TIGA, the trade association representing the UK video game industry has today published a new report, Trolls, Innovation and Thermonuclear War (TIGA, 2014), on the patent troll menace.
TIGA’s report into patent trolls found that:
- There has been an increase in the prevalence of so-called ‘patent trolls’. However, patent trolls are a much larger problem in the USA than elsewhere because of the unique features of the USA patent litigation system, which enable them to conduct ‘patent hold-ups’ without risk of costs if they lose. In the EU, the loser pays the winner’s costs, which at the moment means very few trolls are active; their business model is not favourable under European conditions. Conversely, in the USA even if the defendant wins it has to pay its own costs.
- There has been a big rise in the number of patent applications for computing products and indeed in the number of patents filed generally. More than 14,000 patent applications were made using the international Patent Co-operation Treaty (PCT) in 2012 – an increase of almost 20 per cent on 2011.The global increase in the number of patent applications could result in delays in patent offices.
- There has been an increase in the number of high profile and expensive legal cases waged by high profile technology companies over alleged patent infringements.Steve Jobs, Apple’s late chief executive, vowed to wage “thermonuclear war” on Google’s Android mobile phone software.[i] Patent wars are potentially a cause for concern. Technology companies could spend excessive money on legal costs and defensive patenting, rather than investment in R&D or workforce development.
TIGA recommended that:
- Irrespective of patent trolls, businesses should take steps to protect their IP, retain their IP and exploit their IP.
- The current exclusion of business methods from the list of patentable products should be maintained within the EU. The European Commission consulted on whether industry wanted business methods to be patentable, in the late 1990s, and got a resounding ‘no’.
- The UK Government should encourage the Obama administration to pursue patent reform in the USA, in particular, the principle that the winner may be able to secure legal costs from the loser. See http://www.theverge.com/2013/12/5/5177802/house-of-representatives-passes-goodlatte-patent-troll-act
Dr Richard Wilson, TIGA CEO, said:
“Patent trolls are not common in the UK but when they do strike they can inflict uncertainty, waste time and impose significant costs on high technology businesses, including games developers. Typically, the troll’s approach is to blanket mailshot an industry likely to operate in the field of the patented product or invention. The troll will with confidence allege infringement on the part of the recipient, generally without detail. The troll may also demand that the recipient must enter into a license agreement that of course attracts a considerable fee. The recipient has to determine whether to expend valuable time and resources to determine whether there is any truth to the allegation, or risk ignoring the troll’s demands and face legal action.”
Vincent Scheurer, CEO, Sarassin LLP, a London-based consultancy for video games companies and co-author of the TIGA report, said:
“Lawsuits for accidental patent infringement currently represent a clear and present danger to any company whose software products are distributed in the US. The UK Government should work with it’s US partners to encourage the same ‘loser pays’ approach to litigation costs that we have in the EU. This could go a long way to mitigating the threats UK businesses currently face. ”
Mark Fardell, Head of Legal, Jagex Games Studio and co-author of the report, said:
“Jagex has first-hand experience of the time, effort and cost involved, when a business is sued for patent infringement by a US entity. Fortunately, Jagex is a successful business with the financial resources and expertise to defend itself. If a smaller UK business had been subject to this sort of litigation, it might well have either folded or at the very least been seriously affected.”
Tom Lingard, Partner, Stevens & Bolton LLP, added:
“IP rights can have tremendous value, both as a shield and a sword, so it’s very important for business to think about what IP they are creating and manage it properly, as only then can they realise its true worth.”