Expanding IP law uniquely incentivizes patent trolling which floods the courts with frivolous litigation

Bell, Abraham-- Professor, Bar-Ilan University Faculty of Law; Professor of Law, University of San Diego School of Law; and Gideon Parchomovsky-- Robert G. Fuller, Jr. Professor of Law, University of Pennsylvania Law School and Professor, Bar-Ilan University Faculty of Law. 2014. “Reinventing Copyright and Patent.” Michigan Law Review 113 (2): 231–78. https://search-ebscohost-com.gonzaga.idm.oclc.org/login.aspx?direct=true&AuthType=ip,cookie,url,uid&db=lgs&AN=99133160&site=ehost-live.

Intellectual property systems all over the world are modeled on a one size-fits-all principle. Under current patent law, for instance, an invention that meets the patentability criteria is entitled to protection of the law for a specified period.1 Big inventions or small inventions, valuable inventions or worthless inventions—all receive the same scope of protection, and the same variety of legal remedies, for the same period of time. Essentially, all inventions are equal under the law. While one size fits all is easy to administer, it generates two kinds of problems for the patent system. First, the equality principle gives all creators access to the same remedies, even when those remedies create perverse incentives. Scholarly literature has focused on the phenomenon of “patent trolls”—patent holders who have no interest in marketing or manufacturing their inventions but simply wait for apparent breaches of the patent in order to sue.2 While scholars have characterized trolling as a problem of underproductive patents,3 we view it as a problem of incentives. Patents that are enforced by trolls could potentially be valuable to society, but the one-size fits-all system’s excessive litigation rewards incentivize trolls to hoard their patents for opportunistic litigation rather than license them for productive use. Specifically, by providing uniformly large remedies even for very small inventions, the judicial system allows patent trolls to reap more profit through infringement suits than through selling their inventions on the market. This is not intrinsically problematic, but the judicial system is not cost free. Society subsidizes judges, courtrooms, and enforcement measures while litigating parties bear only some of the costs themselves.4 In the case of patent trolls, these societal subsidies encourage parties to conduct their transactions in the courtroom when the optimal forum is actually private market transactions. In many other cases, partly because the costs of litigation are asymmetric and must be paid in part even by prevailing parties, the threat of these litigation costs can force parties into inefficient transactions.5