PublishedJune 10, 2014

The Scorpion and the Frog, or, If Intellectual Ventures Is For Something You Should Oppose It

Comprehensive patent reform has stalled in the Senate. You might think that would be enough for the patent trolls.

But no, they’re still trying to kill real patent reform for good. How? By pushing for legislation in the House and the Senate that addresses the contents of demand letters without litigation reforms or patent quality improvements.

Vague demand letters from patent trolls are a huge problem. Any legislation intended to deal with patent trolls has to address them.

Unfortunately, if we try to fix the demand letter problem in isolation, there is a risk that we’ll actually make things worse. Without comprehensive reform that changes pleading standards, a lawsuit can be as vague as ever, so patent trolls have an easy way to work around demand letter rules: simply file a lawsuit and send the complaint instead of a demand letter.

In other words, we’d be encouraging even more patent troll lawsuits. (If you doubt this would happen, remember the patent troll who filed 87 lawsuits in one day just to avoid the heightened pleading standards that were in the Senate bill.)

The fact is that there is no simple solution to the patent troll problem. To be effective in stifling the patent troll business model, any bill has to include tools to level the litigation playing field. Otherwise, trolls still have enormous leverage to extort quick settlements.

There’s another good reason to be cautious of bills that only address demand letters.

Intellectual Ventures, for one, has been promoting this as “targeted legislation,” and that alone should be raising red flags. Intellectual Ventures says it’s just offering a compromise “that stops the spread of abusive patent demand letters and discourages frivolous lawsuits against small businesses – without unnecessarily harming all patent holders…”

That does sound reasonable.

But I’m reminded of a fable that goes something like this:

A frog swimming in the river meets a scorpion on the bank. The scorpion calls out to the frog, “Can you please carry me to the other side of the river? I’ll be in your debt.”

The frog replies, “I know you. You’re a scorpion. You’re going to sting me and I’ll die.”

“Why would I sting you? If I do, you’ll sink and I’ll drown.”

The frog thinks about this. “The scorpion’s reasoning makes sense,” he thought. “Why would he sting me and thus kill himself? And it would be nice to have the scorpion as an ally.”

And so the frog agreed to carry the scorpion across the river. The scorpion climbed on the frog’s back and the frog began swimming to the other side.

When the two were about halfway across, the scorpion whipped his tail and jabbed its stinger into the frog’s back.

As he felt his body begin to go numb, the frog cried out, “What have you done? Why would you kill us both?”

Just before the frog lost consciousness, he heard the reply.

“I’m a scorpion. What did you expect me to do?”

Intellectual Ventures is a patent troll, and it isn’t changing any more than a scorpion can stop being a scorpion. If you think you can work with a patent troll on patent reform, be prepared to get stung in the back.

Abusive, vague demand letters are a real problem, but we need comprehensive reform to deal with patent trolls. Let’s not settle for less than a package that addresses demand letters and litigation abuse and patent quality.

And for Pete’s sake, don’t trust a scorpion asking for a lift.

Matt Levy

Previously, Matt was patent counsel at the Computer & Communications Industry Association

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