Patent Trolls vs. Bad Patents

by on March 5, 2007 · 6 comments

IEEE’s Spectrum has published an article in defense of patent trolls. Mike Masnick has a good critique of the article here. But I wanted to point out something that I think the article gets right (sort of):

The pejorative label [“patent troll”] itself does harm. Legal decisions, and more notably settlements, in patent cases are affected by the media’s portrayal of the parties. If a company is slapped with a disparaging label by the media and that labeling affects business, sales, cooperative arrangements, and the company’s stock, there is an incentive to settle or withdraw from a litigation that may be the impetus for the label. Limiting or restricting patent protection only to that which is “commercialized” thus inhibits the progress of science. Such inhibition contradicts the principles of the patent system established by the U.S. Constitution.

What’s more, companies that purchase patent property without performing research or even commercializing any product are nonetheless providing a valuable service. Most inventors barely have enough money to file for a patent application. Even if the inventor can afford to get the patent to issue, patent litigation is exorbitantly costly, frequently requiring millions of dollars. Individual inventors, and even small or medium-size companies, cannot afford such fees. Without another company to finance the litigation or at least to license or buy the patent—as P and IB did for the Korean inventor—the inventor may never realize any benefit from his toils.

This is right, in a twisted way. “Patent trolls” in and of themselves are not the problem. In industries where the patent system tends to enhance innovation, (such as the pharmaceutical industry, perhaps) this sort of division of labor can benefit the progress of science and the useful arts by enabling the division of labor. It’s true that we don’t want to insist that every inventor also be an expert on licensing and litagation. The problem with patent trolls comes in industries like software, in which the patent system exerts a net drag on innovation. In those industries, patent trolls are harmful for precisely the same reason they’re beneficial in industries that benefit from patents: they make the patent system more efficient. That is, they streamline the process of obtaining frivolous patents and filing frivolous lawsuits based on them.

The fundamental problem, then, is not patent trolls but bad patents. But it doesn’t necessarily follow that reining in patent trolls is a bad policy. Given the enormous costs of frivolous patent litigation, restricting the activities of patent trolls is a good way to do damage control until we can build political support for more fundamental reform of the patent system.

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