Inequality between small and large patent holders
Patents held by individuals and small company are much weaker than patents held by large companies.
(Note: not to be confused with the inequality between product developers and patent trolls, whereby the former's patents cannot be used to counter-sue the latter. That's a different problem.)
Small patent holders have a weak negotiating position
A very clear example is Andre Geim's discussion with a large electronics company. Geim won the 2010 Nobel Prize for physics for his discovery of graphene, but he didn't patent it. Graphene is hardware, not software, but this situation shows how weak the position of an individual with a patentable idea is. Geim explains:
We considered patenting; we prepared a patent and it was nearly filed. Then I had an interaction with a big, multinational electronics company. I approached a guy at a conference and said, "We've got this patent coming up, would you be interested in sponsoring it over the years?" It's quite expensive to keep a patent alive for 20 years. The guy told me, "We are looking at graphene, and it might have a future in the long term. If after ten years we find it's really as good as it promises, we will put a hundred patent lawyers on it to write a hundred patents a day, and you will spend the rest of your life, and the gross domestic product of your little island, suing us." That's a direct quote.
Less interest for the public
Consider two word processor formats. Imagine that Microsoft and I both develop separate file formats. Everyone who develops a word processor has to be compatible with Microsoft's format, and no one has to be compatible with mine. Their patent is massively valuable and mine is of no value - the technical quality of the formats is of no consequence.
SME patents fair badly in court
From the 2010 study, Patent Quality and Settlement Among Repeat Patent Litigants, page 18 (pdf page 19):
When the cases do not settle, large patent plaintiffs are significantly more likely than small ones to win, without regard to how the data are sliced. When we combine the two data sets, large entity plaintiffs win 53.1% of the cases decided on the merits (55.9% if default judgments are included), while small entity plaintiffs win only 12.3% of their cases (23.1% if default judgments are included). These differences are highly statistically significant. Adding settlements into the denominator naturally reduces the number of patentee wins, but doesn’t change the relationship: large entities win judgments in 6.5% of all cases in the combined data sets (7.2% if default judgments are included), compared to 1.4% of small entities (2.9% if default judgments are included). These differences too are highly significant.
And page 34 (pdf page 35):
when the plaintiff asserts a patent originally issued to a large entity, defendants are more likely to lose—large entity status is a significant predictor of plaintiff wins.
Related pages on ESP Wiki
- Software patents harm SMEs
- Patent non-aggression pacts - another way for large companies to escape the problems