Taiwan’s Defensive “Patent Bank”

Update: See the Rational Patent Exchange’s (RPX) Defensive Patent Aggregation Service.

In my post The Patent Defense League and Defensive Patent Pooling, I suggested that some companies or industries might be able to form a “patent defense league” where patents are pooled and made available to members for defensive reasons–for example, to ward off patent aggression from competitors.

It appears that Taiwan is now considering a variant on this approach, by means of quasi-governmental “patent banks” to help defend Taiwanese companies from patent suits by foreign companies and patent trolls:

The quasi-government agency, the Industrial Technology Research Institute (ITRI), announced plans for the IP bank on 1 September, saying that it could be similar to existing defensive patent aggregators such as RPX Corp. and Allied Security Trust. Such patent-aggregation companies aim to buy out all the patents that might be asserted against their members.

According to Xiangsheng Xie, director of ITRI, the IP bank will assist Taiwanese manufacturers with the creation of patent portfolios and patenting strategies during the manufacturers’ R&D periods and later assist in defending them from suits and in expanding their market share. Should a Taiwanese firm face a patent-infringement lawsuit filed by its competitor or a patent troll, it can turn to the IP bank for either useful patents for its defensive actions or other strategies. In addition, the company, by way of the ITRI, can use other funds to tap into the intellectual property of Taiwan’s universities and research institutes as the industry’s backup.

This approach was inspired by similar

actions of other Asian nations. Intellectual Discovery, in South Korea, was established in 2010 to help protect domestic manufacturers against foreign patent trolls. Intellectual Discovery buys out patents that might be asserted against Korean firms, and it is creating a fund to help universities and research institutes generate patents and file patent applications overseas. ITRI also looked to Japan, which formed the Innovation Network Corporation of Japan (INCJ), a public-private partnership, in 2009 to provide similar services to Japanese firms.

It is unclear to me how such a patent bank can help defend local firms from suits by trolls, since usually the troll cannot be hit with a patent infringement countersuit since it does not manufacture any products. As I noted in my previous post:

One problem is that the PDL’s pool would be useless against patent trolls. However, patent trolls usually just want money. So they just serve as a kind of tax. But competitors often want to get an injunction to shut down the product lines of their competitors. Having to pay a “tax” to a troll is usually less of an existential threat to a company than is the patent injunction threat from a competitor. So if the PDL deters this kind of patent injunction threat, that is a huge benefit.

The IEEE post says “Should a Taiwanese firm face a patent-infringement lawsuit filed by its competitor or a patent troll, it can turn to the IP bank for either useful patents for its defensive actions or other strategies”–it is not clear what the “other strategies” could be in responding to the troll–perhaps the idea is that if a troll threatens a Taiwanese company and tries to shake the company down for royalties, it could be offered licenses to some patents in the “patent bank” to reduce or offset those royalties, but this strategy doesn’t make much sense for me. Still, even if the patent bank mainly deters anti-competitive patent aggression from competitors, it could serve some useful purpose. Of course, this is all so wasteful. Why do we have patents, again?

[Mises]