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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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  • 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 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.)

  • 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?
  • 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?

  • 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.

  • 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.

  • by Rogerborg ( 306625 ) on Wednesday June 27, 2012 @11:02AM (#40467549) Homepage
    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."

"To take a significant step forward, you must make a series of finite improvements." -- Donald J. Atwood, General Motors