back to article Patent trolling cost the US $29 BILLION in 2011

New research from Boston University suggests that “patent trolling” is a very expensive business, costing $US29 billion in 2011 in America alone, and that trolling reduces the funds available for innovation. The research, by James Bessen and Michael J Meurer of the university’s School of Law, drew on information published in …

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Devil

In other news...

... err hang on, someone's just told me that they have a patent on that expression...!

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WOT?!?!?!?

“cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors”

You mean lawyers are making money out of this??? Quelle surprise.

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FAIL

Re: WOT?!?!?!?

Yep in the modern western service economy you are either a patent lawyer, a drone selling exotic financial instruments, corporate PR and or part of the celebrity media or you are a serf serving fries to one of the above.

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I'm more of a selling them luxury products kind of person instead of serving fries. Maybe I'll go into yachts, there must be a cheap source on Ali Baba around here somewhere...

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Shoot the lawyers, growth industry if ever I saw one.

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Black Helicopters

A slightly better choice perhaps?

Would be to shoot all the Lawyers who are also Politicians who make these silly laws that benefit ONLY other lawyers.

{i.e. Feathering the nests of their bretherin...}

Black Helicopter naturally.

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Shoot the lawyers

Shakespeare said that, so the demand has been there since the start.

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Boffin

Re: Shoot the lawyers

Dick the Butcher: ''The first thing we do, let's kill all the lawyers'' (Henry VI, Part II, Act IV, Scene II)

may be an admirable sentiment, but Shakespeare puts it into the mouth of one of his villains. They are plotting to overthrow the (good guys) state, and recognise that the law is the single most important guardian of freedom and therefore should be the first point of their attack. Of course, things may have changed in the intervening 4 centuries, though probably not human nature.

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Re: Dick the Butcher

And did you see this reported from the appeal case for the Robin Hood Airport Twitter 'Bomber':

Chambers's legal team said. "There is a right enshrined for people to make jokes that others may regard as offensive."

He said if jokes were vetted by the courts, John Betjeman would have had cause to be concerned when he wrote "Come, friendly bombs, and fall on Slough", adding "and Shakespeare when he said 'kill all the lawyers'."

Lord Judge replied: "That was a good joke in 1600 and it is still a good joke now," following laughter in court.

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Facepalm

Yeah, kill 'em all. Let's go back to solving all our disagreements through force of arms!

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partially bollocks

While I fully detest patent trolling, it is hard to see that this is direct cost.

The trolled parties pay money and lawyers so they lose money . The trolling parties gain money, as do the lawyers. Apart from the money the lawyers spend on cocaine etc, the companies gaining from the exercise can then use the money to spend on R&D.

There are some indirect costs though:

* Skilled people have been engaged and their time has been taken up and no value was generated.

* Patents often prevent the best arrangements of technology from happening (eg. FAT file system issues prevent a nice new product from coming to the market). That reduces the potential value of new developments.

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Re: partially bollocks

The direct costs would be: we can't afford a legal fight so we'll just pay up, despite the patent probably being invalid or non-applicable.

Since these are patents, its quite possible that the company did its own R&D which it paid for and then it had to pay someone else again for the the right to use its own research.

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Re: partially bollocks

"the companies gaining from the exercise can then use the money to spend on R&D"

Err... No! What part of 'Non Practicing Entity' slipped past your analysis? Patent trolls NEVER conduct R&D, other than researching who their next victim might be...

This is US $29 Billion dollars worth of attempted self defence fighting funds wasted which potentially drew directly from the R&D spend of those companies that WOULD have used the money for that purpose if they had not had to scrape the trolls off their footwear...

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FAIL

Re: partially bollocks

Exactly! And even when it's the big boys throwing hissy fits at each other, who wins?

Look at the Oracle/Google fracas, Google lost money defending themselves, Oracle lost and got nothing but lawyer bills, so who got the "R&D" money? Dewey, Suem, and Howe!

(But don't worry, I'm sure it'll go into proper research, such as investigating how fast the ice melts in a margarita exposed to the Carribean summer sun.)

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Re: partially bollocks

The trolled party loses money to the troller party and to lawyers. The troller party loses money to the lawyers but gains money from the trolled. Hopefully the troller get enough money from the trolled to cover the lawyers but often not.

See plenty of reasons for lawyers to make money but very little to innovate

The worst kinds of trolls are the ones who are lawyers. They patent ideas that they are never capable of realising and just spend their time in court sueing anyone else who tries.

What do you call five hundred dead lawyers at the bottom of the ocean? A good start.

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Devil

Re: partially bollocks

They do not, but someone else did at some point earlier in time. Most trolls buy patents approaching end of life from big corporations who have failed to implement them and monetize them.

One particular two letter entity in the UK is a prime "troll feeder" example - it used to do lots of R&D so it has a substantial patent portfolio. However, it has failed miserably to build on any of it and its monetization is mostly limited to selling stale patents in their last 2 years of lifespan to trolls. Hint - it is the place Apple got a lot of its UI patents from. There are others.

In any case it is a temporary past-time. It _WILL_ go away.

The management consluttant driven "efficiency" and "though shall not build without a business case" drive in the type of big corporations which produce patents but fail to monetize them has killed off most of their R&D. The average "Troll Feeder" patent output is now a trickle of what it was 15+ years ago. In a few years time the trolls will no longer have troll fodder to eat.

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Facepalm

But...

For cases where both companies and the lawyers are from the same country, then there has been little net transfer of funds outside of that country, so the net impact is low and the figure of $29B misleading. the money just circulates through society a little differently.

Even if the lawers get all the money, it's then passed on to car, yacht and house-builders and will finally trickle down to the public (except if the money gets spent, then paid as asalary, then spent again etc, most of it will end up with the government as tax of one form or another,

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Anonymous Coward

Re: But...

"there has been little net transfer of funds outside of that country, so the net impact is low"

Whereas without patent trolling you could get innovation and exports; net transfer of funds into the country, large positive impact. People squabbling amongst themselves is not a healthy economy.

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Non-practicing entity?

The greatest leaders of our time understand that it is not the little people who simply create things that really matter, but rather the investors, lawyers, and intellectual property firms who monetize and manage those creations who truly make an economy great. Microsoft's own Bill Gates and Nathan Myhrvold are universally admired for their early recognition of this principle in the high-tech world.

Governor Romney makes the case for the free enterprise system around these essential but so-called "non-productive" roles, which has "helped America create the greatest economy on earth -- producing more jobs, opportunities, and prosperity than any other system ever devised... helped lift more people out of poverty across the globe than any government program or competing economic system... a bright beacon of freedom for the world. It has signaled to oppressed people to rise up against their oppressors, and given hope to the once hopeless."

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Anonymous Coward

Re: Non-practicing entity?

"helped America create the greatest economy on earth -- producing more jobs, opportunities, and prosperity than any other system ever devised"

Which is why it's only the 7th richest country... so it isn't the greatest economy then is it?

I mean it's definately wrong on the prosperity part.

And producing more jobs? If we go by a figure that matters like unemployment, almost half of the countries in the world have a better unemployment rate, ergo better number of jobs based on population.

And I can only assume that applies to opportunities also.

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Re: Non-practicing entity?

Trust an American (Twit Romney) to laud the useless hangers-on in society. Making more middle-men is one of the reasons the public have no power.

When it comes to IP, it should follow a simple rule: if you didn't make/create it, it isn't yours to enforce.

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WTF?

Re: Non-practicing entity? [monkeyboyfan]

Yes, of course it has...

Erm.... The national debt is how much? Oh, 102% of GDP!?! Oh, you mean they're bankrupt?!? Wow, what a great system!!!

"As of May 2012, debt held by the public was $11 trillion, while the intra-governmental debt was $4.76 trillion, to give a combined total public debt outstanding of $15.77 trillion, roughly 102% of current dollar GDP.[4][5] The public debt has increased by over $500 billion each year since fiscal year (FY) 2003, with increases of $1 trillion in FY2008, $1.9 trillion in FY2009, $1.7 trillion in FY2010, and $1.2 trillion in FY2011.[6][7] As of February 2012, $5.1 trillion or approximately 50% of the debt held by the public was owned by foreign investors, the largest of which were China and Japan at just over $1 trillion each.[8] As of April 2012, nominal GDP of the United States was $15.46 trillion.[9]"

(wikipedia)

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Facepalm

You would be on the "B" ship, then...

...along with telephone sanitizers, hairdressers, and the entire staff of Bain Capital.

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Re: Non-practicing entity?

"Microsoft's own Bill Gates and Nathan Myhrvold are universally admired"

If you posted that to a Reg comment thread with a straight face, sir, I owe you one upvote for sheer chutzpah.

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Pirate

Just a Shakedown

The real hassle is that with lawyer costs of $200k - $1m facing you to get a summary dismissal (in Deleware at least) even if you *don't* infringe a patent (via the hideously expensive "discovery" process), it is very often in your interest to settle for several hundred thousand dollars as soon as you are served. So it is little more than a legal shakedown really.

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Coat

It's called "Suing for peace" and it's basically a way for lawyers to make money.

A nice description is given in the William Goldman book "Edged Weapons."

The term "Non Practicing Entity" is interesting.

Perhaps "patent parasite" is a more descriptive term for them?

However in IP generally are media companies NPE's or more "active" entities?

Their artists make the IP, *but* OTOH they do *actively* supply services to assist them turn an idea into a product. It could range from finding an artist to record it to setting up venue bookings, PR interviews or professional studio time (which I gather is pretty expensive).

You can guess what's on the Kindle in my pocket.

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Re: It's called "Suing for peace" and it's basically a way for lawyers to make money.

"The term "Non Practicing Entity" is interesting.

Perhaps "patent parasite" is a more descriptive term for them?"

Heh. You're (probably unwittingly) pretty much going in reverse there. 'Non-practicing entity' was pretty much invented as a more 'professional' alternative to the widely used term 'patent troll'.

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Anonymous Coward

Fighting for peace

F*cking for virginity

Patents for encouraging innovation

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Unhappy

"Patents for encouraging innovation"

Actually that is *exactly* the idea.

You, Mr lone inventor, have just spent a decade in your basement making something *everyone* thought impossible work.

Patents give the *possibility* of turning your ideas into (perhaps) serious cash.

You might like to look into the subject a little more carefully.

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Facepalm

Breaking news: the sky is blue

New research from Boston University suggests that “patent trolling” is a very expensive business, (...), and that trolling reduces the funds available for innovation.

To think it took only 20 years for them to turn their eyes up.

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Now the real question...

Now that academia has delivered a paper that is essentially a bitchslap of a wakeup call to US lawmakers to overhaul the patent system will something be done about it? Or will the politicians, as they so often do with matters like this, give the paper a dirty look, utter a 'meh', and then roll over and go back to sleep on the issue? I'm gussing the latter.

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Re: Now the real question...

"Now that academia has delivered a paper that is essentially a bitchslap of a wakeup call to US lawmakers to overhaul the patent system will something be done about it?"

Of course not. Too much money being made for lawyers to allow that to happen. Exactly the same when the government here tried to change personal injury laws. The lawyers took it to court and killed it off.

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