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December 2, 2005
Patents and injunctive relief
Normally I think that Steven Pearlstein is one of the most perceptive business commentators around. But I think he got it wrong in today's column - "Big Firms Caught With Their Patents Down". Pearlstein is taking the side of the little guys in the two major patent fights:
Despite the propaganda emanating from the high-tech lobby, which has rallied to the defense of eBay and RIM, these cases have nothing to do with "patent trolls," those unsavory characters who buy up obscure patents to extort money from innovative and law-abiding companies. Campana and Woolston were trained engineers who came up with genuine innovations for which companies like Yahoo and AutoTrader are currently paying good money.
Moreover, the patents held by Stout and Woolston are entitled to the same legal protection whether they aim to build operating businesses around the patents or merely license them to others. The high-tech industry is full of companies that boast entire business units dedicated to licensing their patent portfolios. It is pure hypocrisy for the industry to argue that this is somehow illegitimate when done by small inventors.
What these cases are about is legal thuggery -- big companies, with their endless motions and discovery and appeals, abusing the legal system no less than the plaintiffs' attorneys they always complain about. The only way to end these wars of legal attrition is for courts to issue business-threatening injunctions that force the parties to the settlement table.
This sounds great -- but there are two problems with this argument.
1) in the eBay case, there has been a settlement! There is no need for "courts to issue business-threatening injunctions that force the parties to the settlement table." And that settlement happened years ago. The only reason for an injunction in this case, as far as I can see, is punitive. Rather than end the legal-war of attrition, such an attitude is likely to provoke it.
2) in the RIM case, Pearlstein admits that "RIM came up with its technology all on its own -- there's no dispute about that." So RIM is to be executed - for that is what the injunction is likely to do - for a flaw in the patent system that gives the patent for the technolgy they came up with to someone else? Yes, maybe there needs to be a court-ordered settlement. But putting RIM out of business for using a technology that it developed on its own is, once again, not the way to end the legal warfare. It will just encourage it.
I'm as much in favor of protecting the little guy and ending the legal warfare that, as Adam Jaffe says, it throwing sand into the gears of innovation. But, the knee-jerk granting of injunctions, as in the eBay and RIM cases, is not the answer.
Steven -- please, tell me where I am wrong.
Posted by Ken Jarboe at December 2, 2005 10:00 AM
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