Patent Trolls
A Hindrance to the Economy and to Computer Science
By Shawn Karber
PHIL 343 Final Paper
05/02/2015
Patent trolls, often referred to as Patent Holding Companies (PHC) in the media, are a defamation to the ideals that the United States patent office were meant to promote, that is protection for the innovators and inventors of America. Wikipedia defines patent trolls as “a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question…”.1 ("Patent troll.") Not only do they undermine the ability of small companies or individuals to experience success and profitability through invention, they also hamper the progress of society, especially in fields of technology. PHCs are a devastating problem in the United States, not only in terms of their impact on global markets and progression, but also in terms of how many PHCs there are and how big they can become.
To understand the breadth of the problem, it is important to understand how prevalent patent trolls have become. According to an article in the Washington Post, patent trolls now account for 67 percent of all new patent lawsuits. Just five years ago, the article says the number of PHC-filed suits was 28 percent less.2 ("Patent Trolls Now Account for 67 Percent of All New Patent Lawsuits.") With an average increase of 5.6 percent a year, it is evident that patent trolls are
gotten to the patent before them allowing for them to create a monopoly. The Capitalists if the
On July 15, 1994, the United States sued Microsoft for unlawfully maintaining its monopoly in the market for PC operating system software. The lawsuit alleged that Microsoft engaged in anti-competitive marketing practices directed at PC manufacturers that distributed Microsoft operating system software preinstalled on its PCs. Microsoft began to levy fines against original equipment manufacturing (OEM) companies who distributed or promoted operating systems other than Microsoft. On August 21, 1995, Microsoft "consented" to a "Final Judgement" against them.
Patent Infringement Litigation. Nonpracticing companies are firms that do not create inventions, rather buy patents in order to sell licenses to other organizations interested in utilizing or commercializing the invention. Nonproducing companies like Bellevue, Washington-based Intellectual Ventures, argue that licensing of patent rights supports innovation, as they are able to broker access to companies and individuals that have the capacity to do something with the intellectual property (e.g. develop or apply the technology in the marketplace). Nonproducing companies aggressively defend their patents by filing patent infringement lawsuits in federal court against companies or groups of companies that that they believe have infringed on their patents. The focus on litigation is in fact a core component of these firms
It is intended both to provide thumbnail descriptions of the various intellectual property regimes to economists working in this area and to indicate where additional economic research might be useful. The other papers in this symposium provide important examples of ongoing research on the economics of intellectual property. Suzanne Scotchmer analyzes the complex effects of patent protection when innovation is cumulative. Rather than analyzing situations in which several firms vie to develop the same innovation-the approach of the "patent race" literature-her analysis examines circumstances in which only one firm can develop an initial innovation but others can also build upon it. She focuses on how the incentive to develop both the initial and subsequent inventions may be affected by the scope of patent protection. Janusz Ordover considers ways of adjusting the patent system that may help to both provide returns to the inventor, and encourage the diffusion of the innovation in the economy. His paper is part of a line of work that explores the place of the intellectual property system among the large number of institutions that affect the amount and nature of research and development that takes place. In the final paper, David
Companies do not have the freedom to merge and acquire as they please do. All have to meet the requirements and essentially be approved by regulatory bodies. In the context of regulations, antitrust laws and security laws are commonly referred to by regulator to determine whether a merger or acquisition should be allowed or rejected. Antitrust laws prohibit mergers and acquisitions that impede competition. The point is very simple where antitrust is referred to as competition. The goal is to increase competition because more competition in economics means that consumers get more at a fairer or lower price. Anytime a regulator believes that a merger or acquisition will make an industry or market less competitive, the business transaction might
The United States Patent and Trademark Office granted the exclusive right to the Knoll brothers to profit from their invention – Photoshop, which Adobe acquired through a licensing deal. While rewarding a person for his invention is good to promote innovation, rule utilitarians would disagree in grating the patent to them because it implicates a social cost that far outweighs the benefits of that one software and the people involved in making it. The inelastic nature of the patent gives tremendous amounts of leverage to Photoshop as it is the undisputed market leader of photo editing programs because it has features that its competitors aren’t allowed to offer due to the patent.
Patent Act brands anyone who “actively induces infringement of a patent” as an infringer, 35 U.S.C. 271(b) and imposes liability on individuals labeled “contributory” infringers 271(c).
The antitrust policy or the anti-monopoly policy was created to prevent monopolization—which occurs in a market structure in which there is only a single seller of a good, service, or resource. In the antitrust law, a monopoly, is a dominant firm that accounts for a high percentage of sales in a given market (739). Furthermore, the antitrust policy promotes fair competition in a market, and allocative efficiency—which occurs when production meets the consumers taste and preferences, in a particular good, to which marginal cost and the price or marginal benefit are equal.
The U.S. government charged that Microsoft had violated antitrust law. Microsoft disagreed. Do you agree with the U.S. government, or with Microsoft? In answering this question, you may wish to address two issues. Was Microsoft a monopoly? Did it use its monopoly to compete unfairly against other companies?
The case against Microsoft was brought buy the U.S. Department of Justice, as well as several state Attorneys General. Microsoft is accused of using and maintaining monopoly power to gain an unfair advantage in the market. The case has been under observation for a long time, but the Justice department is having trouble coming up with substantial evidence against Microsoft. Specifically, the Department must prove:That Microsoft has monopoly power and is using it to gain unfair leverage in the market.And that Microsoft has maintained this monopoly power through "exclusionary" or "predatory" acts(Rule).Some say that Microsoft is only taking advantage of its position in the market and using innovative marketing strategies
As previously mentioned, application fees can reach up to $8000 and maintenance and examination fees can reach up to $650 per year. Since patents may need to be amended and the maintenance fees can accumulate leading to a costly application process. With high costs, after the approval of the patent, many companies charge higher prices for their products in order to recover their costs. This is especially prevalent in pharmaceutical companies who also charge high prices due to the costs of research and development. Pfizer patented a drug called Lipitor and after the expiry of the patent, the cost of Lipitor was “80% off the original cost” (Reference 11). When the drug is first introduced, the drug is the only product that that particular market for a certain medical condition. Therefore, with a monopoly, companies are able to charge higher prices to recuperate their costs from research and development as well as patent costs. However with the patents only protecting innovations for 20 years, patent cliffs occur where the patent expiration of drugs causes many other pharmaceutical companies to produce generic versions of the same drug. This can lead to revenue losses for the original pharmaceutical company as they had to invest significantly into their research and development while other
In the United States, both U.S. Patent Law and U.S. “ Food and Drug Administration” (FDA) law govern the exclusivity rights for new pharmaceutical products. As Chinese companies invest research time and money in developing new drugs, it is important to keep in mind both the relevant U.S. patent law and the applicable FDA law that could affect the exclusivity period for that drug in the United States. Mistakes in not obtaining proper patent coverage or satisfying the FDA laws could cost the drug company valuable exclusivity rights when that drug is sold in the United States. For a successful drug, the lost of exclusivity rights usually means the loss of substantial revenue and profit.
Competition in economics is rivalry in supplying or acquiring an economic service or good. Sellers compete with other sellers, and buyers with other buyers. In its perfect form, there is competition among many small buyers and sellers, none of whom is too large to affect the market as a whole; in practice, competition is often reduced by a great variety of limitations, including monopolies. The monopoly, a limit on competition, is an example of market failure. Competition among merchants in foreign trade was common in ancient times, and it has been a characteristic of mercantile and industrial expansion since the Middle Ages. By the 19th century, classical economic theorists had come to regard
There is a intense rivalry among the big players of this industry. There have been some legal processes involving cases such as false advertising claims and patent infringement.