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So-Called Patent Trolls Strangle Research and Development
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So-Called Patent Trolls Strangle Research and Development

According to a recent Time Magazine online report, Apple and Google spent more money on patent litigation and defensive patent acquisitions in 2011 than on research and development. The article’s author, Sam Gustin, reasoned not only is it not a good sign for the U.S. economy, it’s a stark indication our intellectual-property system is broken.

Even the largest businesses have finite assets. Managing any business, big or small, requires managers to decide how to allocate assets to maximize growth and income. In reality, good business managers are those who can keep competing interests balanced. In a healthy business environment, patent litigation should not cost more than research and development.

Enter the patent trolls. The term is not meant to be flattering. Patent trolls are not the usual competition for businesses. They amount to speculators who buy broad technological patents and wait, without using the patents, until the right time to sue an active market participant for patent infringement. The end result is a disproportionate chunk of corporate assets going to pay for patent litigation.

The current administration agrees patent trolls are a problem and has promised to do something about it in the five executive actions and seven legislative recommendations issued earlier this month. The resolutions are designed to protect innovators from frivolous litigation and ensure high-quality patents.

The broken patent system potentially affects all businesses, not just those directly involved in technological development. Any business which uses technology — and don’t we all? — stands to be affected by higher technology costs. Likewise, shareholders of technology companies (other than the patent squatters) can expect compromised returns.

The experienced business litigation and transactional law attorneys at Glass & Goldberg provide high quality, cost-effective legal services and advice for clients in all aspects of business litigation and transactional law.  Call us at (818) 888-2220, email us at info@glassgoldberg.com or visit us at www.glassgoldberg.com to learn more about our firm and sign up for future newsletters.

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