“So is Sipco a patent troll? I follow the old adage: ‘If it quacks like a duck and walks like a duck, it probably is a duck.’ Sipco even smells like a duck. You decide.”
The purpose of Project Troglodyte is to hunt for bad patents and to show what went wrong. For more information, please see the web page.
What makes a patent troll truly venomous? In a previous posting I analyzed a spurious patent owned by Sipco LLC. I will now analyze Sipco itself. I use Sipco as a concrete example because it sticks out so nicely. It is also involved in technology areas with a high human and environmental impact. That worries me (see Trolling on the human rights; The kiss of death of IPR; Another view; Humanitarian Patent Pool).
The Wikipedia article on patent trolls has a perfect definition: “Patent troll is a pejorative term used for a person or company who enforces patents against one or more alleged infringers in a manner considered aggressive or opportunistic with no intention to manufacture or market the patented invention.”
The difficult part is the term “considered”. Bad press by itself means nothing. In my decade of IPR experience I have really learned only one useful thing: trust no one. The press could be wrong, or biased, or even bought off. And blogs… forget it.
Sipco certainly has gotten very bad press. See SmartGridToday, Green Patent Blog, CleanTech Blog. There’s no doubt that Sipco is litigating aggressively, and doing it proudly and openly (The SmartGridToday article in particular is fascinating, as it describes the company owner’s worldviews in his own words). But that’s not good enough. I believe it’s crucial to be as coldly objective as possible.
The trolling triad
I believe that there are three characteristics that a company needs to have to be considered a truly dangerous troll. The company has a provable history of aggressive litigation; the company doesn’t actually produce anything itself; and the company’s patent portfolio consists of spurious and overly vague patents. I call this the “trolling triad”.
Two out of three can make a company a nuisance, but I believe that all three are needed for a company to become the equivalent of a loose cannon.
Flag 1: Aggressive litigation
If a company is heavily involved in litigation, it may be a red flag. It is not automatic proof of anything. If someone genuinely invests money and time into development, and then finds that someone else is making huge profits on the invention having copied it, the inventor does have a case (legal, and perhaps even moral) for suing the copycat. It’s necessary to look at the context.
(Personal sidenote: I can actually empathize with inventors who go berserk when their ideas are stolen, and go on a litigation rampage. If an inventor spends years of his life working on something, it gets personal. If he further sacrifices his money, friends, health, and family for the invention, it gets deeply personal).
Sipco’s case is quite clear though. The references above make it amply clear that Sipco is in the business of aggressive litigation, and is proud to be so. Sipco’s own press release in PRNewswire also shows that its main business is licensing. One red flag.
Flag 2: Lack of own production
From Wikipedia again: “The non-manufacturing status of a patent troll has a strategic advantage, in that the target infringer cannot counter-sue for infringement.” When two companies both actually produce something, there is a balance of terror. If one sues the other and tries to halt production, the other can sue back and try to halt production. Many of the highest-profile patent litigation cases, for example in the telecommunications industry, are of this type.
I will now say something that may come back to haunt me: I feel that when two equally big players fight each other, society really doesn’t suffer. If one of the players loses, then the other one will just keep manufacturing and developing the products that were argued about. For us in the audience, it really is mostly just a game.
However, if one of the participants is actually producing nothing, it can turn deadly serious. The non-practicing entity (NPE), to use the polite term for a troll, cannot be countersued. If the NPE wins, at minimum the cost of the product will rise due to the extra licensing costs. At worst, the NPE can actually prevent the product from even being produced, and can certainly drop further development dead in its tracks.
However much I search, I can’t find anything that Sipco would actually have produced. Absence of evidence is not evidence of absence, and if I run into some actual Sipco product, I will consider retracting the flag. But for now: second flag, bright red.
Flag 3: The patent portfolio
The truly lethal trolls are ones that have overly broad and vague patents in their arsenal. As long as the patents are specific enough, only a limited number of companies can be attacked. But if the patents are too spurious and vague, almost anyone can be attacked on almost any grounds.
(See the EFF’s Patent Busting site for examples. My personal favorite is the patent on taking and scoring educational tests online. It takes real chutzpah to demand royalties on something like that).
Trying to evaluate the “quality” of a patent is difficult and subjective, but I have so far analyzed Sipco’s patent US7739378 on pollution monitoring. I considered it essentially spurious, and it should not have been granted. So far, I’m not aware of litigation over that patent though. GreenTechGrid discusses several other Sipco patents in the smart grid technology area, which Sipco is in fact litigating on. Based on a quick look, I am highly skeptical whether those patents have much merit, but I need to analyze them more closely. Somewhat tentatively, a third red flag.
So is Sipco a patent troll? I follow the old adage: “If it quacks like a duck and walks like a duck, it probably is a duck.” Sipco even smells like a duck. You decide.