Patent Trolls

Motorola sued Apple over 18 patent infringements related to mobile technology and Apple sued Motorola over multi touch phone technology infringement. Apple sued Samsung over four patents and won a patent lawsuit against HTC. Google and Apple are being sued over street view technology by Florida-based PanoMap Technologies. Microsoft sued Barnes and Noble over an Android App that infringes Microsoft patents. While technology companies work to protect their interests and intellectual property by filing lawsuits against each other, a new type of patent owner has emerged: the patent troll.

TrollPatent trolls are non-practicing entities that follow a certain business model – exploiting weaknesses of the patent system without adding any value. They purchase patents from patent holders, usually technology companies that have gone bankrupt, wait until a certain technology development takes place, and then threaten litigation to get a profit. Unlike large companies who own patents, trolls have very little to lose because they only own paper patents and therefore are not affected by counterclaims.

According to the paper published by researchers from Boston University, the lawsuits initiated by patent trolls led to half a trillion dollars in losses for defendants from 1990 through 2010. The losses are based on the total costs of litigation, falling stock prices, and reduction in innovations. According to Bessen et al., these lawsuits are quite lucrative: trolls filed 2600 lawsuits in 2010, the median defense cost per defendant was $3 million. Since the majority of lawsuits are filed against technology and R&D companies, trolls impact the rate of technology development by hindering the ability of others to do so.

Patent trolls have inspired long-needed reforms in patent law and increased the demand for patent lawyers. Changes in the law, such as new provisions of the America Invents Act, may serve as a barrier for trolls and impairing innovation. The legislation is considered the most significant reform of the Patent Act since 1952. The reforms speed up the patent process by reducing the filing time by one-third. The act also helps patent holders avoid unnecessary litigation by offering new ways to confirm a patent;s validity, and speeds up patent processing for applicants seeking protection abroad.

Comments

  1. Agnieszka says:

    I did realize the extend of this problem until I heard this episode of the NPR radio show ” This America Life.”
    http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack
    Crazy stuff! Thanks for writing about it.

  2. Tamilla says:

    Thank you for sharing the link.
    The article by Bessen et al. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1930272 has some interesting data on the total impact of troll activity in the past decade. Hopefully changes in patent law will help alleviate the situation.

Speak Your Mind

*