Patent trolling cost the US $29 BILLION in 2011
Boston Uni researchers slam ‘NPE’ lawsuits
New research from Boston University suggests that “patent trolling” is a very expensive business, costing $US29 billion in 2011 in America alone, and that trolling reduces the funds available for innovation.
The research, by James Bessen and Michael J Meurer of the university’s School of Law, drew on information published in litigation databases and a survey of defendants to come up with the figure.
Their research found that there were more than 5,800 defences by 2,150 companies against patent assertions by “non practicing entities (NPEs) in 2011.
While high-profile cases – by NPEs the researchers describe as “big game hunters” – give the impression that patent trolling is mostly between giant corporations, the researchers noted that the median defendant had annual revenue of $US10.8 million, and 82 percent of actions were launched against companies with less than $US100 million in annual revenue.
The researchers also analysed the financial state of publicly-traded NPEs, and state that these trolls “cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors”. The result, they say, is that there’s less money available for invention.
The researchers note that NPEs have a long history, and that not all of it’s bad. “Some inventors lack the resources and expertise needed to successfully license their technologies or, if necessary, to enforce their patents. NPEs provide a way for these inventors to earn rents that they might not otherwise realize, thus providing them with greater incentives to innovate,” they write.
Nor is trolling via NPEs a new phenomenon, they write, noting that “patent sharks” in the 19th century used to target railway companies and farmers. However, the rise in NPE trolling has “reached a wholly unprecedented scale and scope”.
It should be noted that this research focused only on the NPE business model – it didn’t take into account the increasingly bitter, frivolous and expensive patent spats between active vendors such as Apple, Motorola, Samsung and the rest.
The paper is available here. ®
Re: partially bollocks
The direct costs would be: we can't afford a legal fight so we'll just pay up, despite the patent probably being invalid or non-applicable.
Since these are patents, its quite possible that the company did its own R&D which it paid for and then it had to pay someone else again for the the right to use its own research.
Re: partially bollocks
"the companies gaining from the exercise can then use the money to spend on R&D"
Err... No! What part of 'Non Practicing Entity' slipped past your analysis? Patent trolls NEVER conduct R&D, other than researching who their next victim might be...
This is US $29 Billion dollars worth of attempted self defence fighting funds wasted which potentially drew directly from the R&D spend of those companies that WOULD have used the money for that purpose if they had not had to scrape the trolls off their footwear...
“cost small and medium-sized firms more money than these NPEs could possibly transfer to inventors”
You mean lawyers are making money out of this??? Quelle surprise.