The Cost of Patent Trolls

Interesting new paper on the cost of Patent Trolls in the US.

In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs to defendants arising from NPE patent assertions. We estimate that firms accrued $29 billion of direct costs in 2011. Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that NPEs are not just a problem for large firms.

For reference, $29 billion is more than NASA’s budget ($19 billion in the same time period). This is a huge problem that has real impacts on our economy and our recovery.

 

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