This system is enriching patent trolls—companies that buy patents in order to extort money from innovators. These trolls are like a modern day mafia. […]

The larger players can afford to buy patents to deter the trolls, but the smaller players—the innovative startups—can’t. Instead, they have to settle out of court. Patent trolls take advantage of this weakness. […]

In the smartphone market alone, $15-20 billion has already been spent by technology companies on building defenses, says Stanford Law School professor Mark Lemley. For example, Google bought Motorola Mobility for $12.5 billion—mostly for its patents. An Apple-Microsoft-Oracle-Nokia consortium bought Nortel’s patent portfolio for $4.5 billion. Microsoft bought Novell’s patent portfolio for $450 million and some of AOL’s patents for $1 billion. Facebook bought some of Microsoft’s new AOL patents for $550 million. Lemley estimates that more than $500 million has been squandered on legal fees—and battles are just beginning. This is money that could have been spent, instead, on R&D. […]

Clearly, the laws need revision. Feld says that software patents should be completely abolished—that in the modern era of computing, the best defense is speed to market, execution, and continuous innovation.

{ Washington Post | Continue reading }

photo { Harry Callahan }

economics, law, technology | May 9th, 2012