Hundreds of new gadgets come out of the Consumer Electronics Show every year -- but to hear some inventors and tech companies talk, thousands of baseless patent suits come out of it, too.
“Patent trolling,” the practice of buying up scores of little-known patents solely to sue others for infringement, is hardly a new phenomenon. By some accounts, patent litigation has been on a steady upward slope for nearly 20 years. But 2013 marks the first year that the issue has been taken up at CES, according to Ars Technica, perhaps because litigators have begun chasing after small start-ups and companies well outside the tech field.
That’s costing businesses dearly, argued Rep. Peter DeFazio (D-Ore.) and representatives from several tech companies on a panel Tuesday. Companies lost $29 billion to patent litigation in 2011, DeFazio said. Forbes reports that Google’s senior patent counsel, Suzanne Michel, estimated that an additional $80 billion is “indirectly” wasted when executives and engineers become distracted by the lawsuits.
Many defenders argue that so-called trolls defend the legitimate interests of inventors. Earlier this year, a jury awarded $1 billion to Apple after Samsung released a smartphone with an overwhelming number of software and design similarities to Apple’s iPhone.
But even that case is in dispute, and tech companies regularly face more frivolous ones. Lee Cheng, the general counsel for online retailer Newegg, said his company was sued for infringing on the concepts of “search,” “shopping carts” and “dropdown menus.” DeFazio name-checked the recent “Project Paperless” suits, which demanded licensing fees of $1,000 per employee for all companies using scanners and e-mail on the same network.
In 2011, two of the Consumer Electronics Association’s marquee members -- Apple and Google -- spent more on patent lawsuits than they did on research and development, according to the New York Times.
In November, one company even sued Apple for packaging earbuds with its phones, pointing to a vague patent on “wireless mobile phone including a headset.”
Also on the intellectual property front, another CES panel tackled copyright infringement on the Internet, with reformers vowing to push for more freedom and shorter copyright terms in 2013, according to Ars Technica.
For now, however Congress has yet to successfully legislate on either patent or copyright issues. The federal SOPA and PIPA proposals, both aimed at stopping online piracy, crashed and burned in light of a public outcry last year. And while DeFazio sponsored patent-troll legislation, called the the SHIELD Act, in August, the legislation hasn’t moved forward. He said during the panel discussion that the bill would need a “broad coalition” of support to succeed.