Maybe Patent Trolls Wouldn't Be So Hated If We Called Them Patent Elves

from the presto-chango dept

I'm not a huge fan of the term "patent troll" which I agree can be unfairly negative, and without a clear definition often leads to problems. Recently, it seems that the term is most often applied to "non-practicing entities" making some people think that the patent system is mainly abused by those operations. That's a bit of misdirection. There's just as much, if not more, abuse of the patent system done by large companies. If there were actual proof (still waiting!) that the patent system actually did lead to more innovation, then I can easily understand why a non-practicing entity that just licensed its works could make sense. Unfortunately, most of the evidence suggests that patents don't actually lead to more innovation. In those cases, the only thing that non-practicing entities end up doing is hindering innovation.

However, Joe Mullin points us to a rather odd paper, suggesting that non-practicing entities are a good thing and should be called "patent elves" rather than "patent trolls." Part of what makes this paper so odd, is that one of the writers works for that law firm that recently advertised that it wouldn't work with patent trolls. Meanwhile, I guess it wants to let those "patent elves" in the back door.

As for the actual paper, it's really not all that different from earlier papers that try to present non-practicing entities as a boon to competition and innovation. They're all based on a few faulty assumptions, however. This latest one is basically a massive broken windows fallacy. That is, it basically states "if specialization is good, more specialization is better" in that it creates more economic activity. What it fails to do, however, is take into account how the market is distorted by that greater economic activity. Just as the broken window fallacy doesn't take into account the hidden costs of what kind of economic activity would take place in the absence of the broken window, this paper fails to take into account the innovation that occurs in the absence of the patent-holding non-practicing entity -- and simply assumes (falsely) that the patent holder is the key component in driving the innovation forward. Instead, it's much more likely that the patent holder represents the broken window -- a cost that detracts from more efficient economic activity, such as actually bringing a product to market where real innovation occurs.

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