HENRY'S BLOG

Don't feed the patent troll!

The Problem

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"A patent troll, also called a patent assertion entity (PAE), is a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question, thus engaging in economic rent-seeking." ~ Wikipedia.org
The purpose of patents is to protect intellectual property. But patent trolls just hoard them to sue other companies or people to make money out of it.
The problem I see is, that nowadays not only some independent patent assertion entities pool patents, but also big companies who want to be forearmed against potential lawsuits. This is particularly true for tech companies. A good example for this are patent battles between Apple and Samsung. In the latest patent spat between the two tech giants, Apple is looking to get the final number modified to a value closer to the $2.191 billion it originally requested.
As you can see, a gigantic amount of energy (and eventually money) flows into these issues!
Now, imagine you are a small startup in the tech/software industry.
+ You probably don't need much capital to build a prototype.
- It's really easy for other (bigger) companies to imitate your product.
You can't even be sure whether there is some patent troll, stuffed with money and good lawyers, that holds patents that (ever so slightly) conflict with your product.
It follows that you basically have two choices:
  1. Put a big amount of energy, time and money into protecting against lawsuits.
  2. Run extremely fast. If you're lucky, some big company may acquire you (instead of imitating your product), because time-to-market is more important to most tech corporations than saving peanuts money. If you're unlucky, you might hit the wall. Only if you are overly successful you have the chance to build an independent, sustainable company.
The conclusion is, that patents can increase the risk of founding a startup dramatically, depending on the industry you want to tackle.

Approach To A Solution

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"Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology."
~ Teslamotors.com
You cannot say that there are solutions available that satisfy all parties. Given that most companies that make money out of patents have a considerable amount of money at hand, mostly small companies suffer from patent crazyness. But only big players have the power to change something that is so bureaucratic. I believe some have to lead by example, like Tesla. Fortunately, more and more big tech companies like Google are getting into the habit of releasing open source products. They can afford to do so, because they are the leaders in their field anyway, so they don't have to fear others taking over. Quite the contrary, they benefit from making code etc. publicly available to anyone.
One cannot say that we should abolish the patent system. Many firms rely on patents that protect what they have created over decades.
But we should think about how we could modify the system sustainably, in order to eliminate patent trolls and in consequence decrease risk for startups.