Search & Research: Patent Trolls

I’d never heard of a patent troll before, and it sounded like an interesting concept. I realize that since it involves patent, it probably isn’t actually all THAT interesting, but the trolling effect had caught my attention and reeled me in. So what is a patent troll exactly? Simply put, it sounds like someone or some company who uses patents as a weapon. They’re companies that don’t actually create a product or offer a service, but pretty much do business in patents. These types of companies include ones that buy patents and then basically threaten the little people (smaller companies or individuals) with lawsuits. This came about with the rise of software patents in the 1990s. Things got so bad that in 2012 more than half of all patent suits were brought by trolls, with the majority of those lawsuits being over software patents.

How do they do this? The trolls can make claims of infringements based on patents that might not be valid. They are in the business of litigation – which can cost the company they’re threatening a lot of money. Thanks to the Patent Office, which issues patents for broad things, non-new things, and things that never should’ve been patented, these trolls armed with said patents go out looking for companies who they can claim infringed on their patent. They send out letters that threaten legal action unless the infringer agrees to pay a licensing fee, which can be quite pricey. Unfortunately it’s often cheaper to pay the licensing fee than take the lawsuit to court, so companies often opt for that (it’s also quicker than a drawn-out patent suit). However, when the little man does take the troll to court, it wins 75% of the time (“Trolling Effects”). How is this legal? It’s legal because anyone with a patent (no matter how valid, vague, etc.) has the legal authority to assert it and create litigation.

Most importantly, why are they patent trolls? The website “Trolling Effects” provided a clear answer: “Some patent trolls are companies established by purported inventors that, rather than commercialize their patent, prefer to wait in the shadows for others to independently develop the technology and then demand a share of revenues (like the troll who hides under the bridge). ”

Trolling Effects Logo

This is hugely important as it not only highlights issues with our patent process, but it also just highlights the greed of individuals at the risk of innovation that can benefit the greater good. Luckily, people are working to reform the laws that make such trolling illegal, which you can read more about here. Harvard Business Review published an article in November 2014 that pointed to the numbers: patent trolls are costing innovators a LOT of money. Money that could be used on… innovation. Not only money, but time and effort. This paper “Startups and Patent Trolls” from the Stanford Technology Law Review showed that that more than half of the firms sued by patent trolls have less than $10 million in annual revenueand that startups are a major target. None of this is good for innovation or society.

How patent trolls hurt innovation - by the numbers. From Harvard Business Review.Clearly, something needs to be done. Just recently this summer, Google announced an effort to eliminate patent trolls and their effect on innovation. Google will now give away patents of certain technologies, no charge, to eligible companies or startups to improve those technologies further. Naturally, there’s a lot more binding to be one of those lucky startups, but the idea is valiant. Maybe we’ll see more of that going forward, since large companies can have a more immediate impact on things like this than getting legislation reformed.

If not, this issue will continue to be good fodder for John Oliver.

Interesting round-up of some relevant sources:

 

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