Benchmarking National - PRO INNO Europe

The patent troll as an SME-affine example of new IPR-related
business models
The term “patent troll” basically describes a patent owner, often a SME, that
enforces patent rights against accused infringers, but does not actually
produce or supply services based on the patents in question. Though
definitions of the terms vary, a key constituting factor seems to be especially
that the trolls are in a position to negotiate licensing fees which are grossly
out of alignment with their contribution to the alleged infringer’s product or
service.
Being a patent troll is actually not unlawful as such. Proponents of patent
trolls underline that such companies increase the liquidity of IP by providing
a ready market for patents which the respective inventors cannot exploit or
commercialize. Furthermore, patent trolls are said to facilitate legal access to
IP by pooling (licensing, aggregating) patents governing a certain technology
from different origins/inventors. Finally, a positive influence on innovation is
ascertained as the troll’s activities are said to provide incentives for the
making, and public disclosure, of new inventions.
By contrast, critics point to the increased costs for manufacturers that need
to be taken account of as a precautionary measure, due to the possibility of
having to pay royalties for IP not owned. They also point to higher costs for
product developers, because patent databases have to be monitored more
closely. All in all, patent troll SMEs can be highly successful on their own and
even important because of market-functioning considerations, but they are in
turn also a potential threat to other companies – be it SMEs or large
enterprises.
The implications for SMEs seem to be threefold:
� SMEs should be at the last aware of the IPR system. Even if they don’t
use formal IPR, it is still advisable that they monitor the IPR environment of the
business regularly. This is especially true for SMEs operating in High-Tech
sectors, but even for industries where patents do not yet play a role it could
prove helpful to stay alert – given the tendency that the borders between
traditional industries get increasingly blurred and the tendency that over time
more and more types of innovations tend to become subject to some type of
IPR regime.
� SMEs should adopt a strategy on IPR and integrate it into overall
(innovation) management. SMEs should be, as a pre-requisite, able to
assess the value of their IP. This would imply that they also are able to consider
how to put IP to its best use. The key issue with an IPR strategy is that it may
not (only) be a protection strategy, but it can also constitute a new way of
doing business.
� There should be by no means a predisposition towards patenting.
Patenting is only one of the tools available for using IP (rather than only
protecting IP), and informal tools, such as trade secrets or defensive publishing
have a rightful place within the current IPR framework. Patents may be the
primary choice on many or perhaps even most occasions – but to patent
without proper risk assessment and with no means to litigate could prove
disastrous. Similarly, patenting without a proper well-defined goal could lead
to money being wasted.
41
SMEs IN THE IPR WORLD