A Comparative Approach to Patent Trolls

According to "Patent Trolls in the U.S., Japan, Taiwan, and Europe," in the CASRIP Newsletter for Spring/Summer 2006, commentators have put forth a number of reasons to explain why so-called "patent trolls" thrive in the U.S. patent system, including our:

• Liberal Approach to Patentability
• Ability to receive a Permanent Injunction
• Rampant Forum Shopping
• Treble Damages
• Low Threshold for Nonobviousness
• High Reversal Rate of the Federal Circuit

In Japan, the terms "patent mafia"and "patent rouge" have also been used to describe this phenomenon. However, in contrast to the U.S., there "is only one famous domestic patent troll case" in Japan, ADC Tech. K.K. v. NTT DoCoMo, Heisei 15 (Wa) 28554, (Tokyo D. Ct., Oct. 1, 2004), where the troll lost because the Japanese Patent Office "decided to revoke the patent on the lack of nonobviousness." The authors point to several factors that that may help keep patent trolls at bay in Japan:

• Higher Judicial Stability - the trial to appeal differential rate of civil patent infringement cases in Japan is only 18% - "This low rate indicates the judicial consistency between district courts and appeals courts in Japan."
• More Reasonable Damages
• More Effective Administrative Proceedings

In Taiwan, "there are no domestic patent troll cases," perhaps because the market is small, relatively immature, and litigation is "innefective." Along with different jusrisdictions for validity and infringement determinations, the losing party bears responsibility for court costs.

Lastly, U.S. patent trolls sometimes assert their patent rights by sending cease and desist letters to all related parties such as customers, distributors or retailers maliciously. However, in Taiwan, if such behavior truly affects the market and economic order, the patentee could be fined by the Taiwan Fair Trade Commission in accordance with Fair Trade Law. Under this kind of circumstance, the patent owner would not be able to threaten people by sending mail maliciously.

Although European patent trolls also appear to be limited, Britain's BTG filed suit against Amazon.com and Barnesandnoble.com based based upon a U.S. patent acquired from Infonautics, a Swiss software development company. The authors suggest that differences between the European and the U.S. litigation systems may be keeping patent trolls away from Europe for now. For example, although a European Community-wide patent has been discussed, issues such as validity or infringement must currently be dealt with on a country-by-country basis. Although litigation costs are generally lower in Europe, contingency fee arrangements are generally not allowed and the loser must often pay all attorney fees.

Click here to join the mailing list for the Center for Advanced Study and Research on Intellectual Property (CASRIP) of the University of Washington School of Law.