Patent trolls: 20 years, $500 billion in losses

One of my BU law professors, Mike Meurer, just posted a working paper (pdf) he co-authored with James Bessen and Jennifer Ford titled “The Private and Social Costs of Patent Trolls.”  Quoting the abstract:

In the past, non-practicing entities (NPEs) — firms that license patents without producing goods — have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.

This works out to around $25 billion in lost wealth per year.  For comparison, even in its pre-Napster days, the RIAA only sold $14.7 billion per year—more than $10 billion less.

H/T Groklaw.

Update:  More analysis by Ars Technica.

0 thoughts on “Patent trolls: 20 years, $500 billion in losses

  1. Pingback: Patents, infrastructure, and payouts | Legally Sociable

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