If we are correct about EDIG's patent portfolio validity, then we are soon to join the ranks of the infamous "patent trolls." As best I can tell, we are in good company and should wear our moniker proudly. Heck, as long as I can cash out a pile of shares in the black, the naysayers can line up and throw rocks at RP's car or Fred's scooter. It actually is about making money.

John

credit to wolfpackvolt for the below lengthy, but interesting (at least, to my little brain) explaination...for those that do not know, Emory is one of the top legal schools in the US and sits in the middle of Atlanta...

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THE MYTH OF THE PATENT TROLL:
AN ALTERNATIVE VIEW OF THE FUNCTION OF PATENT
DEALERS IN AN IDEA ECONOMY†

James F. McDonough III
Emory University School of Law

The evil patent trolls are here, or so the story goes. They have emerged from beneath the patent system’s rusty trestles—old, dusty patents in hand. With reckless abandon they have brought some of corporate America’s finest specimens humbly to their knees. They have earned the rebuke of the most revered publications—the New York Times, the Wall Street Journal, and the Washington Post, to name a few. These giants are banging on the door of the United States Supreme Court, and they are the new mascot for lobbyists pushing major legal reform. But who are these trolls, and why are they so feared? Are they ghastly monsters suffocating a burgeoning patent system, or are they gentle giants poised to carry the United States patent system beyond the twenty-first century? A patent troll is a person or entity who acquires ownership of a patent without the intention of actually using it to produce a product. Instead, the patent troll buys the patent and either licenses the technology to a person or entity that will incorporate the patent into a product, or it sues a person believed to already have incorporated the technology in a product without permission. Trolls are being almost universally denounced. Critics argue that patent trolls do not promote innovation and are causing excessive, baseless litigation. Accordingly, judicial and legislative action is being undertaken to put a stop to the practices of trolls. This Comment argues that, contrary to popular belief, patent trolls actually benefit society. These trolls act as a market intermediary in the patent market. Patent trolls provide liquidity, market clearing, and increased efficiency to the patent markets—the same benefits securities dealers supply capital markets. Ultimately, this Comment suggests that the emergence of patent trolls is simply a stage in the natural evolution of the patent market.

I. THE IDEA ECONOMY AND THE TROLLS WITHIN

The economic landscape of the United States has changed dramatically in the last thirty-five years. Whereas the value of corporations used to be grounded in land, natural resources, and human capital, the driving force in the U.S. economy today is intellectual property. It should not be surprising, then, to learn of the emergence of companies that specialize in management of intellectual property. In response to this emergence, there has been a concerted effort by large corporations and legislators, backed by the media, to put a stop to the practices of these entities pejoratively known as patent trolls.

A. The New Idea Economy

To appreciate the magnitude of the patent troll issue, a clear understanding of the importance of intellectual property to the U.S. economy is necessary. “[C]reativity, in the form of ideas, innovations, and inventions, has replaced gold, colonies, and raw materials as the new wealth of nations.” This paradigm shift is illustrated by several key quantitative measures. Over the last twenty years, technology firms have been patenting more, increasing patent scope, licensing more frequently, and revamping their business strategies in an effort to prioritize intellectual property. Between 1970 and 2004, the annual
number of patents issued by the U.S. Patent and Trademark Office increased from 67,964 to 181,302. Intellectual property is equally important to U.S. foreign trade. U.S. trade in intellectual property has consistently produced a trade surplus over the last 20 years. Between 1987 and 2001 (the last year in which such data is available), annual U.S. receipts from intellectual property foreign trade rose from $9.9 billion to $38.7 billion, creating a net surplus of $22.3 billion in
2001.17 But, perhaps most convincing is the absolute shift in the economic landscape of the United States. The Economist recently observed: In recent years intellectual property has received a lot more attention because ideas and innovations have become the most important resource, replacing land, energy and raw materials. As much as [75%] of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s. Alan Greenspan, former Chairman of the Federal Reserve Board, recently proclaimed that “[t]he economic product of the United States . .. has become ‘predominantly conceptual.’” Intellectual property has become the new economic foundation of the United States.

B. Patent Trolls in the Idea Economy Given the importance of the patent system, its integrity must be upheld. Consequently, there need to be mechanisms of management for this system. Yet, individuals and investors acting in this capacity are criticized as trolls before a full understanding of their role in the patent economy is understood. This raises the question: are trolls really a threat to the integrity of the patent
system? Answering the question demands a closer look at the trolls and the arguments against them.

1. The Anatomy of a Troll
Originally, nonproducing entities that purchased patents were referred to as patent extortionists. By the 1990s, these “unsavory characters who buy up obscure patents to extort money from innovative and law-abiding companies” came to be called “patent trolls.” Peter Detkin, former assistant general counsel for Intel, created the term after Intel was “sued for libel for its use of the term ‘patent extortionist.’” According to Mr. Detkin, “A patent troll is somebody who tries to make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced.” Instead of producing products, the troll licenses and enforces patents. More precisely, the nature of these so-called trolls can be boiled down to three general categories. At one end of the spectrum are individual owners of patented inventions that do not make a product but are suing a large corporation for infringement. In the middle are companies like Intellectual Ventures, an intellectual property think tank that generates ideas for the purpose of patenting, with an eye towards eventually licensing those patents. On the other end of the spectrum are patent holding companies like Acacia Research Corporation, a company that purchases patents merely for licensing and enforcement purposes. Notably, none of the activities associated with trolls are well-regarded in the corporate community.

2. Battling the Trolls: The Movement to Stop Trolls

The general attitudes toward trolls are almost uniformly negative. In fact, there are three ways in which efforts are being aggressively undertaken to stop them. In an attempt to curtail the activities of patent trolls, large corporations are seeking the option of having injunctions stayed when the patent holder is not in competition with the infringer. Further, large corporations are pushing for new legislation targeted at stopping trolls. Finally, several commentators have criticized them.

a. Legal Action: Trolling at the Supreme Court

There is substantial activity in the courts relating to patent trolls, and several parties in such cases have petitioned for certiorari to the U.S. Supreme Court. Three cases illustrate the trolls’ ubiquitous presence: NTP, Inc. v. Research In Motion, Ltd., Eolas Technologies, Inc. v. Microsoft Corp., and MercExchange, L.L.C. v. eBay, Inc. In each case, a small, nonproducing entity sued a larger company to enforce a patent—the typical patent troll scenario. The Supreme Court granted certiorari in MercExchange, L.L.C. v. eBay, Inc. The main question in the case was whether the district court properly denied MercExchange’s motion for injunctive relief against eBay, the alleged infringer. At issue in the case was eBay’s fixed-price purchasing feature, which allows customers to purchase items that are listed on eBay’s website for static, listed prices. MercExchange owns a patent that broadly covers the creation of an online marketplace where items can be offered under live auction conditions and at fixed prices for immediate purchase. MercExchange claimed that eBay was infringing upon this patent. Although the district court jury verdict favored MercExchange, and found that eBay was infringing the patent, the court did not grant an injunction against eBay because it found that MercExchange’s “willingness to license its patents [and]
its lack of commercial activity in practicing its patents . . . are sufficient to rebut the presumption that it will suffer irreparable harm if an injunction does not issue.” The Federal Circuit did not find the case to be “sufficiently exceptional to justify the denial of a permanent injunction,” and it reversed the district court’s denial of injunctive relief. The Supreme Court vacated the Federal Circuit decision and remanded after deciding that it is not necessary for a patent owner to actually practice the patent as a prerequisite to getting an injunction. However, in his concurring opinion, Justice Kennedy suggested
that trial courts should consider whether the patent holder is a patent troll when considering whether to grant an injunction. A second prominent patent troll case was NTP, Inc. v. Research In Motion, Ltd., otherwise known as the Blackberry Case. In that case, an intellectual property holding company called NTP claimed that Research In Motion (“RIM”), the maker of the popular BlackBerry email devices, was infringing on several of its patents. The court found that BlackBerry’s email retrieval system infringed upon the NTP patents and awarded damages and a permanent injunction against RIM. Ultimately, RIM’s petition for certiorari was rejected, and the case settled for $612.5 million. The third high-profile troll case was Eolas Technologies, Inc. v. Microsoft Corp. Eolas is a company that “create[s] and develop[s] the inventions that allow information technologies to enhance the quality of life for everyone.” Eolas sued Microsoft for infringing on a patent covering embedded website technology, claiming that Microsoft’s Internet Explorer incorporated its invention. The Court held that Microsoft was infringing on the patent and granted damages and an injunction pending appeal. A petition for certiorari was rejected by the Supreme Court.

b. Legislative Action: The Patent Reform Act of 2005

In addition to challenges to trolls in court, major legislative reform is being pressed. In June of 2005, Congressman Lamar Smith introduced the Patent Reform Act of 2005, the most substantial legislative reform to the patent system since 1952. The Act was largely prompted by disdain for patent trolls and their practices. The proposed bill includes several significant changes to the patent system. For purposes of this Comment, the most significant is the proposed injunctive stay provisions, which are aimed directly at trolls. The original bill required a finding of irreparable harm not compensable by damages before an injunction could be granted, and allowed courts to consider how the company owning the allegedly infringed patent actually used the invention when granting an injunction. The sponsors of the bill “encourage[d] the Committee to take aim at those who seek to abuse the patent system for profit.”

c. Commentary

Most commentators appear to side with big corporations, and are
salivating at the chance to talk about the “troll attack,” portraying patent trolls as “parasites on successful businesses” and comparing them to the “mold that eventually grows on rotten meat.” Trolls have been described as persons or entities who “secretly [wait] for another inventor to develop the same technology” only to later appear and demand license fees from successful business. They have been called “patent system bottom feeders” that “want[] glittering pots of gold in exchange for doing absolutely nothing.” Commentators criticize the trolls for “manipulat[ing] the patent system for large profits.” Still others say that trolls “are engaging in nothing more than legalized extortion.” Although some commentators recognize the potential value of trolls, their utility is mentioned merely in passing.

3. The Stakes: The Integrity of the U.S. Patent System

Although the recent Supreme Court activity and the provisions proposed in the Patent Reform Act of 2005 are important, these are only used to illustrate the prominent role trolls occupy in today’s legal landscape. The more pressing issue is the general integrity of the patent system. As the Economist recentlypronounced, “Defending the patent system is more important than keeping [a company] up and running.” Limiting the patent holder’s ability to stop the infringing activity will severely diminish the value of patents because the only right inherent in a patent is the right to exclude others from its use. Taking this away would weaken the patent—the foundation of the U.S. economy. Before radical changes are enacted at any level, it is imperative to ensure there really is a problem to fix. This Comment suggests that although there are problems with the patent system that need to be addressed, patent trolling is not among them.