Patent Hoarding Firms Discover The ITC Loophole
from the that's-not-good-for-anyone dept
We’ve been discussing the ITC loophole, that allows patent holders to get two cracks at charging a company with infringement over the same patent (using different rules) for a while now. Patent holders can sue in court and they can complain to the International Trade Commission, which has the power to issue an injunction, barring the import of any “infringing” products. Even worse, the ITC doesn’t necessarily need to follow the rules set forth by the Supreme Court over what is and what is not infringing. It gets to decide on its own. This has resulted in widespread abuse of the process, with many companies getting to use both processes to beat other companies into submission. Perhaps the one saving grace of the ITC loophole was that it was really only used by patent holders who actually had products on the market — since there’s a requirement that the supposedly infringing products represent a threat to a “domestic industry.” That would (in theory) make it difficult for a company that just hoards patents to make a successful claim that a domestic industry is harmed.
But, of course, you should never underestimate the lawyers who deal with such non-practicing entities. Joe Mullin has the latest on one such attempt by an patent hoarding firm, Saxon, who is using the ITC loophole to go after a bunch of companies, including Nokia, HTC, RIM, Palm and Panasonic. Not surprisingly, on the very same day, it filed a patent infringement lawsuit (in East Texas, of course) against the same companies using the same patent. So, it’s a perfect example of getting two cracks at the same issue. But how is Saxon claiming that a “domestic industry” is at risk to the ITC? From all appearances, it seems to claim that its domestic industry is patent licensing itself. And, the argument goes, allowing the companies listed above to continue importing their mobile phones would hurt that “domestic industry.” Many lawyers think this is a pretty big stretch, and hopefully the ITC agrees. If not, expect to see many more companies that do nothing but hoard patents get an extra high-powered weapon in trying to force companies who actually develop products to pay up.