EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

11.17.11

Cost of Patent Trolls Studied as Acceptance of USPTO Falls, Developers Complain Even in Press Releases

Posted in Patents at 11:30 am by Dr. Roy Schestowitz

Bessen

Summary: More academic insight and more anecdotal evidence of the backlash against the existing patent laws and practices

The silly, meaningless measures that we see of innovation as function of patents continue to come from press outlets like the The New York Times, which in turn cites a “report by Thomson Reuters, published on Tuesday [and] tries to draw a more accurate link between corporate patent filings and real innovation. It does so by measuring not only the number of patents a company files, but also the influence, global reach and success of its patents.”

Innovation should not be quantified in these terms. Profit and patents are something better used as indicators of monopoly power, which is what patents are all about at the end of the day. To measure innovation properly, other yardsticks are definitely needed. Watch how Doom 3 source code fails to arrive due to patents. It was in the news yesterday and it’s a fine example of where patents do a lot of harm when geometric knowledge can be shared. There is a better — and for a change academic — work that helps shed light on the effects of patents. It was covered by CNN yet again (as before) and this time it focused on patent trolls. Bessen and his wonderful group published another paper which got the attention of those who keep abreast of the patents debate. Here is the original (Boston University) where the abstract states: “In the past, non-practicing entities (NPEs) — firms that license patents without producing goods — have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.”

IDG covered this too. Notice the opening paragraphs:

For those of us who follow the tech industry closely, patents are a touchy subject lately thanks to all the litigation going on over software patents.

This is particularly true in the mobile arena, where companies including Apple and Microsoft have been especially enthusiastic in their use of patents as leverage over their competitors.

They do this because they are losing to Android/Linux.

Here is another IDG article, this one bearing the headline “Patent Trolls Cost Businesses $80 Billion Per Year, Study Finds”. To quote: ““Non-practicing entities” (NPEs) is the polite name given to patent trolls by Boston University School of Law researchers James Bessen, Jennifer Ford, and Michael Meurer, whose paper, “The Private and Social Costs of Patent Trolls” (PDF), will soon be published in the journal Regulation.

“Whereas such firms once helped enable technology markets and boost the profits small inventors could earn from their inventions, that’s no longer the case, the authors argue. Rather, today’s NPEs assert patents “on an unprecedented scale,” they write, involving thousands of defendants every year in hundreds of lawsuits.

“The researchers studied the effect of patent lawsuits on defendants’ wealth by examining the stock price of those companies around the time the lawsuits in question were filed. After factoring out market trends and random factors, they found that between 1990 and 2010, NPE lawsuits are associated with half a trillion dollars in lost wealth to defendants.”

Here is an example of a legal case that has been concluded after no less than 2 years (i.e. very expensive process):

A Portland, Ore.-based company that sued two multiple listing service software vendors for patent infringement has lost a two-year court battle, with a U.S. District Court Judge dismissing its claim against one of the vendors and invalidating the patent in question.

As the president of the FFII puts it in relation to another case:

ProSoftnet, creator of IBackup.com and IDrive.com, is now defending itself against patent trolls

There is actually a press release about it, which is a testament to the sad state this whole system is in. To quote:

Cloud Storage Pioneer Pro Softnet Faces Most Disruptive Patent Attack to Date

Pro Softnet, an independently owned and operated online backup and cloud storage company that provides service to over 800,000 subscribers through its popular IBackup and IDrive products, is now in the midst of defending itself against the largest patent attack it has yet faced brought on by a non-practicing entity, or NPE. With several new and exciting services in the cloud sharing space scheduled for release in the first quarter of 2012 – the pending lawsuit has the potential to interrupt growth for this pioneering company.

WIPO propaganda is trying to justify its existence, quite frankly as usual, while many genuine companies with real products (and no patent lawyers) are suffering. This leaves development and innovation crashing down and deterring participation. More and more people are starting to really get it. The patent system is on shaky grounds. It does not serve innovators.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

3 Comments

  1. Michael said,

    November 17, 2011 at 8:26 pm

    Gravatar

    FUD:

    It does so by measuring not only the number of patents a company files, but also the influence, global reach and success of its patents.”

    Innovation should not be quantified in these terms. Profit and patents are something better used as indicators of monopoly power, which is what patents are all about at the end of the day.

    And yet you did not complain when Google purchases massive “indicators of monopoly power”.

    Again, massive bias on your part.

    In any case, yes – the patent system is broken. It needs to be improved and it needs to be made more consistent around the world so people know what they are dealing with.

    But unless or until you have an actual solution, all you are doing is whining. Over and over and over.

    saulgoode Reply:

    And yet you did not complain when Google purchases massive “indicators of monopoly power”.

    Actually, Techrights — on several occasions — has complained about Google’s purchasing of patents.

    http://techrights.org/2011/07/25/cartels-part-of-the-problem/
    http://techrights.org/2011/04/06/benjamin-henrion-on-google-nortel/
    http://techrights.org/2011/09/15/brutal-nature-of-patents/

    Michael Reply:

    Fair enough… and thank you for the correction.

    But Google is not deemed “evil”. They are still the good guys – even if they play the same games as the “bad guys”.

    I would love to see Roy state what he sees as good and evil and then apply that equally to all of the companies he talks about: Apple, MS, Samsung, Google, HTC. Also apply it to the open source world.

    is it wrong to sue? Is it wrong to “slavishly” copy other’s work? Is it wrong to give products away for free? Is it wrong to collect users’ data?

    The answer changes with Roy depending on his preconceived notions of who is good or evil. Bottom line: if Apple or MS do any of those things it is wrong; if the others named above do it they are doing the right thing, or, at worst, are making a strategic mistake but are not being evil.

What Else is New


  1. Replacing Patent Sharks/Trolls and the Patent Mafia With 'Icons' Like Thomas Edison

    The popular perceptions of patents and the sobering reality of what patents (more so nowadays) mean to actual inventors who aren't associated with global behemoths such as IBM or Siemens



  2. The Patent Trolls' Lobby is Distorting the Record of CAFC on PTAB

    The Court of Appeals for the Federal Circuit (CAFC), which deals with appeals from PTAB, has been issuing many decisions in favour of § 101, but those aren't being talked about or emphasised by the patent 'industry'



  3. Japan Demonstrates Sanity on SEP Policy While US Patent Policy is Influenced by Lobbyists

    Japan's commendable response to a classic pattern of patent misuse; US patent policy is still being subjected to never-ending intervention and there is now a lobbyist in charge of antitrust matters and a lawyer in charge of the US patent office (both Trump appointees)



  4. The Patent Microcosm's Embrace of Buzzwords and False Marketing Strives to Make Patent Examiners Redundant and Patent Quality Extremely Low

    Patent maximalists, who are profiting from abundance of low-quality patents (and frivolous lawsuits/legal threats these can entail), are riding the hype wave and participating in the rush to put patent systems at the hands of machines



  5. Today, at 12:30 CET, Bavarian State Parliament Will Speak About EPO Abuses (Updated)

    The politicians of Bavaria are prepared to wrestle with some serious questions about the illegality of the EPO's actions and what that may mean to constitutional aspects of German law



  6. Another Loud Warning From EPO Workers About the Decline of Patent Quality

    Yet more patent quality warnings are being issued by EPO insiders (examiners) who are seeing their senior colleagues vanishing and wonder what will be left of their employer



  7. Links 19/2/2018: Linux 4.16 RC2, Nintendo Switch Now Full-fledged GNU/Linux

    Links for the day



  8. PTAB Continues to Invalidate a Lot of Software Patents and to Stop Patent Examiners From Issuing Them

    Erasure of software patents by the Patent Trial and Appeal Board (PTAB) carries on unabated in spite of attempts to cause controversy and disdain towards PTAB



  9. The Patent 'Industry' Likes to Mention Berkheimer and Aatrix to Give the Mere Impression of Section 101/Alice Weakness

    Contrary to what patent maximalists keep saying about Berkheimer and Aatrix (two decisions of the Federal Circuit from earlier this month, both dealing with Alice-type challenges), neither actually changed anything in any substantial way



  10. Makan Delrahim is Wrong; Patents Are a Major Antitrust Problem, Sometimes Disguised Using Trolls Somewhere Like the Eastern District of Texas

    Debates and open disagreements over the stance of the lobbyist who is the current United States Assistant Attorney General for the Antitrust Division



  11. Patent Trolls Watch: Microsoft-Connected Intellectual Ventures, Finjan, and Rumour of Technicolor-InterDigital Buyout

    Connections between various patent trolls and some patent troll statistics which have been circulated lately



  12. Software Patents Trickle in After § 101/Alice, But Courts Would Not Honour Them Anyway

    The dawn of § 101/Alice, which in principle eliminates almost every software patent, means that applicants find themselves having to utilise loopholes to fool examiners, but that's unlikely to impress judges (if they ever come to assessing these patents)



  13. In Aatrix v Green Shades the Court is Not Tolerating Software Patents But Merely Inquires/Wonders Whether the Patents at Hand Are Abstract

    Aatrix alleges patent infringement by Green Shades, but whether the patents at hand are abstract or not remains to be seen; this is not what patent maximalists claim it to be ("A Valentine for Software Patent Owners" or "valentine for patentee")



  14. An Indoctrinated Minority is Maintaining the Illusion That Patent Policy is to Blame for All or Most Problems of the United States

    The zealots who want to patent everything under the Sun and sue everyone under the Sun blame nations in the east (where the Sun rises) for all their misfortunes; this has reached somewhat ludicrous levels



  15. Berkheimer Decision is Still Being Spun by the Anti-Section 101/Alice Lobby

    12 days after Berkheimer v HP Inc. the patent maximalists continue to paint this decision as a game changer with regards to patent scope; the reality, however, is that this decision will soon be forgotten about and will have no substantial effect on either PTAB or Alice (because it's about neither of these)



  16. Academic Patent Immunity is Laughable and Academics Are Influenced by Corporate Money (for Steering Patent Agenda)

    Universities appear to have become battlegrounds in the war between practicing entities and a bunch of parasites who make a living out of litigation and patent bubbles



  17. UPC Optimism Languishes Even Among Paid UPC Propagandists Such as IAM

    Even voices which are attempting to give UPC momentum that it clearly lacks admit that things aren't looking well; the UK is not ratifying and Germany make take years to look into constitutional barriers



  18. Bejin Bieneman Props Up the Disgraced Randall Rader for Litigation Agenda

    Randall Rader keeps hanging out with the litigation 'industry' -- the very same 'industry' which he served in a closeted fashion when he was Chief Judge of the Federal Circuit (and vocal proponent of software patents, patent trolls and so on)



  19. With Stambler v Mastercard, Patent Maximalists Are Hoping to Prop Up Software Patents and Damage PTAB

    The patent 'industry' is hoping to persuade the highest US court to weaken the Patent Trial and Appeal Board (PTAB), for PTAB is making patent lawsuits a lot harder and raises the threshold for patent eligibility



  20. Apple Discovers That Its Patent Disputes Are a Losing Battle Which Only Lawyers Win (Profit From)

    By pouring a lot of money and energy into the 'litigation card' Apple lost focus and it's also losing some key cases, as its patents are simply not strong enough



  21. The Patent Microcosm Takes Berkheimer v HP Out of Context to Pretend PTAB Disregards Fact-Finding Process

    In view or in light of a recent decision (excerpt above), patent maximalists who are afraid of the Patent Trial and Appeal Board (PTAB) try to paint it as inherently unjust and uncaring for facts



  22. Microsoft Has Left RPX, But RPX Now Pays a Microsoft Patent Troll, Intellectual Ventures

    The patent/litigation arms race keeps getting a little more complicated, as the 'arms' are being passed around to new and old entities that do nothing but shake-downs



  23. UPC Has Done Nothing for Europe Except Destruction of the EPO and Imminent Layoffs Due to Lack of Applications and Lowered Value of European Patents

    The Unified Patent Court (UPC) is merely a distant dream or a fantasy for litigators; to everyone else the UPC lobby has done nothing but damage, including potentially irreparable damage to the European Patent Office, which is declining very sharply



  24. Links 17/2/2018: Mesa 17.3.4, Wine 3.2, Go 1.10

    Links for the day



  25. Patent Trolls Are Thwarted by Judges, But Patent Lawyers View Them as a 'Business' Opportunity

    Patent lawyers are salivating over the idea that trolls may be coming to their state/s; owing to courts and the Patent Trial and Appeal Board (PTAB) other trolls' software patents get invalidated



  26. Microsoft's Patent Moves: Dominion Harbor, Intellectual Ventures, Intellectual Discovery, NEC and Uber

    A look at some of the latest moves and twists, as patents change hands and there are still signs of Microsoft's 'hidden hand'



  27. Links 15/2/2018: GNOME 3.28 Beta, Rust 1.24

    Links for the day



  28. Bavarian State Parliament Has Upcoming Debate About Issues Which Can Thwart UPC for Good

    An upcoming debate about Battistelli's attacks on the EPO Boards of Appeal will open an old can of worms, which serves to show why UPC is a non-starter



  29. The EPO is Being Destroyed and There's Nothing Left to Replace It Except National Patent Offices

    It looks like Battistelli is setting up the European Patent Office (EPO) for mass layoffs; in fact, it looks as though he is so certain that the UPC will materialise that he obsesses over "validation" for mass litigation worldwide, departing from a "model office" that used to lead the world in terms of patent quality and workers' welfare/conditions



  30. IBM is Getting Desperate and Now Suing Microsoft Over Lost Staff, Not Just Suing Everyone Using Patents

    IBM's policy when it comes to patents, not to mention its alignment with patent extremists, gives room for thought if not deep concern; the company rapidly becomes more and more like a troll


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts