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December 13, 2004
Patent Vulture Firms Circle Broken Patent System
Our own Jason Schultz has a terrific op-ed in Salon today. The gist: when a patent portfolio is more valuable as a weapon for a patent "vulture" firm than necessary protection for a live company, it's (yet another) signal that the patent system is seriously broken.
Many have compared these new patent licensing firms to terrorists, and in some ways, the analogy is apt. When the Soviet Union collapsed, one of the biggest worries was that rogue military personnel might sell off one or more of the USSR's nuclear missiles to a terrorist group. Securing those weapons became a top priority. The reason was fear -- fear that the terrorists, who had little to nothing at stake in terms of world peace and national stability, would use the missiles to extort or manipulate the world political climate.
With the patents of bankrupt dot-coms, the dynamics are similar. Rogue licensing firms buy up these patents and then threaten legitimate innovators and producers. They have no products on which a countersuit can be based and no interest in stable marketplaces, competition or consumer benefit. Their only interest is in the bottom line.
While profit itself is often a worthy objective, it is not always synonymous with innovation. Every dollar a tech company pays to patent lawyers or licensing firms is one less dollar available for R&D or new hires. Thus, many companies that offer new products end up paying a "tax" on innovation instead of receiving a reward. When this happens, it's a signal that the patent system is broken. Forcing companies to pay lawyers instead of creating jobs and new products is the wrong direction for our economy to be headed and not the result our patent system should be promoting.
For those of you who missed it, here's a piece
of "prior art" by Ben Adida of Creative Commons -- a post comparing software patents to WMD.
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