The Sociology of Patent Trolling

In their interesting history of the rise and fall of Research In Motion, Losing the Signal, Jacquie McNish and Sean Silcoff describe how close a patent troll came to taking down what was at the time becoming the dominant player in the nascent market for smart phones. A patent was salvaged from a failed company and later used to sue RIM and came close to getting them locked out of the U.S. market. From pg 122:

The skeletal company was part of a growing breed of patent trolls whose primary business was to sue businesses allegedly infringing on their rights. Lawyers represented trolls on the contingency they would share a portion of any court awards. It was a booming business. U.S. lawsuits filed by patent trolls rose sharply to 428 in 2007 and 2,750 just five years later, by which point they accounted for nearly 60 percent of all U.S. patent lawsuits, double the level of five years earlier. 

Stout started the hunt for licensing fees by writing letters to dozens of communications companies suggesting they were infringing on its technology. One of the last letters was sent in January 2000 to RIM. NTP received no replies from most of the targets, including RIM.

If we accept the argument that intellectual property laws are intended to preserve profitability in the face of the infinite reproducibility of ideas, patent trolling comes to look like a fascinating systematic pathology. The very system designed to ensure the profitability of ideas leads, under conditions of accelerated competitive individualism, to the destruction of that system from within: what’s designed to facilitate innovation -> application in fact comes to pervasively disrupt it.

On pg 124 there’s a good summary of recent history:

Patent fights snowballed in the Information Age. Computing and communication advances arrived with such velocity that U.S. patent applications increased fourfold in the decade ending in 2010.8 Leading the way was the mobile phone business, accounting for nearly 25 percent of total U.S. patents granted in 2013, up from 5 percent in 2001.9 Many breakthroughs were based on software concepts, opening a new front in the patent wars involving a labyrinth of algorithms and code. These feuds became high-stakes battlegrounds when U.S. courts began handing out rich awards for patent infringements.

On page 128 they describe the long term damage to the company:

Few people knew of the emotional toll the case took on RIM’s chiefs. Lazaridis looked for solace in his faith, and Balsillie in his new guru. The humiliating legal spectacle had unnerved the company’s leaders and diverted their attention from emerging competitors. “We lost some of who we were through that,” says Patrick Spence. “That’s ultimately the cost to the company. It’s not the $ 612 million. It’s what that cost us in terms of taking focus away from where we needed to go.”

The necessity of resisting patent trolls incentivises tactics which may skew corporate priorities. From pg 145-146:

What Balsillie prized most of all was Motorola’s vast arsenal of intellectual property rights. There were an estimated seventeen thousand issued mobile patents, most of them for dated cellphone technology that was more valuable in the legal arena, where RIM and its competitors faced a constant onslaught of patent lawsuits. RIM’s dealmaker was obsessed with intellectual property after the emotionally scarring NTP war. He lobbied governments on both sides of the border and spoke to business groups to push for reforms that might prevent the legal brinksmanship that nearly flattened RIM. Washington and Ottawa were receptive, but progress was slow. In this vacuum, tech companies strengthened their legal rights by acquiring patent collections from struggling rivals. With Motorola’s patent chest, RIM would hold a much stronger hand against patent trolls and competitors alike.

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