Would the strategies used against patent trolls be suitable against copyright trolls in the context of copyright protection in Open Source software?
Master Thesis
LL.M Law & Technology
Tilburg Law School
Tilburg University
2019
Student: Supervisor: Yanitsa Stoyanova Mara Paun Arn. 420366 Second Reader:
Srn. 2019164 Martin Husovec
List of Acronyms and Abbreviations
FOSS Free and Open Source Software
IP Intellectual Property
IPR Intellectual Property Right
ISP Internet Service Provider
NPE Non Practicing Entity
OIN Open Invention Network
PAE Patent Assertion Entity
PE Practicing Entity
R&D Research and Development
SEP Standard Essential Patent
2
Table of Contents
I. Introduction ...... 5 1. Background ...... 5 1.1. Patent trolls ...... 5 1.2. Copyright trolls in Open Source Software ...... 6 1.3. For whom is Open Source copyright trolling problematic? ...... 8 1.3.1. The Telecommunications Industry ...... 8 1.3.2. The Open Source Community ...... 9 2. State of the Art in the Literature ...... 11 3. Research question, methodology and outline ...... 12 II. Chapter 1: How different to each other are patent trolls and Open Source copyright trolls? ………………………………………………………………………………………………...14 1. Patents vs. Copyrights ...... 14 2. Strategies for enforcement used by patent trolls and copyright trolls...... 17 2.1. Stay hidden and get infringed ...... 17 2.2. Be opportunistic ...... 18 2.3. Use litigation as a threat but don’t litigate ...... 19 2.4. Obtain Injunctions ...... 20 2.5. Go Forum Shopping ...... 21 3. Chapter Conclusion ...... 21 III. Chapter 2: Which Ex-Ante Strategies used against patent trolls may be suitable against Open Source copyright trolls? ...... 23 1. License compliance ...... 24 1.1. Patent compliance ...... 25 1.2. Open Source Copyright Compliance ...... 26 2. Insurance ...... 29 2.1. Patent Insurance ...... 30 2.2. Open Source Copyright Insurance ...... 32 3. Defense Networks ...... 32 3.1. Patent Defense Networks ...... 32 3.2. Open Source Copyright Defense Networks ...... 34 4. Chapter Conclusion ...... 34 IV. Chapter 3: Which Ex Post Strategies used against Patent Trolls might be suitable against Open Source Copyright Trolls? ...... 36
3 | P a g e
1. Disregard the danger of litigation ...... 36 2. Negotiate and settle ...... 37 3. Stop using the infringing technology ...... 38 4. Litigate ...... 39 4.1. Forum Shopping ...... 39 4.2. Narrow the scope of the IPR ...... 39 4.3. Obtain information ...... 40 4.4. Prove non-infringement ...... 40 5. Chapter Conclusion ...... 41 V. Conclusion ...... 42 VI. Bibliography ...... 44
4
I. Introduction
1. Background
Trolls are known from the legends and fairytales as greedy creatures who hide under bridges, built by someone else, and demand the travelers to pay a fee against the permission to cross on the other side of the river. Usually, they approach their targets unexpectedly when they are least prepared to defend themselves from a troll attack, but at the same time they desperately need to cross the river. If one wants to continue their journey they have to dearly pay to the bloodcurdling bridge guardian. Should the traveler refuse to pay, the troll becomes aggressive and not only precludes the passing of the bridge but also threatens the victim’s well-being or life. Sneaky, dishonest, violent and assertive, relying on threats, taking advantage of people’s weakness and fears, trolls have become a synonym for someone who is fishing for an easy and non-deserved prize by hiding in the dark and attacking its victims by surprise. Trolls also have their habitat in the world of intellectual property [“IP”]. Here trolls find their “bridges” in IP rights [“IPRs”] enforcement and litigation. Trolling has a long history in patent law and for long time it has been more common in patent law than in copyright law. Studies show that the first explosion of patent litigation and respectively patent trolling in the United States dates back to 1850 with an impressive number of patent litigation cases that even override the number of cases filed in recent years.1 Therefore, as patent trolling exists for longer than copyright trolling, it is more researched and there is more clarity around the concept of patent trolls and the associated complications that they bring to technology companies. On the other side, relatively younger concepts and trends in technology development bring new opportunities for the trolls. With the growing popularity of free and open source software [“FOSS”]2 trolls recently found new ways to copyrights too. Thus the nature of the specific licensing terms of FOSS and the specifics of the FOSS enforcement in particular, introduce new challenges for the companies who have to deal with IP trolls.
1.1. Patent trolls Patent trolls are “known as willing, if not eager, litigants, having built a business around patent enforcement”3 and mainly focus their attacks against manufacturing or practicing entities [“PEs”]. However, not all types of patent assertion is trolling. The term “patent troll” is often replaced with “patent assertion entity” [“PAE”] or “non-practicing entity” [“NPE’]. Even though these terms are repeatedly used as synonyms, their meaning is not identical and the difference between PAEs and NPEs is outlined by some scholars whereas there is no alignment what exactly these terms cover.4 “NPE” literary refers to an
1 Christopher Beauchamp and others, ‘The First Patent Litigation Explosion’ [2015] 125 Yale Law Journal 848, 2016; Brooklyn Law School, Legal Studies Paper No. 428 848
5 | P a g e entity that has patents in its portfolio which it does not practice. Having this working definition into account, the behavior of the NPE towards third parties with respect to the owned patents is of no relevance – the only relevant criteria for an entity to be classified as an NPE is to own a patent and not to use it for the purpose of producing own products or providing own services. This is the reason why universities, scientists, researchers or small inventors who do not have the capacity or the willingness to use in practice their patented technology also fall under the strict definition of an NPE. PAEs, on the other side, are entities that, as the name proposes, assert patents. Furthermore, they assert patents for commercial gain. In the most common scenario, PAEs’ business models are based on the obtaining and asserting IPRs whereas the PAEs “genera[te] revenues through licensing fees, royalties and damage awards”.5 It is not a requirement for the PAE to be non-practicing. PEs are also involved in patent assertion because of “defensive, financial or strategic objectives”6 - for example they might assert patents for the purpose to either defend themselves from competitors or third party patent holders, or to monetize their patent portfolio. There are different types of PAEs depending on their strategy, business model and, moreover, depending on the purpose for which they enforce the respective patents.7 PAEs might be NPEs or PEs, they might acquire patents developed by another party or may have their own research and development activity, they might be offensive or defensive (depending on what is the purpose for which patents are acquired and used by the PAE), they might enforce patents via litigation or may aggregate patents for the purpose to provide protection against patent litigation to their customers or members. Finally, coming back to patent trolls, they are described as entities or individuals who “trap” their victims in patent infringement cases with the aim to benefit from license fees or damage awards for the allegedly non-authorized use of their patent protected technology that is not used by the troll themselves for any other purposes but for IP enforcement.8 Therefore, IPR trolls (or patent trolls in particular) are overall NPEs, because they do not practice the IPRs in their portfolio to create and market a product or service. But strictly speaking trolls are also PAEs, because their motivation to assert IPRs is based on potential financial gain and enforcing IPRs is their business model, from this they generate revenue.
1.2. Copyright trolls in Open Source Software Although trolls are more often noticed in the woods of patent law, they are also spotted under the bridges of copyrights.9 Copyright trolling definition shall be based on the same definition as outlined for patent trolling above, with the exception that the copyright
5 Ruslan Galiakhmetov, Paola Giuri and Federico Munari, ‘How To Enhance Patent Commercialisation? An Analysis of Patent Aggregators in Europe’ (2017) 22 International Journal of Innovation Management 1850040
10 Martin Husovec, ‘Standardization , Open Source and Innovation : Sketching the Effect of IPRs Policies’ [2018] Forthcoming in Jorge Contreras (eds.) Cambridge Handbook of Technical Standardization Law (CUP 2019) TILEC Discussion Paper No. 2018-034 25
7 | P a g e companies use it in their products and the rest expected to use it within the following year.20 It is extremely popular among developers – it is claimed that only in the US more than a million developers were involved in the development of FOSS.21 Consequently, today it is part of almost every ICT product on the market. A survey published by the Linux Foundation in 2014 states that the Linux operating system is the most preferred among enterprise end users with 75% popularity among such companies.22 These numbers, expectedly, attract the attention of IPR trolls, because they promise a lot of potential targets. The significance of the topic is evident from a recent case that will be taken as an example hereunder - the case of the former chair of the Netfilter core development team of Linux - Patrick McHardy who has independently undertaken legal actions for the enforcement of GNU general public license (“GNU GPL”)23 against Linux distributors.24 McHardy is alleged to have approached a number of Linux distributors (supposedly between 30 and 40 cases since 2014)25 with copyright infringement claims for the purpose to gain financial benefits for himself.26 The majority of his cases are reported to be filed in German courts.27 Even though his enforcement is not transparent and there is not much public information thereof, it became one of the reasons for the Open Source community to publicly criticize his actions, to suspend McHardy from the Linux Netfilter team and to proclaim the Principles of Community-Oriented GPL Enforcement, which McHardy has not endorsed as required by the Software Freedom Conservancy.28 McHardy is a study case example of an Open Source copyright troll and has been the inspiration for this paper.
1.3. For whom is Open Source copyright trolling problematic?
1.3.1. The Telecommunications Industry
The telecommunications industry (the sector made up of handheld manufacturers and telecommunications service providers) is especially interested a solution of the IPR trolling problem to be found soon. The main reasons for this are: 1) because telecommunication industry is claimed to be the field with the highest volume of IP infringement litigation cases;29 and 2) because PEs in this area are likely to be the main target of both copyright trolls and patent trolls (telecoms, for example, on one side retail mobile phones that contain high
20 Richard Kemp, ‘Towards Free/Libre Open Source Software (“FLOSS”) Governance in the Organisation’ (2009) 1. 21 Wheeler and others (n 17). 22 See 2014 Enterprise End User Report available at https://www.linux.com/publications/2014-enterprise-end- user-report (last visited November 4th, 2018) 23 https://www.gnu.org/licenses/licenses.html accessed 9 September 2018 24 Heather Meeker, ‘Patrick McHardy and Copyright Profiteering’ (2017)
1.3.2. The Open Source Community IP trolling is also a significant problem for the Open Source community (which includes for the purpose of this paper everyone who contributes to Open Source projects with their IPRs) – both with respect to patent and copyright trolls. In some jurisdictions software is patentable,
30 Cases for GNU GPL2 Enforcement have been filed against Telefonica in Germany – see Case 7 O 189/16 Landgericht Munich, Patrick McHardy v. Telefonica 31 Jorge L Contreras, ‘When A Stranger Calls : Standards Outsiders And Unencumbered Patents’ 1. 32 European Economics, Thumm and Gabison (n 5). 33 Rüther (n 7). 34 Michael J Meurer, ‘Allocating Patent Litigation Risk across the Supply Chain’ [2018] Texas Intellectual Property Law Journal, Boston University School of Law Law & Economics Paper No. 18-02. 35 European Economics, Thumm and Gabison (n 5). 36 Lauren Cohen, Umit G Gurun and Scott DukeC Kominers, ‘Empirical Evidence on the Behavior and Impact of Patent Trolls a Survey’ [2017] Patent Assertion Entities and Competition Policy 27. 37 Case 14 O 188/17 Landegericht Koeln, Patrick McHardy v. Geniatech Europe GmbH; Case 7 O 189/16 Landgericht Munich, Patrick McHardy v. Telefonica 38 Example for this are Android/Linux TV boxes that users install for the purpose to connect to the service of the telco. See for example https://www.geniatech.com/products/linux-set-top-box/ accessed 30 October 2018
9 | P a g e so patent trolls enforce their rights also with respect to pure software inventions and this creates even more problems because software patents might be too general and abstract, but at the same time grated for wide spread technology solutions.39 If an Open Source project uses software that is subject to patents, the patent-holder might enforce his patents against anyone who uses the FOSS, unless patent licenses are also mandatory part of the Open Source license and contributors are obliged to provide or arrange their provision to all FOSS licensees. Thus Open Source Community might also be a target or the patent trolls in some cases. On the other side, Open Source community is also concerned with copyright trolls that enforce Open Source licenses. The issue is not that compliance with the GNU GPL is sought. In fact, the Open Source community welcomes enforcement initiatives.40 However, courts should be seen as last resort for enforcement when all other options appeared to be non- successful.41 Open Source rightholders prefer to work together with the inadvertent infringers to achieve compliance and avoid legal complications.42 The troll problem is that financial gain, not enforcement, is the main aim of this aggressive assertion.43 Even more, the trolls aim to benefit from non-compliance, so they have the motivation to trigger and encourage it. Consequently, the trust in the Open Source community is negatively affected by the actions of separate individuals.44 Companies, who initially relied on the open and free nature of the particular work, now may start to fear litigation risk when they use Open Source software in their products or when they create derivatives. In case of high litigation risk, these companies, that initially invested in the development of FOSS with the presumption that this will also give them access to other developers technology and they will achieve higher diffusion,45 might stop opening their research activities and will prefer to concentrate on in-house developments which will be easier to control and will bring them longer market exclusivity.46 It is important to note that many traditional proprietary companies also contribute to Open Source projects and are therefore also part of the Open Source community. Two recent occurrences have to be mentioned with that respect. The first are the numerous acquisitions of Open Source companies by traditional proprietary software companies.47 The second is the joining of Microsoft to defense patent networks such as the Open Innovation Network48 and
39 Rob Tiller, ‘What to Do about the “Patent Troll” Problem’ (opensource.com, 2012)
2. State of the Art in the Literature As shown above, IPR trolling is problem that is known both in patent law and in copyright law. At the same time, scholars have comprehensively researched the topic of patent trolls, but copyright trolls mainly falls in the shadow of patent trolling,50 and even that some studies are focused on copyright trolls, they are not related to the Open Source topic. The literature available for patent trolls in its majority is focused on the impact of PAEs on innovation and in particular on the research and development [“R&D”] activities of companies who were defendants in patent litigation cases.51 Further, there are also scholars who are concentrated on the different kinds of PAEs, NPEs and patent trolls and their business models, the way how they enforce patents and the strategies they established to do so.52 A third group is focused on the patent litigation that involves NPEs, what are its specifics and possible defense.53 Relevant for this paper are also studies focused on IP and risk management that also pay special attention to IP litigation as a risk for the company, because they show how the patent troll problem might be avoided.54 The literature available for copyright trolls in its majority is dedicated to copyright trolls that initiate great number of litigation cases against physical persons and individuals who allegedly infringed their copyright with respect to works such as movies or musical works via unauthorized sharing – e.g. BitTorrent copyright trolls.55 Here a clarification should be made
49 See https://www.reddit.com/r/linux/comments/9lijxm/microsoft_joins_lot_network_helping_protect/ accessed 28 November 2018 50 Balganesh (n 9) p. 726. 51 Bessen, Ford and Meurer (n 8); Cohen, Gurun and Kominers (n 36). 52 European Economics, Thumm and Gabison (n 5); Schwartz and Kesan (n 4); Rüther (n 7); Christopher A Cotropia and others, ‘Unpacking Patent Assertion Entities ( PAEs )’ [2014] 99 Minnesota Law Review 649 (2014) Illinois Program in Law, Behavior and Social Science Paper No. LBSS 14-20 Illinois Public Law Research Paper No. 14-17 Chicago-Kent College of Law Research Paper No. 2013-49 55. 53 Colleen V. Chien, ‘Patent Trolls by the Numbers’ [2013] Santa Clara Univ. Legal Studies Research Paper No. 08-13
11 | P a g e that this paper is focused only on a specific type of a copyright troll – the copyright profiteer who enforces alleged license rights over Open Source software, so the literature regarding BitTorrent copyright trolls might be used as a source of information regarding copyright trolls in general, but does not provide much information with respect to the specifics of Open Source. Further, there are also studies that are focused on Open Source compliance and public licenses enforcement, but they do not examine copyright trolls in particular.56 This shows that there is a gap in the current state of the art in the literature with respect to Open Source copyright trolling and a research of this topic would be a good contribution.
3. Research question, methodology and outline This paper aims to examine if and to what extent the experience that companies have with patent trolls might be of relevance with respect to Open Source copyright trolling. The objective is to track how patent trolls have been dealt with from a PEs’ perspective and to evaluate if the same approach might be adopted by a company that faces an attack by a copyright troll with respect to Open Source software. Hence, the main research question of the paper is: Would the strategies used against patent trolls be suitable against copyright trolls in the context of copyright protection in Open Source software? The methodology used in this paper is mainly literature research of the rich body of theoretical and empirical studies on patent trolls and IP enforcement. After the topic of patent enforcement is researched, its findings will be compared with Open Source copyright enforcement observations obtained from relevant literature. Further, information about particular cases of FOSS enforcement is also collected from articles, blog posts, court judgements or reports by involved persons. In the First Chapter a comparison will be presented between patent trolls and copyright trolls with the aim to observe if there are any major differences that require change in the strategies used against patent trolls when they are applied to copyright trolls. The comparison is divided in two main streams. On one side are analyzed the differences between copyrights and patents – main role, establishment, limits of protection, licensing and infringement. On the other side are compared the strategies used by patent trolls and copyright trolls. This chapter will analyze how patent and copyright trolls act in order to be further assessed how similar are they to each other and if there is a special strategy that copyright trolls use that will need to be addressed in addition to the traditional companies’ strategies used against patent trolls. The Second Chapter will provide an overview of the established measures for prevention against both types of trolls. The strategies applied ex ante as part of the risk prevention policy of the company will be looked at in parallel and conclusions will be drawn about how applicable certain risk mitigation strategies used by companies against patent trolls are to the new phenomenon of Open Source copyright trolls. I will use the standard corporate risk management approach adapted to the specifics of IPR management. The Third Chapter will examine the strategies that are adopted by companies ex post after they have become target of IPR trolls. Possible outcomes of the troll attacks will be discussed and possible strategies that companies can adopt in each scenario, whereas patent and copyright trolls will again be looked at in parallel. As some of the ex ante strategies lead
Sven Vanneste, ‘Norms and Enforcement: The Case against Copyright Litigation’ (2005) 7 84 Or. L. Rev. 1127 243.; Balganesh (n 9), p. 726. 56 Tsotsorin (n 13); Till Jaeger, ‘Enforcement of the GNU GPL in Germany and Europe’ (2010) 1 Journal of Intellectual Property, Information Technology and E-Commerce Law 34
13 | P a g e
II. Chapter 1
How different to each other are patent trolls and Open Source copyright trolls?
(Patent trolls and Copyright trolls – twin brothers or distant cousins in the IP troll family?)
Chapter 1 will place the focus on the differences between patent and copyright trolls. The importance of this comparison is to outline what are the characteristics of both IP troll types in order to make it possible to assess further in the next chapters why certain strategies might or might not be suitable against one or the other type of a troll. First, I will examine some differences coming out from the difference between the rights that they enforce – respectively patents and copyrights. Then, I will compare how the different type of trolls act and what their respective strategies are when asserting their IPRs.
1. Patents vs. Copyrights Patent and copyright trolls differ from each other due to many reasons, the most essential of which is that the nature of the patent protection and the copyright protection is different. Therefore, the comparison between the two types of trolls shall first be based on a comparison between patents and copyrights. The patent system was invented to grant protection to inventors by allowing them temporary and limited exclusivity with respect to their inventions. The protection is granted for novelty, inventive step and industrial applicability.57 Creativity is essential as far as the requirement for novelty is covered, anything beyond that is an extra, not a mandatory requirement for the protection to be granted. Patented inventions by default have industrial applicability therefore they are essential for businesses. Businesses by default accumulate greater financial resources and this makes them more appealing as targets for patent trolls. This is one of the main reasons why patent trolls came into being first and are already well known to the commercial world. Their main focus is placed on companies that knowingly or not (actual knowledge is of no relevance) infringe the exclusive rights incorporated in the patent.58 It might even be the case that a company independently arrives to the same invention that is already patented without suspecting that the patent exists (for example during the period between the filing of the patent application with the patent office but before the publication of the application) – it will be infringing as well and respective license fees or damages might be claimed by the patent troll from such a company. As a consequence, the
57 Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 2000 58 European Economics, Thumm and Gabison (n 5). 14 victims of the patent trolls might fall in the trap accidentally without even knowing that they infringe someone else’s rights over the technology used.59 Copyrights, on the other side, protect intellectual creations that are somehow fixated and able to be perceived by other people besides their author – e.g. works of literature, music, painting, cinematography, arts etc.60 From the perspective of Open Source software, copyrights are granted to the author of the code due to the intellectual effort and creative choice of symbols that form the code itself. It is the same as the copyright of a writer on his work for the creative choice and order of the words.61 The form of expression of ideas is protected, not the ideas as such. Hence, there might be copyright granted to multiple authors for expressing one and the same idea in different ways or copyright granted to multiple code developers who write dissimilar codes that deliver similar result. Copyrights are granted for creativity not for industrial applicability. Compared to patents with that respect, one might consider that copyright are not of great importance for commercials, but this would not be a correct conclusion, because there is a huge market demand for copyright protected works (works of literature, cinema, software development, etc.) and multibillion industries take care to satisfy consumer demands in that respect. The “deep pockets” of such industries create good conditions for the copyright trolls to appear. So why then do they develop much later than the patent trolls? In the particular case of Open Source software it is because software is a relatively recent development of technology in comparison to industrial inventions that were granted protection much earlier before the existence of software.62 On a separate side, another important reason for this late appearance of copyright trolls is the way how patents and copyrights are granted. In order to patent an invention one must comply with a very precise and detailed procedure that depends on the local patent laws (irrespective of some resent developments in legislation trying to make easier European patent applications, patent protection is still national and there is no absolute harmonization on European level with respect to the enforcement of the European Patent, so from this point of view European Patents are perceived as bundles of national patents).63 For example, if one wants to patent an invention in Germany they need to follow German patent laws procedures. If protection is to be sought in France in addition – separate application shall be filed in France in compliance with the French patent laws. However, when the patent is issued the protection and the patent itself are public and everybody is presumed to be aware that certain invention is patented within certain territory. Due to this transparency of the registration it is also much easier the patent to be enforced as it could be easily proved that one owns the respective patent. This easier enforcement and the above mentioned fact that patents are the driving power of many industries are both factors for the patent trolls to appear relatively early.
59 Brian T Yeh, ‘An Overview of the “ Patent Trolls ” Debate’ (2013)
15 | P a g e
With respect to copyrights, on the other side, there is no formal procedure for their establishment. The only act of fixing the work in a way that it can be perceived by third parties automatically creates the copyright of the author over the intellectual creation.64 The author does not need to file application with a specific copyright authority or to register the work. Of course, the risk here is that it is quite hard to prove that someone is the actual author if the work has not been made public or there is no substantial proof for the date of the creation. Hence, the enforcement might be more difficult in comparison with the patents. Further, today copyrights are not national and are more easily enforced in other jurisdictions outside the jurisdiction of the rightsholder, but in the not-so-distant past it was completely legal to infringe copyrights of authors from other jurisdictions, as in many countries copyrights were not granted to foreign citizens.65 With the limited protection granted in the past and the limited enforcement options abroad, there were no conditions for copyright trolls to come into being as early as the patent trolls. The formal application procedure and the register of the patents, however, introduce another significant difference between patent trolls and copyright trolls. With patents the rightsholder is the one whose name is stated on the patent irrespectively if this is the one who actually first came up with the idea for this invention or the one who actually invented it. The one who succeeds first to apply and obtain a patent is the one who has the protection for the respective invention. With copyrights this is not the case, because there the creativity is protected, so it is important the actual author to be granted the protection. However, in general there is no formal mandatory requirement for registering of copyrights.66 Thus it is hard to prove who created what, and this is particularly hard in group projects where multiple authors are working on one and the same work. This is exactly the case of the copyright troll that is used as a case study for this paper. Patrick McHardy was part of the Netfilter team of the Linux kernel and as such he participated in the development of the code together with his peers from the same team.67 In the code development it is rare that one developer creates a particular piece of the code only by himself. Usually after one writes a piece of the code another might make some corrections or additions and then a separate one will test if the end result is a working piece of a code. Every modification is in theory tracked by a specific tracking tool, e.g. cregit,68 but in practice the tool relies on self-reports and saves the last version uploaded, so it is very hard to assess who did the corrections in the previous versions of the code and who is the actual author of a particular piece of code. Although it is a useful tool to report the contributions of the team members, its reports are not always reliable as it does not make a clear separation between writing of a new code and making minor corrections in what has been already created by others. The relevance for the copyright trolls is that it is hard for the court to assess which part of the open source code was actually
64 World Intellectual PropertyOrganization (n 60). 65 A good example of this is the case of Charles Dickens whose works were published in the US without his permission and even with his explicit protest. See more info here: http://www.trademarkandcopyrightlawblog.com/2017/01/charles-dickens-and-copyright-law-five-things-you- should-know/ accessed 4 July 2018 66 Kur and Dreier (n 63). 67 Meeker (n 24). 68 https://cregit.linuxsources.org/ accessed 4 July 2018 16 developed by the claimant and which not.69 If it was a patent, then it would be much easier because the court would simply check whose name is written on the patent. This is a problem that did not exist with patents, and a main difference between copyright and patent trolls, because the copyright trolls might use it to claim greater rights than they are actually entitled to. On a separate note, there are also some differences with respect to the term of protection. The patents are in general granted for twenty (20) years and the patent holder shall pay maintenance fees in order the patent not to expire during such period. Copyrights are granted for much longer – in Europe, for example, the copyright protection lasts for the lifetime of the author plus seventy (70) years thereafter.70 Apparently, for trolls the copyrights offer longer period of protection during which they can monetarize their rights, so from this perspective copyrights seem to be more appealing to abusive rightholders.
2. Strategies for enforcement used by patent trolls and copyright trolls After clarifying that there are some differences between patent trolls and copyright trolls resulting from the specifics of the patent and copyright system, analysis of the strategies used by patent trolls and copyright trolls shall be also conducted. Understanding how these two types of trolls act when asserting their rights and if there are any differences between the strategies employed is essential for the further analysis of the applicability of the counter strategies to be adopted by targeted companies.
2.1. Stay hidden and get infringed In many cases the patent trolls’ strategy, just like with their fairytale commons, is to hide under the bridge until the victim approaches close enough and there is no way back. They try to keep secret or non-obvious the existence of the rights over the technology under their control as long as possible in order to deceive PEs to unknowingly and unintentionally infringe their respective rights.71 In other words, patent trolls do not even try to prevent third parties from using the subject of their rights - just the opposite, they use their best efforts to get infringed by PEs that need the technology in question for producing or marketing of their products or for conducting business in general.72 After such alleged infringement is in place, the patent troll gets in touch with the “victim” with an ultimatum to either pay license fees or get sued for an infringement of IPRs.73 Common strategy of patent trolls is to ask the PE to sign an non-disclosure agreement and thus not to disclose to third parties any details with regards to the arrangements between the troll and the PE and even with regards to the existence of their relationship.74 Apparently, patent trolls prefer to stay in the shadows and not to attract the attention of future potential victims. If we take the example of telecoms, such confidentiality obligation would put them in a very bad position towards their suppliers. Telecoms might be precluded from the opportunity to disclose the allegations of the patent
69 Welte (n 25). 70 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights 2006 (Official Journal of the European Union) 12. 71 Reitzig, Henkel and Heath (n 53). 72 Ibid. 73 Cohen, Gurun and Kominers (n 36). 74 European Economics, Thumm and Gabison (n 5). p. 26
17 | P a g e troll to the supplier who in fact is the manufacturer of the potentially infringing products. Furthermore, in most of the cases under the contract between the telecom and the supplier an indemnity for IPR infringement is granted to the telecom by the supplier, and a prerequisite for the telecom, in order to benefit from such contractual protection, most likely would be to notify the indemnitor and to provide all information it has available with respect to the case.75 Copyright trolls also like to stay hidden. In the example of Linux copyright trolling, there are only a few cases that are public and the remaining are hidden from the public either because the courts do not disclose the identity of the parties in the process or due to the existence of non-disclosure agreements signed between the troll and the PEs. It is stated that the PEs are approached with a “warning” or a “cease and desist declaration” with a confidentiality provisions incorporated.76 In fact, this is a separate agreement between the copyright troll and the PE which may impose on the PE obligation that otherwise would not exist in the license terms or in applicable law, for example contractual penalties.77 On a separate side, undertaking additional confidentiality obligation with respect to the potential infringement may preclude the PE from seeking help from the Open Source community or from other defendants in similar situation.78 However, there is no unintentional infringement, in contrast with the described above about patent infringements, if the PEs knowingly and intentionally use Open Source works in their solutions and if they therefore abide to the license terms in advance before the infringement arises. The only exception from this is the case when the targeted company sources the products from suppliers and is therefore not aware what kind of technology is part of the purchased solution.
2.2. Be opportunistic Standardly, if the patented technology is owned by a PE, such company would think twice before initiating a litigation, because the targeted company may respond in a similar way by enforcing a patent from its own portfolio against the claimant.79 This is one of the reasons why companies invest in expanding their portfolio of patents in order to defend themselves against potential infringement claims from other PEs – “defensive patenting”. 80 With patent trolls who are in fact NPEs, this is not the case. As the term “non-practicing” states, they produce no products on their own so they do not need to refrain from litigation due to the fear
75 Meurer (n 34). 76 Meeker (n 24). 77 Jaeger (n 56). 78 Ibid. 79 There is no possible way that any company possesses all the patents over the technologies it uses to produce its products, especially due to the standardization in manufacturing certain type of products. For the purpose of not being dependent on competitors’ patents, some companies prefer not only to license, but whenever possible to develop and patent their own technologies. In the best case scenario for the developing company, it will invent and obtain protection for a core patent which might be necessary for competitors to license in order to be able to produce their products. If company A has a core patent which is infringed by company B, but B also possesses a core patent that is needed by A for its own production, then both A and B might be in the so called “armed piece” and each of them will infringe the patent of the other, but neither will initiate litigation because they do not want to cause a countersuit – see Ove Granstrand, ‘The Economics and Management of Intellectual Property’ [1999], Books, Edward Elgar Publishing, number 1651 80 Chien C V, ‘Of Trolls , Davids , Goliaths , and Kings : Narratives and Evidence in the Litigation of High-Tech Patents’ (2009) 85 North Carolina Law Review 1571
2.3. Use litigation as a threat but don’t litigate Although PEs fear patent trolls mainly because of the litigation risk, studies show that NPEs (including patent trolls) bring only a minor part of all IP infringement cases in court.89
81 Ibid, The Limits of Defensive Patenting, p. 1607 82 Lauren Cohen, Umit G Gurun and Scott Duke Kominers, ‘Patent Trolls: Evidence from Targeted Firms’ [2014] 83 Maxwell J Petersen, ‘Strategies for Defending International Companies against US Patent Trolls’ (2009) 4 Journal of Intellectual Property Law & Practice 109; p.111. 84 Levenson (n 49) p.2. 85 John Allison, Mark Lemley and Joshua Walker, ‘Patent Quality and Settlement Among Repeat Patent Litigants’ [2010] Stanford Law and Economics Olin Working Paper No. 398 31
19 | P a g e
One of the possible reasons for this is that the patent trolls’ only assets are their patents.90 Thus, patent trolls are hesitant to expose their most valuable possessions at risk, and potential litigation where the defendant might challenge the validity of the patent is a great risk for the patent holder.91 This however, does not automatically mean that the patent troll will not engage in any litigation. If fact in order to “terrorize” the PEs and to demonstrate the consequences of not obtaining a license the patent troll needs an example for all future victims. This is the reason why it would litigate, but only a limited number of cases where its chances to win are higher. Studies also make a calculation how long do litigation procedures take and cases in which NPEs participate seem to be resolved for the shortest period of time.92 The authors drive to the conclusion that this is a result of the common practice in these cases the parties to settle before the final court decision.93 Patent trolls often prefer to settle. In fact they use settlement as a strategy, to keep their enforcement actions hidden from the public and not to set precedents. Same observations about the strategy of the trolls apply to FOSS copyright trolls – they are very unlikely to bring a case for infringement to the court, except for obtaining of injunction. Just like with their patent commons, their only asset is the alleged copyright and they tend to allege wider rights than actually entitled to, so a court examination of the actual scope of their copyright is avoided.94
2.4. Obtain Injunctions Injunctive reliefs are very often used as means to put pressure on the alleged infringer in license fee negotiations.95 In fact, such a strategy is very popular because it gives the claimant the tools to stop the business of the PE until an agreement is met and therefore it grants to the claimant a very strong bargaining position in negotiations.96 Due to the abuse of rights noticed with respect to patent trolls in some jurisdictions courts have become sensitive towards the issuing of injunctions to NPEs and demand more comprehensive proofs to be provided by the claimant with respect to the need for injunction.97 In copyright cases, injunctions are also very common weapon of claimants and a good tool to impose licensing and to negotiate higher settlement price. Courts tend to issue injunctions as a matter of course and do not necessarily demand a proof of liability which means that the copyright holder can only prove likelihood to succeed on the merits of the case and an injunction may be granted by the court. 98 This puts the copyright trolls in a very convenient
90 Jason Rantanen, ‘Slaying the Troll: Litigation as an Effective Strategy Against Patent Threats’ (2006) 23 Santa Clara Computer and High Technology Law Journal 159
2.5. Go Forum Shopping Another strategy used by the patent trolls is “forum shopping”- they file the case in the most favorable jurisdiction where the potential results of the court case promise to be more beneficial for the patent holder.100 Studies show that in Europe preferred jurisdiction is Germany because of two main reasons – 1) the bifurcated nature of the German legal system which allows injunction to be granted much faster and independent from the procedures for invalidation potentially initiated by the defendant because the injunction procedure and invalidity actions are handled by separate courts; and 2) because “Germany has the lowest average procedure duration until a first instance court decision on infringement, with injunctions often being granted prior to completion of the invalidity action”.101 Forum shopping is common trend in copyright enforcement too due to similar reasons as the ones stated above.102 Copyright holders prefer to file the case in the jurisdictions where their chances to get an injunction faster are greater. Thus, Germany is also a preferred destination for forum shoppers. Evident for this is the fact that three of the well- known Linux Open Source enforcement cases are filed in Germany.103 The litigation actions of McHardy are also taking place in the German court rooms.104
3. Chapter Conclusion As a conclusion, all the above mentioned shows that despite the many similarities between these two types of IP trolls, there are also some differences between patent and copyright trolls that have to be taken into account when discussing if any approach used against the patent trolls might be applied against FOSS copyright trolls. One of the discussed above differences is that patent trolling came into being much earlier than copyright trolling with regards to open source software and patent trolls are wandering in the woods of IPRs for longer time than their copyright commons. As a result of this, telecommunication companies are presumed to be much more prepared to handle the threat of patent trolling in contrast to
99 Kreiken, Floris, Effects of Large Scale Copyright Enforcement on Infringement and Due Process Procedural Safeguards (March 31, 2014). 2014 TPRC Conference Paper. 100 Love and others (n 29); Cohen, Gurun and Kominers (n 36). 101 Darts-ip (n 7). 102 Jaeger (n 56). 103 See 1)Case 14 O 188/17, Landgericht Koeln, Patrick McHardy v Geniatech Europe GmbH.; 2) Case 301 O 89/15 Landgericht Hamburg Christoph Hellwig vs. VMware Global Inc.; and 3) Software Freedom Conservancy, ‘Conservancy Announces Funding for GPL Compliance Lawsuit VMware Sued in Hamburg, Germany Court for Failure to Comply with the GPL on Linux’ (2015)
21 | P a g e copyright trolling because they may rely on the experience of the ones who have fought the greedy patent creatures in the past. In contrast, the Open Source copyright trolling is a relatively recent phenomenon. On top of that, it is not only recent, but also pretty unexpected for its victims. Logically, such companies might search for solutions in their prior experience with or established policies for defense against patent trolls. This chapter described and analyzed the strategies of the trolls by looking both to patent and copyright law. The outcomes of it give a basis for the analysis of the possible counter reactions of the targeted company. Nevertheless, it could be concluded that there are more similarities with respect to the strategies used by the patent and copyright trolls for IP enforcement. This means that the means and strategies to counter react to these enforcement strategies might also be very similar in patent and copyright law. The next two chapters will investigate if this presumption is correct by examining what has been already developed or adopted by PEs for prevention and defense against patent trolls and assessing if those strategies can be applied to copyright trolls.
22
III. Chapter 2
Which Ex-Ante Strategies used against patent trolls may be suitable against Open Source copyright trolls?
(Trolls out there: Prepare your weapons before you enter the woods!)
Old Slavic saying states “If you are afraid of bears, better don’t go to the woods”. Paraphrasing this for the topic of this paper would sound like “If you are afraid of patent trolls, better do not operate on the technology market”. In the introduction chapter I have mentioned that patent trolling is a well-known phenomenon in the ICT industry and in particular it is widely spread in the telecommunications sector. Thus, telecommunication companies are well aware that patent trolls are active predators in their sector and that being a PE in this industry might expose them to the troll risk.105 Does this mean that avoiding the troll problem comes at the price of exiting the market? What do technology companies do if they want to make profit without fearing the opportunistic IP enforcers? Probably they should act the same way as a person who enters the woods with the clear understanding that there are bears out there – get prepared, take measures to avoid the risk and do their best to increase their chances to survive the danger if avoiding it is impossible. PEs take preventative measures under their own risk management plan to mitigate the risk associated with IP.106 This chapter will focus on common ex ante strategies with respect to the IP trolls problem. Both types of IP trolling will be discussed in parallel. I will argue that the ex ante strategies, and in particular the implementation of proper compliance tools within the company, are even more successful in the prevention of copyright trolls than they are in respect to patent trolls. On the other side, there are also some ex ante strategies that cannot yet be adopted for copyright trolling although they are rapidly developing in patent risk management. As a general comment for this chapter, I refer to the strategies described hereunder as to “ex-ante” or “preventative” strategies. This means that the company is adopting those strategies before to mitigate the risk to potentially suffer from IP troll attack. There might be a blurred line between preventative and defensive (ex post) strategies whereby some preventative strategies will develop into defensive strategies at later stage after the actual problem occurs.
105 European Economics, Thumm and Gabison (n 5). 106 The risk management plan contains all the risk management actions and activities adopted by a business in order to assess and mitigate certain risk contingencies. It covers all the steps from identifying and assessing the risk to implementing specific measures to minimize its negative consequences for the business. For the components of a corporate risk management plan see Merna, T. and FF Al-Thani, Corporate Risk Management (2nd edn, John Wiley & Sons, Incorporated 2011).
23 | P a g e
1. License compliance “The best way to limit one’s potential liability is to take steps to insure that one does not become involved in a dispute in a first place”.107 The IP portfolio of a company is deemed to be not only an important asset with licensing and litigation potential but also a source of possible liabilities related to IP infringement claims.108 Hence, the possession of IP rights (or the lack of such) is also associated with risk exposure of the company, so it has to plan how this risk will be managed, how it can be prevented and eventually minimized. The building of a risk management plan always starts with the identification of the possible hazards.109 For precisely identifying the risk associated with its business the company needs to first have a comprehensive overview of what are the technologies incorporated in its products or services, are they IP protected, does it need a license from the rightsholder and has it obtained such prior to the use of the particular technology in its business operations, what are the exact licensing terms and what are the consequences of potential breach of the licensing terms. Having this information available and up-to-date is a key for enabling the managers and IP officers of the company assess the risk exposure with regards to IP but also to assess the relativeness and validity of a particular claim against the company. The company can use a risk management tool as a repository of the identified risks where for each risk a record is created with description of the risk, its probability, potential impact, risk score (the multiplication of risk probability and impact), counter measures, etc.110 As part of their risk management plan companies develop their own compliance programs. Creating such program to mitigate the IP litigation risk is a valuable preventative strategy, but in many cases companies follow this path not “as a truly preventative or offensive effort designed to maximize a company’s potential to succeed both in disputes and in day-to-day businesses”111 but as a response to a negative outside pressure (such as major litigation or investigation).112 PEs seem to either underestimate the potential danger or are not able to predict it at all - they first wait for the problem to occur and then build a prevention program to avoid its re-occurrence. Having in mind the financial and reputational cost of IP litigation,113 this approach might cost dearly to the company. Therefore, establishing a proper compliance program shall be part of the standard strategies companies adopt by default against the potential appearance of IP trolls. Furthermore, as mentioned in the previous chapter, one of the main strategies of IP trolls is to stay hidden and to wait for the victim to infringe their proprietary rights. It is IP trolls’ intention to get infringed and they are eager to have more PEs infringing their IPRs.114 Therefore, being negligent with respect to the IP license compliance is a way to invite IP trolls to pay attention to you. Negligence, however, is
107 Simensky, Osterberg and Small (n 54). 108 Kelly Merkel, ‘How to Stump a Corporate Lawyer: Means of Effective Legal Risk Management for IP Counsel’ (2006) 1 1. 109 Merna, T. and Al-Thani (n 106). 110 See http://www.ip.finance/2015/04/ip-risk-management-process-and-system.html accessed 8 November 2018. Example for a risk management tool is the Alder - IP Risk Management Tool available at http://www.ipeg.com/wp-content/uploads/2016/05/IPEG-Alder-IP-Risk-Management-Tool-Summary- 07022016.pdf , accessed 8 November 2018. 111 Simensky, Osterberg and Small (n 78) p. 126. 112 ibid. 113 Bessen, Ford and Meurer (n 8). 114 Reitzig, Henkel and Heath (n 53). 24 not the only reason for infringement of IPRs. The PE might be practically unable to capture the applicable IPRs or it might not be able to assess what kind of technology is incorporated if it sources the technology from third parties. The compliance program comes at different layers. As a starting point, the company shall adopt a formal written policy which outlines why a compliance program is needed and what are its main goals.115 The policy may in general include rules regarding compliance with IP laws and the use of third party IP protected works in the development of products, provision of services, marketing, sales activities, etc. Besides the general rules, it may also contain references to the specific license terms of third parties whose IP protected technology is used. This however means that the company shall invest in proper due diligence and shall have obtained the relevant licenses in advance from the respective rightholders. Such policy might be helpful in two ways – 1) it will make the officers and employees of the company aware of what are their respective obligations for IP troll risk mitigation, what are the procedures to follow and who are the parties to be involved in case of potential infringement or allegation of infringement of IPRs; and 2) it can be used in litigation where the company needs to prove inadvertent infringement or to prove that the acts of certain employees have not been in line with the general policy of the company.116 Moreover, the existence of a compliance program might also be a prerequisite for the provision of intellectual property insurance.117
1.1. Patent compliance Before adopting certain technology PEs perform due diligence examination to understand if any third party IPRs might be infringed. When it comes to patents, this due diligence investigation is very similar to the state of the art search that patent officers perform before granting a patent.118 ““Freedom to operate” reports need to become an even more crucial element in functional IP management, eventually co-determining the choice of a firms’ entire technological trajectory”.119 For an invention to be novel it should not appear in prior art and “prior art” is not limited to a specific territory or specific formal requirements (the search might cover written publications, oral disclosures in public, prior use, etc.),120 so the scope of this search is very wide. Therefore it is not surprising that it might be time consuming and costly and sometimes not even practically possible to capture all prior art works and to perform an exhaustive patent search. It is a hard task for the patent office even if this is the specialty of the patent officers who are persons skilled in the art, so for a single company that might not have available experts for each of the technologies used to perform an
115 Simensky, Osterberg and Small (n 78), p. 126. 116 Simensky and Osterberg (n 54). 117 Simensky, Osterberg and Small (n 79) p. 127. 118 WIPO Publications No 489 (E) World Intellectual PropertyOrganization, WIPO Intellectual Property Handbook, vol 2 (2nd edn, 2008). 119 Markus G Reitzig, Joachim Henkel and Christopher Heath, ‘On Sharks, Trolls, and Other Patent Animals’ (2006) 36, p. 20, SSRN Electronic Journal 1
25 | P a g e exhaustive patent search might be close to impossible.121 For this reason it might also be the case that an external adviser performs this research for the company as a service.122 The situation gets more complicated when part of the technology is sourced from suppliers whose actions and compliance the PE cannot control or if it sources from intermediaries who buy overseas from suppliers who are even unknown for the company. In this case, the assessment if the sourced technology infringes third party’s IPRs might be difficult. This lack of control or knowledge is not excluding potential liability of the company for patent infringement, because it is the one placing the products on the market and by this infringing the IPR, so it commits a strict liability violation irrespective if it is aware of the infringement or not. If there is an allegation that the products are infringing, the company might be ordered by the court to cease the infringement and stop distributing its products that contain the infringing technology. Common strategy to mitigate the financial risk is the shifting of the litigation risk down to the suppliers who provide the respective products or services.123 This is achieved via contractual arrangements between the supplier and the purchaser in which the parties agree that the supplier will cover any damages and losses of the purchaser from third party claims for alleged IPR infringement due to the use, distribution or marketing of the products or services supplied (indemnification).124 In any case, contractual warranties and representations by the suppliers that the sourced products do not infringe any third party rights (including IPRs) would also be helpful in case of infringement to prove that the company acted in good faith and did not infringe deliberately the third party IPRs. Yet shifting of the litigation risk might help the company to cover its financial losses due to the alleged infringement, but will not prevent the rightholder (potentially the troll) to raise a claim against it.
1.2. Open Source Copyright Compliance
For the purpose to achieve compliance with the applicable Open Source licenses and to properly manage the risk related to its use the PEs may follow the standard risk management approach for the implementation of internal compliance measures that was described above.125 In particular the PE has to take the following main steps with respect to the implementation of FOSS within its organization: 1) to perform audits with the help of its developers (or external auditors/audit solutions) 126 to track what source code is used and which Open Source licenses might apply (identification of the risk), 2) to draft and implement a formal internal policy how FOSS can be adopted in the development of products or further
121 Reitzig, Henkel and Heath (n 119). 122 See for example: http://www.tprinternational.com/patent-prior-art-searches/ 123 Meurer (n 34). 124 Wayne Courtney, ‘The Nature of Contractual Indemnities’ (2011) 27 Sidney Law School Research Paper No. 11/41 1
127 Tsotsorin (n 13)., p. 572; T Robert Rehm, ‘Navigating the Open Source Minefield: What’s a Business to Do’ (2010) 10 Wake Forest Intellectual Property Law Journal 289, p. 314
27 | P a g e
FOSS reporting forms or establishing minimum requirements or mandatory procedures for reporting would help later if a dispute with a troll arises to track back the development of the code and to demonstrate before the court who is the actual creator of a particular piece of work. In this section I shall also mention the important role of the Open Source community in the reaching of higher compliance rate among the companies and respectively the prevention of copyright trolls. The GNU GPL licenses provide that the licensor grants the licensee a license to perform certain actions that otherwise would be deemed violation of the exclusive rights of the copyright holder (such as to distribute or modify the copyright protected work, etc.) which is irrevocable and is for the entire term of the license, provided that the licensee complies with the license conditions.133 The GNU GPL licenses are strong copyleft licenses.134 Any breach of the license conditions on the side of the licensee automatically terminates the rights of the licensee under the license and withdraws all copyright permissions granted. There were some doubts in the past about the enforceability of the GNU GPL licenses which were related to the legal complications introduced by GPL which was regarded as a pure license by some scholars and as a type of contract by others.135 Despite that “[s]cholars and advocates struggle to articulate the legal groundwork that makes the license enforceable”,136 enforcement has been undertaken by FOSS developers and organizations supporting the Open Source movement. Harald Welte, a developer and former maintainer of the Netfilter project, is one of the first who started enforcing the GPL.137 Inspired by his activities for enforcement of pubic licenses, he created the www.gpl- violations.org platform where any violations of the GPL might be reported and recorded, so that the infringers are notified about the violation and are helped to achieve compliance without the need of legal actions to be undertaken against them, unless this is certainly necessary. Interestingly, companies who used GPL licensed software started to self-report their own non-compliance searching for cooperation by the Open Source community in their efforts to fulfil their obligations under the license terms and to correct their compliance with the license terms for the future, motivated on one side by the examples that were set by Welte in court and on the other side by the opportunity to have lawful access to great amount of source code lines of modified Open Source works.138 Harald Welte started a wave of valuable cooperation between the users of the FOSS and the FOSS community whereas the common
133 See Section 2 of GNU GPL3 available at https://www.gnu.org/licenses/gpl-3.0.en.html accessed 20 November 2018) 134 Tsotsorin (n 104), p. 565. The author explains that there are 3 types of copyleft licenses depending on the obligations of the licensee with respect to the derivatives of the work – strong copyleft, weak copyleft and no copyleft. The GNU GPL, which is the subject of this paper, is an example for a strong copyleft, as it requires strict compliance with the license terms and does not allow deviation from the license with respect to any derivatives – they shall in whole be covered by the same license terms irrespective how great is the Open Source contribution towards the final outcome. 135 See an US perspective overview of this separation of the opinions and an argument by the author that the GNU shall be regarded as a “failed contract” as even it is not a pure contract it can be enforced not only by the rightsholder but also by the licensee in the role of defendant: Kumar (n 56). 136 ibid. p. 4 137 Till Jaeger, ‘Enforcement of the GNU GPL in Germany and Europe’ (2010) 1 Journal of Intellectual Property, Information Technology and E-Commerce Law 34, p. 34
2. Insurance Insurance is a well-known risk management device for businesses. One of the strategies of the IP trolls mentioned in Chapter 1 is that IP trolls use the threat of litigation to achieve better settlement price. The targeted company is usually hesitant to litigate the case, among other reasons, because of the high litigation costs (depending on jurisdiction), where
139 https://www.linuxfoundation.org/open-source-management/2017/05/practical-gpl-compliance/, accessed 5 October 2018 140 https://www.softwarefreedom.org/resources/2014/SFLC-Guide_to_GPL_Compliance_2d_ed.html, accessed 5 October 2018 141 https://www.openchainproject.org/curriculum, accessed 5 October 2018 142 See Section 8, paragraph 3 of GNU GPL3 that gives the infringer the opportunity to cure the breach and to permanently reinstate the license rights - available at
29 | P a g e the difference between the amount of litigation costs in Europe and US is one of the reasons defined for the trolls to appear in US more often than in Europe.144 Patent litigation costs tend to rise on yearly basis and there is no sign that this tendency will end soon.145 Consequently, the financial risk associated with patent litigation also grows which is to the benefit of trolls as it helps them to gain better bargaining position in negotiations. Report of the European Commission issued in April 2018 shows that small and medium sized entities do not go to court to litigate their patents because of the high litigation cost.146 This leads to situations where the company might have the rights on a certain technology but is not enforcing those rights as it cannot afford the enforcement expenses. From the perspective of the IP troll problem, it might be the case that the troll asserts a low quality patent, but the targeted company is not fighting the validity of this patent or its actual infringement in court because paying a settlement price will be relatively cheaper and faster solution than litigation.147 Moreover, it might be the case that the troll asserts a patent over a technology that is already patented by someone else, but the patent holder does not react, because of the aforementioned reasons. With respect to this, having a financial security and thus financial freedom to litigate without concerns about attorney costs or legal fees is of high importance.
2.1. Patent Insurance As a prevention strategy with respect to patent trolls companies have two main insurance options – general patent litigation insurance and a patent troll modified variation of the general patent litigation insurance.148 The general patent litigation insurance is used mainly to secure company’s enforcement of its own patents, but also might provide coverage for litigation costs arising from inadvertent infringement of third party patents. More common is the “legal expenses insurance” that provides coverage for attorney fees, court fees, costs for expert opinions and etc. litigation related costs, but not awarded damages or costs of performance of the court ruling; and less common (and much more expensive) type of patent insurance is the “indemnity insurance” which covers against damage awards.149 Further, depending on the insurance management modality, patent insurances might be commodity (standard) insurances which rely on statistical data to determine the risk exposure and post due diligence or ad hoc (customized risks per insured) insurances, where the second option is much more expensive and rarely used.150 In any case, if the insured is alleged to have infringed a third party IPR, a mandatory prerequisite for the insurance to apply is the
144 Love and others (n 29). 145 Anne Duchêne, ‘Patent Litigation Insurance’ (2017) 84 Journal of Risk and Insurance, p. 631. 146 European Union Intellectual Property Office, ‘IP Litigation Insurance Landscape’ (2018)
151 European Union Intellectual Property Office (n 146). 152 Duchêne (n 125), p. 634. 153 Jayant Kumar and Neeraj Parnami, ‘The Marriages of Intellectual Property & Insurance’ 1
31 | P a g e
2.2. Open Source Copyright Insurance
Although patent litigation insurances are not very popular on the insurance market, insurance is still much more common prevention strategy against patent trolls than it is against copyright trolls. There is no special insurance tailored for the needs of Open Source copyright trolling, but companies that face this problem had a similar solution in the light of Open Source compliance insurance offered by Open Source Risk Management LLC (OSRM) in cooperation with London Lloyds.156 The innovative insurance product was launched by OSRM in 2005 and aimed to provide coverage against losses resulting from non-compliance with the Open Source license (including lost profits due to prohibition to sell the infringing products, adjustment of price for compliance purposes or cost of repair of the software code to cure the violation). However, the insurance appeared to be expensive and not very popular among FOSS users, as they prefer to manage their risk via contractual indemnities from suppliers or internal risk management tools for ensuring compliance.157 The OSRM insurance is not available on the market anymore, and I have not discovered another similar solution, but following the findings of the previous section regarding the positive effect of defensive insurance, I find it a suitable tool in the defensive strategy of a company and I think that the demand for Open Source compliance and litigation insurance policies might increase in the future if the number of copyright trolls also surges. Thus, it is worth noting, that a company cannot simply rely on the insurance and underestimate its internal and external mechanisms to comply with the license terms. In fact, the elements of uncertainty of the contingency is essential for insurances and if the insurance applicant cannot demonstrate adequate compliance efforts and even more, if deliberately violates the license terms or simply neglects compliance, insurance will not be granted or the costs and damages from the respective infringement that occurs after the insurance is executed will not be covered. For the same reasons, this strategy cannot be adopted for FOSS copyright trolls if the target has signed a cease and desist letter in which it admits its license violation.
3. Defense Networks
3.1. Patent Defense Networks
As a community reaction to trolling, companies build networks for fighting together the patent trolls or use the services of PAEs that acquire patents for defensive purposes only.158 In the literature the activity of such patent networks is also related to PAEs that use the “catch-and-release”159 model – the PAE acquires certain patent and grants license to all its members. It does not litigate the patent against the competitors of its members, but sells it to a third party, preferably NPE, under the condition that PAE’s members’ license is irrevocable. Thus, the patent troll that purchased the patents from the PAE will target only non-members
156 Risk Assessment Services, ‘Your Open Source Investment—Know. Manage. Protect.’ 8
160 Tomoya Yanagisawa and Dominique Guellec, ‘The Emerging Patent Marketplace’ [2009] STI Workimg Paper 2009/9 Statistical Analysis of Science, Technology and Industry 52
33 | P a g e contain patented technology and therefore patent rights might also apply. From this a collision appears between the imposed by law right of the patent-holder to exclude any third party from the use, distribution and modification of the invention on one side, and the right of the FOSS licensee to freely use, distribute or modify the work under the FOSS license.166 To avoid this situation, Article 11 of GNU GPL3 explicitly states that any contributor grants to the GNU GPL3 licensee “a non-exclusive, worldwide, royalty-free patent license” in a way that enables the licensee to use the GNU GPL3 freedoms with respect to the work. Further, to cover the cases when patents are owned by third parties, the same article notes that the contributor shall arrange patent license to be provided to all further licensees. Consequently, any software patents incorporated in the GPL3 software are not enforceable against anyone who uses the software under the same license. Therefore, using an Open Source license, and in particular GNU GLP3, is itself a strategy for protection from patent trolls. For PEs this comfort, of course, comes at the price to also license their proprietary software under GNU GPL3 and by this also convert it to Open Source.
3.2. Open Source Copyright Defense Networks The Open Source copyright trolling has not been a problem until recently, so companies have not explored yet this strategy with respect to copyrights incorporated in the course code. The Open Innovation Network and the Patent Commons Project show that there is certain level of collaboration between the companies who use FOSS and they are willing to unite to enable open innovation, so it should not be surprising if similar projects develop in the light of copyrights too. However, from my perspective, the common efforts shall be focused not on cross-licensing of copyrights, but on achievement of higher FOSS license compliance rates or on group negotiations with the copyright holders. Telecommunication companies, on the other side, already have experience in building networks to collaborate on the problem of the lack of control over third party suppliers. The Joint Audit Cooperation is an example of the joint efforts of telecoms to verify that manufacturers from whom they source products comply with certain principles of corporate social responsibility.167 The same way telecommunication companies can unite to implement a verification that the sourced product is not infringing third party rights and in particular any FOSS license. Approval from such network body may be a mandatory requirement for FOSS containing product to enter the market and this will give certain security to telecommunication companies that they are compliant with the license terms and are therefore not potential targets of copyright trolls. It can also be used in court to prove that the company did not infringe the copyright deliberately.
4. Chapter Conclusion In conclusion, some of the ex ante strategies that companies use to avoid patent trolls are already adopted in companies’ efforts to achieve Open Source compliance and therefore also work against FOSS copyright trolls. However, patent risk management is more
166 Laura Majerus, ‘Patent Rights and Open Source — Can They Co-Exist ?’ [2006] Fenwick & West LLP. 1, p.2
35 | P a g e
IV. Chapter 3
Which Ex Post Strategies used against Patent Trolls might be suitable against Open Source Copyright Trolls?
Mirror, mirror on the wall, tell me how to fight the troll?
IP trolls are predators that you can accidently crush on in the woods of technology. They converted IP enforcement into business. Where they do not succeed to enter into settlement for license fees, litigation might also be used as a weapon, although NPEs might be hesitant to litigate, because compared to other patent plaintiffs they are less successful to prove the validity of their patents in court.168 Since IP trolls are source of risk for businesses, companies undertake preventative measures before the threat arises as discussed in the previous chapter. Companies should be well aware of their risk management devices and explore the options they provide as a first reaction to IP troll confrontation. The adoption of preventative strategies, however, does not provide universal “antidote against the troll spell”. Thus, PEs shall develop also ex post strategies to react on a particular troll allegations for infringement of IPRs. After a company has been already targeted by a troll, it needs to choose between four main options – 1) to handle the risk of patent enforcement and continue operating on the market without reacting to the trolls demands, 2) to negotiate a license fee with the patent troll; 3) to stop using the alleged infringing technology; 4) to initiate a litigation against the troll (in contrast to the first option here the troll is the defendant).169 In this chapter I will follow Rantanen (2006) four options for reaction of the target company and will examine what are the particular strategies that may be adopted in each case scenario.
1. Disregard the danger of litigation The option to handle the risk of IP litigation is a strategy itself that might work well in three situations – 1) weak patent of the troll that might fail in court; 2) patent litigation insurance that covers company’s legal expenses and, eventually, awarded damages against the company; and 3) if the targeted company is one of the first against which the patent is asserted. Studies show that NPEs contribute insignificantly to the general number of patent litigation cases both in Europe and the US,170 and when they litigate they more often lose.171 Further, it was mentioned in Chapter 1 that IP trolls are reluctant litigants. Consequently, if the IP troll has certain doubts about the validity of its patents, there is possibility that the case will not be filed in court against the targeted company at all. Another reason for similar “step
168 Janicke and Ren (n 53).; Allison, Lemley and Walker (n 85) 4. 169 Rantanen (n 90). 170 Janicke and Ren (n 53).; Love and others (n 28) 171 ibid. 36 back” of the patent troll is that the patent might have not been yet tested in enforcement as the company is one of the first against which it is asserted.172 If the company is in the beginning of the “defendant string”173 it has more bargaining power because if it succeeds to prove non- infringement or to invalidate the patent or to limit its scope then the patent troll will miss the opportunity to monetarize its patent against future targets. Thus, the patent troll very carefully selects the targets in the beginning of the defendant string with high preference for such companies that are more likely to settle.174 And finally, the company shall have more comfort to neglect the assertion if it is insured, because it will have the financial security to handle the case if it reasonably believes that it has not committed infringement. Disregarding the claim for non-compliance with FOSS license might not be a suitable strategy although that most of the cases also do not enter the court rooms. Most of the enforcement actions are brought by the Open Source community against deliberate infringers who do not want to cooperate and comply with the license terms and court actions are not preferred.175 Even where enforcement is undertaken by a copyright troll, only a small part of the cases actually reach the court. Copyright trolls tend to stay away from potential examination by the court of the scope of their copyright and a proof of this is the withdrawing of the GeniaTech176 and Telefonica177 cases by the troll when the court found that injunction cannot be granted without examination of the alleged copyright at first place. In fact none of the cases brought until now by a FOSS copyright troll has been decided on the merits by the court. However, here there is no option for insurance, so the additional financial safety net for targeted companies does not exist and they might be confronted with litigation that they do not have the financial resources to handle. On a separate side, there are already FOSS enforcement court cases proving that the copyleft provision is enforceable,178 and the copyright trolls take advantage of this. Further, in the case of McHardy future targets are not in the beginning of the string anymore, as many other have been targeted already.179
2. Negotiate and settle Negotiation and payment of the license fee might be attractive option for targeted companies due to the reasons that it is faster and they will not be forced to interrupt the business and lose profits.180 In the case of NTP vs. Research in Motion,181 the defendant preferred to enter into settlement even if it challenged the validity of the patent and it had reasonable grounds to believe that the patent will be declared invalid.182 The Research in Motion’s decision was based on the need to shortly close the case and to be able to keep distributing its products without interruption.183 The decision to negotiate and settle depends
172 Petersen (n 83). 173 ibid, p. 109. 174 ibid. 175 Jaeger (n 56). 176 Case 14 O 188/17, Landgericht Koeln, Patrick McHardy v. Geniatech Europe GmbH (n 103). 177 Case 7 O 189/16 Landgericht Munich, Patrick McHardy v. Telefonica 178 Jaeger (n 56). 179 Meeker (n 24). 180 Tiller (n 39). 181 Case 4 18 F.3d 1282 (Fed. Cir. 2005) NTP, Inc. vs. Research in Motion, LLC 182 The US Patent Office indeed found it invalid shortly after the settlement was executed. 183 Watkins (n 129) p. 121.
37 | P a g e on other economic factors too – for example if injunction will preclude defendants possibility to perform its obligations under contracts with its suppliers and customers and if any contractual penalties might arise from this, what will be the amount of the lost profits, what will be the cost of litigation and what is the chance that infringement is found by the court and damages are awarded for the benefit of the plaintiff.184 The bargaining power of the parties also plays an important role. The troll usually has an advantage – it holds a patent that the other party most likely already uses in its business, so the NPE is able to stop the business of the other party if it obtains an injunction, and on a second place, there is no urgency for the NPE to find a solution to the dispute. Patent trolls usually do not provide much information about the patent in question and the PE cannot research for what exactly is the fee to be paid and how likely is the patent valid or infringed, so they do not know where they are in the position of powers in negotiations.185 Settlement negotiations start after the execution of a non-disclosure agreement, which limits company’s ability to make potential abuse of IPRs public. All of the above applies in the negotiation with FOSS copyright trolls too. When negotiating with a copyright troll companies should be careful not to undertake more obligations than what is already prescribed by the applicable FOSS license.186 Further, it is to the benefit of the infringer to prolong the negotiation process as long as possible as this would preclude the copyright holder to obtain an injunction later, because one of the main requirements for granting of injunctions is urgency (defined differently per jurisdiction).187 The specific of settlements regarding FOSS copyright infringement is how exactly will be the settlement price or license calculated. Usually in FOSS enforcement the infringer is required to pay for the enforcement costs (e.g. the procurement of a product for test purposes) and may also be asked to pay damages – the profit made by the company on the non-compliant work.188 Another important issue that has to be covered is the negotiation of proper grace period, as FOSS compliance overnight is not possible and without grace period the company may infringe again the license which will trigger new claims by the troll.
3. Stop using the infringing technology This option applies the same way for both IP trolls and results in either finding a design around (for patents), or repairing the source code whereby the infringing parts are replaced with proprietary software or other non-infringing FOSS (for copyrights),189 or exiting the market due to the inability to replace the infringing technology with non- infringing. However, if the company decides to follow this path it should take into account that its product on the market might already be infringing and therefore it might also suffer damages due to granted warranties and indemnities towards third parties (mostly its customers). In any case this option is rarely used as design arounds and corrections are time
184 Allison, Lemley and Walker (n 85). 185 Cohen, Gurun and Kominers (n 36). 186 See the strategy used by the trolls to make infringers sign separate agreements imposing high contractual penalties discussed in Chapter 1. 187 Jaeger (n 119) p.36. 188 ibid. 189 Tsotsorin (n 13). 38 consuming and will not solve the issue with respect to products that already reached the market.
4. Litigate Finally, initiating litigation is also an option for response against the patent troll. It might sound as something that PEs want to avoid, but in some cases litigation is a good choice due to multiple factors. In defense against patent trolls, to fight the patent in court in order to prove non-infringement or permissive use or to fight the validity of the patent is already known defensive strategy.190 In Open Source copyright trolling it is not used yet and there are no cases yet where a PE has brought a case against the troll in the court to challenge the validity or the scope of the claimed copyrights.
4.1. Forum Shopping If the targeted company (irrespective if in patent or copyright case) initiates the litigation it may choose the forum which will bring some benefits such as court proceeding with which the company is familiar and fewer costs for travel and translations.191 Moreover, the company might choose a court that is not likely to grant an injunction requested by an NPE.192 This is basically the same strategy that trolls use against PEs in IP enforcement cases and that was discussed in Chapter 1, so I will not re-examine it in detail.
4.2. Narrow the scope of the IPR Bringing the case into the court is beneficial for the targeted company in light of the ability to narrow down the scope of the patent. Patent trolls are often targeting companies with very wide patents of low quality.193 Of course, proving the invalidity of the patent is the best case scenario, but even if the patent appears to be valid, the court might interpret and define the scope of the patent claim and by doing so might also limit it. This will give the targeted company the possibility to design around and to patent another technology that will deliver similar results, so that it can be implemented in the products and make them non- infringing.194 However, here also exists the possibility the NPE to chase the company for the infringing products that have already been placed on the market for which design around will not help. Another benefit of limiting the scope of the claim is that the NPE will be precluded to change the scope of the patent in future cases, because it will be bound by the court ruling.195 Thus, it will not be able to widely interpret its patent scope and to adjust it dependent on the technology that it aims to target as infringing. With respect to Open Source trolls, in the Introduction Chapter I explained that it is not easy to differentiate from a technical point of view between the contributions of all
190 Rantanen (n 90). 191 ibid. 192 See Seaman (n 97)., which shows that after the eBay case the courts in some US jurisdictions are more likely to reject an injunction if it is requested by an NPE. 193 Reitzig, M., Henkel, J., and Heath, C. (2007) “On sharks, trolls, and their patent prey: Unrealistic damage awards and firms’ strategies of being infringed” Research Policy, Vol 36, No 1, p134–154. 194 Rantanen (n 90). 195 ibid.
39 | P a g e developers who worked on the same piece of code. However, the copyright trolls claim co- authorship on the whole source code in general without making clear where they contributed in particular.196 Thus, if the targeted company files an application for negative declaratory judgement into the court it may succeed to prove non-infringement or at least to limit the scope of the claimed copyright which will also limit the future actions of the troll. Alternatively, the company may cooperate with other FOSS developers who also contributed to the same code but do not act as trolls. The copyrights of such developers may be concerned by the troll allegations. They can support the company in proving that certain pieces of the work are copyright protected in their name and were not created by the troll.
4.3. Obtain information Initiating litigation might be successful strategy because it is a good way to extract information from the troll.197 As said above, in many cases the patent troll does not provide much information about the patent that it holds, so it is not easy for the company to assess how strong the position of the NPE is with respect to the validity of the patent and its enforcement. Without having this information the company cannot assess if there is an infringement and if it should enter into settlement or not. However, if the targeted company initiates litigation, the NPE will be obliged by the court to provide some information to the court and to the plaintiff in response to the claim. If the NPE does not hold a valid IPR but only alleges to do so, this might be revealed during the court proceedings. Moreover, the NPE might even start negotiating with the targeted company to settle, because it does not want to reveal this information.198 For example, one of the supposed reasons for the withdrawal of the claim against Geniatech was that the troll did not want to submit further information regarding his copyrights and did not want the court to examine further the scope of the same.199 Obtaining information from the copyright troll regarding the exact parts of the code that are infringing will help the company to potentially prove non-infringement if these parts are not used in the allegedly infringing software.
4.4.Prove non-infringement Invalidating the patent in court is a good motivation to initiate litigation. Basically it is the main reason why PEs challenge IP infringements in court. However, there is also the possibility that the court finds the patent valid but there is no infringement by the targeted company (for example if the PE’s products do not contain the technology in question or use a design-around).200 In this scenario, the patent may not be enforced against the company, but the troll might target its competitors whose products might fall under the scope of the patent. This would mean that the competitors of the targeted company would have to pay a license fee for using the patented technology in their products, but the targeted company will be free to continue producing its products without paying a license fee, so it will gain a competitive
196 Welte (n 25). 197 Rantanen (n 90). 198 Allison, John R. and Walker, Joshua H. and Lemley, Mark A., Patent Quality and Settlement among Repeat Patent Litigants (September 16, 2010). Stanford Law and Economics Olin Working Paper No. 398. Available at SSRN: https://ssrn.com/abstract=1677785 or http://dx.doi.org/10.2139/ssrn.1677785 199 Welte (n 25). 200 Rantanen (n 90). 40 advantage.201 In this case, initiating litigation against the patent troll is the best strategy that the company may adopt. This scenario has not yet been proved in FOSS copyright troll cases, but I would presume that similar outcomes are possible if the targeted PE has not used parts of the FOSS that fall under the scope of the trolls copyrights, but its competitors have used it. In any case, if the technology is licensed under a type of license with strong copyleft provision which does not allow restoration of the license rights in case of cure of the breach (e.g. GNU GPL2), then the competitors of the defending PE, provided that their products are infringing, might be charged a licensing fee to use the software, so the PE will be in an advantageous position compared to its competitors with respect to prices.
5. Chapter Conclusion As a conclusion, choosing a concrete option and following a particular strategy highly depends on the characteristics, size and bargaining power of both the troll and the target, on how far the business of the target is concerned by the allegations and what are the available resources of the target (financial and strategical). There is no universal strategy that will work in all cases. As mentioned before, having proper prevention and risk mitigation mechanisms is of high importance for the position of the company in a particular IP infringement case. This chapter showed that basically most of the ex post strategies can be applied against Open Source copyright trolls to a certain extent. The main difference is that the ones related to litigation have not yet been tested because none of the defendants has used the option to initiate litigation for declaratory purposes against an Open Source copyright troll yet. However, it seems that this strategy is able to provide good solutions to many of defendants’ problems related to unbeneficial forum, uncertainty about the scope of the copyright or doubts about the infringement.
201 ibid.
41 | P a g e
V. Conclusion
1. Conclusions The objective of this paper is to examine what are the existing strategies that companies use to protect themselves from patent trolls assertions and if the same may be applied against Open Source copyright trolls, which are relatively new players on the IP litigation stage. The comparison between the two types of IP trolls showed that they share similar features and strategies. They both pursue the same goal – monetarization of IP rights over an invention or a work that their victims widely adopted in their business.202 Both are enforcing the alleged rights in aggressive way via threats of potential litigation using the vulnerability of their victims to make them pay high amounts in order to settle the case and not to affect their business or reputation. Further, both do not use the work or technology that is subject to the claim to produce products or provide services, so they do not fear the retaliatory power of the defendants.203 They also share the same taste for victims – corporations with working businesses who invested the costs of bringing the product into the market,204 which very often are also medium sized to large corporations in the telecommunications sector.205 All these similarities suggested that defense against copyright and patent trolls should also rely on certain similarities. This assumption was confirmed in the discussion of some of the PE’s ex ante strategies such as compliance and due diligence. It was discussed that the implementation of proper compliance program and monitoring of compliance with license terms which will keep PEs away from aggressive enforcers. Patent and Open Source license compliance are both based on the same IP risk management rules, but Open Source license compliance is more accessible because of the extra efforts of the Open Source community to support the users of FOSS. PEs do not get any support from patent holders to ensure non-violation, but in contrast they get encouragement by the Open Source community to achieve compliance with the GNU GPL and therefore to avoid trolls. This is evident from the principles of enforcement proclaimed by the community and also from the actions of some Open Source enforcers who cooperate with the infringers to help them cure their violations.206 Some FOSS projects even provide guidelines and propose internal implementation of compliance programs for PEs. Moreover, GNU GPL3 grants infringers a second chance to prove compliance and cure their violation and to get their license rights reinstated, which precludes the copyright trolls’ enforcement.
202 See Case 547 U.S. 388, eBay Inc. v. MercExchange, L.L.C., (2006) – the patented technology was so deeply implemented in the business operations of the defendant that the claimant was able to disrupt or even to temporary shut-down the whole business of the defendant if an injunction has been granted. This imbalance of negotiation powers and the extreme vulnerability of the defendant was one of the reasons why injunction has been rejected by the court. With respect to Open Source copyright trolling see Case 14 O 188/17, Landgericht Koeln, Patrick McHardy v. Geniatech Europe GmbH (n 103). where the copyright troll attacked a vendor of devices that enable telecoms to provide their services to end users and is widely adopted on the market. 203 Ove Granstrand, 1999 ‘The Economics and Management of Intellectual Property’ Books, Edward Elgar Publishing, number 1651. 204 Reitzig, Henkel and Heath (n 53). 205 European Economics, Thumm and Gabison (n 5), p. 6. 206 Gay (n 41). 42
Another group of strategies were found to be suitable against patent trolling, but not yet used against Open Source copyright trolling – insurance, participation in defensive networks and litigation. Insurance is one of the standard risk management tools used by PEs, but with respect to IPR management it appeared that insurance is used very conservative by PEs. Even if it has certain applicability in relation to patent troll litigation, there were not found any insurance solutions suited for Open Source litigation specifically. However, due to the increasing number of Open Source enforcement cases, the potential market for this solution will grow and this might motivate insurers to customize their services for Open Source copyright troll initiated litigation as well. Participation in defensive networks, on the other side, was found to be a strategy commonly used for patent trolls prevention and it has also certain suitability for Open Source as far as software patents are concerned – the Open Source community and PEs use cross-licensing models to ensure that no patents are enforced in Open Source and thus the actions of patent trolls are barred. A suggestion was made that same approach may be used by telecommunication companies that may build networks to solve the Open Source troll problem they share by establishing standards or compliance pre- checks for third party sourced software in order to prevent unintentional infringement which may trigger troll problems. The defense against patent trolls already provides good examples of creative strategical solutions which are result of the common effort of numerous concerned parties. Furthermore, given the developments of some Open Source copyright troll initiated cases, it is likely that initiating litigation is also a good strategy against copyright trolls, because it might give the PE the opportunity to choose the forum, to narrow down the scope of the copyright or at least to obtain valuable information from the troll which is otherwise not accessible for the PE. In general, the findings of this paper proved that PEs’ experience with patent trolls provide a good basis for the development of strategies against Open Source trolls, even if some of the traditional prevention and defense strategies against patent enforcement might have to be adapted to the specifics of copyrights and Open Source enforcement.
43 | P a g e
VI. Bibliography
Allison J, Lemley M and Walker J, ‘Patent Quality and Settlement Among Repeat Patent Litigants’ [2010] Stanford Law and Economics Olin Working Paper No. 398 31 44 2/?utm_source=IP2I&utm_medium=public website link> Depoorter B and Vanneste S, ‘Norms and Enforcement: The Case against Copyright Litigation’ (2005) 7 84 Or. L. Rev. 1127 243 Duchêne A, ‘Patent Litigation Insurance’ (2017) 84 Journal of Risk and Insurance 631 European Economics, Thumm N and Gabison G, Patent Assertion Entities in Europe (EUR 28145, 2016) 45 | P a g e Kemp R, ‘Towards Free/Libre Open Source Software (“FLOSS”) Governance in the Organisation’ (2009) 1 Kuhn BM, ‘Welte Receives Open Source Award for GPL Enforcement’ (2008) 46 (2009) 4 Journal of Intellectual Property Law & Practice 109 Rantanen J, ‘Slaying the Troll: Litigation as an Effective Strategy Against Patent Threats’ (2006) 23 Santa Clara Computer and High Technology Law Journal 159 47 | P a g e Tiller R, ‘What to Do about the “Patent Troll” Problem’ (opensource.com, 2012) 48