GE’s IP counsel takes a surprising position on so-called “patent trolls”

 

Richard Rainey, Executive Counsel, IP Litigation, General Electric CorporationWhen a corporate IP counsel speaks to a group of patent lawyers, what position do you expect them to take about those companies that don’t make products, but assert their patents against companies that do? Negative, right?

This is what made Richard Rainey’s keynote address at the American Bar Association Intellectual Property Lawyers group (ABA IPL) luncheon on April 5, 2013, so surprising, refreshing, and inspiring. Richard Rainey is Executive Counsel, IP Litigation, for General Electric Corporation (GE). Undoubtedly, with the thousands of products GE produces worldwide, it has been on the receiving end of many patent infringement lawsuits by those who are currently being labeled “patent trolls” or “non practicing entities.” Thus, who would blame him if he were to come out swinging against patent trolls?

Instead, however, he took exception with president Obama’s strong statement on February 14th on the subject:

“They don’t actually produce anything themselves. They are essentially trying to leverage and hijack somebody else’s idea and see if they can extort some money out of them.”

Mr. Rainey reflected that “hijack” and “extort” are rather strong words to be used to describe any situation when a patent is asserted by someone who isn’t necessarily the original inventor!

The danger of doing so, he said, is that this scenario can describe the activities of many companies, including GE, who don’t necessarily make a product for every patent they eventually assert against another entity. Logically then, a company such as GE, then, could also be accused of “hijacking” and “extorting.” Why use derogatory terms such as “patent troll,” “non practicing entity,” or even “patent assertion entity,” to describe firms that simply assert their patent rights as part of their primary business model?

Mr. Rainey continued to make a compelling argument against classifying such entities differently or fashioning special rules against them. Two of my favorite statements he made during his presentation were the following:

“People complain this troll problem is terrible because all these outfits want is money. When did it become a problem to make money off a patent? It may come as a surprise to you, but GE often asserts patents, and we are looking for revenue.”

—and—

“[It’s well established that] a patent doesn’t give you the right to produce a product…. Why, then, is it problematic to be a non-practicing entity when a patent doesn’t give you the right to practice anything at all.”

Without his stating this directly, my interpretation was that Mr. Rainey was standing for the integrity of the system—and against those who would undermine it for the sake of eliminating something they personally deemed inconvenient.

As Mr. Rainey noted, if you ask any corporate business leader how many cases against them are by “trolls,” the answer is commonly “all of them.”

“It seems, then, that anyone against you is a troll.”

This is an important stance to take—because people love to create “bogeymen” and assign blame. It is way safer to rally the masses into following you, pitchforks and all, to the castle, than it is to be the voice of reason, and get them to put down their pitchforks.

Mr. Rainey: Bravo, for taking a risk, for eloquently and effectively making your point, and shifting the conversation among IP attorneys. I applaud and appreciate your clear sense of social responsibility, as well as responsibility to the profession. Consider that the frequent “knowing” laughter during your presentation demonstrated the extent to which your colleagues recognized the lack of logic in the frequent complaining they’ve done or listened to about the so-called “patent trolls.” And for me personally, your keynote made staying for Friday’s lunch worthwhile!

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