Mobile firms vs the patent trolls

24 October 2011 Last updated at 22:46 GMT By Leo Kelion Technology reporter A recent study claimed "patent trolls" cost industry billions of dollars a year Patent litigation among the world's leading mobile phone companies is on the rise.

Barely a week goes by without a development, whether it is Apple and Samsung trying to prevent each others' products from going on sale, or Microsoft forcing another handset maker to pay it a licence fee for the alleged use of its technologies in Google's Android software.

However the legal action is not limited to the big brand names.

Experts also point to a rise in activity of so-called patent trolls - a derogatory name given to organisations that aggressively defend patent libraries without releasing products of their own.

This, the second of two reports into the patent wars, starts by exploring their role.

Unsurprisingly, litigants try to avoid being associated with Scandinavian folkloric monsters wherever possible.

So the industry uses the term "non-practicing entity" to refer to organisations that own and license patents without producing goods of their own.

One of the best known is Intellectual Ventures, which has a library of more than 35,000 patents.

Set up by a former Microsoft executive, Nathan Myhrvold, it recently revealed it has earned over $2 billion through licensing its portfolio to others since 2000.

Like the phone makers it is willing to take legal action to protect its assets.

Earlier this month it sued Motorola Mobility, accusing the handset maker of using its technology to perform updates, file transfers and other functions on its Android phones.

Intellectual Ventures declined to contribute to this report, but previously referred to the case saying: "We will not tolerate ongoing infringement of our patents to the detriment of our current customers and our business."

Expensive Continue reading the main story

Some manufacturers hold back some patents so they have a weapon to deploy against competitors”

End Quote Jonathan Radcliffe Mayer Brown International A recent study, called "The private and social costs of patent trolls" by Boston University law professor, James Bessen, suggests such cases are not uncommon.

He found NPEs initiated more than 2,600 lawsuits against US companies in 2010, more than five times the number than were filed in 2004.

Based on the resulting damage to the defendants' stock prices, he estimates the actions cost them more than $83bn a year over the last four years.

You might think that would act as an incentive for the technology giants to license patents from their inventors, rather than risk court action.

However, Professor Bessen says the reverse is true because successful claims are often the result of "inadvertent" infringements.

Since companies are having to put aside money to cover these lawsuits, he claims they then have less cash to pay for third party innovations.

"The defendants in these lawsuits are firms that already invest a lot in innovation," Professor Bessen said.

"Their losses make it more expensive for them to continue to do so and it also makes them less willing to license new technologies from small inventors."

Fight back

The rise of the NPEs has led to creation of a new type of business, which describes itself a "defensive patent aggregator".

Apple used the FRAND defence to prevent Samsung from banning sales of its iPhone in the Netherlands

One of the first examples is a company called RPX. It was co-founded three years ago by John Amster, an ex-employee of Intellectual Ventures.

Like NPEs, RPX owns a patent library which it licenses out. But it markets its service to others as protection against legal disputes, vowing never to launch a patent lawsuit of its own.

For an annual fee its clients are offered use of RPX's portfolio to help them countersue or settle third party claims. The firm then reinvests part of its earnings to further extend its patent collection.

The service appears to be popular. The firm's prospectus says its clients include Sony, Sharp, Samsung, Nokia and Google.

"The high transaction costs associated with NPE litigation are a tax on the tech industry," Mr Amster told the BBC.

"Today, nearly 50 cents of every dollar spent does not make it to the patent owner."

RPX's fees may help save its clients money in the long run, but it all adds to the costs of the patent wars.

The FRAND defence

Another way companies can limit their costs is to claim the technology involved is essential to an industry standard.

When a new technology - such as JPEG format photographs, or the GSM telephone network - is created, industry player agree to license related patents on fair, reasonable and non-discriminatory (FRAND) terms.

Continue reading the main story

I worry about the overhead that large players will have to spend in defensive patent manoeuvres”

End Quote Kevin Werbach Pennsylvania University This means the patent owner's fee cannot be excessive and it is not allowed to discriminate who gets to use the innovation

The idea is to ensure different companies' products can communicate and share data formats with each other.

"Consumers benefit from this because standards promote interoperability of products and processes, as well as encouraging 'intra-standard' rivalry between multiple manufacturers who each want to be the best in that field, and beat the others," said Jonathan Radcliffe, a London-based partner at the law firm Mayer Brown.

Apple used the FRAND defence against Samsung in the Netherlands earlier this month when a Dutch court ruled that the South Korean firm's 3G patents were part of essential standards, and could not be used to ban iPhone sales.

However, enforcing FRAND standards opens the door to another set of potential abuses.

Companies may be tempted to over-declare their number of FRAND-type patents in order to attract extra fees. The more patents they declare as essential to a standard, the larger the number of license charges they can potentially claim.

Conversely, firms may prove coy at the declaration stage.

Mr Radcliffe said that in cases where the standard setting organisation fails to issue clear rules "some participants might be tempted to hold back some patents so they have a weapon to deploy against competitors to keep them off the market and/or to force a significantly higher payment".

Collateral damage

In September President Obama signed into law a bill reforming the US patent system. It is due to come into effect in March 2013.

The new rules allow businesses to examine newly granted patents and challenge the decision to grant them within a nine month window, potentially heading off the prospect of court action.

It also places new limits on NPEs, preventing them from launching infringement claims against multiple targets unless there is evidence of collusion. The new principle of "one defendant-one lawsuit" should mean they sue fewer firms.

However, other proposals to restrict the freedom to file lawsuits and limit damages awards were abandoned.

"It makes some useful technical changes, but does nothing to address the core problems," says Kevin Werbach, associate professor of legal studies and business ethics at the University of Pennsylvania's Wharton School.

"I worry about the overhead that large players will have to spend in defensive patent manoeuvres, and the innovative start-ups that will never get off the ground because of threats from patent holders."

It looks like the patent wars, and their fallout, are set to spread.

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Attack of the trolls

14 September 2011 Last updated at 16:58 GMT By Tom de Castella and Virginia Brown BBC News Magazine Celebrities are often targets for abuse An internet "troll" has been jailed for mocking dead teenagers on various websites. Public figures, including Stephen Fry and Miranda Hart, have also been victims of trolling. So what is it and why do people do it?

The word comes from a Norse monster but the troll is a very modern menace. For some it's the internet equivalent of road rage, vandalising a grave, or kicking a man when he's down.

Trolling is a phenomenon that has swept across websites in recent years. Online forums, Facebook pages and newspaper comment forms are bombarded with insults, provocations or threats. Supporters argue it's about humour, mischief and freedom of speech. But for many the ferocity and personal nature of the abuse verges on hate speech.

In its most extreme form it is a criminal offence. On Tuesday Sean Duffy was jailed for 18 weeks after posting offensive messages and videos on tribute pages about young people who had died. One of those he targeted was 15-year-old Natasha MacBryde, who had been killed by a train. "I fell asleep on the track lolz" was one of the messages he left on a Facebook page set up by her family.

Continue reading the main story Natasha MacBryde - Sean Duffy was jailed for 18 weeks for posts on social networking sites about the 15-year-old after she committed suicideHayley Bates - MP Karen Bradley raised trolling in Parliament after a Facebook page was set up mocking the 17-year-old's death in a car crash Jade Goody - Colm Coss was jailed for 18 weeks after posting obscene messages on Facebook sites set up in memory of the Big Brother star and several other dead peopleDuffy is the second person to be jailed for trolling in the UK. Last year Colm Coss was imprisoned for posting obscene messages on Facebook tribute sites, including that of Jade Goody.

Trolling appears to be part of an international phenomenon that includes cyberbullying. One of the first high-profile cases emerged in the US state of Missouri in 2006, when 13-year-old Megan Meier killed herself after being bullied online. The bully, Lori Drew, was a middle-aged neighbour who had set up a MySpace account to win - and later betray - her trust. Drew was acquitted of unauthorised computer use in 2009 due to concerns that a conviction would criminalise false online identities.

The First Amendment of the US Constitution protects free speech and makes it difficult to punish people who post offensive messages. But concern over internet vitriol is growing.

Facebook's former marketing director Randi Zuckerberg and Google head Eric Schmidt have both suggested anonymous posting should be phased out.

One of the difficulties is that trolling is a broad term, taking in everything from a cheeky provocation to violent threats. And why people do it continues to baffle the experts.

"Online people feel anonymous and disinhibited," says Prof Mark Griffiths, director of the International Gaming Research Unit at Nottingham Trent University. "They lower their emotional guard and in the heat of the moment may troll either reactively or proactively."

It is usually carried out by young adult males for amusement, boredom and revenge, he adds.

Arthur Cassidy, a social media psychologist, says young people's determination to create an online identity makes them vulnerable to trolling. Secrecy is jettisoned in favour of self-publicity on Facebook, opening the way for ridicule, jealousy and betrayal.

And the need to define themselves through their allegiance to certain celebrities creates a world in which the rich and famous become targets for personal abuse. As a result trolling is "virtually uncontrollable" until the government forces websites to clamp down, he says.

But it's not just young people. Scan any football, music or fan site and there are people of all ages taking part in the most vituperative attacks. But many of the theories that have been put forward as to why people do it don't stand up, says Tom Postnes, professor of social psychology at Groningen University in the Netherlands.

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Will Brooks on setting up Myfootballclub.co.uk

It was £35 to join MyFC so I don't think anyone joined with the intention of trolling. But disagreements on the forum all too easily turned to abuse. Finding out that respected professionals in their mid-fifties could post in that way was an eye opener. I've since discovered that forums have a habit of turning sour as it only takes a minority to skew them. As a format they've lost their innocence.

After researching "flaming" - the term for trolling in the early days of the internet - he rejects the idea that people "lose it" when online. If anything they become more attuned to social convention, albeit the specific conventions of the web. Provoking people appears to be the norm in some online communities, he says.

Most trolling is not criminal - it's about having a laugh, says Rob Manuel, co-founder of the website B3ta, which specialises in altering photographs for comic effect. "Trolling taps into people's desire to poke fun, make trouble and cause annoyance," he says.

He first became aware of the phenomenon in the 90s when a friend cross-posted on fan sites for Lord of the Rings and Star Wars, asking: "Who'd win in a fight - the Emperor or Gandalf?" Manuel says his friend sat back and laughed like some "mad scientist looking at insects in a jar" as hundreds of passionate posts followed.

'No guilt'

We're all capable of becoming a troll, says Jaron Lanier, a computer scientist in the US and author of You Are Not A Gadget. Lanier admits he has sometimes behaved badly online and believes the cloak of anonymity can encourage people to react in extreme ways.

"The temptation is there and we can get caught up in impulses. If someone reacts, it's emotional and it can be hard to get out of. We can all become trolls."

Former Facebook executive Zuckerberg says anonymous posting should be phased out

Twitter has given the public direct access to celebrities. And stars, including Stephen Fry and Miranda Hart, have temporarily left the website after coming under fire. Internet experts say the key is not to "feed the troll" by offering them a response. Comedian Dom Joly takes a different approach.

He describes himself as "troll slayer" and takes pleasure in tracking down the culprits and exposing them to public shame, especially from close family.

"There's something about a bully that really annoys me," he says. "They'll say something online that they'd never dare to say to your face."

The deviousness is "freaky". He discovered that one of those who'd threatened him was a 14-year-old girl with nine different online identities. They aren't always very intelligent about how they do it, he says.

Continue reading the main story The Communications Act 2003 governs the internet, email, mobile phone calls and text messagingUnder section 127 of the act it is an offence to send messages that are "grossly offensive or of an indecent, obscene or menacing character"The offence occurs whether those targeted actually receive the message or not"One guy tweeted from his work account that he hoped my kids die of cancer. I let the MD of the firm know and the guy was fired. I felt no guilt, he should have gone to prison."

Some think regulation is needed, but trolling is not the internet's fault, says Jeff Jarvis, author of Public Parts. "The internet does not create special threats. It's a public square where people will be saying all sorts of things, some of them offensive."

The answer is for newspaper websites and online forums to employ sufficient moderators to prevent the comments spiralling into petty vendettas, he says. To ban online anonymity in order to prevent trolling would be to remove the right of whistleblowers and dissidents to get their message across, he adds.

Manuel agrees. "People are saying nasty, stupid things. So deal with it. Shutting down free speech and stamping on people's civil liberties is not a price worth paying."

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