A new study from MIT shows that what's good for lawyers and patent trolls hurt innovation.
The paper says that some litigation is actually desirable and fuels investment, since the VCs feel that the IP of the companies they invest in will be protected. But it has an U-shaped effect with PAEs. "My analysis showed that litigation by patent trolls did not foster entrepreneurial investment at all," Professor Tucker said on presenting her paper. "It is instead associated with significantly reduced venture capital investment in entrepreneurship, preventing startups from developing and suppressing job growth."
Some companies are taking a different approach to fuel innovation and disrupt the market. Recently Telsa announced it is making its electric car battery patents "open-source"; it will provide access to all of the "several hundred" patents it has filed and won't sue anyone who uses them in "good faith." The idea is to lure more automakers into developing "serious electric cars" and making EVs widely available.
Unfortunately, patent trolls have deep pockets and, I believe, will continue to litigate aggressively even if they have to pay the costs of the defendant. The relative cost of litigation should not be underestimated. Also PAEs do not manufacture anything, they simply collect royalties for the IP they own, so it is much easier for them to prepare litigation to enforce their patents. Basically they collect royalty checks and pay lawyers to chase potential "customers."
While industries such as biotech and pharmaceuticals are less affected by patent trolls, many others are, especially in analytics, mobile hardware and software, and communications. While strong IP protection is desired, a reasonable licensing system should be in place, and the cost of litigation, especially for small startups, should be also considered.
— Pablo Valerio is a freelance blogger who writes about mobile and telecom issues for EE Times. He lives and works in Barcelona.