Good Magazine Goes Bad: The Ethics of Patent Trolling

In its current issue, GOOD magazine has a lengthy profile of Erich Spangenberg, one of the most successful "patent trolls."

Good, founded by Ben Goldhirsh to be a magazine for people who "give a damn," missed a great opportunity to address the ethical quandaries at the heart of large-scale patent assertion. While I write for a primarily a legal and business audience, I think that the kind of people who read Good would want to know how widespread patent lawsuits affect them—as consumers and as citizens. It’s an important issue, given that the purpose for patents under U.S. law is to "promote the progress" of science. 

It's one thing to say "patent trolls" aren't such bad guys after all and fill a needed niche in the economy. But Good goes so far as to compare Erich Spangenberg to Robin Hood. Hm... wouldn't we need some poor people to come into the picture after the "rob from the rich" part?

The reporter who wrote Good’s Spangenberg story really missed the point. First, she made the common mistake of mostly ignoring the most important public record of how patents are actually used—federal court litigation. It’s easy, but misleading, to go on and on about the "intellectual property business" when you conveniently ignore what's really happening—patent-holders going to court to enforce monopoly rights. 

In the story, she allows Spangenberg to dramatically understate his patent caseload by saying he has sued "a bunch" of companies and has "eight or nine" cases going at once. I haven't tallied the number of defendants he’s targeted, but it's certainly in the mid-hundreds. PatentFreedom has Plutus IP, one of Spangenberg’s holding companies, with 65 lawsuits to its name (and some of those suits are sprawling, multi-defendant affairs.)

I know the writer was aware of my blog, and TPA posts alone could have provided her with plenty of leads to the litigation record, including the Wisconsin opinion where Spangenberg was found shuffling his patents around to repeatedly sue the same defendants, and where a judge found Spangenberg had engaged in witness tampering (that case is noted in the comments of the Good story, which are universally negative.)

The piece refers to patent infringement suits filed by Spangenberg as allegations of "idea stealing." But I'm not aware of a single instance where Spangenberg alleges any patented invention of his was actually copied or "stolen." His lawsuits, like most patent lawsuits, don't accuse anyone of copying anything. Rather, he makes straightforward allegations that others are trespassing on his idea-space.

(Some folks, like patent lawyer Lawrence Ebert, have criticized the fact that I continue to mention the presence or lack of copying allegations. Those criticisms are out of touch with reality. Copying and "stealing" are terms used constantly in discussions of patent disputes, and that's why I write about that.)

The nature of the claimed invention in these cases also raises serious questions about online rights. The Spangenberg companies, by suing hundreds of websites, have claimed a proprietary right over e-commerce itself. I'm not making that judgment based on an analysis of his patents—I'm making it based on the accusations in the lawsuits, filed against hundreds of companies that don't have anything apparent in common other than the fact that they sell stuff online. And while Spangenberg targets only big corporations, many of his imitators have no such scruples.

Yes, Spangenberg’s patents were duly issued by the U.S. Patent Office. But patents are routinely issued that describe advances that are either miniscule or simply not advances at all, as any serious patent practitioner can tell you.

What Good failed to grasp—to the point that it actually makes that amazing comparison to Robin Hood—is that his campaign amounts to an Internet tax, achieved through litigation. That's an arguable point, but it's an important one and worth debating. This story should have at least raised that issue (instead of telling us what brand of vodka Spangenberg likes best). Considering the $72 million that one Spangenberg company had in the bank as of 2007, the dozens of settlements since then, and the still unpaid $34 million plus interest that might be on the way from Hyundai, the Spangenberg patent tax could easily be $1 for every one of the United States' 138 million taxpayers.

Now, even if this "e-commerce tax" is three times that amount, it's still a relatively low one. It's hardly going to bring innovation to grinding halt.

But we're paying it, to Spangenberg and many others like him, many of them patent industry insiders, some of them wielding their own "inventions" that would not be recognizable as such to most people.

Why are we paying it? Why do the beneficiaries deserve it? Does it aid innovation and "promote the progress?" Is it fair? And why are the most important parts of these market-moving disputes—clear descriptions of the technology at issue, testimony about how these great innovations were created—largely kept from public view?

Good doesn’t bother to address these questions. Shoddy work from folks who say they "give a damn."

Photo: Flickr / zawtowers

Comments

[Doug Park]

Joe,
I agree that it is non-sensical to liken patent trolls to Robin Hood. I linked to your post on my blog, and also wrote about Economically Rationally Patent Trolls on my blog at http://bit.ly/7JeuF. Thanks for your posts.