Technology × Freedom

How Patent Defense Leagues Could Topple the Entire Patent System (and Why That's a Good Thing)

May 19, 2017 invisiblehand

In case you didn't know, the U.S. patent system is pretty much the worst. Not because the system has been corrupted by big business or patent trolls, but because patent law is inherently unjust and stifles innovation without actually protecting "the litle guy." As intellectual property (IP) attorney Stephan Kinsella notes, IP law (which includes copyright and patent laws) stifles innovation

because a lot of smaller people just give up. They don't go into a certain field…because they know they would be sued out of existence. It causes oligopolies and cartels, which of course reduces competition, reduces innovation, and increases costs for everyone…. I estimate $1 trillion a year in lost wealth due to increased innovation that we otherwise would have, maybe even more. We would be so far ahead technologically in this world if we didn’t have patents…it’s mind blowing.

Speaking of Kinsella, he was recently interviewed on the Future Gravy podcast about Blockstream's defensive patent strategy. The basic idea is that Blockstream promises to use its patents only defensively, a.k.a. to countersue if another company attempts to sue them for patent infringement, but never offensively to keep other blockchain companies from using their software, code, etc. They back up their promise by submitting all patents under a Defensive Patent License. Kinsella says that, while this system is pretty good, Blockstream (or any other company) could theoretically go back on its word at any time, because a Defensive Patent License is just a good-faith gesture and isn't actually legally binding or enforceable. Blockstream's defensive patent strategy and similar strategies such as patent pooling and creative commons licenses are a good start, says Kinsella, but a better approach would be what he calls patent defense leagues:

Let’s say companies A, B, and C are all part of this patent league…. Let’s say Apple sues [company A] for patent infringement; one of my defenses could be, "Hey, Apple’s infringing one of my patents." But I might only have three patents and Apple’s not infringing any of them. But let’s say I’m part of a community of 100 companies and I can look through all of their patents, maybe they have 10,000 patents together, and I find company C has a patent that Apple infringes…. So I go to C and say, "Hey, we’re both members of this club, you have an obligation to assign me your patent under reasonable terms temporarily so I can countersue Apple with it." Now the members of this club…have potential other weapons they can acquire and use defensively against Apple. If Apple knows they’re part of this patent defense league…now Apple’s lawyers have to look at all those patents because they know if they’re infringing any of the patents…company A could possibly get it and use it against Apple.

At some point, Kinsella theorizes, these defense leagues would become so popular that even the big companies like Apple - or IBM, which generates hundreds of millions of dollars in revenue off of patent infringement lawsuits for technologies it doesn't even use - would have to join these leagues as well. What then?

At the point where IBM wants to join, then everyone’s in it, and then what’s the point of the patent system? It would be a world of mutually assured destruction. So you’d have companies acquiring patents, paying fees, no one’s using them; lawsuits would go down, innovation would go up. Then someone would wake up and say, "Wait a minute, why is the economy spending $300 million a year on patent lawyer fees to acquire these patents that no one ever uses?"

Kinsella himself notes a potential weakness in this strategy, which is that the government could view these leagues as monopolies and use anti-trust laws to break them up:

The government grants patents that allow people to acquire monopoly power, but then if you ‘abuse’ this monopoly power, you’re violating anti-trust law…. I could see the government complaining that the entire purpose of the patent system is being eroded by the successful growth of the patent league I’m envisioning, which of course is the point of it: to kill the patent system, which is evil and horrible.

I encourage readers to listen to the whole podcast, which is illuminating. For example, I learned the difference between copyright and patents. (Hint: copyright isn't a verb.) He also digs on the EFF: "They do not want to abolish patents." Seriously, go listen to it.