Tom Petrocelli's take on technology. Tom is the author of the book "Data Protection and Information Lifecycle Management" and a natural technology curmudgeon. This blog represents only my own views and not those of my employer, Enterprise Strategy Group. Frankly, mine are more amusing.

Friday, July 21, 2006

Riding That Train..

Riding the same train as my previous post on intellectual property, I turn my attention to those most reviled of creatures, The Patent Troll.

To many, Patent Trolls - those who buy patents only to generate licensing fees from them - are a form of life only sightly above parasitic worms. I don't understand the rancor. These aren't spammers or treet purveyors (all lower case, don't be upset Armour and Hormel). These folks simply bought an asset and are trying to get some money from it. If I bought a car and rented it out to people, would folks throw rocks at me? They might but not because of the car. This is no different.

When you read the stories of people complaining about Patent Trolls, two themes emerge.

  • The complaining folks want something they did not work for, namely someone else's asset

  • The complainers did not do their homework to see if there is a patent for the widget they are building

In other words, it's their fault they are in legal hot water.

The most common charged levied at the so-called Patent Troll is that they squelch innovation. Really? It would seem to me that it is in the patent holders best interest to license the patent as widely as possible. Otherwise, they won't make much money from it. The more times they license the patent, the more money they make. It is also in the Patent Trolls best interest to do this without litigation. Paying lawyers costs money. A lot of money. That cuts into the profit they can expect to make from licensing, in essence raising the cost of deriving value from the asset. Why bother to do a thing like that?

The reason they bother is that some people don't want to pay what the patent holder wants. Think about this a minute. The chief complaint is that the Patent Troll won't sell their asset for what certain people are willing to pay for it. Keep in mind, I did not say that no one is willing to pay that price. If no one will pay what the Patent Troll is asking, then The Troll will price themselves out of the market. That means that someone is willing to pay for it at the price the Troll wants.

Now, this only applies to legitimate patents. Companies that claim patents on public work, such as Linux perhaps, don't fall into this category. Patent holders who knowingly lie in wait for someone to develop products and then immediately litigate are scum. Companies that buy patents so that no one can use them are hurting the economy and the technology industry. However, if you buy an asset and simply want to be paid for its use, then you are not a troll. You are a capitalist.

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