Patent Trolls and Willie Sutton


All right, WC knows Willie Sutton probably never told that reporter that he robbed banks because “that’s where the money is.” Sutton himself – never a very reliable source – blamed it on the reporter.

But patent trolls may not know that Sutton’s law is based on an urban legend. It looks like patent trolls are making Apple, Inc. the target of their dubious claims because “that’s where the money is.”

Apple, Lazarus-like, is back from the dead. In 1997, Apple had to borrow money from Microsoft to stay afloat; today, Apple is twice as big as Microsoft by market capitalization, and by the same measure the largest corporation in the U.S. and the second largest in the world.

The technical term for a business as large as Apple is “target.” At least if you are a patent troll.

And, indeed, Apple was the number one target for patent troll claims over the last five years, with a total of 171 cases brought against it through June 30 of this year.


patenttroll

Hewlett Packard, with 137 claims against it, is a distant second.

A patent troll, long-time readers will recall, is a “non-practicing entity” (NPE) and is further defined by research firm PatentFreedom as “any entity that earns or plans to earn the majority of its revenue from the licensing or enforcement of its patents”. PatentFreedom estimates there were as many as 4,200 patent troll lawsuits in the first half of 2013. The average patent troll claim was settled for almost $30 million. It’s often much cheaper to settle the cases than to be like NewEgg and litigate each one to a messy end. And if you are a patent troll, that’s your business plan.

The patent and copyright laws are broken. Completely obvious ideas are granted intellectual property protection. The dubious patents and copyrights are snatched up and used as a form of quasi-legal extortion. In the second quarter of 2013, Apple spent more in legal fees and settlement of doubtful claims (4.1% of gross revenue) than it did on research and development (3.0% of gross revenue).

Intellectual property law in the U.S. is broken. Congress needs to fix it. The current miserable state of affairs is a drag on innovation, a severe burden on start-up businesses and may be discouraging economic growth.

Some previous screeds about patent trolls:

RICO the Patent Trolls
Patent Trolls 101: MPHJ Technologies
Patent Trolls: An Update
The Patent Troll Plague

 

2 thoughts on “Patent Trolls and Willie Sutton

  1. Completely agree. The patent system needs to be completely overhauled and updated. This country also needs to take a long hard look at the repercussions of allowing corporations to patent natural species such as plants.

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