At Trend Micro we’ve been protecting businesses, consumers and governments from cyber threats for more than 27 years now. Our success over this time has been built on our passion to make the world safer for the digital exchange of information, and it all starts with the efforts of our highly innovative research and development teams around the world. After all, they are responsible for developing the ground-breaking products that help keep our customers safe.
Like most companies that invest millions of dollars in research and development, we must rely on our intellectual property (IP) rights – including software patents in rare cases – to deter unscrupulous would-be competitors from simply hijacking our hard earned work then using it to compete against us. Unfortunately, for every real legitimate product company that brings a patent suit for this reason, there are many more suits brought by patent speculator entities (otherwise known as “trolls,” “NPEs” or “PAEs”) that produce nothing at all, and instead derive their revenue from lawsuits (or the threat thereof). These are typically based on overbroad readings of vaguely worded patents with little apparent relevance to the businesses under attack.
These suits often involve older patents in which the original inventors have no remaining stake, which were also purchased quite cheaply by the speculators because of their low apparent value or relevance to the industry. This sort of litigation doesn’t help the inventors as the speculators often argue. It instead imposes a significant burden on the real innovators who invest significant time, money and expertise in developing an innovative product only to face demands for substantial royalties from mysterious entities that made no such investment and never could have conceived of, let alone developed, the product in question.
That’s why we’re delighted that the US Court of Appeals last week confirmed the invalidity of the patents asserted against Trend Micro by Intellectual Ventures (IV). It’s a victory for us and for all companies that invest in innovation but are increasingly challenged by speculators looking to generate profits for themselves through opportunistic patent claims.
A fair ruling
IV describes itself as a business that develops and licenses IP. In reality what this means is that it has spent the past decade and a half buying up tens of thousands of patents – funded by billions in investor cash. Those patents are then leveraged in an attempt to generate potentially billions more in licensing revenues, using litigation to coerce reluctant licensees. In our case, it was apparent from the beginning that the patents that IV asserted against Trend Micro were likely invalid and we did not believe that our products infringed them in any event, so we held firm and litigated the case for six years to this successful conclusion.
The recent ruling by the US Court of Appeals for the Federal Circuit affirms a previous U.S. District Court of Delaware ruling that annulled claims made by IV that Trend Micro infringed various claims to US Patent Nos. 6,460,050 (’050) and 6,073,142 (’142). The former relates to the generation of a digital identifier to assist email filtering, while the latter describes an “automated post office,” which enables the analysis and filtering of vetted emails recognized to be unsafe. Even before the court ruling that these patents were invalid, IV dropped claims to two other patents because it likely believed them to not be infringed or invalid. The patents were deemed invalid because the concepts they describe are simply too vague and unoriginal to be patentable, regardless of whether they are expressed in software. This line of reasoning leaves plenty of room for original and specific software innovations to be protected, while giving real product companies a bit more breathing room to build the products that the market demands.
Innovation under threat
The increasingly heavy burden imposed on real businesses by aggressive patent speculators is a peculiarly American problem. And that’s largely attributable to our otherwise laudable jury system. In this country we persist in forcing a jury of everyday folk to reach decisions in incredibly complex intellectual property disputes. This is not to denigrate the jury system per se – it still has tremendous value in a wide variety of cases. It’s just not a fit when we’re talking about highly complex IP disputes that only experts can really grasp. Anyone who has sat through a mock patent trial with duelling technical and economic experts, and then watched a mock jury taken from the local pool deliberate about issues of patent claims, technology, infringement and damages can immediately understand the problem. Few, if any, can understand the real issues in the case, so much of the outcome turns on credibility, likability, and comprehensibility of counsel, with a lot of room for error and group dynamics to factor in, as well. In that environment, the weakest cases might still result in a very positive outcome for the plaintiff if other factors are in their favor.
The truth is that these patent speculators – and there are probably more of them than you think operating in the U.S. today – are overburdening our court system with their overreaching patent claims in the hope that the winds of chance will keep blowing their way often enough to make it worth their efforts. It’s a judicial system already stretched to the limit and struggling to provide a quality service to the taxpayer, and obviously was never intended to serve as a platform for this dubious industry.
At Trend Micro, we invest millions of dollars every year in R&D. It’s a vital part of what we do – to stay ahead of the competition and, more importantly, the bad guys trying to attack our customers. That investment in IP should be protected by patent laws – but there’s a balance to be had. If we allow overbroad patents to be used by speculators that have only one goal in mind – to monetize them through legal action – then we’ve gone too far.
Hopefully the ruling last week will help deter this kind of practice in the United States and help protect real businesses like Trend Micro that are focused on innovating their way to success.