The Rise of the Trolls

A new study from Boston University School of Law* has looked at the impact of so-called “Patent Trolls” on the companies they have asserted their patents against with surprising, and yet unsurprising, results.
The type of company often, commonly called a Patent Troll, is now likely to be tagged a Patent Assertion Entity, and is sub-type of a group of companies labelled Non-Practising Entities (NPEs) because although they own technology, often in the form of patents, and license and/or assert their patents, they do not produce goods or services.  The class of NPEs includes many organisation deemed reputable to whom the tag “Patent Troll” seems inappropriate.  Organisation like universities and research institutes, as well as the apocryphal lone inventor, all fall into the group NPEs but lack some of qualities of a Patent Assertion Entity, or “Patent Troll”, which typically has acquired patents with the primary, if not sole, purpose of finding companies with fat wallets, suing them for patent infringement, and taking the roll of the dice with the courts on a favourable judgement.
Voices have long questioned the “Societal Value” of Patent Assertion Entities and their business model, the BU School of Law is another siren voice, with data to back up the message of warning.  The claimed data is staggering: half a trillion dollars value lost to defendants in the three decades to 2010, after cases with Patent Assertion Entities.  The paper does make some bold assertions to back this claim, sighting loss in stock market value amongst other things as being more detrimental to defendants than the financial damages lost to the Patent Assertion Entities.
There is an underlying issue raised in The IP Observers before, beyond the data and the debate between those, like the authors of the BU School of Law paper, who see the business model of Patent Assertion Entities as intrinsically bad for society and those, and there are contrary voices, who see this “new” business model as a healthy of form market development.  As said previously on The IP Observers, these Patent Assertion Entities buy up unused assets, particularly patent assets and use them, releasing their potential value, and these patent assets, often from defunct or bankrupt companies, are valuable IP assets which could, and perhaps should, be serving the broader interests of society.
The underlying issue is not then with the Patent Assertion Entities or “Patent Trolls” who take advantage of the arbitrage opportunity created by leaving this pile of valuable assets lying around, the issue is why aren’t those patent assets and the technology behind them taken up and used for economic development in line with the general aspirations which led to the creations of patent systems world-wide in the first place.  Until policy makers tackle that underlying issue there will always be someone ready to make a fast buck or a trillion doing what comes naturally.