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< i>In our 632nd issue:
Software Patents and the Rise of Patent Trolls

In most issues of EFFector, we give an overview of all the work we're doing at EFF right now. In light of this week's announcement of the SHIELD Act, we're doing a deep dive into a single issue: Software Patents and the Rise of Patent Trolls.

Beloved podcasts like the Adam Carolla Show and HowStuffWorks are under attack. They and other podcasts are getting sued for, well, podcasting. And they're not the only victims—developers are being targeted for building mobile apps, and offices around the nation are being attacked for using ordinary networked scanners. These creators are only a few of the thousands of victims of one of the biggest threats to innovation: patent trolls.

Patent trolls are entities that don't create products themselves, but instead buy patents and make money from lawsuits. Trolls often make broad claims of infringement based on patents of questionable validity, and most defendants choose to settle because of the outrageous nature of patent litigation. It is risky and expensive—and trolls offer settlement amounts that, although incredibly burdensome, are cheaper than a lawsuit, which can often cost well into the millions of dollars.

This week, Congress made huge strides with the introduction of the SHIELD Act—a bill that, if passed, would become the first legislation to directly address the problem of patent trolls. The Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act, introduced by Reps. Peter DeFazio (D-OR) and Jason Chaffetz (R-UT) in the House, directly targets the trolls' incentive model. The bill creates a system where if a troll loses in court because the patent is found to be invalid or there is no infringement, then it pays the other side’s costs and legal fees.

This bill marks an important step toward ending the patent troll problem for good. We encourage you to tell your lawmakers to support the SHIELD Act. Read on and discover how patent trolls became such a problem.
The Flood of Software Patents

Software patents are relatively new phenomena; the software industry grew from nothing into a mature business without any need for patent protection. For decades, the Patent & Trademark Office (PTO) was generally reluctant to issue patents that covered software. But in the mid-1990s, the Federal Circuit (the court that hears patent appeals) first held that an algorithm implemented in a general-purpose computer could be patentable.

This opened the floodgates for software patents. The PTO now issues about 40,000 software patents a year. That's more than 100 per day. Unfortunately, the quality of these patents has tended to be very low. On average, examiners spend only 18 hours reviewing each patent application. This is not nearly enough time to properly check if the invention is new. To make things worse, the claims in software patents (this is the language that is supposed to mark the boundaries of the invention) are often vague and overbroad—giving unscrupulous patent owners the ability to claim that their patent covers a wide range of technology.
The Rise of The Patent Troll
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