Nicholas Pell
Feb 28, 2012

The destructive nature of patent trolling

Lawyers wrote a new chapter in the Patent Wars recently when Microsoft and Apple took on Google via Motorola Mobility. At issue were the royalties requested by Motorola to use its patents, particularly with regard to video standards. Motorola currently demands 2.25 percent for patent use on key video standards. Microsoft claims that over 2,000 other patents for video standards can be had for a princely total of two cents.

Of course, when talking about Patent Wars, one must appraise the two reasons for any lawsuit: the good reason and the real reason. It’s no secret in or out of Silicon Valley that patent lawsuits are as much a means of sticking it to the competition as they are a way to protect IP.

What’s most confusing is why the companies at issue don’t use innovation rather than courtrooms. While it’s true that no small degree of inter-organizational and inter-personal rivalries exist in the world of tech, this seems an inadequate explanation. Rather, it seems more a case of business as usual getting in the way of technological breakthroughs. As patent trolling has become par for the course in the world of tech, big tech firms have displayed a crisis of imagination preventing them from taking the most obvious way out of patent difficulty: Designing around existing patents and making new ones.

The money currently spent leasing patents from other companies and taking them to court over restrictive trade practices could be funneled into R&D. Not only would this make the issue moot, it would also result in greater levels of innovation and economic enrichment for all. It is, put bluntly, the difference between flushing money down the toilet and planting seeds.

Microsoft frequently plays the role of consumer advocate -- a fairly cynical brand of PR considering their past history with regard to antitrust lawsuits. The claim on the part of Jobs and Co. is that anticompetitive patents drive up the cost of consumer goods, due to the high leasing fees associated with certain patented standards. This line of reasoning ignores the elephant in the room: Doesn’t hiring a team of the world’s best IP lawyers to go after your rivals drive up the cost of consumer goods as well?

The issue should be considered from a return on investment perspective above all. Lawyering up and bickering in the courts is a black hole for money, time and resources. This money, time and resources could be far better spent on developing new patents and standards. Companies could pool resources to work together to find industry standards that benefit everyone involved and avoid the patent wrangling that has flamed into full-scale guerilla warfare in recent years.

The consequences are broader than this or that company’s quarterly earnings report. It’s a crucial question of where social wealth is invested. Patent trolling is irresponsible not just because it ties up courts, but because it directs social resources into an area with nearly no return on investment.