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Saturday, August 25, 2012

Lawsuits are smothering Innovation. What can we do?

We’re all familiar with the phrase that if you build a better mousetrap the world will beat a path to your door. The problem is that if I did invent a better mousetrap, and then got a patent, and then put it on the market, Apple would sue me, or Samsung or maybe even an actual mousetrap manufacturer. It’s incredible to me the sheer volume of never-ending litigation between the big computer and phone brands. Apple might say that my mousetrap is shaped like their iPhone. They might point out that my product is rectangular and has similar length, width, depth...and feel. Since I am a brand new company with little wealth or resources on-hand to fight them in court, I would almost certainly lose that court battle and so I would have to pay Apple a billion dollars.

The lesson that I would learn is that unless I could start out with 2 billion dollars—one billion to fight a court battle, and another in case I lose—I had better not even think about getting into the “better-mousetrap” market. This is of course the point…the big tech companies don’t want any small-potatoes competition. I’m not a conspiracy theorist but maybe the Justice Department should take a good look at this behavior? It seems to me that it's designed to eliminate competition.

With seven billion people on Earth and 470 million college degrees, there’s more than enough sheepskin on the wall to continue the innovation avalanche we’re lucky enough to be living in. The problem is that even though we have all this innovation happening all the time, very little of it ever makes it to the market. If we’re to ratchet up the level of knowledge of science and ability to innovate new technology ever more rapidly, society has absolutely got to find a way to stop all these tech giants from filing lawsuits at the drop of a hat.

So here’s my idea: publicly shame them. Instead of rewarding them with billion dollar awards, make the public absolutely aware of how many times they’ve been to court in the past decade. Let the world know how much money a company spent on legal services, and how much money they won and lost. I once read that war ends up costing more money than any argument it ever ends up settling. I’d be willing to bet the same thing holds true for court battles.

Imagine a family looking into buying a new computer. They do their due-diligence pre-purchase information searching. They want the best computer for the least amount of money. They read about capabilities and prices, and then finally they read the “Court Shame Sheet” which every publicly traded company would be required to provide, possibly on-line, possibly at store outlets.

The family, after reading the shame sheet, discovers that the company with the highest rated product also has 478 court battles to their name in the last decade. They discover that 45 billion dollars was paid out by this company to various attorneys and their staff. They discover that of all the winning and losing court battles, the net win vs. loss is a complete wash. Maybe they decide they don’t want to reward a company that spends most of its time in court instead of innovating new products. Maybe they decide to reward a less litigious company with their business.

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