Monday, December 13, 2010

Intellectual Property Rights vs Innovation Part 2

This is a continuation of our series on patent laws and lawsuits.  Do they stifle innovation?

We left off speaking about the average patent infringement lawsuit costing an average of $1 million.   Who is doing most of the suing?  Is companies that innovate and produce products, or, NPEs?  If you look at the world of mobile technology the answer is fairly clear.  It seems clear that there is a connection between companies that are doing well getting sued a lot and companies that are not doing as well doing a lot of the suing for patents.  Look at this chart:
click to enlarge via: fooyoh
As you can see Apple is being sued by Nokia, Minerva, Kodak, Picsel, NTP, Smartphone Technologies, as well as Mobile MEdia Ideas.  HTC another company that is doing well selling Android phones is also getting sued a great deal.  In these cases, the lawsuit is meant to slow your competition down, and perhaps even extract some money from them.  This however is not the same as Non Practicing Entities.  All of these companies manufacture  products using patents.

Here is another chart of the top companies being sued for patent infringement.
click to enlarge via: PatentFreedom

These are the top NPEs in lawsuits. The first chart demonstrates the ones using counterparties (the number of companies they own with those patents).
click to enlarge via:PatentFreedom

click to enlarge
These are the top companies by number of lawsuits.  We can look at the top one Acacia Technologies.  What they do is purchase patents from all sorts of companies and then aggressively look for any possible violations, in which case, they litigate and divide the award from with the original patent owner.  Of course, this approach encourages lawsuits, and most of them get settled out of court (95%), guaranteeing a certain amount of money.  Here is a chart from their own website as to how they work.
click to enlarge

Here is a chart from PatentFreedom which shows the largest patent holders (NPEs).
click to enlarge

There has been a 300% increase in the number of patent lawsuits since 1990.

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In out next part in this series, we will discuss how these lawsuits may be affecting innovation.  Is America falling behind other countries in innovation?  Stay tuned.


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