Imagine this scenario: Dozens of competitors are thrown into an arena where they need to vie for a cornucopia of weapons which they then use to eliminate their competition to survive, with little or no help from the outside world. This scenario, which summarizes the popular book and movie “The Hunger Games”, equally describes the situation in which dozens of technology companies currently find themselves with respect to patents. Just as in the popular series, good decisions by competitors are often rewarded with success while ill-advised moves are potentially fatal.
That this is happening, and in a big way, is indisputable. Indeed, this scramble for patents and the consequences of all this ownership flipping dominates the IP headlines. Last year a consortium of companies including Microsoft, Apple and Oracle purchased a portfolio of 880 or so patents from Novell for a reported $450 million.
More subtly, however, is that the seeds for this cornucopia of patents were planted through a series of legal decisions in the mid to late 1990s that expanded the scope of patentable subject matter to include software, business methods, ecommerce and the like. Then, in the heady days of the dot-com boom people and companies were pursuing patent protection on their business models in record numbers. These patents wound their way through the Patent and Trademark Office over the following years, at the same time that the companies filing them either abandoned the business concepts or simply failed to monetize them.
Because patents expire 20 years after filing, patents filed in the mid to late 1990s will be expiring in the mid to late 2010s, resulting in the present being the peak time for owners to sell or otherwise monetize them. One particularly nasty way companies monetize these patents is by selling patents to so-called patent trolls but keeping a license, since these trolls will then sue their competitors while they are free and clear. And that’s what’s happening now.