Hold the Phone, Someone Put Out Bad Numbers?

It was bound to happen, and it finally did.  Someone is disputing the claim that patent trolls cost companies $29 Billion in damages.  I’ve used the claim myself so that makes me part of the spread of bad information.  I can see The Internets shaking it’s collective finger at me now, using it’s best “for shaaaaame!” voice. Adam Mossoff has done a pretty good job of ripping gigantic holes in the numerical claim, the people who helped create the number, their methodological failures, and, just to beat the dead horse a little harder, the SHIELD act.  It’s like he dropped a daisy cutter bomb on the whole party.  Ouch. Edit, 12:15 PM CDT:  Adam pointed out that the study of the numbers, linked here, was done by David Schwartz and Jay Kesan.  The article to which I linked is his analysis of it, and I’m glad to have the opportunity to add the link in to their original work.  Also, Adam?  I can one-up you on the geek-o-meter by saying that not only are trolls a hot-button issue now, some of us actually read this stuff for fun.  True story.  You may send my “Geek Goddess of All Time T-Shirt” to me at  505 E Travis St, Marshall, TX 75670.  (Kidding, that’s a Rick-Roll.) Totally with him on the SHIELD act, as we all know.  My reasons differ from his, but whatever, we’re on the same side of that particular battlefield. To the quotes:

The entire U.S. court system is an inefficient cost imposed on everyone who uses it.  Really?  That’s an assumption that reduces itself to absurdity—it’s a self-imposed reductio ad absurdum!

{Clutches pearls and looks around nervously.} ZOMG, did he just use a Harry Potter spell on the Internets?  My Latin is rusty but I think what he means is that we’re all going to get dizzy again trying to follow the logic that the people who drew the $29 Billion conclusion have a vested interest in the number being as high as it is.  Point: Mossoff. Next:

There are several reasons why the extremely broad definition of “NPE” or “patent troll” in the study is unusual even compared to uses of this term in other commentary or studies. First, and most absurdly, this definition, by necessity, includes every universityin the world that sues someone for infringing one of its patents, as universities don’t manufacture goods.  Second, it includes every individual and start-up company who plans to manufacture a patented invention, but is forced to sue an infringer-competitor who thwarted these business plans by its infringing sales in the marketplace.

To the first point in this quote, I’m baffled.  Do we not know the names of the Universities in the US, and can we not exclude them from the study?  I’m not going to do it because, well, it would just be showing off but my guess is that in three clicks or less someone could generate a list that would pretty much handle 90% of the institutions you’d want to exclude from a study like this.  You take this list, match it to the data you have, do a really delete quick query and voila!  They’re disappeared.  I’d love to know the logic behind not excluding them, if that’s in fact what happened. To his second point though, that’s a whole lot harder to quantify.  How do you really know what a company’s intentions are?  And further, what if those intentions change?  A company can, for all the world, “plan to manufacture” all sorts of things that they never get around to for reasons that are anywhere on the scale from Completely Troll-ish to Not At All Trollish.  So excluding companies like that may actually hurt you, if you can even get the names of them at all. Finally,

There are many other methodological flaws in the $29 billion cost study, such as its explicit assumption that patent litigation costs are “too high” without providing any comparative baseline for this conclusion.  What are the costs in other areas of litigation, such as standard commercial litigation, tort claims, or disputes over complex regulations?  We are not told.  What are the historical costs of patent litigation?  We are not told.  On what basis then can we conclude that $29 billion is “too high” or even “too low”?  We’re supposed to be impressed by a number that exists in a vacuum and that lacks any empirical context by which to evaluate it.

Some people, and I may or may not be one of them, contend that any litigation in this particular arena is bad.  That’s an over-simplification and one I freely admit, but I can see why the study labels costs “too high” regardless of the actual number. The question I have though, is does it matter?  Does it matter how much money the trolls have cost companies?  Is there even really a fair and methodologically unquestionable way to get at that information?  Pre-litigation settlement terms and even post-litigation terms are not always discoverable so really, any number that people throw out is going to be questioned, and rightly so. But just because this particular number can be proven to be falsely contrived doesn’t make the whole conclusion that patent trolls are a nuisance without merit.  They clearly are, even if, and especially if, all they cost companies is time.  Time to battle these guys, time to respond to nastygrams, time to consult with counsel, all of those things take resources away from a company’s core business.  Time is the one thing you cannot ever get back.  You can always earn more money…how many times has The Donald gone bankrupt?  And where is he now, besides firing people on Celebrity Apprentice (which, by the way Big D, Bret Michaels totally did not deserve that)?  That’s right: not bankrupt. My point, and I do have one, is that yeah we want all the numbers to be factually correct and all the research to be on the up and up with no bias and no flaws but it doesn’t really matter.  It does not take a genius or a flawless study to tell us what we already know:  trolls are bad for American business.  Full stop. Just sayin’, IPTT

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3 thoughts on “Hold the Phone, Someone Put Out Bad Numbers?

  1. I very much appreciate the friendly engagement with me on this issue. This is an all-too-often rarity today, especially on such hot-button issues like “patent trolls” and other issues in the patent policy debates. Wow, the tech geek in me never could have predicted that I’d be referring to patent law as a “hot button” issue! 🙂

    I’d like to offer just one small correction: The substantive and methodological critique of the $29 billion cost study is not original to me. I wish I was brilliant enough to have made it, and to have made it first, but that particular distinction goes to Professors David Schwartz and Jay Kesan, and their paper can be downloaded at: http://ssrn.com/abstract=2117421. (I was just summarizing in my blog posting with a bit more rhetorical flair some of their criticisms of the $29 billion cost study.)

  2. Pingback: MythBusters: Patent (Troll) Litigation Explosion Edition | IP Troll Tracker

  3. Pingback: Oh, Intellectual Asset Management Magazine, You Silly Thing, You! | IP Troll Tracker

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