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Patent Sharks (Trolls?) – insightful or missing the point?

‘Patent Sharks’ is an article by Joachim Henkel and Markus Reitzig in the June 2008 edition of the Harvard Business Review.

In the article, Henkel and Reitzig discuss the serious menace faced by technology firms from ‘patent sharks’ (which seems to be another term for the garden variety patent troll – but which are distinguished in the article from small time inventors).  These sharks collect patents through bankruptcies, licensing and their own R&D, hide their IP so that they can deliberately trap tech firms into inadvertent patent infringement – then they sue.

Henkel and Reitzig recommend shark-proofing your firm by: making your technology modular (the theory being that you can swap out any infringing modules), collaborating with competitors to spot potential patent problems, streamlining your patent portfolio and recognizing the limits of legal remedies.

Here are some comments:

1 – Considering non-legal remedies is a great idea – please do;

2 – A good freedom to operate strategy should uncover any ‘hidden’ patents – notwithstanding the large (and ever increasing) number of patent applications filed eached year;

3 – A well drafted patent won’t only claim the component (that you would like to swap), but will also cover interoperability with it and surrounding components.  So simply swapping out infringing components isn’t going to be as easy as the authors suggest;

4 – Unfortunately, the article is replete with sensationalist and emotive language, a bit  unnecessary for the calibre of these authors and HBR;

5 – I think it is only the US which has archaic damages rules which overly penalise infringers of patents for minor components;

6 – Most industries and their Standards setting organisations are acutely aware of the IP issues surrounding Standards and have a set of well drafted rules in place to cover this.  Rambus is a poor example of this, because the rules were not so good at all.  This is not a new ‘tactic’ by patent sharks.

7.  I completely agree that a large portfolio of patents will not work on non-practicing entities.  However, I think this is a poor reason (alone) to dramatically reduce the number of patents a company files.  There are other, much better reasons, and sometimes this is simply a bad idea.

8. Collaborating with competitors is a great idea – if they want to do the same and it fits your business model…

9.  I’m not sure that there is a direct correlation between the ‘flood’ of patent applications and a perceived lowering of the bar to patentability.  As I mentioned in a recent IAM-Magazine interview, I’m not even sure that the bar has actually lowered.

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