Steven Levy has always been a great writer covering the tech industry, but his article on "the patent problem" for Wired is a must read
, even if you're familiar with these stories. He does a great job illustrating just how screwed up the patent system is, focusing on a few key trolls, and pulling in some important information and data to support the anecdotal claims. Much of the story is about Mitchell Medina, who took a ridiculous patent that came from an idea about scanning medical documents into electronic format, and turned it into a belief that he held a patent on which practically every website infringed. You really should read the whole thing, but a few tidbits: first off, Medina and the two other people named on the patent never actually could build a working product.
Although the three had never tried to build a working model before they were granted the patent, they now set out to create a business based on the idea. Elias made a prototype, albeit one that Medina would later admit “didn’t work particularly well.” He claimed to have visited “every big player” they could think of in the computer industry to see if they would like to license his patent and build a commercial version themselves. He also claimed that he had attempted to raise venture capital to create a company of his own. But no corporation or VC would put money into it. According to Medina, they were particularly annoyed when, during a meeting, an executive from IBM’s Lotus division rudely dismissed the idea of paying to use the concept. “He acted as if these kinds of patents were somehow laughable,” Lech says.
Eventually Medina cut out the guy who actually came up with the idea of scanning documents, and set himself up as a patent troll. He sued over 100 companies -- and realized that as long as the "license" he asked for was cheaper than fighting him in court, everyone would pay up, and everyone did... except one company, Flagstar Bancorp. Levy goes through details of the seven years spent fighting the case, including two separate district court judges who absolutely slammed the lawsuit (one said the case had "indicia of extortion") and told Medina he had to pay up for filing such a ridiculous lawsuit (in between all that, the appeals court, ridiculously, disagreed and sent it back). Eventually the appeals court agreed with the lower court, and the Supreme Court refused to hear the case, but it was a massive waste of time and energy. Amazingly, the guy who demanded payment from all those companies (and got it from most), for doing absolutely nothing to actually help with the development of e-commerce, claims he's a "victim."
Mitchell Medina, who has sued more than 100 companies for infringing his patents, sees himself as a victim. “When Jobs and Wozniak or Hewlett and Packard start in a garage, they’re heroes and captains of industry,” he says. “If you apply for a patent first, you’re a troll.” Via email from Africa, he continues to attack the Flagstar decision, claiming that Martinez ignored key evidence and ruled incorrectly. (Medina felt it best not to talk by phone, because, as he put it, “I tend to speak my mind, and it would be unwise for me to do so without the self-censorship of writing.”)
“We did nothing improper,” he writes. “The judges in this case comported themselves like spectators in a Roman coliseum who wanted to see plenty of blood on the floor in the form of litigant’s money before they considered the show worthy of their interest.”
Really, this is just touching the surface. Even if you're familiar with the Flagstar case (which we wrote about
last year when the final CAFC ruling came down), reading Levy's detailed piece is worth it. The problem, of course, is that this kind of thing is happening over and over and over again -- nearly all of it taking money from productive purposes of building companies and products, and sending it to lawyers. It's a massive drain on the economy and it's about time we fixed it.