Won't work. One of the fundamental principles is that A patent is a sword, not a shield. Owning a patent doesn't shield you from litigation, it simply allows you to litigate against others.

The "patent arsenal" idea is that if you have a trove of patents, you can respond to competitors by cross-licensing. The competitor won't sue you if they don't want to be sued in turn, a kind of mutual non-agression pact.

This doesn't work against a patent troll, who is not in business and cannot be sued on the basis of any patent. I apologize in advance if this simile is offensive, but I think patents are a little like nuclear weapons. They are very effective as a deterrent against other fully functioning countries attacking you, because they know that even if they "win" the war, they will lose.

But what is their value against terrorists? Nothing, because the terrorists do not have anything you can attack with a nuclear weapon. Worse, if you put a nuclear weapon in the hands of a criminal mastermind, you face extortion on a massive scale (see the movie "Thunderball").

A collection of your own patents is no defense against a non-practicing entity like Lodsys. They don't make any products, so there's nothing in any portfolio that can threaten their business and force them to deal.

A bunch of smaller businesses could definitely create a spin-off entity that bought patent rights and 'exploited' them. But it could never use those patents to target a troll. It could target other tech companies, but then you wouldn't be beating anyone, you'd be joining them.

Short of that, small developers could create some sort of shared legal fund to make fighting these entities less individually-burdensome. But for any individual developer, it's probably going to be cheaper to just hope you don't fall into a net and pay when you do, than to pay every year toward a very expensive patent litigation fund.

These cases can easily cost millions to tens of millions of dollars. A consortium of a thousand companies could each contribute a thousand dollars a year for a decade and wind up broke after a single lawsuit. Where's the up-side for the developer, compared to just keeping their head down and hoping for the best, paying out a few thousand dollars when they get ensnared?

Not to mention that having a large consortium out there would draw the Trolls like a beacon, ensuring that any net they cast hooked the funds of every developer in the consortium.

And, ultimately, any good patent lawyer working for such a consortium would still just advise paying the troll most times. So the practical effect would likely just be to streamline the settlement process.

Small developers would, quite frankly, get far better bang for their buck directing any such consortium moneys into a patent-reform lobby.

Another option for developers: Start your companies in a country not covered by these laws.

I always remind myself that if I want to get around the US laws, I can just move to Nigeria (or something).

Unless you want to limit yourself to the market in such a country, that tactic isn't really going to work. If you are providing goods/services to the US market, you will be subject to their laws.