Trolling

Patent trolls cost American companies $29 billion last year, says BostonUniversity. Trolls impose ‘a significant tax on investment in innovation,’ says the university.

Trolls, companies which develop technology but don’t use it to make products, claim that they are advancing technological progress.

Top troll Nathan Myhrvold, who left Microsoft to form a troll company called Intellectual Ventures, argues that it’s hard for inventors to get paid for patents and that trolls help them to get paid.

BostonUniversity disagrees, saying that trolls actually take more out of the US economy than they put in.

2,150 US companies had to defend 5,842 patent lawsuits last year, says the university.

Moreover, the $29 billion figure does not take into account the cost of the diversion of companies’ resources to deal with trolls, the consequent delay in product introductions and the resulting loss of market share.

The $29 billion does take into account the cost of lawyers’ fees, licensing fees and royalties. Lawyers’ fees represent a quarter of the cost of the litigation, says the university.

Tags: intellectual ventures, inventors, nathan myhrvold, product introductions, royalties

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7 Comments

  1. Ian
    June 30, 2012 08:47

    The system is pretty screwed up and unwieldy, and it’s pretty much impossible to defend a patent or attack an infringement without it costing a shedload of money. Something is certainly broken, but I’m not sure what.
    Take a look at this on TED about dealing with a patent troll:
    http://www.ted.com/talks/drew_curtis_how_i_beat_a_patent_troll.html

  2. David Manners
    June 29, 2012 18:29

    It will take a cleverer man than me to answer that, SecretEuroPatentAgentMan

  3. June 29, 2012 17:08

    In a court of law one has to judge by the law rather than gut feeling, so what many dismiss as wishy-washy is a real problem.
    The whole idea about IPR is to promote the useful arts, as Americans put it. So the basic idea is simple: a time limited privilege for the full disclosure of an invention. And to stop abuse a whole lot of complicated rules and laws are put into place and with it follows the law of unintended consequences, resulting in a never ending stream of amendments to laws, regulations and case law.
    I have no problems seeing the difference between filing for patents and designing cores. ARM does both. I just checked and see that ARM files roughly 15 patents per year. As for filing a patent it is not sufficient to have an idea, it is necessary to reduce it to practice (another US expression) and provide an enabling disclosure of your invention so that a person skilled in the art can actually work your invention. Intellectual Ventures, a popular whipping boy in IPR discussions, has a lab to develop and reduce to practice.
    So, how do you clearly define a troll?

  4. David Manners
    June 29, 2012 14:49

    The semantics are wishy-washy, SecretEuroPatentMan, but I see a big difference between filing for patents and designing cores.

  5. SecretEuroPatentAgentMan
    June 29, 2012 09:01

    This is ironical. Trolls, or Non Practicing Entities (NPE) as some like to call them, are actually vaguely defined if you dig into it.
    Some buy IPR to litigate, some to license out without litigation in mind, some develop themselves for selling licenses only. Often I see a vague generalisation of trolls being that they do not make a physical products, which is why the NPE concept was brought up.
    There are nevertheless serious problems still.
    Many universities develop of aquire the right to an invention from staff and students and many univerisies have large licensing offices. As an example, Stanford gets money from Google because of rights from the Google founders’ time at Stanford. Universities are hardly known for their production facilities. So, are universities trolls? Or all but Boston University?
    Many companies are founded on the idea of selling IP blocks. So do you consider CSR and ARM as trolls? Probably not.
    Patents and IPR in general are means for the small guys to survive amongst the giants with huge legal muscle. Conflicts occationally do arise but is generally avoided, it is expensive and time consuming and deflects energy away from where both parties wish to be: developing new technology and making sales. Before settlements there is often a bit of muscle flexing on both parties. The little guys will accuse the opponent of crushing competitiion. And the big guy will accuse the opponent of being a nuicanse and a money wasting troll. There are cultural aspects here too, various contries known for military warfare tend to be conduct very aggressive verbal warfare before settlement.
    I also question the concept of taking more money out of the economy than bringing in. Just how is that possible? Do the trolls burn the money?
    And finally, how much of those 29 billion dollars are licensing money to companies like ARM, companies that I cannot remember to have seen critisised in your columns.

  6. David Manners
    June 28, 2012 11:27

    No I’m asleep then, usually, but one of the wonders of this modern software stuff is that when you tell it to do something it asks you when? And for my morning post I’ve always put in 1am. Don’t know why. Could be 2,3,4,5,6,7,8 or 9 equally easily.

  7. Anonymous
    June 28, 2012 11:22

    David – why do you post at 1AM? Are you a night owl?

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