Regrettably, A Number of Companies Have Sprung Up for the Sole Purpose of Amassing Software Patent Portfolios.

Reading Passage Question

Regrettably, a number of companies have sprung up for the sole purpose of amassing software patent portfolios. These companies generate revenue by pursuing patent infringement cases. Software code is analogous to literature in that its exact language is legally the intellectual property of its author. However, innumerable software patents that also protect the concept behind the software have been approved by the U.S. Patent and Trademark Office since the late 1990s. And when multiple patents exist for a single idea, there has sometimes been sufficient evidence to award one patent holder damages from companies that have designed software using an idea expressed in another, similar patent.

Although protections on intellectual property may seem invaluable, many innovative companies have been destroyed by the enforcement of vaguely worded software patents. As the importance of maintaining a consumer-friendly web presence has grown, it is not unusual to see identical interactive features on dozens of websites across a single industry. The abundance of web-based consumer transactions makes it unreasonable to stipulate that unrestricted use of a convenient feature, such as an online shopping cart, be limited to the website of the company whose developer first conceptualized it.

The patenting of concepts can actually stifle the innovation that patents should encourage. Imagine a smart phone that uses a popular operating system to run all of its downloadable applications. If a startup developed an application that was compatible with that operating system, but the theory behind the compatibility of that well-known system with an application had been patented—especially if that patent were owned by a third party whose sole intent was to use it to generate revenue—the startup could be sued and bankrupted even though the application itself was a novel idea.

A particularly egregious case of patent abuse took place when one particular company with a long history of engaging others in lawsuits based on undue claims of patent infringement sued dozens of well-known companies for their use of streaming video. In an unfortunate twist, even though the “patent troll” ultimately lost its case in front of a federal jury, it had already earned millions from this claim. Although a handful of companies were willing to take the case to trial, for most companies the financial burden of waging a legal defense made an out-of-court settlement the more pragmatic option.

“Regrettably, a number of companies have sprung up for the sole purpose of amassing software patent portfolios” - is a GMAT reading comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension.

This GMAT Reading Comprehension consists of 3 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Questions.

Solution and Explanation

1. Which of the following cautions does the passage offer to companies that are engaged in the development or public use of software in some capacity?

1. Companies that file patents to protect the intellectual property of their software developers might not be able to use those patents as a legal defense in infringement cases.
2. Companies that are sued for patent infringement seldom recover from the financial setback of such a lawsuit if they choose to take their cases to trial.
3. Companies that design software to be compatible with existing electronics will incur significant costs in the process of obtaining the rights to do so.
4. Companies that hold patents for certain software theories and concepts may not have done enough to protect their intellectual property.
5. Companies that utilize common software features on their websites will inevitably expose themselves to the financial liability of lawsuits.

2. The passage most clearly implies that which of the following is true concerning website features, the concepts of which are eligible for patent protection?

1. Their patents are void when there is more than one patent that covers the same general concept, regardless of whether the code used differs greatly.
2. Their patents are so vague that one company will not be motivated to offer a settlement to another company that sues the first for patent infringement.
3. They are likely to be the subject of infringement lawsuits brought by "patent trolls" more often than are other patent protected software concepts.
4. They are likely to be considered essential components of doing business effectively within certain industries, regardless of the patent holder.
5. Their patents are so unreasonable that no company is able to independently defend its patent ownership rights in a jury trial.

3. The final paragraph of the passage accomplishes which of the following tasks?

1. It reviews information already given in the passage and offers a case study that demonstrates the dangers faced by innovative companies of the type discussed in previous paragraphs.
2. It offers suggestions on what risks companies that are faced with infringement lawsuits should take into consideration when debating their courses of action.
3. It describes an especially gross instance of patent abuse that was surprising to the author because it affected some companies differently than it did others.
4. It presents an additional quality unique to software patents that makes them particularly vulnerable to abuse.
5. It recounts a specific example of a problem that arose from impractical circumstances that are explained more generally elsewhere in the passage.

4. It can be inferred from the passage that which of the following provides sufficient grounds for one company to file a lawsuit against another for patent infringement?

1. A company has started utilizing the same interactive web features on its consumer-facing website as has a competitor that has been in the industry a longer period of time.
2. A company has a substantial patent portfolio that covers several operating systems used in consumer electronics.
3. A company contracts with a startup to develop software for its new line of laptop computers, but the startup also has a contract with a competitor for a similar product.
4. A company develops a unique, interactive web feature that is based on a theory originally patented by a developer who sold the patent years ago.
5. A company submits an application to the U.S. Patent and Trademark Office to patent a software concept for which several other patents already exist.

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