[Originally posted on Mises.ca]
Patent trolls are companies whose entire business model is to file patent suits against legitimate businesses, in order to extort them for money. Patent trolls are bad.
However, they are not the worst thing about the current intellectual property regime.
In fact, they may be one of its best features.
Last month, John Oliver featured a long segment on the issue of patent trolls, which you can see here: https://www.youtube.com/watch?v=RLOwX6yVlWM
The gist of the story is this: there are lots of companies right now who make their money not by “creating” or “producing” things of value, but by filing vague and ambiguous patents and then suing whoever they can for patent infringement for exorbitant (and some would say extortionate) sums. They have then gamed the system in such a way that it is in the benefit of the company being sued to settle the suit out of court.
The problem with this, apparently, is that this is a huge money suck for the companies being sued. That part is true.
However, patent trolls are not the worst part of the intellectual property system. The reason is simple: unlike many “legitimate” owners of IP, patent trolls allow new and innovative products to come to market. Yes, they demand a fee. But at least the market has new products.
Compare this to “legitimate” IP owners (whether they be for patents or copyrights), who want to force injunctions against their competition. By stopping their competition, not only are they robbing the market of new goods and services immediately, they are also keeping their own prices higher than they otherwise would be, as well as slowing down the pace of innovation.
If it’s possible for you to be sued to innovating, you are less likely to innovate.
Of course, intellectual property shouldn’t exist. The problem with patent trolls isn’t that it’s too easy to file a too vague patent. It’s that it is possible to file a patent at all.
Patents are not justified economically, and they are not justified ethically. There are many examples of industries, from currently and historically, that have managed to thrive in the absence of intellectual property protection. Legally, the history of IP being granted explicitly as “monopolies” by monarchs, as opposed to evolving naturally through contracts like most other laws, should be reason enough to be deeply skeptical of them.
But so long is they do exist, we should be celebrating any act that makes it more difficult to get a patent, and more difficult to file an IP claim. Hopefully as more patent trolls are exposed, the lunacy of the IP system becomes more apparent to the masses.