I just ran across this article on Patent trolling which should scare the bejeezus out of South Dakota businesses, where we rank among the top states to do business.
While Islamic terrorists threaten people overseas, in some cases nations that our allies seek to threaten our domestic productivity:
“Patent trolling,” the practice of obtaining large buckets of intellectual property rights with the intention of using them to extract damages and settlement revenue rather than to protect innovation or produce anything, is not a new idea. Over the past 40 years, lawmakers have tried to strike a balance between defending research and advancements while dissuading offensive use of patents that negatively impact our economy.
Unfortunately, countries like France, Taiwan, China and others are now engaged in just that kind of abusive behavior. France established a $134 million investment fund called France Brevets that is dedicated to “patent promotion and monetization”; in Taiwan, the government-backed Industrial Technology Research Institute has secured nearly 20,000 patents and launched more than 225 startups. Earlier this year China also began its own patent trolling effort, claiming it was founded to “help Chinese high-tech companies to gain core IP rights.” However many are skeptical because China is not known for its enforcement against intellectual property and copyright violations.
These government-sponsored patent trolls (GSPTs) amass patents to effectively manipulate markets, and with government funding and regulatory clout behind them, they can do so on an unprecedented scale. They are able to discourage foreign competitors, thereby giving a distinct leg up to companies within their borders.
For businesses statewide, these GSPTs pose a real threat to our economic development. According to a study conducted by Santa Clara (California) University, defending against a troll’s suit costs an average of $875,000 to $1 million in legal fees. Settlement outside the courtroom cost an average of $340,000. For small businesses and startups operating on thin margins, such hefty costs can drive them into bankruptcy, and having a foreign government as your legal adversary does not inspire confidence.
It’s probably a little wonky of a subject, but putting an end to patent trolling is something that they need to take a look at fixing in Washington, especially with foreign governments getting into the business.