Patent Trolls: Legal Warfare is Killing Intellectual Innovation

In the last few years, large financial institutions have been accumulating vast numbers of patents for the sole purpose of suing other companies, rather than create any new products themselves.

By owning an ocean of generalized patents, these companies can force smaller competitors, start-ups, or inventors to pay out expensive settlements, rather than face the daunting process of a lengthy trial.

These hijackers of innovation have become an alarming trend, the most publicized example of which was the Apple vs. Samsung $1,000,000,000 verdict, in which Samsung was forced to pay fines for allegedly infringing on Apple patents.

But trolls may soon be feeling the first blow against their predatory habits, with a recently introduced bill that aims to force them to pay defendant’s legal fees should their lawsuits fail in court. Furthermore, plaintiffs would be exempt if they invented the patent themselves, or could demonstrate that they had made substantial investments trying to bring the product to market.

This bill will hopefully signal the end of people buying cheap patents simply to attack companies with vaguely similar technologies. In 2011 alone, businesses were estimated to have paid out approximately $29 billion in expensive settlements.

The purchase and pursuit of ideas should always feed innovation, eventually bringing products to the marketplace and consumer. Inventors should no doubt profit from their creations, but not by stifling everyone else. Striking a fair balance in this regard can be a difficult task, but we’ve clearly seen a shift in favor of restrictive practices lately.

An interesting figurehead in this ongoing debate is Nathan Myhrvold – Microsoft’s ex Chief Technology Officer. Myhrvold is a fascinating genius of the highest order, and has an academic track record that would rival most Bond villains. He attended university at the tender age of 14, studying mathematics, geophysics and astrophysics – quickly followed with a master’s degree in mathematical economics and a PhD in theoretical and mathematical physics at Princeton. He also held a postdoctoral fellowship at the University of Cambridge, where he worked under a somewhat notable Physicist named Stephen Hawking.

Myrhvold's main company, Intellectual Ventures, pursues a lot of inventions that aim to "solve difficult problems in science and technology." Among those manifestations, are a number of philanthropic endeavors – including TerraPower which aims to produce a "travelling-wave nuclear reactor" utilizing non-weaponizable uranium and functioning for 50-100 years without refueling. Another venture is a mosquito killing "photonic fence" which could greatly aid in the battle against Malaria.

But Intellectual Ventures is also one of the biggest purchasers of intellectual property, and has been trying to create a capital market for inventions by buying thousands upon thousands of patents from a wide variety of industries. With the power of owning new ideas, comes the ability to charge rates on innovation and decide which players can survive in any given field. This has, perhaps justifiably, drawn Myrhvold a lot of criticism.

Intellectual Venture, and other I.P. hoarders of its magnitude, often utilize Wall Street bankers to help assess the value of the patents. The only problem with this filtration process, however, is that bankers are motivated by profit – not research and development, innovation or the public good. If you want to cash out of I.P., who better to partner with than financial experts that always advocate the route of highest profit?

It becomes hard to know if vast quantities of patents would be better off not being owned by one corporation or incredibly accomplished genius – rather than spread across a variety of smaller industries in an open and free market. Without access to data, it’s impossible to know what might have happened had these patents not been swallowed up.

Myrhvold himself is frustrated with the trolling accusations, and for all intents and purposes his aims might very well be to support innovation and technological development. But whether satisfying his personal passions, or seeking to profit off of boundless enterprises, it seems perfectly reasonable to keep a concerned eye on anyone who wants to stick their fingers in this many pies.

The 2008 economic collapse brought to light the way in which capital is managed in vast pools, and all the evidence needed to see that this isn’t necessarily a good thing. A corporation of ideas, which doesn’t concentrate on one market or innovate one product – but rather places many tentacles in several pools, can’t simply be dismissed as broad investment practices. The potential hazards, delays and restrictions across a massive array of industries are simply too great.