March 08, 2006
BlackBerries and Patent Trolls
Posted by Funmi

Bruce Sewell, the general counsel for Intel Corp., wrote a commentary in Monday's Wall Street Journal entitled "Troll Call."  He discusses the recent $612.5 million settlement that RIM, maker of the ever popular BlackBerry, agreed to pay NTP, a patent holding company that is said to consist of one inventor and one patent lawyer (talk about winning the lottery).  His commentary points out some problems with the ways NTP and other patent trolls use the patent system to force settlements from companies who might be faced with injunctions that would shut down their businesses.  The judge also seems to have played a role here in pushing the settlement.  This most recent settlement is also significantly more than the $450 million settlement that Judge Spencer invalidated in 2005.  RIM's stock price increased by close to 20% after the $612.5 million settlement was announced, showing that markets are at least happy that a major source of uncertainty about RIM's business has been removed.  This was also the biggest one-day increase on the Toronto Stock Exchange since March 16, 2005, when the subsequently invalidated $450 million RIM-NTP settlement was announced.  Sewell suggests that patent owners that have not commercialized inventions should not be able to block others from using such inventions and suggests that the injuction remedy not be applied so broadly for all patents.  He also points to the eBay v. MercExchange case, which the Supreme Court will hear, that will address (and from his perspective hopefully limit) the use of injunctions in patent cases.  The question remains whether this is the way our patent system should work.  I am working on a paper on strategic behaviors and competition and am particularly interested in patent trolls and strategic uses of intellectual property.  I am also looking at the role that the increasing predominance of intangibles plays in intellectual property generally.  What should we consider to be a strategic use of IP?  Have strategic uses of intellectual property increased in recent years?  Do markets value intellectual property and other intangibles in a different way today than they did in the past?  Should it be harder for the NTPs of the world to use the injunction weapon to extract settlements from those who actually commercialize inventions?  Is NTP just taking advantage of the fact that BlackBerry devices have an avid and in some cases addicted user base (leading some to call them CrackBerries)?  What are other examples of strategic uses of IP (copyright and patent) that have had an adverse influence of competition?  Do examples exist where strategic behaviors have enhanced competition?                                                                        

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