"Patent trolls": How some say they're hurting U.S. economy
(CBS News) It seems as if every time a high-tech company comes up with something new, another company files a patent lawsuit, saying they had it first.
Experts say all these lawsuits are significantly damaging the American economy by slowing innovation. But things may be changing. CBS News found a man who says he's willing to risk it all to fight for what's right. It's his battle in the wider patent wars.
Austin Meyer has always been fascinated with flying. He told CBS News, "I almost feel like I was born in a cockpit."
It was that passion that propelled Meyer to start writing X-Plane, a flight simulator program that grew into a successful small business.
Two years ago, Meyer made an X-Plane app for the Android smartphone. Things were going great. Then, this past summer, he received a letter. Meyer said a company called Uniloc was filing suit against him for patent infringement.
According to the lawsuit, Uniloc says it owns the idea of a computer program checking a central server for authorization.
It's a routine source code from Google that Meyer and many others plug in, simply allowing the app to confirm it was purchased legally.
Meyer said, "It is the technology upon which all Android apps are based."
Asked if that's all Android apps, Meyer said, "That I know of, everyone I know of."
So conceivably they could sue everyone who makes an app for Android? Meyer replied to that question, "It's my understanding -- based on that lawsuit and the patent and the way Android apps work -- the answer to your question is 'yes'."
It might sound hard to believe, but it's nothing unusual in the tech world these days. Companies like Uniloc are often called "patent trolls." They don't invent anything, or sell anything, they simply stockpile patents and make their money by threatening lawsuits.
Julie Samuels, a staff attorney at the Electronic Frontier Foundation, said, "What we see with the trolls is that they take advantage of someone -- you know, weaknesses in the system."
Samuels says patent trolls are badly hurting the American economy. Research shows this type of litigation has cost investors an estimated half a trillion dollars since 1990. Samuels said, "It's not what the Constitution intended when the Constitution talks about the progress of useful arts and science. The patent system is supposed to protect innovation. Or it's supposed to incentivize innovation. And right now, that's not what it's doing."
CBS News reached out to Uniloc repeatedly, but have not gotten a response, which is not unusual. Most of these companies seem to have no interest in publicly defending their lawsuits, even though they are legal.
Samuels said, "It's legal. Does that mean it's right? I don't think so."
And it's not just small companies like Meyer's -- Uniloc went after Microsoft. The software giant recently settled for an undisclosed amount after an eight-year court battle. More than 2,700 so-called "troll lawsuits" were filed this year. A decade ago the number was just 144.
Most everyone settles because it becomes so expensive. But Meyer says he'll go to the mat to fight back.
Asked how much he's willing to pay, Meyer said, "Everything I have, everything I will have until it gets to 12 people that will make a decision based on their best conscience."
If it went all the way to a jury decision, Meyer estimates it would cost him at least $1.5 million.
Asked whether he would rather spend $1.5 million to defend his case and win rather than spend $100,000 to settle it, Meyer said "Yes ... because I believe it's wrong."
For Jeff Glor's full report, watch the video in the player above.
CBS News' Jeff Glor said on "CBS This Morning," one solution for this issue is to change the rules and the way patents are designed. "These rules were initially designed for a mechanical world. We're living in a digital world now, it's much more dynamic. And so if you want to keep in place these iron-clad protections for pharmaceuticals, for example, for 20 years, then maybe change them for software because that is a business that changes much more quickly."
Glor added, "A company like Microsoft has the lawyers and the millions or billions, in some cases, to defend these lawsuits. But when you're a small businessman, and you have to spend a million-and-a-half dollars to potentially fight one of these lawsuits for five or 10 years, it can make or break your career."
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