Patent trolls cost US tech companies $29 billion last year

The direct cost of actions taken by so-called “patent trolls” totalled $29 billion in the US in 2011, according to a study by Boston University…It analysed the effect of intellectual rights claims made by organisations that own and license patents without producing related goods of their own.

Such bodies say they help spur on innovation by ensuring inventors are compensated for their creations…But the study’s authors said society lost more than it gained.

The research covered industry bodies that refer to themselves as “non-practising entities”. They include businesses that buy patents with the sole aim of licensing them out, individual inventors, universities and companies that assert patent rights unrelated to the products they make.

The “direct costs” included lawyers’ bills and licence fees. But authors James Bessen and Michael Meurer – both from Boston University’s school of law – said other charges meant their study only reflected part of the impact.

“This figure does not include indirect costs to the defendants’ businesses such as diversion of resources, delays in new products, and loss of market share,” they wrote…”Even so, the direct costs are large relative to total spending on [research and development], which totalled $247 billion in 2009, implying that NPE patent assertations effectively impose a significant tax on investment in innovation.”

The academics said that actions by NPEs meant 2,150 companies had to mount 5,842 defences to lawsuits last year, according to figures from RPX – a business that rents out patents but has promised never to launch a lawsuit of its own.

They noted that corporate giants were not the only ones to suffer. Their research suggested companies earning less than $100 million a year in revenue accounted for half of all cases. Such firms – they said – subsequently had less money to invest in their own research.

The authors added that about one quarter of the cost of NPE litigation consisted of legal fees – money, they said, that could otherwise be used to fund innovation.

Patent Trolls offer their predictable range of patent leather excuses, trying to justify their existence. IMHO – they are parasites who have discovered a way to make money through legalized extortion.

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