Death to Patent Trolls

March 19th, 2013 at 12:00 pm by David Farrar

Jordan Weissmann writes at The Atlantic:

It’s hard to think of any business more inherently obnoxious than a patent troll. These are the tech-world parasites that buy up troves of intellectual property, not so that they can make a product, but so that they can turn around and sue successful companies for patent infringement with the aim of nabbing a quick and profitable settlement. They’ve infested the courts over the last decade, and by one count are now responsible for more than half of all U.S. patent cases, potentially costing American businesses some $29 billion a year.

So kudos to Oregon congressman Peter DeFazio, who Thursday morning introduced a bill aimed squarely at putting the trolls out of commission. His smart and simple legislation, called the SHIELD Act, would force trolls that lose in court to reimburse the companies they sue for their legal fees, which can amount to millions of dollars. That might not sound particularly bold. But it’s a carefully calibrated step that could go a long way to containing the the troll problem by driving up the cost — and risk — of bringing flimsy patent cases. 

I like it.

Trolls have flourished over the last few years largely because it’s now easier and cheaper to bring a patent case than it is to defend against one. Much like personal injury lawyers who advertise on TV, the attorneys who represent trolls often work on contingency, meaning they only take a cut of what they win. Defense lawyers, on the other hand, ask for their pay up front, and usually bill by the hour. As a result, a single troll can file a barrage of lawsuits without putting much skin in the game, while the small companies they tend to target — about 55 percent of the businesses sued make less than $10 million a year — are forced to mount a costly defense that saps their finances with each passing day. 

We’re lucky that generally we’re too small to target, but we have had a few.

There’s also a more subtle way DeFazio’s bill throws a kink into the troll business model. At the start of each patent suit, the plaintiffs will have to show that they are either a university, the original inventor of the patent, or a company sincerely trying to turn it into a commercial product. If they can’t, they will be officially deemed a troll, and be required to post a bond to cover the defendant’s costs, should they lose a case. That will tie up their money, which in turn will make it more cost-intensive to bring lots of suits while simultaneously cutting their return on investment. 

Hopefully he can get it past Congress.

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8 Responses to “Death to Patent Trolls”

  1. Lance (2,634 comments) says:

    And that’s just the patent trolls.
    I see an endless stream of ‘new’ patents out of the US for items that according to patent rules are not patent-able. Lots of prior art, concepts and bloody obvious ‘next steps’ or combinations of existing products.

    I would suggest the entire system (especially in the US) is broken.

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  2. RRM (9,826 comments) says:

    Agree with the comment that the patent system seems to be broken.

    But I would imagine there’s more besides just trolls occupying office chairs that take the piss out of patents anytime they think they might get away with it.

    Cool story:

    I read somewhere that the old CD Stromberg carburettor (as seen in some old Holdens, and various Brit cars of the 1960s) was originally designed by an in-house Engineer at the Standard-Triumph motor company in the late 1950s solely because they needed a good side-draught carburettor that worked in the same way as the SU carburettor. The motivation was that genuine SU carburettors would have been too expensive for the upcoming new Triumph 2000, a car that had to be built to a pretty strict price point if it was going to live.

    The design of the Stromberg blatantly copied the SU method of operation, while changing just enough marginal details to ensure that it avoided all of SU’s patents. I guess this is either a fiendishly clever piece of design work, or else it is just about as morally bankrupt as patent trolling, depending on which way you look at it…?

    (It can’t have been a great copy of an SU, as only the Mk1 and early Mk2 2000s ran the Strombergs, and then they changed to use proper SUs after all…)

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  3. Dennis Horne (2,388 comments) says:

    Poo? Just lawyers doing their jobs…

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  4. wrightingright (143 comments) says:

    So called “intellectual property” is fundamentally opposed to true property rights, nobody who really believes in property rights should even for a second put up with this nonsense which has been deceptively named “intellectual property”.

    http://mises.org/document/3582/Against-Intellectual-Property
    https://mises.org/daily/4848/
    http://wiki.mises.org/wiki/Without_Intellectual_Property
    http://wiki.mises.org/wiki/Costs_of_intellectual_property

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  5. rangitoto (239 comments) says:

    Patents should also be subject to use it or lose it on some reasonable time limit.

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  6. Alan Wilkinson (1,871 comments) says:

    In my view the problem is completely inappropriate patents plus grossly excessive copyright protection.

    All businesses own intellectual property which they are entitled to share and protect as they wish contractually. It is where the State imposes monopoly protections on the world that IMO all the issues arise.

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  7. slijmbal (1,230 comments) says:

    This completely misses the point.

    Making it more expensive to protect a real patent just means companies will feel safer ignoring patents.

    Software\IT patents are granted when they should not be. Fix this and the problem goes away. We are left then with the real ones.

    Dispose of the bleeding obvious patents, focus on real innovation and many lawyers will need to find a new market.

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  8. Paul Marsden (995 comments) says:

    You can patent anything you want, but true inventions are rare. Very rare. And unless you have the horsepower to protect your IP through the Courts, for the most part, you’re probably just wasting your time and money. Better perhaps to put the money into marketing and obtain first mover advantage, instead of providing every Tom, Dick and Harry the world over, with the most intimate details of your project. But it really depends on what your idea/product is. With my inventions/patents wherever possible, there is a “Jesus bolt”which only I know about, and is the difference between success and failure for IP pirates.

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