Joff Wild

An article by Colleen Chien of Santa Clara University Law School, whose work is regularly quoted by those looking to curb “patent trolls”, neatly illustrates one of the huge problems that currently exists in the debate about their activities: terminology. In other words, what is a troll, an NPE, a PAE and so on; who gets to decide and on what basis is the assessment made? Until we can all agree on the answers to these questions, it seems to me, the chances of there being a meaningful and equitable discussion about what the issues are is going to be nigh on impossible. And if you cannot have such a discussion, how on earth can you begin to think about legislation?

Anyway, let me explain. Chien gives her piece the title "Everything You Need to Know About Trolls (The Patent Kind)"; in it she defines what she means when she uses the term PAE: “A patent “troll” — or the more polite “PAE” (or patent assertion entity, a term I coined) is an entity that asserts patents as their primary business model. The term “PAE” is narrower than the commonly used “NPE” (or non-practicing entity) because PAEs don’t include entities like start-ups and universities whose goal is to get their technologies out there.” You can argue with this definition – and many would – but it is pretty clear what Chien is talking about, even if you do not agree with her.

Also in the article, Chien talks about Tessera, which she describes as a technology company. That’s fair enough, given her definition of what a PAE is. However, if I switch to another oft-cited source of information on NPEs, PatentFreedom, I find Tessera listed as having one of the largest NPE patent holdings. So, for Chien Tessera is a technology company; for PatentFreedom it is an NPE. And if I go to another frequently referenced piece of work, The Private and Social Costs of Patent Trolls, written by James Bessen, Jennifer Ford and Michael Meurer, I find a PatentFreedom database being used as a primary source for research that claims that “NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010” and that “the loss of billions of dollars of wealth associated with these lawsuits harms society”. As noted on this blog at the time, this research garnered a great deal of coverage, with headlines including “Patent trolls cost inventors half a trillion dollars” and “Innovation’s down, but patent trolls are thriving”.

Thus, Chien’s technology company is defined elsewhere as an NPE by an organisation whose database has been used to do research that is headlined as being about trolls and which led to a great deal of coverage about how pernicious trolls are. And lo and behold, we find Tessera listed as one of “Tech's 8 Most Fearsome 'Patent Trolls'” in an article put together by Business Insider at the end of last year. The cited source of the information is PatentFreedom, which also lists the likes of InterDigital, WARF, CSIRO and Rambus as NPEs. All are entities which spend tens of millions of dollars a year on R&D.

If one regular source of information on “trolls” considers Tessera to be a technology company, and another considers it to be an NPE, and another equates NPEs with trolls, what chance do we have of ever getting to the truth of what harm, if any, is being done to innovation and the US economy by entities which focus on patent licensing instead of rolling out products and service offerings? I would submit that there is no chance at all. But that, unfortunately, there may be some people out there who are actually quite comfortable with this.