Copyright and trade mark trolls?
Patent trolls are old news. How about other forms of intellectual property?
Danwei recently posted an item about a Chinese man, Zhan Qizhi who has systematically acquired copyrights and then asserted them against at least 300 websites. (Sounds like troll activity, but he does own a publishing house which he says has been hurt by the alleged infringements.)
Raises an interesting question though. To what extent could one buy up and assert other IP rights in a ‘troll’ like manner.
It’s been often said that most IP value is in brands and trade marks – why haven’t they been the subject of troll activity to date? Probably because of the way they work. Their value is underpinned by the goods or services that they are associated with. So, you can’t just acquire a trade mark and expect it to maintain value without also continuing to supply the goods or services. If there are no goods or services, then there’s probably little value in the trade mark, and the damages will be low to non-existent.
A ‘troll’ may be able to get some piece of the enforcement action by agreeing to take the risk of enforcement activity in return for a share of the damages award. This is already happening with contingency law firms and IP insurance. Then there’s IBM’s new business method patent under which you can pay for the right to use another’s intellectual property in the future should you need it (mostly in a counter suit and almost exclusively in patents).
So, trade marks are tough – but I don’t think impossible.
Copyrights are more likely to work as they don’t have the problems that trade marks do. The question is why would the copyright owner want to sell their rights rather than enforce them? It’s usually about risk – the acquirer (‘troll’) is happy to take more risk and the chance at a large return. If that’s correct, then in what situations would copyright infringement be sufficiently widespread to generate the returns? The online environment and software seem to be prime candidates.
What do you think?
5 Comments on “Copyright and trade mark trolls?”
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I like to distinguish between trolls – greedy, ugly beings who jump out from under the (patent) bridge and force you to pay a toll (sometimes betting that you’ll pay them off rather than fight, even if they don’t have a case) – and “IP developers” – people who have the capital and risk tolerance to enforce the IP rights they buy from inventors who want to stick to inventing/producing.
Trademarks and copyrights seem less fertile ground for trolls than patents. If you are unintentionally infringing a patent you may be out of business for quite a while if you don’t pony up the license fee and while you certainly might be accidentally infringing a trademark, changing a trademark is unlikely to put you out of business (many companies do it on their own; Esso –> Exxon) so the troll doesn’t have much leverage.
There’s really no way for you to unintentionally use copyrighted material, so anyone coming after you is not a troll, at least in my book. The enforcement is only a surprise to you because you assumed you’d get away with the infringement and that makes you, not the enforcer, the bad guy.
Bruce – great comments, thank you.I like the distinction you make. (Though ‘troll’ is an easy short hand to use for people who acquire and then enforce IP without selling a product or service.)You assume that those on the wrong end of an infringement suit have done the (alleged) infringing act unintentionally – that’s not always the case, even in patents. And if that’s right then, doesn’t your logic about copyright trolls fall away?In relation to trade marks, the same applies, but as you say, it’s easy to change a trade mark. That’s right, but if the reason for the trade mark use is to trade off the value of it, then anything that is close (deceptively similar) will still infringe – either registered or common law trade mark rights (or some other tort such as for misrepresentation, etc). “Exxon” vs “Esso” would fall into this category if the comparison was directly between them. (As you probably know, the reason for the change [largely in the US] was because ‘Esso’ pronounced ‘S O’ calls to mind the former parent company – Standard Oil and the other derivative companies after it was split up complained.
Hi Duncan – I did not mean to suggest that infringement is always unintentional. In keeping with my distinction between a troll and an IP developer I was only focusing on the “pure-of-heart” infringer who gets mugged by the troll. I have little sympathy for intentional infringer, whether nabbed by a troll, developer, or originator.
With regard to copyrights; I was suggesting that it is almost impossible to accidentally but substantially infringe a copyright (sure, the 1 million monkeys might eventually type Hamlet, but I’m not counting on it!) so if a troll finds you, tough luck. [“substantial” is important because damages are going to depend on substance]
Finally, regarding trademarks, remember that I am focusing on unintentional infringers getting “trolled” into financial problems. If such a company was approached by a troll, my point was that they could easily change their trademark to something clearly non-infringing. I used the Esso/Exxon example only to point out that changing one’s trademark is not the end of the world. It was the first one that popped to mind but I’m sure we could find other examples easily. The point is that it’s easy to duck if a trademark troll swings at you.
Anther reason that trademark trolling isn’t likely to become popular is the very question you raise about Esso/Exxon. Would “Exxon” be considered deceptively similar to Esso? Particularly if not used in the oil business? And if the trademark in question were not a made up word we know that the identical word can be trademarked by multiple companies (Apple and Apple). So the troll has a very narrow class of infringers to chase.
The final “blow” to the trademark troll is that it’s hard to believe that there are many big (i.e., deep-pocketed) companies – those really invested in their trademarks – who haven’t checked the PTO database and/or registered their own trademarks and who are yet unintentionally infringing the trademark of another big company. I say this is a blow to trademark trolling because the only way to make money in that business is to
have the rights to a valuable trademark (one protecting a lot of sales)
have a deep-pocketed target who will not want to change trademarks but who is gun shy about going to court
be able to surprise that target with the blackmail proposition: license or see me in court.
In the patent world all of these conditions are different – but you know that.
HI BruceI think we’re definitely in heated agreement about unintentional infringers.Contrary to what some say, I think acquiring IP assets to enforce them (and thereby extract value) is a legitimate business activity. The same occurs with real property. So intentional infringers are also interesting to consider.Staying with the unintentional infringers:On the trade mark front – as you say, co-existing identical marks can occur – but only in if there’s a substantial difference in the goods and services, or unusual circumstances such as a disclaimer, cross-license etc.Also on trade marks, one can think of a few, hopefully rare situations (in this supposedly globalised world) that a large, sophisticated entity who is unwilling to change their mark will get into trouble with a troll. One example would be entry into a new market in which the troll had previously filed a trade mark application. (The troll would presumably have to support the mark with some level of commercial use or ir would be susceptible to removal for non-use.) One would hope that this wouldn’t happen any more, but it does.Even then, as you say, the large entity can readily change their mark. Sometimes, it’s more cost effective to pay a ‘go away’ fee and just get on with business.
You wrote: Contrary to what some say, I think acquiring IP assets to enforce them (and thereby extract value) is a legitimate business activity.
I get in trouble sometimes espousing that view! But from a logical consistency perspective it’s the only way to go. The whole point of owning property – real or intellectual – is to be able to use or sell it as one sees fit.
IP developers, like their real estate counterparts, buy property from owners who, of their own free will, have elected to “take the money and run”. Admittedly sometimes the kids may be selling the family farm because they are cash poor, but don’t blame the developer.
As I said earlier, the problem with a troll is not that he isn’t actually producing anything but rather his tactic of threatening an extended and expensive patent suit, hoping you’ll cave.