There is a previous transaction though - the patent trolls acquire their patent portfolios from, in the long run, inventors. They "bought" and "own" them, and are now asserting those rights, to the expense of $29B to other companies who should be licensing the rights.

Nobody blames landlords of costing businesses billions of dollars a year - they own property and businesses pay rent. Nobody builds a business using a landlords property without paying rent, then plausibly claims their legal costs defending themselves against landlords asserting their rights are somehow an unexpected and unfair imposition. (Well, actually food carts probably do exactly that, but nobody writes academic papers claiming billions of dollars worth of cost for them…)

I haven't read the whole paper, but I wonder about two other numbers - 1) how much money did the NPE's pay to the inventors of the patents they're defending (who under the current system have every right to choose "selling their patents/IP" as their means of monetizing their inventingwork)? and 2) how much would licensing the existing patents (instead of running up legal bill later) have been, compared to the $29B losses described here?

I'm not saying the current system is "right", but it is reasonably well understood. I can only assume the $29B cost is accepted as a "cost of doing business" by companies who know (or even just suspect) they may be infringing patents? (or perhaps it's not an assumed "cost", and many businesses choose to gamble that they'll never be held accountable?)

Here is the thing: small business folks love free stuff. They love shifting costs onto other people. They think everything they have to pay for is a huge drain on the economy and everything they get for free is a justified incentivization of entrepreneurship.

Now don't get me wrong, I love small tech companies. The engineering companies I have worked at have been exclusively small tech companies. They're great. But most in the industry have constructed this idealization of the morally virtuous startup founder. Everyone likes free things, sure, but big companies at least seem to acknowledge the fact that they're inflating their profits at the cost to someone else. Small company culture doesn't do that. The AirBnB debate recently was a great example. People were decrying regulations that could undermine AirBnB, but it didn't even register to people that a lot of the "value created" by AirBnB was actually just costs that were shifted to the other residents of the building/surrounding community.

I see the same sort of thinking when patents come up on HN. There is this presumption of the morally virtuous innovator. Therefore, every $1 he must spend paying NPE's must be $1 of dead weight loss to society. There is no conception of the fact that some part of that $1 represents money he would rightfully have had to pay to the original patent holder, because (statistically!) he's not morally virtuous 100% of the time.

If wealth creation happens at any step, it's when an invention that is beneficial to society is created, and the patent system exists to account for that.

If the invention is junk (like the Lodsys patents), it doesn't matter how wealth has been transferred around; no value has been created. Any rent sought on those patents is an economic distortion and (in my opinion) immoral.

I didn't even start this off to take a side (though I guess I have by now) - I was just pointing out a fallacy in GP's thinking.

Trademarks require proof of use in commerce to be valid.

Perhaps patents should require proof of use- If not by the inventor, then by the patent owner within a probation period of 3 years or so.

All right: how much of the quoted sum do you think the (for-profit) patent troll companies book as revenue? I think the order of magnitude is right. (Remember that traditional comapnies can also play the game and book some of the settlements etc as revenue - i.e. elective litigation.)

Give me your guess, if you think that the article quotes the systemic cost and not the part that is booked as revenue.

What I'm saying in it doesn't matter what the patent troll companies book as revenue. That's just the wealth transfer.

Wealth transfer is not necessarily value creation. This is obvious, because if we all pay everyone else on the planet $100 a day we don't magically have an econmy worth $1.3 × 10^24.

Wealth transfer often destroys value. Wealth unjustly taken away from value creators becomes a disincentive to produce.

You have to look at wealth creation. Are the patents involved in litigation honest to god inventions that made the world a better place? Wealth was created. Eg, the first retrovirus medication.

Are the patents involved non inventions that were of no use, but are broad enough that patent trolls can, without merit, start seeking rent on products from companies they no part in creating? No wealth was created. Eg Lodsys.

In general, different segments of HN disagree over which patents fall into which categories, but the vast majority agree, myself included, that software patents basically all fall in bucket #2.

This is my last reply to you, as I'm pretty sure by now that you're just trolling, and HN doesn't need to be polluted with this thread.