Patent racketeering

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Let's imagine that we are watching the program "In the world of animals." In the usual kind voice of Nikolai Drozdov, they tell us: “Patent trolls are very cunning and voracious animals. Their distribution area is extremely wide, but the largest population lives on the North American continent, in the Silicon Valley region of California. This is not surprising - they keep close to food sources. Patent trolls feed on inventions. If the troll senses an invention (and the patent troll has a wonderful scent) - sometimes already large, and more often still small, but promising - he pounces on him, grabs it and drags him into his lair. Often, trolls drive whole herds of inventions. Their population has grown tremendously lately. Thanks to the abundance of food, they actively reproduce, become large, even more voracious and dangerous. Patent trolls are protected by law and are not afraid of humans. Increasingly, they are raiding farms where they grow inventions, and in this way they cause great damage to the economy."

How big - several Boston University staff tried to count. It turned out that over the past 20 years, the damage from the actions of companies that are called "patent trolls" amounted to a colossal amount - about $ 500 billion, almost two annual budgets of Russia. In recent years, trolls' appetites have been growing, and since 2006, the world economy has been losing about $ 83 billion annually. In 2010, trolls filed 2,600 lawsuits against American companies alone, which is 5 times more than in 2004.

The role of patent trolls in the innovation ecosystem has been debated for a long time, but nevertheless, the opinion that they are extremely harmful is almost universal. They themselves usually do not produce anything and earn money from what some would call extortion. By buying up patent rights from small firms or through bankruptcy auctions, they later sue companies that they believe are using the technology they own. Sometimes they themselves "reinvent the wheel", patent and go to court. Often they file claims against multiple organizations at once. One fat troll named Gooseberry Natural Resources recently claimed to own a patent for an Internet news site. And he filed lawsuits against many of the most popular information portals. Among the victims of this predator are Techcrunch and Yahoo. No less fat troll GeoTag, having secured this patent, sued, it seems, everyone - from the Yellow Pages company, which gave the name to the directories of the same name, to Starbucks and Pizza Hut.

Almost all of us have to feed the patent trolls. If you did not see them even in "Animal World" and did not even suspect about their existence, this does not exempt you from tribute. After all, manufacturing companies have to pay royalties and compensation to trolls - and then, of course, all this is included in the final cost of the product that we buy. Let's say Apple at the end of last year finally lost in court to another troll - Mirror Worlds - more than $ 600 million. The dispute concerned the technologies used in the iPhone, iPod, Mac computers. Accordingly, each owner of a gadget from Apple had to contribute to feeding the impudent animal. A similar story is with the i4i troll, which sued Microsoft for its office suite. There is a troll for every world famous manufacturer - and more than one. It is clear that manufacturers are also not bastards and sometimes behave predatory, organizing real patent wars. Apple Corporation, for example, also decided to patent everything in the world, and its founder personally developed enormous activity in this direction. But at least they use patents for their intended purpose, and in general, such activity is largely a consequence of trolling by parasites.

Not all the lawsuits of the parasite companies turn out to be successful for them. Rather, on the contrary, they often lose cases. But here, as in the venture business, one successful investment can pay off 100 unsuccessful ones. The patent, acquired for several thousand dollars, will knock hundreds of millions out of major manufacturers. Great business! In recent years, he has brought the trolls tens of billions of dollars. Dozens but not hundreds? Where did the Boston researchers get the $ 500 billion from? They decided that it would be wrong to calculate losses only by the amount of royalties and fines (especially since this information is far from always available). Indeed, in addition to obvious financial problems, trolls provoke organizational problems, complicate the introduction of new technologies … Let's say Microsoft did not agree with the trolls in an amicable way and was forced to "cut" the functionality of its applications under the threat of a ban on their distribution. How do you calculate this influence?

The study authors decided to rely on the market for this. That is, to his reaction after it became known about the results of the trial. Investors, having received information, include new risks and new problems associated with the defeat of the company in court in the share price, and they include the price of unsold products. After examining several thousand cases, isolating the usual background from fluctuations in the stock price and taking only the reaction to the news, the researchers on the change in the capitalization of the victim companies calculated the damage from the trolls. Not the most accurate method, let's face it, but no other has yet been invented.

The huge difference between the amount of money the trolls knocked out of producers and the amount at which the total damage is estimated, according to the authors of the study, is the damage to innovation as a whole. Hundreds of billions of dollars are unrealized ideas, unrealized products, unfinished gadgets. Actually, these are also our losses. And this despite the fact that so far only an insignificant part of patents belonging to parasitic organizations has been used in the courts. For example, the fattest known troll - Intellectual Ventures - owns approximately 15,000 patents (comparable to Motorola's base), which everyone else prefers not to think about, knowing how much the troll will ask for the right to use them. And no one will ever count the losses from the fact that many interesting ideas simply lie dead weight in the den of impudent trolls.

Patent racketeering in Russia. Theft of trademarks and brands

Patent racketeering in Russia has become a common practice, today you can steal and register anything you want - someone else's brand known to the whole world, someone else's name, someone else's design - in order to then sell them to their true, but sluggish owners. Moreover, all this can be done without breaking the law.

Legally

There are more than enough examples of unfair use of someone else's trademark, brand name, logo all over the world, brands have been stolen at all times, but nowhere and never has such activity acquired such a scale as is observed in Russia now.

Our Criminal Code has article No. 147 ("Infringement of invention and patent rights"), which provides for small fines or imprisonment for up to five years, but it is practically never used. The worst thing that can happen to an unscrupulous user of someone else's brand is that after long (within a year or two) legal proceedings and examinations this brand will be taken away from him. The state, in fact, has withdrawn itself from participation in the protection of patent rights, while in Western Europe and the United States, special government bodies are engaged in this.

The story that happened in Russia with an American company is indicative. Interbrand … It was created in 1974 and is engaged in brand consulting - in particular, determines the value of brands. The essence of the method: from the company's value in shares, its book value is deducted (i.e.tangible assets), the remainder is the price of intangible assets, that is, the price of the brand.

But Interbrand is a well-known brand in itself, the company's annual turnover is about $ 100 million, it has offices in 20 countries around the world. And so, in 2000, the Interbrand Rusconsult company appeared in Moscow, calling itself the "daughter" of Interbrand. Among its clients, the firm mentioned Nestle, PricewaterhouseCoopers, British Airways, BMW, etc. areas of use of trademarks.

Meanwhile, the New York headquarters of the Interbrand Group said that they knew nothing about their Moscow "daughter". Nevertheless, Interbrand Rusconsult, registered offshore, received the overseas trademark on a completely legal basis. On the same legal basis, hundreds of well-known brands were once registered in Rospatent without the knowledge of their true owners - here we can mention Akai, Funai, Focus Wickes, Forbes, IKEA (the owners of the last two brands eventually managed to fight off pirates, appealing to "publicity ", - more on this below).

Means of protection

Russian legislation is constantly being reformed. Nevertheless, holes in the legislation that allow successfully dealing with patent racketeering remain. How not to get into a series of protracted lawsuits, can you exclude the very possibility of buying out your own trademark?

Marina Bogdanova, director of the Moscow office of the law firm "Uskov and Partners": "I believe that large firms or brands should fight back through their" well-known "- such a rule is provided for in Article 19 of the Law" On Trademarks. "According to it, well-known marks cannot be used in any of the existing product groups, even if the owner of this mark did not attend to the registration. That is, if the Coca-Cola mark is recognized by Rospatent as well-known, then any private enterprise will not be able to sew panties or sell seeds under this brand under any circumstances - common knowledge applies to all classes of goods. However, the routine examination procedure for registering a trademark is not ideal. An expert may not know about the existence of a large company, or pretend not to know anything about it."

Here is the ground for patent racketeering and corruption - the conclusion is obvious, and this is an objective reality. However, the specialists of Rospatent could not (or did not want to) comment on this conclusion to the Deneg correspondent, having played ordinary bureaucratic football with him. It's a pity.

Marina Bogdanova: "If we compare a patent with a car alarm, then we can recall that an expensive alarm is installed on a Mercedes, and a cheap one on a Zaporozhets. If you have a small company that produces a local product, then, of course, you only need to register a trademark on this product is only in the country where you live, and in one product class. If you are a multinational company, then, of course, the cost of protection against pirates rises sharply - in an amicable way, you need to register a trademark in all countries of the world that are important to you and for all commodity classes. To simplify this whole procedure, there is the so-called Madrid Agreement, signed by the countries of Europe, Russia and the United States, - participation in it allows you to pay for global rights in a centralized manner, without unnecessary red tape."

It is curious that not only companies, but also prominent figures of the glamorous establishment are trying to protect themselves with patents. For example, the singers Alla Pugacheva and Larisa Dolina registered the trademarks Alla Pugacheva, Alla Borisovna and Larisa Dolina in 11 out of 42 product classes. It is clear that they can sing without fear and in the absence of a patent, but such registration will help them protect their rights in the field of, say, the production of toilet paper. The problem here is that in this case Alla Pugacheva will have to organize the issue of this very paper herself - otherwise, in three years, the Alla Borisovna brand can be taken away from her as unused.

Here we can also mention the writer Igor Volgin, who has already made a double for himself, since he did not patent his name and surname in time.

Experts and participants in patent wars are unanimous that Russian patent legislation is far from perfect. However, the prospects for its development are assessed in different ways.

Marina Bogdanova: “The most important problem in the existing patent law, I consider the contradiction between the concepts of“trademark”and“trade name.”For example, Sony is a trade name, and the name Play Station, under which this company produces a game console, is a trademark. So, the law on trade names does not exist at all. Another hole in the current law is that any company can claim any well-known mark if it is not formally recognized as such. Nevertheless, I think that patent wars are gradually coming to naught, since our the legislation is approaching the global one. Experts at Rospatent have become more qualified, they understand who they are dealing with."

Valery Medvedev: "In the USA, some local unincorporated legal entity cannot register for itself, for example, the Ford brand - pirate registrations are excluded there. If our patent system does not fundamentally change, then the principle of" who is the first right. "And, therefore, patent racketeering will not disappear anywhere."

I am sure of the latter Sergey Zuikov, who is negotiating the sale of another well-known brand to its foreign owner - Starbucks: “Starbucks was going to open a business in Russia, but we were ahead of them. The first Starbucks coffee shop is planned to appear in September - but it will have nothing to do with the original Starbucks., am I participating in this project? I would like to declare: yes, I am participating, I registered and sell this trademark!"

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