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Big Tech’s Great Patent Troll Smash and Grab

“While we were busy smashing our patent system, the Communist Chinese Party (CCP) strengthened theirs. As a result, a significant share of early-stage funding went to Chinese startups, and Shenzhen has now taken the Silicon Valley crown.”

https://depositphotos.com/46003303/stock-illustration-big-troll.htmlBig Tech’s patent troll narrative is really just the great Big Tech smash and grab. Jean Ann Booth explains in the Waco Tribune what patent trolls are by taking Big Tech’s cartoonish characterization as her own: Patent trolls are rich investors who buy up patents from failed startups just so they can sue companies commercializing the invention in order to extort their money. Extortion – that’s what patent trolls do. And they are wrecking U.S. innovation to boot. They sure sound scary.

Patent trolls are indeed frightening. Flush with big bucks, Big Tech lobbyists pushed the patent troll narrative on Congress, the administration, and the courts, demanding that we gut U.S. patent law (the same U.S. patent law that drove over 200 years of American innovation) if we are to save American innovation. Government bureaucrats and politicians complied by smashing the U.S patent system. Now Big Tech can grab whatever technology they want.

What is a Patent Troll?

Patent trolls are certainly terrifying, but what exactly is a patent troll? Let’s start by defining its first name, “patent”.  (We can skip the last name “troll” because other than being scary, it is meaningless.)

A patent is nothing but an exclusive right, the very essence of a personal property right. Like any personal property right, a patent can be collateralized to secure funding. In much the same way as the deed to your house becomes collateral to secure a mortgage, patents are collateral to attract investment in startups, especially those at a very early stage.

Collateral must be valued before anyone will invest in it. In the case of patents, investors calculate the future value of the market created by the invention, and then attribute some of that value to the patent. The patent’s value is then used to calculate how much they can invest.

If Big Tech steals patented technology, like they so often do, and then leverage their massive markets and endlessly deep pockets to saturate the market with their knockoff, they run the startup out of business.

When that happens, investors take control of the patents and are left with two options: They can sue the Big Tech company that stole the technology, or they can sell the patents to someone else who will.

In either case, the cause of litigation is that Big Tech stole the invention. The investors (who Big Tech calls Patent Trolls) are trying to get their investment back from the Big Tech thieves.

So Big Tech’s patent troll narrative is a Big Tech lie. It positions the argument backwards such that the cause of the litigation is the patent and not the theft. It does that trickery for the purpose of misinforming people with limited knowledge of patents, which include most politicians.

Fear the Patent Troll Lie

It should not surprise anyone that the patent troll lie is the well-nurtured brainchild of Big Tech. But patent trolls are not scary for the reasons Big Tech explains through Booth in the Waco Tribune.

Read any Big Tech annual report and you will see that startups with patented technologies are the biggest threat to Big Tech. The scariest part of the patent troll lie is that it attacks the very foundation of the secondary market for patent assets that drives investment into startups. If investors can’t get their investment returned, why invest in startups in the first place?

The patent troll lie has destroyed virtually every longstanding construct of patent law. Today, patents are invalidated at extreme rates in the Patent Trial and Appeal Board (PTAB) and under the unintelligible “abstract idea”. Injunctions have also been eliminated. With a startup’s ability to defend their patent rights smashed, Big Tech grabs whatever technology it wants, and they keep it.

What fools are we. Big Tech’s patent troll lie has always been a stealth vehicle to enable a massive smash and grab of America’s most valuable personal property rights for the intended purpose of eliminating the only real competition that threatens Big Tech – startups with disruptive technologies.

As scary as that is for startups and their investors, the real thing we should fear is that with no startups threatening the core technologies of Big Tech monopolies, Big Tech is untouchable and emboldened. So much so that they have the audacity to censor a sitting U.S. president and any other voices that defend him, as well as any disagreeable thought spoken on their captured markets.

Fear the Petri Dish Effect

Investors are a smart lot. They know that defending a U.S. patent is nearly impossible. So, they invest where patents can be defended in places like China. This has caused the entire swaths of disruptive technology to move to China.

The petri dish effect shows that once a new technology is seated in a region, people learn the know-how and know-not of the technology. They create new uses for it and startup new companies. Those companies get acquired or go public bringing in new capital. In just a few years, the region develops a critical mass of know-how, know-not, and capital to keep that technology localized for generations.

Since the great patent troll smash and grab, the Silicon Valley is but a shadow of its former self. Its venture capital is controlled largely by Big Tech monopolies, their executives, shareholders, and alumni.  Not surprisingly, they don’t fund startups challenging the core technologies of Big Tech – it’s too risky and not in their interest either. Instead, most tech startups make phone apps and other devices that run exclusively on Big Tech’s captured markets.

Fear for U.S. National Security

While we were busy smashing our patent system, the Communist Chinese Party (CCP) strengthened theirs. As a result, a significant share of early-stage funding went to Chinese startups, and Shenzhen has now taken the Silicon Valley crown. Because of the petri dish effect, it will keep it for a generation before we can take it back.

But take it back, we must. The CCP seeks to expand their borders as they have in Hong Kong and threaten to in Taiwan, and it is challenging the world for control of shipping channels in the South China Sea and elsewhere. The CCP’s fusion of civilian and military means that they will leverage the gains in civilian technology, made possible by smashing the U.S. patent system, into their military technology and very soon, if not already, will be far ahead of us. The failure of the U.S. patent system is today a national security crisis, which can, and probably will, morph into a national security disaster.

I suspect that Washington politicians and bureaucrats will choose willful blindness for a while longer. Careers have been built on patent troll lies and acting on these lies magically creates mountains of campaign cash and lucrative promotions to lobbying firms.

We must apply substantial pressure on those politicians and bureaucrats who are willfully blind to the disaster created by the great patent troll smash and grab. And we must also support their peers who are trying to fix it. Only if the patent system is fixed can we have an open market for new ideas and free speech and take back the Silicon Valley crown from China.

 

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Author memoangeles
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14 comments so far. Add my comment.

  • [Avatar for mike]
    mike
    January 7, 2022 09:05 am

    Just reemphasizing this from the article:

    the cause of litigation is that Big Tech stole the invention. The investors (who Big Tech calls Patent Trolls) are trying to get their investment back from the Big Tech thieves.

    So Big Tech’s patent troll narrative is a Big Tech lie. It positions the argument backwards such that the cause of the litigation is the patent and not the theft. It does that trickery for the purpose of misinforming people with limited knowledge of patents, which include most politicians.

  • [Avatar for Anon]
    Anon
    January 7, 2022 10:14 am

    The petri dish effect has several historical waves — the offshoring of the American Industrial machine (general manufacturing) has long standing parallels to such hollowings of textiles (from the American Northeast) and the turning of the steel belt to the rust belt (of the American Midwest).

    Those that do not learn from history are bound to repeat it.

    I would add that the opposite effect has also been historically shown: with both biomed and software in each of their early stages proliferating in the US because other Sovereigns in other parts of the world would not provide innovation protection.

    We have failed to learn the very lesson that brought us prosperity.

  • [Avatar for Bemused]
    Bemused
    January 7, 2022 11:33 am

    Excellent article, Paul. Until we find out a way to minimize or stop Big Tech’s influence (through lobbying or PACs or revolving jobs) on Congress, there is little hope for the US patent system. Getting rid of Citizens United would be a start.

  • [Avatar for pharmanon]
    pharmanon
    January 7, 2022 01:10 pm

    This is so similar to the discussions surrounding pharmaceutical/biotech patents.

    The cause of the litigations are the wanton infringement by the generics/biosimilars.

    Yet the policy is almost always cast in their favor because drug pricing and reimbursement is a quagmire.

    IP is not the problem.

  • [Avatar for anon]
    anon
    January 7, 2022 01:20 pm

    Bemused – absolutely agree that Citizens United must be abrogated.

    The juristic person of the corporation need be reigned in.

  • [Avatar for Pro Say]
    Pro Say
    January 7, 2022 02:53 pm

    We pledge allegiance to the flag . . . of Chinamerica.

  • [Avatar for Michael]
    Michael
    January 8, 2022 01:48 pm

    Thanks, Paul, this is well written and clearly identifies what the big companies have done to the little guy by creating and using the “patent troll” insult/lie. I am an independent inventor, who has spent decades and hundreds of thousands of dollars creating intellectual property. The patent troll lie has made my investment worthless. Although many companies infringe on my patents, because of the patent troll backlash it would cost me more to defend those patents than I could ever recover. Big companies whine about having to spend money to defend against people like me. Instead, they could simply talk to us, negotiate fair prices for licenses, and probably end up spending less. They have set the narrative, and somehow convinced a large part of the public (and politicians) that they, the monopolies and other big companies, are the victims, and people like me are evil trolls. So-called “patent trolls” are the creation of the big companies, who refuse to even talk to independent and small inventors who are therefore forced to sell the patents at bargain basement prices to entities who can afford to defend them in court.

  • [Avatar for C.Whewell]
    C.Whewell
    January 10, 2022 02:35 pm

    There is no such thing as a patent troll, it is a fiction, just as MICKEY MOUSE(TM) and many other characters ! I’m a fan of some fictional works myself, but I think letting fantasy characters interfere with the normal course of commerce is a bad idea.

  • [Avatar for Anon]
    Anon
    January 11, 2022 08:42 am

    C. Whewell,

    The art of effective lying (also known as propaganda), is that a lie should have a kernel of truth.

    And so it is with “patent Tr011s.”

    Are there “bad actors” out there with patents trying to obtain nuisance value settlements?

    Sure.

    Thus, there is an easy counter to your position.

    The better thrust avoids the “all or nothing” aspect of your thrust, and still seeks to expose the propaganda for what it is.

    One merely has to look at the entities that broadly used (and in fact “popularized”) the Tr011 narrative, see that they did so NOT for the benefit of the public, but for their own pocketbook, and note that non-patent law options are available for controlling bad actors — rather than attacking the strength of patents; while also noting the very real existence of Efficient Infringement (and noting exactly the types of people attempting to mislead others on that existence); and wrap all this up with a simple directive: follow the money.

    The so-called “Tr011s” — non-practicing entities — were actually a BOON to strong patents and showed that the business practice of merely gathering a war chest to inoculate against one’s own disregard for the patents of others by ransom could be defeated (thereby reinforcing the actual nature of a patent as a negative right — NOT required to be tied to ‘having a product’).

    Separate the propaganda.
    Understand the actual nature of the patent right.

  • [Avatar for James Bitetto]
    James Bitetto
    January 14, 2022 12:43 pm

    Nicely done! I hope this article gets widely distributed. The inventor-centric laws of the past have been completely circumvented in favor of large companies. Thanks for shining a light on this problem.

  • [Avatar for C. Whewell]
    C. Whewell
    January 16, 2022 11:33 am

    Thank you anon, but there is no counter to my “position”, as it is mere opinion. Since opinions are not facts, and since there can be a plethora of opinion on most any given matter, it is senseless to even use the word “counter”. Patent Trolls don’t exist, but in the minds of those living a fantasy. I never said fantasy is wrong or bad either ! Edison at one time had probably fantasized about lighting up Menlo Park !! There is nothing to argue here !

  • [Avatar for Anon]
    Anon
    January 16, 2022 06:04 pm

    Mr. Whewell,

    I will disagree with your attempted parsing and improper elevation of “opinion.”

    As you may well (should) know, not all opinions are of equal value, as the simple contrast between an informed opinion and an opinion from someone who does not understand the topic to which an opinion is being offered would amply demonstrate. I would put to you that the value of “counters” comes in the realm of moving from uninformed to informed.

    The fact of the matter is that “bad actors” who well may fight the desired narrative of “Patent Tr011” DO exist, and your view will be outright dismissed, when the thrust of what you want to advocate need not suffer that fate.

  • [Avatar for C. Whewell]
    C. Whewell
    January 19, 2022 10:11 am

    Dear Anon, ok, that is great, and thanks for the reply. Can I inquire as to your methodology for determining value of opinions ? I mean, I see a lot of talk about valuation of IP, and let me say that there are some really really smart people in the IP Valuation field, yet, there remain discrepancies even among the gurus. If you care to share your method of evaluating the value of opinions, it could be a good contribution. i.e., if I could knock out the opinions of lesser value, as they pertain to IP Valuation, then I think that puts my boss ahead of the pack. Do you realize the potential, if you actually have a contribution ? Be careful however, b/c the word “value” itself is often mis-used, mis-understood, and not everyone will be able to understand what you might be tempting to convey. It is probably best if you keep your opinion valuation as a trade secret, b/c by revealing to others, I think it would dissipate and any competitive advantage you may have had, would be gone. Want to do an NDA ? I can evaluate your method and give you my opinion of it.

  • [Avatar for C. Whewell]
    C. Whewell
    January 19, 2022 10:30 am

    But in all seriousness, you probably have some valid points. But also, isn’t Fiction and Fantasy a factor in much of commerce ? The Corporation itself is a legal fiction. Sometimes, a sellers or a buyer’s expectations are total Fantasy and they don’t learn of that until later. There are many more examples, and the concept of “Patent Troll” is but one more. But it only exists by your Will, if you choose to breathe Life into it. It can become a Collective Will, so be careful b/c some forms of Collective Will have been quite destructive ! Similarly is the idea of “Think outside the Box”. Guess what ? There is no box, never was, it was all in their heads !! There is no box ! I saw where by some folks’ fictitious interpretation of “patent troll” that most universities fit their definition !! It turns out, I got one of my Degrees from an artificial entity which qualifies as being a Patent Troll in some people’s fantasies !! We need more merch. Where’s the tiny stuffed doll with “patent troll” on its belly ? I’d think by now there’d be Patent Troll T-shirts, that one can send to a litigious adversary , haha, I bet I could sell a lot of those but ther’d be a DeLuxe package for the more sophisticated. In the end analysis, the ones who operate on a the Higher Truth win out, even though it may take time. In each scenario, identify the higher truth and proceed accordingly. I wonder if any University offers a course on “Dealing with Fantasy in Business in a Real World”

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