Making the Case Against Patent Trolls

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A new study finds that patent trolls were likely behind almost half of all patent lawsuits filed in 2011. Several tech companies are fighting back and raising the alarm about a patent system that seems broken.

First the study: Robin Cooper Feldman, Sara Jeruss and Joshua W. Walker are publishing a study commissioned by the Government Accountability Office in the Duke Law & Technology Review. They found, “The data confirm in a dramatic fashion what many scholars and commentators have suspected: patent monetization entities play a role in a substantial portion of the lawsuits filed today. Based on our sample, lawsuits filed by patent monetizers have increased from 22% of the cases filed five years ago to almost 40% of the cases filed in the most recent year. In addition, of the five parties in the sample who filed the greatest number of lawsuits during the period studied, four were monetizers and only one was an operating company.” Of course, “patent monetizers” is just a more polite way to say “patent troll.”

GigaOm’s Derrick Harris noted that recent patent lawsuits have included “cases against Foursquare; a power trio of Facebook , Walmart and Disney; and pretty much everyone who built a product based on Hadoop. It’s this state of affairs that has spurred U.S. appellate judge Richard Posner to call the patent system dysfunctional, and has researchers, entrepreneuers and even Google devising methods to improve it.”

Several tech firms are fighting back against the patent trolls. MikeMasnick from TechDirt reported, “Last year, we wrote about a crazy patent troll, named Innovatio, who had sued a ton of restaurants and hotels, claiming that anyone who used WiFi was violating its patents.” He added, “Cisco, Motorola and Netgear have now filed an amended complaint which rips Innovatio apart, and doesn’t just seek a declaratory judgment of non-infringement, but outlines a parade of lawbreaking by Innovatio, arguing that it’s actually involved in racketeering and conspiracy among other things. “

Meanwhile, Twitter’s Ben Lee is calling for new legislation to fix the patent troll problem. He wrote, “According to the American Intellectual Property Law Association (AIPLA)’s 2011 survey, an average patent lawsuit costs between $900,000 to $6,000,000 to defend. In the last month and a half alone, Twitter has received three new patent troll lawsuits. The law currently does not allow us to recover the millions of dollars in fees we spent to defend ourselves — nor does it compensate us for the time spent by many Twitter employees who worked on the case. The law only allows us to ask for certain types of minor fees, which is why the court was only able to order this particular patent troll to pay us $10,447.85.” He said that Twitter supports the recently introduced SHIELD act, which would force patent trolls to pay the costs of defending against frivolous lawsuits.