AIN Blog: Trolling For Dollars: The Games Patent-holders Play
A year ago, Laminar Research, the maker of the popular X-Plane flight simulator software, was sued by a company called Uniloc, which accused Laminar Research of infringing a Uniloc patent titled “System and method for preventing unauthorized access to electronic data.” Uniloc is seeking a jury trial and wants agreement that its patent has been infringed, payment for damages and costs, post-judgment royalties and pre- and post-judgment interest.
Laminar Research is fighting the lawsuit, and company founder Austin Meyer estimates that it will take two or three years and $1.5 million to defend his company.
The lawsuit states that Laminar Research is infringing claims of the Uniloc patent without Uniloc’s consent, “by or through making, using, offering for sale, selling and/or importing Android-based applications for use on cellular phones and/or tablet devices that require communication with a server to perform a license check to prevent the unauthorized use of said application, including, but not limited to, X-Plane.” The specific application that Uniloc believes is infringing its patent is an Android version of X-Plane used on mobile devices.
According to Meyer, “In our Android app (X-Plane), we used the same copy protection Google provides to everyone that is making a game for Android! (That I know of.)”
While Meyer is naturally upset about the time and cost needed to fight the lawsuit, he is also worried about the broader implications of companies that exist to buy and create patents to obtain payment from violators of their patents. Some people have labeled these types of companies—also known as non-practicing entities or NPEs—as “patent trolls,” although Meyer does not specifically use this term when referring to Uniloc. He does, however, note that the cost to defendants for these types of lawsuit has been estimated at anywhere from $29 billion to $500 billion a year. Many settled lawsuits mandate that no information be divulged, so it’s hard to know a more precise number. “I promise you: I will NEVER settle with them,” Meyer wrote on his website.
The patent troll problem is costing lost productivity and the shifting of money away from legitimate and beneficial product research and development to entities that contribute nothing to the economy. While one might debate whether an Android app that is mostly a game is something that benefits the economy, Meyer points out that the money and time he is spending on this lawsuit could be put to much better uses, including Laminar Research products that contribute to aviation safety.
Meyer posted on his website about the patent issue: “The patent system is not encouraging innovation at all! In fact it is destroying it…and providing the rewards to the lawyers and those who have the most money to feed them, or most commonly file the most frivolous lawsuits.”
The U.S. Government Accountability Office (GAO) researched the patent troll problem and concluded, “lawsuits involving software-related patents accounted for about 89 percent of the increase in defendants over this period [2007-2011].” Although one-fifth of the lawsuits were brought by NPEs and the majority were brought by companies that make products, “GAO’s detailed analysis of a representative sample of 500 lawsuits from 2007 to 2011 shows that the number of overall defendants in patent infringement lawsuits increased by about 129 percent over this period.”
The GAO’s recommendations resulting from this study included: “that PTO [Patent and Trademark Office] consider examining trends in patent infringement litigation and consider linking this information to internal patent examination data to improve patent quality and examination. PTO commented on a draft of this report and agreed with key findings and this recommendation.” There is a legislative effort to provide relief to companies that make products like X-Plane, the Shield Act (Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013). The act is still in committee, however, and according to GovTrack.us, has a tiny chance of being enacted.
The patent problem isn’t new and has some prominent history in aviation, although in this case the patent-holders were true inventors, but their actions held back the state of the art. In 1906, the Wright brothers patented their unique methods of controlling aircraft, which included the wing-warping technique that they employed on their airplanes. The patent also included other methods of lateral control, and the broadness of the patent allowed the Wright brothers to defend the patent in court when other aircraft manufacturers tried incorporated wing warping and ailerons. There even was a licensing agreement that allowed pilots to fly in airshows without getting sued, according to a Wikipedia page on the Wright patent.
In summary, Wikepedia points out, “The Wrights’ preoccupation with the legal issue hindered their development of new aircraft designs, and by 1910 Wright aircraft were inferior to those made by other firms in Europe. Indeed, aviation development in the U.S. was suppressed to such an extent that when the country entered World War I no acceptable American-designed aircraft were available, and U.S. forces were compelled to use French machines.”
What should be done about the current patent troll situation? It seems silly that a company that had nothing to do with creating an invention can file a lawsuit or even suggest that legal action might be forthcoming to extract licensing fees and royalties from other entities, especially when the patents cover such broad areas of invention. The Patent and Trademark Office clearly is awarding way too many questionable patents (for example, Apple’s patent on a rectangle with rounded corners), and of course, smart people are taking advantage of them. But when this hinders the growth of real companies and the development of useful products, it’s time to stop such nonsense.
Back in 1917, the U.S. government stepped in and promoted the formation of a patent pool called the Manufacturers Aircraft Association, which cross-licensed the applicable patents. Eventually, the patent war petered out, according to Wikipedia, after World War I ended in 1918 and “the litigation was never renewed.”
If Android apps were important to a war effort, then this patent troll situation would be resolved rather quickly. But even so, innovation and the incentives that make people go to extraordinary efforts to develop new products should be protected. Patents are one way to do this, but when they are abused, as they clearly were by the Wright brothers, the government should step in and put a stop to such frivolous and counterproductive actions.