Quinn: Patent PERPs are the real bullies of the licensing world

By Bruce Berman

A disturbing article by IP Watchdog’s Gene Quinn asks “Who are the real bullies of the patent world?” It’s not patent trolls. They are far less of a problem than Patent PERPs – Practicing Entities that Refuse to Pay.

The founder and editor of IP Watchdog, one of the leading IP blogs, pointed a finger at reluctant patent licensees today in “A Patent Owner Defending Property Rights is NOT a Bully,” an article that attempts to reveal who are the real villains of patent licensing.

Exhibit One in Quinn’s indictment of the twisted rhetoric that surrounds patent licensing is Colleen Chien, a Santa Clara University law professor and former senior IP adviser to President Obama. Professor Chien wrote in The Wall Street Journal recently, “that small businesses may want to simply ignore letters they receive from patent owners alleging infringement of a patent.”

Ignore the Nuisance

“This is rather astonishing for several reasons,” says Quinn. “First, a patent is a right granted by the federal government that is supposed to be legally presumed to be valid. A recently departed senior adviser to the President who is advising potential infringers that they should just ignore notices telling them they are infringing speaks volumes about how the Executive Branch views patents and patent owners. Once upon a time patents and inventors were very highly regarded in our society, today they are seen as a nuisance that can and probably should be ignored, even by the White House apparently…”

“A patent owner that seeks to prevent another from infringing is NOT a bully, period. A patent owner that takes action to prevent infringement is merely protecting the property right they have been granted; a right purposefully granted by the federal government after a lengthy examination process. It should be self-evident to everyone that you cannot be a bully when you are standing up to protect a right you have been given. It is utter nonsense to even suggest that a patent owner seeking vindication from the trampling of rights could ever in any fair way be characterized as a bully…”

PERPs are Perpetrators

“Frankly, if we want to be perfectly honest about the state of the industry, we would be talking about those Patent using Entities that Refuse to Pay (PERPs),” concludes Quinn. “Thanks to the confluence of patent reform and Supreme Court precedent the people who are getting bullied the most are patent owners. These PERPs simply ignore all inquiries even from those with large portfolios and valid patents that are being infringed. They engage in a game of efficient infringement, or so it is called. Efficient infringement is such a sanitary way to say – willfully stealing without paying.

“With the deck so substantially stacked against the patent owner, companies know that if they simply ignore all inquiries, both legitimate and those smaller number that are extortion, they can willfully infringe patented technology without having to pay anything. So why pay? That is efficient infringement; a cold business calculation that results in the patent owner being screwed.”

Negative Right

Efficient infringement means that given the risk-reward of using someone else’s invention, it is economically viable for most companies, in many industries, to infringe patents at will most of the time. It’s like a parking violation. First, they have to catch me breaking the law. What are the chances? And if they do, paying the price of the ticket is often easier (and cheaper) for large companies than obeying the law.

A patent is a negative right – the right to sue to protect an owner’s intellectual property, an invention. A patent suit is a costly and time-consuming process, and defendants know that. Patents are meant to be used (enforced) where appropriate. Quinn is saying that the behavior of those refusing to pay a license (PERPs) – and who invent delaying tactics to avoid doing so – is ethically questionable, legally suspect and damaging to innovation.

For the full IP Watchdog article go here.

[This post originally appeared at IPCloseUp.]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: