One of the critical obstacles to our innovation economy are patent trolls or Patent Assertion Entities (“PAE”) which acquire patents simply to bring patent litigation and effectively tax innovation. PAEs exploit numerous problems in our legal system including the expense and uncertainty of patent litigation, the excessive granting of patents in the high-tech space, the ambiguity of abstraction surrounding the claims of many high-tech patents, and the anticompetitive pricing power that comes from aggregating patents in an industry where market definition is especially difficult. PAEs are costing the economy over $29 billion annually and creating barriers to the innovation that is critical [...]
Over the last decade, the patent landscape has been dramatically altered by the rise of entities whose business model is to acquire significant patent portfolios and aggressively pursue license fees from businesses selling products that may infringe on some of those patents. Such companies are known as “non-practicing entities” (NPEs) or “patent assertion entities” (or, in some circles, “patent trolls”) because they do not manufacture or sell any products to consumers. The U.S. antitrust agencies are considering how the antitrust laws should apply to NPEs, and one news organization has reported that the agencies intend to hold a workshop later this year to address the issue.
The patent wars have become a real drag on the economy. A recent study estimated that the direct cost of patent trolls, firms that use patents solely as a source of securing revenue from litigation, exceeded $29 billion. The real costs in litigation: delayed innovation and loss of consumer choice are even greater. Now, the U.S. Congress is taking notice. Just last week, the Senate Judiciary Committee held a hearing to examine the use of standard essential patents (SEPs) in claims before the International Trade Commission (ITC) and now the House Judiciary Committee is holding a hearing on July 18.
After the Supreme Court put the brakes on some abuses of patent law in its 2006 eBay v. MercExch [...]
When competitors form a truce, consumers need to worry because often they find ways to make consumers pay more by cutting off competition. Nowhere is that a more big-ticket concern than an alliance between Nokia and Microsoft, waging a potential patent war on their smart phone rivals and potentially costing consumers millions of dollars in higher smart phone prices. Both companies recognize they have been losing the battle for smart phone dominance, as products like Apple’s iPhone and open source operating systems like Google’s Android continue to prevail.
With the knowledge they cannot succeed based on fair competition, Microsoft and Nokia have turned to patent enforcement as a means of dri [...]