Why tech vendors fund patent 'trolls'

Experts say it's about protection from lawsuits and access to a large pool of patents

By Gina Smith, Computerworld |  IT Management

And then the Wright Brothers -- though they never manufactured their wing for sale -- started suing. Some consider the Wright Brothers the first known PAE because they litigated on a patent that they owned but never used in manufacturing their own products, even if others did.

The Wrights sued American inventor Glenn Curtiss, who claimed his wings were fundamentally different from the Wrights' invention. He refused to pay patent fees to the Wrights. But Curtiss lost in court, became a patent activist and spent a great deal of his time trying to show that manned heavier-than-air flight had been possible before the introduction of the Wright invention.

After Wilbur Wright died in 1912, Orville Wright eventually sold the patent for more than $1 million to a company that had been paying for the rights to use it.

That company became Wright-Martin, and it notified other early 20th century aircraft makers that they'd have to each pay a royalty of 5% on every plane sold.

The bottom line: The search giant made an investment of well into the tens of millions of dollars in 2008 in the IV entity known as IV IP I, the source said, and refused to go for a second round. Google and Adobe are the only technology companies among the current IV backers that didn't invest at least twice.

It's important to keep in mind, however, that none of these practices is illegal. It is endemic to the patent system in the U.S.

There are more than 2 million active patents in the U.S. alone, Ewing says, but only "a tiny fraction" of them are used commercially, either through licensing or through litigation, he explains.

"The aggregation model stands to increase the number of patents in play by one to two orders of magnitude," Ewing says. "I suspect the truth is that no one really knows what the net commercial impacts will be."

Based in San Francisco, Gina Smith is a New York Times best-selling author and a veteran tech and science journalist specializing in news, news analysis and investigative work. She's also the editorial director of the geek site aNewDomain.net . You can email her at Gina@aNewDomain.net .

Read more about it industry in Computerworld's IT Industry Topic Center.


Originally published on Computerworld |  Click here to read the original story.
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