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US Patent Trolling Costs $29 Billion a Year
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."
'We estimate that firms accrued $29 billion of direct costs in 2011'
not the law firms.
...because the potential entrepreneur expects that if they become successful, a patent troll will take all their money?
That's a truly groundbreaking discovery. I mean, who could possibly expect that patent trolling may be bad practice?
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.)
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
Former Microsoft executive Nathan Myhrvold, who now heads up the controversial Intellectual Ventures patent rights company, told the All Things Digital conference two weeks ago that "I was never a popular kid in class".
"I'm not going to be popular in this class."
translation: back in school he was beaten up on a daily basis. Now he's armed with patents and lawyers and is going after everyone else's lunch money.
The patent trolling industry is worth £29 billion a year??? We must protect this vital industry - just think of the loss to the economy if anything happened to it.
While I agree to some extent, in the case of patents there are actual numbers we should be able to use to show the losses. Take the price paid to the lawyers for patent suits, add the settlement amounts paid to firms that don't produce anything using the patent in question, and you should have a rough idea of how much money is lost due to patents. 80B sounds high, but I could well believe that it's into the billions with some of the astoundingly high dollar amounts the courts award for these cases.
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 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?
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.
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!
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.
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: "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).
Or from earlier this year: "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.
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?
The reality is that if Apple of IBM or MS makes a product using my patent, they should have to pay me. I should not have to sell my patent to a patent troll firm for pennies on the dollar so I can a some profit from my work. I do not necessarily deserve profit from my work, but neither does the large firms deserve to profit from my work without renumeration.
Which is to say people on /. often ask how can the MPAA claim that piracy is destroying the industry when box office sales are through the roof for the good films. Likewise we can complain that patent trolls are costing major corporations $15 billions, but in five years just the iPhone has generated 10 time that much in revenue, so not only can we ask if this is a significant figure in the grand scheme of things, but we can also ask if corporations were willing to compensate others instead of jumping to litigation if these numbers might be far smaller overall.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
This is the totally wrong way to look at it. First of all, you will not be sued unless you are successful. Secondly, if you incorporate, you will be able to keep whatever money you make if they sue you into bankruptcy. But they won't do that, because they are like parasites. A dead host is useless to them. Instead, they will charge you what they think you can bare. If you are really passionate abut something, the threat of a patent lawsuit shouldn't detur you.