[rot13xor]

If the patents are legitimate it seems like a business model similar to debt collectors or "cash now for annuity" companies. A small company might have a winnable case of damages but doesn't have the resources or risk appetite to take the case to trial. It's a rational decision to sell off the claim to another company for X% of the expected value and let them take risk of enforcing the claim.

[gpm]

Taking a look around this thread should make it clear that even if patents are legitimate, many patent trolls are not. They are frequently going after entities that are not actually infringing, or threatening people with obviously invalid patents, because the legal system makes it cheaper to pay the troll than go to court, even if you will win.

(But you probably have a point that if patents are legitimate than an otherwise ethical patent troll would also be legitimate)

[hvis]

> But you probably have a point that if patents are legitimate than an otherwise ethical patent troll would also be legitimate

I'm not sure it's possible to be an "ethical" patent troll. It is a structure explicitly chosen to minimize any collateral in case their patents are thrown out in court, claims are invalidated, and they have to pay to for the counterpart's expenses (and which point the company is simply dissolved, with little to no damage to the owners).

If somebody is so sure their patents are valid, let them form a "real" company which utilizes said patents to bring in revenue, and let that company go to court with competitors and bear the risk of having to pay for frivolous lawsuits.

Not that I think that that software should ever be patentable, of course.

[gpm]

Step 1 for being an ethical patent troll would be having enough assets that you aren't just a judgement proof vehicle for lawsuits, but there's no reason that isn't possible. A diverse portfolio of legitimate patents, a healthy bank account, and voila.

There are a variety of reasons why forming a "real company" that produces products might not be practical. For example you might be in a field where the startup costs for a competitive company is in the billions (silicon manufacturing), or that is a natural monopoly already monopolized by one or two big companies (operating systems). Your competitors also have patents on things that you would need to be competitive and for whatever reason you aren't willing to license them.

Or really you might just not be well suited to running a company, bad at managing people or whatever, and if patents are legitimate it seems like they are legitimate regardless of whether or not you want to start a company.

(PS. I'm generally against patents, and strongly against software patents, but that's neither here nor there on whether or not patent trolls are legitimate under the assumption that patents are)

[hvis]

I'm not sure it's feasible to meaningfully regulate/legislate what a "healthy bank account" is for such a company. There is always risk that, when the going gets tough, the company will transfer funds (e.g. by purchasing some "consultation services" from a tightly-controlled shell company), or that it will get into too many lawsuits, losses on which will still exceed the available balance.

> There are a variety of reasons why forming a "real company" that produces products might not be practical. For example you might be in a field where the startup costs for a competitive company is in the billions (silicon manufacturing), or that is a natural monopoly already monopolized by one or two big companies (operating systems). Your competitors also have patents on things that you would need to be competitive and for whatever reason you aren't willing to license them.

But what are you doing with those patents, then? As much as we both consider them to be a bad idea, patents are supposed to be a vehicle to promote tangible advancements in the field, to encourage development and manufacturing. If you don't produce anything but just stop anybody else from doing that, or just collect rent by granting out permissions, you are not using patents "correctly".

[gpm]

> I'm not sure it's feasible to meaningfully regulate/legislate what a "healthy bank account" is for such a company.

I'm not sure it is either, the law is a blunt tool and it's not always possible to legislate things like "be ethical".

One potential way to do legislate this is to require that plaintiffs place funds in escrow pending the outcome of the case, to pay for the other sides fees if they lose. Occasionally courts will already order this under current law. I'm not going to generally advocate for that as a good idea though, I think it probably has a lot of side effects and I haven't put enough thought into it to be sure it is a good idea.

> But what are you doing with those patents, then? As much as we both consider them to be a bad idea, patents are supposed to be a vehicle to promote tangible advancements in the field, to encourage development and manufacturing. If you don't produce anything but just stop anybody else from doing that, or just collect rent by granting out permissions, you are not using patents "correctly".

Theoretically, it was the act of inventing that occurred prior to the award of the patent that the patent is supposed to be rewarding. The reward is precisely the ability to extract rent from people who use the invention (whether by making it and selling devices at a premium, or licensing the patent).

You see this mechanism actually function in pharmaceuticals for instance, because patents are so valuable there are companies that pour resources into inventing new drugs that they can patent. (I have other issues with patents in this industry, I wrote about them elsewhere in this comment thread, but the reward mechanism really does motivate useful work here: https://news.ycombinator.com/item?id=27587034)

[hvis]

> One potential way to do legislate this is to require that plaintiffs place funds in escrow pending the outcome of the case, to pay for the other sides fees if they lose. Occasionally courts will already order this under current law. I'm not going to generally advocate for that as a good idea though, I think it probably has a lot of side effects and I haven't put enough thought into it to be sure it is a good idea.

That's an interesting direction, but how does the collateral compare to the average lawsuit's costs? What happens if the suit drags on, exceeding the collateral, do the parties just agree to disagree and drop it?

I could also be a small company, on the defending side, which is the frequent case in patent trolling scenarios. I shouldn't be barred from defending myself in court if I don't have the ability to post the collateral up front (if I'm convinced my case is strong, at least).

On the flip side, a small IP owner should still be able to sue a giant company that is violating their patents/copyrights/etc. Even if the said company has a lot of money and is liable to create huge attorney bills. But I suppose if the escrow for plaintiffs becomes more common, it's a small price to pay for the benefit of the whole ecosystem.

> You see this mechanism actually function in pharmaceuticals for instance, because patents are so valuable there are companies that pour resources into inventing new drugs that they can patent. (I have other issues with patents in this industry, I wrote about them elsewhere in this comment thread, but the reward mechanism really does motivate useful work here: https://news.ycombinator.com/item?id=27587034)

Good points on the pharma industry.

But okay, let's agree that there are pharma companies (research laboratories, etc) that don't ever do the end production themselves. Perhaps that's even a good state of affairs (of which I'm less certain).

Still, those companies are "real", and they have financing and budgets for stuff other than the patent lawsuits. They have to do the said research and put quite a lot of money in it (which is what makes those patents valuable and arguably a benefit to society as a whole), and that distinguishes them from an average patent troll.