Patent Trolls deck startup innovation---the mere perception decks innovation.

If you ask entrepreneurs and investors in Silicon Valley what's holding back innovation, patent trolls will surely be high on all of their lists.

Why are patent trolls so deleterious? Well, these companies exist for no other reason than to gobble up patents and then file frivolous lawsuits over semantic patent violations against any target they can find, with the hope of cashing in with a big settlement. Needless to say, this can wreck the finances of startup companies. (If you want more details, listen to this brilliant This American Life investigation of patent trolls from 2011.)

Patents are valuable. They protect intellectual property from copycats and thieves. But America's patent system is broken. The U.S. patent office grants very broad patents, or patents for inventions where "prior art" (to use the term of art) already exists. Shell companies find ways to buy those patents and exploit them to wring cash out of technology companies. Think of it as the tech equivalent of ambulance chasing.

This is a tremendous drag on innovation, because patent trolls typically go after startups. Google and Apple have all the cash in the world to defend themselves against frivolous lawsuits. They're not particularly ripe targets for patent trolls. Much juicier are cash-strapped and time-strapped startups, which typically prefer to settle a frivolous lawsuit quickly rather than fight it all the way to the bitter end.

Sometimes patent trolls will extract payment in patents, so that they can go after even more firms. This creates a vicious cycle. Other times, they will kindly offer to lend their patents to the target firm for a fee, to protect themselves from lawsuit, a form of extortion.

Patent trolls cost defendant firms $29 billion per year in out-of-pocket costs, according to one study. But the drag on innovation is much bigger than that. Think of all the fledgling companies that miss crucial time-to-market opportunities, and whose products don't reach their full potential, because they have to fight patent trolls. Some would-be entrepreneurs are surely so frightened of patent trolls that they don't even bother trying.