Tech Patents Straining US Economy

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When most people think of patents, they think of geniuses pushing the boundaries of human knowledge and protecting their inventions. But in the technology industry, many patents are granted for ideas that are completely obvious, and this is having a profound effect on the economy. Small businesses, city governments and tech giants are all affected.

Most people don’t think twice about scanning a document, and then emailing a PDF copy, but this could come at a hefty price. A company called Project Paperless has patented this process, and they want companies to pay $1,000 per employee in order to access the technology.

An article in Ars Technica discusses the journey of one man, Steven Vicinanza, who received a legal letter from Project Paperless. Enraged by the letter, Steven fought back and the company ended up dropping the case. But for every person like Steven, there will be a business that decides that it’s easier to settle the case out of court and pay up.

“Many companies would rather settle for small six figures and avoid a prolonged court battle,” explained James Cupero. “And patent owners are often wary about going to court, because their patents could be struck down.”

It’s not just companies that are being targeted by patent owners. American cities have mostly avoided patent troubles, but recently a string of cities have reached settlements with a company that is enforcing a patent on bus tracking systems. The patent has never been tested in court, but some of the patents have been reexamined by the patent office. Some of the patents have been struck down, but at least one of the patents survived, according to another article in Ars Technica.

Patents are not just affecting everyday use of technology, but also the way companies make products. Eileen Yu wrote about the recent litigation between Apple and Samsung, and the difficulties Apple competitors could face in light of the judgment:

Over dinner this week, my friends and I were discussing the Apple-Samsung patent lawsuit when I joked that the next-generation of non-iOS phones would have us licking the device to scroll and tapping it on our foreheads to zoom.

Lest you haven’t heard, in one of the most hotly watched patent trials, the U.S. court on Aug. 25 ruled in Apple’s favor and agreed Samsung had infringed several of Cupertino’s patents including double-tap to zoom and one-finger to scroll.

Many of the biggest technology companies reach agreements where they cross-license patents to each other. This type of arrangement is possible for larger businesses that have amassed a large number of patents, but it’s not an option for smaller businesses that have few patents on their books.

It is widely believed that Google bought Motorola only to acquire its vast portfolio of patents, and to protect the Android ecosystem. This idea was given more credence when Google quickly started dismantling Motorola and selling off large parts of its business shortly after the purchase. While Google has a large number of patents, many of its competitors had much more developed portfolios, and so Google had to make a defensive purchase. When Google had to make a move like this, it’s hard to imagine how a smaller player could ever enter the smartphone OS business.

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