Report Shows Patent Trolls Are Thriving 135
eldavojohn writes "The 2009 Patent Litigation Study has been released by Price Waterhouse Coopers. It shows evidence that patent trolls are growing and doing quite well. Using a very conservative view of a non-practicing entity (referred to as NPE in the report), PWC noted that 'damage awards for NPEs have averaged more than double those for practicing entities since 1995' and 'certain federal district courts (particularly Virginia Eastern and Texas Eastern) continue to be more favorable to patent holders, with shorter time-to-trial, higher success rates, and higher median damages awards.' The report paints a dire picture of the state of patent lawsuits and especially those brought by NPEs and also shows that in the past eighteen years the number of patent cases filed yearly is on the rise significantly when normalized against the number of patents granted yearly."
Prima Faciae Corruption? (Score:3, Interesting)
Is it merely the volume of the cases that makes it plaintiff friendly, or is it more plaintiff friendly than other districts when you adjust for volume?
Has anyone asked why it's more plaintiff friendly? Has anyone done any kind of analysis of the judiciary to determine if they have some kind of background that gives them a superior understanding (engineering degrees, patent experience, etc)?
Somehow it all smells rotten -- a group of judges and a group of local attorneys who have built a cozy little legal franchise. Local attorneys with familiarity in the courts handle the plaintiffs, the attorneys get paid handsomely for their access & familiarity and the judges get re-elected with the financial support of the attorneys.
In short, everyone gets paid and the trolls don't really care because to them its all profit.
Now, I'm sure this is more conspiratorial than it all really is, but even so -- why would judges in those areas be so plaintiff friendly?
Re:Don't Abbreviate (Score:5, Interesting)
It doesn't need to be Joe Basement (the single inventor), many firms are "small" when compared to the deep pockets of Microsoft, IBM, et al.
Re:Nothing inherently wrong with NPEs (Score:3, Interesting)
Yes. Having invented something, you may not want to do a startup. Often, the technology developed is useful, but not suited for a standalone business, because it's better used as part of something else.
I hold several patents, and put "inventor" on my tax return. One patent was licensed to Autodesk, one was licensed to Havok, and I'm currently going after DARPA for patent infringement on a third. My fourth patent is about to issue, and a fifth one is in examination. In each case, there's a working implementation, but not necessarily a commercial product.
The one that was licensed to Havok is for an approach to game physics engines. I had the first ragdoll physics engine that worked, back in 1997, and I sold it as a high-end animation plug-in for a few years. But the physics engine middleware business looked awful as a business. Mathengine went bust, and Havok lost money for its founders and original investors. (Havok was revived by a second round of investors who bought in cheap and replaced the management team. In the VC community, this is called a "haircut".)
Most of the whining about patents comes from people who've never solved a hard problem. I've never had serious "obviousness" objections from the USPTO. For the ragdoll physics patent, we submitted, among other things, reviews of Trespasser, describing its miserable physics engine, with objects randomly flying off into the air ("This is the worst game I ever played"). That's a clear demonstration of non-obviousness - a big, expensive failure by a major organization to solve the problem. The USPTO accepts that.
Re:Don't Abbreviate (Score:3, Interesting)
It all depends on the company, really. If that money goes into slush funds, ridiculous executive salaries, and market speculation, it wouldn't be all that great for the economy. If it went to a company that provided fair wages and invested in its workers, it would be fantastic.
Overall, corporations abuse patents. It's in their best interest to squeeze as much money out of them as possible, despite any ill effects on other businesses, the economy, or anyone else. Educational institutions milk them for additional funding to do more research. I guess I trust research colleges to be better citizens than any corporation ever could be.
Re:"...shorter time-to-trial..." (Score:2, Interesting)
Patent trolls don't need to spend months or years preparing their cases, and typically they don't. Most law firms representing trolls do the minimum amount of work necessary to keep the case going. The real nightmare comes when the defendant receives discovery requests for documents. A single 30-page generic set of requests (that can be copied from a prior case) forces a defendant's lawyers to interview scores of employees and collect what almost always amounts to millions of pages of documents. Then these have to be processed, searched, and reviewed (with a price tag larger than a very nice home in the Bay Area).
Circa 2007, the median cost of a patent suit (with more than $25 million at risk) was $5 million with half of that cost incurred by the end of discovery. For a lot of patent trolls, that holdup value is what they are after. If you can sue every company in an industry (and most of these ridiculous software patents span multiple industries) and extract a few million from each one, you've made a nice profit with very little work.
IAAL
Re:Disgusting (Score:2, Interesting)
Both are being manipulated.
The problem would not exist without a set of patent laws (and a USPTO) which encourage this type of systemic abuse.
Whether any fair patent system can exist, or is necessary, is another question entirely -- but it's clear that the rules defining our current treatment of patents are fundamentally flawed.
Re:Prima Faciae Corruption? (Score:3, Interesting)
Federal judges are selected, not elected, and their appointment is for life.
This is really misleading. District courts are wholly in the purview of Congress, specifically the Judiciary committees. District Court != Supreme Court.
If you want to know why E.D. Texas is able to do what it does, for example, look at who is the ranking member of the House Judiciary Committee.
When it suits their political interests, Congress has no problem changing the specialization of District courts, or even firing a judge.
Don't let them pass the buck with this "appointment for life" nonsense. Your elected representatives are wholly responsible for the District system.