Reeling in the Patent Troll: Was Ebay v. MercExchange Enough?

Journal of Intellectual Property Law Volume 14 | Issue 2 Article 5 April 2007 Reeling in the Patent Troll: Was Ebay v. MercExchange Enough? Damian Myers University of Georgia School of Law Follow this and additional works at: https://digitalcommons.law.uga.edu/jipl Part of the Intellectual Property Law Commons Recommended Citation Damian Myers, Reeling in the Patent Troll: Was Ebay v. MercExchange Enough?, 14 J. Intell. Prop. L. 333 (2007). Available at: https://digitalcommons.law.uga.edu/jipl/vol14/iss2/5 This Notes is brought to you for free and open access by Digital Commons @ Georgia Law. It has been accepted for inclusion in Journal of Intellectual Property Law by an authorized editor of Digital Commons @ Georgia Law. Please share how you have benefited from this access For more information, please contact . Myers: Reeling in the Patent Troll: Was Ebay v. MercExchange Enough? REELING IN THE PATENT TROLL: WAS EBA Y V MERCEXCHANGEENOUGH? TABLE OF CONTENTS 334 I. INTRODUCTION II. BACKGROUND ............................................ 339 A. CONSTITUTIONAL AND STATUTORY LAW .................... B. PRE-MERCEXCHANGE REMEDIAL PRACTICE .................. C. THE MERCEXCHANGE LITIGATION ......................... 339 340 342 1. The DistrictCourt Decision ............................... 2. The FederalCircuitDecision .............................. 3. The Supreme CourtDecision .............................. 342 344 346 ........................................... III. ANALYSIS ................................................. A. IMPLICATIONS OF MERCEXCHANGE ........................ B. SUGGESTIONS FOR FURTHER REFORM ....................... 348 349 351 1. Improving Review of Business-Method Patents .................. 352 2. Weakening the Presumption of Validiy for Business-Method Patents .............................................. 353 3. Elimination of the Submarine Patent ......................... 353 4. Requiring Representative Damages .......................... 353 IV . CONCLUSION ............................................. Published by Digital Commons @ Georgia Law, 2007 354 1 Journal of Intellectual Property Law, Vol. 14, Iss. 2 [2007], Art. 5 J. INTELL PROP.L [Vol. 14:333 I. INTRODUCTION Research in Motion, Inc. (RIM) is the provider of the popular BlackBerry wireless message device, which allows "out-of-office" users to send and receive electronic mail messages without the need of a personal computer.' Since its public release in 1999, the BlackBerry has achieved great success in the marketplace, surpassing six million subscribers in 2006.2 However, this success has not been achieved without at least one significant obstacle. On November 13, 2001, NTP, Inc. filed suit against RIM alleging that the BlackBerry wireless message device infringed on several of its patents.3 Following trial, a jury concluded that RIM had infringed on NTP's patents and awarded nearly $54 million in damages to NTP.4 More importantly, the trial court issued a permanent injunction, which was stayed pending appeal, ordering RIM to shut down its popular BlackBerry service so long as the device infringed upon NTP's patents.' Although the patents asserted by NTP were of questionable validity, the threat of a permanent injunction disrupting the BlackBerry system eventually forced RIM to settle for $612.5 million.6 RIM was not the only company to be confronted with an infringement claim asserted by NTP; Good Technology and Nokia were also forced to pay large fees to NTP.7 As the BlackBerry litigation illustrates, there is an emerging problem in patent law-the powerful patent troll. A patent troll can exist either as an individual entity or a corporate entity. 8 Whether the patent troll is an individual or NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1289 (Fed. Cir. 2005). 2 Mark Heinzl, R!Ms Profit Surges on BlackBery Subscriber Growth, WALL ST.J., Sept. 29, 2006, at A3. 3 NTP, 418 F.3d at 1282. 4 Id. at 1292. 5Id. 6 Ian Austen, BlackBerr Senice to Continue, N.Y. TIMES, Mar. 4, 2006, at C6; see also Yuki Noguchi, Canada LobbiesforMaker of BlackBery; Offices Contacting U.S. on PatentReview, WASH. POST, Feb. 22, 2006, at D1 (reporting that after failing on nearly every issue in court, RIM sought reexamination of the NTP patents at issue). At the time of the RIM settlement, the United States Patent and Trademark Office (USPTO) had issued an initial finding of invalidity as to all patents involved in the litigation. Id However, because the court was unlikely to respond to the USPTO's initial findings, RIM was forced to settle. Id. David V. Radack, Patent Trolls: Pay Up orFight?,LAW.J., Aug. 4, 2006, at 3. Indeed, RIM is not the only major corporation confronted with a patent troll like NTP in past few years. Intel was confronted in 2003 by a patent troll that demanded $8 billion for a patent purchased for nearly $50,000. Id. Similarly, Medrad was forced to pay out a total of $1.25 billion to a patent troll in 2005. Id. 8 David G. Barker, Trollor no Troll? PoliangPatent Usage with an Open Post-GrantReview, DUKE L. & TECH. REv., Apr. 15, 2005, at 7; see also Patent Trolls: FactorFiction?: HearingBefore the Subcomm on Courts, the Internet, and IntellectualProperty of the H. Comm. on the Judiday, 109th Cong. 14-17 (2006) https://digitalcommons.law.uga.edu/jipl/vol14/iss2/5 2 Myers: Reeling in the Patent Troll: Was Ebay v. MercExchange Enough? 2007] PATENT TROLLING corporation, these entities either receive or purchase the patent and wait until another individual or a corporation creates and implements a product or service that potentially infringes the patent held by the patent troll. 9 Once another party uses the patent owned by the patent troll to implement a product or service, the patent troll will generally wait until the industry builds up around the potentially infringing product or service.'0 Following this industry build-up, the patent troll will demand that the user of the patent pay a licensing fee." If the user of the patent refuses to pay for a license to use the patent, the patent troll often will bring legal action alleging patent infringement. 2 Many times, the patents held by the patent troll are of questionable validity or the patents cover a trivial part of the overall product. 3 Patent trolls generally are not interested in enforcing their right to exclude others from using the patent, but rather, they use this right opportunistically as a way of extracting a large, sometimes exorbitant, settlement payment from the manufacturer of the product.' Until recently, the Federal Circuit provided patent trolls with a very powerful tool: the presumptive right to permanent injunctive relief following a finding of infringement.' 5 Accordingly, when a company, such as RIM, is confronted with an infringement action brought by a patent troll, such as NTP, it is forced to make a difficult decision. The manufacturer or provider of the product or service (...truncated)