Are there any definitions for ‘non-practicing entity’ or ‘patent troll’ that doesn’t also apply to ARM Holdings plc, (designers of the ARM processors used in many mobile computing devices)?
They develop the instruction set and architecture, but leave the actual production up to their licensees.
Mobile computing as we know it owes a great deal to ARM processors, thanks to their combination of low cost and power-consumption in a tiny package. They’re not resting on their laurels, either; design updates are released often enough to compete in (if not dominate) the target market.
For those unfamiliar with their work (but familiar with NPE concepts in general) here’s the wikipedia page (which provided most of hte information I included here): wikipedia.org/wiki/ARM_architecture
I don’t see how this is any different from software companies like Microsoft that write software but leave the actual construction of the computers that run the software to other companies.
My understanding is that what ARM provides is a lot more detailed than what a patent troll provides – instruction sets, chip layouts, &c. I.e. one can take what one licenses from ARM and actually make a specific chip, as opposed to something vague like, “have an online shopping cart”, that requires a great deal of additional work to make specific. It is insanely easy to avoid making an ARM chip by accident while trying to make some other kind of chip, while patent trolls rely on the fact that companies doing something in the most natural way will infringe on their patent.
Calling ARM a patent troll would be like calling an architecture firm a patent troll because they draw pictures of buildings but rely on other companies to actually build the buildings.
(And I’m pretty sure their IP is mostly protected by copyright, rather than patent).
A ‘non practising entity’ means a holding company that doesn’t actually do any work in the area the patent is held. Like a bunch of lawyers owning patents they purchased from the inventors, and own for the specific purpose of enforcing to make money.
ARM is most certainly a practising company. It actively works in the area, performs new research, and is responsible for the inventions it holds patents on. The fab-less chip design company is a very common business, and companies that design IP-blocks (ie working sub-component designs that can be placed into designs) a critical part of the eco-system. Probably none more important than ARM.
ARM’s not doing something that lots of other microprocessor/microchip companies don’t already do. Fabless semiconductor companies don’t own their own fabs; they just do the design, and then farm out the manufacturing to various third-party fabs.
Qualcomm does this, Broadcom, Marvell, MediaTek, AMD and NVIDIA all do this as well. What ARM’s doing is one step different- rather than designing and marketing the semiconductor devices, and letting a third-party actually produce them, they’re designing them, and then letting the rest of it be handled by a third party. Not much different overall.
Being a patent troll would involve them having the enforcement of patents and patent infringements or the threat thereof as a lever for licensing as a serious revenue stream or way of doing business. Patent trolls are basically the equivalent of personal injury fraud.
I’m not familiar with ARM Holdings or their apparently good work in processing so I can’t really comment on them specifically but I’ll try to distinguish patent trolls from other patent holders more generally. In the U.S., a person can get a patent if he or she "invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” So a patent must be “new” (i.e., “novel”) and “useful.” The government grants patents to encourage inventors to share their knowledge with the world and allow others to learn from their expertise. This means that an inventor must describe their invention thoroughly in the patent application so others can build on their discovery. In exchange for sharing this information with the world, the government grants the inventor exclusive use of the patent for a fixed time. Patent holders can use their exclusive patent term to either build things that rely on the patent as a monopolist or they can choose to license their patent to another person or people in exchange for a royalty. Patent holders can also sell their patent to someone else or sue people who infringe on their patents.
“Patent troll” is just colloquial term for people who sue or threaten to sue on the basis of low-quality or worthless patents. It doesn’t have any legal meaning but patent practitioners know a patent troll when they see one. “Non-practicing entity” is the euphemism that patent trolls would prefer to be called.
I’ll say that what differentiates patent trolls from other good patent holders is that patent trolls sue to enforce low quality or worthless patents. These can be either patents that the troll bought from other inventors or the troll’s own dubious inventions. Since patent litigation is expensive, patent trolls often pick on smaller companies who can’t defend a lawsuit and look to settle for nuisance value.
Patent trolls can be distinguished from other patent holders because they have to rely on lawsuits or the threat of lawsuits to get any revenue from their patents. They can’t license their patents to good-faith users either because their patent is on something so obvious that no one else would have looked for a prior art patent before they started doing the same thing. For example, the Supreme Court said that the the general idea of managing financial risk with a computer is too obvious to be worth a patent. In fact, you can’t just patent the idea of doing any old thing “with a computer” and start collecting your patent royalties.
Alternatively, the patent troll’s patent might be so vague or over-broad that no other user could have found it when they searched for prior art or could have imagined that the troll’s patent would have applied to their innovation. One example was a patent on “the inventive digital memory system which was configured and designed so as to permit for the first time, inter alia, the secure and controlled receipt, storage, retrieval, use and transmission of digital data that offered a range of functionality which included, but was not limited to, digital rights management (DRM) and payment facilities.” Who can tell what kind of computer system that applies to? That could be stretched to apply to almost anything.
I presume that ARM does research in novel areas and actually advances the state of the art in their field. I also assume that people choose to license ARM’s patents because they are innovative and useful.
Yeah, the key distinction is not that the patentor has to be directly involved in production or manufacture, but that they’ve designed or developed something that wouldn’t have been practical without their effort. If other people were doing work on essentially the same kind of chip before ARM showed up with the patents, and then ARM said “No, you can’t build those chips without paying us, because we have the patent”, then they’d be a patent troll. But instead, (AIUI,) they designed a new kind of chip, made a case that “hey, these chips are better than the ones you’re making now, here’s why, license our patent, you can build our design of chips instead and make a whole bunch of money.”
ARM’s predecessors didn’t invent the RISC chip, but they arguably perfected it and used a clever licensing model to keep it alive when there weren’t nearly as many applications for it as there are today.
Well, in a manner of speaking. The original Acorn RISC design is now 30 years old. In this thread people explained to me what ARM is doing today that is still adding value.
they license out their IP on a FRAND (fair, reasonable, and non-discriminatory) basis, and
(most importantly) I haven’t heard anything about them suing companies for infringing purchased patents.
also, they give licensees options on how they want to use ARM’s IP. you can buy the design of a complete system-on-chip (SoC) which you then go find someone to fab chips for you; you can license an ARM core then build your own SoC around it (then have it fabbed,) or you can do what companies like Apple and Qualcomm do and get an architecture license which lets you design your own ARM-compatible CPU/SoC from the ground up.
Is the patent system even involved? I thought that the kind of chip design ARM does is non-patentable and anyone trying to use their IP without licensing it would be breaking copyright, not infringing on a patent.
If a company purchased ARM’s IP with the express purpose of licensing it while it was still under patent protection, but not developing it further, would they be a patent troll?
Can you request a motion for summary judgement in a patent case on the grounds that the patent is overbroad and shouldn’t have been granted in the first place?
If so, would it be particularly difficult to get such a motion granted?
Is the role of the court in this to “know it when it sees it”, and if so, possibly label the plaintiff as a vexatious litigator?
sweeteviljesus, you could move for summary judgment but it would almost certainly be denied. Generally, summary judgment can be granted only when there are no material facts in dispute between the parties. It allows the judge to say, basically, “You both agree about all the facts in this case and I know everything I need to know. With these facts, I can only conclude…” In any patent case, the parties will disagree about whether the invention is useful. Does the patent even describe something that works (so no perpetual motion machines)? Is it non-obvious (no patents on “using a computer” to balance a checkbook)? A patent also has a scope. The parties will disagree on whether the purported infringer is actually doing something covered by the patent. It is very unlikely that the parties won’t have some facts still in dispute even at the close of the trial. A fact finder (judge or jury as appropriate) will sort that out.
Vexatious litigation is something else. It’s usually a plaintiff repeatedly suing someone over the same issue even though the plaintiff keeps losing the case because it’s frivolous. It’s unlikely a patent troll would be deemed a vexatious litigator unless it had abused the legal process, such as by repeatedly suing Apple to enforce a patent that had been declared invalid. Patent trolls don’t make money by repeatedly losing cases or by investing in litigation they know they are going to lose.
In the sense that I’ve seen them used, “troll” and “NPE” are pretty close to synonyms, and neither ARM nor the hypothetical company that bought their IP would qualify. A classic troll/NPE might develop, does own, and seeks to license patents, and basically nothing else, maybe with some token “real business” generating negligibly small revenue by comparison. ARM, like many semiconductor companies, applies for patents, but their primary business is to write RTL for processor cores, and deliver that–either as HDL for synthesis, or as a hard macro already placed for a particular semiconductor process–to customers who integrate that core in some larger ASIC. It happens that their customers place the TSMC order and not ARM (except for test chips), but that doesn’t materially change ARM’s technical work.
At least historically, patents last more time than commercially valuable processor designs take to become obsolete. So without any new development, ARM’s patent license revenue would probably ramp down slower than their complete-design license revenue. It’s not uncommon for a once-proud company to die as a patent troll, once there’s nothing else of value left. ARM would have a long way to fall, though.
At least in the US, copyright does not apply to a finished IC design (i.e., the particular layout of silicon and metal traces). Instead, a special type of IP called a “mask work” serves a similar purpose. Copyright does apply to many source files used to generate that mask work. ARM’s IP is a mixture of patents, copyrights, mask works, and contractually protected trade secrets, not that different (except for the mask works) from that of a company selling a software library.
Possible troll tests:
Before you served them with the lawsuit, were your “customers” aware that you existed? Troll no, ARM probably yes.
Are you at risk of patent litigation yourself? An NPE has no real products of its own, so it can attack large companies with no risk of counterattack, despite its targets’ massive patent portfolios. ARM doesn’t enjoy that advantage.
If your patents all got found to be invalid, by what fraction would the value of your company decline? A classic troll becomes almost worthless. ARM declines–off-brand RISC processors sell at a discount now, and ARM clones with the same interfaces and toolchains would narrow that gap–but it doesn’t go to zero.
Of course, none of those tests are complete; any drug company would fail the third test, for example. There’s a lot more to being a troll/NPE than just not physically making stuff, though.
All of these tests are useful and capture some important points, but there’s one basic question which cuts to the heart of the matter:
Does the company add value to the economy beyond employing lawyers?
ARM does. ARM creates new processor cores and software for those cores. Those cores are new, useful, and innovative, and would not exist but for ARM spending R&D money to pay engineers to create them.
Trolls/NPEs do not. They are a bunch of lawyers and a patent (or, less commonly, copyright) warchest. Nothing they do advances the state of the art, not even in law. More than that, they exert a drag on the economy by parasitizing on companies that actually do productive work. They’re an economic malaria, creating their very own sickle-cell anemia in the form of companies being unwilling to enter some fields seen as patent troll-infested waters.
I would tend to say “no” for the patent troll question above. Neither would ARM suddenly become a patent troll if they suddenly stopped developing their patents further; that’s not a requirement.
The development they’ve done in the past has built up an asset (the intellectual property) with future value. They’re entitled to a return on their investment when others use that asset. And if they choose, they can sell off the asset to another company, who can then be entitled to the ROI of their purchase.
The OP has a point in that there is an ongoing dispute regarding whether an objective definition of “patent troll” can be created that isn’t overbroad.
