Figures prove that patent wars are killing tech industry

It is starting to look like Amazon boss Jeff Bezos is right – patent wars are killing the tech industry.

Bezos, who famously encouraged his staff to file for controversial web patents on obvious ideas like “one click to buy”, appears to have had a change of heart and is turning into an advocate for patent reform.

Now new research, seen by InfoWorld and published as a consequence of the America Invents Act, supports Bezos’ worries.

The Government Accountability Office (GAO) has conducted a study on the effects of patent trolls on the economy by using figures squeezed from the Stanford IP Clearinghouse (now called Lex Machina).

Covering five-years from 2007 to 2011, the report identifies and classifies patent activities across all industries and uses a statistically significant sample to draw conclusions.

The researchers concluded that the number of patent troll law suits have increased significantly over the five-year period.

Four of the top five patent litigants in America exist solely to file lawsuits.

In most cases the claims never reached court, and the main impact of patent trolls was probably in the costs they impose way before litigation commences.

The main goal of patent trolls is to extract money from their victims without ever going to court.

Most of defendants settle because patent litigation is risky, disruptive, and expensive, regardless of the merits. Patent trolls set their royalty demands strategically well below litigation costs to make the business decision to settle an obvious one.

Technology industry cases constitute half of all patent suits and in the software industry, internet-related patents were litigated 7.5 to 9.5 times more frequently than non-internet patents.

When cases actually go to court, they are often unsuccessful, but since most lawsuits from patent assertion entities are settled out of court that does not really matter.

The figures show that most patent trollage is conducted in secret with lots of NDAs floating around.

One in six patents covers smartphones and these make up the bulk of the cases.

The report suggests that software patents are far too easy to obtain and are poor quality, with prior art invalidating them if one is able to check. But fighting them is too expensive for start-ups who will often go under instead.