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Innovation Imperilled
Patent Trolls Account for Two-Thirds of All New Patent Lawsuits

Companies that buy patents not to manufacture or design products but just to sue productive corporations, known as patent trolls, are a serious and growing problem. How bad is it getting? A new study indicates they may account for two-thirds of all patent lawsuits filed in the US:

A new study from PricewaterhouseCoopers shows that the problem is getting worse: While monetary awards from patent lawsuits are decreasing overall, patent trolls — also known as non-practicing entities because they simply stockpile patents without making anything with them — are making way more off of litigation than their practicing counterparts. Even as the median award has shrunk over time, awards to trolls are only growing.

In fact, PwC finds, patent trolls’ median awards are now three times higher than those of other companies. Non-practicing entities (NPEs) also account for an increasing share of all patent lawsuits filed, at 67 percent. That’s up from 28 percent just five years ago.

Even though most of these cases either get dismissed or settled out of court, those that do go to trial often end in victories for the trolls — largely because the cases are being filed in troll-friendly courts, like the Eastern District of Texas.

As you can imagine, these abuses of the legal system fall heaviest on startups and small corporations, who lack big legal departments to chase the trolls back under their bridges. Unfortunately, those small companies are also where the innovations that drive our economy often come from.

So far, finding legislative solutions to patent trolling has proved tricky. More moderate proposals are now before Congress, though, and this may prove a case where some action is better than none. This is the worst possible time, after all, to let the economy get bogged down any further.

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  • Andrew Allison

    Surely the purpose of patent protection is to permit the holder to commercialize the invention, not the patent. The owner who chooses not to commercialize the invention has the option of selling the patent, Simply put, no sale or the patent or its realization, no damages.

    • LarryD

      The purpose of the patent is to get the innovator to publish, rather than hold an innovation as a tradesecret. But everyone seems to have forgotten that.

      Last I heard, half the patents challanged lose and are rescinded. And conceptual patents are just rent-seeking without doing the work of actually developing an innovation.

      At this point, I’d be willing to just shut down the patent office entirely.

      • Andrew Allison

        Surely the purpose of publishing is to lay claim to the invention and thereby prevent anybody else from re-inventing or otherwise benefitting from, it for 17 years?

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