Patent trolls have the smartphone industry in a state of emergency

“According to a study from the Boston University School of Law, patent litigation caused by ‘non-practicing entities’ (NPEs), better known as ‘patent trolls,’ cost U.S. software and hardware companies US$29 billion in 2011,” Jack Purcher reports for Patently Apple.

“NPEs are individuals and firms that own patents but do not directly use their patented technology to produce goods or services and instead assert their patent rights against companies that do,” Purcher reports. “Patent litigation costs to technology companies from NPE lawsuits have dramatically risen from $6.7 billion in 2005 to $12.6 billion in 2008 and more than $29.2 billion in 2011.”

Purcher reports, “The report goes on to state that ‘The rapid growth and high cost of NPE litigation documented here should set off an alarm warning to policy makers…’ A new report published today indicates that the domestic smartphone industry has indeed pressed the panic button to set off the alarm regarding the damage that patent trolls are exacting on their industry.”

Full article here.

[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]

22 Comments

  1. This article is a bit of a red herring. Yes there are NPE that have crappy (vague) patents that they try to make fit a successful product. However, inventors are not always large companies able to bring to market their inventions and often these inventions are, in essence, used without permission by large companies who, knowing that the individual or small entity can’t afford lawyers, feel free to use the patent without payment. Patents can and should be awarded to NPE, but should a “poser” NPE file a bogus lawsuit, severe penalties (legal fees, etc) should be awarded against the NPE.

    1. I agree, there are many inventors who developed, prototyped & patented products but were unable to gain the traction necessary to actually produce & sell it.
      An inventor seeking just compensation for his invention is a far cry from a patent troll.

        1. very true, and why I included the qualifier “just” to compensation.
          However there are grey areas in patent trolling. There are cases when a company bought another company to get it’s patent assets but isn’t actively using all of them (not applicable to the companies current products). They may license (or demand royalties for) patents they aren’t and don’t intend to use.
          But agreed, these lawyer run companies that specialize in buying up obscure patents and then sue companies of successful products when sometimes the patent is barely (or sometimes clearly) not applicable. I think the test here is “do you derive the majority of you profits from actually making a product or from litigation (and licensing)” However even this would need to be tempered to include “licensing bodys” and patent pools like MPEGLA which (or attempt to anyway) keep and fairly license “industry standards” (but are separate from FRAND aplicable standards)
          We are a lot better offnow (mpeg4) than in the wma/avi days where there were literally hundreds of incompatible .avi file and codec formats on the web

          1. Or companies can acquire patent rights and sit on them to quash competitive products. A prime example is the Chevron acquisition of GMs battery technology and subsequent refusal to grant a license at any price, just to hamstring electric car development. Not free market capitalism at its finest and certainly not good for America.

            1. Oooh coal powered cars, what a good idea?

              Conspiracy theories my friend not facts, besides we need to do a whole lot better than battery powered cars, charging off the grid will just not work (they offer a discount for nighttime (ie off peak) charging…now. But just think about if battery powered cars ever become successful… Overnight won’t be “off peak” anymore and you will be charged accordingly. Besides ~60-70% of the US’s grid is coal and nuclear. with the rest being mainly Hydro & Oil/natural gas (and good Hydro have already been developed and also come at the cost HUGE enviromental “restructuring”)

              So what are you going to expand to power the battery powered cars? Nukes (dangerous and the highest cost of production) or Coal (lowest cost of production but considerable CO2 and significant environmental pollution or Oil natural gas (which have to be drilled, an or “fracked” and also cause CO2 emission and significant environmental damage)
              You conspiracy theorists need to think this “battery car” thing through carefully, What you don’t get is the Cheveron doesn’t need or want to “suppress battery technology” they are an energy company (oil coal and gas) it would be to their benefit if we all doubled or tripled out electric consumption.

              (and please don’t say “wind or solar” unless you look up ACTUAL generation rates efficiencies and costs, they are not viable (technology showcases only) even after the government spending (wasting?) billions in attempted development)

            2. This is about patent-related misbehavior. Chevron did acquire the patents and did refuse to sell the rights to use the technology to manufacturers, including Toyota, who became unable to provide replacement battery packs for their very popular RAV4 EV and were forced to interrupt its production. They will be back in the market in 2012, using Tesla Motors battery technology.

              As far as the merits of EVs goes, you can make all the “fuel” you need in your backyard today. That’s the nice thing about electricity, there are lots of ways to get it. I’m kind of a free market guy myself, as long as nobody is cheating the system. Right now Chevy Volt owners are going months between visits to the gas station and saving hundreds of dollars per month in fuel costs.

              I think good things lie ahead. Trying to fuel Americas future, transportation or otherwise, with old dead trees, dead dinosaurs or unclear energy would be foolish. Last month Germany produced more than 50% of its electricity from solar for the first time. All that’s required for America is the will to do it.

            3. That was a fluff piece designed to mislead the easily lead not real gross electric production figures. You need to wake up and join the real world. (and quit with the silly conspiracy theories nonsense)

              The real gross electric production for germany in 2012 is 5.3% from solar and 9.2% from wind turbines.

              http://www.ise.fraunhofer.de/en/news/news-2012/electricity-production-from-solar-and-wind-in-germany-in-2012

              and

              http://www.ise.fraunhofer.de/en/downloads-englisch/pdf-files-englisch/news/electricity-production-from-solar-and-wind-in-germany-in-2012.pdf

            4. And here is a report from the IEA, showing (among others) germany using mostly fossil fuel, and secondarily, Nukes
              http://iea.org/stats/surveys/mes.pdf

              It’s funny you’ll believe wild conspiracies about Chevron suppressing battery technologies, but don’t get that you are being seriously mislead by the “green power conspiracy”. You literally went around believing germany produced 50% of it’s power from solar and the bad americans in the US burn coal and oil because Cheveron wants us to. You need to wake up my friend and realize where the real conspiracy is.

            5. In one month, for a few days, Germany did. They had never done that before. The term for that is progress. Burn more coal is not progress, it is death. Death for mountains, death for people, death for the environment. I’ve got a few years left before death will choose me. In the meantime, I choose progress.

            6. Holy crap did you even look at the reports? Germany generates 5% of it’s power from solar not 50%”. Those are actual verifiable, up to date figures (as of a few weeks ago).
              You are running through life eyes wide shut, open them before it is too late.

            7. Too late for what? To buy more coal, oil or nuclear? I don’t dispute the production figures to date. I just see a better future, if we try. If we don’t the future will go to those who did. The only claim is that for a couple of days the Germanys produced more than 50% of their electricity from solar.

              The first flight at Kitty Hawk in 1903 lasted 12 seconds and covered 120 feet. 24 years later Lindbergh flew from New York to Paris, 34 years after that the Boeing 707 entered commercial passenger service.

              The future is what we make it, not an extension of what used to be. I’d say Germany just made the Kitty Hawk flight. Where will they be in 24 years? Where will we be?

  2. I agree with Mark on a variety of levels.

    Patents are assets which can be bought and sold, just as chairs, desks, CNC machines, computers, filing cabinets, etc.

    If someone is smart enough to buy an individual’s or firm’s patents, then they have all the rights of the previous patent holder.

    The only red flag in all these suits, is that a non-practising entity is using their owned assets to earn a buck (or a billion bucks). Whereas, the original patent holder did not.

    The real issue in my mind, is that a School of Law is proposing some changes in patent litigation law, which would only have the effect of enriching lawyers that much more.

  3. There is proposed legislation in the works that will require the loser in any “patent troll” litigation, to pay 100% of the winners legal fees. But alas the airheads in DC will never let it pass.

    1. The airheads to which you refer are, of course, lawyers themselves and view the “loser pays” system (popular in England) very negatively. Of course, they’ll deep six it, just like they do tort reform in the medical arena.

    2. Well that would be all well and good if you assume the “winners” are ‘always’ the most deserving of victory. Whereas the reality is that your chances of success in litigation rest on the so called quality (cost), of your legal team. Your low rent two-man team of worthies will be blown aside by a tidal wave of arcane legalese, low ball tactics, impossibly expensive-and-instantaneous research, all served up with enough red herrings to hang you up, in limbo. You have almost zero chance despite the legitimacy of your claim.
      Which is where the patent trolls come in. They can afford to pay for the best legal ‘protection’ and your patents are safe – for an extra fee over and above legal costs of course.
      Assuming your patents are valid and valuable, surely this can’t be wrong.

  4. I went through a lot of the archives from Patently Apple’s patently-legal archives and there are a lot of crazy troll law suits that hang on one claim that’s out to lunch. For most trolls it’s a business with patents without merit. They’re just nuisance suits.

  5. Patents should be registered and then sold – new technology = higher price to use it
    Old = cheaper
    Should then be less each year that it’s been around on a percentage basis working down to a minimum charge to use it

    All new products then to be checked by a higher body for patent infringements before release

    1. you have to be careful there.. sometimes huge investments and long tome to market success. Like in the case of the ipad and iphone where some patents go back a decade. Apple had spent 10 years and likely —Billions— of dollars developing those products (the iPad research was actually first but was shelved and the iphone made production first.
      Apple took huge risks pouring resources (talent and $$) into a project that all had failed at (tablets) and just because some of the underlying and foundational patents are 7-10 years old dozen’t make them less relevant.

      You need to protect the companies who risk huge assets to attempt to push the envelope or we will cease to move forward (without Apple I am convinced that “state of the art in personal computing” would be a large beige Pentium 7 box running Windows XP XL-VI-personal edition 3, Service pack 12, hot patch 36 😉

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