Patent reform may have stalled in the Senate, but the damage from patent trolls only continues to grow. A few weeks ago, Lex Machina released a report showing that patent assertion entity litigation is on the rise. And remember that day in April when patent trolls filed nearly 200 lawsuits?
And yet, we’ve continued to hear anti-reformers complain that the patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. problem is overblown and overstated. All the evidence is anecdotal, they say.
Which is why CCIA commissioned a study by an MIT economist, Catherine Tucker. She used publicly available data and objective measures to examine the relationship (if any) between venture capital investment and patent litigation.
We released the study yesterday. Professor Tucker, using standard economic regression analysis, found that PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). litigation has a strong negative impact on venture capital investment and startups. Joe Mullin at Ars Technica has a nice explanation of the study’s findings.
Given the study’s conclusions, it’s no surprise that we’re seeing responses like this from patent trolls:
New study says PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). litigation reduced the amount of VC investment.Problem: Correlation does not mean causation. http://t.co/LwgOTrrILh
— IP Navigation Group (@IPNAV) June 12, 2014
It’s certainly theoretically possible that a drop in venture capital investment causes patent trolls to file more lawsuits. But it’s hard to figure out how that might work. On the other hand, it’s easy to see how more patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. lawsuits would discourage VC investment: more trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. lawsuits means greater risk.
The truth is, patent trolls are continuing to damage American businesses, especially startups. The evidence is undeniable at this point. And the Senate’s failure to provide relief, even after the House did so overwhelmingly, means that the tab will keep running up.
This is why we can’t give up on reform. While we may not have gotten over the finish line this year, the patent trolls won’t stop, and neither will we.
