Patent Happy Companies Cost Industry $500 Billion
0Overall Score

Three researchers from Boston University have put a dollar figure on patent trolling in the US. The figure is a massive $500 billion, starting from 1990, with most of it generated within the last four years.

Electronista claim in the last four years patent trolling cost the US $83 billion per year, amounting for more than a quarter of their R&D over that time period.

Patent trolling occurs when a company’s only assets are a wide patent portfolio and instigate legal action against larger, cashed up companies. Trolls are intent on reaching a settlement and generating revenue through royalties, as victim companies continue production of their patent infringing products.

The researchers, James Bessen, Mike Meurer and Jennifer Ford, factored in tangible costs such as Legal fees and settlement payouts. The 500 billion dollar figure excludes intangibles, such as employee distractions, legal uncertainty and product redesigns. Additionally, publicly held companies were only included, neglecting the cost of smaller private companies who were forced to litigate or went out of business.

Companies motivated by patent litigation fears have been investing in takeovers, acquiring other companies with patent portfolios to help protect them from legal squander. In July, 6,000 patents were purchased by a consortium including Apple, Ericsson, Microsoft, RIM and Sony from Nortel for $4.5 billion.

Google left out in the cold purchased over 1,000 patents from IBM, and then acquired Motorola Mobility for $12.5 billion, who have over 17,000 patents.

The telecommunication industry has now more than ever been rife with patent disputes, especially since Apple became patent happy, suing Motorola, Samsung and HTC. Currently, Samsung is feeling the majority of Apple’s force, being sued in 4 continents, 12 courts concerning 19 cases, primarily over claims that its Galaxy range are a ‘slavish’ knock off of Apple’s iPhone and iPad.

Google has been ubiquitous during the proceedings, even offloading 5 patents to HTC in its legal battle against Apple.

 

The investment of $500 billion in research and development could have contributed to innovation in the technology industry, instead of empowering trolls. Immediate legal recourse through patent happy companies is stunting industry growth, halting tech development.

American Congress has begun its reactive response to patent trolling, addressing some of the shortcomings in the patent protection process. The America Invents Act was passed in September, intending on preventing trollers from slipping through the system.