Today, companies large and small with any intellectual property spend inordinate amounts of time, energy, and resources fighting patent battles that ultimately hinder everyone from innovating by diverting huge quantities of capital into spurious legal battles over trivial patents.
There are Patent Toll companies that develop intelectual property and then never turn these ideas into anything tangible. These trolls make money by extorting innovators who seek to bring these ideas to real market reality.
Software patents seem particularly absurd, given the context of how they are applied. My neighbor once said something to the effect of "A software patent in many cases is like patenting the ideas of putting mustard in a refrigerator ". After studying closed source patent heavy software, I became a fan of Linux and open source software.
Has the patent system been abused and degraded by frivolous legal entities and their litigious practices? Yes!
NEST, the learning thermostate is the first thing that comes to mind when I think of frivolous patent trolls. Honeywell, the industrial monopoly behemoth of HVAC controllers, frivolously claims that NEST (a small startup company) has violated some of Honeywell's patents. Examined within a historical context, Honeywell failed to use their IP (intelectual Property) to commercialize anything even remotely similar to the learning thermostate developed and brought to market by NEST. You can read more about this here :
More recently the spat between Apple and Google/Samsung over android total search (a method for finding content, apps, contacts or other information on a smartphone) resulted in Apple filing for sales injunctions against Samsung, preventing them from selling their latest flagship Android phone. Earlier in history Apple has litigated against samsung because they claim samsung's android tablet looks too similar to the iPad.
This trend of big companies litigating against smaller companies, and against their larger competitors has been an increasing problem lately. This problem has many people starting to question if there is something fundamentally wrong with apply our old patent system in todays rapidly evolving technology markets.
Keeping unethical fraud at bay: patents are designed to help an innovator recoupe their development investment in order to help their turn a profit by innovating. Sadly, some of the brightest minds have been absorbed into unethical patent troll companies that develop and then shelve ideas in a dark closet so they never see the light of day. Then when some pragmatic innovator (small or large) comes along and tries to do something described in one of the troll's shelved patents, the troll steam rolls out with litigation to extort fee's and royalties from the pragmatic party wishing to commercialize the innovation.
Intelectual Ventures is known for this kind of patent trolling activity:
"the company makes most of its income from lawsuits and licensing of already-existing inventions, rather than from its own innovation"
Another example of the problems with software patents explained with a comparison :)isantop says: