How “patent assertion entities” stifle innovation. (It’s even worse than you think.)

Why the slowdown in sales? Imagine what would happen to iPhone sales if Apple’s last product was its 3G phone introduced in 2009: Android-based devices would be running away with the market. Tucker claims that at least part of the reason imaging software sales were slowed by the Acacia suit is that R&D at the affected companies went into a deep freeze. In the two years following the suit, none of the defendants came out with a single new version of their products, while improvements continued in their text-based systems and at smaller competitors not subject to the suit.

Given the nature of U.S. patent law, it’s easy to understand why—a company that continues to develop new products while targeted with a patent suit is guilty of “willful infringement” if it loses the case and is then subject to triple damages. So the court need not even rule in favor of patent trolls like Acacia to slow down innovation—merely the threat of a possible guilty verdict is enough to put R&D on hold.

Before joining the lynch mob that’s after Acacia and its fellow patent trolls, it’s important to remember that encouraging innovation involves a delicate set of tradeoffs. Acacia claims it is merely defending the intellectual property of small-scale inventors whose ideas would have been usurped by multinational bullies without patent trolls to license and litigate on their behalf. That’s what has led some people to sing their praises.

At the same time, most experts feel that the system is designed too much in patent litigants’ favor. Patent claims are often ridiculously broad—Acacia’s PACS suit claimed to cover all systems that transmit medical images over the Internet; Amazon patented the one-click checkout; and according to a recent episode of NPR’s This American Life, patent number 5771354 covers any software upgrade delivered via the Internet. Many patents cover inventions that are neither new nor useful—according to the same NPR story, 30 percent of patents are granted for pre-existing innovations and for ideas as frivolous as a new way of swinging on a swing, issued to a 5-year-old in 2002. (His dad was a patent attorney.)

Some research even goes so far as to suggest that we’d get no less innovation if there were no patent protection at all: In a fascinating study of innovations presented at two World’s Fairs in the 19^th century, economic historian Petra Moser compares inventions exhibited by countries with varying degrees of patent protection.

The exhibitions, which allowed for a global exchange of technology, patented and otherwise, drew on the very best ideas from countries eager to show off their technological prowess. Awards for the most innovative and useful exhibits provided Moser with a ready measure to assess the quality of each country’s entries. The results might surprise patent trolls and their defenders—there were three countries that had no patent protection whatsoever at one or more of the two exhibitions: Switzerland, Denmark, and the Netherlands. Yet their innovations fared just as well in competition as those from Belgium and France, which gave 15 or 20 years of protection to patented ideas. It’s not that Swiss and Danish inventors were oblivious to theft of intellectual property—they focused on invention in areas where secrecy was relatively effective in keeping ideas from others, namely scientific instruments and food processing. But overall they were just as innovative.

Patent laws aren’t going to disappear anytime soon. But work like Tucker’s is beginning to show that the system we’ve got is often achieving the opposite of its intended purpose. If we want to ensure that Americans keep innovating, we probably need to produce fewer lawyers trained to pursue patent litigation, more inventors to create new ideas, and weaken the laws intended to protect them.