There has been a recent surge of cases involving Chinese non-practicing entities suing US companies for violating broad and vague patents that they claim to hold. These NPEs, often known as patent trolls, are companies that don't actually invent or innovate, but just buy up patents for the purpose of making money through litigation. In essence, patent trolls are manipulating the legal system for their own personal gain.
One example of this is Personal Audio LLC, a Chinese patent troll, which used extremely complicated legalese to deliver a nonsensical court case to many large media companies in the US. One of these cases was based on the vague and complicated claim that a company that creates podcasts violated their patent on podcasting technology.
As I wrote about in a previous blog post, this is becoming an increasingly large problem because state-sponsored patent trolls are now interfering in the market for intellectual property. A technology hub in China known as Zhongguancun recently received a $15 million grant to create a patent-troll entity known as Ruichuan IPR Funds. This would mainly be designed to buy up patents and then use these to litigate against foreign companies.
China has an interesting system known as the Utility Model Patent system (UMP), wherein applicants can basically have a cheap, fast-track to getting a patent, without much examination or review. This is problematic because it leads to situations where non-practicing entities can quickly get patents that they don't deserve to have and use it to litigate against perfectly legitimate companies. Even if they don't actually have a claim to their patent and are ultimately invalidated, they cost the legitimate company a huge sum in legal fees having to defend their fair practices. China is now using this as an offensive technique to cripple US businesses operating in China, and in doing so, give Chinese companies a chance.
Source: http://www.commdiginews.com/business-2/chinese-patent-trolls-attack-us-entities-24936/
One example of this is Personal Audio LLC, a Chinese patent troll, which used extremely complicated legalese to deliver a nonsensical court case to many large media companies in the US. One of these cases was based on the vague and complicated claim that a company that creates podcasts violated their patent on podcasting technology.
As I wrote about in a previous blog post, this is becoming an increasingly large problem because state-sponsored patent trolls are now interfering in the market for intellectual property. A technology hub in China known as Zhongguancun recently received a $15 million grant to create a patent-troll entity known as Ruichuan IPR Funds. This would mainly be designed to buy up patents and then use these to litigate against foreign companies.
China has an interesting system known as the Utility Model Patent system (UMP), wherein applicants can basically have a cheap, fast-track to getting a patent, without much examination or review. This is problematic because it leads to situations where non-practicing entities can quickly get patents that they don't deserve to have and use it to litigate against perfectly legitimate companies. Even if they don't actually have a claim to their patent and are ultimately invalidated, they cost the legitimate company a huge sum in legal fees having to defend their fair practices. China is now using this as an offensive technique to cripple US businesses operating in China, and in doing so, give Chinese companies a chance.
Source: http://www.commdiginews.com/business-2/chinese-patent-trolls-attack-us-entities-24936/
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