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Patent Trolls Cost U.S. $29 Billion

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    NEWSLETTERS

    DENIS POROY/INVISION/AP
    Patent trolls (not pictured, but artistically referenced) are getting bigger and bigger settlements from legitimate software and hardware companies.

    Owning a patent and waiting for someone else to do something similar to that patent -- and then suing. That's a non-practicing entity's modus operandi. And it's costing hardware and software companies $29.2 billion in legal fees and settlements, according to a recent report.

    Patent trolling got the academic treatment from the Boston University School of Law in a recent study. The sum total cost in 2005 was only $6.7 billion.

    This isn't about rival manufacturers Apple and Samsung and their fight over the look and feel of the iPhone; however, particularly hard hit is the American smartphone market. 

    One firm, InterDigital, was singled out in Korea's etnews.com. In an article titled 'Smartphone Industry in an Emergency Circumstance Due to Patent Trolls,' they report the company "has applied for 618 American patents and 155 in Japan." 

    InterDigital employs 300 engineers, so by definition is not a patent troll. They develop their own technologies, according to a company spokesman. The development of technology around the various standards used in mobile devices does not put the amount of patent applications out of proportion with their staffing.

    They also advise companies to not enter negotiations defensively just because a firm claims to hold a similar technology patent.

    The Boston Law School advises that the only real help is to get more transparency in the patent system as well as having courts monitor the damages awarded, ensuring they are a proportional response to the technology's uniqueness.

    That's all well and good, but the escalation in damages is undeniable; meanwhile, legitimate companies are being harassed by the trolls. More than an academic report is needed -- and soon.