Skip to Content

Are ‘Patent Trolls’ the Secret Heroes of the Tech World?

If innovative small companies can’t protect their inventions, who will? Companies who specialize in suing over IP, that’s who.
November 1, 2010

Joikusoft is a small Finnish company that invented an innovative technology used on mobile devices, principally in Europe - it allows cell phones, mostly Nokia devices, to use their Wi-Fi radios to create hot spots that are connected to the wider Internet via the phone’s 3G or 4G radio.

Not all trolls are nasty
cc Pete Jelliffe

If this sounds familiar, it’s because almost everyone offers their own version of this technology - Novatel’s MiFi, Palm, Sierra Wireless, even Google. But, arguably, JoikuSoft got there first. In 2007, it filed for a patent on the technology. Later, it let other companies play with the technology - notably Google - which, after letting the conversation with JoikuSoft drop, went on to implement its own version of the technology.

A Flawed Patent System

Google is not exceptional in this behavior. Tech companies do stuff like this every day. It’s impolite, but it’s not actionable. Until the U.S. Patent Office grants JoikuSoft a patent on its technology, it doesn’t own it and can’t demand a licensing fee from anyone who builds their own version of it. Getting this all-important patent can take up to five years, says Ted Shelton, an entrepreneur and technology consultant who is helping JoikuSoft navigate these waters.

The problem is that while JoikuSoft waits on this patent, it’s earning $0 in licensing fees for technology that it invented. That’s a flaw in the patent system, argues Shelton, because the technology world moves so quickly that by the time a patent is issued, the technology it covers could already be on its way out.

Litigation No One Can Afford

The second, more vexing problem is that even if JoikuSoft gets a patent on its technology, no big company even has to pay it a licensing fee. That’s because the bigger company can just bury the little one in patent litigation - outspending the small fry in the courtroom and tying up licensing fees for a decade.

If you don’t think Google is capable of that sort of thing, you haven’t been following its fight with Skyhook Wireless, a geolocation company that claims that Google not only stole its technology, but actually forced handset maker Motorola to dump Skyhook’s technology in favor of Google’s. (Google has yet to answer this claim.)

So, back to JoikuSoft. In an imaginary 2012 in which the company gets lucky, gets a patent issued, and asks Google, Palm, Novatel etc. to pay a licensing fee, what happens if these companies say no? JoikuSoft’s only recourse would be to respond with a patent infringement suit. It’s likely that suit would immediately go before a judge tasked with making a “rapid judgment” about the merit of the claim.

“The problem is that these are very complex technologies,” says Shelton. “But making a case for why another company is infringing or not relies ultimately on these snap judgments that are determined by much how money you can can put behind a team of lawyers with fancy multimedia presentations. A small company can hardly mount a defense against a Google.”

Patent Trolls to the Rescue

That’s where so-called “patent trolls” come in. If you’re a small company, you at least have the threat of selling your IP to a company that specializes in suing big companies and/or forcing them to pay licensing fees for patents. In this instance, patent trolls are essentially the only thing standing between small companies that need and deserve financial incentives in order to continue being the engines of innovation in the tech world, and big companies who could otherwise crush them in the courtroom.

Shelton isn’t arguing that patent trolls don’t do plenty of questionable things, as well, including amassing huge portfolios of junk patents and then forcing large companies to license the entire package. But just as we wouldn’t want to live in a world in which product liability law didn’t exist, areas of the law that are sometimes abused can have value in the cases when they’re not.

The problem is finding that balance. “I don’t have an answer,” says Shelton. “But the point is that there is a use for ‘patent trolls’ because some companies are bad actors - we need checks and balances.”

Follow Mims on Twitter or contact him via email.

Keep Reading

Most Popular

Workers disinfect the street outside Shijiazhuang Railway Station
Workers disinfect the street outside Shijiazhuang Railway Station

Why China is still obsessed with disinfecting everything

Most public health bodies dealing with covid have long since moved on from the idea of surface transmission. China’s didn’t—and that helps it control the narrative about the disease’s origins and danger.

individual aging affects covid outcomes concept
individual aging affects covid outcomes concept

Anti-aging drugs are being tested as a way to treat covid

Drugs that rejuvenate our immune systems and make us biologically younger could help protect us from the disease’s worst effects.

Europe's AI Act concept
Europe's AI Act concept

A quick guide to the most important AI law you’ve never heard of

The European Union is planning new legislation aimed at curbing the worst harms associated with artificial intelligence.

Stay connected

Illustration by Rose WongIllustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.