Over the last several months, we have been vocal in our calls for software patent reform to put an end to the threat of lawsuits on behalf of patent assertion entities (PAEs), more commonly known as patent trolls. Why? Because at Rackspace it has become our most pressing legal issue. Since 2010, our spending to combat patent trolls has increased by 500 percent.
Patent trolling has become big business. It hurts the economy – a Boston University study conducted last year found that patent trolls cost the U.S. economy about $29 billion in 2011, up from $7 billion in 2005.
No one is immune – this is an issue that affects businesses of all sizes, but small business owners and software developers are hit the hardest. At Rackspace, we are especially concerned with the impact patent trolls suits can have on open source software projects, which are important innovation centers. To us, open source gives our country the ability to increase our share of global technology innovation.
Open source development touches every almost every company in America. Rackspace is best known for our involvement with OpenStack, a cloud computing system that we created, open-sourced and now have spun off into its own independent foundation. OpenStack has been adopted by a host of organizations.
This one open source project is creating value, providing jobs and driving innovation at hundreds of companies, not just our own. We know that patent trolls pose a direct threat to open source development, which is integral for startups, small business and even mature companies looking for new growth opportunities.
Patent trolls are especially hard on startups, small businesses and developers. The fear of being caught up in a high-dollar patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. suit has been enough to prompt some developers to pull projects, limit features in their offerings or redirect their efforts – true stifling of innovation. This is why software patentA generalized term referring to patents whose subject matter extends to computer-implemented code, which have been the subject of great controversy, including but not limited to how they interact with open source software. Although software patents are often denigrated, there is no accepted definition. However, there are a variety of methods for identifying software patents for empirical analysis. See Bessen, A reform is necessary and must be a top priority for Congress – and why we as an industry must encourage action.
At Rackspace, we are strong supporters of the SHIELD Act, which was filed this week by Rep. Peter DeFazio (D-Oregon) and Representative Jason Chaffetz (R-Utah) which will require losing patent trolls to pay defendants’ legal costs. Under current law, patent trolls don’t face any meaningful risk in bringing litigation, while defendants are subjected to massive legal expenses and discovery costs. This approach will help level the playing field and reduce the trolls’ unfair advantage.
Together, we can push for legislation that will lead to true patent reform and leave these trolls powerless against the most creative and productive elements of our technology economy.