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07.22.10

Patent Trolls Have a Field Day; University of San Diego/UC Berkeley Study Questions Patenting

Posted in America, Europe, Law, Patents at 5:25 am by Dr. Roy Schestowitz

Summary: As another bunch of patent trolls shows its parasitic nature, a study is released to show scepticism of patents amongst actual young businesses (not well-established monopolies)

Patent trolls — can’t live with them, can’t… well, that’s about it actually. A few days ago we mentioned the bogus company which decided to troll everyone who posts press releases. TechDirt puts it succinctly and offers decent interpretation of the case. [original source]

Law.com has an article highlighting how incredibly devastating a bogus patent infringement lawsuit can be to small businesses. In this case, someone hiding behind a series of shell companies is using a ridiculously laughable patent that appears to cover the concept of putting press releases online (6,370,535) and suing a bunch of companies that do exactly that. The article highlights the head of one tiny company — which, it should be noted, has been in business and doing the same thing since before the patent application was filed — who is debating whether he should go without a salary or company profits for three years to fight this, or just pay up. It’s really a sickening display of how patents are used to seriously harm small businesses.

According to this report just found by Glyn Moody, over 30 companies have also just been sued for daring to remove SPAM.

A Texas company called InNova is suing 36 companies – including Google, Yahoo, Apple, Dell, AOL, Bank of America, RIM and 29 others saying it that all of these companies are infringing on InNova’s patent for – get this – email spam filtering.

Unless Texas does something to change its status as patent trolls haven, lawsuits like this one will continue to harm its reputation. By extension, this is the type of legal action that leads people to saying, “only in America…”

Software patents, frivolous patent lawsuits, and especially patent trolls seem to be phenomena that plague the United States more than any other country. In the EU, for example, it is sometimes being said that patent trolls don’t exist (but few do exist and we gave examples before). Pamela Samuelson and Ted Sichelman have just published their Californian study which is more of a survey that they published in O’Reilly Radar and also at Patently-O [1, 2, 3].

To summarise:

More than 1,300 high technology entrepreneurs in the software, biotechnology, medical devices, and computer hardware fields filled out the Berkeley Patent Survey. All of these firms had been started no more than ten years before the survey was conducted. We drew our sample from a general population of software firms registered with Dun & Bradstreet (D&B) and from the VentureXpert (VX) database that has a rich data set on venture-backed startups. (Just over 500 of the survey respondents were D&B firms; just under 200 were VX firms.)

Here are some of the questions and issues they explored:

Why do entrepreneurs and startup companies file for patents? Why not? How often do startups acquire patents from others? How important are patents in fostering innovation at startups? In helping them raise financing? In providing leverage in cross-licensing negotiations? Are entrepreneurs and startups subject to patent thickets?

Glyn Moody found this new item from IP Watch. It indicates that “IPR rights was no incentive,” at least according to one person who deals with the field of biology.

Some experts in Europe are coming to agreement that a tipping point might have been reached with regard to biological patents.

[...]

“We noted that IPR rights was no incentive,” said Pelegrina. Instead, feeding the community and adapting seeds to climate change are important motivations. She concluded that the current seed policies imported from industrialised countries do not fit the highly dynamic development of breeding in local communities.

The merits of patents depend on propaganda that emphasises just one side of the scale and ignores all the drawbacks. What the world needs now is balance. Reform is necessary.

Model balancing

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A Single Comment

  1. Jose_X said,

    July 23, 2010 at 6:47 am

    Gravatar

    The example above showing the small businesses being put out of business from patent threats shows why patent broad government subsidy hand-cuffing monopolies should never be applied to the medium and small groups (or at least not too harshly). Let the giants fight, but if some technology is within the development capabilities of small firms, then a monopoly or even just the threat of it by litigious entities is too stifling to many.

    We should not be creating tools (and artificial scarcity) by helping wealthy groups tax small groups or even put them out of business with these tools.

    One possibility for patent reform is to limit how any patent can be used on entities which have revenues/profits below a certain amount and are not mostly owned or controlled by another entity that itself might fail to qualify.

    An additional possibility is to outright prevent “information” or abstract patents. The SCOTUS has ruled this way over the years, but that hasn’t kept litigation down in the US. Congress should pass a clear law to remove “information” patents. The broad coverage possible from a patent (or from a broad copyright “derivative works” definition) is too far reaching and hence stifling unless it only affects a small number of groups that already have significant levers at their disposal.

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