“Implications of Intellectual Property Rights in International Business”
Sobia Qureshi
MBA - REGN. NO. 15728
A Term paper in partial fulfillment of the requirements for the Course “International
Business”
DEPARTMENT OF MANAGEMENT SCIENCES
IQRA UNIVERSITY, ISLAMABAD CAMPUS
2012
1
Abstract
The term paper is based on the implications of Intellectual property rights in international
business. As now in the globalized world, businesses are not operated within the geographical
boundaries but whole world is considered a market. With increased international business
practices, technological products, innovation and creation have gained a lot of importance. For
the protection of intellectual property internationally, registration of intellectual property in the
form of copy rights, Trademarks and trade dress and most importantly patents.
This term paper will encompass the concept of patent rights, patent trolls and the ethical
implications patents trolls have in the corporate world. The main emphasis of this paper is to
develop understanding about the mechanism of patent trolls that how companies manipulate their
patent rights. In many cases patents are registered not only for protection and exclusive
ownership but for making more and more money.
The ethical implications will be identified that is it ethical to make use of the patent rights other
than protecting your intellectual property. The challenges or costs that consumer has to pay due
to the law suits among companies will also be discussed in a broader spectrum.
2
Table of Contents
Introduction.................................................................................................................................... 4
Patent Rights ............................................................................................................................... 4
Patent Trolls ................................................................................................................................ 4
Motivation for Patent Trolls .......................................................................................................... 4
Patent Trolls and Preliminary Injunction .................................................................................... 5
Patent Trolls: Illegal or Unethical Dilemma ................................................................................ 5
Who pays for patent trolls shiva vandana ..................................................................................... 6
From business perspective ............................................................................................................. 6
Cases ............................................................................................................................................... 7
Conclusion...................................................................................................................................... 8
Recommendations .......................................................................................................................... 9
References .................................................................................................................................... 10
Appendix ....................................................................................................................................... 11
3
Introduction
Patent Rights
Patents rights are the exclusive rights given to the original inventor as a regard or appreciation
for developing a valuable component. This is one form of Intellectual Property Rights granted to
the inventor, issued by the Intellectual Property Rights Office. These rights exclude others from
making, using, offering for sale, or selling products or services based on the invention of the
patent holder (Myhrvold, 2010).
Patent Trolls
Patent trolls are the individuals or firms that develop inventions, get them registered in the
Intellectual Property Rights Offices but they don’t have any intension to practice their
inventions. These patent trolls or patent sharks don’t advertise their inventions rather they stay
quiet and wait for the big companies to infringe patent rights unintentionally. The stream of
income for patent trolls comes from the lawsuits they file against big companies that
inadvertently infringe their patent rights (Henkel and Reitzig, 2008).
Motivation for Patent Trolls
Patent holders generate money from royalties of licensing their patents to other companies but
the amount patent trolls get as a settlement of lawsuits is much higher then the royalties. Money
plays significant role for patent trolls to hide and file lawsuits (King, 2004).
4
Patent Trolls and Preliminary Injunction
Companies that inadvertently infringe patent rights have to pay demanded money to the patent
sharks; if they don’t court can give preliminary injunction (Dan, Burk and Lemley, 2003).
Patent sharks mostly take place in technologically intensified companies. Companies that keep
on investing in Research and Development come up with more innovative patents face serious
issues created by patent sharks (Boldrin and Levine, 2001).
Patent Trolls: Illegal or Unethical Dilemma
Patent trolls are perfectly legal, it is the right of every inventor to own, manufacture, sell, dispose
or reproduce its work. Court has given exclusive rights to the inventor only even if the inventor
does not practice the patent and involves in the patent troll; court cannot enforce it (Sidak, 2007).
The debate arises that whether this practice is ethical or not. Researchers show different
perspectives regarding this aspect of patent trolls. According to some researchers it disrupts
innovation for which patent rights have given to the inventor. It is considered an obstacle and
abuse for the dominant position given by IPO and court. US Department of Justice and the
Federal Trade Commission published the report “Antitrust Enforcement and Intellectual Property
Rights” in April 2007. In this report it was categorically described that main objective of
granting Intellectual Property Rights is to enhance consumer welfare and promote innovation.
Patent trolls abuse these rights that is why, trolls are strictly condemned by many researchers
(Straus, 2010).
Moreover the most important goals of issuing exclusive monopolistic rights to the inventor are to
develop new and better technologies that can improve products and services. Another significant
reason is to provide better options to customer at lower prices and additional value (Gregory,
Duff, Jay, Taylor, John, Prescott and Swift, 2008).
Patent holders are rewarded because of their contributions to the society through bringing
innovative ideas and making marketplace more competitive. It has been witnessed that many
5
patent holders under US patent law are exceeding their limits of benefits. The social benefits
patent holders are taking are not aligned with their contributions. Patent trolls misuse the benefits
they get and harm economy by disrupting innovation and affecting price changes (Shapiro,
2007).
Who Pay for Patent Trolls
Intellectual Property has deep roots in technologically intensified countries of the world but it
impacts greatly on the lives of people belong to developing and poor nations. When big
companies acquire patents and get them registered in developing countries; the prices related to
that patented products increase dramatically. If the scenario of patent trolls is taken under
consideration; the money companies have to pay for the settlement of lawsuits directly increases
the prices and it becomes even more difficult to developing nations to cope with this price
instability (Gentleman, 2007).
In India over the last decade, 200,000 farmers committed suicide because of increase in cotton
seed price from 7 rupees per kilo to 17000 rupees per kilo. The reason of this dramatic increase
in price was that Monsanto got patent for BT cotton seed. In this way patents controlled the
production of food in India. Researcher Dr Shiva Vandana considers patents a “Tool for
imperialistic control”; researcher explains that patent agreement for staple food products stops
people
to
have
food,
medicine
and
technological
advancement.
Source:www.inmotionmagazine.com.
From business perspective
Another perspective of looking at patent trolls is business. Many Venture Capital firms consider
buying more and more patent and getting money by selling them at remarkably high prices as a
business idea of making money. These firms also don’t commercialize their patents but they sell
patents to other companies. These firms are called Intellectual Ventures and their purpose is to
develop a capital market for inventions (Lohr, 2010).
6
Cases
NTP v. RIM
NTP is a patent holding company that filed lawsuit against RIM in 2000 for the infringement of
its five patents and appealed for injunction. The case pulled to five years and RIM did not feel
any danger of injunction. On February 2006 District court judge James Spencer was inclined to
give injunction. RIM then settled the case by paying $612.5 million (Henkel and Reitzig, 2008).
Intergraph v. Intel
Clip maker Intel paid $675million to Intergraph for infringement of its clipper processor patents.
Intergraph was non-practicing and stopped manufacturing hardware before many years. It never
used its patents in the product (Henkel and Reitzig, 2008).
Boston Scientific v. Dr Bruce Saffran
Dr Bruce Saffran was the owner of patent number “760” entitled “Method and Apparatus for
Managing Macromolecular Distribution”. Dr Bruce filed a lawsuit against Boston Scientific for
infringing his patent rights. On February 12, 2008 Boston Scientific paid $431 million to settle
the law suit (Piper, 2008).
MercExchange v. EBay
In 2001 MercExchange sued eBay on infringing its patent rights around the “buy it now” feature.
The case held up in court for seven years. Federal jury had ordered EBay to pay MercExchange
$25 million in damages. Later on EBay and MercExchange announced a settlement of that
circuitous dispute. Ebay got license from MercExchange and settled the suit out of court (Stone,
2008).
Other Cases
In 2007 NTP filed lawsuits against several telecommunications carriers. The companies sued in
the carrier suits included AT&T, Sprint Nextel, T-Mobile and Verizon Wireless. These cases
have not yet been settled or come to trial. Other than R.I.M; Nokia and Good technology have
also licensed NTP’s mobile e-mail patents. Source www.nytimes.com
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Conclusion
The literature and cases reveals that patent trolls are the non practicing entities and their purpose
is to make money. Trolls are opportunist not entrepreneurs and they exploit the rights given to
them as an appreciation of their innovative work.
Patent trolls are the source of creating
disruption in the growth of economy by becoming obstacle in innovation and harming consumer
welfare. Patent trolls are considered a growing threat to the companies working in USA
especially in the technology field (Petersen, 2009).
Business entities don’t consider trolls as a negative component in the industry. Intellectual
Capitalist is an emerging concept and has been practiced by some entrepreneurs. According to
this buying patents and then selling them at higher price is not something negative but is it about
creating capital market for inventions (Lohr, 2010).
Hence patent trolls can be considered unethical from consumer perspective but as far as business
is concerned they cannot be called unethical. As many researchers have considered it to be an
entrepreneurial idea.
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Recommendations

Laws must be defined by courts to ensure that new proprietary technologies, products and
services are bought, sold, traded and licensed in a competitive environment (Petersen,
2009).

Court should ensure at the time of deciding patent trolls cases that whether the patent has
added any value or it has just registered to trap other forms.

Companies should invest in patents that can really add value to their business and
economy. Registering unnecessary patents should be controlled (Henkel and Reitzig,
2008).

Technologically intensified companies should have correspondence to ensure that there
should not be duplication in the R&D department. (Henkel and Reitzig, 2008).

Patent office should make sure that all patent holders advertise their patent holding, so
that companies contact them for licensing.
9
References
Dan, L, Burk and Lemley, M (2003). “Policy Levers in Patent Law”, Journal of Virginia Law
Review,
Vol.
89,
No.
7
(Nov.,
2003),
pp.
1575-1696
Stable
URL:
http://www.jstor.org/stable/3202360.
King, R (2004). “Companies Frequently Sued Over Patents” retrieved on 1st December 2010
from http://images.businessweek.com/ss/10/02/0202_patent_trolls_top_targets/10.htm.
Boldrin, M and Levine, D (2001). “Against Intellectual Monopoly” University of California, Los
Angeles.
Straus, J (2010). “Patent Application: Obstacle for Innovation and Abuse of Dominant Position
under Article 102 TFEU” Journal of European Competition Law & Practice, 2010, Vol.
1, No. 3
Sidak, J (2007). “PATENT HOLDUP AND OLIGOPSONISTIC COLLUSION IN
STANDARD-SETTING ORGANIZATIONS” Journal of Competition Law &
Economics,
5(1),
123–188
doi:10.1093/joclec/nhp007.
Downloaded
from
jcle.oxfordjournals.org by guest on January 5, 2011
Gregory A, Duff, Jay, G, Taylor, John F. Prescott J and Michael A (2008). “ Patent trolls (and
other bad news) lurking in your mailbox: handling cease-and-desist letters in the USA”
Journal of Intellectual Property Law & Practice, 2008, Vol. 3, No. 7.
Shapiro, C (2007). “Patent Reform: Aligning Reward and Contribution” Carl Innovation Policy
and the Economy Vol. 8, (2007), pp. 111-156 Published by: The University of Chicago
Press Stable URL: http://www.jstor.org/stable/25056200.
Gentleman,A (2007). “Drugs for poor and patent rights at issue in Novartis suit in India Business - International Herald Tribune” Retrieved from www.nytimes.com
Lohr, S (2010). “Turning patents into invention capital”. Retrieved from www.nytimes.com
10
Myhrvold, N. (2010). The Big Idea: Funding Eureka. Harvard Business Review ,
http://hbr.org/2010/03/the-big-idea .
Piper,
H
(2008).
“Boston
Scientific
v.
Dr
Bruce
Saffran”
Retrieved
from
http://www.dicksteinshapiro.com/newsevents/pressreleases/detail.aspx?news=885
Smartphone
Patent
Suits
Challenge
Big
Makers
retrieved
from
http://dealbook.nytimes.com/2010/07/09/smartphone-patent-suits-challenge-bigmakers/?scp=10&sq=articles%20on%20patent%20trolls&st=cse
Petersen,M (2010). “Strategies for defending international companies” Journal of Intellectual
Property Law & Practice, 2009, Vol. 4, No. 2
STONE,
B
(2008).
“EBay
Settles
Its
Patent
Dispute”
http://bits.blogs.nytimes.com/2008/02/28/ebay-settles-with-its-patenttroll/?scp=6&sq=articles%20on%20patent%20trolls&st=cse
11
Retrieved
from