Defining the patent troll

Analysis: Has the CSIRO imposed a tax on innovation?

A growing number of technology patent wars around the world has highlighted the rise of the “patent troll”: rights holders whose claim to an invention does more harm than good.

Non-competing entities that litigate over software patents are often accused of imposing a tax on innovation by blocking others from developing products despite having no intention of doing so themselves.

The concept of a patent troll is particularly relevant in the US, where relatively unknown entities that may not make any products lay claim to a core process employed by a commercially active software maker.

Australia’s intellectual property authority, IP Australia, revealed last month that computing-related applications accounted for six percent of patent applications in Australia and ten percent in the US.

Software patent applications and grants in the US have grown slightly faster than total patents, with software patents accounting for nearly a quarter of all patent lawsuits in the US by the end of 2010. 

A 2011 study by James Bessen at the Boston University School of Law found that most US software patents were awarded to firms outside the software industry.

The majority of software firms did not rely on patents, and the patents that contributed to the acceleration in software the industry were mostly granted to large firms, Bessen found.

The number of disputes has prompted digital rights group Electronic Frontiers Foundation (EFF) amongst others to oppose software patents, placing some blame on the US Patent and Trademark Office for giving trolls the weapon to make their claims.   

EFF staff attorney Julie Samuels said software patents should be an “oxymoron”, arguing that software was “fundamentally situated as a building block technology”.

“I am not sure there is a single root cause [to patent trolling],” Samuels told iTnews.

“But I do believe the prevalence of software patents – especially those of dubious quality – have done the most harm by giving patent trolls tools to exploit the federal litigation system in the US.

“The patent system we currently have stops making sense when we start talking about software.”

One of the “trolls” Samuels points to is Lodsys, a Texas-based company that owns several patents without using them in any products.

It sold a license to Apple covering an in-app payment feature that was made available to iOS developers, but has gone on to threaten legal action against to dozens of developers. 

Florian Mueller, FOSS Patents blogger and patent law consultant, pointed out that iOS developers in Lodsys’ sights could fight to invalidate the patent, but doing so may cost anywhere between tens of thousands or millions.

Fred Wilson of Union Square Ventures argued for less patent protection in IT, no patent protection for software and business methods, and the elimination of the patent troll. 

In 2009, Wilson raised the idea that software trolls were a “huge tax on innovation”. Union Square Ventures includes amongst its investments Twitter, SoundCloud, FourSquare and Kickstarter.

Although he was “all for” protecting the small inventor, he wanted the US to introduce a “lose it or use” clause in the patent system, because the solo inventor brings less economic value to society than the entrepreneur who commercialises the technology. 

Read on to page two to find out why the CSIRO has been accused of patent trolling.