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"How Patent Suit Became Judge's Nightmare"

Stephanie Stoughton of the Associated Press has details (Nov. 20). Research In Motion Ltd. could be forced to pay a giant settlement to avoid an injunction that would put them out of business—even though they expect the patents in question, owned by patent-holding company NTP Inc., to eventually be invalidated by the patent office, which has yet to act. "Despite RIM's optimism about the office's deliberations, the nearer-term prospect of the court injunction could force the company into a settlement as costly as $1 billion." See also OL May 2.

"NTP is often portrayed as a so-called 'patent troll,' a company with no products and little infrastructure. These predatory companies amass patent portfolios with the intent of filing suits against legitimate businesses. They have become many corporations' nightmares."

Walter has elsewhere spoken out against patent-holding companies (OL Sep. 16; OL May 9). But to the extent that the underlying intellectual property is legitimate, there should be no reason to treat holding companies different than other patent-holders. Not every inventor can afford to commercialize his or her invention, and the ability to sell one's patents to third parties with the resources to enforce a legitimate patent creates market efficiencies, additional competition, and incentives for innovation—especially when the market for the underlying product is already monopolized, which would limit the range of purchasers of intellectual property if holding companies were not allowed to enforce patent rights.

The problem arises because of the number of illegitimate patents granted by the USPTO, and the uncertainties and expense of litigation, which makes Lemelsonian tactics a feasible possibility.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.