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The Private and Social Costs of Patent Trolls

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  • James Bessen

    ()
    (Research on Innovation, Boston University School of Law, Berkman Center for Internet and Society (Harvard))

  • Jennifer L. Ford
  • Michael J. Meurer

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.

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Bibliographic Info

Paper provided by Research on Innovation in its series Working Papers with number 1103.

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Date of creation: 2011
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Handle: RePEc:roi:wpaper:1103

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Web page: http://www.researchoninnovation.org

Related research

Keywords: patent; litigation; litigation cost; non-practicing entities; software patents;

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Cited by:
  1. Alexy, Oliver & Reitzig, Markus, 2013. "Private–collective innovation, competition, and firms’ counterintuitive appropriation strategies," Research Policy, Elsevier, vol. 42(4), pages 895-913.
  2. Christian Le Bas & Julien Pénin, 2014. "Patents and innovation : Are the brakes broken, or how to restore patents’ dynamic efficiency ?," Working Papers of BETA 2014-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  3. Andrei Hagiu & David B. Yoffie, 2013. "The New Patent Intermediaries: Platforms, Defensive Aggregators, and Super-Aggregators," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 45-66, Winter.
  4. 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.
  5. Dr Chiara Rosazza Bondibene, 2012. "A Study of Patent Thickets," NIESR Discussion Papers 11129, National Institute of Economic and Social Research.
  6. Schwiebacher, Franz, 2013. "Does fragmented or heterogeneous IP ownership stifle investments in innovation?," ZEW Discussion Papers 13-096, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  7. 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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