Joff Wild

An article written by James Bessen and Michael Meuer, and published last week in the Boston Globe, raises serious questions about the pair’s credibility as participants in the on-going debate about patent reform in the United States. Claims made in the article by the two Boston University academics, whose work has been cited and at least partially funded by supporters of fundamental change, are so inaccurate that it is hard to conclude other than that they have either deliberately misrepresented basic facts or are unable to conduct even cursory research before committing pen to paper.

In the article, published on 5th November, Bessen and Meurer claim that France Brevets, the Innovation Network Corporation of Japan (INCJ) and Taiwan’s Industrial Technology and Research Institute (ITRI) are all what they term “government-sponsored patent trolls”, which “are frequently active in US courts”.  As discussed yesterday on this blog, in the article the pair define trolls as “firms with no interest in innovation or technology transfer; they hold patents to assert them against innocent businesses to extract some of the profit from genuine innovators”. This represents a fundamental change to their previous definition. They also accuse trolls of using “deceptive and unfair assertion tactics”. The US’s trading partners, they state, must “play by the rules”. The problem is that just about everything that Bessen and Meurer say about France Brevets, the INCJ and ITRI is demonstrably untrue.

Let’s start with the European entity – at least its name is translated correctly. But it all goes downhill from there. Set up in March 2011, France Brevets works with organisations that have a link to France in order to help them to license their portfolios, as well as to provide them with freedom to operate. It works closely and in partnership with French SMEs and has brought two actions in the US in three years – one against LG and the other against HTC. The case with LG was settled in August. France Brevets has sued one American company in three years, in Germany. Clearly, it is not a frequent litigator anywhere.

“Unlike “patent trolls”, France Brevets does not adopt a “sue first” posture,” its website explains. “In contrast, France Brevets undertakes numerous preliminary steps such as evidencing use of the claimed inventions via detailed reverse engineering, and formulation of high quality claim charts. This is done to facilitate and advance discussions with potential licensees in the most transparent way.” The firm splits revenues with its partners – innovative companies that have turned to it because they do not have the expertise or the resources to build licensing programmes themselves. “The patentee is thus given a supplemental cash flow while remaining the owner of its inventions,” the website states. France Brevets is founded on the principle of rewarding innovation.

But one thing that you can say about France Brevets, I suppose, is that it is a firm whose business model is built on patents. Not even that applies to either INCJ or ITRI. The former was established in 2009 as a private-public body funded by the Japanese government and 26 major Japanese corporations, the vast majority of which have long track records in investing in R&D and producing innovative products.  INCJ’s brief is: “To provide financial, technological and management support in order to promote the creation of next-generation businesses through “open innovation,” or the flow of technology and expertise beyond the boundaries of existing organizational structures.” A brief glance at the news link on its website shows that it has invested in and helped to establish a number of innovation-based SMEs in Japan, as well as funding several acquisitions. To the best of my knowledge, INCJ has never litigated a single patent in the United States.  It clearly does not horde patents in order to assert them against innocent, innovative companies. It has invested the equivalent of $30 million in IP Bridge, an open innovation business. IP Bridge has not sued anyone in the US or elsewhere either.

Over in Taiwan, ITRI “is a nonprofit R&D organization engaged in applied research and technical services”. Founded in 1973, “ITRI employs around 6,000 personnel, including over 1,300 who hold Ph.D.s and 3,000 with master’s degrees”. There really isn’t much need for me to go on. Basically, we are talking about a world class R&D entity that owns a lot of patents because it does a lot of R&D. According to the IPO, ITRI was awarded 485 US patents last year – placing it at 79 in the rankings.Research done by MDB Capital that was published in issue 65 of IAM found that the institute had one of the 100 biggest patent portfolios in the US at the end of last year – with 4,341 assets in total. ITRI is as far from the new Bessen and Meurer definition of a patent troll as it is possible to get. In 2011, ITRI was involved in the establishment of a defensive patent fund whose aim was to shield Taiwanese companies from patent assertions, but speaking last November at the IPBC Asia in Singapore, Benjamin Wang, general manager of the ITRI’s Technology Transfer Centre (yes - surprise, surprise - it has one), said that the  financial targets for the fund had yet to be hit and that they are not operational.  

Bessen and Meurer are the authors of numerous papers whose findings have been widely quoted both in the press and by campaigners to justify the need to reform the patent litigation system in the US. Yet, as this blog has shown, they have just produced an article full of the most basic inaccuracies. It is clear that not one of France Brevets, the INCJ or ITRI comes close to being a patent troll. Indeed, they actively help to foster innovation and are closely involved in R&D. To suggest otherwise is deeply insulting to them.  None of the information I have provided above is hidden away. You can find it in minutes doing the most basic of internet searches. Given that, there are surely only two credible explanations for the Boston Globe article:

  • Bessen and Meurer have deliberately set out to misinform the publication’s readership about France Brevets, the INCJ and ITRI in order to create a false narrative about foreign trolls posing a significant risk to US interests in the knowledge that such a narrative can easily gain traction and force legislators to take action.

  • Bessen and Meurer genuinely believe that the three are patent trolls and do pose a risk to US interests, but are totally incapable of doing even basic background research to ascertain whether such a belief can stand up to any kind of scrutiny.

Clearly neither scenario reflects well on them.

With that, and their decision to completely rewrite their definition of patent troll, in mind, the pair’s role in the US patent reform debate needs to be very seriously questioned. If their work is to be used as evidence by those seeking to justify fundamental change to the US patent system, it has to be beyond reproach. Today, it is clear that it is not. At the end of their Boston Globe article, Bessen and Meurer talk about the US’s trading partners playing by the rules. A little bit of self-awareness would not have gone amiss when they wrote that.