Saturday, March 11, 2006

Wharton school on NTP v. RIM

Does the patent system itself need a do-over?

“That’s the central question,” says Wharton professor Eric Clemons. “The balance is between encouraging innovators and benefiting society. This debate has been around for hundreds of years, and it ebbs and flows. Ben Franklin opposed patents in any form, and obviously he was wrong. Innovation is encouraged if innovators are rewarded. But when patents are too easy to get, mini-innovations can either shut down real services or command enormous payments for, in essence, doing nothing.” [IPBiz note: the patent system is about incentives for disclosing inventions, not about encouraging innovators. The allusion to Ben Franklin may concern his not patenting the lightning rod.]

Whether the RIM-NTP battle sparks a larger debate on patent law remains to be seen, and experts at Wharton and elsewhere are decidedly mixed on the case. But one thing is certain. NTP, whose only significant assets are its wireless email patents, has won its share of rulings, notably one in 2003 that instructed RIM to halt its sales of BlackBerry devices and services in the United States until NTP’s patents run out in 2012. That ruling was stayed pending appeals. Meanwhile, RIM on February 9 announced a workaround plan, essentially a software fix that it claims would steer clear of NTP’s disputed patents and that “provides a contingency for our customers and partners and a counterbalance to NTP’s threats,” according to Jim Balsillie, chairman and co-CEO of RIM. “This will hopefully lead to more reasonable negotiations since NTP risks losing all future royalties if the workaround is implemented.” RIM maintains that the BlackBerry was created in 1999 independently of NTP’s patents.

**Wharton take on patent troll

When experts at Wharton were asked about the RIM-NTP dispute, the phrase “patent troll” inevitably came up. A patent troll is a slang term for a company, or individual, that acquires vague or overly broad patents, and then waits for an invention to emerge that may infringe on these patents. From there, a lawsuit is launched. The game is to demand dollars in proportion to the strength of a potential lawsuit, says Clemons.

Wagner doesn’t buy the patent troll argument. “NTP has every right to enforce its patent,” says Wagner. “If the patent was so terrible, the courts would have claimed it invalid. But at every stage, it’s been upheld.” In that context, NTP isn’t a patent troll, a term he says rings hollow because “one person’s patent troll is another’s freedom fighter.” Is NTP, he asks, really any different from companies like IBM, Intel and Texas Instruments that hold a large number of patents and enforce them from time to time? [IPBiz note: Claims of the NTP patents were rejected in final Office Actions in re-examination over art that was not used in the litigation. Even though the litigation has settled, the re-examination will continue to a conclusion.]


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