Tech companies find a way to fight “Patent Trolls”

Over the past few decades, the patent system has grown progressively. Today almost anything under the Sun that is made by man is considered patentable. Fuelling this is the increasing number of inventions made everyday. Organizations are seeking patents even for the minor modification they make in their original invention. Though this looks like a good trend, but like every coin has two sides, the patent system is also not untouched by the flip side.

It started with patent infringement law suits, wherein the defaulting party has to pay up huge amount of money as compensation. This created an opportunity for some. The opportunity of earning through the patent law suits. They are called the “Patent Trolls” who exist only to extort large payments out of cash rich companies. This trend is seen more in the technology space. The patent trolls seek to buy intellectual property to extract royalties from companies that rely on a particular technology.

Technology companies are known to pay up amounts to the tune of Millions of Dollars to settle the patent infringement law suits. This is becoming quite an annoying trend. Measures have been taken to curb this practice but haven’t seen satisfying results yet.

Technology heavy-weights like Google, Verizon Communications, Cisco Systems, Telefon AB L.M. Ericsson, and Hewlett-Packard among other have formed a group to tackle this. They are called the Allied Security Trust. This group plans to buy up key intellectual property before it is obtained by parties who might use it against them. To join the group, each company will pay about $250,000 and about $5 million into an agreement for future patent purchases. Considering the heavy amounts these companies end up paying in settlements, the amount for joining the group looks very minimal.

The number of patent-related law suits has seen an alarming rise in the recent past – nearly 2500 through October’07 from 921 in 1990. With the Allied Security Trust, the technology companies are hoping to stay clear of such law suits which cost them heavily.