Patent News

Dec. 30, 2014

Oxford University Press blog: How the US government invented and exploited the “patent troll” hold-up myth, by John Howells and Ron D. Katznelson

This post originally appeared in the Oxford University Press blog on December 30, 2014.

A patent like other property rights is a right to exclude others and not a right or an obligation to make the patented invention. Yet today there is a growing campaign by certain industry sectors and the government against patent holders that do not make any products but enforce their patent rights for licensing revenues, often pejoratively called patent “trolls.” In a recent White House report on the subject, President Barack Obama is quoted as saying that these patent holders “don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.” The government alleges that “trolls” are responsible for a patent litigation crisis. Armed with this narrative, the White House had recently announced executive actions for “taking on patent trolls.”

This narrative of harmful patent assertion by non-practicing entities is not new. A century ago, the Wright aircraft company was accused by US government officials of causing such harm because it had attempted to enforce the Wright airplane patent, which it did not practice, by sending licensing demand letters to alleged infringers. Government officials stated that the assertion of the Wright airplane patent was “injurious to the development of aircraft and the aircraft industry in the United States.” They argued that “any adequate return to the Wright stockholders upon their investment [in the Wright patent] must be through the manufacture and sale of airplanes … and not through patent channels,” and that “any return from patents must necessarily fade into insignificance.”

This myth that the assertion of the Wright patent harmed the development of aviation continues to be propagated and erroneous lessons drawn for patent policy today: In 2014, Goldstone’s book Birdmen was published as the latest in the constant reworking through time of the Wright brothers’ story. The widespread reviews of this book emphasized that the Wright brothers were patent “trolls” – Orville Wright was a “vindictive SOB whose greed and begrudgery [sic] were surpassed only by those of his brother Wilbur” and the brothers were “cursed with an addiction to malice to anyone who challenged their primacy or stood in their path to riches.” The purported tool of their “malice” was, of course, their patent. The ostensible general lesson for today is explicitly and erroneously drawn by Goldstone; “Patent law remains [today] the damper on innovation that it was when airplane development was nearly grounded in its infancy.”