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US Patent Trolling Costs $29 Billion a Year 130

Posted by Soulskill
from the gotta-give-those-courtrooms-something-to-do dept.
New submitter Bismillah writes "This piece of research from Boston University seems to put an end to claims that patent trolling is 'socially valuable,' and instead is a social loss. 'We estimate that firms accrued $29 billion of direct costs in 2011. Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that [non-practicing entities] are not just a problem for large firms.' The total cost to society could be around $80 billion, according to the researchers. What's more, the costs have gone up fourfold since 2005."
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US Patent Trolling Costs $29 Billion a Year

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  • well (Score:5, Insightful)

    by Anonymous Coward on Wednesday June 27, 2012 @08:16AM (#40465775)

    'We estimate that firms accrued $29 billion of direct costs in 2011'

    not the law firms.

    • by hemo_jr (1122113)

      As they are a bottomless pit of non-productive expense, they are where the money goes to die.

      • by EdIII (1114411)

        Clearly not.

        Do you know how much money lawyers spend on fast cars, hookers, cocaine, and more hookers? Not to mention incidental industries like suits and briefcases.

  • by mellon (7048) on Wednesday June 27, 2012 @08:16AM (#40465777) Homepage

    ...because the potential entrepreneur expects that if they become successful, a patent troll will take all their money?

    • by Anonymous Coward on Wednesday June 27, 2012 @08:43AM (#40465961)

      There are many reasons why small businesses don't start; the vague threat of patent trolling is WAY down that list. In fact I'd go as far as to say anyone worried about this before even starting a business is an idiot, so those businesses were probably better of not starting anyway.

      • by apsyrtes (557388) on Wednesday June 27, 2012 @08:58AM (#40466087)
        I guess I'm an idiot then... every time I think of turning an idea into a little bit of an extra revenue generator for myself my second thought is that somebody from the US will just sue me and it's not worth that.
        • by Anonymous Coward

          Same here, I am working on a small MMO, and I am definitely thinking of only allowing access to European customers.
          It is just not worth adding a bit more of the market for the risk it represents.

          • by Anonymous Coward

            Your first problem is trying to understand intellectual property by reading slashdot. The amount of (mis)information of this site is astounding. You would get better quality information about particle physics from a website directed to exploring the hidden meanings of the writings of James Joynce than you get about patents from this website.

            First, nobody is going to sue you if you don't have any money. Unless you are raking in multi-, multi-millions/pounds/euros of revenue, you are too small.

            Second, if s

            • Re: (Score:3, Informative)

              by Anonymous Coward

              Ya wanna see an idiot, look in the mirror.
              Yeah, trolls don't sue small buisinesses. They get their lawsuit money from threatening to sue small businesses. $100k here, $200k there, and before long they can finance a lawsuit against the big fish.
              The settlements, of course, are not trackable, and therefore do not figure into the $29 billion.

            • Raccoons get rabes? Who knew? Now I have to wear thick padded pants on top of my combination faraday cage/sharkproof mail to go to the store.

              Damn you, AC!

              rgb
        • This is the totally wrong way to look at it. First of all, you will not be sued unless you are successful. Secondly, if you incorporate, you will be able to keep whatever money you make if they sue you into bankruptcy. But they won't do that, because they are like parasites. A dead host is useless to them. Instead, they will charge you what they think you can bare. If you are really passionate abut something, the threat of a patent lawsuit shouldn't detur you.

      • by nukenerd (172703)
        Another idiot here, although that should worry you as I have been responsible as an engineer for checking that trains are not likely to derail and that certain nuclear power stations stay safe.

        I have always had a lot of engineering ideas, and have applied them at work but only in a limited area, or have confined them to my own stuff (like around the house and on my cars).

        I have considered more than once going into business with an invention, but the thought that some patent holder could come along
        • Re: (Score:2, Insightful)

          by Anonymous Coward

          Well maybe idiot is too strong a word; but genius engineers are often idiots in business. If you're focussed on these issues then my contention is you probably don't understand enough about business anyway to start one. There are risks inherent in any venture, and most risks are way larger than this one. If your estimation is that this is the *biggest* risk, then you're missing a dozen much, much larger risks, which makes you a business idiot. I mean that in the nicest possible way, though. A life focu

        • I have considered more than once going into business with an invention, but the thought that some patent holder could come along and sue my pants off is the main factor that has deterred me.

          With all due respect, you're an idiot, as the GP stated. Read the study - patent trolls are going after "small companies", which they define as companies with a median of $89 million in annual revenue. If you're turning down the potential for tens of millions in annual revenue, out of fear of a half million dollar lawsuit, then you're an idiot.

          But honestly, you're not an idiot. You just don't realize that trolls aren't going to spend half a million to sue someone with a hundred thousand in revenue, understandably with all the scare stories here on Slashdot. Go into business. If you manage to strike it big and earn millions upon millions of dollars, then you can spend a few sleepless nights worrying about trolls from the comfort of the giant pile of money you're using as a mattress.

          • by mellon (7048) on Wednesday June 27, 2012 @09:30AM (#40466415) Homepage

            Right. They wait until you're making money, and then they come take it. Half a million? No. The damage can be your entire company. What would RIM look like right now if they hadn't suffered a half a billion dollar patent tax on push email?

            • Right. They wait until you're making money, and then they come take it. Half a million? No. The damage can be your entire company. What would RIM look like right now if they hadn't suffered a half a billion dollar patent tax on push email?

              Probably no different. The RIM v. NTP settlement was in March 2006, at which point their stock price was at $27 [google.com]. 16 months later, they were at $85 and did a 3:1 split... at which point it then went up to a peak of $144... So one share of $27 stock when that half billion dollar "tax" (really? taxes go to the government, this was to the patent owner) was then worth $432, or a 1600% increase.

              No, what killed RIM (aside from the 2008 recession, but that hurt everyone) was the fact that they rested on their Blackberry laurels and never innovated further, believing themselves to have a lock on the enterprise market, and iOS and Android shot past them. [phonedog.com]

            • by mjr167 (2477430)
              The bigger question is though... who gives a crap what happens to the company? You already got your island in the Carribean. There is a difference between your personal assets and the company assets. If you set your company up correctly, you are sheilded. The company gets sued under, you don't. You still have the island and a couple million in your bank account.
          • This only adresses trolls, though. If you are enough of a success to threaten an incumbent market leader, they could go after your company with their patent warchest.
            • by Anonymous Coward

              No .... what they will do is try to buy you out -- particularly if you are smart enough to generate some of your own intellectual property.

              The Google's, Microsoft's, and IBM's of the world don't threaten competition with patents -- they just buy them out. This means that their founders, instead of cowering over patent lawsuts, become rich overnight because they had a set.

              • It's more likely to play out like this: [slashdot.org] The Simpsons summarized it well back in 1998 when they had Bill Gates say "Oh, I didn't get rich by writing a lot of checks!"
          • by slashrio (2584709)

            ...patent trolls are going after "small companies"...

            And for the small companies a cease and desist letter suffices in which they threaten with an expensive lawsuit that in itself would already exhaust all the company's resources.

      • by cgenman (325138)

        It's not really a vague threat. You have to have a patent defense plan if you're starting any sort of tech business. At this point, unless you're going out of business you WILL be sued. Now, sometimes that's being sued by some shmuck that can barely afford a lawyer himself, and all you need is a solid 20k for an IP lawyer of your own. But you better build that into your plan.

      • by jd2112 (1535857)
        Patent trolls are only interested if you have enough money to make a lawsuit worthwhile, so until you are profitable or at least get VC funding pattent trolls aren't much of a problem.
    • by firex726 (1188453)

      Pretty much...

      Gone are the days of a single guy with a great idea reaching the top.
      He'll either be bought out long before he makes it rich, and his idea stuck in some vault, never to be seen again; or squashed by patent lawsuits.

    • ...because the potential entrepreneur expects that if they become successful, a patent troll will take all their money?

      Some, but they probably lack the wisdom to be successful at all, if that's what they're afraid of. Trolls are parasites, no? A parasite that kills its host is not a very good one. Trolls want companies to manufacture products and grow big so that they can take a share of royalties. It simply doesn't make sense to spend half a million suing a start-up into oblivion, if that start-up has only made a few hundred thousand.

      In fact, look at the line in the Summary here:

      Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that [non-practicing entities] are not just a problem for large firms.

      Sounds scary, right? Small firms... That's

      • by mellon (7048)

        Trolls are parasites in the same sense that people who eat fruit are parasites. You don't eat half the fruit and leave the rest. You eat the whole thing, and then chuck the pits in the trash, where they never germinate. Why would you leave any money on the table?

        Another analogy would be mosquitoes. Sure, no individual mosquito is going to take a substantial amount of your blood, but living in a cloud of mosquitoes is not a happy life.

      • by CrimsonAvenger (580665) on Wednesday June 27, 2012 @09:38AM (#40466541)

        Organisations of all sizes were affected by 2011 patent action, with the study finding that half of all patent litigation cases hit companies with less than $US100 million in annual revenue.

        So, yes, if you're a startup with a hundred million in annual revenue, you may be a target for patent trolls.

        While your main point is no doubt correct, it should be pointed out that "less than $100 Million" is NOT "$100 million".

        • Organisations of all sizes were affected by 2011 patent action, with the study finding that half of all patent litigation cases hit companies with less than $US100 million in annual revenue.

          So, yes, if you're a startup with a hundred million in annual revenue, you may be a target for patent trolls.

          While your main point is no doubt correct, it should be pointed out that "less than $100 Million" is NOT "$100 million".

          Conceded... From a different post, the "small company" category had a median size of $89 million.

          Unfortunately, there's no exact data on what the smallest of the smalls were, but if their "less than $100 million" had a median of $89 million, we're probably not talking a bunch of sub-$1 million companies.

          • by CrimsonAvenger (580665) on Wednesday June 27, 2012 @10:27AM (#40467103)

            Unfortunately, there's no exact data on what the smallest of the smalls were, but if their "less than $100 million" had a median of $89 million, we're probably not talking a bunch of sub-$1 million companies.

            Quite so. Which is why I wrote "While your main point is no doubt correct".

            A patent troll isn't interested in really small new startups, since they don't have enough money on hand for a large award. If it costs more for your lawyers to sue someone than they can afford to pay, then you don't sue them.

            On the other hand, if you've got a great new idea, and think you can make a metric buttload of money with it, then, at some point you're going to be visited by a patent troll.

            And while $89 million may sound like a lot, Google just spent a significant fraction of that amount defending itself against Oracle. If you own a $90 million company, and a major patent troll comes after you (whether its actions are legally justified or just plain economic terrorism), then you're going to pretty much go broke defending yourself, even if you win.

            This is the primary danger of the patent troll - a startup will either remain insignificant, or it'll attract the attention of a patent troll. Either way, the big boys aren't going to be threatened by a new player

            Keep in mind, the only real way to prevent monopolies from forming is to encourage new players to enter the market. Having a bunch of lawyers playing gatekeeper for the big boys prevents that quite successfully.

            • And while $89 million may sound like a lot, Google just spent a significant fraction of that amount defending itself against Oracle. If you own a $90 million company, and a major patent troll comes after you (whether its actions are legally justified or just plain economic terrorism), then you're going to pretty much go broke defending yourself, even if you win.

              Unlikely. Even super expensive patent litigation isn't going to cost more than $5 million. And consider, for your $90M company to go broke defending itself, you'd be spending $90M on litigation, no? At which point, what exactly is the patent troll supposed to collect if they win? Your office furniture? No, it's in their interests for you to (i) settle or (ii) lose, but lose early and inexpensively. Having you go broke is the worst possible outcome for the troll, since they're parasites.

    • by Eponymous Coward (6097) on Wednesday June 27, 2012 @09:15AM (#40466247)

      It can get a lot more depressing than that.

      Try starting something cool, build a bit of a following, then have a lawyer contact you with the news that a larger company is interested in acquiring you. Sounds good, right? Maybe not.

      So you call up the lawyer and find out that the offer is insultingly small and comes with a catch. If you don't accept it, they are going to start suing you for all the bullshit patents you are violating. You are small, have nothing to fight back with, so what do you do?

      • by Yvanhoe (564877) on Wednesday June 27, 2012 @10:38AM (#40467239) Journal
        I stay in France.

        True story.
      • Re: (Score:2, Interesting)

        by Rogerborg (306625)
        You laugh and say "Go ahead, Sparky. By the time you get your default judgement, it'll be against an abandoned shell company with no assets. Repeat that as often as you like against my endless shells, until you die penniless in the gutter, you worthless Goddamn parasite."
      • by servies (301423)

        So you call up the lawyer and find out that the offer is insultingly small and comes with a catch. If you don't accept it, they are going to start suing you for all the bullshit patents you are violating. You are small, have nothing to fight back with, so what do you do?

        Get your shotgun and shoot the lawyer?

      • by gregski (765387)

        respond thusly:

        "We refer you to the reply given in the case of Arkell v. Pressdram"
        http://www.nasw.org/users/nbauman/arkell.htm [nasw.org]

    • Absolutely, in my experience troll letters start as soon as you have MARKET VISIBILITY which has only become easier and more necessary in the past two decades. I started a software company in the mid 90's and even then trolls made making my small fortune miserable both before and even after we sold it, due to the always-present "indemnification" clause that puts the seller personally in line to pay any claims above some threshold. Yes I survived with a little luck, but it wasn't fun.

    • by tlhIngan (30335)

      ...because the potential entrepreneur expects that if they become successful, a patent troll will take all their money?

      Actually, patent trolls have a self-interest in seeing you succeed. Suing you out of business isn't in their interests as well.

      Think about it - they rely on patents to earn them money. Suing someone who makes $20M in revenue for $100M in damages does little - at the end of the day, the guy will close up shop, the product stops being sold, and that's it - it's really a pyhrric victory.

      A pate

  • No, really? (Score:5, Funny)

    by qbast (1265706) on Wednesday June 27, 2012 @08:17AM (#40465781)
    That's a truly groundbreaking discovery. I mean, who could possibly expect that patent trolling may be bad practice?
    • That's a truly groundbreaking discovery. I mean, who could possibly expect that patent trolling may be bad practice?

      If it means that your competitor is either hurting because of the money you got from them, or even better, out of business, then the companies that starting the patent dispute won.

      It may of "cost them" billions, but it was probably worth it, if it means their competitor(s) aren't selling products, directing money to themselves.

  • by Kupfernigk (1190345) on Wednesday June 27, 2012 @08:20AM (#40465795)
    Both are ways of seeking malicious intermediation in other people's activities, and seeking to glean entrepreneurial profit. (It is also called "rent-seeking"). Patent trolls seek to make money by the ownership of the right to do something in which they have no actual interest: hedge funds try to manipulate the price of commodities which they neither produce nor consume, also for profit.

    If patent litigation was limited to inventors and the users of the inventions, and commodities derivatives were limited to actual producers and consumers, I suspect we would see a sudden reduction in income inequality. But it isn't going to happen, because the accumulation of wealth with the entrepreneurs gives them too much control over law and its enforcement.

    (I am using entrepreneur in the literal sense of a middleman who seeks to profit without adding value; its meaning has been extended to "people who start productive businesses", which is part of the devaluation of linguistic currency that has helped getting us into this mess.)

    • I checked on your claim of entrepreneur and found no reference. The only middleman referred to was one who was an intermediary between capital and labor. That's a good thing.

      Citation needed for your negative version.

    • Without paying rent, where would one live? As cynical as you are, you largely ignore the benefit of entrepreneurship, which is capital for "rent" payers to profit from. Money isn't free, after all. No matter how you want to use the term, it has never been used as a derogative in the way you suggest. They are simply a class of investors, nothing less.

      The critical difference with patents is that there isn't a mechanism for competition. Patent trolls are effectively operating legal extortion. You can't opt out
    • by dmbasso (1052166)

      I agree with your message (including the linguistic devaluation part), but...

      (I am using entrepreneur in the literal sense of a middleman who seeks to profit without adding value; its meaning has been extended to "people who start productive businesses", which is part of the devaluation of linguistic currency that has helped getting us into this mess.)

      From http://www.etymonline.com/index.php?term=enterprise [etymonline.com]:

      enterprise
      early 15c., "an undertaking," from O.Fr. enterprise "an undertaking," noun use of fem. pp. of entreprendre "undertake, take in hand," from entre- "between" + prendre "to take," contraction of prehendere (see prehensile). Abstract sense of "readiness to undertake challenges, spirit of daring" is from late 15c.

      So no, entrepreneur is one who adds value by assuming the risks involved in the enterprise.

  • by Anonymous Coward on Wednesday June 27, 2012 @08:23AM (#40465817)

    Former Microsoft executive Nathan Myhrvold, who now heads up the controversial Intellectual Ventures patent rights company, told the All Things Digital conference two weeks ago that "I was never a popular kid in class".

    "I'm not going to be popular in this class."

    translation: back in school he was beaten up on a daily basis. Now he's armed with patents and lawyers and is going after everyone else's lunch money.

    • by netwarerip (2221204) on Wednesday June 27, 2012 @08:31AM (#40465875)

      Former Microsoft executive Nathan Myhrvold, who now heads up the controversial Intellectual Ventures patent rights company, told the All Things Digital conference two weeks ago that "I was never a popular kid in class".

      "I'm not going to be popular in this class."

      Maybe if he spent $250 and bought a freakin vowel he'd have a better shot.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        Norwegian ancestry, I see. Y is a vowel, h before another consonant is silent (and usually archaic), and "vold" in place names is an archaic form of "voll" (mound, embankment).

        We don't usually modernize names, but it would turn into "Myrvoll", pronounced something like [my:r'vol].

    • by firex726 (1188453)

      Generally speaking, high up Execs of fortune 500 companies are not the kids getting beaten up.

      You either got a fuck ton of talent and are sleeping with Lady Luck; or you got wealth&connections to get up there.
      Ever notice how they don't go looking for CEO's on Monster?

  • by Anonymous Coward on Wednesday June 27, 2012 @08:27AM (#40465851)

    The patent trolling industry is worth £29 billion a year??? We must protect this vital industry - just think of the loss to the economy if anything happened to it.

    • The patent trolling industry is worth £29 billion a year??? We must protect this vital industry - just think of the loss to the economy if anything happened to it.

      Makes sense, scared now.

    • by Anonymous Coward

      Psst - you've apparently confused "news for nerds" with "news for lawyers." Down the hall, third door on the right, mind the fire and brimstone.

  • You know if the MPAA put such a number so that we would feel sorry all the starving children and whiny stuntmen and stop pirating films online, we would all be aghast that such nonsense was posted on our august boards. However, since it is patents, I am sure we will all find the validity.
    • Eeh. No.
      Simple fact is that the USA has the largest number of lawyers per head of the population in the world. Add to that a large population in absolute terms, and you end up with a gigantic industry that just absorbs money from your economy to achieve very little in general.

      Given the total GDP of the USA (15 T$), I'm surprised that only such a small percentage of lawyers seems to be a complete waste of money.

    • by Anonymous Coward

      You're smart. Why are you here?

    • by w_dragon (1802458)
      While I agree to some extent, in the case of patents there are actual numbers we should be able to use to show the losses. Take the price paid to the lawyers for patent suits, add the settlement amounts paid to firms that don't produce anything using the patent in question, and you should have a rough idea of how much money is lost due to patents. 80B sounds high, but I could well believe that it's into the billions with some of the astoundingly high dollar amounts the courts award for these cases.
      • by fermion (181285)
        To clarify, the abstract indicates that the paper is based on the same methodology the MPAA uses. It surveys the 'victims', asks them how much the patents trolls costs them, and then used that number. The abstract also talks about this not being a problem only for corporations, as we should be more concerned about the damage to small firms, or the 'children', even though the majority of the costs were to the large corporations.

        The reality is that if Apple of IBM or MS makes a product using my patent, th

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      So, because of the MPAA inventing big numbers, all big numbers are now invalid.

      Goddamn MPAA! When I thought they couldn't do worse, they also broke our big numbers!

    • by gman003 (1693318)

      No, $2.9*10^10 for an entire national industry, per annum, seems a reasonable number. That's less than 0.1% of the entire national GDP.

      Now, if MAFIAA lawyers were coming up with these numbers, it would be roughly $130 septillion ($1.3*10^26), including everything from companies that *would* have made actual products with their patents but found it more profitable to troll, to all the patent-invalidation appeal lawyers that lost business because no patents seem to ever get invalidated.

  • BU seem me trollin', they hatin'.
  • Cars kill thousands of people each year. It's time we get rid of this menace from society!

    In case anyone misses the point, if we mention only the negative aspects of just about anything, we can make a poor argument for getting rid of it. Of course, this argument will convince only someone who already believes that because it's what that person wants to hear.

  • by AttyBobDobalina (2525082) on Wednesday June 27, 2012 @08:49AM (#40466003)
    How do I link this story to another headline? http://news.slashdot.org/story/12/06/27/028249/high-frequency-traders-are-the-ultimate-hackers-says-mark-cuban [slashdot.org] Essentially, it's the same ethic at work - making money by gaming the system. For high frequency traders, it is exploiting technological loopholes. For patent trolls, it is exploiting legal loopholes. Talk about a shadow economy - what happens to the U.S. economy if and when these nefarious practices are ended?
    • Re: (Score:2, Insightful)

      by phantomfive (622387)
      It's hard to feel sorry for anyone complaining about high frequency traders on the stock market. They are all there for the exact same reason, the self-interested purpose of making money.

      Now, there's nothing wrong with that, go ahead and make money however you want, but complaining because someone is better at it than you is just whining.
      • So by that logic, you have no problem with patent trolls either. They are all there for the exact same reason, protecting their patent rights.
        • Sort of. Both groups are people who are trying to make money and don't care about anything else. The difference is, patent trolls hurt people who are actually trying to produce things, whereas high-frequency traders are greedy people trying to make money off other greedy people.

          So yeah, you're wrong.
          • Wait - you mean people who seek patents aren't "greedy people"? C'mon - that's the very bedrock principle of the patent system - 1. I invent something. 2. I win patent. 3. I hold exclusive rights to the use of the product for several years. 4. ???? 5. Profit! So I gotta disagree with you - The patent trolls and the high frequency traders both exploit a system in a way that it was not designed for, i.e., hacking. They each are hurting people who are trying to use that system within the rules. Even
            • Patent trolls don't produce, by definition. They are merely hurting other people who are actually making things.
              • Patent holders produce income for themselves by producing widget. Patent trolls hijack patent system for profit only. Shareholder produce income for themselves by investing their money in patent holder's company that is producing widget and needs capital. High speed traders hijack system for profit only. I think you're making my point.
                • No, most likely you're just trying to justify your own stock trading strategy as 'more valuable' if it is long term. Venture capitalists and banks invest in startups. Forget it, the long term stock trader is just as greedy as the guy doing high frequency trading.
  • RIAA math? (Score:4, Insightful)

    by Theaetetus (590071) <<theaetetus.slashdot> <at> <gmail.com>> on Wednesday June 27, 2012 @08:50AM (#40466007) Homepage Journal

    The study suggested that during 2011, 2150 companies mounted a total 5842 defences in US cases against intellectual property companies that owned and licensed patents without producing any related goods of their own.
    As a result, companies lost an estimated $US29 billion in direct costs — legal and licensing fees

    Well, yes, paying for a license or facing litigation is always going to be more expensive than simply copying someone else's work without paying for it. Similarly, copyright piracy costs trillions, according to the RIAA/MPAA, who think of every download as being a lost sale. That said, "things cost money" is not really a great argument for or against patents (or copyrights), but rather a simple statement of economics: would consumers and companies save money if they never had to pay for copies or licenses? Yes. Is that a reasonable argument for abolishing IP protection? No.

    We have better arguments and better avenues for reform - damages based on patent owner's sales/licenses, instead of infringer's profits, for example - that may actually have traction. Trying to get Congress to reform patent law simply because licenses are expensive is destined to fail.

    • by Kergan (780543)

      That said, "things cost money" is not really a great argument for or against patents (or copyrights), but rather a simple statement of economics: would consumers and companies save money if they never had to pay for copies or licenses? Yes. Is that a reasonable argument for abolishing IP protection? No.

      According to the RIAA/MPAA, your iPod is worth $8 billion [ted.com]. So their math is somewhat bunk, to put it mildly... Is that reasonable argument for abolishing IP protection? Not really indeed.

      That said, it may be worth reminding that IP protection was introduced to protect publishers rather than authors. Before Gutenberg, it was dubious for anyone to claim a cut when a monk spent days or weeks manually copying a work so the original could move on to the next monastery. Movable type turned this process over its h

    • by ThosLives (686517)

      But that's not what the article says - it doesn't say that it costs more for litigation and licensing, it says that it's a net loss to society.

      The argument is that, for a given unit of technology in society, it costs more to have that technology in the presence of litigation and patent trolls. This doesn't have anything to do with the distribution of spending between the licensing and licensed, but the total amount society must pay for a given level of technology.

      It's kind of like monthly payments: you can

  • Trolling (Score:5, Insightful)

    by whisper_jeff (680366) on Wednesday June 27, 2012 @08:55AM (#40466059)

    Who here is surprised by this?...

    I know I'm in the minority here in that I have no problems with patents (copyrights, on the other hand, are out of control...). I do, however, have a significant problem with patents being wielded by non-practicing entities. Patents being claimed and enforced by Microsoft or Apple or Google or Motorola or Samsung or whatever other company who actually does something is fine. I know many people here are outraged when a company actually enforces their patent and calls the company in question a patent troll but the truth is they are simply enforcing their rights as a patent holder, as is their right. That's the point of patent protection and I'm fine with that.

    Non-practicing entities, however, aren't protecting their intellectual property. They aren't protecting their innovative edge over their competitors. They are leaches. That's it. That's all.

    While I don't pretend to think that fixing the problem would be simple, it would be nice to require patent holders to actually be actively using the patent to be permitted to enforce it. Yes, I realize that becomes complex for patents that are granted before the innovated product comes to market but I think that's not an insurmountable detail to overcome. The point remains the same - companies that aren't practicing entities should have no authority or ability to enforce patents. That would solve so many problems across so many industries.

    • Re:Trolling (Score:5, Interesting)

      by Anonymous Coward on Wednesday June 27, 2012 @09:44AM (#40466605)

      I'm in agreement with you. But I'm posting as AC, for a variety of reasons. Namely, I am a patent attorney. I specialize in software patents and handle both prosecution and litigation. I also used to be a software developer, so I'm sensitive to the problems that software patents can cause.

      So, with that being said I might be a little biased, but the reality is that I think most people would have way less problems with software patents if there were no more NPEs. The vast majority of patent litigation in the electronics/software industry is done by NPEs. While it does happen, you don't generally see the big firms suing the little guys. They typically sue each other, see,e.g.,Google, MSFT, Apple, and Samsung. If they want to see each other, who cares.

      I think for there to be a workable NPE rule, you would have to limit the assignment of patents. It would be too unworkable to determine whether the company "practices" the patents. It would leave too much to interpretation. Moreover, it would be used to limit the scope of the patent to the items being practiced, which is not the idea of a patent. My rule would work like this:

      1. Can only reassign in cases where your company or line of business is being sold
      2. For a company to assert a patent they must show revenues from sales (other than licensing revenues)
      3. You are on the hook for Attorney fees if Def wins on non-infringement (invalidity is more tricky, since its somewhat of a crapshoot anyway)
      3. There would be an exception would for the original inventor/assignee, who need not show anything (they could essenttially by an NPE, if they wanted). They would still be on the hook for Attorney fees.

      These are simple black letter rules, that would probably stop the vast majority of NPE suits.

      • Making patents end on insolvency would be a great one too. No more vultures raiding carcasses.

      • I'm in agreement with you. But I'm posting as AC, for a variety of reasons. Namely, I am a patent attorney. I specialize in software patents and handle both prosecution and litigation. I also used to be a software developer, so I'm sensitive to the problems that software patents can cause.

        So, with that being said I might be a little biased, but the reality is that I think most people would have way less problems with software patents if there were no more NPEs. The vast majority of patent litigation in the electronics/software industry is done by NPEs. While it does happen, you don't generally see the big firms suing the little guys. They typically sue each other, see,e.g.,Google, MSFT, Apple, and Samsung. If they want to see each other, who cares.

        I think for there to be a workable NPE rule, you would have to limit the assignment of patents. It would be too unworkable to determine whether the company "practices" the patents. It would leave too much to interpretation. Moreover, it would be used to limit the scope of the patent to the items being practiced, which is not the idea of a patent. My rule would work like this:

        1. Can only reassign in cases where your company or line of business is being sold 2. For a company to assert a patent they must show revenues from sales (other than licensing revenues) 3. You are on the hook for Attorney fees if Def wins on non-infringement (invalidity is more tricky, since its somewhat of a crapshoot anyway) 3. There would be an exception would for the original inventor/assignee, who need not show anything (they could essenttially by an NPE, if they wanted). They would still be on the hook for Attorney fees.

        These are simple black letter rules, that would probably stop the vast majority of NPE suits.

        Yes, and it would also kill the research departments at MIT, Cornell, USC, Harvard, Georgia Tech, etc., etc.
        I have to question the credibility of any patent attorney who doesn't realize that universities file for and assign or license thousands of patents each year.

        • by Anonymous Coward

          LOL. As I said I deal with software, it is not that common in the software patent world to see universities licensing (it's not unheard of, just rare), so you'll have to excuse me that it wasn't in the forefront of my mind. In biotech, however, it is very common.

          But like everything else in the patent world, we can just add a university exception to my rule. As you may be aware, universities already get extremely favorable treatment under the AIA. Not only do they get micro-entity status, but you cannot ass

    • If patents actually expired instead of the USPTO allowing the concept of submarine patents, then the situation might be workable. The best idea I've heard is what one of my friends has proposed. This would not apply to drug patents, but for everything else, you have to build a workable device to get a patent. That would eliminate vague software patents that have done nothing but enrich our legal system. However, you have to consider that the USPTO has a vested interest in allowing darn near anything to
    • I know I'm in the minority here in that I have no problems with patents (copyrights, on the other hand, are out of control...).

      While the typical FLOSS advocate likes to differentiate (after the fashion of RMS and others) between patents and copyrights, I see a convergence between the two. If we disregard the case of software patents, which most people here are probably against, the main difference between patents and copyrights is that patents are for hardware and copyrights are for software that includes s

    • > I know many people here are outraged when a company actually enforces their patent and calls the company in question a patent troll but the truth is they are simply enforcing their rights as a patent holder, as is their right.

      Of course it is their right. The outrage is that is actually IS their right. Yourself said "copyrights are out of control" -- but all copyright holders are doing is enforcing their (bought-and-paid-congress-for) rights. Where's the difference here?

      > Non-practicing entities, how

      • Copyrights are out of control in as much the length of a copyright is simply insane now. I have no issue with a rights holder defending their copyright but I do not agree with life+50 (or 70, depending on the country) because that is insanity and abuse of the intent of the system.

    • I really don't get all that buzz about non-practicing entities. Why can't a lone inventor protect something he created, but can't produce, yet a corporation can patent anything they like just because they own a factory? Restricting things this way will only shield big companies from the bad consequences of the patent system, while giving them even more force to bully small companies out of their markets.

      A sane patent legislation would employ the requisites of non-obviouness, novelty, specificity and clarity

  • We should try to tackle some of these patents by scouring the internet searching for any prior art to invalidate them. Companies no longer invent things anymore -- they just make money by trolling everyone else...
    • by Phrogman (80473)

      So we need a detailed list of patents, a means to allow people to review those patents and a way to crowdsource prior art listings. Then the average joe can help break the chokehold the patent trolls and their lawyer thralls have on creativity and innovation. Perhaps even get companies to pony up a reward for successful breaking of patents?

  • to the whole world!

  • So...what they're really saying is high ranking corporate lawyers are paid way the hell too much. I kinda knew that already actually.
  • by Grond (15515) on Wednesday June 27, 2012 @09:45AM (#40466617) Homepage

    Two of their policy recommendations: "More rigorous enforcement of the claim definiteness standard would be an excellent step forward. ... One promising policy reform is greater use of fee-shifting to favor defendants in cases brought by trolls."

    I am probably regarded as a pro-patent advocate here, but I have made those same recommendations on Slashdot in the past. For example, from October, 2010 [slashdot.org]: "I am personally in favor of substantially tightening the enablement requirement (as well as the related written description requirement)." Enablement and written description are closely related to definiteness (they're all part of 112 [cornell.edu]).

    Or from earlier this year [slashdot.org]: "I favor greater use of fee-shifting in patent cases (i.e. patentee pays the other side's attorney's fees if the patent is invalidated)."

    I say this not to say "I told you so" (I certainly didn't come up with the ideas on my own), but rather to point out that there are some important solutions that patent policy analysts agree on, even if they disagree about the nature or scope of the problems with the patent system. I think Bessen and Meurer are wrong about several things, but there's still common ground regarding policy recommendations.

  • Whichever the real cost of patent trolling is, I'd wager it's a drop in a bucket compared to the cost of bailing out banksters, or the cost of waging dubious wars. It doesn't make it any less relevant, mind you, but it seems to me that the latter two are much larger, lower hanging fruits.

  • 1 work things so that you have to include the validity of the patent as part of the lawsuit

    2 require that any patent be USED IN PUBLIC COMMERCE to prove its value

    3 have as an automatic part of a suit that if you lose the suit you are liable for any and all business lost during the suit

    4 any over time damages must be counted FROM THE TIME THE FIRST NOTICE was given (call this the Torpedo clause)
    so that you can't get a patent sit on it for X years and then when like everybody is using the covered product star

  • This could be looked at as injecting 29$ Billion into the legal economy. I mean Lawyers, Judges, Court Officials, all gotta get paid dawg!

  • According to the RIAA, as "one credible analysis by the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year".
  • Lawyers have to feed their family's too ya know.

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