In our 632nd issue:
Software Patents and the Rise of Patent Trolls
In
most issues of EFFector, we give an overview of all the work we're
doing at EFF right now. In light of this week's announcement of the
SHIELD Act, we're doing a deep dive into a single issue: Software
Patents and the Rise of Patent Trolls.
Beloved podcasts like the Adam Carolla Show and HowStuffWorks are under attack. They and other podcasts are getting sued for, well, podcasting. And they're not the only victims—developers are being targeted for building mobile apps, and offices around the nation are being attacked for using ordinary networked scanners. These creators are only a few of the thousands of victims of one of the biggest threats to innovation: patent
trolls.
Patent
trolls are entities that don't create products themselves, but instead
buy patents and make money from lawsuits. Trolls often make broad claims
of infringement based on patents of questionable validity, and most
defendants choose to settle because of the outrageous nature of patent
litigation. It is risky and expensive—and trolls offer settlement
amounts that, although incredibly burdensome, are cheaper than a
lawsuit, which can often cost well into the millions of dollars.
This week, Congress made huge strides with the introduction of the SHIELD Act—a
bill that, if passed, would become the first legislation to directly
address the problem of patent trolls. The Saving High-Tech Innovators
from Egregious Legal Disputes (SHIELD) Act, introduced by Reps. Peter
DeFazio (D-OR) and Jason Chaffetz (R-UT) in the House, directly targets
the trolls' incentive model. The bill creates a system where if a troll
loses in court because the patent is found to be invalid or there is no
infringement, then it pays the other side’s costs and legal fees.
This bill marks an important step toward ending the patent troll problem for good. We encourage you to tell your lawmakers to support the SHIELD Act. Read on and discover how patent trolls became such a problem.
The Flood of Software Patents
Software
patents are relatively new phenomena; the software industry grew from
nothing into a mature business without any need for patent protection.
For decades, the Patent & Trademark Office (PTO) was generally
reluctant to issue patents that covered software. But in the mid-1990s,
the Federal Circuit (the court that hears patent appeals) first held that an algorithm implemented in a general-purpose computer could be patentable.
This opened the floodgates for software patents. The PTO now issues about 40,000 software patents
a year. That's more than 100 per day. Unfortunately, the quality of
these patents has tended to be very low. On average, examiners spend
only 18 hours reviewing each patent application. This is not nearly
enough time to properly check if the invention is new. To make things
worse, the claims in software patents (this is the language that is
supposed to mark the boundaries of the invention) are often vague and
overbroad—giving unscrupulous patent owners the ability to claim that
their patent covers a wide range of technology.
The Rise of The Patent Troll
The
rise in such broad software patents created an environment ripe for
patent trolling to surge in popularity. Since 2005, the number of patent
troll lawsuits per year has skyrocketed—a four-fold increase to over
5,000 lawsuits every year. By 2012, for the first time ever, more than half of all patent suits were brought by trolls.
Patent
trolls often sue with weak software patents, so when they are actually
challenged in court, they usually lose. From 1995-2011, patent trolls
won fewer than 25%
of cases that went to judgment. And the most aggressive trolls fare
even worse: of the most frequently litigated patents (those asserted in
eight or more lawsuits), the trolls won fewer than 10% of their cases.
Unfortunately,
patent litigation is so expensive that it is often cheaper to pay the
troll to go away. Even for smaller companies, the average cost of
defending a patent case all the way through trial approaches $2 million.
Despite these costs, some companies—like Newegg and Twitter—have fought back and won. But the astronomical expense of patent litigation means that most defendants will settle.
With
the explosion of patent troll lawsuits, most technology companies can
expect to be targeted at some point. The patent troll motto seems to be:
if you build anything, we will come. The result is that
patents—especially the vague and overbroad software patents beloved by
trolls—act as a disincentive to innovate and create.
Trolls Target Startups and End Users
In recent years, patent trolls have increasingly targeted smaller firms that are less likely to fight back. A recent study showed that more than half of the firms sued by patent trolls have less than $10 million in annual revenue—with startups being a common target.
Another disturbing trend is patent trolls going after end users for everyday tasks. For example, a patent troll has sued restaurants, hotels, and companies for using Wi-Fi. And another troll has blanketed the nation with letters demanding that companies pay $1,000 per employee for using standard office technology like scanners and email.
Software Patents Hurt Innovation
In the
hands of patent trolls, software patents are a tax on innovation. And
this tax is getting bigger every year. In 2011, companies made $29 billion in direct payouts to patent trolls. And the overall cost to the economy has been estimated
at about $80 billion per year. Every dollar spent fighting or paying
off a troll is a dollar not spent on launching new products and creating
jobs.
And the harm caused by software patents goes beyond the problems with trolls. Patent wars—such as the fight between Apple and Samsung—mean that companies are competing in the courts instead of the marketplace. In 2011, both Apple and Google both spent more on patent litigation and buying patents
than they did on research. When some of the nation’s flagship
technology companies are spending more on patents than they are on
actual innovation, it is clear that the system is
broken.
What EFF is Doing to Fix the Problem
EFF has outlined seven proposals to begin the conversation about setting things right through our Defend Innovation
campaign. Individuals can sign on in support or leave comments with
their own ideas for fixing the problems behind software patents. We will
compile these comments and signatures and use them as the basis for a
report we will present to Congress later this year. The proposed fixes
include shorting the length of software patents, requiring running code to be included in patent applications, and codifying an innocent infringers defense.
We're also meeting with tech companies to hear their thoughts on the
current software patent system, and we will include those views in our
paper. Set up a meeting with us for your company—your on-the-ground experiences and opinions are crucial for reform.
EFF is one of the only
organizations in the world taking on patent cases with the intent to
narrow and invalidate bogus software patents. Though patent lawsuits
take many years, we're proud to say that our Patent Busting Project
has already taken down several overbroad patents. To find out more
information about our software patent work, including blog posts and
infographics, check out our patent issue page.
Today, we're excited to join many in the EFF community in supporting the SHIELD Act,
which is based on one of the proposals put forward in Defend
Innovation. This bill would make it so that patent trolls pay the legal
fees if a patent in a lawsuit is invalid or if there's no actual
infringement. This act is a simple, important change that would help
deter patent trolls from bringing egregious lawsuits upon businesses and
innovators. Please join us in fighting for the SHIELD Act by telling your lawmaker you support it.
Supported by Members
Our members make it possible for EFF to bring legal and technological expertise into crucial battles about online rights. Whether defending free speech online or challenging unconstitutional surveillance, your participation makes a difference. Every donation gives technology users who value freedom online a stronger voice and more formidable advocate.If you aren't already, please consider becoming an EFF member today.
Administrivia
Editor:
Adi Kamdar, Activist
editor@eff.org
editor@eff.org
EFFector is a publication of the Electronic Frontier Foundation.
eff.org
eff.org
Membership & donation queries: membership@eff.org
General EFF, legal, policy, or online resources queries: info@eff.org
Reproduction of this publication in electronic media is encouraged. MiniLinks do not necessarily represent the views of EFF.
No comments:
Post a Comment