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November 11, 2013

On Friday's Global IP Summit, patent trolls, and lousy numbers

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On Friday, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) held its 2013 Global IP Summit at its headquarters in Washington, DC. The event was very well attended, at least through its highlight, the luncheon panel on patent litigation reform.

One highlight for me came early in the program when former Commerce Secretary Carlos Gutierrez made it clear that attacks on intellectual property rights are attacks on capitalism. You might could tell that this is a pet theme of mine from this recent blog entry.

During the patent litigation reform panel, it was clear that there is some subset of Rep. Goodlatte’s proposed legislation that pretty much everyone could agree upon, though of course such a subset of solutions would not please those who are fond of very broad definitions of patent “trolls,” and who would like to see it made much more difficult to uphold a broad array of patents. As Manus Cooney put it, “to the degree to which you make patent enforcement more difficult, you make patent trolling less risky.”

One surprise was to hear Michael Beckerman of the Internet Association claim that “over the past 20 years, patent trolling has cost the economy over half a billion dollars.” I tweeted immediately that I doubted this figure, and Todd Dickenson of the AIPLA quickly interjected that there are serious methodological problems with the study they use to back up this figure. The work that is the basis of these assertions, by Bessen and Meurer, has been severely criticized by many, and rightfully so.  One careful criticism by Schwartz and Kesan finds that Bessen and Meurer’s methodology is deficient in several respects, and thus their estimate is almost certainly wrong, probably spectacularly wrong. This blog entry at Gametime IP summarizes what’s wrong with the Bessen and Meurer research, so I won’t just reproduce it here.

One enormous problem, which IPI has addressed several times, is that the term “patent troll” is being thrown around fairly promiscuously. Not everyone who collects portfolios of patents for the purpose of licensing is a troll. Not every non-practicing entity (NPE) or “patent assertion entity” (PAE) is a “troll.” Any solution to the problem of abusive patent enforcement assertions should deal with the bad behavior, and not the business model of a particular property owner. We should focus on the bad acts of the bad actors, and not pass legislation that will discourage the development of new business models in the intellectual property space. ‘Cause we still believe in markets, right?

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