Patents weren’t designed to stifle innovation and take a massive toll on holders

This is an exciting time to immerse yourself in the wonders of technology. Smartphones are becoming smarter, tablets and touchscreens are changing the way we interact with the web, and on the hori on are exciting developments like Google Glasses. Like any good party though, it only takes a bit of riffraff to ruin the fun. In this case, its name is Patent Law.

A recent study by a pair of law professors at Boston University School of Law sheds light on the financial impact of patent litigation, and the results may surprise you. For example, would you have guessed that “non-practicing entities” (NPEs), which are individuals and companies that own patents but only use them for litigation (or “patent trolls,” as the study’s authors refers to them), were able to accrue $29 billion (BILLION!) in 2011 by suing hardware and software companies, many of them classified as small and medium-si ed businesses? In other words, patent trolls are targeting the little guys and lining their pockets with an obscene amount of dollars that could otherwise be used on research and development in the field of technology. The actual cost is even higher.

“This [$29 billion] figure excludes various indirect costs to the defendants’ businesses such as diversion of resources, delays in new products, and loss of market share,” James Bessen and Michael J. Meurer state in their study.

It’s a rotten situation, and NPEs aren’t the only culprit. Apple recently convinced a judge to ban sales of Samsung’s Galaxy Tab 10.1 tablets in the US based on the accusation that Samsung copied “the look and feel” of its iPad and iPhone devices. If the injunction holds, Samsung’s Galaxy S3 could be next.

Patentable?

Apple, which has been one of the most aggressive players in patent litigation, has beenconsiderably less successful suing Motorola, but that’s what appeals are for. Moreover, the ever present threat of patent infringing lawsuits has companies spending time and resources building up patent portfolios for the sole purpose of erecting legal shields, money that could otherwise be spent on innovation.

Some companies are even looking to change the way they do business altogether. The most recent example is Qualcomm, which just announced a corporate restructuring to protect its patents. Qualcomm created a wholly-owned subsidiary, known as Qualcomm Technologies Inc. (QTI), which will handle product development for the company’s chip business, while the existing parent company will hold onto most of the patents. Why?

According to Foss Patents, Qualcomm understands that “its patents are the crown jewels of the company” and things can get sticky as it heads into open source territory, but it also shows how far companies are willing to go to shield themselves from patent lawsuits.

Necessity is supposed to be the mother of invention, but as long as companies like Apple are able to broadly patent wedge-shaped notebook designs and sue competing products right off of store shelves, the real need is for patent reform.

Patents weren’t designed to stifle innovation and take a massive toll on holders