Cost of Patent Trolls

In Study: patent trolls have cost innovators half a trillion dollars Ars Technica reports on findings of three Boston University professors who studied the economics of patent-infringement lawsuits filed by “non-practicing entities”–business entities that exist only to own patent portfolios and sue for infringement.  The cost for publicly-traded companies since 1990 is $500 trillion and lately has run at about $83 billion a year. The researchers used stock market event study analysis to calculate the cost.  Read the article to learn more.

Patents Sword and Shield

I’ve blogged recently (here and here) about businesses that acquire patent portfolios for the sole end of aggressive litigation intended to force royalty deals (as opposed to, say, acquiring patents to exploit their technology). Google’s planned acquisition of Motorola Mobility will give it control of MM’s portfolio of 17,000 patents to, as the Wall Street Journal reports, “defend itself against a rash of lawsuits against its Android software.” The Journal reports that also, “[b]esides countersuing in the event it is attacked, Google could use the Motorola patents to lend a legal hand to Android partners such as HTC Corp., which is entangled in litigation with Apple over Android.”

More Patent Abuse

The prior post was timely.  The Official Google Blog just ran a post titled When Patents Attack Android describing “a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents.”  The culprits paid $4.5 billion for Novell’s and Nortell’s old patents–five times their pre-auction estimated worth of $900 million and $1.5 billion more than Google’s bid–and are “seeking $15 licensing fees for every Android device[,] attempting to make it more expensive for phone manufacturers to license Android (which we provide free of charge) than Windows Phone 7.”  Let’s get ready to rumble!

Patent Abuse

In When Patents Attack!–truly a great title–This American Life devotes an hour to uses and abuses of software patents, focusing on Intellectual Ventures, a Silicon Valley company that exists to acquire and enforce patents through litigation.  Outsiders view Intellectual Ventures as a patent troll–“a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered (by the party using the term) unduly aggressive or opportunistic, often with no intention to manufacture or market the patented invention” (I am perfectly comfortable citing Wikipedia for this definition).  Intellectual Ventures disagrees.  It’s a provocative episode if you have any interest in intellectual property and cutting-edge issues in patent law.  One criticism is that it leaves the impression that ideas themselves can be patented, when patent law protects the manifestation or implementation of an idea but not the idea itself.  As I said last night in class you cannot patent the idea <mousetrap>, only a particularly-described method or process for catching mice.  (“Use peanut butter” is not particular enough.)  The episode does address how software patent claims are often overbroad, throwing a net over far more than is legitimate, and I recommend it notwithstanding my criticism.

The Cup Runneth Over

The problem in teaching Internet law is choosing what to cover. There is no such thing as “Internet Law,” not in the sense of an integrated body of legal principles such as contract law, tort law, or constitutional law. “Internet Law” might better be described as “The Legal System’s Response to Problems Arising from Use of the Internet and Digital Technology for Commercial and Other Transactions.” That’s a title certain to scare away prospective students, and still probably incomplete.

When Internet Law, or Cyber Law, entered the legal consciousness about eight years ago textbook publishers rushed a number of Internet law texts to market. I looked at all of them, tried out a few, and now don’t use any. One problem they shared was the lack of clear vision as to what they should cover. They spent time on topics like non-disclosure agreements for employees of tech companies or forms of business organization for Internet start-ups. These are interesting topics in an employment law or entrepreneurship course, but pose no issues unique to the Internet. Teaching this course requires guidelines to determine what topics are in and what are out. Two Internet law professors might use different guidelines and disagree about whether to include a particular topic. For instance, I don’t discuss patent law in my Internet law course. Patent law raises vitally important issues these days, such as the patentability of methods of doing business and the Patent Office’s need to vet prior art thoroughly, but in my view these cutting-edge issues do not turn on unique Internet characteristics.

Fortunately the news abounds with issues of Internet law. These are some of the stories that came across my desktop yesterday:

Darren Waters, Warnings over ‘broken up” Internet, BBC News, Oct-11-06 (reporting on concerns that countries such as China will tailor Internet architecture to their specific needs, resulting in “island of connectivity that have no inter-connectivity between them”)

Jonathan Bick, E-Communications Policy: Getting It Right, E-Commerce Law & Strategy (Law.com), Oct-12-06 (recommendations about employer policies governing employee use of “Internet, computer, and electronic assets” that recognize the ubiquity inherent insecurity of current methods of electronic communication)

Jack M. Germain, The False Promise of Browser Security, E-Commerce Times, Oct-11-06 (“Vulnerabilities are so embedded in any browser that surfing the Web is no safer than driving a tank through a mine field while blindfolded.”)

Does YouTube Make Google a Big Target for Copyright Suits?, The Wall Street Journal, Oct-11-06 (Discussion between John Palfrey, Harvard law professor and Director of the Berkman Center for Internet and Society and Stan Liebovitz, University of Texas economics professor and Director of the Center for Analysis of Property Rights and Innovation)

Susanna Hamer, Google’s big bet, CNNMoney.com, Oct-12-06 (Advertisers will use databases of personally-identifable information, tracking cookies, geo-location software, and other devices to deliver personally-customized video ads to Internet users)

Like I said, the problem in teaching Internet law is choosing what to cover. There is too much.