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 in other sites/networks: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Reddit
  • email

This post is also available in Gemini over at:

gemini://gemini.techrights.org/2011/11/17/academic-insight-into-swpats/

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. For 17 Days (and Counting) António Campinos Has Failed to Respond to Call for Compliance With the Law

    Team Campinos has been so arrogant and so evasive that there’s no indication (yet) that it will follow court orders (Willy ‘Guillaume’ Minnoye openly bragged about ignoring court orders and he's still cheering for the EPO's abuses); therefore, staff of the EPO takes collective action



  2. Raw: Elodie Bergot Breaking the Law by Threatening Against the Exercise of Fundamental Rights

    Over the years we saw a number of rude letters from Elodie Bergot, the grossly under-qualified spouse of a friend of Vichyite Benoît Battistelli; most of these we never published (we already have these and can always publish if the need arises), but those paranoid and insecure “Mafia”-like ‘cabal’ need to be exposed for the mobsters they are; for nearly a decade they’ve illegally bullied EPO staff in clear violation of the law (and for over 3 years António Campinos has kept those bullies on board); why does Europe do nothing and why is it never holding high-profile abusers accountable (only low-level facilitators)? Is it because the EU too is being infiltrated by them?



  3. Linspire Should Be Avoided in 2021 Just Like It Was Avoided 14 Years Ago

    The brand "Linspire" was brought back, but the agenda seems to be more or less the same, namely pushing proprietary software and serving Microsoft's commercial agenda (in 'Linux' clothing)



  4. The Death of Freenode Would Be Freenode's Own Fault

    Freenode is going dark and now it’s asking people to create accounts at IRC.com (just to get back into the network that they may have already occupied for decades) as if Freenode owns “IRC” as a whole



  5. Links 31/7/2021: KDE Progress and Activision Catastrophe

    Links for the day



  6. IRC Proceedings: Friday, July 30, 2021

    IRC logs for Friday, July 30, 2021



  7. The Smartest Meter of All

    Yesterday a lady came over to take our power readings (electric/gas meter); secure these people's jobs as they help protect people's privacy (dignity) at home



  8. [Meme] A Web of False Dichotomies

    A reminder that Techrights is fully available (all blog posts and wiki pages) in gemini://



  9. Freenode Shrinks by Another Quarter and Gemini Continues to Grow (For Techrights at Least)

    Freenode continues to perish faster than we've imagined; it's a good thing that we've had contingencies set up; regarding the monopolised and increasingly centralised Web, we're still making baby steps towards weaning ourselves off it



  10. Links 31/7/2021: Wine 6.14 and Chrome 93 Beta

    Links for the day



  11. European Media Does Not Care About Europe's Second-Largest Institution Crushing Basic Laws and Fundamental Rights

    New video about the latest publication from SUEPO (the EPO’s staff union); it was published yesterday, seeing that the “Mafia” (what EPO staff actually calls the management!) hasn’t done anything to comply with a wide-ranging set of court rulings from ILO-AT; why has the media said nothing about this and what does that say about today’s media? The material is all in the public domain, in widely understood languages, and SUEPO spoke about it more than 3 weeks ago.



  12. Links 30/7/2021: Distro Comparisons and Tootle Introduced

    Links for the day



  13. [Meme] Enforcing ILO-AT Rulings...

    We’re still waiting for a statement — any statement (direct or indirect) — from EPO management, seeing that almost a month has passed



  14. 'Open Source' as a Failed Initiative

    A closer look at the dire state of the Open Source Initiative, or OSI, which no longer protects Open Source (let alone software freedom) but instead helps openwashing, Microsoft entrapment, and a coup against the FSF



  15. [Meme] Rowan and António Sittin' on a Tree...

    How much longer can Team Campinos keep issuing tons of noisy and self-congratulatory puff pieces to (perhaps) distract from the elephant in the 10th floor of the Isar building (EPO HQ)? Staff won't wait for eternity.



  16. IRC Proceedings: Thursday, July 29, 2021

    IRC logs for Thursday, July 29, 2021



  17. Half the People in This Letter Are IBM Employees

    IBM seems to be continuing its war on the FSF because IBM wants to own everything (CentOS being ‘canned’ was just part of the plan)



  18. The OSI Song

    The sad demise of OSI, which has become little but a front group of proprietary software companies in pursuit of openwashing services (and outsourcing to proprietary disservices looking to eradicate copyleft)



  19. [Meme] OSI is Doing Just Fine

    So what if OSI is run by someone who raised money from Microsoft (to sell Microsoft a keynote slot in a copyleft event — the thing that Microsoft attacks through GitHub!) while funnelling the OSI's funds to a serial GPL violator?



  20. The OSI's Defunct Elections (Privacy Breach), Conflict of Interest (Nicholson), and Other Lingering Problems

    The above, together with an email from the OSI below, serves to show they’re re-running a bad election and — yet worse! — there appears to be a conflict of interest implicating the OSI’s sole member of staff!



  21. Links 30/7/2021: Audacity 3.0.3 and KD Chart 2.8.0

    Links for the day



  22. Links 29/7/2021: siduction 2021.2 and Xubuntu 21.10 Dev Update

    Links for the day



  23. GitHub is Racism

    Microsoft has the world's most racist code hosting repository; it wasn't like this when Microsoft took over as the racist policies were added to impress Donald Trump, who would later rig a procurement/tendering process to bail out Microsoft (10 billion dollars from the Pentagon, i.e. taxpayers)



  24. [Meme] António Lost His Power Over Patent Examiners

    Team Campinos at the EPO must be rather stressed at the moment; the people who do all the work can go on strike any time (or all the time, until/unless demands are met)



  25. European Patent Office is Going on Strike (or Strikes)

    The staff of the EPO is ready to strike like never before (dissatisfaction and outrage over 8 years of gross injustice, namely Battistelli's breach of fundamental rights, including the right to strike)



  26. Crying “Wolf!” About Systemd is Only Beneficial to IBM and Systemd Developers/Pushers

    Microsoft controls Systemd only to the extent that Systemd is controlled by GitHub, which is in turn controlled by Microsoft; But Systemd has long been on that proprietary platform (its developers don’t truly value software freedom) and this has long been a problem, even before Microsoft hijacked it for coercive power



  27. Links 29/7/2021: Mesa 21.2 RC3, FSF Responds to Microsoft's 'Hey Hi' Attack on Copyleft

    Links for the day



  28. IRC Proceedings: Wednesday, July 28, 2021

    IRC logs for Wednesday, July 28, 2021



  29. [Meme] No Crime Goes Unrewarded at the EPO

    It is more or less undeniable that from a legal and functional perspective the EPO is already defunct and is still perishing under a couple of Mafiosos whose sole interest is cover-up and grifting/plunder (of what’s left of the Office after almost 40 years of goodwill/reputation); the recent G 1/21 fiasco was just icing on the cake and the EU’s insistence on a patently unconstitutional UPC (more legal powers for chronic EPC violators) actually weakens unity in Europe (by discrediting the Union)



  30. [Meme] There's Always a Way (When Financial Results Are Not So Good...)

    Too many US ‘tech’ companies still lie to their investors. They choose financial engineering instead of real engineering.


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

Recent Posts