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Chief Technology Officer
Sisvel Group
Torinese (TO), Italy
1. Introduction
Innovation and technology are fundamental drivers of the world economy. Mobile technologies, in particular, generated a global revenue of around $3.3 trillion in 2014, with more than 11 million jobs worldwide being related to mobile technology, and it is estimated that at least two-thirds of the mobile industry is based on innovation. 37 percent of the $3.3 trillion revenue was generated by mobile devices (components and manufacturing, device retail, etc.), 44 percent by communication services (mobile infrastructure, mobile site operations and mobile operators), the rest was generated by mobile content and applications [BCG].
Innovation is at the core of economic development, and intellectual property is a fundamental tool to protect and foster the phenomenal innovative ecosystem that we have helped create. In recent years, however, we have been witnessing the radicalization of the discussion around intellectual property rights (IPRs), and patents in particular, due to two extreme viewpoints.
On one side, there are companies known as “patent trolls”
1 that exploit litigation costs to extort licensing revenues from businesses of any size, including very small ones, on the basis of patents that are often weak or even openly invalid. According to [Saba]:
“But what are patent trolls? And is the monetization of intellectual property per se a troll behavior? Trolls are those entities that bully the market by asserting, or threatening to assert, in court invalid or bogus patent portfolios to industry players that do not have the resources to defend themselves or for which it does not make economic sense to fight back in court. They seek quick settlements by asking relatively (compared to the cost of defending against those patents in court) small sums. By creating risk and exploiting the exorbitant costs of litigation (especially in the U.S.), patent trolls are often able to extort, in aggregate, significant sums. Many companies, especially in the past, settled in the fear of the residual risk.”
On the other end of the spectrum, there is a growing number of stakeholders that equate licensing revenue of any sort with “extortion,” even if said revenues are used and reinvested in research and development (R&D). Academic literature abounds that have tried to quantify the costs associated with patent trolls and non-practicing entities (NPEs) as a whole [Bess], [Chien], often relying on weak (or even bluntly incorrect) assumptions or flawed arguments
2 [Quinn].
Some industry players have gone as far as to equaling injunctions with extortion. This is not only ethically wrong, but also shamefully deceiving. Injunctions, in reality, are a fundamental property right, and a matter of justice to prevent unauthorized use of technologies. Without injunctions, patent owners will be left power-less against the theft of their innovations. Unfortunately, most people do not understand what injunctions really are and what purpose they are serving. Those players, rather than favoring a balanced debate, are fueling a populistic view of injunctions as being bad for the whole industry while simply trying to reduce their costs for using somebody else’s technologies. Fortunately a recent decision [ECJ] by the European Court of Justice (ECJ) clarified the requirements for patent owners to obtain injunctive reliefs (refer to the discussion in the following sections).
The recent public debate on patents and costs associated with licensing and litigation is purposely blurring the line between NPEs and trolls. We need to stress that research labs, universities and individual inventors are all NPEs. However, those who are supporting this argument have a clear economic interest to disqualify all NPEs as trolls: they simply want to avoid paying royalties to inventors! In doing so, they apparently want to destroy the good reputation of universities, research institutes, inventors and, ultimately, all innovators. There are legitimate business models—which include all those actors, from universities to for-profit, high-tech companies that rely on technology and IP licensing to fully or partially fund their R&D activities—and extortionists.
It is incorrect and ultimately morally wrong to classify these entities as trolls. By forcing them to forego monetization of their technologies through licensing, we would undercut their ability to further invest in innovation [Saba]. Individual inventors, academics, research universities and R&D labs have contributed and contribute immensely to global technological advance and welfare [Niro].
The innovation and high-tech ecosystem must recognize that using poorly-designed instruments such as overly broad legislation or shortsighted policies that do not distinguish between legitimate, reasonable and appropriate licensing activities on the one hand and the extortion-like activities on the other hand, harms the entire industry [Saba]. We encourage members of the IP community, as well as governments, committees and judiciary branches to seek the advice of multiple stakeholders (technology companies, universities, licensing entities, individual inventors, etc.) and not heed only those who shout loudest or with the deepest pockets.
