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Stop the Grandstanding on Patent Trolls

By David Teece

David J. Teece is the Tusher Professor in Global Business and director of the Institute for Business Innovation at the Haas School of Business at the University of California, Berkeley. He is also chairman and co-founder of Berkeley Research Group, LLC.

BERKELEY - President Obama came out swinging last month against “patent trolls,” those much-vilified firms that make their money by threatening to sue companies for patent infringement and demanding hefty royalty payments.

The president and White House officials didn’t shy away from the word “trolls,’’ with its image of reptilian goblins who hold up innocent travelers at bridges. Yet a close review of the president’s plans to crack down reveals that none would actually do much about trolling or the “smartphone patent wars” (few of which, by the way, involve trolls).

Let’s stipulate that there is a problem. Patent litigation has grown by leaps and bounds in the past decades. So have “patent assertion entities” (aka trolls), which by some estimates filed more than half of all patent lawsuits in 2012.

Some of the so-called trolls invoke patents with stale ideas and flimsy claims, and then exploit the unpredictability and cost of litigation. Many companies pay substantial money to...

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