Startups And Patent Trolls Report Issued

SCU Professor Colleen Chien who is rapidly becoming a “go-to” authority on Patent Trolls, er, Patent Assertion Entities, has just published a 36 page report.  Her conclusion from her research:

“I find that although large companies tend to dominate patent headlines, most unique defendants to troll suits are small. Companies with less than $100M annual revenue represent at least 66% of unique defendants and 55% of unique defendants in PAE suits make under $10M per year. Suing small companies appears distinguish PAEs from operating companies, who sued companies with less than $10M per year of revenue only 16% of the time, based on unique defendants. Based on survey responses, the smaller the company, the more likely it was to report a significant operational impact. A large percentage of responders reported a “significant operational impact”: delayed hiring or achievement of another milestone, change in the product, a pivot in business strategy, shutting down a business line or the entire business, and/or lost valuation. To the extent patent demands tax innovation, then, they appear to do so regressively, with small companies targeted more as unique defendants , and paying more in time, money and operational impact, relative to their size, than large firms.”

Among her recommendations to address the toll that PAE’s are imposing on small companies:

*”Congress could consider adopting some version of an “innocent user defense” or expanding existing limits on liability for users of technology that now exist for surgical method patents to internet and software technologies that represent staple articles of commerce.”

*”Collective, self-help-based solutions such as joint defense efforts and industry association groups that can set policies for the group
(e.g. do not settle)12 and coordinate and pooled purchasing of patent defenses e.g.insurance for small companies could undermine divide-and-conquer tactics.”

Here is the link to the report and it is a good, but disturbing, read: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2146251

 

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Filed under Mass Aggregators, NPE Articles, Patent Trolls

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