuals like Sorensen. Individuals can be viewed as the formative stages of the full-on patent troll organizations. The study even suggests that many current large-scale patent trolls began with individuals attempting and failing to run the sorts of companies that make things. In other words, the roots of patent trolling are failure (though I’m not implying that this is the case regarding Sorensen).

An interesting thing in the study is the revelation that monetizers rarely win in court, compared to operating entities. Is this a suggestion as to the validity of all of the great many licensing situations that never reach the courtroom? Or does it just mean that the weaker the case, the more likely it is that an organization won’t settle/license out-of-court? Probably a bit of both, though the sample size isn’t big enough to do anything more than suggest.

Patents were created to foster innovation by giving inventors exclusivity over/ownership of their ideas. Now, that fostering innovation argument is out the window, or at least on its way out (40 percent out?). A law limiting the number of defendants a patent-owner could sue at once was passed by the US Congress last year, but the pace of litigation hasn’t slowed. Notably, both Apple and Samsung are currently spending more on patent litigation than R&D. Is there a solution?

I spoke with Robin Feldman, one of the study’s three authors — along with Sara Jeruss and Joshua Walker — about how and if we can even fix the system. “The problem is tremendously complex, and the solutions will not be simple,” she says. “In other work, I have suggested that Sunshine rules, providing greeter information about patent transfers, licensing, and entity relationships, could be tremendously helpful for understanding the full nature of the problem, as well as exposing objectionable behavior. I am still working on my own thoughts of where the solutions lie. One thing is clear, it will take tremendous leadership on the part of both judges and legislators to get the patent system back on track.”

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