The Dire Straits And Stanford Weigh In On Patent Trolls

Something about Stanford University says “totally legit” to me.  Why is that?  I’m not even sure, because I’m not a California college kinda gal.  It just seems like anything that comes out of that neck of the woods is a good thing, and the recent article about the US patent system is no exception.

Jeff John Roberts, who wins the prize for “Most First Names in a Row”, wrote a piece last week about the current state of patent affairs, and how patents actually do little to facilitate technology transfers, his comments based on a study done by a couple of Stanford guys.  In said study, they found out that patents purchased from trolls are old and useless and amounted to nothing more than a tax on innovation.

I’m not sure how this is news, because a while back I took the top 10 most litigated patents right out of the NPE Litigation playbook that Goodwin Proctor cooked up and did a little bit of Tableau magic on it:


I was stunned to find that the average age of those patents was over 11 years.  (Hint: I was totally not stunned.)  So, yeah, that part isn’t news, particularly when so many of the patents are technology-related and therefore they age at an accelerated rate.  One year in technology is like 15 years in any other industry, on account of how quickly things change.  I taught a class recently with a student who mentioned a Zip drive.  Zip.Drive.  Raise your hand if you even know what that is anymore, and then harken back to the days when it was the bees knees as it topped out at 750 megs of storage space.  OMG, I can now fit that on a thumb drive the size of my…thumb.


Connect it using a parallel port. Oh, for cute!!


But what is news, according to Jeff and the study, is that Universities are singing the same song, and just as badly out of tune:

The paper also notes that the same phenomenon, in which licensees pay money for nothing, is also pervasive when universities are the ones wielding the patents. Instead, as with the trolls, university patent deals rarely lead to meaningful tech transfer or innovation. The findings could have important implications at a time when more universities, including MIT and Boston University, are using decades-old patents to demand money from Apple and other big companies.

Dire Straits, IP Troll Tracker

What confuses me is why on earth Universities are allowed to patent any of the things anywayIt seems a little bit desperate for Universities to try and be hangers-on to the brilliance of their students and professors if their stated goal is to advance knowledge for its own sake.

It’s interesting though that they have the same track record that patent trolls do in terms of using old patents to extort new money from companies.  And here I used to argue that they were the purest form of NPE:  they weren’t trying to extort money!  They were simply taking all that Sheldon and Leonard-ish knowledge and selling it so as to fund more and more cool stuff and to further innovation.  Survey says?  Not so much, lesson learned.

This quote from the study is key to me, and it’s something that I want to say to all of the inventors on Twitter with whom I routinely engage on the idea of how to get paid for their innovation.

A critical factual assumption that underlies this debate is whether patent licensing is in fact a mechanism for technology transfer to the licensees and the creation of new products, or whether a request for a patent license is simply a means of collecting money in exchange for agreeing not to sue.

Inventors routinely claim that they can’t make any money off their invention without patent trolls (which many claim don’t exist, Paul Morinville I’m looking at you), willing to fight dirty to get them the royalties they deserve.  First of all, do you get those royalties?  Really?  Let’s take a look at another quote:

Further, studies suggest that such rewards are not flowing. In what economists are calling the “leaky bucket,” only an estimated 20% of the payments to NPEs get back to the original inventor or into internal research and development by the NPE.

Whether the troll is an NPE or a university, you’re not really going to get your money it would seem.  Just go read how Yale handles its patents.  They start out getting 50% of the royalties, though it does go down slightly on a sliding scale.  Blech, how is that of any good to an inventor?

That’s not the whole point of the article though, getting money for your invention.  The point is to answer the question, which I’ve paraphrased because I can, “Do patents further innovation anymore, or do they just cause the exchange of money from one company/individual to another, often under duress as in the case of patent trolls?”

Great question, given that the original intent of patents was, and I quote from the US Constitution, Article I, Section 8, Clause 8:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

Is that even what patents are doing anymore?

Or are they just money for nothing?



{Dire Straits image found here. Zip drive image found here.}