Real cost of patent trolling

Kim sez, "Tech investor Brad Feld has a blog entry up summarizing and linking to a great paper by some BU School of Law students, in which they research the social & fiscal real world costs of patent trolls. From his site: '... a phenomenal paper titled The Private and Social Costs of Patent Trolls. Rather than be politically correct and refer to NPEs simply as 'non-practicing entities,' they cut through all the noise, define what a patent troll is, and go through a detailed and rigorous analysis of the private and social costs of patent trolls."

Regarding money:

* From 1990 – 2010 NPE lawsuits are associated with $500 billion dollars of lost wealth to defendants.
* In the past four years, NPE lawsuits are associated with an average of $80 billion per year of lost wealth to defendants.
* Very little of this loss wealth represents a transfer to inventors.

The litigation has distinctive characteristics:

* It is focused on software and related technologies.
* It targets firms that have already developed technology.
* Most of these lawsuits involve multiple large companies as defendants.

The authors suggest that these lawsuits exploit weaknesses in the patent system. They conclude that the loss of billions of dollars of wealth associated with these lawsuits harm society and state “while the lawsuits increase incentives to acquire vague, over-reaching patents, they decrease incentives for real innovation overall.”

The Real Cost of Patent Trolls


  1. The amazing thing is.  Software by the very definition of a patent, can’t be patented.  Something Donald Knuth tried to explain to congress, but they failed completely to understand.   This whole situation is mind boggling.  How can that many people be that god awful stupid for that long?

      1. OldBrownSquirrel beat me to the comment. The issue of  “lost wealth to defendants” doesn’t mean lost wealth to the lawyers.

        It’s like a full employment plan for them. I wonder if the algorithms that are developed for high frequency trading on wall street are patentable? I’ll bet that some law firm, seeing money flowing in huge chunks out to the firms doing HFQTrading will find an early creator of an algorithm and sue for a cut of the revenues that it helps them get.

        The reason I think this is because I am for a trading tax and I think that the HFQ trading tax would be a good one to implement. I can’t be the only one who sees the vast sums of money and wants to use it.

        1. If you develop a private piece of engineering, use it for yourself, and don’t tell anyone, you don’t need to bother with patents, not only that but if you patent it you’d have to tell others what the secret sauce is, even though they’d need to pay to license it, it could harm the usability of some categories of invention. I would guess this category is where HFQ software falls. Not patented and very secret.

          1. As a general rule of thumb, if someone actually has something useful on their hands, they DON’T patent it.  You only patent stupid worthless shit that you can either bludgeon your competition with, or at the very least threaten to bludgeon your competition with if they come to bludgeon you.

            There is a worthy case for some patents, but frankly, seeing how badly it has been mangled and how it can’t keep up with the rapid pace of technological growth, I think the whole thing should be scrapped.  Strength trade secret laws so that small companies can still safely display and sell technology, but kill the patent system that has devolved into a method of waging economic war by other means.

            The hilarious thing about patents is that they were originally designed to encourage technology sharing.  Originally, they were there to try and convince companies to share their secrets in return for a monopoly on those secrets once shared.   

            Now though?  We race down the technology path, and as each person hits a mark… ANY mark, they patent whatever they find.  Then, when a dozen other companies hit that same point a couple of months later on their own, they get sued.  The whole system is completely fucked and harming innovation.

            Too bad the lawyers in congress have about as much interest in dismantling this system as I have in overpaying on my taxes.

          2. My understanding is that the current patents are so vague that nobody can really use them to do anything useful.  They’re written by lawyers, for lawyers, for the sole purpose of gaming the legal system.

  2. The patent system was perverted by parasites. Now it is blocking invention instead of supporting it. No wonder we haven’t got hoverboards yet.

  3. “In other news, rain is wet, the sky is blue, and scientists have conclusively proved that the Moon is not, in fact, made of cheese!
    More on our later bulletin”

  4. Gee. I looks like only the lawyers and the courts win the money game of Patent Trolling.
    Maybe the quickest route to winning for both parties in the Patent Troll game is to simply kill the lawyers.

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