Patents
Over the summer, as I was driving, I listened to a great segment on NPR about patents, specifically the problems patent trolls pose to creativity and small firms. Firstly, the basic definition of a patent troll is a firm that buys and hoards patents simply to sue other firms that are using these patents. These patent trolls often do not produce anything of their own and exist primarily to make money off of these lawsuits. Sometimes, the patents being discussed are as general and broad as the feature on websites that, when a mouse hovers over a section, a pop-up box appears. Thus, a patent troll that controls a patent like this is able to sue virtually any website that uses this. Part of this problem stems from the broadness of the patents themselves, and whether or not they deserve a patent in the first place. However, the major problems of patent trolls include stifling innovation and new firms. Start-ups are hit especially hard, although large firms such as AT&T, Dell, and Visa. A company called Intellectual Ventures is a self-proclaimed protector of inventors. It knows that small time inventors do not have the resources or capabilities to challenge other companies that are using their patents. IV will buy these inventors’ patents and “makes sure that companies who are using the idea pay for it.” Many people in Silicon Valley are wary of IV though, claiming that they themselves are patent trolls. Of the patents IV owns, 1000 are from their own employees, and 30,000 are bought from others. This prompts companies such as Google, Microsoft, and Apple to spend billions of dollars on patents at patent auctions when a company sells its assets. All of this money could be spent better elsewhere, such as in R&D, than in protection against silly yet serious lawsuits. NPR ends with a good quote describing the results: “The big companies — Google, Apple, Microsoft — will probably survive. The likely casualties are the companies out there now that no one’s ever heard of that could one day take their place.
Later in the year, in September, Obama signed into legislation a new patent law. This law stipulates that the “first to file” gets the patent, as opposed to the previous policy, which allowed the first person to invent it to get the patent. Between patent trolls and the new patent law, it seems that a small time inventor or a start up company has new good strategy. Firstly, it seems like they have a choice to file it or not. Even if they came up with the invention themselves, it may be stolen by someone else. When they choose to file it, a mafia-like company such as IV will come and bully them into selling their patent. Thus, innovation is stifled. Companies like Intellectual Ventures have strictly dominant strategies. The people that NPR interviewed were very concerned with revealing their identities, lest IV smite them. They are large enough to force companies or individuals to sell them patents, or to make their lives very difficult with lawsuits of their own if they do not want to sell. All in all, patents in the United States are in disarray. If the government wants to facilitate and foster new ideas, this patent system must be reworked.
http://www.npr.org/blogs/money/2011/07/26/138576167/when-patents-attack
http://www.npr.org/2011/09/16/140543464/obama-signs-patent-overhaul-bill