A patent is a monopoly granted by the government to an inventor. For the duration of the patent, the inventor has the right to control who can make use of the invention described in the patent. If someone exploits the invention without licensing the patent, the patent holder can sue to recover the royalties they might otherwise have earned.
Originally, patents were granted for tangible inventions (such as an improved light bulb). The inventor may have been working for some time to create the invention, and the patent gave a chance to gain a large financial reward from it. Of course, another inventor may have also been working on the same idea, and may have independently invented the same thing, but the first one to gain a government patent can extract royalties from others.
In recent decades, the scope of patents has increased hugely. Nowadays, many
countries allow business processes to be patented. One can also patent the implementation of ideas in software. Although a skilled practitioner could create their own software to implement the same idea, the one who gained the patent can stop others from writing software to perform the same function, or can extract money from them by licensing the patent to them.
An idea is not supposed to be patentable if it is reasonably obvious to those skilled in the art. However, in practice, the patent clerk is not in a position to judge this, and many dubious patents are granted. These can later be challenged in court, but the process is expensive and time-consuming.
Just about any software application is likely to infringe against many patents. Large organizations (such as IBM) protect against the risk of patent infringement by accumulating a collection of their own patents, which can be used defensively against others who sue them. Thus, when SCO sued IBM, IBM trawled through its patent library to find four patents which it used to file a counter-suit against SCO.
Recently there has been a boom in corporations that acquire a library of patents, then set out to aggressively pursue honest businesses who have developed their own applications that may (or may not) infringe upon those patents. Because the patent troll has no productive business of their own, they are not at risk of a counter-claim.
Although some of the patents in the troll’s armoury may be invalid, it’s so expensive to challenge a patent in court that the troll’s victims may prefer to pay up than to incur a huge legal bill.
Reform of the patent system is the only practical way to diminish the power wielded by patent trolls. Google’s patent counsel, Tim Porter, recently spoke out about this:
The current system is broken … software patents are written by lawyers in a language that software engineers don’t even understand. They’re being used to hinder innovation or skim revenue off the top of a successful product … you don’t know what patents cover until courts declare that in litigation …
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