The patent system is not broken stop bleating understand the real issues and get on with business

Ok, I get it that lobbying can be an important part of an overall strategy and so hats off to those who have created some fog around a seemingly broken patent system.

However, things have gone just a little too far now – and unfortunately all of the hyperbole is focused on the United States.

To summarize Kenneth Lustig’s recent Forbes article on the topic:

(and thanks to David Kline for sending it on):

  1. The US patent system has for a long time driven economic growth;
  2. Non Practicing Entities (NPE’s, ‘trolls’, whatever…) have been around since the very early days of patent systems [in fact it was designed for them - consider the earliest patent statue in Venice];
  3. Patent rights are meaningless without the ability to enforce them – which is the same for all property rights;
  4. There has not been an explosion in the number of patent suits.  The number of patent suits that go to trial is about 100 which is the same as 10, 20 and even 30 years ago.  [Note that some commentators would say that NPEs do most of their damage before trial with threats etc.]
  5. The number of patent suits filed in the smartphone industry today is less than one fifth of those during the ‘telephone wars’ in  Alexander Graham Bell’s time.

What is interesting though when you take all of this in context, is that most of the angst is focused on the United States where almost all NPE lawsuits happen to be.

The reason for the lawsuits, as I’ve said before, isn’t the patent system itself, guys.

It is a lot more to do with the size of the US economy (it’s worthwhile to have a try at one of these suits) and some peculiarities of its justice system, including no right to attorneys fees for a prevailing party, triple damages for willful infringement, incredibly expensive discovery and a proliferation of contingency firms – all of which make NPE lawsuits much more likely.  (People say that the overall tort litigation rate is higher than elsewhere as well – please let me know if you have the data…)

Given that the US Constitution might have to be looked at closely to deal with some of these, then maybe it’s not going to be such an easy task…

Perhaps its better then to understand the terrain you’re working with, and get on with business.

[Image credit: EIDave]

6 Comments on “The patent system is not broken stop bleating understand the real issues and get on with business

  1. Seems like an argument as type presented in Think Fast & Slow on perception versus reality.  Still, to spur innovation, need to speed up the examination if possible to get more certainty for investment.

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  2. One interesting recent development is the rise of mass patent aggregators like RPX. Whether or not one agrees with their business model, as more large conglomerates profit from patent acquisition and enforcement, at least it will likely change the tone and focus of the “patent troll” debate — which is, after all, getting rather tiresome.
    http://www.aminn.org/patent-legislation

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  3. great points.  in the US, if you truly want patent reform remove the issue of treble damages (or cap them for willfulness) and remove infringement as a strict liability tort (align it with copyright).  thanks,

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    •  Thanks – how would the patent incentives work though if patent infringement were not strict liability?  (For those who are unsure about this term – it doesn’t matter whether you intended to infringe a patent, if you have a product or process that falls within the claims then you infringe.  The suggestion is to move this to relative liability based on whether you intended to do it, were reckless about it, negligent about it, or did it accidentally (for example).  Also by removing strict liability you would in fact need to keep wilfulness – wouldn’t you?  Isn’t that the point of relative liability?

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