Patent protection laws aim to incentivize innovation and to allow the inventor and investor to benefit financially from their invention.
Furthermore copycats that free ride someone else’s invention shall be legally prevented from doing this for a set amount of time.
But patent laws in many countries, Germany among these, have helped incentivize an entirely new industry that actually causes the opposite of what patent laws intended to do.
German patent law, and especially how German courts interpret it, disincentives innovation and most start-ups claim that it makes innovation harder.
Germany is the only country that applies so-called Orange Book Laws. Orange Book Laws bundle an entire set of patents into technology standard (e.g. the mobile phone data standard 3G) and obliges every company that uses such a standard in one of their products to compensate any holder of patents listed in that standard.
The problem lies in the nature of these bundles; even if the product does not use certain patents that are defined in that bundle, it still has to compensate owners of these patents.
Technology firms have to proactive proof in court that they explicitly don’t use these patents in order to get away without paying for license fees and potential fines. Prior to winning such an argument the company usually has to go through an injunction put on them by the patent holder.
In order to understand why some companies are actually focusing their business on merely holding patents and suing companies that use industry standards (bundles) it is important to understand what these ‘patent trolls’ are up to.