Some believe the US patent system is being used to curb innovation, handicap inventors and drain corporate resources in lengthy litigation that cripples competition rather than being used to drive innovation. Many US legislators believe that patent ‘trolls,’ the non-practicing entities that purchase patents and pursue infringement litigation, threaten America’s economy and ability to innovate. In response to the patent trolls, Representative Bob Goodlatte (R-VA), along with 27 cosponsors, introduced the anti-troll legislation, H.R. 9 – Innovation Act in February, 2015.
However, the US Congress is not the only entity that wishes to solve the problems within the patent system. On April 27, 2015, Google announced the ‘Patent Purchase Promotion,’ an experimental marketplace inviting owners to directly sell their patents. Google stated that bad things such as lawsuits and wasted efforts happen when smaller participants sometimes end up working with patent trolls. Therefore, the Patent Purchase Promotion is Google’s attempt to “remove friction from the patent market” and “help improve the patent landscape and make the patent system work better for everyone.” The Patent Opportunity Submission Portal opened from May 8 – 22, 2015 for patent holders to submit information to Google about the patents they wanted to sell and at what price.
While emphasizing that it is an experimental program, Google said the program is a new model for sharing intellectual property across a variety of technology areas and that the objective is to promote innovation. However, many wonder whether the program will truly foster innovation or whether it will simply permit Google to use the patents in the same way that the patent trolls do. Google has not provided any insight or guidance on its anticipated usage for these patents, so it is unclear how Google will promote innovation through this new program.
Based on Google’s demonstrated record of innovation for the past 16 years, the likelihood is high for the Patent Purchase Promotion to promote innovation. Google began only with one product, Google Search, but today the company touches billions of lives daily with hundreds of its innovative solutions. The self-driving car is a great example of such innovation. Rather than becoming a car company, Google came up with the self-driving car to address the problem of over 1,000,000 fatal car accidents each year due to human error. Google’s long-term plan to become an artificial-intelligence company could provide the opportunity to leverage some of the patents.
The program could also benefit smaller companies and independent inventors who do not have money or a patent broker to sell their patents. This program would reduce the transaction costs, but the concern is that the sellers may not receive top dollars for their patents. Given the short period of time for submission and decision, the patent owners do not have time to gauge their patents’ potential value through competitive bids. The program structure does not provide any opportunity to negotiate on the price. Although the check box options for the price that patent owners want has an option for ‘Other’ to list prices outside of the options, the listed options are quite low. The starting point is $10K and goes up to $75K. The $10K to $25K price generally does not even cover the cost of applying for the patent.
By June 26, 2015, Google will contact patent submitters if it wants to purchase their patents. To date, Google has not released any information on the number of submissions. If Google were to purchase a large number of the submitted patents, only time will tell whether the portfolio of patents in the hands of a dominant company like Google would help foster innovation or simply create another patent troll.