The Real Costs of Patent Trolls

New paper on the real costs of patent trolls:

The Private and Social Costs of Patent Trolls



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.

via The Private and Social Costs of Patent Trolls by James Bessen, Michael Meurer, Jennifer Ford :: SSRN.

In a related vein, the OECD has a new report out that, among other things, highlights the declining quality of patents in the last decade. Graph follows:

Patent quality



  1. Interesting, did they account for the lost revenue and profits of the companies that created the inventions, when they were stolen?

    This study's methodology can be compared to the losses that resulted to a criminal enterprise when they were charged with a crime. It ignores the cost to the owner's of the property and just adds up the cost to the criminal enterprise because of prosecution.