Numbers don't lie: Patent trolls are a plague

Recent research supports view that patent troll activity is rising -- costing America a fortune in wasted legal fees and lost jobs

Jeff Bezos is not the most obvious advocate for change to the patent system. The founder and driving force behind Amazon, he has in the past encouraged his staff to file for controversial Web patents on obvious ideas like "one click to buy." Under his guidance, Amazon has wielded those patents as part of lawsuits against competitors; the one-click patent was used against Barnes & Noble, for example. At one point, the Free Software Foundation was even coordinating a boycott of Amazon as a result.

Bezos is no bleeding-heart patent liberal. Yet in London this week, he told local newspaper Metro:

Patents are supposed to encourage innovation and we're starting to be in a world where they might start to stifle innovation. Governments may need to look at the patent system and see if those laws need to be modified because I don't think some of these battles are healthy for society.

[ Simon Phipps tells us how he really feels: Why software patents are evil. | Track the latest trends in open source with InfoWorld's Technology: Open Source newsletter. ]

Bezos is not alone in this view -- even the New York Times is now carrying stories about the threat from abuse of the patent system. Recently, a wide range of academic research has begun to cast light on the problems caused by the patent system, and a consensus -- that there's a real problem -- is emerging. Panelists speaking at an event sponsored by the Advisory Committee to the Congressional Internet Caucus explored the topic and mostly found the patent system wanting. Technology startups face huge challenges from companies seeking to do little more than tax their innovation using binders full of patents; technology lawyer Marvin Ammori commented that the patent system as it stands is very hard for innovative startups to navigate.

An academic paper from law professor Colleen Chien of Santa Clara University looks more closely at the challenges patents pose for startups. She found 40 percent of the respondents to her survey reported trolls causing significant operational impact on their young businesses, including delays in hiring, undesirable changes of strategy, and loss -- or elimination -- of value. She also found that patent trolls were frequently used as a buyer for the patents of failed startups. Aaron Williamson of the Software Freedom Law Center points out:

The truth is that the patents aren't a moat around the startup's product, but around the VC's investment. As every VC knows, a huge proportion of startups fail -- as many as 90 percent. Given this high failure rate, VCs don't see startups as investments in themselves, but as pieces of an investment portfolio; they've placed bets across the board, expecting most of them to lose.

I've written before about the problems software patents pose, especially to open source projects. Indeed, I believe software patents to be one of the top five drivers of change in the world of open source today. New research published as a consequence of the America Invents Act supports the fears expressed by Bezos, Ammori, and many others. It has revealed the extent to which the patent system is being harnessed against technology innovators in ways that harm the economy.

Among the other measures in the America Invents Act, passed by Congress about a year ago, section 34 requires the nonpartisan Government Accountability Office (GAO) to conduct a study on the effects of patent trolls on the economy. The GAO in turn went to a group of academics associated with the Stanford IP Clearinghouse (now called Lex Machina) to gather the data required. Those academics have now supplied the data to the GAO and published their own assessment of the research. Covering a five-year period from 2007 to 2011, it rigorously identifies and classifies patent activities across all industries and uses a statistically significant sample to draw conclusions.

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