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Spend any time with tech lobbyists, and one topic is unavoidable: patent trolls. The phrase elicits more scorn in their industry than almost any subject, despite its low profile for those outside the arcane world of intellectual property law.
A “troll,” or patent assertion entity, purchases patents for the express purpose of filing patent infringement lawsuits against other companies to get licensing fees, without actually making any goods or providing any services.
The practice has long plagued tech companies. But what if the plaintiff and patent holder is the original inventor of a piece of software? Is that a cutting-edge company seeking to protect its innovation? Or simply an established company trying to stave off smaller competitors from using what, over time, has become a widely accepted technology? Should they be subject to any limits?
While patent assertion entities are often blamed for creating the problem of trolling, they aren’t the only ones using patents as offensive tools.
Large tech companies have gotten into the game in recent years, spending billions of dollars to purchase patent portfolios that they then use to try to derail their competitors’ new offerings. The courtroom has become the latest battleground for tech firms, where they can vie for control of the consumer marketplace via litigation rather than innovation.
With a typical patent trial costing in the neighborhood of $5 million, defendants are often compelled to settle cases rather than defend themselves via expensive litigation. Patent trolls only exacerbate the problem by filing countless lawsuits in hopes of extracting settlements before trial. Passing legislation to curb such lawsuits is now the tech industry’s top priority on Capitol Hill, apart from an immigration overhaul that would bring in more foreign high-tech guest workers.
“Listening to the stories of patent troll victims — everyone from large retailers to small technology startups from New York and across the country — has made clear the need for Congress to take swift action to protect our country’s innovators,” said Sen. Charles E. Schumer, D-N.Y.
The problem is particularly pronounced for software patents, which accounted for almost 90 percent of the increase in patent lawsuits from 2007 to 2011, according to the Government Accountability Office. While the number of lawsuits has spiked, many of those software patents have failed to hold up under legal scrutiny. However, few patent lawsuits ever make it through trial, and only large companies have the resources to prove a plaintiff’s patent is invalid.