Anyone who has a pulse on technology and innovation has at least anecdotally heard of patent lawsuits being filed on behalf of known or relatively obscure entities. Most prevalent, among the well-known, are the cases surrounding Apple – as these are the most publicized. Apple vs. Samsung. Apple vs. HTC, Apple vs. Nokia. Engadget, Gizmodo, and tech blogs down the line will cover these stories.
Despite the increased attention placed on Fortune 100 tech companies involved in patent litigation, the “problem” extends far beyond these lawsuits you hear about from time to time. The tables below show the extent to which patent suits have been not only targeting these expected product companies, but also companies that really don’t place technology advancement as a primary strategic goal (the underlying data sourced from news.priorsmart.com through the end of August; also, please note that this is just a subset of the 2,500+ patent lawsuits that have been filed in 2013):
Why is this case? Well – and trying not to oversimplify here – companies today need to use technology to compete and increase shareholder value. This ranges from using QR codes on theirs goods for item identification and tracking, “securing their website” with various authentication protocols, offering the ability for customers to pay with “digital wallets”, enhancing the efficacy of their website search engine, and down the line. The question becomes, “who is building this technology?” Certainly not Bed Bath & Beyond. Like Guitar Center, like Aeropostale; they’ll partner with or become customers of third party vendors who will supply these incremental, but necessary technology enhancements.
Ultimately, however, it does not matter if Bed Bath & Beyond did not make these technologies themselves. Patent Law 101 would tell you that patents “provide the right to exclude others from making, using, selling, offering for sale, or importing the patented invention for the term of the patent.” Thus, even if hypothetical Company ABC provides the back-end supply-chain management system for Bed Bath & Beyond, that doesn’t change the fact that Bed Bath & Beyond is still using that third party system in its day to day operation.
So what? What are the implications here? It often boils down to “why solely sue the third party vendor who 1) may have less than 1% of the revenues of BB&B and probably doesn’t have large reserves of cash on hand, and 2) is less likely to settle quickly because they just haven’t been down this rodeo before (in combination with not having the money)?” In many cases, suing the downstream end-users provides the highest possible financial outcome for the patent asserting parties.
– Brian Bochicco