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Rather than keeping their best code to themselves, software engineers can register their creations with the government, creating a marketplace of functionality. Anyone creating new products can save time and money by licensing, rather than reinventing. If the patent system actually worked anything like that, software patents would be a no-brainer, but it doesn't, and they're not. In fact, quite the opposite. Instead, the patent office contains vaguely worded descriptions written and held by lawyers, not for accelerating innovation, but for taxing it. Reality of the software patents system Software patents, as practised, are legalised extortion. Someone brings a product to market, born from their own minds, built with their own hands, and shipped through the sacrifice of their own families. Before they ever see their first paycheque, they start getting letters from those lawyers: "That's a nice little app you've got here. It would be a shame if someone sued you for patent infringement." In actual patent infringement, there would be an inventor with an invention whose sales are damaged by some dishonest party's copying for the intended purpose of siphoning off some of those sales. Situations such as that one do exist, but the patent system doesn't seem to do a good job of rectifying them. Instead, the question of patent infringement stands in as a threat, in the form of a lawsuit. Simply asking the question of whether a product infringes on a patent can cost millions of dollars. That's why such lawsuits are rare. Right or wrong, it's cheaper to settle. Apparent cost of doing business That is the depressing calculus that enables extortion. Compared with the threat of bankruptcy, signing a licence with a patent troll such as Lodsys seems like a much better decision. The little more than half a percent of revenue is just the cost of doing business. But as uncovered at the Appsterdam Legal Summit in October — where app makers and intellectual property attorneys came together to discuss these issues — the settlement offer is only made to look like the easy choice. For example, the Lodsys 'licensing fee' of 0.0575 percent of revenues above $10,000 (£6,300) doesn't seem like much, but that carries with it an auditing clause that allows it to open your books at leisure. Moreover, you'll continue paying that licensing fee even when the patent expires or is found invalid. Worse than that is what... ...the organisation will spend the money on: getting more money out of other app makers. Giving in to this process creates a kind of viral licensing. It's hard to clean a virus from your system, but it beats passing on the infection to everyone you know. It's even more sinister than that. As revealed by the investigative reporters at National Public Radio — the closest thing the Americans have to the BBC — the patent troll Lodsys is one of thousands of shell companies leading back to a Silicon Valley start-up called Intellectual Ventures. Founded by a former Microsoft executive and