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Against Monopoly

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Patent Trolls

Monopoly corrupts. Absolute monopoly corrupts absolutely.





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How the Most Successful Patent Troll Does It

The New York Times goes after patent trolls in a long review in the Sunday paper link here. Its author, David Segal, thinks he has found the worst offender, Erich Spangenberg, whose company, IPNav, even has a classy website, link here on which it claims to have "Monetized to date: $610,549,103" and makes its sales pitch to existing and prospective clients.

It is at the top of the list of patent trolls, ranked according to the number of defendants added to their suits from 2008-2012. The total number of patent infringement suits (in litigation?) has jumped from 2304 in 2009 to 4731 in 2012. One estimate of the costs of these suits was 29 billion in 2011. Only $6 billion went to inventors, with the balance going to lawyers and the trolls themselves as expenses and profits.

The article has a lot of details on how IPNAV operates, some of which have gotten it in trouble with the law, but so far it has escaped using lots of money and legal talent. But the bottom line is that it is a huge tax on innovation and on consumers with no redeeming features. The question is how long the U.S. or the patent system survives.


Comments

It appears that the "troll" phenomenon is concentrated on software, which is to be expected since most manufacturing companies value their patents as being representative of their products.

Quote from the Bessen and Meurer paper (which is also the source for the $29 billion number):

Sixty-two percent of the time they feature software patents (Bessen et al. 2011) which are notoriously difficult to interpret. Allison et al. (2010) study patents litigated multiple times and usually asserted by NPEs; they find that software patents account for 94% of such lawsuits.


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