Freedom Line Blog

“Patent troll.”  The term has assumed prevalence amid discussion of broader patent law reform, which we at CFIF have supported in some incarnations.

The “patent troll” problem, however, is to a large degree a litigation problem more than a problem inherent in our patent system.  And in that vein, two prominent conservative/libertarian figures have penned a Wall Street Journal commentary entitled “The Myth of the Wicked Patent Troll.”  Author Stephen Haber is a senior fellow at the Hoover Institution’s Task Force on Intellectual Property, Innovation and Prosperity, while co-author Ross Levine is a business professor at the University of California, Berkeley and a senior fellow at the Milken Institute.  In other words, their intellectual and free-market credentials are well-established.

In their commentary, Mr. Haber and Mr. Levine substantively detail research showing that, “innovation rates have been strongest in exactly the industries that patent-reform advocates claim are suffering from ‘trolls’ and a broken patent system.”  They also correctly highlight the fact that, for whatever its flaws, our patent system is the world’s greatest:

Thanks in large part to the patent system we have, the current rate of invention in the U.S. might be the fastest in human history.  Where is the evidence that society would benefit from undertaking the risky process of reforming a patenting system that has been the envy of the world for more than two centuries?”

The real problem, they say, is large corporations seeking to leverage government power in pursuit of their own self-interest:

There is one basic reason behind the attacks on trolls:  Big Money.  Many patent-intensive products — the smartphone in your pocket, the laptop computer in your briefcase — are produced by big corporations that license many patents.  The iPhone is a classic example:  It contains thousands of patented components, but Apple does not own many of the key ones.  It must negotiate for the right to use them.  These corporations can make higher profits the less they pay to use patented technology they do not own, and higher profits still by paying nothing at all.  The battle over the ‘right price’ for patented technologies takes many forms, one of which is political.  Indeed, some corporations are looking to gain a competitive edge by changing the rules of the game.  The strategy is to pass patent-reform legislation that weakens the negotiating position of patent holders.  Corporations that pay large sums for patented technologies will point to lawsuits, trolls and anything else that will encourage lawmakers to pass such reforms.”

Agree or disagree, their piece brings an important and under-discussed perspective to the ongoing patent reform debate.