Tuesday, May 27, 2014

Patent Troll Reform Killed

I'll digress a bit into another area of law that, like the divorce system, is sorely in need of reform, namely patent law. Last week a very weak but nonetheless important first step in patent reform was killed in the U. S. House. 

In the past I have had to deal with some of these so called patent trolls, entities that exits to, what is in essence, legally extort money from companies.  Their modus operandi is to acquire vague patents from third parties and then send letters to companies stating they are in violation of those patents and asking them to settle. Many companies settle because it is often quite a bit cheaper than fighting the patent due to the legal costs. 

One suit I was involved with was from a company claiming to have a patent for (roughly) putting information on a web page and then electronically sending that information to a program initiated via user interaction. So they claimed that anytime anyone entered information on a web page and pressed  enter they deserved a licensing fee. Utterly ridiculous. We used to joke that we were going to patent the concept of a gas that would sustain life. Anyone who breathed would then own us a fee. Trying to extort money from companies based on obvious concepts should be a crime not a get rich quick scheme. 

The cost to the economy? $29 billion in direct costs. Not quite up to the divorce industry but still significant. And like divorce the direct costs are only a small fraction of the true costs. Think how much stronger our country would be and how much more taxes the government would bring in if all those smart but unethical patent trolls actually worked to increase the wealth (whether that be GDP, artistic, or moral) of the nation.  

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