Legal Entrepreneurship

15 January 2008 at 6:51 pm 1 comment

| Steve Phelan |

 I just had lunch with the general counsel of an internet retailer, which is headquartered here in Las Vegas. He was bemoaning the fact that the biggest headache in his job is patent infringments…

I naturally thought that it must be difficult to hunt down those infringing his company’spatents but instead it turned out he was referring to those attempting to sue his company for patent infringement. It seems that every little device on their website, from the shopping cart checkout procedure to customer reviews and recommendations is a potential (or actual) lawsuit. It appears that entrepreneurs are buying up the patents of defunct dotcom companies and then filing lawsuits against large companies who appear to breach their newly acquired patents (often on very spurious or tenuous grounds).

Large companies have the resources to fight these entrepreneurial lawsuits (or pay to settle), but midsize firms lack these deep pockets. Several companies are now seeking patent lawsuit reform but these moves are being resisted by big pharma because they are keen to maintain flexibility in the system to defend their own patents.  

I suggested that he might want to examine the incentive structure that makes these entrepreneurial lawsuits (aka fishing expeditions) so appealing. One approach may be to automatically award costs against plaintiffs when suits have been deemed to lack merit and to make attorneys personally liable for such costs (ouch!). I would be keen to hear any other suggestions for creating incentives to deter nuisance suits but preserve the legal rights of those with legitimate patent violations.

Entry filed under: Entrepreneurship, Evolutionary Economics, Former Guest Bloggers, Institutions. Tags: .

Reflections on LLSV Brain Flows

1 Comment Add your own

  • 1. spostrel  |  16 January 2008 at 6:34 pm

    The only solution is to get the PTO to stop awarding patents that are so obvious that the same idea is independently stumbled on by every person that works in the area. Jeff Bezos once admitted he was embarrassed by Amazon’s patent on “one-click” checkout, but said he had to play by the rules as he found them; he proposed shorter patent life for e-commerce patents as a reform. I think it would be better simply to refuse such patents on the grounds of obviousness. And a retroactive proof of obviousness would be evidence of widespread independent rediscovery.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 274 other followers