Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Another player exploiting patents--to the cost of the consumer

The New York Times has a good short article on the growth of patent trolls (which it terms as non practicing entities or NPEs) link here. The story hangs on the suit against EBay for $3.8 billion by XPRT Ventures which goes unmentioned thereafter.

It then describes the basic patent troll model: "The basic idea is that an investment firm buys a pre-existing patent for, say, $2 million. It then sues perhaps a dozen companies that use technology potentially overlapping the patent. Each firm that fights may end up paying $500,000 or more to defend itself and could also face penalties. The alternative is to settle for, say, $1 million or so. If just three firms pay up to avoid a battle, the patent owner makes big money."

The EBay example is not particularly apt here since it is for so much money that EBay is likely to fight it. But the story provides the excuse for the article which goes on to cite the rise in the number of such suits, 500 last year or six times the number in 2001.

The article then switches to a "new" business response to the patent troll threat, the counter-troll that acquires patents to sue or cross license other firms by which its member companies might be sued for infringement. Thus for a generous annual fee, it seems to offer some insurance against loss.

Its exemplar, roughly two year old RPX, has an extensive website link here, a puff piece, and Google adds little more. However, the Times piece reminded me of ten-year-old Intellectual Ventures about which we wrote link here and which now has a Wiki write-up link here . I checked quickly for officer names of the two but found no overlap. I do note, however, that IV has some big corporate subscribers including Microsoft, Verizon (also "insured" by IV), and Intel.

Thus the "counter-troll" model seems to have proved so attractive that it has spawned a rival. Here is another reminder of how patents enrich the big oligopoly companies and exploit the consumer while providing no benefit to the inventor in whose name patents are issued.


Luckily the patent bubble is gonna burst within this decade.
It is so amazing how technology works nowadays! Lots of things are being made to people to make our life easy. This may have a disadvantage but if we are going to use the products of technology on a good way this won't harm us. However, there are some products that are not that beneficial to humans. The first generation of http://personalmoneystore.com/moneyblog/2010/07/26/nap-nanny-products-recalled/ have been recalled by the Consumer Product Safety Commission and company Baby Matters. One death has been attributed to a Nap Nanny, but in that case the product was being used incorrectly. It is really important for us to be well informed on how we are going to correctly use the products that we going to buy.
It's not clear how that has anything to do with patents, "Charmed".

P.S. your post would be more readable if you used HTML properly: <a href="insert long URL here">Nap Nannies</a>.

This post contains an inaccuracy; although RPX does acquire patents, it does not sue to enforce them. RPX buys up numerous tech-sector patents that NPEs ("patent trolls") might use against RPX members. The patents are then collectively licensed and available to RPX members, for an annual subscription fee. This actually helps to prevent patent infringement litigation. RPX does not initiate or directly benefit from patent enforcement suits. Thus, while it is perhaps rather accurate to say (as I have heard some comment) that the RPX model is basically a "protection racket," you can't accurately label RPX a patent troll, or even a "counter-troll."
It's still parasitical economic activity. It's not as bad as NPEs suing or the like, but all the money going to RPX could be plowed directly into R&D if the patent system were abolished.

As you say, the money going to RPX could be plowed directly into R&D. However, it seems that prior to the implementation of patents in Italy that the Italian pharmaceutical industry was putting little or no money into R&D, instead merely copying foreign invented pharmaceuticals. So, while the money could go "directly" into R&D, as you note, there is no guarantee that the money going to RPX would actually go to R&D. Correct?

Lonnie again:


As you say, the money going to RPX could be plowed directly into R&D. However, it seems that [calls me a liar]

None of the nasty things that you have said or implied about me are at all true.

The data in Against Intellectual Monopoly says pharma R&D decreases when patents are issued in that area.

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