Tuesday, June 4, 2013

Prosecute the Patent Trolls

From Felix Salmon at Reuters:
Here’s an idea: take the resources that the SEC is currently using to prosecute insider trading, and give them instead to the FTC, so that they can be used to aggressively prosecute patent trolls instead. The cost would be the same (by definition), and the benefit would surely be much greater, as today’s wonderful report from the White House underscores.
Patent trolls are known by various names — one is “non-practicing entities”, or NPEs. Another term is “Patent Assertion Entities”, or PAEs. But whatever they’re called, the most important research into the costs of trolls is this paper from researchers at Boston University:
We find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010. During the last four years the lost wealth has averaged over $80 billion per year.
And we’re not talking about a steady loss of $80 billion per year, either. If the PAEs were costing $80 billion per year from 2007-2010, they’re probably making three or four times as much today, given how quickly their business is growing. Here’s a chart showing PAE activity, in red, versus all other patent cases, in blue:
trolls.tiff
The patent trolls are harming the nation in all manner of unquantifiable ways as well. This American Life just aired a fantastic episode on the subject of patent trolls, which features a man called Nick Desaulniers who wanted to build a low-cost heart monitor. But he was quickly dissuaded: after doing a patent search, he came away “horrified at how generic some of the patents were”,  and persuaded that there was no way he could possibly build a business. “However many jobs I could have created or however many lives I could have saved,” he concluded, “that’s it.”...MORE