The Patent Shakedown

from the we've-got-4,000-patents... dept

Gary Reback (famous for taking on Microsoft a number of years ago, among other things) has written a great article in Forbes describing why our patent process is not helping to encourage innovation. As it stands right now, it’s being used by large companies to shakedown smaller companies. He gives a great example of IBM lawyers trying to get money out of a young Sun many years ago. After Sun’s lawyers (including Reback) explained why the claims the IBM lawyers made were not valid, the IBM lawyers responded, “OK, maybe you don’t infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?” There’s little evidence that the current patent process does much to boost innovation, and there are some studies that suggest it does more to hurt innovation. However, it appears unlikely to change because the government is raking in cash from patent applications, patent lawyers are raking in cash from patent filings and patent lawsuits, and big companies are raking in cash from the patent shakedown.

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