The Private and Social Costs of Patent Trolls
AbstractIn 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.
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Bibliographic InfoPaper provided by Research on Innovation in its series Working Papers with number 1103.
Date of creation: 2011
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Web page: http://www.researchoninnovation.org
patent; litigation; litigation cost; non-practicing entities; software patents;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property Rights
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-01 (All new papers)
- NEP-COM-2011-10-01 (Industrial Competition)
- NEP-INO-2011-10-01 (Innovation)
- NEP-IPR-2011-10-01 (Intellectual Property Rights)
- NEP-TID-2011-10-01 (Technology & Industrial Dynamics)
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- Pénin, Julien, 2012. "Strategic uses of patents in markets for technology: A story of fabless firms, brokers and trolls," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 633-641.
- Alexy, Oliver & Reitzig, Markus, 2013. "Private–collective innovation, competition, and firms’ counterintuitive appropriation strategies," Research Policy, Elsevier, vol. 42(4), pages 895-913.
- Tucker, C.E., 2012. "Institutions, competition and regulation: Intellectual property and innovation," Discussion Paper 2012-030, Tilburg University, Tilburg Law and Economic Center.
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