I have watched every season of gold Rush!

I sell three new mining products that carry patents. Of course, no one on this site knows a damn thing about mining.

The papers start with the conclusion that NPEs are enforcing patents of questionable validity. However, the paper offer no proof of this and does not even try to justify this position. Once you start with that position, it is a foregone conclusion that any litigation is unjustified and wastes resources. However, the initial assumption is not proven and in fact many papers have shown the opposite. If you do not start with this assumption then the paper’s whole argument falls apart. Litigation losses by operating companies are a justified return to the inventor and their investors. The operating companies are not victims, but victimizers and the return to inventors and their investors encourages more inventive activity.


The paper’s big conclusion is:

“Specifically, in the years following litigation, firms against whom cases are dismissed produced spent on average $211 million (t = 1.96) more on R&D expenditures than firms that lost to NPEs. These firms also spent on average $49 million more (t = 2.95) to acquire more in process R&D from outside.30 Furthermore, in the years following litigation, firms against whom cases are dismissed produced 63.52 more new patents (t = 2.96), and these new patents received 723.98 more citations (t = 3.45), relative to the group of firms that suffered the cost of NPE litigation.31 These large differences in R&D expenditure, patent production and in the quality of produced patents do not appear until after NPE litigation.”

Inherent in this statement is that anytime a firm lost a patent litigation case to a NPE it was a bad result. If the firm was stealing an invention, then the fact that they lost is a good thing. The companies that lost in litigation spend less on R&D according to the paper. Perhaps that is because they were not as inventive to start with, perhaps it is because they decided to focus on manufacturing and purchasing their R&D from outside inventors, and perhaps it is because they lost a substantial amount of money. Just because the infringer did not spend as much on R&D does not mean that total R&D is down. When inventors see their rights are upheld then they are encouraged to spend more time inventing. These comments also apply to citation differences. The authors are only looking at the microeconomic system that they care about, but you cannot draw the macroeconomic conclusions they do, because they don’t consider all the macroeconomic effects.

This is a interview with Nathan Myhrvold, co-founder of Intellectual Ventures, which is accused of being the largest patent troll and part of the problem the authors you are citing suggest. What do you think?

Thanks, Alan! I downloaded the original paper into my "Patents" folder under the "Sociology" directory here. One of my last graduate classes in 2010 was "Technology and Society" with Ron Westrum (http://en.wikipedia.org/wiki/Ron_Westrum...) who with Charles Perrow was a pioneer in complex organizations. Most of Ron's class was about patents and inventors.

You should be aware of the fact that Objectivist patent attorney Dale Halling here in the Gulch denies the existence of patent trolls.