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US Patent Trolling Costs $29 Billion a Year 130

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 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.

  • RIAA math? (Score:4, Insightful)

    by Theaetetus ( 590071 ) <> 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 Anonymous Coward on Wednesday June 27, 2012 @08:55AM (#40466057)

    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!

  • 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.

  • 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 on Wednesday June 27, 2012 @09:18AM (#40466281)

    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 focussed on engineering is never going to produce the best business brain. Find a partner if you're serious about these ideas - one that knows business - and see how he appraises the patent trolling risk compared to the others.

  • 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?

  • 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".

  • 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.

  • by Anonymous Coward on Wednesday June 27, 2012 @10:28AM (#40467131)

    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 somebody does sue you, their demands are likely to be very small. Most want you to use their technology -- they just want a little cut of the action.

    My advice to any entrepeneur is (1) focus on building aviable business first; (2) protect your own intellectual property (it very well be the most valuable asset you produce); and (3) worry about other people's intellectual property only after you get big enough to pop up on somebody's radar. When (3) happens, you'll probably already be in your second or third round of financing and thinking about buying an island in the Caribbean with all the money you are going to make once you go public.

    Let me guess, are you one of those people that are afraid to walk out of the house because there is some small chance that you'll get hit by lightning or bitten by a rabid raccoon?

  • by lhunath ( 1280798 ) <lhunath@lyn d i> on Wednesday June 27, 2012 @10:52AM (#40467433) Homepage

    There are a few problems in your line of thinking:

    1. You seem to think that "ideas" are somehow unique enough that only one person can ever think of them and all others can only acquire the same by "stealing".
    2. You seem to think that any great new ideas that have not yet been implemented are "new ideas".

    The amount of registered IP today probably covers nearly anything anyone could possible come up with, unique or not, just by the mere fact that ideas are inherently very generic and most registered IPs are very badly evaluated.

    Anyone talking about "intellectual PROPERTY" or "innovating" by registering new IP, makes me sick. Turning intellectual products into property is the death of intellectual innovation, and anyone that thinks otherwise has deluded themselves or hasn't thought it through.

    Innovation would happen when LOTS of people innovated using the SAME intellectual product. Then there would be competition. Customers could choose considering things like price and quality. This choice would drive implementers to innovate more than their competition. It would drive the whole economy.

    Turning intellectual products into property denies it from the competition and effectively breaks the whole foundation of capitalism.

  • by phantomfive ( 622387 ) on Wednesday June 27, 2012 @11:43AM (#40468067) Journal
    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.
  • by arth1 ( 260657 ) on Wednesday June 27, 2012 @01:06PM (#40469203) Homepage Journal

    The bigger question is though... who gives a crap what happens to the company?

    The employees and their families?

Money is better than poverty, if only for financial reasons.