Once an arcane feature of an arcane area of the law, patent trolls -- or, more politely, "non-practicing entities," or NPEs -- have jumped to the top of the nation's political, legislative, and judicial agenda. These are the companies that, while selling no products or services of their own, account for most patent litigation today. In their most controversial form, they purchase patents on the open market and then assert them against companies that do sell products or services, like AT&T, demanding licensing fees and, very often, suing to get them.
In the past two years the U.S. Justice Department, the Federal Trade Commission, the Patent and Trademark Office, and a White House task force have all launched studies of the growing NPE phenomenon. There are three important NPE-related cases awaiting argument before the U.S. Supreme Court this term and five major NPE-related bills pending in Congress. In January, President Barack Obama even trumpeted the need for patent reform to curb "needless litigation" -- a veiled reference to trolls -- in the State of the Union address.
The numbers generating all the attention are stark. AT&T is no anomaly. Google was hit with 43 NPE suits last year; Verizon, 42; Apple, 41; Samsung and Amazon, 39 each; Dell and Sony, 34 each; Huawei, 32; BlackBerry, 31. Every brand on this unenviable top 10 list was sued by an NPE at least once every 12 days.
NPEs sued more than 4,800 defendants last year, or -- if one counts repeatedly sued defendants only once -- more than 2,600 different companies. Last year they brought nearly six times as many lawsuits as they did in 2008, against 60% more companies, and thereby accounted for 67% of all patent suits filed -- up from about 26% six years earlier.
At the same time, NPEs have their champions. They argue that giant tech corporations routinely pilfer innovations dreamed up by independent inventors and that NPEs simply give these powerless individuals the financial support and litigation muscle they need to vindicate their rights. NPEs therefore serve not only small inventors, the argument continues, but also society at large by preserving the incentive systems that our Founding Fathers wrote into the Constitution to ensure that the Thomas Edisons of the world would be motivated to provide the rest of us with the maximum possible benefit from their genius.
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