In my last Blog Post I talked a little about what a Patent Troll is giving a few examples of the companies most frequently involved in these cases and what some of the largest cases were.
This time I would like to look a little bit into the significance of Patent Trolls for our modern market.
Their name suggests that Patent Trolls are a nemesis to society, however it is not evident that this stigma is true. Whilst they are painful and seem "sneaky" to traditional inventors who use the patent system to protect themselves, the rising popularity in this new form of litigation has redefined a new way for entities to use the Justice System to turn a profit.
A study made by Northwestern Law school's Michael Mazzeo and Jonathan Hillel reveals some interesting facts about this practice. They find that the economic value of the Patent doesn't change whether the holder is a practicing or non-practicing entity, but the incentives that govern different patent assertion practices are different for both of these groups.
What this could mean is that this new practice of Patent "trolling" is not affecting the economic validity, and/or value of the patents in question, but rather changes the landscape regarding whether or not a lawsuit to assert the patent's protection is worth the suers while.
This dynamic is why facing a patent troll in a court of law is a very particular case unlike many other court cases. Many strategies that large corporation use against smaller legitimate companies are useless when employed against Patent Trolls. For example: litigation costs for the defendant are significantly higher than for the plaintiff who can use a contingency-fee lawyer, and plaintiff-friendly courts can be hand-picked by the Patent Trolls to ensure a better chance for success.
Furthermore, many defensive strategies used by corporations in Patent law litigation can't be applied to Patent Trolls. For example when companies monitor the patent activity of their competitors to avoid infringing, this is obviously useless against NPEs as they are not competitors and generally aren't coming up with new patentable designs in a specific field. Another strategy is to approach the litigation using a "scorched earth" defense that significantly raises litigation costs, however NPE's funds are collected specifically to pay for litigation costs, the sole income for their industries, thus this strategy is also ineffective.
Following this reasoning, we can now see how the introduction of NPEs, or Patent Trolls, into our modern marketplace have had a few interesting implications for corporations across many industries.
That's all for this blog post and please watch the below video for a discussion on the above! See you all in class!
Oliviero,
ReplyDeleteGreat post that showed great insight to the awful patent trolls! I am overjoyed by the fact that patent trolls are finally being criticized, not yet legally punished for their horrendous actions, but atlas given less incentive to run after companies who they claim stole their ideas. Decreasing the legitimacy of the field is what we need to do to stop these trolls, as obviously it would be impossible to completely eliminate them from the game. However, decreasing incentive will decrease participation which is a good thing.
Cheers
Very intriguing post! I never thought about some of the other impacts / effects patent trolls can have! The general view is that they are detrimental to society, but even more than that, they are changing the industry landscape. I'd love a deeper discussion on some of these implications, and how they are changing the industry. Adding more tangible statistics and data on this post would also further strengthen it. Nonetheless, awesome work!
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