Patent Trolls Foster Innovation, Marketplace Liquidity, According to WolfBlock's Steve Rubin

NEW YORK, Sept. 18 -- High-profile patent cases such as the May 2006 eBay decision and, most recently, the case against Blackboard Inc., which brought allegations of patent infringement to the steps of academia, have continued to fuel negative press about so-called "patent trolls" and focused even greater attention on how the U.S. patent system works. A patent troll is commonly viewed as a company that buys patents simply to extract licensing fees from other companies without performing any research and development on its own and/or without any interest in commercializing the invention.

According to Steven Rubin, counsel in WolfBlock's Intellectual Property/Information Technology Practice Group in New York who has experience litigating and prosecuting patents, as well as analyzing the value of patent portfolios, the reality of patent trolls is not black and white, and their utility is frequently not acknowledged.

"While much has been made of the predatory nature of patent trolls, these entities, including financial institutions, licensing firms and 'technology' companies simply looking to bolster their own patent portfolio, actually positively influence the market and bring a value that is largely unrecognized to both the patent marketplace and the state of American innovation," said Rubin.

"Patent trolls may actually foster innovation by allowing inventive companies and individuals to dedicate their focus to developing products and processes, leaving other non-commercializing entities to handle the patent matters," he explained. "Patent trolls also facilitate liquidity within the patent market just as other secondary markets do, such as the mortgage marketplace. This liquidity ultimately makes patents more valuable."

However, the practice of labeling some as "trolls" also disincentivizes a company from conducting research in areas that they may not end up commercializing. For example, a company selling cell phones may be less interested in research and development of a new cell phone battery. This is because the company might be wary of being labeled a troll with respect to battery patents as those patents would not be viewed as having been commercialized, Rubin explained.

The policing and even the identification of patent trolls is also an issue to consider. In order to determine whether someone is commercializing, i.e., whether someone should be marked with the pejorative label "troll," the test would be whether the owner of the patent effectively "infringes" upon his own patent, according to Rubin.

"Otherwise how else would you know if he is commercializing the invention? Such a test turns the basic tenets of patent law on its head. A patent gives the right to exclude others from practicing the invention, not a license for the owner to practice the invention," Rubin added.

About Wolf, Block, Schorr and Solis-Cohen

WolfBlock is a multipractice law firm with offices in Delaware, Massachusetts, New Jersey, New York, Pennsylvania and Washington, DC. The firm has more than 300 attorneys and government relations professionals who offer the full complement of legal services to corporate, government, nonprofit and individual clients locally, nationally and internationally. For more information on WolfBlock, visit http://www.wolfblock.com/.

The May 2006 issue of Intellectual Property Today ranked WolfBlock as #71 on this year's list of top trademark firms, which was comprised of 126 law firms and individuals.