Sunday, May 5, 2013

Trolls, Trolls, and More Trolls

Over at Forbes, there's an article suggestingthat it's time to protect startups from Patent Trolls.

Here's a much simpler idea - How about we establish a compulsory license for tech IP, similar to the compulsory license for music?

Here's a basic outline - Let's estimate the maximum percentage of the value of a software product that any IP involved in the product could account for. Let's suppose that amount turns out to be 30% - the exact number doesn't matter for the purposes of discussion, although the industry will want to argue endlessly.

Suppose, then, that every company must pay 30% of its net income (or gross, or whatever) for the ability to use the compulsory licensed products. All of them. From anybody.

That money all goes in a pot, and IP trolls can only sue the pot, not the company. The industry and the stakeholders can come up with rule-of-thumb valuation standards. One of those standards has to evaluate the value added by the creators/sellers, who are also entitled to their cut of the royalties.

Percentage of lines of code, or allocation by importance to the finished product [acceleration methods are critical for games, less so for other things, etc], or any other reaosnable method can be decided by the industry.

The great thing about this schema is that, once the industry decides on such a schema, it becomes the de facto standard for evaluating an IP troll's contribution, If the industry has agreed that at most 30% of the value of the finished product (or 10%, for that matter) is due to the "prior art" that may be incorporated into the product, then no court will give more than that to a troll. And if that percentage of the gross/net has already been paid to a royalties organization, then an IP troll has only one place to go for their alleged infringement.

This leaves IP trolls, who hold patents but do not develop them for use, at a huge disadvantage. Lawsuits stop being an economical way to collect their rent, which drops the value of their IP to whatever value it actually might have in USE, as opposed to its value in barratry.

We're seeing that difference made clear in the Prenda Copyright Trolls case which I referred to here.

This would provide a nice way to daylight the trolls all at once.

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