When patent trolls are hungry, they reach for Apple. And when they do, they often get fed. In the bizarre world of US patent law, even when your case has little merit, you’re probably going to get paid anyway.
Apple vs. Trolls
The Chicago Tribune put together a great report detailing several recent public statements from Apple that support the claim that Cupertino is the most favored target of patent trolls.
Patent trolls are known in the industry (which can’t call them “patent trolls” in court) as Patent Assertion Entities, or PAEs. They do not invent or create anything, they don’t manufacture anything, they don’t even sell anything. All they do is buy patents so they can take other companies to court.
According to Apple, patent trolls “do nothing more than acquire vague patents, and then use litigation or the threat of litigation to negotiate royalties that are far larger than what the patents warrant.”
In a filing to the Federal Trade Commission, Apple stated that “No firm has been targeted by PAEs more than Apple.” Apple further stated that it has had to battle patent trolls “92 times in the past three years alone,” which is more than any other tech company.
Apple, as we cover in this space every week, generally has its act together in court. The Cupertino legal team is a finely tuned machine, and it’s very uncommon to see them lose in court. So why would patent trolls keep coming after them?
In an amicus brief for an upcoming Supreme Court case, Apple puts the issue into sharper relief: “Apple has rarely lost on the merits. But victory figures as small consolation, because in every one of these cases, Apple has been forced to bear its legal fees. This reality is the lifeblood of the patent assertion industry…”
While it stings to pay trolls cash when they’re threatening you with a bogus lawsuit, it’s sometimes the only smart thing to do, since you have to pay your lawyers whether you win or lose. Too often, it’s cheaper to feed the troll with cash than to go to court, even when you’re right. Even when you win.
Trolling Apple in court: good work if you can find it.
“Indeed, the opening line of many negotiations is some form of, ‘What we’re asking for is less than it will cost you to litigate this case to judgment,’ Apple stated. So how often does Apple just pay to make the troll go away?
Out of the most recent 92 cases, Apple has resolved 57 of them. In 51 of those cases, Apple just decided to settle with the troll to avoid legal costs, despite a firm belief that it had not infringed any patents; in the other six cases, the troll either lost or quit.
So, 51 wins for the trolls out of 57; that’s a winning percentage of 89.5 percent. Easy money. But what is the real cost to this nonsense?
According to one Apple brief, patent trolls “have become a drag on technological innovation, inflicting billions of dollars in deadweight losses every year.”
The reason we’ve received this rare insight into the inner workings of Apple is because it’s one of several tech companies — including Netflix, Facebook. LinkedIn, and Google — that have filed briefs for the upcoming Supreme Court case Highmark v. Allcare Management Systems. If the SCOTUS rules in favor of the Apple and the rest, it will make it easier to collect attorney fees from trolls that lose in court.
That alone might be enough to encourage companies to fight back against trolls, which would certainly be enough to make trolls run and hide. Because right now, having to pay your lawyers to argue an absurd case in court doesn’t make a lot of sense. Right now, feeding the troll is often the only way to win.
Connect with this writer, Adrian Hoppel, through his website: adrianhoppel.com