Matthew Bye, the Senior Competition Counsel at Google, has reported that Google has submitted comments with BlackBerry, EarthLink, and Red Hat to the Federal Trade Commission (FTC) and the Department of Justice (DOJ) about the growing harm that is caused by “patent trolls.” Google was encouraged by the recent attention on the problems that patent trolls cause, which is estimated to be around $30 billion per year according to a Boston University law study. Patent trolls hurt consumers and they stifle innovation.
Many companies are even transferring their patents to patent trolls and are providing incentives to assert those patents against their competitors. The transfers can significantly raise the costs for rivals. This trends has been coined as “patent privateering.” Patent privateering is when a company sells parents to trolls with the goal of setting up “asymmetric warfare” against competitors. Since patent trolls do not actually build anything themselves, they cannot be countersued.
The company that transferred the patents to the patent troll shields themselves from litigation and sets up agreements to get a cut from the money that is extracted from the lawsuits and licenses. Since privateering allows a company to split up their patent portfolio into smaller sub-portfolios that are “stacked” on each other, the number of entities that a firm must negotiate with increases and causes the licensing costs to multiply. This causes the costs for the rival to go up, which ends up driving prices up for consumers.
Google is interested in setting up a “patent peace” process with some of their rivals through good-faith negotiation and cross-licensing. Google has asked companies to work with them to develop cooperative licensing agreements to curb privateering. Hopefully the FTC and DOJ takes the comments from Google, BlackBerry, EarthLink, and Red Hat very seriously.