Patent trolling in Asia muted for now

Current immature IP system means it will take the region at least 10 years for patent trolling to catch up with U.S., where there are stricter laws.
Written by Jamie Yap, Contributor

As compared to other regions that have more mature intellectual property (IP) enforcement, Asia will not yet see regular or significant patent trolling. However, if it does in future, the likely hotspots where trolls will lurk are the Web and mobile arenas, observers say.

The relative immaturity of the IP landscape in Asia basically means that for now, patent trolling continues to be more pervasive among big, global companies in the West, even if it does seem to be picking up within Asia, said Dao Thi Minh Thao, ICT research associate, Asia-Pacific at Frost & Sullivan.

Lawyers define a patent troll as a term referring to a non-performing entity (NPE) that acquires and enforces a patent it has no plans of using, in order to get money from companies infringing that patent.

Patent trolls "follow the money" and need a developed legal system which enforces IP rights effectively, said Michael Burdon, head of international IP group at Olswang. That is why they have mostly focused on the United States market where they have been particularly successful, as opposed to Asia, he pointed out.

Similarly, trolls would also prefer a jurisdiction where they can make more money from enforcing their patents, said Alan Chiu, senior associate for IP and IT practice group at Mayer Brown JSM. For example, the amount of damages awarded by courts in Asia, such as China, is generally lower than what could be obtained in a U.S. patent lawsuit.

Chiu added that the U.S. will likely continue to have one of the highest rates of patent trolling. The legal cost of defending against a patent infringement lawsuit in the U.S. is high, so defendants are more likely to pursue an early settlement, he explained.

Trolls to come out… later
Nonetheless, Burdon argued that Asia's attitude toward IP is fast catching up, even if patent trolling activities in the meantime are "more a case of the occasional nuisance claim".

"There's been a remarkable increase in patent filing, including by Asian and Chinese companies. IP infringement cases are getting more frequent and awarding damages more common. But these are not at the scale of the U.S., and enforcement systems [in Asia] are still developing," said the Olswang lawyer.

"I anticipate patent trolls and opportunistic one-off enforcers of IP rights will become more significant in Asia but realistically this will take at least 10 years or so to get to the level of the U.S.," he added.

According to industry watchers, patents in Web and mobile software as well as mobile devices are likely hotspots for trolling should it come to fore in Asia.

The intense rivalry and million-dollar lawsuits between prominent names such as Apple, Samsung, Google and Microsoft, could lead to trolls jostling for a share in the sectors these giants play in, said Frost & Sullivan analyst Dao.

Chiu, the lawyer from Mayer Brown JSM, noted that mobile apps are an increasingly profitable market, and more clients are asking about patent eligibility of apps. However, many app developers are startups which may not have funding to apply or maintain the patents.

This makes them a potential target for trolls to acquire their patents and then sue the big players in the market to generate more money, he explained.

Similarly, the immense penetration and popularity of Web technologies such as those used in social media sites and social games in Asia make it another possible target for trolls, he added.

Still, Burdon pointed out that trolls may instead eye "unglamorous but essential" backend technologies for enterprises, such as operational software, in order to extract royalties from tech companies which are reliant on this business. The rationale is that consumer-target offerings or products are lower in value, because they can be abandoned or re-engineered to avoid infringement, he said.

Editorial standards