July 20, 2009 11:20
In 1998 an obscure American company called TechSearch filed a patent infringement suit against computer chip giant Intel. TechSearch claimed in the lawsuit that its patented chip technology known as "reduced instruction set computer" had been used without authorization by Intel to produce its Pentium Pro microprocessor. TechSearch had bought the technology two years earlier from a financially-troubled company called International Meta Systems. TechSearch demanded that Intel pay three percent of its annual chip sales as royalties or a one-time fee of US$500 million.
Intel's attorney Peter Detkin criticized TechSearch as being a "patent thief" which tries to rob companies of their hard-earned money. When TechSearch sued him for defamation, Detkin retracted that epithet and instead called TechSearch a "patent troll." Since then, the term has been adopted for all such companies that make no products but rather seek to profit from patent disputes.
There are hundreds of these so-called "patent pirates." They are mostly American companies, which have a lot of knowledge about intellectual property rights. Perhaps best representative of these is Intellectual Ventures (IV), founded by none other than Detkin, the creator of the term "patent troll." Armed with ample funds drawn from shareholders such as Intel, Microsoft and Cisco Systems, IV, by mainly targeting bankrupt companies, has acquired around 20,000 patents and earns astronomical sums each year through those properties.
Lawsuits filed by patent trolls can be fatal. In 2003, Canada's Research In Motion (RIM), famous for its BlackBerry smartphones, lost a lawsuit filed by a firm called NTP and was ordered by a court to stop selling the devices in the U.S. RIM settled for $600 million, which almost drove the company to bankruptcy. Kosdaq-listed Seoul Semiconductor is currently mired in a patent infringement lawsuit filed by Japanese LED manufacturer Nichia. As a result, Seoul Semiconductor's share prices have plummeted while the company has had to spend W60 billion (US$1=W1,260) in legal fees.
Patent hunters comb through universities and research centers around the world and buy up the rights to different technologies from the gestation stage. Korea is among their prey. Seoul National University has signed patent sharing deals involving 114 of its technologies, while KAIST, Yonsei and Korea universities are said to have formed such pacts involving more than 260 types of technologies. Patent hunters file international patents for their technologies, which is a process that can cost hundreds of millions of won. In return, patent hunters take half the profits generated by their technologies. Experts say that once the Korea-U.S. free trade agreement comes into effect, American patent trolls will step up their lawsuits against Korean companies. We need to come up with measures to protect our national assets from being seized by these trolls.
By Chosun Ilbo columnist Lee June
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