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April 10, 2012

'Patent Trolls' Have Destroyed Picture and Image Medical Industry: Slate

Electronic Health Records (EHRs) were supposed to markedly improve our lives by providing information to medical professionals wherever and whenever it was needed. A big part of that was images, like scans, that doctors and patients could discuss over iPads or iPhones while looking right at the picture.

But according to a story by Ray Fisman, the picture and image industry has stopped coming out with new products, and there’s a really aggravating reason why. In an unpublished study, Catherine Tucker, an MIT economist who studies the medical IT market, has shown that the slowdown in R&D occurred as a result of litigation.

By whom? By a company, Fisman claims, “whose primary reason for existing is to acquire the rights to others’ inventions and file patent claims against producers of related products—a patent troll.” 

Fisman notes that patents are necessary to allow inventors to benefit from the creativity and hard work (and hours and hours) needed to turn an idea into a “new and useful” product.

But ideas can’t be patented, though patents can be allowed to expire after a number of years so others can use them, and can be licensed in exchange for payment.

This is where what Fisman calls “patent trolls” come in. He says they’re more politely called patent assertion entities. But at heart they are companies simply set up to buy and exploit the inventions of others, he says.

And they do it by licensing technologies. As Fisman explains it in his story, “Often, trolls buy patents with the intent of suing first and asking questions later.”

He affirms that in the mid-’90s, a surgeon and engineer team in Tampa filed a patent on a system for sharing medical images over communications networks. Then they sold their patent to Acacia Research Corp. in 2005. And here’s where the problem begins.

Acacia is a patent troll, Fisman declares. “They claimed broad coverage over their newly acquired patents, arguing in press releases that the patents encompassed any system that could ‘enable multiple, remote users to simultaneously access image data from remote display terminals over common phone and data networks, such as the Internet.’” And so they sued to prove it.

What Tucker found, according to Fisman, was that the market for imaging software died after the Acacia lawsuit. Not a drop in demand for imaging software. But terror in R&D, because what else could be stolen?

Fisman writes that encouraging innovation involves a delicate set of tradeoffs. He adds that “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.”

But he concludes that this country could use fewer lawyers, more people coming up with brilliant ideas, and laws to protect them. 

Edited by Jennifer Russell
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