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Ghost-town offices of “Patent Trolls” hinder technological innovation by costing economy over $60 billion

June 10, 2016

 (Photo: pixabay/RyanMcGuire)

Rebel without a cause, Troll without a cost

In light of a series of Supreme Court rulings in 2014 that rejected claims on abstract technological patents, the US’s litigation system seemed to be on track to protecting innovative firms from the plague of patent trolls – shell companies with no real asset other than patents. These patent trolls do nothing else other than acquire purposely broad and abstract patents related to software and sue the living crap out of unknowing companies that accidentally infringe on them.

 

When the habitual suing of fledgling developers got out of hand, the Supreme Court took actions to protect the interests of developers, invalidating these patent trolls that were dishing out subpoenas whenever anyone did anything on a computer for profit. After a brief hiatus, they seem to be back on action, equipped with a much more sneaky repertoire than ever before.

 

 

Patent trolls have become an epidemic, where two-thirds of all patent lawsuits were filed by these “non-practicing entities”(NPEs) that basically do nothing but buy intellectual property with the sole purpose of waiting for someone to unknowingly step on the bear-trap. According to United Patents’ 2015 year-end report, about two-thirds of all patent lawsuits were filed in the high-tech sector, of which 88% involved the actions of NPEs.

 

These patents inflict heavy costs on companies that attempt to create innovative and useful solutions, thereby diminishing the optimistic outlook towards startups and venture investments in general. Patent trolls are blood-sucking leeches of the tech-world, the bane of conducting business in a lawsuit-happy culture that allows people to sue McDonalds for 3 million dollars because they served hot-coffee that was too hot. 

Watch as Meyer gets to the bottom of NPE ghost-offices/Video: YouTube

 

Software developer Austin Meyer was sued by one of these patent trolls for selling a flight simulator on Android’s app store, obviously one of the most widely used technological platforms available. Bemused and angered, Meyer did what any logical, tech-savvy individual with a personal vendetta would do. He visited Texas, where most of these patent trolls are located and filmed what he discovered for all of YouTube to see.

 

What he found was that the official addresses of these high-profile companies were vacant, most without a receptionist to turn the lights on during business hours of a weekday. According to Meyer, major NPEs gathered in an unoccupied ghost-town, with nothing but a fake shell of an office to stand for the billions of dollars worth of lawsuits that they file on an yearly basis. 

Meet the living troll of the US litigation system/Image: inc.com

 

These trolls take shell-companies to a whole new level. Not only do these companies not produce anything, they don’t even have the decency to play a part in enriching the local job market. Why keep these ghost-house offices at all?

 

Turns out the Eastern District of Texas is notorious for having patent-friendly judges. While 71% of district judges banned claims for abstract patents (Delaware at 90%, now have something else to be recognized for other than their tax-havens), the Eastern District of Texas banned a nation-low 27%, making it a fine nesting ground for such parasitic trolls. To file a lawsuit in East Texas the “office” of the plaintiff must be located there, hence the reason why more than 70% of all NPE lawsuits filed in 2015 were done so in, you guessed it, the state of rodeos and loose gun-controls.

 

It’s almost amusing how unreserved patent trolls are about how they literally do nothing except suck the life out of fledgling developers. It might even be more cost-effective to them to rent out a food-truck parked in front of the district courthouse rather than keep a vacant office for the sake of having the right address to go on a subpoena.

How patent trolls are proving cancerous to innovation/Image: HBR.org

 

Defending yourself from a patent infringement lawsuit can cost millions of dollars and god-forbid, if you lose to one of these trolls, say bye-bye to your business, car, apartment, shoes and underwear, as NPEs won’t even flinch for a second when they strip you of everything you're worth.

 

In aggregate, patent litigation costs the US economy over $60 billion a year, and robs a whopping $29 billion directly from the pockets of defendant firms. This in turn adds pressure on investors, consequently shedding valuable R&D money that could’ve served a much more productive purpose than feeding these tech-fungi with a hard-on for subpoenas.

 

Though not all patent lawsuits are illogical and unjustified by nature, the overwhelming evidence shows that an alarming wealth of these intellectual property feuds are caused by individuals that seem to stand against the socially empowering nature of entrepreneurship and innovation. It's time to lawyer-up and wage war against these patent-grubbing assholes.

 

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